Patrick KOLLER,Chief Executive OfficerMartin FISCHER,Deputy CEO and CEO as from March 1,2025Olivier DURAND,Chief Financial OfficerFY2024 RESULTSRESILIENT PERFORMANCE AND NET DEBT REDUCED BY 0.4BN IN 2024CONTINUED FOCUS ON PROFITABILITY,CASH FLOWAND DELEVERAGING IN 2025February 28,2025|012024Highlights2024 Results-February 28,2025AGENDA0203042024 Financial Performance2025OutlookTakeawaysP.2|012024 HIGHLIGHTS2024 Results-February 28,2025Patrick KollerCEOP.3|2024:A YEAR OF CONTINUED TRANSFORMATIONIN A CHALLENGING ENVIRONMENT2024 Results-February 28,2025P.4CONTINUED TRANSFORMATION BASED ON THREE PILLARSIN A PERSISTENTLY CHALLENGING ENVIRONMENTEconomic and political instability in many geographiesLower but still high inflation and interest ratesAutomotive industry under pressure(electrification)resulting into lower volume produced in H2 2024TECHNOLOGY AND INNOVATIONGEOGRAPHYSUSTAINABILITYincluding digital transformation|RESILIENT 2024 PERFORMANCEIN A DIFFICULT ENVIRONMENT2024 Results-February 28,2025P.5CONTINUEDOUTPERFORMANCERESILIENT OPERATING MARGINNET CASH FLOW NET DEBT/ADJUSTEDEBITDASALES OF27bn5.2%OF SALES655mBELOW2.0XGUIDANCE 2.0 xGUIDANCE 550mGUIDANCEBETWEEN5.0%AND 5.3%OF SALESGUIDANCEBETWEEN26.8bnAND 27.2bn150bps outperformancein a declining market(-1.1%)and despite unfavorablegeographic mixAbove 2023 levelRecurring net cash-flow significantly improved1.97x compared to 3.1x at end-June 2022Net debt reduced by 0.4bnSignificant improvementfor SeatingandClean Mobility|2024 Results-February 28,2025P.68.47.97.06.6End of June 2022End of Dec.2022End of Dec.2023End of Dec.20243.1x 2.7x 2.1x 2.0 x Net Debt/Adj.EBITDA Net Debt in bn1.8bn NET DEBT REDUCTIONCONTINUOUS DELEVERAGINGSINCE THE ACQUISITION OF HELLA|ROBUST ORDER INTAKE OF 31 BILLION*2024 Results-February 28,2025UPFRONT COSTS FURTHER REDUCED VS.2023ELECTRONICS7bnKEY AWARDS FROMCHERY(COCKPIT&DISPLAY)AND GM(VIRTUAL KEY)ASIAc.11bnCHINA REPRESENTING c.9bn,MORE THAN 60%OF WHICH WITH CHINESE OEMsHIGH CONTENT VEHICLESc.16bnMAINLY DRIVEN BY INNOVATION FOR TECHNO LEADERSP.7|2024 Results-February 28,2025CONTINUED COST REDUCTION ACHIEVED THROUGH SYNERGIES WITH FORVIA HELLA AND THE LAUNCH OF EU-FORWARDSYNERGIES IN LINE WITHc.400M AMBITION BY 2025Cumulative synergies of 334m at end-2024Purchasing efficiencies,notably drivenby ElectronicsAcceleration in OperationsJoint Shared Services Centerand IT resourcesDELIVERING ADDITIONALSYNERGIES WITH FORVIA HELLACONFIRMED 2028 TARGET OF 500m NET SAVINGSAt the end-of of 2024,operations announced:Represented close to 2,900 headcount reductionRepresented P&L savings of c.140mon an annualized basisGenerated P&L impact of c.15mAt the end-of of 2025,operations:Should represent c.5,700 headcount reductionShould represent P&L savings of c.300mon an annualized basisEFFECTIVE START OFEU-FORWARD COMPETITIVE PLANP.8COMBINED COST EFFICIENCIES OFC.160M IN 2024|2024 Results-February 28,2025BUILDING SALES MOMENTUM IN ASIAFROM CHINA TO EUROPEStrong growth at Interiors,Electronics and Clean MobilityOpening of a state-of-the-art seat assembly plant in Thailand in July 2024New steps of our strategic cooperation with BYDthrough first business awards in Hungary and TurkeyGOING GLOBAL WITHBYDSTRONG PROSPECTSWITH CHINESE OEMsChinese OEMs accounted for close to 50%of total salesin China in 2024Joint venture for smart and sustainable cockpits with CHERY in China,targeting 1bn salesin 2029More than 6bn order intake with Chinese OEMs in 2024 for all BGsACCELERATING WITHLEADING CHINESE PLAYERSSTRONG GROWTH POTENTIALIN JIKASet up of a dedicated JIKA organization to foster development in Japan,India,Korea and AseanGrowth above 20%in Japan,notably driven by ElectronicsDouble-digit growth in India,driven by SuzukiDEVELOPING WITH and INJ-OEMs&INDIAP.9|PIONEERING A SUSTAINABLE MOBILITY INDUSTRY2024 Results-February 28,2025P.10FORVIA Renewable(solar wind)in 2024(GWh)(versus 19%in 2023)57%Intensity vs.2019(MWh/M)(2024:-26%)-30%Energy Savingplan NET ZEROScopes 1&2-67%Scope 3-15%Scopes 1&2-80%by 2025CO2absolute reductioncompared to 2019AT LEASTScope 3-45%by 2030CO2reductioncompared to 2019|MEASURABLE PROGRESS IN ESG RATINGSAGENCIESSCORE100804020100NegligibleLowMediumHighSevereCCCBBBBBBAAAAAAAA60659.3 2 PTSVS 2023 3 PTSVS 2023CLIMATESUPPLY CHAIN MEMBERBWATER2024 Results-February 28,2025P.11|2024TAKEAWAYS|2024 Results-February 28,2025P.12RESILIENTPERFORMANCEIN A DIFFICULT ENVIRONMENTSALES OUTPERFORMANCE AND RESILIENT OPERATING MARGINCONTINUEDDEBT REDUCTIONSTRONG COMMITMENTTO SUSTAINABILITYPREPARINGTHE FUTURESOLID ORDER INTAKEFUELED BY INNOVATIONINCREASING EXPOSURETO FAST-GROWINGCUSTOMERS AND GEOGRAPHIESACCELERATED RAMP-UPOF SELF-HELP INITIATIVES|022024 FINANCIAL PERFORMANCE2024 Results-February 28,2025Olivier Durand CFOP.13|SALES OF 27 BILLION,OUTPERFORMANCE OF 150BPSOPERATING MARGIN AT 5.2%OF SALES IN A DIFFICULT ENVIRONMENT2024 Results-February 28,2025P.14Reported sales down by 1.0%Organic growth of 0.4%Driven by Europe and North America Supported by tooling sales Despite unfavorable geo mix of c.200bpsCost efficiencies offset by unfavorable mix and one-off Synergies and EU-FORWARD Unfavorable geographic and business mix(47)m one-off at Interiors NAOStable operating margin excl.one-offWWproductionof90.5m units*WWproductionof89.5m units*111m(82)m(302)m 0.4%-1.1,248m26,974m-0.3%Automotive production growth*-1.1%(24)m13m(28)m1,439m1,400m5.3%of sales5.2%of sales|SOLID OUTPERFORMANCE AND FURTHER MARGIN EXPANSION2024 Results-February 28,2025P.15Organic growth of 1.8%Low single-digit growth in Europeand in North America China:high comparable with BYDnot offset by accelerationwith Chery and MercedesOperating margin supported by improved operational performance and repricingS E AT I N G32%of Group consolidated sales in the period2023Organic growthCurrency effect20243.7%of sales5.0%of sales8,5518,634 1.8%-0.9%Operatingmargin 130bpsOutperformance of c.290bps*Sales 1.0%|PERFORMANCE PENALIZED BY H1 ONE-OFF IN NORTH AMERICA2024 Results-February 28,2025P.16Mid-single digit organic growth boosted by tooling sales High number of SOPs drivingdouble-digit growth in NA Low single-digit growth in Europe,slight decline in ChinaProfitability hit by North America one-off H1 performance penalized by abnormally high number of SOPs and issue with a supplier triggering 47m one-off extra cost in H1 H2 margin in North America gradually catching up towards normal levelI N T E R I O R S19%of Group consolidated sales in the period2023Organic growthCurrency effect20244.1%of sales2.1%of sales4,9235,108 5.0%-1.2%Operatingmargin-200bpsOutperformance of c.610bps*Sales 3.8%|IMPROVED MARGIN DESPITE LOWER SALES2024 Results-February 28,2025P.17Organic growth penalized by electrification and customer mix Sales decline in Europe andNorth America largely attributableto activity with Stellantis Sales decline in China in the contexof continued progress of electrification;growth with BYDCosts reduction enabling improved profitability Operating margin of Ultra Low Emission activity(Clean Mobility excl.Hydrogen storage solutions)at around10%of salesC L E A N M O B I L I T Y15%of Group consolidated sales in the period2023Organic growthCurrency effect20247.9%of sales8.3%of sales4,8324,153-5.3%-1.4%Scope effect-7.3%Impact ofCVI disposalUnderperformanceof c.420bps*Operatingmargin 40bpsSales-14.0%|SOLID PERFORMANCE IN SALES AND PROFITABILITY2024 Results-February 28,2025P.18Organic growth in all three main regions Low single digit growth in Europeand North America,driven by VWand GM respectively Robust growth in AsiaProfitability supportedby continued turnaroundat Clarion Electronics Resilient operating marginat HELLA ElectronicsE L E C T R O N I C S16%of Group consolidated sales in the period2023Organic growthCurrency effect20245.3%of sales5.5%of sales4,1394,189 2.6%-1.4%Outperformance of c.370bps*Operatingmargin 20bpsSales 1.2%|PERFORMANCE IMPACTED BY SALES DROP IN H22024 Results-February 28,2025P.19Organic sales declinereflected:Mid-single digit growth in Europe despite weak sales in Q4 Sales down in China and in the USdue to unfavorable customer mixOperating margin down 30bpsL I G H T I N G14%of Group consolidated sales in the period2023Organic growthCurrency effect20245.1%of sales4.8%of sales3,7463,879-2.7%-0.9%Scope effect 7.2%Underperformance of c.160bps*Sales 3.5%Operatingmargin-30bps|MAINTAINED HIGH MARGIN IN A SOFT MARKET2024 Results-February 28,2025P.20Organic growth:Lower demand in thecommercial vehicle segment Growth of the spare part segmentOperating margin maintainedat high level:Impacts of lower volumesand HELLA Pagid acquisition R&D expenses aheadof new programsL I F E C Y C L E S O L U T I O N S4%of Group consolidated sales in the period2023Organic growthCurrency effect202412.1%of sales9.3%of sales1,0581,011-3.8%-0.7%Sales-4.5%Operatingmargin-280bps|MARGIN STABLE IN EMEA AND IMPROVED IN AMERICAS DOUBLE-DIGIT MARGIN MAINTAINED IN ASIA DESPITE SALES DROP 2024 Results-February 28,2025P.21EMEA2023OrganicgrowthCurrencyeffect20242.5%of salesOutperformance ofc.540bps*12,65112,607 1.3%-0.5%OperatingmarginStableScopeeffect-1.2%2.5%of sales47%of salesStable margin in a difficult environment Outperformance driven by Interiorsand Lighting H2 margin under pressure on missing volumes Benefits of EU-FORWARD yet to comeAMERICAS2023OrganicgrowthCurrencyeffect20244.3%of salesOutperformance ofc.420bps*7,2077,152 3.2%-1.1%Operatingmargin 40bpsScopeeffect-2.8%4.7%of salesMargin up 40bpsto 4.7%of sales Solid outperformance in the US Margin improvement despiteone-off at InteriorsASIA2023OrganicgrowthCurrencyeffect202411.0%of salesUnderperformance ofc.400bps*7,3907,216-3.9%-2.2%Operatingmargin-60bpsScopeeffect 3.7.4%of salesDouble-digit margin despite temporary headwinds in China Unfavorable customer mix in China Increased profitability in the Rest of Asia26%of sales27%of sales|20232024ChangeSales27,24826,974Operating income before PPA1,4391,400-39Amort.of int.assets acquired in business combinations(193)(190)Restructuring(171)(362)-191Other non-recurring operating income and expense(11)(74)-63Net interest expense(496)(495)Other financial income and expense37(50)-87Income before tax of fully consolidated companies606229-365Income taxes(232)(235)Share of net income of associates(2)(18)Net income from discontinued operations(5)0Minority interest(143)(161)Consolidated net income,Group share222(185)-3952024 Results-February 28,2025P.22Restructuring costs of 362m at Group level,of which281m in Europe(vs.92m in 2023)owing to EU-FORWARD ramp up108m non-cash costs relatedto assets write-downsRESTRUCTURING COSTS: 191Mvs.2023NON-RECURRING COSTS: 63Mvs.2023Litigation costs including with a Mexican supplier in H1 for 34m M&A projects related costsNET LOSS MOSTLY RELATED TOINCREASED RESTRUCTURING COSTS|20232024Operating income1,4391,400Depreciation and amortization,of which:1,8891,955Amortization of R&D intangible assets712750Other depreciation and amortization1,1771,204Adj.EBITDA3,3283,355%of sales12.2.4pex(1,137)(973)Capitalized R&D(1,046)(1,039)Change in WCR659611Change in factoring111(33)Restructuring(170)(208)Other(operational)(51)(157)Financial expenses(529)(564)Taxes(515)(337)Net Cash Flow649655%of sales2.4%2.4%NET CASH FLOW SLIGHTLY ABOVE 2023 LEVEL AT 655M 2024 Results-February 28,2025P.2310461039113797320232024CAPEX REDUCTION ENGAGED2,1832,012INVENTORY MANAGEMENT ACTIONS CENTRALTO WORKING CAPITAL CONTRIBUTION2904258120232024-171m-443m*FURTHER IMPROVEMENT IN STRUCTURAL NET CASH FLOW TARGETED IN 2025|2024 Results-February 28,2025P.24CONTINUED DEBT REDUCTION SUPPORTED BY NET CASH FLOW AND DISPOSALS2.0 x6,623mNet debtEnd2023Net Cash-FlowDisposalsDividend tominoritiesIFRS 16FX&OtherFORVIAdividendEnd20242.1XLeverageratio6,987mNet debt0.4bnof debt reductionEnd 20242.0XLeverageratio|2024 Results-February 28,2025P.25EXTENDED GROUP AVERAGE MATURITY THROUGH ACTIVE DEBT MANAGEMENTDecember 31,20242.3bn of new financing issued in 2024 to repay 2024-2026 maturities Diversification of financing sources,including SSD Average maturity increased from 2.9y to 3.2yDEBT MATURITY PROFILE*NO SIGNIFICANT MATURITYBEFORE JUNE 202620242026202820302032 2024 New debt2024 RepaymentsSolid Cash position 4.5bn available cash 2bn of two fully undrawn senior credit facilities|2024 Results-February 28,2025P.2603OUTLOOKMartin FischerDeputy CEO|OBSERVATIONS FROM MY FIRST 100 DAYS2024 Results-February 28,2025P.27SOLIDBUSINESSRobust BusinessGroup PortfolioClear Growth DriversBest-in-class SustainabilityCUSTOMER INTIMACYGlobal FootprintDiversifiedCustomer BaseStrong Order IntakeORGANIZATIONSTRENGTHS“Can do”attitudeAccountabilityDemonstratedExecution|MY PRIORITIES AS NEXT CEO2024 Results-February 28,2025P.28DELEVERAGEBEST-IN-CLASSPERFORMANCELevel-upfunctional&operational excellenceDeliver financial targetssupported bymanage by cashBUSINESSTRANSFORMATIONDispose ofnon-strategic assetsBoost innovation through partnerships and AILeverage sustainabilityINVIGORATINGCULTUREEmpowerleaders&teamsStreamlinedecision makingFoster cross-collaborationFOCUS ONCORE PORTFOLIODELIVER“ONE FORVIA”|2024 Results-February 28,2025P.29Europe46%-4.9%FY 2025NorthAmerica24%-2.1%FY 2025-4.9% 0.9%China21% 1.9%FY 2025FORVIAS 2025 MARKET ASSUMPTION ALIGNED WITH S&P ESTIMATES,WITH STRONG REGIONAL DISPARITIESVOLUMES EXPECTED FLAT VS.2024 AT 89.5 M LVsUNFAVORABLE GEOGRAPHIC MIX OF c.-2%AT GROUP LEVEL(c.-4%in H1;neutral in H2)-8.7%-0.4% 7.8%-2.8%|2024 Results-February 28,2025P.30SALES26.3bnAND 27.5bnBETWEENOPERATING MARGIN 5.2%AND 6.0%OF SALESBETWEENNET CASH FLOW2024LEVELi.e.655MNET DEBT/ADJ.EBITDA RATIO 1.8xBEFORE DISPOSALSBEYOND THIS ORGANIC DELEVERAGING TARGET,THE GROUP IS COMMITTED TO RESTORE A SOLID BALANCE SHEETWITH THE OBJECTIVE TO REDUCE NET DEBT/ADJUSTED EBITDA RATIO BELOW 1.5x IN 2026,SUPPORTED BY DISPOSALS2025 GUIDANCE:FOCUS ON PROFITABILITY IMPROVEMENT,CASH OPTIMIZATION AND DELEVERAGINGTHIS GUIDANCE ASSUMES:2025 worldwide production in line with S&P Mobility latest estimates of 89.5m Light VehiclesNo significant scope effect in 2025 vs.2024No impact from US tariffs not yet enforcedNo major disruption materially impacting productionor retail sales in any major automotive region during the year AT CONSTANT FOREIGN EXCHANGE|2024 Results-February 28,2025P.3104KEYTAKEAWAYSMartin FischerDeputy CEO|KEY TAKEAWAYS2024 Results-February 28,2025P.32RESILIENT PERFORMANCEIN A DIFFICULT ENVIRONMENTRIGHT FOCUS&RIGHT INITIATIVESIN PLACE TO DELIVER ON OUR PLAN|Q&A SESSION|DEFINITIONS OF TERMS USED IN THIS DOCUMENTSALES GROWTHFORVIAs year-on-year sales evolution is made of threecomponents:A Currency effect,calculated by applying average currencyrates for the period to the sales of the prior year A Scope effect(acquisition/divestment)And Growth at constant scope and currencies or OrganicgrowthAsscopeeffect,FORVIApresentsallacquisitions/divestments,whose sales on an annual basis amount tomore than 250 millionOther acquisitions below this threshold are considered as“bolt-on acquisitions”and are included in“Growth atconstant currencies”ADJUSTED EBITDAis Operatingincome as defined above depreciation andamortization of assets;to be fully compliant with the ESMA(European Securities and Markets Authority)regulation,this termof“AdjustedEBITDA”willbeusedbythe Group as of January 1st,2022 instead of the term“EBITDA”thatwas previously used(this means that“EBITDA”aggregates until2021 are comparable with Adjusted EBITDA”aggregates as from2022)NET CASH-FLOWis defined as follow:Net cash from(used in)operating and investing activities less(acquisitions)/disposalofequityinterestsand businesses(net of cash and cash equivalents),other changes and proceeds from disposal offinancial assets.Repayment of IFRS 16 debt is notincludedNET FINANCIAL DEBTis defined as follow:Gross financialdebt less cash and cash equivalents andderivativesclassifiedundernon-current and current assets.It includesthe lease liabilities(IFRS 16 debt)DEBT COVENANTis the ratio Net financial debt at theend of the period vs.AdjustedEBITDAoverthelast12 months;it is tested twice everyyear at June 30 and at December31stOPERATING INCOMEOPERATING INCOME IS THE FORVIA GROUPS PRINCIPAL PERFORMANCE INDICATOR.IT CORRESPONDS TO NET INCOME OFFULLY CONSOLIDATED COMPANIES BEFORE:Amortization of intangible assets acquired in business combinationsOther non-recurring operating income and expense,corresponding to material,unusual and non-recurring items including reorganization expenses and early retirement costs,the impact of exceptional events such as the discontinuation of a business,the closure or sale of an industrial site,disposals of non-operating buildings,impairment losses recorded for property,plant and equipment or intangible assets,as well as other material and unusual lossesIncome on loans,cash investments and marketable securities;Finance costsOther financial income and expense,which include the impact of discounting the pension benefit obligation and the return on related plan assets,the ineffective portion of interest rate and currency hedges,changes in value of interest rate and currency instruments for which the hedging relationship does not satisfy the criteria set forth in relationship cannot be demonstrated under IFRS 9,and gains and losses on sales of shares in subsidiariesTaxes2024 Results-February 28,2025P.36|INVESTOR RELATIONSBloomberg Ticker:FRVIA.FPReuters Ticker:FRVIA.PAISIN:FR00001211472024 bonds:XS16111678562025 bonds:XS17854677512026 bonds:XS2553825949XS19638300022027 bonds:XS2047479469XS2405483301XS20814740462028 bonds:XS22093445432029 bonds:XS2312733871XS27743926382031 bonds:XS2774392638Sbastien LEROYTel: 33 1 72 36 75 70E-mail:Adresse:23-27,Avenue des Champs Pierreux92000 Nanterre(France)Website:Share tickers&ISIN codeBONDS Isin codes2024 Results-February 28,2025P.37|2025 FINANCIAL CALENDARMay 28,2025July 28,2025April 17,2025October 20,2025Annual Shareholders Meetings in Nanterre(France)Q3 2025 Sales(before market hours)Q1 2025 Sales(before market hours)H1 2025 Results(before market hours)2024 Results-February 28,2025P.38|DISCLAIMER2024 Results-February 28,2025IMPORTANT INFORMATION CONCERNING FORWARD LOOKING STATEMENTSThis presentation contains certain forward-looking statements concerning FORVIA.Such forward-looking statements represent trends or objectives and cannot be construed as constitutingforecasts regarding the future FORVIAs results or any other performance indicator.In some cases,you can identify these forward-looking statements by forward-looking words,such asestimate,expect,anticipate,project,plan,intend,objective,believe,forecast,foresee,“guidance”,likely,may,should,goal,target,might,would,“will”,could,predict,continue,convinced,and confident,the negative or plural of these words and other comparable terminology.Forward looking statements in this document include,but are not limited to,financial projections and estimates and their underlying assumptions including,without limitation,assumptionsregarding present and future business strategies(including the successful integration of HELLA within the FORVIA Group),expectations and statements regarding FORVIAs operation of itsbusiness,and the future operation,direction and success of FORVIAs business.Although FORVIA believes its expectations are based on reasonable assumptions,investors are cautioned that theseforward-looking statements are subject to numerous various risks,whether known or unknown,and uncertainties and other factors,all of which may be beyond the control of FORVIA and couldcause actual results to differ materially from those anticipated in these forward-looking statements.For a detailed description of these risks and uncertainties and other factors,please refer to public filings made with the Autorit des Marchs Financiers(“AMF”),press releases,presentations and,in particular,to those described in the section 2.Risk factors&Risk management”of FORVIAs 2023 Universal Registration Document filed by FORVIA with the AMF on February 27,2024 undernumber D.24-0070(a version of which is available on ).Subject to regulatory requirements,FORVIA does not undertake to publicly update or revise any of these forward-looking statements whether as a result of new information,future events,orotherwise.Any information relating to past performance contained herein is not a guarantee of future performance.Nothing herein should be construed as an investment recommendation or aslegal,tax,investment or accounting advice.The historical figures related to HELLA included in this presentation have been provided to FORVIA by HELLA within the context of the acquisitionprocess.These historical figures have not been audited or subject to a limited review by the auditors of FORVIA.FORVIA HELLA remains a listed company.For more information on FORVIA HELLA,more information is available on .*This presentation does not constitute and should not be construed as an offer to sell or a solicitation of an offer to buy FORVIA securities.P.39|
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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 20-F oREGISTRATION STATEMENT PURSUANT TO SECTIONS 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACT OF 1934ORxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31,2024 ORoTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ORoSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 001-36675Stellantis N.V.(Exact Name of Registrant as Specified in Its Charter)The Netherlands(Jurisdiction of Incorporation or Organization)Taurusavenue 1 2132 LS HoofddorpThe NetherlandsTel.No.: 31 23 700 1511(Address of Principal Executive Offices)Giorgio Fossati Taurusavenue 12132 LS HoofddorpThe NetherlandsTel.No.: 31 23 700 (Name,Telephone,E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading Symbol(s)Name of Each Exchange on which RegisteredCommon Shares,par value 0.01STLANew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneSecurities for which there is a reporting obligation pursuant to Section 15(d)of the Act:NoneIndicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:2,880,492,279 common shares,par value 0.01 per share,and 866,410,716 special voting shares,par value 0.01 per share.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes o No If this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Act of 1934.Yes o No Indicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No oIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes No oIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See definition of“large accelerated filer,”“accelerated filer,”and emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filer oNon-accelerated filer oEmerging growth company oIf an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).oIndicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP o International Financial Reporting Standards as issued by the International Accounting Standards Board Other oIf“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow:Item 17 o Item 18 o.If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes o No (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes o No oTABLE OF CONTENTSPageBoard of Directors and Independent Auditor4BOARD REPORT5INTRODUCTION5MANAGEMENT REPORT9Stellantis Overview9Dare Forward 2030 strategic plan12Overview of Our Business12Sales Overview17Environmental and Other Regulatory Matters30Financial Overview37Results of Operations45Liquidity and Capital Resources60Risk Management67Risk Factors72CORPORATE GOVERNANCE91Remuneration Report135CONTROLS AND PROCEDURES163FINANCIAL STATEMENTS166Consolidated Financial Statements at December 31,2024166Consolidated Income Statement171Consolidated Statement of Comprehensive Income172Consolidated Statement of Financial Position173Consolidated Statement of Cash Flows174Consolidated Statement of Changes in Equity175Notes to the Consolidated Financial Statements176OTHER INFORMATION285ADDITIONAL INFORMATION FOR NETHERLANDS CORPORATE GOVERNANCE285ADDITIONAL INFORMATION FOR U.S.LISTING PURPOSES289FORM 20-F CROSS REFERENCE304SIGNATURES3073BOARD OF DIRECTORS ChairmanJohn ElkannVice ChairmanRobert Peugeot(3)DirectorsHenri de Castries(1),(2),(3)Fiona Clare Cicconi(1),(3)Nicolas Dufourcq(1)Ann Frances Godbehere(2)Wan Ling Martello(2),(3)Claudia Parzani(1),(2)Benot Ribadeau-Dumas(1),(3)Jacques de Saint-Exupry INDEPENDENT AUDITOR AND REGISTERED PUBLIC ACCOUNTING FIRMDeloitte Accountants B.V.(independent auditor of the Company for the purposes of our annual reports file with the Autoriteit Financile Markten(“AFM”)(4)Deloitte&Associs(independent registered public accounting firm for our Consolidated Financial Statements included in our reports on Form 20-F)(4)_(1)Member of the Environmental,Social Governance Committee(“ESG”)(2)Member of the Audit Committee(3)Member of the Remuneration Committee(4)Refer to“About this Report”for additional information relating to these regulatory filings4BOARD REPORTINTRODUCTIONAbout this Report Stellantis N.V.was created as a result of the merger between Peugeot S.A.(“PSA”)and Fiat Chrysler Automobiles N.V.(“FCA N.V.”),effective on January 17,2021,with FCA N.V.as the surviving company.Upon the merger,FCA N.V.was renamed to Stellantis N.V.,a public limited liability company(naamloze vennootschap),organized in the Netherlands,as the parent of Stellantis with its principal executive offices located at Taurusavenue 1,2132LS Hoofddorp,the Netherlands.This document,referred to hereafter as the“Form 20-F”or the“Annual Report”,constitutes the Annual Report on Form 20-F,applicable to Foreign Private Issuers,pursuant to Section 13 or 15(d)of the U.S.Securities Exchange Act of 1934(the“Exchange Act”),of Stellantis N.V.for the year ended December 31,2024.Documents on DisplayThe Securities and Exchange Commission(“SEC”)maintains an internet site at http:/www.sec.gov that contains reports,information statements,and other information regarding issuers that file electronically with the SEC.The address of the SECs website is provided solely for information purposes and is not intended to be an active link.Reports and other information concerning our business may also be inspected at the offices of the New York Stock Exchange,11 Wall Street,New York,New York 10005.We also make our periodic reports,as well as other information filed with or furnished to the SEC,available free of charge through our website,at ,as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.The information on our website is not incorporated by reference in this report.Certain Defined TermsIn this report,unless otherwise specified,the terms“we”,“our”,“us”,the“Company”and“Stellantis”refer to Stellantis N.V.,together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“FCA”,“FCA N.V.”and“FCA Group”mean Fiat Chrysler Automobiles N.V.or Fiat Chrysler Automobiles N.V.together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“PSA”and“Groupe PSA”mean Peugeot S.A.or Peugeot S.A.together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“the merger”refer to the merger between PSA and FCA completed on January 16,2021 and resulting in the creation of Stellantis.References to the Chief Executive Officer(“CEO”)and Strategy Council refer to our top executive management structure prior to December 2,2024 and references to Chairman and Interim Executive Council(“IEC”)refer to top executive management structure on or after December 2,2024.Presentation of Financial and Other Data This report includes the Consolidated Financial Statements of Stellantis as of December 31,2024 and 2023 and for the years ended December 31,2024,2023 and 2022 prepared in accordance with International Financial Reporting Standards(“IFRS”)as issued by the International Accounting Standards Board(“IASB”),as well as IFRS as adopted by the European Union.There is no effect on these Consolidated Financial Statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union.The consolidated financial statements and the notes to the consolidated financial statements are referred to collectively as the“Consolidated Financial Statements”.5All references in this report to“Euro”and“”refer to the currency issued by the European Central Bank.Stellantis financial information is presented in Euro.All references to“U.S.Dollars”,“U.S.Dollar”,“USD”and“$”refer to the currency of the United States of America(“U.S.”).All figures shown are rounded to the nearest million.Certain totals in the tables included in this report may not add due to rounding.The language of this report is English.Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.Except as otherwise disclosed within this report,no significant changes have occurred since the date of the audited Consolidated Financial Statements included elsewhere in this report.Market and Industry Information In this report,we include or refer to industry and market data,including market share,ranking and other data,derived from or based upon a variety of official,non-official and internal sources,such as internal surveys and management estimates,market research,publicly available information and industry publications.Market share,ranking and other data contained in this report may also be based on our good faith estimates,our own knowledge and experience and such other sources as may be available.Market share data may change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data,the voluntary nature of the data-gathering process,different methods used by different sources to collect,assemble,analyze or compute market data,including different definitions of vehicle segments and descriptions and other limitations and uncertainties inherent in any statistical survey of market shares or size.Industry publications and surveys and forecasts generally state that the information contained in such publications,surveys and forecasts has been obtained from sources believed to be reliable,but there can be no assurance as to the accuracy or completeness of the included information.Although we believe that this information is reliable,we have not independently verified the data from third-party sources.In addition,we typically estimate market share for automobiles and commercial vehicles based on registration data.In markets where registration data are not available,we calculate our market share based on estimates relating to sales to final customers.Such data may differ from data relating to shipments to our dealers and distributors.While we believe our internal estimates with respect to our industry are reliable,our internal company surveys and management estimates have not been verified by an independent expert,and we cannot guarantee that a third party using different methods to assemble,analyze or compute market data would obtain or generate the same result.The market share data presented in this report represents the best estimates available from the sources indicated as of the date of this report but,in particular as they relate to market share and our future expectations,involve risks and uncertainties and are subject to change based on various factors,including those discussed in the section Risk Factors in this report.Cautionary Statements Concerning Forward Looking StatementsStatements contained in this report,particularly those regarding possible or assumed future performance,competitive strengths,costs,dividends,reserves,our growth,industry growth and other trends and projections and estimated company earnings are“forward-looking statements”that contain risks and uncertainties.In some cases,words such as“may”,“will”,“expect”,“could”,“should”,“intend”,“estimate”,“anticipate”,“believe”,“remain”,“on track”,“design”,“target”,“objective”,“goal”,“forecast”,“projection”,“outlook”,“prospects”,“plan”,or similar terms are used to identify forward-looking statements.These forward-looking statements reflect our current views with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.These risks and uncertainties include,without limitation:our ability to launch new products successfully and to maintain vehicle shipment volumes;our ability to attract and retain experienced management and employees;changes in trade policy,the imposition of global and regional tariffs or tariffs targeted to the automotive industry;6changes in the global financial markets,general economic environment and changes in demand for automotive products,which is subject to cyclicality;our ability to accurately predict the market demand for electrified vehicles;our ability to offer innovative,attractive products,and to develop,manufacture and sell vehicles with advanced features,including enhanced electrification,connectivity and autonomous-driving characteristics;our ability to produce or procure electric batteries with competitive performance,cost and at required volumes;our ability to successfully launch new businesses and integrate acquisitions;a significant malfunction,disruption or security breach compromising information technology systems or the electronic control systems contained in our vehicles;exchange rate fluctuations,interest rate changes,credit risk and other market risks;increases in costs,disruptions of supply or shortages of raw materials,parts,components and systems used in our vehicles;changes in local economic and political conditions;the enactment of tax reforms or other changes in laws and regulations;the level of governmental economic incentives available to support the adoption of battery electric vehicles;the impact of increasingly stringent regulations regarding fuel efficiency and greenhouse gas and tailpipe emissions;various types of claims,lawsuits,governmental investigations and other contingencies,including product liability and warranty claims and environmental claims,investigations and lawsuits;material operating expenditures in relation to compliance with environmental,health and safety regulations;the level of competition in the automotive industry,which may increase due to consolidation and new entrants;exposure to shortfalls in the funding of our defined benefit pension plans;our ability to provide or arrange for access to adequate financing for dealers and retail customersrisks related to the operation of financial services companies;our ability to access funding to execute our business plan;our ability to realize anticipated benefits from joint venture arrangements;disruptions arising from political,social and economic instability;risks associated with our relationships with employees,dealers and suppliers;our ability to maintain effective internal controls over financial reporting;developments in labor and industrial relations and developments in applicable labor laws;earthquakes or other disasters;andother factors discussed elsewhere in this report.7Furthermore,in light of the inherent difficulty in forecasting future results,any estimates or forecasts of particular periods that are provided in this report are uncertain.We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this report or in connection with any use by any third party of such forward-looking statements.Actual results could differ materially from those anticipated in such forward-looking statements.We do not undertake an obligation to update or revise publicly any forward-looking statements.Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements,refer to“Risk Management-Risk Factors”included elsewhere in this report for additional information.8MANAGEMENT REPORTStellantis Overview Stellantis is a global automaker and mobility provider engaged in designing,engineering,manufacturing,distributing and selling vehicles and components worldwide.Stellantis designs,engineers,manufactures,distributes and sells vehicles across five portfolios:(i)luxury vehicles under the Maserati brand;(ii)premium vehicles covered by Alfa Romeo,DS and Lancia brands;(iii)global sport utility vehicles under the Jeep brand;(iv)American brands covering Dodge,Ram and Chrysler vehicles and(v)European brands covering Abarth,Citron,FIAT,Opel,Peugeot and Vauxhall vehicles.Stellantis centralizes design,engineering,development and manufacturing operations,to allow it to efficiently operate on a global scale.In 2024,a Stellantis-led joint venture,Leapmotor International launched operations to distribute the vehicles of Leapmotor,a Chinese new energy vehicle OEM,outside of China.Stellantis supports its vehicle shipments with the sale of related service parts and accessories,as well as service contracts,worldwide.Additionally,Stellantis provides retail and dealer financing,leasing and rental services available through its subsidiaries,joint ventures and commercial arrangements with third party financial institutions.Until December 2024,Stellantis operated in the production systems sector under the Comau brand.Refer to Note 3,Scope of consolidation in the Consolidated Financial Statements included elsewhere in this report for details on the sale of our majority interest in the production systems business.In connection with our Dare Forward 2030 strategic plan,we have also increased our focus on generating growth in several other areas,such as our pre-owned car business,the two mobility brands,Free2move and Share Now,as well as independent aftermarket parts and services and software,with a particular focus on data services.Stellantis Ventures funds investments in early and later-stage startup companies that develop innovative,customer-centric technologies that targets the automotive and mobility sectors.Stellantis ambition is to contribute to global carbon neutrality,with an ambitious carbon footprint reduction roadmap,including:(i)cutting CO2 vehicle emissions by offering a wide range of battery electric vehicles(“BEVs”)and plug-in hybrid electric vehicles(“PHEVs”)and innovation through low-carbon technologies;(ii)moving forward into a carbon-efficient production system by embracing green energy and reducing emissions and(iii)improving the environmental performance of the supply chain through a strong engagement of our supply chain to mitigate emissions.Additionally,this is supported through our circular economy business,whose main objectives are to extend the life of vehicles and parts by returning material and end-of-life vehicles back to the manufacturing process for new vehicles and products.In 2024,Stellantis reported:5,415 thousand vehicles shipped(refer to Financial Overview-Shipment Information included elsewhere in this report for additional information);Net revenues of 156.9 billion;Net profit of 5.5 billion;Adjusted Operating Income(“AOI”)of 8.6 billion(Refer to Non-GAAP Financial Measures included elsewhere in this report for additional information);Cash flows from/(used in)operating activities 4.0 billion;andIndustrial free cash flow of(6.0)billion(Refer to Non-GAAP Financial Measures included elsewhere in this report for additional information).At December 31,2024,the Companys available liquidity was 51.8 billion(including 12.9 billion available under undrawn committed credit lines).Refer to Financial Overview-Liquidity and Capital Resources included elsewhere in this report for additional information.History of StellantisStellantis N.V.(“Stellantis”)was incorporated as a public limited liability company(naamloze vennootschap)under the laws of the Netherlands in April 2014 under the name Fiat Chrysler Automobiles N.V.In its current configuration,Stellantis is the result of the merger of FCA and PSA,each of which were leading independent global automotive groups prior to the merger.9Fiat S.p.A.,the predecessor to FCA,was founded as Fabbrica Italiana Automobili Torino in July 1899 in Turin,Italy as an automobile manufacturer.Fiat grew in Italy and internationally in the following decades both organically and through the acquisition of several prominent brands and manufacturers including Lancia,Alfa Romeo,Maserati and Ferrari.In October 2015,the initial public offering of Ferrari N.V.was completed,followed by the spin-off of FCAs remaining interest in Ferrari to its shareholders in January 2016.In 2009,FCA US LLC(“FCA US”),then known as Chrysler Group LLC,acquired the principal operating assets of the former Chrysler LLC as part of a government-sponsored restructuring of the North American automotive industry.Between 2009 and 2014,Fiat S.p.A.expanded its initial 20 percent ownership interest to 100 percent of the ownership of FCA US and in October 2014,Fiat S.p.A.completed a corporate reorganization resulting in the establishment of FCA as the parent company of the FCA Group,with its principal executive offices in the United Kingdom.Peugeot S.A.began manufacturing and selling vehicles to consumers in 1896 and also expanded its automotive business,particularly in the second half of the twentieth century.In 1974,PSA acquired all of the outstanding shares of Citron S.A.and then merged the two companies in 1976.In 1978,PSA acquired Chrysler Corporations stake in its industrial and commercial subsidiaries in Europe,as well as Chrysler Financial Corporations European commercial financing subsidiaries.In 1995,PSA Finance Holding,which provided financing for Peugeot and Citron vehicle sales,was transformed into a bank and subsequently renamed“Banque PSA Finance”.PSA acquired the Opel and Vauxhall subsidiaries of GM in August 2017.On December 17,2019,FCA and PSA entered into a combination agreement(as amended,the“combination agreement”)agreeing to merge the two groups.On January 16,2021,PSA merged with and into FCA,with FCA as the surviving company.On January 17,2021,the combined company was renamed to Stellantis N.V.On January 18,2021,Stellantis common shares began trading on Euronext Milan and Euronext Paris,and on January 19,2021,began trading on the New York Stock Exchange(“NYSE”).Stellantis common shares trade under the following symbols:Euronext Milan:“STLAM”;Euronext Paris:“STLAP”;NYSE:“STLA”.The principal office of Stellantis is located at Taurusavenue 1,2132LS Hoofddorp,the Netherlands(telephone number: 31 23 700 1511).Its agent for U.S.federal securities law purposes is Christopher J.Pardi,c/o FCA U.S.LLC,1000 Chrysler Drive,Auburn Hills,Michigan 48326.10Major ShareholdersAs of February 25,2025,the largest shareholders of Stellantis were Exor N.V.(“Exor”)(holding 15.52 percent of the outstanding common shares),tablissements Peugeot Frres(“EPF”)(holding 7.74 percent of the outstanding common shares)and Bpifrance Participations S.A.(“BPI”)(holding 6.65 percent of the outstanding common shares).As a result of the loyalty voting mechanism,the voting powers of Exor,EPF and BPI are 23.89 percent,11.92 percent and 10.24 percent,respectively.For a description of the loyalty voting mechanism,including the terms and conditions of our special voting shares,please see“CORPORATE GOVERNANCE-Loyalty Voting Structure.”As of February 25,2025 the share capital of the Company consists of the following:2,896,073,567 common shares and 866,522,224 Class A special voting shares,all with a par value of 0.01 each.Based on the information in the Stellantis shareholder register,regulatory filings with the AFM and the SEC and other sources available to Stellantis,the following persons owned,directly or indirectly,in excess of three percent of Stellantis capital and/or voting interest as of February 25,2025:Stellantis ShareholdersNumber of Issued Common Shares(1)Percentage of Issued Common SharesExor(2)449,410,092 15.52EPF(3)224,228,121 7.74BPI(4)192,703,907 6.65BlackRock Inc.(5)96,885,2313.34Capital Research and Management Company(6)_(1)Issued shares includes common shares as well as 866,522,224 Class A special voting shares.Refer also to Corporate Governance-Articles of Association and Information on Stellantis Shares-Share Capital for additional information(2)Exor owns 449,410,092 common shares and 449,410,092 Class A special voting shares(23.89 percent of the issued shares)(3)EPF,through Peugeot Invest and its subsidiary Peugeot 1810,owns 224,228,121 common shares and 224,228,121 Class A special voting shares(11.92 percent of the issued shares)(4)BPI owns 192,703,907 common shares and 192,703,907 Class A special voting shares(10.24 percent of the issued shares).BPI is a joint venture of EPIC Bpifrance(Bpi Groupe)and Caisse des Dpots et Consignations(both holding a 49.3 percent interest in Bpifrance SA).Caisse des Dpots et Consignations also(directly and indirectly)holds an additional 8,207,316 Stellantis common shares,representing an additional 0.28 percent of the common shares and 0.22 percent of the issued share capital and voting rights of Stellantis(5)According to information published on the AFM website as of February 25,2025,BlackRock Inc.owns 96,885,231 common shares(2.57 percent of the issued shares)and 112,341,810 voting rights(2.99 percent of the issued shares)(6)According to information published on the AFM website as of February 25,2025,Capital Research and Management Company owns 123,437,499 voting rights(3.28 percent of the issued shares)Based on the information in Stellantis shareholder register and other sources available to Stellantis,as of February 25,2025,approximately 502 million Stellantis common shares,or approximately 17 percent of the Stellantis common shares,were held in the United States.As of the same date,approximately 310 record holders of Stellantis common shares had registered addresses in the United States.11Dare Forward 2030 strategic plan Many of the targets set forth in the Companys Dare Forward 2030 strategic plan depend on the industrys transition to full electrification,conducive BEV policies(e.g.,charging infrastructure,BEV purchasing incentives),and the availability of decarbonized energy.These targets have become increasingly challenging in light of the trends in market dynamics,government policy and regulation that have emerged since the plans introduction in March 2022.Although the targets remain in place,the speed and trajectory at which they may be met is the subject of ongoing assessment by the Company.Overview of Our Business Stellantis activities during the year ended December 31,2024,were carried out through the following six reportable segments:(i)North America:Stellantis operations to manufacture,distribute and sell vehicles in the United States,Canada and Mexico,primarily under the Jeep,Ram,Dodge,Chrysler,FIAT and Alfa Romeo brands.Manufacturing plants are located in:U.S.,Canada and Mexico;(ii)Enlarged Europe:Stellantis operations to manufacture,distribute and sell vehicles in Europe(which includes the 27 members of the European Union,the United Kingdom(“UK”)and the members of the European Free Trade Association).Under the mainstream brands Citron,FIAT,Opel,Peugeot,Vauxhall,premium brands Alfa Romeo,DS and Lancia.Manufacturing plants are located in:France,Italy,Spain,Germany,UK,Poland,Portugal,Serbia and Slovakia.In 2024,we commenced the distribution of Leapmotor-branded vehicles;(iii)Middle East&Africa:Stellantis operations to manufacture,distribute and sell vehicles primarily in Turkey,Algeria and Morocco under the Peugeot,Citron,Opel,FIAT and Jeep brands.Manufacturing plants are primarily located in Morocco,Algeria and Turkey,through our joint venture with Tofas.In 2024,we commenced the distribution of Leapmotor-branded vehicles;(iv)South America:Stellantis operations to manufacture,distribute and sell vehicles in South and Central America,primarily under the FIAT,Jeep,Ram,Peugeot and Citron brands,with the largest focus of its business in Brazil and Argentina.Manufacturing plants are located in the main markets of Brazil and Argentina.In 2025,we will commence the distribution of Leapmotor-branded vehicles;(v)China and India&Asia Pacific:Stellantis operations to manufacture,distribute and sell vehicles in the Asia Pacific region(mostly in China,Japan,India,Australia and South Korea)carried out in the region through both subsidiaries and joint ventures,primarily under the Jeep,Peugeot,Citron,FIAT,DS and Alfa Romeo brands.Manufacturing plants are located in India and Malaysia,through our joint operation India Fiat India Automobiles Private Limited(“FIAPL JV”)and our wholly owned subsidiary Stellantis Gurun(Malaysia).Our Citron and Peugeot branded vehicles are manufactured in China by Dongfeng Peugeot Citron Automobiles(“DPCA”)under various license agreements.In 2024,we commenced the distribution of Leapmotor-branded vehicles in Asia Pacific(excluding China);and(vi)Maserati:Stellantis operations to design,engineer,develop,manufacture,distribute worldwide and sell luxury vehicles under the Maserati brand.Design,engineering and manufacturing plants are located in Italy.Stellantis also owns or holds interests in companies operating in other activities and businesses.These activities are grouped under“Other Activities”,which primarily consists of our pre-owned car business,mobility businesses through the brands Free2move and Share Now,the Companys software and data businesses,and other investments,including Archer,as well as the financial services activities of dealer and customer financing primarily in North America,Enlarged Europe,South America and China and until December 2024,the Companys industrial automation systems design and production business,operating under the Comau brand name.Refer to Note 3,Scope of consolidation in the Consolidated Financial Statements included elsewhere in this report for details on the sale of our majority interest in Comau.Also included under“Other Activities”are our companies that provide services,including accounting,payroll,tax,insurance,purchasing,information technology,facility management and security for the Company and management of central treasury activities.12Definitions and abbreviations Passenger cars include sedans,station wagons and three-and five-door hatchbacks,that may range in size from“micro”or“A-segment”vehicles of less than 3.8 meters in length to“large”or“F-segment”cars that are greater than 5.1 meters in length.Utility vehicles(“UVs”)include sport utility vehicles(“SUVs”),which are available with four-wheel drive systems that provide true off-road capabilities,and crossover utility vehicles,(“CUVs”),which are not designed for heavy off-road use.UVs can be divided among six main groups,ranging from“micro”or“A-segment”,defined as UVs that are less than 4.0 meters in length,to“large”or“F-segment”,defined as UVs that are greater than 5.1 meters in length.Light trucks are divided between vans(also known as light commercial vehicles,or“LCVs”),which typically are used for the transportation of goods or groups of people,and pickup trucks,which are light motor vehicles with an open-top rear cargo area.Minivans,also known as multi-purpose vehicles(“MPVs”)typically have seating for up to eight passengers.A vehicle is characterized as“all-new”if it is a new product with no prior model year,or if its vehicle platform is significantly different from the platform used in the prior model year and/or it has had a full exterior renewal.A vehicle is characterized as“significantly refreshed”if it continues its previous vehicle platform but has extensive changes or upgrades from the prior model year.Design and ManufacturingWe sell vehicles in the SUV,passenger car,truck and LCV markets.Our SUV and CUV portfolio includes vehicles such as the Jeep Grand Wagoneer,Jeep Wagoneer S,Jeep Grand Cherokee,Jeep Meridian,Alfa Romeo Tonale,Citron C5 Aircross,DS 3 Crossback,Maserati Grecale and Peugeot E-3008.Our passenger car product portfolio includes vehicles such as the Opel and Vauxhall Mokka,Fiat 500,Alfa Romeo Giulia,Citron C3,Lancia Ypsilon,Dodge Charger and Peugeot 308,and minivans such as the Chrysler Pacifica.We sell light duty and heavy duty pickup trucks such as the Ram 1500,Ram 2500/3500,Fiat Strada,Peugeot Landtrek,Jeep Gladiator,and chassis cabs such as the Ram 3500/4500/5500.Our LCVs include vans such as the Fiat Professional Dobl,Peugeot Partner,Citron Berlingo,Opel/Vauxhall Combo and Ram ProMaster.The Stellantis Production Way(“SPW”)is a set of manufacturing-related tools and principles intended to achieve best in class performance as measured by health and safety,quality,throughput,cost and environmental metrics,through empowerment of employees,enhancement of employee skill-sets,the sharing of best practices and the improved and economical use of production assets.Following the 2022 launch of SPW,Stellantis has focused on implementation and execution,as SPW tools,principles and priorities have been deployed throughout each of its manufacturing plants.Research and DevelopmentIn alignment with its Dare Forward 2030 strategic plan targets,Stellantis recent research initiatives have been mainly concentrated in the areas of mobility electrification and clean energy,autonomous driving,infotainment technology,vehicle electrical and software architecture,and connectivity technologies.Significant activity has also continued with a focus to reduce overall vehicle energy demand,fuel consumption and emissions based on traditional technologies.Recent fuel consumption and emissions reduction activities have primarily focused on propulsion system technologies,including engines,transmissions,axles and drivelines,hybrid and electric propulsion and alternative fuels.Recent Technology InitiativesModular Vehicle Platforms In January 2024,Stellantis unveiled the STLA Large platform,which has a range of 800 kilometers and is available in 400 and 800-volt BEV architectures as well as multi-energy variants,including hybrid and internal combustion,allowing for increased flexibility in a wide range of vehicle applications.Global production of the STLA Large began in 2024 and is expected to launch across eight vehicles through 2026.STLA Large is designed to host mid-size to full-size vehicles.In November 2024,Stellantis unveiled the STLA Frame platform,designed for full-size,body-on-frame trucks and SUVs,and able to support internal combustion,hybrid,hydrogen,BEV and REEV technologies.The all-new,all-electric 13Ram 1500 REV light duty pickup will be built on the STLA Frame and is expected to launch in 2026.The all-new 2025 Ram 1500 Ramcharger REEV,expected to have a range of 1,100 kilometers,will also be built on STLA Frame and production is expected to begin in 2025.STLA Large and STLA Frame are two of the four platforms comprising Stellantis BEV-centric platform strategy,along with STLA Small(ultra-compact cars)and STLA Medium(compact to mid-size vehicles),which was the first platform unveiled in July 2023.Propulsion Systems In February 2024,Stellantis announced a significant investment in an existing plant in Szentgotthard,Hungary to increase electric drive module(“EDM”)production in Europe.EDM production in Szentgotthard is targeted to begin in late 2026.Stellantis electric propulsion system strategy includes three families of EDMs that combine the motor,gearbox and inverter,each designed to meet different performance needs.The EDMs can be configured for front-wheel drive,rear-wheel drive and all-wheel drive.A program of hardware upgrades and OTA software updates is expected to extend the life cycle of the propulsion systems and,therefore,the vehicles.Stellantis intends to internally develop software and controls in order to maintain characteristics unique to each brand.In April 2024,Stellantis also announced the production launch of the next-generation eDCTs for hybrid and plug-in hybrid vehicles at its Mirafiori complex in Turin,Italy.The eDCTs produced at Mirafiori incorporate a 21-kW electric motor into a dual-clutch transmission.The motor delivers electric propulsion in low-torque scenarios,such as city driving or cruising,allowing the ICE to remain off 50 percent of the time on the urban cycle.Battery TechnologyStellantis announced a five-year collaboration with CEA,a major French research organization,in July 2024.The collaboration targets in-house design of next-generation battery cells for BEVs with the goal of providing Stellantis with more affordable,next-generation BEV batteries with best-in-class technologies.Connectivity In January 2024,Stellantis announced the acquisition of the artificial intelligence framework,machine learning models and intellectual property rights and patents of CloudMade,a developer of data-driven automotive solutions.The acquisition is intended to support the mid-term development of STLA SmartCockpit,Stellantis initiative to deliver artificial intelligence-based applications such as navigation,voice assistance,e-commerce and payment services for use in its vehicles.Intellectual PropertyStellantis owns a significant number of patents,trade secrets,licenses,trademarks and service marks,including,in particular,the marks of its vehicle and component and production systems brands,which relate to its products and services.We expect the number to grow as we continue to pursue technological innovations.We file patent applications in Europe,the U.S.and around the world to protect technology and improvements considered important to our business.No single patent is material to our business as a whole.Property,Plant and Equipment As of December 31,2024,Stellantis manufacturing facilities(including passenger vehicle and light commercial vehicle assembly,propulsion systems and components plants,and excluding joint ventures),are primarily located in Enlarged Europe(mainly in France,Germany,Italy,Spain and UK),North America(U.S.,Canada and Mexico),South America(Brazil and Argentina)and Africa(Morocco).Stellantis companies have also historically owned other significant properties including parts distribution centers,research laboratories,test tracks,warehouses and office buildings.The total carrying value of Stellantis property,plant and equipment as of December 31,2024 was 45.0 billion.A number of Stellantis manufacturing facilities and equipment,including land and industrial buildings,plant and machinery and other assets,were and are subject to mortgages and other security interests granted to secure indebtedness to certain financial institutions.As of December 31,2024,property,plant and equipment reported as pledged as collateral for 14loans amounted to approximately 0.5 billion,excluding Right-of-use assets(refer to Note 11,Property,plant and equipment,within the Consolidated Financial Statements included elsewhere in this report for additional information).Stellantis is not aware of any environmental issues that would materially affect the utilization of fixed assets.Refer to“Industrial Environmental Control”included elsewhere in this report for additional information.Supply of Raw Materials,Parts and Components Stellantis purchases a variety of components(including but not exclusively,mechanical,steel,electrical,electronic and plastic components as well as castings and tires),raw materials,supplies,utilities,logistics and other services from numerous suppliers.The purchase of raw materials,parts and components has historically accounted for a substantial majority of our total Cost of revenues.The raw materials purchased include,but are not limited to,steel,rubber,aluminum,resin,copper,lead,rare earths,precious metals(including platinum,palladium and rhodium)and battery materials(including lithium,manganese,nickel,graphite and cobalt).The Companys focus on quality improvement,cost reduction,sustainability,and product innovation and flexibility require the Company to rely upon suppliers who share this focus and have the capability to provide cost reductions.Stellantis has valued relationships with suppliers,and has worked to establish closer ties with a significantly reduced number of suppliers by selecting those with a leading position in the relevant markets.In addition,within purchasing and supply quality,a specific raw materials organization was set up in 2023 to increase Stellantis control of raw material supply.Through this organization,several partnerships were established prior to 2024 relating to the supply of nickel,lithium hydroxide,lithium carbonate,manganese and copper.In 2024,additional partnerships were established to secure the supply of rare earth,synthetic graphite anode and natural graphite anode materials.For a discussion of Stellantis risks relating to raw materials,parts and components,refer to“Risk Factors-We face risks associated with increases in costs,disruptions of supply or shortages of raw materials,parts,components and systems used in our vehicles.”included elsewhere in this report for additional information.In order to mitigate these risks,Stellantis works proactively with suppliers to identify material and part shortages and take steps to mitigate their impact by deploying additional personnel,accessing alternative sources of supply and managing its production schedules.Stellantis also continues to refine processes to identify emerging capacity constraints in the supplier tiers given the ramp up in manufacturing volumes to meet volume targets.In addition,Stellantis continuously monitors supplier performance according to key metrics such as part quality,delivery,performance,financial solvency and sustainability.15Employees At December 31,2024,Stellantis had a total of 248,243 employees(excluding employees of joint arrangements,associates and unconsolidated subsidiaries),a 3.9 percent decrease from December 31,2023,and a 8.9 percent decrease from December 31,2022.The following table provides a breakdown of employees as of December 31,2024,2023 and 2022 by geographical area.202420232022North America 75,554 81,341 88,835 Enlarged Europe 126,242 135,211 142,681 Middle East&Africa 7,874 6,101 5,311 South America 32,612 28,928 28,968 China and India&Asia Pacific 5,961 6,694 6,572 Total 248,243 258,275 272,367 At December 31,Stellantis employees are free to join trade unions,provided they do so in accordance with local laws and the rules of the related trade union.Local collective agreements are led by the regions and/or countries which take the global Company polices into account and reflect local particularities.As of December 31,2024,approximately 85 percent of our employees were covered by collective bargaining agreements.An active dialogue was maintained in 2024 with various employee representation bodies existing at the national or transnational level.This is represented in Enlarged Europe through the European Works Councils of former PSA,Fiat and Opel and Vauxhall,in North America through the union,the International Union,United Automobile,Aerospace and Agricultural Implement Workers of America(“UAW”)and in Canada through the union,Unifor.Trade Unions and Collective Bargaining Stellantis social relations strategy is based on six commitments:Stellantis supports the principles of the United Nations Universal Declaration of Human Rights and the provision of a decent equitable work environment.We work towards providing competitive and living wages;Stellantis is committed to compliance with all applicable labor laws and regulations and aims to apply best practices in human resources management;Stellantis bases social dialogue on relationships with independent labor unions and employee representatives and seeks workplace cooperation;Stellantis objective is to negotiate collective bargaining agreements that are pragmatic,inclusive and protective of its employees;Stellantis fosters social dialogue with the workforce on a daily basis;andStellantis monitors social indicators in its subsidiaries and globally discloses in a transparent manner to its stakeholders.The Company endorses the International Labor Organizations(“ILO”)declaration on fundamental principles and rights at work.Stellantis is committed to a strategy for collective agreements through innovative solutions to balance social challenges while allowing the Company to remain competitive.16Sales Overview New vehicle sales represent sales of vehicles primarily by dealers and distributors,or,directly by us in some cases,to retail and fleet customers.Sales include mass-market,premium and luxury vehicles manufactured at our plants,as well as vehicles manufactured by joint ventures and third party contract manufacturers and distributed under our brands.Sales figures exclude sales of vehicles that we contract manufacture for other OEMs.While vehicle sales are illustrative of our competitive position and the demand for our vehicles,sales are not directly correlated to Net revenues,Cost of revenues or other measures of financial performance in any given period,as such results were primarily driven by vehicle shipments to dealers and distributors or to retail and fleet customers.For a discussion of our shipments,refer to“Financial OverviewShipment Information”included elsewhere in this report for additional information.Figures in the tables in this section may not add due to rounding.Additionally,prior period figures have been updated to reflect current information provided by third party industry sources.The following table shows Stellantis new vehicle sales by geographic market for the periods presented:202420232022(millions of units)North America 1.5 1.8 1.8 Enlarged Europe 2.6 2.7 2.6 Middle East&Africa 0.5 0.6 0.4 South America 0.9 0.9 0.8 China and India&Asia Pacific 0.1 0.2 0.2 Total Regions 5.7 6.1 5.8 Maserati 0.01 0.03 0.02 Total Worldwide 5.7 6.2 5.8 Years ended December 31,_-Maserati excluded from volumes and market share of the regions-Leapmotor excluded from volumes and market share of the regions-Without Banned Countries:Belarus,Cuba,Iran,Russia,Sudan,SyriaNorth AmericaNorth America Sales and CompetitionThe following table presents Stellantis vehicle sales and estimated market share in the North America segment for the periods presented:Thousands of units(except percentages)U.S.1,304 8.0%1,527 9.6%1,547 10.9nada 130 7.28 9.59 11.4%Mexico 94 6.0 6.8t 6.6%Total 1,527 7.8%1,782 9.4%1,791 10.7%Years ended December 31,2024(1)2023(1)2022(1)North AmericaSales Market ShareSales Market ShareSales Market Share _(1)Estimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources:Canada-DesRosiers Automotive consultants,Mexico-INEGI(Government National Institute)and U.S.-Wards AutomotiveMaserati excluded from volumes and market shareLeapmotor excluded from volumes and market share of the region 17The following table summarizes new vehicle market share information and our principal competitors in the U.S.,our largest market in the North America segment:U.S.202420232022AutomakerPercentage of industryGM 16.6.3.1%Toyota 14.3.2.9%Ford 12.8.5.2%Hyundai/Kia 10.5.4.4%Honda 8.7%8.2%7.0%Stellantis(1)8.0%9.6.9%Nissan 5.7%5.7%5.2%Other 23.4#.1.4%Total 10000%Years ended December 31,_(1)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources:Canada-DesRosiers Automotive consultants,Mexico-INEGI(Government National Institute)and U.S.-Wards Automotive U.S.industry sales,including medium and heavy-duty vehicles,in addition to commercial vehicles,were up approximately 387 thousand units in 2024 from 15.9 million units in 2023.Industry sales were up 2.4 percent over 2023 calendar year.Our vehicle line-up in the North America segment primarily leveraged the brand recognition of the Jeep,Ram,Dodge and Chrysler brands to offer UVs,pickup trucks,cars and minivans under those brands.Vehicle sales and profitability in the North America segment were generally weighted towards larger vehicles such as UVs,trucks and vans,consistent with overall industry sales trends in the North America segment,which have become increasingly weighted towards UVs and trucks in recent years.Sales in the U.S.were down 15 percent from 2023 primarily due to temporary gaps in our product offering as a result of the transition to new generation products.Stellantis takes three of the top five spots among best-selling plug-in hybrids in the U.S.Jeep brand leads the way with the Jeep Wrangler 4xe retaining Americas best-selling plug-in hybrid vehicle crown;the Grand Cherokee 4xe is No.3;and the Chrysler Pacifica Hybrid claims No.4 spot.The U.S.ended the year with inventory at a two-year record low well positioning itself for 2025.Jeep Compass sales increased 16 percent year over year.Dodge Hornets total year sales increased 120 percent year over year.North America Distribution In the North America segment,our vehicles are sold primarily to dealers in our dealer network for sale to retail consumers and to fleet customers.Fleet sales in the commercial channel are typically more profitable than sales in the government and daily rental channels since they more often involve customized vehicles with more optional features and accessories;however,vehicle orders in the commercial channel are usually smaller in size than the orders made in the daily rental channel.Fleet sales in the government channel are generally more profitable than fleet sales in the daily rental channel primarily due to the mix of products included in each respective channel.North America Dealer and Customer FinancingIn November 2021,Stellantis acquired First Investors Financial Services Group,now known as Stellantis Financial Services U.S.Corp(“SFS U.S.”).SFS U.S.provides U.S.customers and dealers with a complete range of financing options,including retail loans,leases,and floorplan financing.However,while SFS U.S.grows,Stellantis also utilizes independent financial service providers,including Santander Consumer USA Inc.(“SCUSA”)to complement its financing offer to dealers and retail customers in the U.S.In February 2013,FCA entered into a private label financing agreement with SCUSA(the“SCUSA Agreement”),under which SCUSA will continue to provide a wide range of wholesale and retail financial services to dealers and retail customers in the U.S.,under the Chrysler Capital brand name.In April 2022,the SCUSA Agreement was amended and extended through 2025,allowing SCUSA to serve a complementary role to SFS U.S.Under the SCUSA 18Agreement,SCUSA has certain rights,including limited exclusivity to participate in specified minimum percentages of certain retail financing subvention programs.As of December 31,2024,SFS U.S.provided wholesale(i.e.floorplan and others)lines of credit to 155 dealers representing approximately 6 percent of the Stellantis network in the U.S.with SCUSA and Ally Financial Inc.(“Ally”)providing wholesale funding to,approximately,an additional 9 percent and 28 percent respectively.In 2024,approximately 78 percent of the retail vehicles sold to U.S.retail customers were financed or leased;of those financed or leased retail sales,SCUSA,Ally,and SFS U.S.(third full year of operations)market share represented 12 percent,10 percent,and 24 percent respectively.In Canada,our customers are served by cooperation agreements with main local banks providing retail financing and leasing.In Mexico,we have a private label agreement with Banco Inbursa Group in order to provide dealer and retail customer financing programs for all brands.Enlarged EuropeEnlarged Europe Sales and Competition The following table presents Stellantis vehicle sales and market share in the Enlarged Europe segment for the periods presented:202420232022Enlarged Europe(1)Sales Market Share Sales Market ShareSales Market ShareThousands of units(except percentages)France 599 28.5c4 29.4b0 33.1%Italy 531 30.2Y1 33.5S5 36.3%Germany 416 13.489 12.571 12.9%UK 299 12.913 13.9&8 14.1%Spain 208 17.61 20.2!4 22.9%Other 502 11.1T6 12.5T5 14.1%Europe(2)2,555 17.0%2,695 18.3%2,553 19.7%Other Europe(3)21 2.8 2.4 3.0%Total 2,577 16.4%2,713 17.5%2,569 19.1%Years ended December 31,_(1)Banned Countries:Belarus,Russia(2)EU30=EU27(excluding Malta),Iceland,Norway,Switzerland and UK.Industry and market share information is derived from third-party industry sources(e.g.Agence Nationale des Titres Scuriss(“ANTS”),Ministry of Infrastructure and Sustainable Mobility(“MIMS”)and ANFAC Spain)and internal information(3)Other Europe=Eurasia(Armenia,Azerbaijan,Georgia,Kazakhstan,Moldova,Uzbekistan)and other Europe(Albania,Bosnia,Kosovo,Malta,Montenegro,North Macedonia,Serbia and Ukraine)Maserati excluded from volumes and market share of the regionLeapmotor excluded from volumes and market share of the region 19The following table summarizes new vehicle market share information and our principal competitors in Europe,our largest market in the Enlarged Europe segment:Volkswagen 24.3$.0#.0%Stellantis(2)17.0.3.7%Renault 10.7.5.1%Toyota 7.4%6.7%6.8%Hyundai/Kia 7.1%7.5%8.2%Mercedes-Benz 6.2%6.2%6.5%BMW 6.2%6.2%6.3%Ford 5.5%5.9%6.5%Other 15.6.7.8%Total 10000%Years ended December 31,Europe 30(1)202420232022AutomakerPercentage of industry_(1)Europe 30=27 members of the European Union excluding Malta and including Iceland,Norway,Switzerland and UK(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources(e.g.,ANTS,MIMS and ANFAC Spain)and internal informationIn 2024,the EU30 automotive market recorded results broadly in line with the previous year with new vehicle registrations at 14,989,469 resulting in a slight growth of 1.7 percent compared to 2023.Demand for electric cars fell by about 2 percent compared to the previous year.In the EU30 PC and CV markets,Stellantis confirmed its second place with a market share of 17 percent,launching several new models in 2024 and over 50 international awards received by its brands.Sales increased in four of the G10 countries,Stellantis confirmed its first place in France,Italy and Portugal and is in second place in Germany,Spain,United Kingdom,Austria,Belgium,Luxembourg and the Netherlands.In the EU30 CV market,Stellantis Pro One confirmed its overall leadership with a share of 29.1 percent and first place in fifteen countries.Total sales also increased by 2.2 percent compared to 2023.Our growing performance in the BEV market resulted in a share of 31.5 percent with Peugeot as the number 1 electric brand at 14.6 percent.Stellantis performance is supported by iconic models such as the Peugeot 208 which is amongst the top five best sellers in the EU30,while in France we boast four models among the top 10 in the PC market.In Germany,the Opel Corsa is the best-selling small car in 2024,while in Italy the Fiat Panda is the best-selling car in the overall market and the Jeep Avenger is the best-selling SUV of the year.In the BEV market,despite the general decline in demand for electric vehicles,Stellantis firmly maintained its position among European manufacturers with a 12 percent share.In the A-segment,the Fiat 500e is number 1 in Europe,while in the B-segment Stellantis has five models among the top 10 best sellers.There have been noteworthy achievements in key European markets:in France,Stellantis is overall number 1 for the second year in a row in the BEV market,while the Fiat 500e,Peugeot E-208,and Peugeot E-2008 are leaders in their respective segments.Enlarged Europe DistributionIn Europe,we sell and service our vehicles through our own dealers(located in most European markets),independent dealers,retailers,and authorized workshops.In other markets and segments where we do not have a substantial presence,we have agreements with general distributors.In 2023,Stellantis and its European dealers signed over 8,000 sales and 25,000 aftersales contracts in ten key European countries.Their shared objectives include simplification,a multi-brand approach,customer-centricity,and quality assurance.Stellantis initially adopted the new retailer model in Austria,Belgium,Luxembourg,and the Netherlands in September 2023,and has been working to further enhance the model in these early adopter countries,allowing its network sufficient time to adapt in a competitive landscape with new entrants.After one year of implementation,the model has shown 20a 26 percent year-over-year increase in total orders.The business model remains in a pilot phase and will be rolled out more broadly once we achieve full satisfaction with market share,processes,information,communication and technology(“ICT”),and other key performance indicators.During 2024,Stellantis began distributing Leapmotor vehicles in Europe through the Stellantis led joint venture Leapmotor International and has been introduced in more than 400 dealerships already representing our existing brands.Stellantis continues to work closely with its dealer network,emphasizing their partnership to address the challenges of the automotive industry,including the electrification.Enlarged Europe Dealer and Customer FinancingSince 2023,the Stellantis leasing and financing activities in Europe have been structured through the following partnerships:(i)Leasys,a 50 percent held joint venture with Crdit Agricole Consumer Finance S.A.(“CACF”)dedicated to pan-European multi-brand long-term operational leasing activities;(ii)A partnership between Stellantis Financial Services Europe(“SFSE”),and BNP Paribas Personal Finance(“BNPP PF”)related to financing activities carried-out through approximately a 50 percent interest in a joint-venture operating in Germany,Austria and the UK;and(iii)A partnership between SFSE and Group Santander Consumer Finance(“SCF”)related to financing activities carried out through 50 percent held joint-ventures in France,Italy,Spain,Belgium,Poland,the Netherlands and through a commercial agreement with SCF in Portugal.The partnerships with BNPP and SCF cover all Stellantis brands and the Leapmotor brand.21Middle East&Africa(“MEA”)Middle East&Africa Sales and Competition The following table presents Stellantis vehicle sales and market share in the Middle East&Africa segment for the periods presented:Years ended December 31,202420232022Middle East&AfricaSalesMarket ShareSalesMarket ShareSalesMarket ShareThousands of units(except percentages)Turkey 343 27.7A9 34.0%0 31.9%Algeria 67 65.2V 86.5 53.5%Morocco 35 19.93 20.74 20.8%Gulf(1)30 2.03 2.4& 2.3%Overseas France(2)19 28.5! 28.8$ 33.8%Israel Zone(3)14 5.2! 7.4 8.0%Egypt 6 7.1%8 10.8 16.3%Other(4)24 2.6# 2.6 3.0%Total 538 12.4a4 14.8A5 11.9%_(1)Includes:Bahrain,Kuwait,Oman,Qatar,Saudi Arabia,UAE and Yemen(2)Includes:French Guiana,Mayotte,Reunion,Martinique and Guadeloupe(3)Includes:Israel and Palestine(4)Without banned countries:Iran,Sudan and SyriaLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources of MEA countries(e.g.,AMIC(Egypt),ODD(Turkey),AMBG(Saudia Arabia,Qatar,United Arab Emirates,Yemen),AIVAM(Morocco)and internal informationMaserati excluded from volumes and market share of the regionIn 2024,the total industry volume of Middle East&Africa increased by 4.4 percent,with growth in all markets except Overseas France and South Africa.Sales decreased by 12.4 percent with 76 thousand less deliveries.Overall market share of the region reached 12.4 percent,down by 240 basis points compared to 2023.The decrease was primarily due to negative performance of sales and market share in Turkey and Israel.Additionally in Algeria,although our sales increased,our market share decreased from 86.5 percent in 2023 to 65.2 percent in 2024.CV sales decreased by 0.9 percent,down to 180 thousand units,or 21.4 percent market share.Stellantis achieved number one position in the LCV markets in the fourth quarter of 2024.22The following table summarizes new vehicle market share information and our principal competitors in the Middle East&Africa:Years ended December 31,G6(1)Middle East&Africa202420232022AutomakerPercentage of industryToyota 17.5.0 .3%Stellantis(2)13.5.8.8%Hyundai/Kia 13.1.3.9%Volkswagen 8.2%7.7%6.8%Renault 8.2%8.6%9.3%Ford 5.5%5.2%4.7%Nissan 5.2%4.9%5.0%Mercedes-Benz 1.6%1.4%1.4%BMW 1.2%1.1%1.1%Other 26.0.9.7%Total 10000%_(1)G6:Turkey,Morocco,Israel zone,Gulf,Overseas France and EgyptIsrael Zone:Israel and PalestineGulf:Bahrain,Kuwait,Oman,Qatar,Saudi Arabia,UAE and YemenOverseas France:French Guiana,Mayotte,Reunion,Martinica and Guadeloupe(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources of MEA countries(e.g.AMIC(Egypt),ODD(Turkey),AMBG(Saudia Arabia,Qatar,United Arab Emirates,Yemen),AIVAM(Morocco)and internal informationMiddle East&Africa DistributionIn Turkey,Peugeot,Citron,DS and Opel brands are distributed through a national sales company,consolidating operations for these four brands,whereas FIAT,Alfa Romeo and Jeep brands are distributed by a joint venture with Koc Automotiv Group,Tofas.In Morocco,following the acquisition of Sopriam,(refer to Note 3,Scope of consolidation,within the Consolidated Financial Statements included elsewhere in this report for additional information),the national sales company is in charge of distributing Alfa Romeo,Citron,DS,FIAT,Jeep and Peugeot.Opel is managed by a local importer.In South Africa we also operate through a national sales company that distributes Peugeot,Citron,Opel,FIAT,Jeep and Alfa Romeo.In Algeria,a national sales company is in charge of distributing FIAT,while Opel is managed by local importer.In all other markets of the region,we distribute through agreements with local general distributors,with the regional offices of Stellantis located in Cairo and Dubai coordinating operations in Egypt and Middle East.Middle East&Africa Dealer and Customer FinancingIn Turkey,our activities related to the former FCA brands(mainly connected to retail financing)are carried out through a 100 percent owned subsidiary of our joint venture,Tofas,that provides financial services and insurance products mainly to retail customers,while the activities related to the former PSA brands are carried out by a subsidiary of SFSE in cooperation with a TEB Finansman AS,with Garanti Bank,Yapi Kredi and different insurance providers.Cooperation agreements are also in place with third-party financial institutions to provide dealer network and retail customer financing in South Africa,Morocco and Algeria.A binding agreement has been signed in Morocco for the acquisition of 80 percent of a financial services company currently operating in the country.The closing is subject to customary conditions.23South America South America Sales and Competition The following table presents Stellantis vehicle sales and market share in the South America segment for the periods presented:2024(1)2023(1)2022(1)South America Sales Market ShareSales Market ShareSalesMarket ShareThousands of units(except percentages)Brazil 734 29.4h7 31.4d7 32.9%Argentina 116 29.70 28.27 30.7%Other South America 66 5.9r 6.4 6.2%Total 916 22.99 23.54 23.2%Years ended December 31,_(1)Estimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources,National Organization of Automotive Vehicles Distribution and Association of Automotive ProducersMaserati excluded from volumes and market share Banned Country:CubaLeapmotor excluded from volumes and market share of the regionThe following table summarizes new vehicle market share information and our principal competitors in Brazil,our largest market in the South America segment:2024(1)2023(1)2022(1)AutomakerPercentage of industryStellantis(2)29.41.42.9%Volkswagen 16.6.4.3%GM 12.6.0.8%Ford 1.9%1.3%1.1%Other 39.45.97.0%Total 10000%BrazilYears ended December 31,_(1)Estimated market share data presented are based on managements estimates of industry sales data,which use data provided by ANFAVEA(Associao Nacional dos Fabricantes de Veculos Automotores)(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionAutomotive industry volumes within the countries in the South America segment increased by 7 percent to 4 million units in 2024,which was primarily driven by Brazilian market growth of 14 percent,mainly due to improved credit conditions.The Argentinian market,on the other hand,recorded an 8.1 percent decline in sales volume in 2024.Stellantis maintained its market share leadership in South America even with the decrease of 0.6 percent from 23.5 percent in 2023 to 22.9 percent in 2024,as well as in Brazil and Argentina markets with 29.4 percent and 29.7 percent,respectively.FIAT is the brand leader in the region,maintaining its leadership position with a 14.5 percent market share in both 2023 and 2024.FIAT also led the pickup truck market in Brazil,with the Fiat Strada,Toro,and Titano,launched earlier this year(together represent an aggregate of 43.1 percent market share in the segment).Jeep achieved 4.9 percent of the total industry sales in Brazil with 12.9 percent market share in the SUV segment.24South America DistributionIn Brazil and Argentina,distribution is through dealers of each brand,although it is common for the same distributor to have several stores in order to offer different brands.In other countries,distribution is through multi-brands importers or dealers.South America Dealer and Customer FinancingIn the South America segment,we provide access to dealer and retail customer financing as well as rental products through captive finance companies and through strategic relationships with financial institutions.In Argentina,we have a 100 percent owned captive finance company,FCA Compaia Financiera S.A.(“FCA CF”)that offers dealer and retail customer financing for the former FCA brands.In December 2024,Fidis S.p.A signed an agreement with Banco BBVA Argentina S.A.(“BBVA”)for the disposal of 50 percent of FCA CF.This transaction is subject to regulatory approvals and other customary closing conditions.In addition,we have a 50 percent owned joint venture,PSA Finance Argentina Compaia Financiera S.A.,that offers dealer and retail customer financing and leasing services for the former PSA brands(with BBVA owning the other 50 percent).In Brazil,we have three 100 percent owned captive finance companies that offers dealer and retail customer financing and rental services with Banco Stellantis S.A.mainly focusing on dealer financing,Stellantis Financiamentos Sociedade de Credito,Financiamento e Investimento S.A.on retail financing and Stellantis Locadora de Automoveis Ltda on rental services.China and India&Asia PacificChina and India&Asia Pacific Sales and Competition The following table presents Stellantis vehicle sales and market share in the China and India&Asia Pacific segment:2024(1)(5)2023(1)(5)2022(1)(5)China and India&Asia PacificSales Market ShareSales Market ShareSales Market ShareThousands of units(except percentages)China(2)*48 0.2i 0.3 0.4%Japan 25 0.73 0.84 1.0%India(3)12 0.3 0.4 0.5%Australia 11 0.9 1.5 1.7%Asean&General Distributors(“AGD”)(4)11 0.3 0.3 0.6%South Korea 4 0.2%7 0.4%9 0.6%New Zealand 1 1.2%3 1.8%3 2.1%China and India&Asia Pacific major Markets 112 0.37 0.48 0.6%Other China and India&Asia Pacific 1%2%1%Total 113 0.39 0.49 0.5%Years ended December 31,_*Includes Hong Kong and Taiwan(1)Estimated market share information is derived from third-party industry sources of China&Asia Pacific countries(e.g.CADA and CPCA(China PC Domestic),CATARC(China PC Import),FCAI(Australia),SIAM(India PC),JADA and JAIA(Japan),MIA(New Zealand),IHS(Thailand),MAA(Malaysia)and internal information(2)Data include vehicles sold by our joint ventures in China for Stellantis brands(3)India market share is based on wholesale volumes(4)AGD includes Bangladesh,Brunei,Cambodia,French Polynesia,Indonesia,Laos,Malaysia,Myanmar,Nepal,New Caledonia,Philippines,Singapore,Sri Lanka,Thailand and Vietnam 25(5)Sales reflect retail deliveries.China and India&Asia Pacific industry reflects aggregate for major markets where the Company competes(China(PC),Japan(PC),India(PC),South Korea(PC and Pickups),Australia,New Zealand and AGD).Market share is based on retail/registrations except,as noted above,in India where market share is based on wholesale volumesMaserati excluded from volumes and market shareLeapmotor excluded from volumes and market share of the regionIn 2024,23.9 million vehicles were sold in China,which represents a 4.7 percent year-over-year increase.The automotive industry grew by 4.8 percent in India due to new model launches from local OEMs lifting the market,dropped 6.7 percent in Japan due to local OEM regulatory issues,2 percent increase in Australia coming from a strong sales increase in hybrid models,decreased 4.4 percent in South Korea due to sales decline from local brands and New Zealand decreased by 13.9 percent due to the withdrawal of government incentives.The automotive industry in AGD experienced a sales decrease of 5.6 percent due to economic slowdown in key markets during the year.We sell a range of vehicles in the China and India&Asia Pacific segment,including small and compact cars,premium mid-size cars,UVs and light CVs.Although our smallest segment by vehicle sales,the China and India&Asia Pacific segment represents a significant growth opportunity and we are invested in building relationships with key partners in India to increase our manufacturing footprint and presence in the region.In the China and India&Asia Pacific segment we also distribute vehicles that are manufactured in the U.S.and Europe through our dealers and distributors.China and India&Asia Pacific DistributionIn the key markets in the China and India&Asia Pacific segment(China,Australia,India,Japan,South Korea and AGD),Stellantis vehicles are sold by our 100 percent owned subsidiaries or through DPCA to local independent dealers.Dongfeng Peugeot Citron Automobile Sales Co(“DPCS”)markets the vehicles produced by DPCA under various license agreements in China,and a Stellantis fully-owned national sales company in China operates and manages the import vehicles sales in China(except Maserati).We also operate through national sales companies in Australia,Japan,India,Malaysia and South Korea.In AGD and smaller markets,we have agreements with general distributors.China and India&Asia Pacific Dealer and Customer FinancingIn China,we operate 100 percent owned finance and lease companies,Stellantis Automotive Finance Co.,Ltd and,since April 2023,following the finalization of an equity transfer agreement with Dongfeng,Stellantis Leasing Services Co Ltd.These entities allow us to support our sales activities in China offering to our dealer networks and retail and commercial customers,a full range of wholesale and retail financing as well as financial and operational leasing products.Cooperation agreements are also in place with third-party financial institutions to provide dealer network and retail customer financing in India,South Korea,Australia and Japan.MaseratiThe following table shows the distribution of Maserati sales by geographic regions and as a percentage of total sales for each of the years ended December 31,2024,2023 and 2022:2024 SalesAs a percentage of 2024 sales2023 SalesAs a percentage of 2023 sales2022 SalesAs a percentage of 2022 salesU.S./Mexico 4,807 32.6%7,907 29.6%6,945 29.7%Europe top 4(1)3,733 25.4%6,035 22.6%5,442 23.3%China 1,209 8.2%4,367 16.4%4,680 20.0%Japan 1,102 7.5%1,729 6.5%1,238 5.3%Other countries 3,874 26.3%6,651 24.9%5,099 21.8%Total 14,725 100.0&,689 100.0#,404 100.0%_(1)Italy,United Kingdom,Germany and SwitzerlandChina includes Hong KongU.S.includes Mexico and Puerto RicoIn 2024,a total of 14.7 thousand Maserati vehicles were sold,a decrease of 12 thousand units compared to 2023.This result is mainly influenced by lower Grecale volumes,reduced appetite for western OEM luxury products in China,the 26impact of a reduction in the portfolio,as three nameplates ended production at the end of 2023,and the impact of inventory reduction initiatives.In Europe,depending on the country,access to dealer and customer financing for Maserati vehicles are either through joint ventures with BNPP PF or with SCF.In China,our 100 percent owned captive finance companies,Stellantis Automotive Finance Co.Ltd and Stellantis Leasing Services Co Ltd.provide dealer and retail financing and financial and operational leasing products.In the U.S.,JPMorgan Chase Bank is the main financial services provider to retail customers,complemented also by SFS U.S.In other regions,we rely on local agreements with financial services providers for the financing of Maserati brand vehicles to dealers and end customers.Cyclical Nature of the Business As is typical in the automotive industry,Stellantis vehicle sales are highly sensitive to general economic conditions,availability of low interest rate vehicle financing for dealers and retail customers and other external factors,including fuel prices,and as a result could vary substantially from quarter to quarter and year to year.Retail consumers tend to delay the purchase of a new vehicle when disposable income and consumer confidence is low.Moreover,increases in inflation may lead to subsequent increases in the cost of borrowing and availability of affordable credit for vehicle financing,which may further influence retail consumers to delay the purchase of a new vehicle.In addition,Stellantis vehicle production volumes and related revenues could vary from month to month,sometimes due to plant shutdowns,which could occur for several reasons including raw material or component unavailability,production changes from one model year to the next and actions to balance vehicle supply and demand fluctuations and also to adjust dealer stock levels appropriately.Plant shutdowns,whether associated with model year changeovers or other factors such as temporary supplier interruptions,could have a negative impact on Stellantis revenues and working capital as Stellantis continues to pay suppliers under established terms while Stellantis would not receive proceeds from vehicle sales.Refer to“Liquidity and Capital ResourcesLiquidity Overview”included elsewhere in this report for additional information.Legal ProceedingsTakata Airbag InflatorsPutative class action lawsuits were filed in March 2018 against FCA US,a wholly owned subsidiary of Stellantis,in the U.S.District Courts for the Southern District of Florida and the Eastern District of Michigan,asserting claims under federal and state laws alleging economic loss due to Takata airbag inflators installed in certain of our vehicles.The cases were subsequently consolidated in the Southern District of Florida.In November 2022,the Court granted summary judgment in FCA USs favor against all claimants except those in Georgia and North Carolina.Plaintiffs were granted leave to file an amended complaint to add additional states to the pending action.Plaintiffs appeal of the grant of summary judgement was dismissed by the Court for lack of jurisdiction.In May 2024,the Court entered an order to allow FCA USs renewed motions for summary judgment to address the remaining amended claims.In June 2023,the Court entered an order preliminarily granting class certification for the amended complaint.In July 2023,the Court revisited its class certification order and further narrowed the classes based on a recent Court of Appeals decision.FCA US appeal of the Courts preliminary order was denied.EmissionsWe face class actions and individual claims alleging emissions non-compliance in several countries.Several former FCA and PSA companies and Dutch dealers have been served with class actions in the Netherlands by Dutch foundations seeking monetary damages and vehicle buybacks in connection with alleged emissions non-compliance of certain vehicles equipped with diesel engines.We have also been notified of a potential class action on behalf of Dutch consumers alleging emissions non-compliance of certain former FCA vehicles sold as recreational vehicles,and are subject to a securities class action in the Netherlands,alleging misrepresentations by FCA.Class actions alleging emissions non-compliance has also been filed and are on-going in Portugal regarding former FCA vehicles,in the UK regarding former FCA and PSA vehicles,and in Israel regarding former PSA vehicles.We are also defending approximately 4,000 pending individual consumer claims alleging emissions non-compliance in Germany and approximately 60 individual consumer cases in Austria relating to former FCA vehicles.27The results of the private litigation matters described above cannot be predicted at this time and may lead to damage awards which may have a material adverse effect on our business,financial condition and results of operations.It is also possible that these matters and their ultimate resolution may adversely affect our reputation with consumers,which may negatively impact demand for our vehicles and consequently could have a material adverse effect on our business,financial condition and results of operations.General Motors In November 2019,General Motors LLC and General Motors Company(collectively,“GM”)filed a lawsuit in the U.S.District Court for the Eastern District of Michigan against FCA US,FCA N.V.,now Stellantis N.V.,and certain individuals,claiming violations of the Racketeer Influenced and Corrupt Organizations(“RICO”)Act,unfair competition and civil conspiracy in connection with allegations that FCA US made payments to The International Union,United Automobile,Aerospace and Agricultural Implement UAW officials that corrupted the bargaining process with the UAW and as a result FCA US enjoyed unfair labor costs and operational advantages that caused harm to GM.GM also claimed that FCA US had made concessions to the UAW in collective bargaining that the UAW was then able to extract from GM through pattern bargaining which increased costs to GM and that this was done by FCA US in an effort to force a merger between GM and FCA N.V.The court dismissed GMs lawsuit with prejudice and the U.S.Court of Appeals for the Sixth Circuit subsequently affirmed the dismissal of GMs complaint.In April 2023,the U.S.Supreme Court declined to grant review of the Sixth Circuits decision,which finally resolved the federal court case.Following dismissal of its Federal court case,GM filed an action against FCA US and FCA N.V.,now Stellantis N.V.,in Michigan state court,making substantially the same claims as it made in the federal litigation.In October 2021,the court granted Stellantis N.V.and FCA USs motion for summary disposition.GM filed a motion for reconsideration and in December 2021,the court granted GMs motion,permitting GM to amend its complaint.GM filed a second amended complaint in December 2021.In May 2022,the court denied FCA USs motion for summary disposition and permitted discovery to proceed against FCA US.In July 2022,the court granted Stellantis N.V.s motion for summary disposition,but in November 2022 the court granted GMs motion for reconsideration and permitted jurisdictional discovery to proceed against Stellantis N.V.The case is currently stayed while the Michigan Court of Appeals considers certain trial court rulings regarding privilege.2024 Financial GuidanceIn August 2024,a putative securities class action complaint was filed in the U.S.District Court of the Southern District of New York against Stellantis N.V.and certain of its former officers,alleging that the defendants made material misstatements relating to the Companys 2024 financial guidance.Government InquiriesEmissionsWe are subject to criminal and civil governmental investigations alleging emissions non-compliance in certain European jurisdictions and we continue to cooperate with these investigations.As part of the judicial investigation of several automakers in France,commencing in 2016 and 2017,Automobiles Peugeot and Automobiles Citron were placed under examination by the Judicial Court of Paris in June 2021 on allegations of consumer fraud in connection with the sale of Euro 5 diesel vehicles in France between 2009 and 2015.In July 2021,FCA Italy(now known as Stellantis Europe)was placed under examination by the same court for possible consumer fraud in connection with the sale of Euro 6 diesel vehicles in France between 2014 and 2017.As is typical in a French criminal inquiry,each of the companies were required to pay bail for the potential payment of damages and fines and to ensure representation in court,and to provide a guarantee for the potential compensation of losses.None of these amounts were,individually or in aggregate,material to the Company.Civil parties have joined the prosecutors case and may seek further compensation.In May 2023,the German authority,Kraftfahrt-Bundesamt(“KBA”)notified Stellantis of its investigation of certain Opel Euro 5,Fiat Euro 5 and Euro 6 vehicles and its intent to require remedial measures based on the alleged non-compliance of the diesel engines in certain of those vehicles.The KBA subsequently expanded its inquiry to include Euro 5 and Euro 6 engines used in certain Alfa Romeo,Fiat and Jeep vehicles,as well as Suzuki vehicles equipped with diesel engines supplied 28by FCA Italy and requested information relating to all Stellantis vehicles that may make use of strategies similar to those allegedly used by the identified vehicles.In January 2024,the KBA advised that the Opel vehicles,equipped with Euro 5 engines,are non-compliant.At the KBAs request,during the first half of 2024,Opel submitted a plan to bring the vehicles into compliance.In July 2024,Opel received a formal decision of non-compliance from the KBA regarding its vehicles equipped with Euro 5 diesel engines.Although we objected to this formal decision,we continue to cooperate with the KBA inquiries and,at this stage,we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.Given the number of vehicles potentially involved,however,the cost of any recall,and the impact that any recall could have on related private litigation,may be significant.In December 2019,the Italian Ministry of Transport(“MIT”)notified FCA Italy of communications with the Dutch Ministry of Infrastructure and Water Management(“I&W”)regarding certain irregularities allegedly found by the RDW and the Dutch Center of Research TNO in the emission levels of certain Jeep Grand Cherokee Euro 5 models and a vehicle model of another OEM containing a Euro 6 diesel engine supplied by FCA Italy.In January 2020,the Dutch Parliament published a letter from the I&W summarizing the conclusions of the RDW regarding those vehicles and engines and indicating an intention to order a recall and report their findings to the Public Prosecutor,the European Commission(“EC”)and other member states.FCA engaged with the RDW to present our positions and cooperate to reach an appropriate resolution of this matter.FCA Italy proposed certain updates to the relevant vehicles that have been tested and approved by the RDW and are now being implemented without further concerns being raised by RDW.In July 2020,unannounced inspections took place at several of FCAs sites in Germany,Italy and the UK at the initiative of the Public Prosecutors of Frankfurt am Main and of Turin,as part of their investigations of potential violations of diesel emissions regulations and consumer protection laws.In April 2022,former FCA companies received an order to produce documents to the Public Prosecutors.In October 2022,inspections took place at the Italian offices of FCA Italy and Maserati and at the German office of Maserati Deutschland.At the Public Prosecutor of Turins request,the Italian proceedings were dismissed in September 2023 and October 2023.We continue to participate in discussions with the Public Prosecutor of Frankfurt to resolve this matter regarding former FCA vehicles and,based on the status of those discussions,we have recognized a provision in an amount that is not material to the Company.In January 2024,the EC notified the MIT of the alleged non-compliance of Fiat Ducato Euro 5 and Euro 6 vehicles based on tests performed at the ECs request.We are cooperating with the MIT in its substantive responses to EC.End of Life VehiclesIn March 2022,the EC and the UK Competition and Markets Authority(the“CMA”)conducted unannounced inspections at the premises of Opel and several other companies and associations active in the European automotive sector.These inspections,as well as contemporaneous and subsequent information requests received from the EC and CMA,relate to potential collusion in the collection,treatment,and recovery of end-of-life vehicles and whether such activity may have violated relevant competition laws.We continue to cooperate with these investigations.29 Environmental and Other Regulatory MattersAt Stellantis,we engineer,manufacture and sell our products and offer our services around the world,subject to regulatory requirements applicable to our products that relate to vehicle emissions,fuel economy,emission control software calibration and on-board diagnostics and vehicle safety,as well as those applicable to our manufacturing facilities that relate to stack emissions,the management of waste,water and hazardous materials,prohibitions on soil contamination,and worker health and safety.Our vehicles and the propulsion systems that power them must also comply with extensive regional,national and local laws and regulations(including those that regulate end-of-life vehicles(“ELVs”)and the chemical content of our parts).Compliance with the range of regulatory requirements affecting our facilities and products involves significant costs and risks.We consistently monitor the relevant global regulatory requirements affecting our facilities and products and adjust our operations and processes as we seek to remain in compliance although,in certain exceptional circumstances,we may from time to time fail to meet a particular regulatory requirement.For a discussion of the environmental and other regulatory-related risks we face,refer to“Risk Factors-Risks Related to the Legal and Regulatory Environment in which We Operate.”included elsewhere in this report for additional information.Automotive Tailpipe EmissionsNumerous laws and regulations place limits on vehicle emissions,including standards on tailpipe exhaust emissions and evaporative emissions.These standards govern a category of emissions called“criteria emissions”that does not include greenhouse gases(“GHGs”).Related laws impose requirements on how vehicles emission control systems are designed to ensure emissions are controlled in normal,real driving conditions,as well as requirements to employ diagnostic software to identify and diagnose problems with emission control components,which if undiagnosed could lead to higher emissions.This diagnostic software is called an on-board diagnostic system(“OBD”).Regulations also require manufacturers to conduct vehicle testing to demonstrate compliance with these emissions limits for the useful life of a vehicle.These requirements become more challenging each year,especially in light of increased scrutiny of emission control systems for internal combustion engines,and we expect these emissions and requirements will continue to become even more stringent worldwide.North America RegionThe U.S.Environmental Protection Agency(“EPA”)has established federal Tier 4 emissions standards and CARB has adopted Low Emission Vehicle(“LEV”)IV emission standards.EPA and CARB both review manufacturers emission control software design as part of their emission certification evaluation,whereas EPA has delegated the administration of OBD software requirements to CARB.In addition to its LEV III emissions standards,CARB regulations also require that a specified percentage of cars and certain light-duty trucks sold in California qualify as zero emission vehicles(“ZEV”),such as electric vehicles,hybrid electric vehicles or hydrogen fuel cell vehicles.Advanced Clear Car II Regulations(“ACC II”)requires that ZEV sales increase to 100 percent of new vehicle sales by the 2035 model year.Other states have adopted or are in the process of adopting CARB standards.Similarly,Quebec has amended its light-duty regulations to require that ZEV sales increase to 100 percent of new vehicle sales by the 2035 model year.EPA and CARB have also set heavy-duty vehicle criteria emissions standards.CARBs Omnibus Low NOx regulation took effect for 2024 model year and reflects a 75 percent reduction in NMOG NOx from prior levels,with a further reduction in 2027 model year.EPAs Clean Trucks Program will take effect in 2027 model year and is similar in stringency to CARBs Omnibus Low NOx regulation.Similar to its light-duty rule,CARB regulations require medium-and heavy-duty vehicle manufacturers to sell a specified percentage of ZEVs.The Advanced Clean Trucks regulation has annually increasing ZEV sales requirements for medium-and heavy-duty manufacturers which increase to 100 percent battery electric or fuel cell electric vehicles in 2036 model year.30Enlarged Europe RegionIn Europe,emissions are regulated by the European Union(“EU”)and the United Nations Economic Commission for Europe.EU Member States can provide tax incentives/contributions for the purchase of vehicles that are rated as ZEVs or for vehicles that meet emission standards earlier than the compliance date.Vehicles must meet emission requirements and receive specific approval from an appropriate Member State authority before they can be sold in any EU member state,and these regulatory requirements include random testing of newly assembled vehicles and market surveillance testing of vehicles in the field for emission compliance.Euro 6 emission levels are currently in effect for all passenger cars and light commercial vehicles which required additional technologies and increased the cost of diesel engines compared to prior Euro 5 standards.These technologies have put additional cost pressure on the already challenging European market for small and mid-size diesel-powered vehicles.Further requirements of Euro 6 have been developed by the EU and are effective for all new passenger cars and light commercial vehicles.In addition to the Worldwide Harmonized Light Vehicle Test Procedure(“WLTP”),real driving emissions(“RDE”)test procedures assess the regulated emissions of light duty vehicles under real driving conditions.Test requirements related to RDE,as well as requirements relating to On-board Fuel and/or Energy Consumption Monitoring Device for Fuel Consumption Monitoring,are in effect for all new passenger cars and light commercial vehicles.A new Euro 7 regulation was published in May 2024 and some portions of the new regulation will apply beginning in late 2026.The primary new requirements of the new Euro 7 regulation will be the introduction of limits for particles emitted by brakes and tire abrasion,as well as stringent battery durability requirements.For a discussion of emissions-related inquiries from relevant governmental agencies in the EU,refer to Note 27,Guarantees granted,commitments and contingent liabilities,within the Consolidated Financial Statements included elsewhere in this report for additional information.Refer also to“Risk Factors-Risks Related to the Legal and Regulatory Environment in which We Operate”included elsewhere in this report for additional information.South America Region Certain countries in South America follow U.S.procedures,standards and OBD requirements,while others follow European procedures,standards and OBD requirements.In Brazil,vehicle emission standards are regulated by the Ministry of the Environment.The environmental phase of regulations(PROCONVE L7),which went into effect in 2022 and ended on 2024,set new tailpipe,evaporative and noise,vibration and harshness limits,and new OBD and RDE requirements.Under the current phase of regulations(PROCONVE L8),which went into effect in January 2025 with new requirements,the Company has fleet target limits(U.S.BIN methodology)and RDE compliance factors,increasing in stringency from 2025 to 2031.Argentina has implemented regulations that mirror the EU Euro 5 standards.In Chile,Euro 6b standards are in force until September 30,2025,at which time Euro 6c will become effective.China and India&Asia Pacific Region China 6 standards were released in 2016 and were applied nationwide,beginning in January 2021 with China 6a thresholds and China 6b thresholds in July 2023.China 6a and 6b have more stringent tailpipe emissions thresholds than Euro 6,implement OBD requirements similar to U.S.OBD II and evaporative emission control requirements,and add RDE and U.S.onboard refueling vapor recovery requirements.Beginning July 2023,a more stringent RDE conformity factor was implemented and emission durability mileage was extended to 200,000 kilometers.A preliminary study on China 7 emissions has been initiated which,in addition to emissions pollutants,may add ammonia and brake wear particles to the regulations.OBD requirements are also expected to be updated to accommodate the increasing market penetration of BEVs.The formal legislation process is expected to begin in 2025.For all gasoline vehicles,including mild hybrid electric vehicles(“MHEVs”)and PHEVs,South Korea has implemented regulations that are similar to Californias LEV III regulations,and beginning in 2026 will implement regulations that are similar to LEV IV regulations,while diesel vehicles are required to meet Euro 6 emissions requirements.Japan has adopted the UN R154,which is WLTP without highway speeds and scenarios known as the Extra High phase,for all vehicle models.31India has implemented nationwide Bharat Stage VI(“BSVI”)Emission norms(equivalent to Euro 6).Stage 2 of BSVI norms with more stringent OBD limits,RDE and an in-use performance ratio,was implemented beginning April 2023.Currently E5/E10 fuel is the reference fuel for BSVI,and there is a plan to change the fuel to E20 in April 2025.A proposal has also been made to change the emission test cycle from Modified Indian Driving Cycle to WLTP beginning in April 2027.In addition,Australia is developing a revised Regulatory Impact Statement to introduce mandatory Euro 6 standards beginning in 2027.Euro 5 standards are expected to remain in force until such time.Automotive Fuel Economy and Greenhouse Gas Emissions North America RegionIn the U.S.,the National Highway Traffic Safety Administration(“NHTSA”)enforces minimum corporate average fuel economy(“CAFE)standards for fleets of new passenger cars and light-duty trucks sold in the U.S.CAFE standards apply to all domestic and imported passenger car and light-duty truck fleets and currently target fuel economy increases through model year 2031.Failure to meet NHTSA CAFE standards results in the payment of civil penalties.CAFE civil penalties are calculated by multiplying the number of vehicles by the penalty rate,which is subject to an annual inflation adjustment.EPA has also promulgated a GHG rule under the federal Clean Air Act,the stringency of which increases year-over-year through model year 2031.In March 2022,the EPA reinstated Californias authorityunder the Clean Air Actto enforce its own,more stringent,GHG emission standards for passenger vehicles and light duty trucks(the“California Waiver”).California emission standards covered by the California Waiver may be adopted by other states and to date 17 other states(the“California Waiver States”)have adopted Californias GHG emissions standards under the California Waiver.Prior to the EPAs withdrawal of the California Waiver,automotiveOEMs were deemed to be compliant with Californias GHG emissions standards if they were compliant with the EPAs GHG standards.This“deemed to comply”mechanism was removed from the California regulation prior to the reinstatement of the California Waiver.As interpreted by CARB,the EPAs reinstatement of the California Waiver together with the removal of the“deemed to comply”mechanism means that automotive OEMs areretroactivelysubject to the separate California GHG standards beginning with the model year 2021fleet.To settle and resolve CARBs regulation of automotive GHG emission reductions for model years 2021-2026 and to obtain greater certainty regarding continuing automotive GHG emission reduction and zero-emission vehicle requirements,Stellantis and CARB entered into a Settlement Agreement that sets forth GHG fleet commitments for model years 2021-2026.For heavy duty vehicles(8,500 pound gross vehicle weight rating),the U.S.GHG and fuel consumption standards are utility based(payload and towing)and are increasing in stringency through 2032 and 2035,respectively.Heavy-duty vehicles which exceed 14,000 pounds gross vehicle weight rating also have GHG and fuel consumption standards based on service class and usage with increasing stringency through 2032 for GHG,and 2027 for fuel consumption.The Canadian market has adopted GHG standards derived from the U.S.governments footprint-based structure and generally align with its technology-adoption compliance approach.Mexico is expected to adopt a fleet average target for CO2 per kilometer,using the U.S.governments footprint-based regulatory structure.Starting in model year 2025,the stringency of the annual target will
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Stellantis N.V.Annual Report for the year ended December 31,2024TABLE OF CONTENTSPageBoard of Directors and Independent Auditor3Message from the Chairman4BOARD REPORT6INTRODUCTION6MANAGEMENT REPORT10Stellantis Overview10Dare Forward 2030 strategic plan13Overview of Our Business16Sales Overview21Environmental and Other Regulatory Matters34Financial Overview41Results of Operations49Liquidity and Capital Resources64Risk Management71Risk Factors76CORPORATE GOVERNANCE95Remuneration Report141SUSTAINABILITY STATEMENT169CONTROLS AND PROCEDURES2752025 STELLANTIS GUIDANCE AND OUTLOOK279FINANCIAL STATEMENTS280Consolidated Financial Statements at December 31,2024280Consolidated Income Statement281Consolidated Statement of Comprehensive Income282Consolidated Statement of Financial Position283Consolidated Statement of Cash Flows284Consolidated Statement of Changes in Equity285Notes to the Consolidated Financial Statements286Company Financial Statements at December 31,2024395Income Statement396Statement of Financial Position397Notes to the Company Financial Statements398OTHER INFORMATION413ADDITIONAL INFORMATION FOR NETHERLANDS CORPORATE GOVERNANCE413ADDITIONAL INFORMATION FOR U.S.LISTING PURPOSES417Independent Auditors Report431FORM 20-F CROSS REFERENCE440This copy of the annual financial reporting of Stellantis N.V.for the year ended 31 December 2024 is not presented in the ESEF-format as specified in the Regulatory Technical Standards on ESEF(Delegated Regulation(EU)2019/815).The ESEF single reporting package is available at:https:/ OF DIRECTORS ChairmanJohn ElkannVice ChairmanRobert Peugeot(3)DirectorsHenri de Castries(1),(2),(3)Fiona Clare Cicconi(1),(3)Nicolas Dufourcq(1)Ann Frances Godbehere(2)Wan Ling Martello(2),(3)Claudia Parzani(1),(2)Benot Ribadeau-Dumas(1),(3)Jacques de Saint-Exupry INDEPENDENT AUDITOR AND REGISTERED PUBLIC ACCOUNTING FIRMDeloitte Accountants B.V.(independent auditor of the Company for the purposes of our annual reports file with the Autoriteit Financile Markten(“AFM”)(4)Deloitte&Associs(independent registered public accounting firm for our Consolidated Financial Statements included in our reports on Form 20-F)(4)_(1)Member of the Environmental,Social Governance Committee(“ESG”)(2)Member of the Audit Committee(3)Member of the Remuneration Committee(4)Refer to“About this Report”for additional information relating to these regulatory filings3MESSAGE FROM THE CHAIRMAN The hallmarks of Stellantis are speed,flexibility and creativity.2024 was a year in which those attributes were more relevant than ever.Internal and external challenges came to our door and,like the great brands that define our Company,we showed our continued ability to evolve.In 2025,our focus must remain on creating long-term value for our Company and all our stakeholders.In a challenging year,we achieved several important milestones.Let me share just a few examples.Ram outperformed every brand in the J.D.Power 2024 U.S.Initial Quality Study and Jeep was recognized for the 23rd year in a row as Americas most patriotic brand;In Europe,we have an industry-leading range of 40 battery electric vehicles including the Alfa Romeo Junior,Citron-C3,Fiat 500e,Jeep Avenger,Opel Grandland,Peugeot E-208 and a completely renewed Pro One van lineup;In Brazil,where FIAT is once again the leading brand,we introduced the innovative bio-hybrid technology in the Fastback and Pulse models;We are driving the micro-electromobility transformation from the Middle East&Africa with our Citron AMI,Fiat Topolino and Opel Rocks-e;Stellantis Pro One,the Stellantis commercial vehicles business unit,introduced a completely refreshed 12-nameplate range of light commercial vehicles in 2024,and maintained its top position in Europe and South America;andWith our unique partnership with Leapmotor,one of the most innovative electric vehicle Chinese companies,we are providing to customers in Europe a highly accessible product offering with our experienced distribution network.We also took important steps to build our future,as illustrated by these examples:We introduced the STLA Large platform,a multi-energy platform underpinning the new Dodge Charger Daytona,Jeep Wagoneer S and Jeep Recon,as well as upcoming Alfa Romeo,Chrysler and Maserati vehicles.We also unveiled the STLA Frame platform,tailored for full-size,body-on-frame trucks and SUVs,a critical segment in North America and select global markets.It will debut on the Ram 1500 Ramcharger later this year,featuring range-extending hybrid technology;We deployed our dual-chemistry approach lithium-ion nickel manganese cobalt and lithium iron phosphate to serve our customers needs while still exploring innovative battery cell and pack technologies.In late 2024,we announced a joint development agreement aimed at developing lithium-sulfur EV batteries to deliver higher performance at a lower cost compared to traditional lithium-ion batteries;We continued connecting with our communities through our Motor Citizens global initiative,with nearly 6,000 Stellantis colleagues volunteering last year.I was also very happy to have joined the third edition of the global Stellantis Student Awards,where we celebrated the academic successes of the children of our colleagues;andWe extended Shares to Win our Employee-Share Purchase Plan to nearly the entire Stellantis global workforce.With this initiative,we strengthened our commitment to sharing value creation with our employees and further foster pride in Stellantis growth.Nonetheless,Stellantis 2024 performance was well below our potential,due primarily to the combination of operational difficulties and disruptions associated with transitioning to our next generation of products.Net revenues were 4down 17 percent compared to 2023 at 156.9 billion,Net profit was down 70 percent at 5.5 billion,Net cash from operating activities of 4.0 billion and Industrial free cash flows were negative 6.0 billion.Following the resignation of Carlos Tavares on December 1,2024,the process to appoint the new Chief Executive Officer,managed by a Special Committee of the Board,is well under way and will be concluded within the first half of 2025.In the meantime,the Company is focused on execution,under the leadership of the Interim Executive Committee which I chair.Since taking on this responsibility,Ive had the chance to get to know many of our people up close,talented people who represent Stellantis greatest strength.All of them have the clear understanding of the context in which we are competing,with its challenges,obstacles and problems to solve.But most importantly,they have also the skills needed to chase the opportunities that are also there for the taking.At the end of the first quarter of the century our industry is undergoing a sea-change,with all the challenges this entails.But we rely on a number of fundamental strengths.Our iconic brands will offer customers more freedom to choose internal combustion,hybrid and electric with our multi-energy powertrain strategy;Our commitment to create human-centric technologies that are useful,easy and enjoyable,and to make them accessible and affordable for everyone;andOur belief in meritocracy and the talent of our people will thrive when we create the right conditions for them to reach their full potential.Coming from many walks of life,we work together as one team,driven by our common passion for the automotive industry and our shared determination to embrace all the opportunities this period of great transformation has to offer.2025 will be a crucial year.I am confident that,with our positive engagement with all stakeholders our customers,dealers,suppliers,investors and our communities with the power of our iconic brands and with the creativity and dedication of our incredible colleagues,we will grow stronger,shaping a bright and exciting future for our Company.Thank you.February 27,2025/s/John Elkann Chairman 5BOARD REPORTINTRODUCTIONAbout this Report Stellantis N.V.was created as a result of the merger between Peugeot S.A.(“PSA”)and Fiat Chrysler Automobiles N.V.(“FCA N.V.”),effective on January 17,2021,with FCA N.V.as the surviving company.Upon the merger,FCA N.V.was renamed to Stellantis N.V.,a public limited liability company(naamloze vennootschap),organized in the Netherlands,as the parent of Stellantis with its principal executive offices located at Taurusavenue 1,2132LS Hoofddorp,the Netherlands.This document,referred to hereafter as the“Annual Report”,constitutes the Statutory annual report in accordance with Dutch legal requirements,of Stellantis N.V.for the year ended December 31,2024.Documents on DisplayThe Securities and Exchange Commission(“SEC”)maintains an internet site at http:/www.sec.gov that contains reports,information statements,and other information regarding issuers that file electronically with the SEC.The address of the SECs website is provided solely for information purposes and is not intended to be an active link.Reports and other information concerning our business may also be inspected at the offices of the New York Stock Exchange,11 Wall Street,New York,New York 10005.We also make our periodic reports,as well as other information filed with or furnished to the SEC,available free of charge through our website,at ,as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC.The information on our website is not incorporated by reference in this report.Certain Defined TermsIn this report,unless otherwise specified,the terms“we”,“our”,“us”,the“Company”and“Stellantis”refer to Stellantis N.V.,together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“FCA”,“FCA N.V.”and“FCA Group”mean Fiat Chrysler Automobiles N.V.or Fiat Chrysler Automobiles N.V.together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“PSA”and“Groupe PSA”mean Peugeot S.A.or Peugeot S.A.together with its consolidated subsidiaries,or any one or more of them,as the context may require.References to“the merger”refer to the merger between PSA and FCA completed on January 16,2021 and resulting in the creation of Stellantis.References to the Chief Executive Officer(“CEO”)and Strategy Council refer to our top executive management structure prior to December 2,2024 and references to Chairman and Interim Executive Council(“IEC”)refer to top executive management structure on or after December 2,2024.Presentation of Financial and Other Data This report includes the Consolidated Financial Statements of Stellantis as of December 31,2024 and 2023 and for the years ended December 31,2024,2023 and 2022 prepared in accordance with International Financial Reporting Standards(“IFRS”)as issued by the International Accounting Standards Board(“IASB”),as well as IFRS as adopted by the European Union.There is no effect on these Consolidated Financial Statements resulting from differences between IFRS as issued by the IASB and IFRS as adopted by the European Union.The consolidated financial statements and the notes to the consolidated financial statements are referred to collectively as the“Consolidated Financial Statements”.6All references in this report to“Euro”and“”refer to the currency issued by the European Central Bank.Stellantis financial information is presented in Euro.All references to“U.S.Dollars”,“U.S.Dollar”,“USD”and“$”refer to the currency of the United States of America(“U.S.”).All figures shown are rounded to the nearest million.Certain totals in the tables included in this report may not add due to rounding.The language of this report is English.Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.Except as otherwise disclosed within this report,no significant changes have occurred since the date of the audited Consolidated Financial Statements included elsewhere in this report.Market and Industry Information In this report,we include or refer to industry and market data,including market share,ranking and other data,derived from or based upon a variety of official,non-official and internal sources,such as internal surveys and management estimates,market research,publicly available information and industry publications.Market share,ranking and other data contained in this report may also be based on our good faith estimates,our own knowledge and experience and such other sources as may be available.Market share data may change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data,the voluntary nature of the data-gathering process,different methods used by different sources to collect,assemble,analyze or compute market data,including different definitions of vehicle segments and descriptions and other limitations and uncertainties inherent in any statistical survey of market shares or size.Industry publications and surveys and forecasts generally state that the information contained in such publications,surveys and forecasts has been obtained from sources believed to be reliable,but there can be no assurance as to the accuracy or completeness of the included information.Although we believe that this information is reliable,we have not independently verified the data from third-party sources.In addition,we typically estimate market share for automobiles and commercial vehicles based on registration data.In markets where registration data are not available,we calculate our market share based on estimates relating to sales to final customers.Such data may differ from data relating to shipments to our dealers and distributors.While we believe our internal estimates with respect to our industry are reliable,our internal company surveys and management estimates have not been verified by an independent expert,and we cannot guarantee that a third party using different methods to assemble,analyze or compute market data would obtain or generate the same result.The market share data presented in this report represents the best estimates available from the sources indicated as of the date of this report but,in particular as they relate to market share and our future expectations,involve risks and uncertainties and are subject to change based on various factors,including those discussed in the section Risk Factors in this report.Cautionary Statements Concerning Forward Looking StatementsStatements contained in this report,particularly those regarding possible or assumed future performance,competitive strengths,costs,dividends,reserves,our growth,industry growth and other trends and projections and estimated company earnings are“forward-looking statements”that contain risks and uncertainties.In some cases,words such as“may”,“will”,“expect”,“could”,“should”,“intend”,“estimate”,“anticipate”,“believe”,“remain”,“on track”,“design”,“target”,“objective”,“goal”,“forecast”,“projection”,“outlook”,“prospects”,“plan”,or similar terms are used to identify forward-looking statements.These forward-looking statements reflect our current views with respect to future events and involve significant risks and uncertainties that could cause actual results to differ materially.These risks and uncertainties include,without limitation:our ability to launch new products successfully and to maintain vehicle shipment volumes;our ability to attract and retain experienced management and employees;changes in trade policy,the imposition of global and regional tariffs or tariffs targeted to the automotive industry;7changes in the global financial markets,general economic environment and changes in demand for automotive products,which is subject to cyclicality;our ability to accurately predict the market demand for electrified vehicles;our ability to offer innovative,attractive products,and to develop,manufacture and sell vehicles with advanced features,including enhanced electrification,connectivity and autonomous-driving characteristics;our ability to produce or procure electric batteries with competitive performance,cost and at required volumes;our ability to successfully launch new businesses and integrate acquisitions;a significant malfunction,disruption or security breach compromising information technology systems or the electronic control systems contained in our vehicles;exchange rate fluctuations,interest rate changes,credit risk and other market risks;increases in costs,disruptions of supply or shortages of raw materials,parts,components and systems used in our vehicles;changes in local economic and political conditions;the enactment of tax reforms or other changes in laws and regulations;the level of governmental economic incentives available to support the adoption of battery electric vehicles;the impact of increasingly stringent regulations regarding fuel efficiency and greenhouse gas and tailpipe emissions;various types of claims,lawsuits,governmental investigations and other contingencies,including product liability and warranty claims and environmental claims,investigations and lawsuits;material operating expenditures in relation to compliance with environmental,health and safety regulations;the level of competition in the automotive industry,which may increase due to consolidation and new entrants;exposure to shortfalls in the funding of our defined benefit pension plans;our ability to provide or arrange for access to adequate financing for dealers and retail customersrisks related to the operation of financial services companies;our ability to access funding to execute our business plan;our ability to realize anticipated benefits from joint venture arrangements;disruptions arising from political,social and economic instability;risks associated with our relationships with employees,dealers and suppliers;our ability to maintain effective internal controls over financial reporting;developments in labor and industrial relations and developments in applicable labor laws;earthquakes or other disasters;andother factors discussed elsewhere in this report.8Furthermore,in light of the inherent difficulty in forecasting future results,any estimates or forecasts of particular periods that are provided in this report are uncertain.We expressly disclaim and do not assume any liability in connection with any inaccuracies in any of the forward-looking statements in this report or in connection with any use by any third party of such forward-looking statements.Actual results could differ materially from those anticipated in such forward-looking statements.We do not undertake an obligation to update or revise publicly any forward-looking statements.Additional factors which could cause actual results and developments to differ from those expressed or implied by the forward-looking statements,refer to“Risk Management-Risk Factors”included elsewhere in this report for additional information.9MANAGEMENT REPORTStellantis Overview Stellantis is a global automaker and mobility provider engaged in designing,engineering,manufacturing,distributing and selling vehicles and components worldwide.Stellantis designs,engineers,manufactures,distributes and sells vehicles across five portfolios:(i)luxury vehicles under the Maserati brand;(ii)premium vehicles covered by Alfa Romeo,DS and Lancia brands;(iii)global sport utility vehicles under the Jeep brand;(iv)American brands covering Dodge,Ram and Chrysler vehicles and(v)European brands covering Abarth,Citron,FIAT,Opel,Peugeot and Vauxhall vehicles.Stellantis centralizes design,engineering,development and manufacturing operations,to allow it to efficiently operate on a global scale.In 2024,a Stellantis-led joint venture,Leapmotor International launched operations to distribute the vehicles of Leapmotor,a Chinese new energy vehicle OEM,outside of China.Stellantis supports its vehicle shipments with the sale of related service parts and accessories,as well as service contracts,worldwide.Additionally,Stellantis provides retail and dealer financing,leasing and rental services available through its subsidiaries,joint ventures and commercial arrangements with third party financial institutions.Until December 2024,Stellantis operated in the production systems sector under the Comau brand.Refer to Note 3,Scope of consolidation in the Consolidated Financial Statements included elsewhere in this report for details on the sale of our majority interest in the production systems business.In connection with our Dare Forward 2030 strategic plan,we have also increased our focus on generating growth in several other areas,such as our pre-owned car business,the two mobility brands,Free2move and Share Now,as well as independent aftermarket parts and services and software,with a particular focus on data services.Stellantis Ventures funds investments in early and later-stage startup companies that develop innovative,customer-centric technologies that targets the automotive and mobility sectors.Stellantis ambition is to contribute to global carbon neutrality,with an ambitious carbon footprint reduction roadmap,including:(i)cutting CO2 vehicle emissions by offering a wide range of battery electric vehicles(“BEVs”)and plug-in hybrid electric vehicles(“PHEVs”)and innovation through low-carbon technologies;(ii)moving forward into a carbon-efficient production system by embracing green energy and reducing emissions and(iii)improving the environmental performance of the supply chain through a strong engagement of our supply chain to mitigate emissions.Additionally,this is supported through our circular economy business,whose main objectives are to extend the life of vehicles and parts by returning material and end-of-life vehicles back to the manufacturing process for new vehicles and products.In 2024,Stellantis reported:5,415 thousand vehicles shipped(refer to Financial Overview-Shipment Information included elsewhere in this report for additional information);Net revenues of 156.9 billion;Net profit of 5.5 billion;Adjusted Operating Income(“AOI”)of 8.6 billion(Refer to Non-GAAP Financial Measures included elsewhere in this report for additional information);Cash flows from/(used in)operating activities 4.0 billion;andIndustrial free cash flow of(6.0)billion(Refer to Non-GAAP Financial Measures included elsewhere in this report for additional information).At December 31,2024,the Companys available liquidity was 51.8 billion(including 12.9 billion available under undrawn committed credit lines).Refer to Financial Overview-Liquidity and Capital Resources included elsewhere in this report for additional information.History of StellantisStellantis N.V.(“Stellantis”)was incorporated as a public limited liability company(naamloze vennootschap)under the laws of the Netherlands in April 2014 under the name Fiat Chrysler Automobiles N.V.In its current configuration,Stellantis is the result of the merger of FCA and PSA,each of which were leading independent global automotive groups prior to the merger.10Fiat S.p.A.,the predecessor to FCA,was founded as Fabbrica Italiana Automobili Torino in July 1899 in Turin,Italy as an automobile manufacturer.Fiat grew in Italy and internationally in the following decades both organically and through the acquisition of several prominent brands and manufacturers including Lancia,Alfa Romeo,Maserati and Ferrari.In October 2015,the initial public offering of Ferrari N.V.was completed,followed by the spin-off of FCAs remaining interest in Ferrari to its shareholders in January 2016.In 2009,FCA US LLC(“FCA US”),then known as Chrysler Group LLC,acquired the principal operating assets of the former Chrysler LLC as part of a government-sponsored restructuring of the North American automotive industry.Between 2009 and 2014,Fiat S.p.A.expanded its initial 20 percent ownership interest to 100 percent of the ownership of FCA US and in October 2014,Fiat S.p.A.completed a corporate reorganization resulting in the establishment of FCA as the parent company of the FCA Group,with its principal executive offices in the United Kingdom.Peugeot S.A.began manufacturing and selling vehicles to consumers in 1896 and also expanded its automotive business,particularly in the second half of the twentieth century.In 1974,PSA acquired all of the outstanding shares of Citron S.A.and then merged the two companies in 1976.In 1978,PSA acquired Chrysler Corporations stake in its industrial and commercial subsidiaries in Europe,as well as Chrysler Financial Corporations European commercial financing subsidiaries.In 1995,PSA Finance Holding,which provided financing for Peugeot and Citron vehicle sales,was transformed into a bank and subsequently renamed“Banque PSA Finance”.PSA acquired the Opel and Vauxhall subsidiaries of GM in August 2017.On December 17,2019,FCA and PSA entered into a combination agreement(as amended,the“combination agreement”)agreeing to merge the two groups.On January 16,2021,PSA merged with and into FCA,with FCA as the surviving company.On January 17,2021,the combined company was renamed to Stellantis N.V.On January 18,2021,Stellantis common shares began trading on Euronext Milan and Euronext Paris,and on January 19,2021,began trading on the New York Stock Exchange(“NYSE”).Stellantis common shares trade under the following symbols:Euronext Milan:“STLAM”;Euronext Paris:“STLAP”;NYSE:“STLA”.The principal office of Stellantis is located at Taurusavenue 1,2132LS Hoofddorp,the Netherlands(telephone number: 31 23 700 1511).Its agent for U.S.federal securities law purposes is Christopher J.Pardi,c/o FCA U.S.LLC,1000 Chrysler Drive,Auburn Hills,Michigan 48326.11Major ShareholdersAs of February 25,2025,the largest shareholders of Stellantis were Exor N.V.(“Exor”)(holding 15.52 percent of the outstanding common shares),tablissements Peugeot Frres(“EPF”)(holding 7.74 percent of the outstanding common shares)and Bpifrance Participations S.A.(“BPI”)(holding 6.65 percent of the outstanding common shares).As a result of the loyalty voting mechanism,the voting powers of Exor,EPF and BPI are 23.89 percent,11.92 percent and 10.24 percent,respectively.For a description of the loyalty voting mechanism,including the terms and conditions of our special voting shares,please see“CORPORATE GOVERNANCE-Loyalty Voting Structure.”As of February 25,2025 the share capital of the Company consists of the following:2,896,073,567 common shares and 866,522,224 Class A special voting shares,all with a par value of 0.01 each.Based on the information in the Stellantis shareholder register,regulatory filings with the AFM and the SEC and other sources available to Stellantis,the following persons owned,directly or indirectly,in excess of three percent of Stellantis capital and/or voting interest as of February 25,2025:Stellantis ShareholdersNumber of Issued Common Shares(1)Percentage of Issued Common SharesExor(2)449,410,092 15.52EPF(3)224,228,121 7.74BPI(4)192,703,907 6.65BlackRock Inc.(5)96,885,2313.34Capital Research and Management Company(6)_(1)Issued shares includes common shares as well as 866,522,224 Class A special voting shares.Refer also to Corporate Governance-Articles of Association and Information on Stellantis Shares-Share Capital for additional information(2)Exor owns 449,410,092 common shares and 449,410,092 Class A special voting shares(23.89 percent of the issued shares)(3)EPF,through Peugeot Invest and its subsidiary Peugeot 1810,owns 224,228,121 common shares and 224,228,121 Class A special voting shares(11.92 percent of the issued shares)(4)BPI owns 192,703,907 common shares and 192,703,907 Class A special voting shares(10.24 percent of the issued shares).BPI is a joint venture of EPIC Bpifrance(Bpi Groupe)and Caisse des Dpots et Consignations(both holding a 49.3 percent interest in Bpifrance SA).Caisse des Dpots et Consignations also(directly and indirectly)holds an additional 8,207,316 Stellantis common shares,representing an additional 0.28 percent of the common shares and 0.22 percent of the issued share capital and voting rights of Stellantis(5)According to information published on the AFM website as of February 25,2025,BlackRock Inc.owns 96,885,231 common shares(2.57 percent of the issued shares)and 112,341,810 voting rights(2.99 percent of the issued shares)(6)According to information published on the AFM website as of February 25,2025,Capital Research and Management Company owns 123,437,499 voting rights(3.28 percent of the issued shares)Based on the information in Stellantis shareholder register and other sources available to Stellantis,as of February 25,2025,approximately 502 million Stellantis common shares,or approximately 17 percent of the Stellantis common shares,were held in the United States.As of the same date,approximately 310 record holders of Stellantis common shares had registered addresses in the United States.12Dare Forward 2030 strategic plan Achievements in 2024 toward the three pillars of the Dare Forward 2030 strategic plan are as follows:TechIn 2024,sold 314,500 BEVs worldwide:Stellantis Pro One(our commercial vehicles business unit)maintained its BEV leadership in EU29 with 31.5 percent share of the BEV market In electrification development:Stellantis joined with the French Alternative Energies and Atomic Energy Commission(CEA)to pursue next-generation battery cell technology.This joint program includes designing advanced technology cells with higher performance,longer lifespan and a lower carbon footprint at competitive costsStellantis and Infineon Technologies AG announced they will work jointly on the power architecture for Stellantis electric vehicles to support Stellantis ambition of offering clean,safe and affordable mobility to allStellantis announced an increase in theproduction capacity of electric drive modules to support growth in itselectrification portfolio by adding production in Szentgotthard,Hungary,targeted to begin in late 2026Electrified dual-clutch transmissions(“eDCTs”)production launch at our Mirafiori complex marked another milestone in thetransformation of theiconic Italian site into Mirafiori Automotive Park 2030Stellantis invested more than 388 million($406 million)in three Michigan facilities to support multi-energy technology and manufacturing flexibilityStellantis Ventures invested in Tiamat,a France-based company developing and commercializing sodium-ion battery technology Stellantis and Contemporary Amperex Technology Co.,Limited(“CATL”)entered into an agreement to invest up to 4.1 billion in a joint venture for a large-scale lithium iron phosphate(“LFP”)gigafactory to be located in SpainStellantis started production of 9 all-new BEVs in 2024 Stellantis introduced the highly flexible STLA Large platform in 2024.This platform is designed to be the most adaptable multi-energy BEV-centric platform in the industry,covering a wide spectrum of vehicles.The Company also unveiled the STLA Frame platform,tailored for full-size,body-on-frame trucks and SUVsStellantis is expanding connected services and software-enabled features for retail and fleet customers,while developing its in-house technology platforms:STLA Brain,STLA SmartCockpit and STLA AutoDrive as well as its software engineering capabilities:Stellantis delivered more than 100 million Over-the-Air(“OTA”)updates in 2024,enhancing the mobility experience for customers Next-generation technology platforms STLA Brain,STLA SmartCockpit and STLA AutoDrive-progressed toward full technology readiness for integration in 2024,with their debut in new vehicles set for 2025 13Stellantis is advancing its software capabilities,driving faster development timelines and customization across its operation:Stellantis acquired the AI framework,machine learning models and intellectual property rights and patents of CloudMade,supporting the integration of AI in the STLA SmartCockpit platform Stellantis has secured the critical semiconductor chips for its STLA Brain platformsStellantis purchased shares in Archer Aviation Inc.(“Archer”)for 87 million($94 million)comprising amounts due under a forward equity purchase agreement which became payable following successful milestone achievements and open market purchases.CareStellantis2024 carbon footprint trend is aligned with the carbon net zero by 2038(with single-digit percentage compensation of the remaining emissions)roadmap,and showed an emissions reduction of 11 percent on a per vehicle basis(CO2 equivalent per vehicle,Scopes 1,2,and 3)versus our 2021 baseline,and against our-50 percent target by 2030;Concluded its third global employee survey in March with a 71 percent participation rate;Sustainability initiatives include:VALORAUTO,Stellantis take-back and recycling service for end-of-life vehicles,launched the online portal dedicated to private owners of all brands and engines,in France,Belgium and LuxembourgLaunched the SUSTAINera RECYCLE product range in Enlarged EuropeEstablished a material flow management organization to manage recycled materials and develop closed material loops in Enlarged Europe and North America,aimed at reintroducing the Companys internal waste into the supply chain and building an efficient materials eco-system with various stakeholders Expanded SUSTAINera circular economy activities in North America,including new product lines and range extension of remanufactured spare parts and launched a Reuse range in the U.S.through the B-Parts platformIn March,a green bond was issued with a principal amount of 500 million with an interest rate of 3.75 percent and matures in March 2036.Refer to Note 22,Debt,within the Consolidated Financial Statements included elsewhere in this report for additional information30 percent reduction since 2021 in vehicle rate defects 3 months after customer delivery;Women hold 33.5 percent of leadership roles(approximately 840 women in leadership roles);Stellantis Student Awards global education program recognized more than 660 recent high school and university graduates of Stellantis employees from 22 countries with a monetary award;Stellantis Motor Citizens celebrated International Volunteer Day with many events across the regions in 2024,nearly 5,800 Motor Citizens volunteered in excess of 22,000 hours to initiatives in their communities supporting the four focus areas:sustainable communities,climate change,quality education and gender equality;Stellantis broadened the availability of its employee-share purchase plan to nearly its entire workforce,representing more than 230,000 employees worldwide;14In 2024,Stellantis rewarded employees worldwide in recognition of the Companys strong 2023 performance with nearly 1.9 billion in bonus payments;andAs part of a broader stakeholder engagement plan,Stellantis was joined by four internationally-known experts and students from three universities in France,Morocco and the U.S.for the second annual Freedom of Mobility Forum to debate“How will our planet accommodate the mobility needs of eight billion people?”.ValueStellantis Pro One,the Companys commercial vehicles business unit,inaugurated its global commercial vehicles hub at Mirafiori Automotive Park 2030 in Turin,Italy.The hub brings together all functions aligning the business units strategy and guidelines to increase efficiency and speed in decision-making;Stellantis announced a5.6 billion investment in South America,to support the launch of more than 40 new products from 2025 to 2030,and the development of new bio-hybrid technologies,innovative decarbonization technologies across the automotive supply chain,and new strategic business opportunities;Stellantis allocated the production of the mid-size“K0”model to Tofas-Turk Otomobil Fabrikasi A.S.(“Tofas”)for four brands and the light commercial vehicle version was launched in 2024;In Europe,Leapmotor International,a joint venture led by Stellantis in collaboration with Chinese automaker Leapmotor,distributed the first vehicles,the Leapmotor T03 and C10 electric vehicles,supported by over 400 dealers;Stellantis completed the sale of a majority interest in Comau S.p.A.(“Comau”),its production components business,to One Equity Partners.The transaction was part of the strategic agreement,set in connection with the merger between former FCA and Groupe PSA that formed Stellantis N.V.;Stellantis rejoined the European Automobile Manufacturers Association(“ACEA”);andIn December 2024,Stellantis finalized an agreement to enter into a CO2 regulatory credits open pool for passenger cars to contribute to the achievement of its 2025 European emissions targets while optimizing its resources.Many of the targets set forth in the Companys Dare Forward 2030 strategic plan depend on the industrys transition to full electrification,conducive BEV policies(e.g.,charging infrastructure,BEV purchasing incentives),and the availability of decarbonized energy.These targets have become increasingly challenging in light of the trends in market dynamics,government policy and regulation that have emerged since the plans introduction in March 2022.Although the targets remain in place,the speed and trajectory at which they may be met is the subject of ongoing assessment by the Company.15Overview of Our Business Stellantis activities during the year ended December 31,2024,were carried out through the following six reportable segments:(i)North America:Stellantis operations to manufacture,distribute and sell vehicles in the United States,Canada and Mexico,primarily under the Jeep,Ram,Dodge,Chrysler,FIAT and Alfa Romeo brands.Manufacturing plants are located in:U.S.,Canada and Mexico;(ii)Enlarged Europe:Stellantis operations to manufacture,distribute and sell vehicles in Europe(which includes the 27 members of the European Union,the United Kingdom(“UK”)and the members of the European Free Trade Association).Under the mainstream brands Citron,FIAT,Opel,Peugeot,Vauxhall,premium brands Alfa Romeo,DS and Lancia.Manufacturing plants are located in:France,Italy,Spain,Germany,UK,Poland,Portugal,Serbia and Slovakia.In 2024,we commenced the distribution of Leapmotor-branded vehicles;(iii)Middle East&Africa:Stellantis operations to manufacture,distribute and sell vehicles primarily in Turkey,Algeria and Morocco under the Peugeot,Citron,Opel,FIAT and Jeep brands.Manufacturing plants are primarily located in Morocco,Algeria and Turkey,through our joint venture with Tofas.In 2024,we commenced the distribution of Leapmotor-branded vehicles;(iv)South America:Stellantis operations to manufacture,distribute and sell vehicles in South and Central America,primarily under the FIAT,Jeep,Ram,Peugeot and Citron brands,with the largest focus of its business in Brazil and Argentina.Manufacturing plants are located in the main markets of Brazil and Argentina.In 2025,we will commence the distribution of Leapmotor-branded vehicles;(v)China and India&Asia Pacific:Stellantis operations to manufacture,distribute and sell vehicles in the Asia Pacific region(mostly in China,Japan,India,Australia and South Korea)carried out in the region through both subsidiaries and joint ventures,primarily under the Jeep,Peugeot,Citron,FIAT,DS and Alfa Romeo brands.Manufacturing plants are located in India and Malaysia,through our joint operation India Fiat India Automobiles Private Limited(“FIAPL JV”)and our wholly owned subsidiary Stellantis Gurun(Malaysia).Our Citron and Peugeot branded vehicles are manufactured in China by Dongfeng Peugeot Citron Automobiles(“DPCA”)under various license agreements.In 2024,we commenced the distribution of Leapmotor-branded vehicles in Asia Pacific(excluding China);and(vi)Maserati:Stellantis operations to design,engineer,develop,manufacture,distribute worldwide and sell luxury vehicles under the Maserati brand.Design,engineering and manufacturing plants are located in Italy.Stellantis also owns or holds interests in companies operating in other activities and businesses.These activities are grouped under“Other Activities”,which primarily consists of our pre-owned car business,mobility businesses through the brands Free2move and Share Now,the Companys software and data businesses,and other investments,including Archer,as well as the financial services activities of dealer and customer financing primarily in North America,Enlarged Europe,South America and China and until December 2024,the Companys industrial automation systems design and production business,operating under the Comau brand name.Refer to Note 3,Scope of consolidation in the Consolidated Financial Statements included elsewhere in this report for details on the sale of our majority interest in Comau.Also included under“Other Activities”are our companies that provide services,including accounting,payroll,tax,insurance,purchasing,information technology,facility management and security for the Company and management of central treasury activities.Definitions and abbreviations Passenger cars include sedans,station wagons and three-and five-door hatchbacks,that may range in size from“micro”or“A-segment”vehicles of less than 3.8 meters in length to“large”or“F-segment”cars that are greater than 5.1 meters in length.Utility vehicles(“UVs”)include sport utility vehicles(“SUVs”),which are available with four-wheel drive systems that provide true off-road capabilities,and crossover utility vehicles,(“CUVs”),which are not designed for heavy off-road use.UVs can be divided among six main groups,ranging from“micro”or“A-segment”,defined as UVs that are less than 4.0 meters in length,to“large”or“F-segment”,defined as UVs that are greater than 5.1 meters in length.16 Light trucks are divided between vans(also known as light commercial vehicles,or“LCVs”),which typically are used for the transportation of goods or groups of people,and pickup trucks,which are light motor vehicles with an open-top rear cargo area.Minivans,also known as multi-purpose vehicles(“MPVs”)typically have seating for up to eight passengers.A vehicle is characterized as“all-new”if it is a new product with no prior model year,or if its vehicle platform is significantly different from the platform used in the prior model year and/or it has had a full exterior renewal.A vehicle is characterized as“significantly refreshed”if it continues its previous vehicle platform but has extensive changes or upgrades from the prior model year.Design and ManufacturingWe sell vehicles in the SUV,passenger car,truck and LCV markets.Our SUV and CUV portfolio includes vehicles such as the Jeep Grand Wagoneer,Jeep Wagoneer S,Jeep Grand Cherokee,Jeep Meridian,Alfa Romeo Tonale,Citron C5 Aircross,DS 3 Crossback,Maserati Grecale and Peugeot E-3008.Our passenger car product portfolio includes vehicles such as the Opel and Vauxhall Mokka,Fiat 500,Alfa Romeo Giulia,Citron C3,Lancia Ypsilon,Dodge Charger and Peugeot 308,and minivans such as the Chrysler Pacifica.We sell light duty and heavy duty pickup trucks such as the Ram 1500,Ram 2500/3500,Fiat Strada,Peugeot Landtrek,Jeep Gladiator,and chassis cabs such as the Ram 3500/4500/5500.Our LCVs include vans such as the Fiat Professional Dobl,Peugeot Partner,Citron Berlingo,Opel/Vauxhall Combo and Ram ProMaster.The Stellantis Production Way(“SPW”)is a set of manufacturing-related tools and principles intended to achieve best in class performance as measured by health and safety,quality,throughput,cost and environmental metrics,through empowerment of employees,enhancement of employee skill-sets,the sharing of best practices and the improved and economical use of production assets.Following the 2022 launch of SPW,Stellantis has focused on implementation and execution,as SPW tools,principles and priorities have been deployed throughout each of its manufacturing plants.Research and DevelopmentIn alignment with its Dare Forward 2030 strategic plan targets,Stellantis recent research initiatives have been mainly concentrated in the areas of mobility electrification and clean energy,autonomous driving,infotainment technology,vehicle electrical and software architecture,and connectivity technologies.Significant activity has also continued with a focus to reduce overall vehicle energy demand,fuel consumption and emissions based on traditional technologies.Recent fuel consumption and emissions reduction activities have primarily focused on propulsion system technologies,including engines,transmissions,axles and drivelines,hybrid and electric propulsion and alternative fuels.Recent Technology InitiativesModular Vehicle Platforms In January 2024,Stellantis unveiled the STLA Large platform,which has a range of 800 kilometers and is available in 400 and 800-volt BEV architectures as well as multi-energy variants,including hybrid and internal combustion,allowing for increased flexibility in a wide range of vehicle applications.Global production of the STLA Large began in 2024 and is expected to launch across eight vehicles through 2026.STLA Large is designed to host mid-size to full-size vehicles.In November 2024,Stellantis unveiled the STLA Frame platform,designed for full-size,body-on-frame trucks and SUVs,and able to support internal combustion,hybrid,hydrogen,BEV and REEV technologies.The all-new,all-electric Ram 1500 REV light duty pickup will be built on the STLA Frame and is expected to launch in 2026.The all-new 2025 Ram 1500 Ramcharger REEV,expected to have a range of 1,100 kilometers,will also be built on STLA Frame and production is expected to begin in 2025.STLA Large and STLA Frame are two of the four platforms comprising Stellantis BEV-centric platform strategy,along with STLA Small(ultra-compact cars)and STLA Medium(compact to mid-size vehicles),which was the first platform unveiled in July 2023.17Propulsion Systems In February 2024,Stellantis announced a significant investment in an existing plant in Szentgotthard,Hungary to increase electric drive module(“EDM”)production in Europe.EDM production in Szentgotthard is targeted to begin in late 2026.Stellantis electric propulsion system strategy includes three families of EDMs that combine the motor,gearbox and inverter,each designed to meet different performance needs.The EDMs can be configured for front-wheel drive,rear-wheel drive and all-wheel drive.A program of hardware upgrades and OTA software updates is expected to extend the life cycle of the propulsion systems and,therefore,the vehicles.Stellantis intends to internally develop software and controls in order to maintain characteristics unique to each brand.In April 2024,Stellantis also announced the production launch of the next-generation eDCTs for hybrid and plug-in hybrid vehicles at its Mirafiori complex in Turin,Italy.The eDCTs produced at Mirafiori incorporate a 21-kW electric motor into a dual-clutch transmission.The motor delivers electric propulsion in low-torque scenarios,such as city driving or cruising,allowing the ICE to remain off 50 percent of the time on the urban cycle.Battery TechnologyStellantis announced a five-year collaboration with CEA,a major French research organization,in July 2024.The collaboration targets in-house design of next-generation battery cells for BEVs with the goal of providing Stellantis with more affordable,next-generation BEV batteries with best-in-class technologies.Connectivity In January 2024,Stellantis announced the acquisition of the artificial intelligence framework,machine learning models and intellectual property rights and patents of CloudMade,a developer of data-driven automotive solutions.The acquisition is intended to support the mid-term development of STLA SmartCockpit,Stellantis initiative to deliver artificial intelligence-based applications such as navigation,voice assistance,e-commerce and payment services for use in its vehicles.Intellectual PropertyStellantis owns a significant number of patents,trade secrets,licenses,trademarks and service marks,including,in particular,the marks of its vehicle and component and production systems brands,which relate to its products and services.We expect the number to grow as we continue to pursue technological innovations.We file patent applications in Europe,the U.S.and around the world to protect technology and improvements considered important to our business.No single patent is material to our business as a whole.Property,Plant and Equipment As of December 31,2024,Stellantis manufacturing facilities(including passenger vehicle and light commercial vehicle assembly,propulsion systems and components plants,and excluding joint ventures),are primarily located in Enlarged Europe(mainly in France,Germany,Italy,Spain and UK),North America(U.S.,Canada and Mexico),South America(Brazil and Argentina)and Africa(Morocco).Stellantis companies have also historically owned other significant properties including parts distribution centers,research laboratories,test tracks,warehouses and office buildings.The total carrying value of Stellantis property,plant and equipment as of December 31,2024 was 45.0 billion.A number of Stellantis manufacturing facilities and equipment,including land and industrial buildings,plant and machinery and other assets,were and are subject to mortgages and other security interests granted to secure indebtedness to certain financial institutions.As of December 31,2024,property,plant and equipment reported as pledged as collateral for loans amounted to approximately 0.5 billion,excluding Right-of-use assets(refer to Note 11,Property,plant and equipment,within the Consolidated Financial Statements included elsewhere in this report for additional information).Stellantis is not aware of any environmental issues that would materially affect the utilization of fixed assets.Refer to“Industrial Environmental Control”included elsewhere in this report for additional information.18Supply of Raw Materials,Parts and Components Stellantis purchases a variety of components(including but not exclusively,mechanical,steel,electrical,electronic and plastic components as well as castings and tires),raw materials,supplies,utilities,logistics and other services from numerous suppliers.The purchase of raw materials,parts and components has historically accounted for a substantial majority of our total Cost of revenues.The raw materials purchased include,but are not limited to,steel,rubber,aluminum,resin,copper,lead,rare earths,precious metals(including platinum,palladium and rhodium)and battery materials(including lithium,manganese,nickel,graphite and cobalt).The Companys focus on quality improvement,cost reduction,sustainability,and product innovation and flexibility require the Company to rely upon suppliers who share this focus and have the capability to provide cost reductions.Stellantis has valued relationships with suppliers,and has worked to establish closer ties with a significantly reduced number of suppliers by selecting those with a leading position in the relevant markets.In addition,within purchasing and supply quality,a specific raw materials organization was set up in 2023 to increase Stellantis control of raw material supply.Through this organization,several partnerships were established prior to 2024 relating to the supply of nickel,lithium hydroxide,lithium carbonate,manganese and copper.In 2024,additional partnerships were established to secure the supply of rare earth,synthetic graphite anode and natural graphite anode materials.For a discussion of Stellantis risks relating to raw materials,parts and components,refer to“Risk Factors-We face risks associated with increases in costs,disruptions of supply or shortages of raw materials,parts,components and systems used in our vehicles.”included elsewhere in this report for additional information.In order to mitigate these risks,Stellantis works proactively with suppliers to identify material and part shortages and take steps to mitigate their impact by deploying additional personnel,accessing alternative sources of supply and managing its production schedules.Stellantis also continues to refine processes to identify emerging capacity constraints in the supplier tiers given the ramp up in manufacturing volumes to meet volume targets.In addition,Stellantis continuously monitors supplier performance according to key metrics such as part quality,delivery,performance,financial solvency and sustainability.19Employees At December 31,2024,Stellantis had a total of 248,243 employees(excluding employees of joint arrangements,associates and unconsolidated subsidiaries),a 3.9 percent decrease from December 31,2023,and a 8.9 percent decrease from December 31,2022.The following table provides a breakdown of employees as of December 31,2024,2023 and 2022 by geographical area.202420232022North America 75,554 81,341 88,835 Enlarged Europe 126,242 135,211 142,681 Middle East&Africa 7,874 6,101 5,311 South America 32,612 28,928 28,968 China and India&Asia Pacific 5,961 6,694 6,572 Total 248,243 258,275 272,367 At December 31,Stellantis employees are free to join trade unions,provided they do so in accordance with local laws and the rules of the related trade union.Local collective agreements are led by the regions and/or countries which take the global Company polices into account and reflect local particularities.As of December 31,2024,approximately 85 percent of our employees were covered by collective bargaining agreements.An active dialogue was maintained in 2024 with various employee representation bodies existing at the national or transnational level.This is represented in Enlarged Europe through the European Works Councils of former PSA,Fiat and Opel and Vauxhall,in North America through the union,the International Union,United Automobile,Aerospace and Agricultural Implement Workers of America(“UAW”)and in Canada through the union,Unifor.Trade Unions and Collective Bargaining Stellantis social relations strategy is based on six commitments:Stellantis supports the principles of the United Nations Universal Declaration of Human Rights and the provision of a decent equitable work environment.We work towards providing competitive and living wages;Stellantis is committed to compliance with all applicable labor laws and regulations and aims to apply best practices in human resources management;Stellantis bases social dialogue on relationships with independent labor unions and employee representatives and seeks workplace cooperation;Stellantis objective is to negotiate collective bargaining agreements that are pragmatic,inclusive and protective of its employees;Stellantis fosters social dialogue with the workforce on a daily basis;andStellantis monitors social indicators in its subsidiaries and globally discloses in a transparent manner to its stakeholders.The Company endorses the International Labor Organizations(“ILO”)declaration on fundamental principles and rights at work.Stellantis is committed to a strategy for collective agreements through innovative solutions to balance social challenges while allowing the Company to remain competitive.20Sales Overview New vehicle sales represent sales of vehicles primarily by dealers and distributors,or,directly by us in some cases,to retail and fleet customers.Sales include mass-market,premium and luxury vehicles manufactured at our plants,as well as vehicles manufactured by joint ventures and third party contract manufacturers and distributed under our brands.Sales figures exclude sales of vehicles that we contract manufacture for other OEMs.While vehicle sales are illustrative of our competitive position and the demand for our vehicles,sales are not directly correlated to Net revenues,Cost of revenues or other measures of financial performance in any given period,as such results were primarily driven by vehicle shipments to dealers and distributors or to retail and fleet customers.For a discussion of our shipments,refer to“Financial OverviewShipment Information”included elsewhere in this report for additional information.Figures in the tables in this section may not add due to rounding.Additionally,prior period figures have been updated to reflect current information provided by third party industry sources.The following table shows Stellantis new vehicle sales by geographic market for the periods presented:202420232022(millions of units)North America 1.5 1.8 1.8 Enlarged Europe 2.6 2.7 2.6 Middle East&Africa 0.5 0.6 0.4 South America 0.9 0.9 0.8 China and India&Asia Pacific 0.1 0.2 0.2 Total Regions 5.7 6.1 5.8 Maserati 0.01 0.03 0.02 Total Worldwide 5.7 6.2 5.8 Years ended December 31,_-Maserati excluded from volumes and market share of the regions-Leapmotor excluded from volumes and market share of the regions-Without Banned Countries:Belarus,Cuba,Iran,Russia,Sudan,SyriaNorth AmericaNorth America Sales and CompetitionThe following table presents Stellantis vehicle sales and estimated market share in the North America segment for the periods presented:Thousands of units(except percentages)U.S.1,304 8.0%1,527 9.6%1,547 10.9nada 130 7.28 9.59 11.4%Mexico 94 6.0 6.8t 6.6%Total 1,527 7.8%1,782 9.4%1,791 10.7%Years ended December 31,2024(1)2023(1)2022(1)North AmericaSales Market ShareSales Market ShareSales Market Share _(1)Estimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources:Canada-DesRosiers Automotive consultants,Mexico-INEGI(Government National Institute)and U.S.-Wards AutomotiveMaserati excluded from volumes and market shareLeapmotor excluded from volumes and market share of the region 21The following table summarizes new vehicle market share information and our principal competitors in the U.S.,our largest market in the North America segment:U.S.202420232022AutomakerPercentage of industryGM 16.6.3.1%Toyota 14.3.2.9%Ford 12.8.5.2%Hyundai/Kia 10.5.4.4%Honda 8.7%8.2%7.0%Stellantis(1)8.0%9.6.9%Nissan 5.7%5.7%5.2%Other 23.4#.1.4%Total 10000%Years ended December 31,_(1)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources:Canada-DesRosiers Automotive consultants,Mexico-INEGI(Government National Institute)and U.S.-Wards Automotive U.S.industry sales,including medium and heavy-duty vehicles,in addition to commercial vehicles,were up approximately 387 thousand units in 2024 from 15.9 million units in 2023.Industry sales were up 2.4 percent over 2023 calendar year.Our vehicle line-up in the North America segment primarily leveraged the brand recognition of the Jeep,Ram,Dodge and Chrysler brands to offer UVs,pickup trucks,cars and minivans under those brands.Vehicle sales and profitability in the North America segment were generally weighted towards larger vehicles such as UVs,trucks and vans,consistent with overall industry sales trends in the North America segment,which have become increasingly weighted towards UVs and trucks in recent years.Sales in the U.S.were down 15 percent from 2023 primarily due to temporary gaps in our product offering as a result of the transition to new generation products.Stellantis takes three of the top five spots among best-selling plug-in hybrids in the U.S.Jeep brand leads the way with the Jeep Wrangler 4xe retaining Americas best-selling plug-in hybrid vehicle crown;the Grand Cherokee 4xe is No.3;and the Chrysler Pacifica Hybrid claims No.4 spot.The U.S.ended the year with inventory at a two-year record low well positioning itself for 2025.Jeep Compass sales increased 16 percent year over year.Dodge Hornets total year sales increased 120 percent year over year.North America Distribution In the North America segment,our vehicles are sold primarily to dealers in our dealer network for sale to retail consumers and to fleet customers.Fleet sales in the commercial channel are typically more profitable than sales in the government and daily rental channels since they more often involve customized vehicles with more optional features and accessories;however,vehicle orders in the commercial channel are usually smaller in size than the orders made in the daily rental channel.Fleet sales in the government channel are generally more profitable than fleet sales in the daily rental channel primarily due to the mix of products included in each respective channel.North America Dealer and Customer FinancingIn November 2021,Stellantis acquired First Investors Financial Services Group,now known as Stellantis Financial Services U.S.Corp(“SFS U.S.”).SFS U.S.provides U.S.customers and dealers with a complete range of financing options,including retail loans,leases,and floorplan financing.However,while SFS U.S.grows,Stellantis also utilizes independent financial service providers,including Santander Consumer USA Inc.(“SCUSA”)to complement its financing offer to dealers and retail customers in the U.S.In February 2013,FCA entered into a private label financing agreement with SCUSA(the“SCUSA Agreement”),under which SCUSA will continue to provide a wide range of wholesale and retail financial services to dealers and retail customers in the U.S.,under the Chrysler Capital brand name.In April 2022,the SCUSA Agreement was amended and extended through 2025,allowing SCUSA to serve a complementary role to SFS U.S.Under the SCUSA 22Agreement,SCUSA has certain rights,including limited exclusivity to participate in specified minimum percentages of certain retail financing subvention programs.As of December 31,2024,SFS U.S.provided wholesale(i.e.floorplan and others)lines of credit to 155 dealers representing approximately 6 percent of the Stellantis network in the U.S.with SCUSA and Ally Financial Inc.(“Ally”)providing wholesale funding to,approximately,an additional 9 percent and 28 percent respectively.In 2024,approximately 78 percent of the retail vehicles sold to U.S.retail customers were financed or leased;of those financed or leased retail sales,SCUSA,Ally,and SFS U.S.(third full year of operations)market share represented 12 percent,10 percent,and 24 percent respectively.In Canada,our customers are served by cooperation agreements with main local banks providing retail financing and leasing.In Mexico,we have a private label agreement with Banco Inbursa Group in order to provide dealer and retail customer financing programs for all brands.Enlarged EuropeEnlarged Europe Sales and Competition The following table presents Stellantis vehicle sales and market share in the Enlarged Europe segment for the periods presented:202420232022Enlarged Europe(1)Sales Market Share Sales Market ShareSales Market ShareThousands of units(except percentages)France 599 28.5c4 29.4b0 33.1%Italy 531 30.2Y1 33.5S5 36.3%Germany 416 13.489 12.571 12.9%UK 299 12.913 13.9&8 14.1%Spain 208 17.61 20.2!4 22.9%Other 502 11.1T6 12.5T5 14.1%Europe(2)2,555 17.0%2,695 18.3%2,553 19.7%Other Europe(3)21 2.8 2.4 3.0%Total 2,577 16.4%2,713 17.5%2,569 19.1%Years ended December 31,_(1)Banned Countries:Belarus,Russia(2)EU30=EU27(excluding Malta),Iceland,Norway,Switzerland and UK.Industry and market share information is derived from third-party industry sources(e.g.Agence Nationale des Titres Scuriss(“ANTS”),Ministry of Infrastructure and Sustainable Mobility(“MIMS”)and ANFAC Spain)and internal information(3)Other Europe=Eurasia(Armenia,Azerbaijan,Georgia,Kazakhstan,Moldova,Uzbekistan)and other Europe(Albania,Bosnia,Kosovo,Malta,Montenegro,North Macedonia,Serbia and Ukraine)Maserati excluded from volumes and market share of the regionLeapmotor excluded from volumes and market share of the region 23The following table summarizes new vehicle market share information and our principal competitors in Europe,our largest market in the Enlarged Europe segment:Volkswagen 24.3$.0#.0%Stellantis(2)17.0.3.7%Renault 10.7.5.1%Toyota 7.4%6.7%6.8%Hyundai/Kia 7.1%7.5%8.2%Mercedes-Benz 6.2%6.2%6.5%BMW 6.2%6.2%6.3%Ford 5.5%5.9%6.5%Other 15.6.7.8%Total 10000%Years ended December 31,Europe 30(1)202420232022AutomakerPercentage of industry_(1)Europe 30=27 members of the European Union excluding Malta and including Iceland,Norway,Switzerland and UK(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources(e.g.,ANTS,MIMS and ANFAC Spain)and internal informationIn 2024,the EU30 automotive market recorded results broadly in line with the previous year with new vehicle registrations at 14,989,469 resulting in a slight growth of 1.7 percent compared to 2023.Demand for electric cars fell by about 2 percent compared to the previous year.In the EU30 PC and CV markets,Stellantis confirmed its second place with a market share of 17 percent,launching several new models in 2024 and over 50 international awards received by its brands.Sales increased in four of the G10 countries,Stellantis confirmed its first place in France,Italy and Portugal and is in second place in Germany,Spain,United Kingdom,Austria,Belgium,Luxembourg and the Netherlands.In the EU30 CV market,Stellantis Pro One confirmed its overall leadership with a share of 29.1 percent and first place in fifteen countries.Total sales also increased by 2.2 percent compared to 2023.Our growing performance in the BEV market resulted in a share of 31.5 percent with Peugeot as the number 1 electric brand at 14.6 percent.Stellantis performance is supported by iconic models such as the Peugeot 208 which is amongst the top five best sellers in the EU30,while in France we boast four models among the top 10 in the PC market.In Germany,the Opel Corsa is the best-selling small car in 2024,while in Italy the Fiat Panda is the best-selling car in the overall market and the Jeep Avenger is the best-selling SUV of the year.In the BEV market,despite the general decline in demand for electric vehicles,Stellantis firmly maintained its position among European manufacturers with a 12 percent share.In the A-segment,the Fiat 500e is number 1 in Europe,while in the B-segment Stellantis has five models among the top 10 best sellers.There have been noteworthy achievements in key European markets:in France,Stellantis is overall number 1 for the second year in a row in the BEV market,while the Fiat 500e,Peugeot E-208,and Peugeot E-2008 are leaders in their respective segments.Enlarged Europe DistributionIn Europe,we sell and service our vehicles through our own dealers(located in most European markets),independent dealers,retailers,and authorized workshops.In other markets and segments where we do not have a substantial presence,we have agreements with general distributors.In 2023,Stellantis and its European dealers signed over 8,000 sales and 25,000 aftersales contracts in ten key European countries.Their shared objectives include simplification,a multi-brand approach,customer-centricity,and quality assurance.Stellantis initially adopted the new retailer model in Austria,Belgium,Luxembourg,and the Netherlands in September 2023,and has been working to further enhance the model in these early adopter countries,allowing its network sufficient time to adapt in a competitive landscape with new entrants.After one year of implementation,the model has shown 24a 26 percent year-over-year increase in total orders.The business model remains in a pilot phase and will be rolled out more broadly once we achieve full satisfaction with market share,processes,information,communication and technology(“ICT”),and other key performance indicators.During 2024,Stellantis began distributing Leapmotor vehicles in Europe through the Stellantis led joint venture Leapmotor International and has been introduced in more than 400 dealerships already representing our existing brands.Stellantis continues to work closely with its dealer network,emphasizing their partnership to address the challenges of the automotive industry,including the electrification.Enlarged Europe Dealer and Customer FinancingSince 2023,the Stellantis leasing and financing activities in Europe have been structured through the following partnerships:(i)Leasys,a 50 percent held joint venture with Crdit Agricole Consumer Finance S.A.(“CACF”)dedicated to pan-European multi-brand long-term operational leasing activities;(ii)A partnership between Stellantis Financial Services Europe(“SFSE”),and BNP Paribas Personal Finance(“BNPP PF”)related to financing activities carried-out through approximately a 50 percent interest in a joint-venture operating in Germany,Austria and the UK;and(iii)A partnership between SFSE and Group Santander Consumer Finance(“SCF”)related to financing activities carried out through 50 percent held joint-ventures in France,Italy,Spain,Belgium,Poland,the Netherlands and through a commercial agreement with SCF in Portugal.The partnerships with BNPP and SCF cover all Stellantis brands and the Leapmotor brand.25Middle East&Africa(“MEA”)Middle East&Africa Sales and Competition The following table presents Stellantis vehicle sales and market share in the Middle East&Africa segment for the periods presented:Years ended December 31,202420232022Middle East&AfricaSalesMarket ShareSalesMarket ShareSalesMarket ShareThousands of units(except percentages)Turkey 343 27.7A9 34.0%0 31.9%Algeria 67 65.2V 86.5 53.5%Morocco 35 19.93 20.74 20.8%Gulf(1)30 2.03 2.4& 2.3%Overseas France(2)19 28.5! 28.8$ 33.8%Israel Zone(3)14 5.2! 7.4 8.0%Egypt 6 7.1%8 10.8 16.3%Other(4)24 2.6# 2.6 3.0%Total 538 12.4a4 14.8A5 11.9%_(1)Includes:Bahrain,Kuwait,Oman,Qatar,Saudi Arabia,UAE and Yemen(2)Includes:French Guiana,Mayotte,Reunion,Martinique and Guadeloupe(3)Includes:Israel and Palestine(4)Without banned countries:Iran,Sudan and SyriaLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources of MEA countries(e.g.,AMIC(Egypt),ODD(Turkey),AMBG(Saudia Arabia,Qatar,United Arab Emirates,Yemen),AIVAM(Morocco)and internal informationMaserati excluded from volumes and market share of the regionIn 2024,the total industry volume of Middle East&Africa increased by 4.4 percent,with growth in all markets except Overseas France and South Africa.Sales decreased by 12.4 percent with 76 thousand less deliveries.Overall market share of the region reached 12.4 percent,down by 240 basis points compared to 2023.The decrease was primarily due to negative performance of sales and market share in Turkey and Israel.Additionally in Algeria,although our sales increased,our market share decreased from 86.5 percent in 2023 to 65.2 percent in 2024.CV sales decreased by 0.9 percent,down to 180 thousand units,or 21.4 percent market share.Stellantis achieved number one position in the LCV markets in the fourth quarter of 2024.26The following table summarizes new vehicle market share information and our principal competitors in the Middle East&Africa:Years ended December 31,G6(1)Middle East&Africa202420232022AutomakerPercentage of industryToyota 17.5.0 .3%Stellantis(2)13.5.8.8%Hyundai/Kia 13.1.3.9%Volkswagen 8.2%7.7%6.8%Renault 8.2%8.6%9.3%Ford 5.5%5.2%4.7%Nissan 5.2%4.9%5.0%Mercedes-Benz 1.6%1.4%1.4%BMW 1.2%1.1%1.1%Other 26.0.9.7%Total 10000%_(1)G6:Turkey,Morocco,Israel zone,Gulf,Overseas France and EgyptIsrael Zone:Israel and PalestineGulf:Bahrain,Kuwait,Oman,Qatar,Saudi Arabia,UAE and YemenOverseas France:French Guiana,Mayotte,Reunion,Martinica and Guadeloupe(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionEstimated market share information is derived from third-party industry sources of MEA countries(e.g.AMIC(Egypt),ODD(Turkey),AMBG(Saudia Arabia,Qatar,United Arab Emirates,Yemen),AIVAM(Morocco)and internal informationMiddle East&Africa DistributionIn Turkey,Peugeot,Citron,DS and Opel brands are distributed through a national sales company,consolidating operations for these four brands,whereas FIAT,Alfa Romeo and Jeep brands are distributed by a joint venture with Koc Automotiv Group,Tofas.In Morocco,following the acquisition of Sopriam,(refer to Note 3,Scope of consolidation,within the Consolidated Financial Statements included elsewhere in this report for additional information),the national sales company is in charge of distributing Alfa Romeo,Citron,DS,FIAT,Jeep and Peugeot.Opel is managed by a local importer.In South Africa we also operate through a national sales company that distributes Peugeot,Citron,Opel,FIAT,Jeep and Alfa Romeo.In Algeria,a national sales company is in charge of distributing FIAT,while Opel is managed by local importer.In all other markets of the region,we distribute through agreements with local general distributors,with the regional offices of Stellantis located in Cairo and Dubai coordinating operations in Egypt and Middle East.Middle East&Africa Dealer and Customer FinancingIn Turkey,our activities related to the former FCA brands(mainly connected to retail financing)are carried out through a 100 percent owned subsidiary of our joint venture,Tofas,that provides financial services and insurance products mainly to retail customers,while the activities related to the former PSA brands are carried out by a subsidiary of SFSE in cooperation with a TEB Finansman AS,with Garanti Bank,Yapi Kredi and different insurance providers.Cooperation agreements are also in place with third-party financial institutions to provide dealer network and retail customer financing in South Africa,Morocco and Algeria.A binding agreement has been signed in Morocco for the acquisition of 80 percent of a financial services company currently operating in the country.The closing is subject to customary conditions.27South America South America Sales and Competition The following table presents Stellantis vehicle sales and market share in the South America segment for the periods presented:2024(1)2023(1)2022(1)South America Sales Market ShareSales Market ShareSalesMarket ShareThousands of units(except percentages)Brazil 734 29.4h7 31.4d7 32.9%Argentina 116 29.70 28.27 30.7%Other South America 66 5.9r 6.4 6.2%Total 916 22.99 23.54 23.2%Years ended December 31,_(1)Estimated market share data presented are based on managements estimates of industry sales data,which use certain data provided by third-party sources,National Organization of Automotive Vehicles Distribution and Association of Automotive ProducersMaserati excluded from volumes and market share Banned Country:CubaLeapmotor excluded from volumes and market share of the regionThe following table summarizes new vehicle market share information and our principal competitors in Brazil,our largest market in the South America segment:2024(1)2023(1)2022(1)AutomakerPercentage of industryStellantis(2)29.41.42.9%Volkswagen 16.6.4.3%GM 12.6.0.8%Ford 1.9%1.3%1.1%Other 39.45.97.0%Total 10000%BrazilYears ended December 31,_(1)Estimated market share data presented are based on managements estimates of industry sales data,which use data provided by ANFAVEA(Associao Nacional dos Fabricantes de Veculos Automotores)(2)Excluding MaseratiLeapmotor excluded from volumes and market share of the regionAutomotive industry volumes within the countries in the South America segment increased by 7 percent to 4 million units in 2024,which was primarily driven by Brazilian market growth of 14 percent,mainly due to improved credit conditions.The Argentinian market,on the other hand,recorded an 8.1 percent decline in sales volume in 2024.Stellantis maintained its market share leadership in South America even with the decrease of 0.6 percent from 23.5 percent in 2023 to 22.9 percent in 2024,as well as in Brazil and Argentina markets with 29.4 percent and 29.7 percent,respectively.FIAT is the brand leader in the region,maintaining its leadership position with a 14.5 percent market share in both 2023 and 2024.FIAT also led the pickup truck market in Brazil,with the Fiat Strada,Toro,and Titano,launched earlier this year(together represent an aggregate of 43.1 percent market share in the segment).Jeep achieved 4.9 percent of the total industry sales in Brazil with 12.9 percent market share in the SUV segment.28South America DistributionIn Brazil and Argentina,distribution is through dealers of each brand,although it is common for the same distributor to have several stores in order to offer different brands.In other countries,distribution is through multi-brands importers or dealers.South America Dealer and Customer FinancingIn the South America segment,we provide access to dealer and retail customer financing as well as rental products through captive finance companies and through strategic relationships with financial institutions.In Argentina,we have a 100 percent owned captive finance company,FCA Compaia Financiera S.A.(“FCA CF”)that offers dealer and retail customer financing for the former FCA brands.In December 2024,Fidis S.p.A signed an agreement with Banco BBVA Argentina S.A.(“BBVA”)for the disposal of 50 percent of FCA CF.This transaction is subject to regulatory approvals and other customary closing conditions.In addition,we have a 50 percent owned joint venture,PSA Finance Argentina Compaia Financiera S.A.,that offers dealer and retail customer financing and leasing services for the former PSA brands(with BBVA owning the other 50 percent).In Brazil,we have three 100 percent owned captive finance companies that offers dealer and retail customer financing and rental services with Banco Stellantis S.A.mainly focusing on dealer financing,Stellantis Financiamentos Sociedade de Credito,Financiamento e Investimento S.A.on retail financing and Stellantis Locadora de Automoveis Ltda on rental services.China and India&Asia PacificChina and India&Asia Pacific Sales and Competition The following table presents Stellantis vehicle sales and market share in the China and India&Asia Pacific segment:2024(1)(5)2023(1)(5)2022(1)(5)China and India&Asia PacificSales Market ShareSales Market ShareSales Market ShareThousands of units(except percentages)China(2)*48 0.2i 0.3 0.4%Japan 25 0.73 0.84 1.0%India(3)12 0.3 0.4 0.5%Australia 11 0.9 1.5 1.7%Asean&General Distributors(“AGD”)(4)11 0.3 0.3 0.6%South Korea 4 0.2%7 0.4%9 0.6%New Zealand 1 1.2%3 1.8%3 2.1%China and India&Asia Pacific major Markets 112 0.37 0.48 0.6%Other China and India&Asia Pacific 1%2%1%Total 113 0.39 0.49 0.5%Years ended December 31,_*Includes Hong Kong and Taiwan(1)Estimated market share information is derived from third-party industry sources of China&Asia Pacific countries(e.g.CADA and CPCA(China PC Domestic),CATARC(China PC Import),FCAI(Australia),SIAM(India PC),JADA and JAIA(Japan),MIA(New Zealand),IHS(Thailand),MAA(Malaysia)and internal information(2)Data include vehicles sold by our joint ventures in China for Stellantis brands(3)India market share is based on wholesale volumes(4)AGD includes Bangladesh,Brunei,Cambodia,French Polynesia,Indonesia,Laos,Malaysia,Myanmar,Nepal,New Caledonia,Philippines,Singapore,Sri Lanka,Thailand and Vietnam 29(5)Sales reflect retail deliveries.China and India&Asia Pacific industry reflects aggregate for major markets where the Company competes(China(PC),Japan(PC),India(PC),South Korea(PC and Pickups),Australia,New Zealand and AGD).Market share is based on retail/registrations except,as noted above,in India where market share is based on wholesale volumesMaserati excluded from volumes and market shareLeapmotor excluded from volumes and market share of the regionIn 2024,23.9 million vehicles were sold in China,which represents a 4.7 percent year-over-year increase.The automotive industry grew by 4.8 percent in India due to new model launches from local OEMs lifting the market,dropped 6.7 percent in Japan due to local OEM regulatory issues,2 percent increase in Australia coming from a strong sales increase in hybrid models,decreased 4.4 percent in South Korea due to sales decline from local brands and New Zealand decreased by 13.9 percent due to the withdrawal of government incentives.The automotive industry in AGD experienced a sales decrease of 5.6 percent due to economic slowdown in key markets during the year.We sell a range of vehicles in the China and India&Asia Pacific segment,including small and compact cars,premium mid-size cars,UVs and light CVs.Although our smallest segment by vehicle sales,the China and India&Asia Pacific segment represents a significant growth opportunity and we are invested in building relationships with key partners in India to increase our manufacturing footprint and presence in the region.In the China and India&Asia Pacific segment we also distribute vehicles that are manufactured in the U.S.and Europe through our dealers and distributors.China and India&Asia Pacific DistributionIn the key markets in the China and India&Asia Pacific segment(China,Australia,India,Japan,South Korea and AGD),Stellantis vehicles are sold by our 100 percent owned subsidiaries or through DPCA to local independent dealers.Dongfeng Peugeot Citron Automobile Sales Co(“DPCS”)markets the vehicles produced by DPCA under various license agreements in China,and a Stellantis fully-owned national sales company in China operates and manages the import vehicles sales in China(except Maserati).We also operate through national sales companies in Australia,Japan,India,Malaysia and South Korea.In AGD and smaller markets,we have agreements with general distributors.China and India&Asia Pacific Dealer and Customer FinancingIn China,we operate 100 percent owned finance and lease companies,Stellantis Automotive Finance Co.,Ltd and,since April 2023,following the finalization of an equity transfer agreement with Dongfeng,Stellantis Leasing Services Co Ltd.These entities allow us to support our sales activities in China offering to our dealer networks and retail and commercial customers,a full range of wholesale and retail financing as well as financial and operational leasing products.Cooperation agreements are also in place with third-party financial institutions to provide dealer network and retail customer financing in India,South Korea,Australia and Japan.MaseratiThe following table shows the distribution of Maserati sales by geographic regions and as a percentage of total sales for each of the years ended December 31,2024,2023 and 2022:2024 SalesAs a percentage of 2024 sales2023 SalesAs a percentage of 2023 sales2022 SalesAs a percentage of 2022 salesU.S./Mexico 4,807 32.6%7,907 29.6%6,945 29.7%Europe top 4(1)3,733 25.4%6,035 22.6%5,442 23.3%China 1,209 8.2%4,367 16.4%4,680 20.0%Japan 1,102 7.5%1,729 6.5%1,238 5.3%Other countries 3,874 26.3%6,651 24.9%5,099 21.8%Total 14,725 100.0&,689 100.0#,404 100.0%_(1)Italy,United Kingdom,Germany and SwitzerlandChina includes Hong KongU.S.includes Mexico and Puerto RicoIn 2024,a total of 14.7 thousand Maserati vehicles were sold,a decrease of 12 thousand units compared to 2023.This result is mainly influenced by lower Grecale volumes,reduced appetite for western OEM luxury products in China,the 30impact of a reduction in the portfolio,as three nameplates ended production at the end of 2023,and the impact of inventory reduction initiatives.In Europe,depending on the country,access to dealer and customer financing for Maserati vehicles are either through joint ventures with BNPP PF or with SCF.In China,our 100 percent owned captive finance companies,Stellantis Automotive Finance Co.Ltd and Stellantis Leasing Services Co Ltd.provide dealer and retail financing and financial and operational leasing products.In the U.S.,JPMorgan Chase Bank is the main financial services provider to retail customers,complemented also by SFS U.S.In other regions,we rely on local agreements with financial services providers for the financing of Maserati brand vehicles to dealers and end customers.Cyclical Nature of the Business As is typical in the automotive industry,Stellantis vehicle sales are highly sensitive to general economic conditions,availability of low interest rate vehicle financing for dealers and retail customers and other external factors,including fuel prices,and as a result could vary substantially from quarter to quarter and year to year.Retail consumers tend to delay the purchase of a new vehicle when disposable income and consumer confidence is low.Moreover,increases in inflation may lead to subsequent increases in the cost of borrowing and availability of affordable credit for vehicle financing,which may further influence retail consumers to delay the purchase of a new vehicle.In addition,Stellantis vehicle production volumes and related revenues could vary from month to month,sometimes due to plant shutdowns,which could occur for several reasons including raw material or component unavailability,production changes from one model year to the next and actions to balance vehicle supply and demand fluctuations and also to adjust dealer stock levels appropriately.Plant shutdowns,whether associated with model year changeovers or other factors such as temporary supplier interruptions,could have a negative impact on Stellantis revenues and working capital as Stellantis continues to pay suppliers under established terms while Stellantis would not receive proceeds from vehicle sales.Refer to“Liquidity and Capital ResourcesLiquidity Overview”included elsewhere in this report for additional information.Legal ProceedingsTakata Airbag InflatorsPutative class action lawsuits were filed in March 2018 against FCA US,a wholly owned subsidiary of Stellantis,in the U.S.District Courts for the Southern District of Florida and the Eastern District of Michigan,asserting claims under federal and state laws alleging economic loss due to Takata airbag inflators installed in certain of our vehicles.The cases were subsequently consolidated in the Southern District of Florida.In November 2022,the Court granted summary judgment in FCA USs favor against all claimants except those in Georgia and North Carolina.Plaintiffs were granted leave to file an amended complaint to add additional states to the pending action.Plaintiffs appeal of the grant of summary judgement was dismissed by the Court for lack of jurisdiction.In May 2024,the Court entered an order to allow FCA USs renewed motions for summary judgment to address the remaining amended claims.In June 2023,the Court entered an order preliminarily granting class certification for the amended complaint.In July 2023,the Court revisited its class certification order and further narrowed the classes based on a recent Court of Appeals decision.FCA US appeal of the Courts preliminary order was denied.EmissionsWe face class actions and individual claims alleging emissions non-compliance in several countries.Several former FCA and PSA companies and Dutch dealers have been served with class actions in the Netherlands by Dutch foundations seeking monetary damages and vehicle buybacks in connection with alleged emissions non-compliance of certain vehicles equipped with diesel engines.We have also been notified of a potential class action on behalf of Dutch consumers alleging emissions non-compliance of certain former FCA vehicles sold as recreational vehicles,and are subject to a securities class action in the Netherlands,alleging misrepresentations by FCA.Class actions alleging emissions non-compliance has also been filed and are on-going in Portugal regarding former FCA vehicles,in the UK regarding former FCA and PSA vehicles,and in Israel regarding former PSA vehicles.We are also defending approximately 4,000 pending individual consumer claims alleging emissions non-compliance in Germany and approximately 60 individual consumer cases in Austria relating to former FCA vehicles.31The results of the private litigation matters described above cannot be predicted at this time and may lead to damage awards which may have a material adverse effect on our business,financial condition and results of operations.It is also possible that these matters and their ultimate resolution may adversely affect our reputation with consumers,which may negatively impact demand for our vehicles and consequently could have a material adverse effect on our business,financial condition and results of operations.General Motors In November 2019,General Motors LLC and General Motors Company(collectively,“GM”)filed a lawsuit in the U.S.District Court for the Eastern District of Michigan against FCA US,FCA N.V.,now Stellantis N.V.,and certain individuals,claiming violations of the Racketeer Influenced and Corrupt Organizations(“RICO”)Act,unfair competition and civil conspiracy in connection with allegations that FCA US made payments to The International Union,United Automobile,Aerospace and Agricultural Implement UAW officials that corrupted the bargaining process with the UAW and as a result FCA US enjoyed unfair labor costs and operational advantages that caused harm to GM.GM also claimed that FCA US had made concessions to the UAW in collective bargaining that the UAW was then able to extract from GM through pattern bargaining which increased costs to GM and that this was done by FCA US in an effort to force a merger between GM and FCA N.V.The court dismissed GMs lawsuit with prejudice and the U.S.Court of Appeals for the Sixth Circuit subsequently affirmed the dismissal of GMs complaint.In April 2023,the U.S.Supreme Court declined to grant review of the Sixth Circuits decision,which finally resolved the federal court case.Following dismissal of its Federal court case,GM filed an action against FCA US and FCA N.V.,now Stellantis N.V.,in Michigan state court,making substantially the same claims as it made in the federal litigation.In October 2021,the court granted Stellantis N.V.and FCA USs motion for summary disposition.GM filed a motion for reconsideration and in December 2021,the court granted GMs motion,permitting GM to amend its complaint.GM filed a second amended complaint in December 2021.In May 2022,the court denied FCA USs motion for summary disposition and permitted discovery to proceed against FCA US.In July 2022,the court granted Stellantis N.V.s motion for summary disposition,but in November 2022 the court granted GMs motion for reconsideration and permitted jurisdictional discovery to proceed against Stellantis N.V.The case is currently stayed while the Michigan Court of Appeals considers certain trial court rulings regarding privilege.2024 Financial GuidanceIn August 2024,a putative securities class action complaint was filed in the U.S.District Court of the Southern District of New York against Stellantis N.V.and certain of its former officers,alleging that the defendants made material misstatements relating to the Companys 2024 financial guidance.Government InquiriesEmissionsWe are subject to criminal and civil governmental investigations alleging emissions non-compliance in certain European jurisdictions and we continue to cooperate with these investigations.As part of the judicial investigation of several automakers in France,commencing in 2016 and 2017,Automobiles Peugeot and Automobiles Citron were placed under examination by the Judicial Court of Paris in June 2021 on allegations of consumer fraud in connection with the sale of Euro 5 diesel vehicles in France between 2009 and 2015.In July 2021,FCA Italy(now known as Stellantis Europe)was placed under examination by the same court for possible consumer fraud in connection with the sale of Euro 6 diesel vehicles in France between 2014 and 2017.As is typical in a French criminal inquiry,each of the companies were required to pay bail for the potential payment of damages and fines and to ensure representation in court,and to provide a guarantee for the potential compensation of losses.None of these amounts were,individually or in aggregate,material to the Company.Civil parties have joined the prosecutors case and may seek further compensation.In May 2023,the German authority,Kraftfahrt-Bundesamt(“KBA”)notified Stellantis of its investigation of certain Opel Euro 5,Fiat Euro 5 and Euro 6 vehicles and its intent to require remedial measures based on the alleged non-compliance of the diesel engines in certain of those vehicles.The KBA subsequently expanded its inquiry to include Euro 5 and Euro 6 engines used in certain Alfa Romeo,Fiat and Jeep vehicles,as well as Suzuki vehicles equipped with diesel engines supplied 32by FCA Italy and requested information relating to all Stellantis vehicles that may make use of strategies similar to those allegedly used by the identified vehicles.In January 2024,the KBA advised that the Opel vehicles,equipped with Euro 5 engines,are non-compliant.At the KBAs request,during the first half of 2024,Opel submitted a plan to bring the vehicles into compliance.In July 2024,Opel received a formal decision of non-compliance from the KBA regarding its vehicles equipped with Euro 5 diesel engines.Although we objected to this formal decision,we continue to cooperate with the KBA inquiries and,at this stage,we are unable to reliably evaluate the likelihood that a loss will be incurred or estimate a range of possible loss.Given the number of vehicles potentially involved,however,the cost of any recall,and the impact that any recall could have on related private litigation,may be significant.In December 2019,the Italian Ministry of Transport(“MIT”)notified FCA Italy of communications with the Dutch Ministry of Infrastructure and Water Management(“I&W”)regarding certain irregularities allegedly found by the RDW and the Dutch Center of Research TNO in the emission levels of certain Jeep Grand Cherokee Euro 5 models and a vehicle model of another OEM containing a Euro 6 diesel engine supplied by FCA Italy.In January 2020,the Dutch Parliament published a letter from the I&W summarizing the conclusions of the RDW regarding those vehicles and engines and indicating an intention to order a recall and report their findings to the Public Prosecutor,the European Commission(“EC”)and other member states.FCA engaged with the RDW to present our positions and cooperate to reach an appropriate resolution of this matter.FCA Italy proposed certain updates to the relevant vehicles that have been tested and approved by the RDW and are now being implemented without further concerns being raised by RDW.In July 2020,unannounced inspections took place at several of FCAs sites in Germany,Italy and the UK at the initiative of the Public Prosecutors of Frankfurt am Main and of Turin,as part of their investigations of potential violations of diesel emissions regulations and consumer protection laws.In April 2022,former FCA companies received an order to produce documents to the Public Prosecutors.In October 2022,inspections took place at the Italian offices of FCA Italy and Maserati and at the German office of Maserati Deutschland.At the Public Prosecutor of Turins request,the Italian proceedings were dismissed in September 2023 and October 2023.We continue to participate in discussions with the Public Prosecutor of Frankfurt to resolve this matter regarding former FCA vehicles and,based on the status of those discussions,we have recognized a provision in an amount that is not material to the Company.In January 2024,the EC notified the MIT of the alleged non-compliance of Fiat Ducato Euro 5 and Euro 6 vehicles based on tests performed at the ECs request.We are cooperating with the MIT in its substantive responses to EC.End of Life VehiclesIn March 2022,the EC and the UK Competition and Markets Authority(the“CMA”)conducted unannounced inspections at the premises of Opel and several other companies and associations active in the European automotive sector.These inspections,as well as contemporaneous and subsequent information requests received from the EC and CMA,relate to potential collusion in the collection,treatment,and recovery of end-of-life vehicles and whether such activity may have violated relevant competition laws.We continue to cooperate with these investigations.33 Environmental and Other Regulatory MattersAt Stellantis,we engineer,manufacture and sell our products and offer our services around the world,subject to regulatory requirements applicable to our products that relate to vehicle emissions,fuel economy,emission control software calibration and on-board diagnostics and vehicle safety,as well as those applicable to our manufacturing facilities that relate to stack emissions,the management of waste,water and hazardous materials,prohibitions on soil contamination,and worker health and safety.Our vehicles and the propulsion systems that power them must also comply with extensive regional,national and local laws and regulations(including those that regulate end-of-life vehicles(“ELVs”)and the chemical content of our parts).Compliance with the range of regulatory requirements affecting our facilities and products involves significant costs and risks.We consistently monitor the relevant global regulatory requirements affecting our facilities and products and adjust our operations and processes as we seek to remain in compliance although,in certain exceptional circumstances,we may from time to time fail to meet a particular regulatory requirement.For a discussion of the environmental and other regulatory-related risks we face,refer to“Risk Factors-Risks Related to the Legal and Regulatory Environment in which We Operate.”included elsewhere in this report for additional information.Automotive Tailpipe EmissionsNumerous laws and regulations place limits on vehicle emissions,including standards on tailpipe exhaust emissions and evaporative emissions.These standards govern a category of emissions called“criteria emissions”that does not include greenhouse gases(“GHGs”).Related laws impose requirements on how vehicles emission control systems are designed to ensure emissions are controlled in normal,real driving conditions,as well as requirements to employ diagnostic software to identify and diagnose problems with emission control components,which if undiagnosed could lead to higher emissions.This diagnostic software is called an on-board diagnostic system(“OBD”).Regulations also require manufacturers to conduct vehicle testing to demonstrate compliance with these emissions limits for the useful life of a vehicle.These requirements become more challenging each year,especially in light of increased scrutiny of emission control systems for internal combustion engines,and we expect these emissions and requirements will continue to become even more stringent worldwide.North America RegionThe U.S.Environmental Protection Agency(“EPA”)has established federal Tier 4 emissions standards and CARB has adopted Low Emission Vehicle(“LEV”)IV emission standards.EPA and CARB both review manufacturers emission control software design as part of their emission certification evaluation,whereas EPA has delegated the administration of OBD software requirements to CARB.In addition to its LEV III emissions standards,CARB regulations also require that a specified percentage of cars and certain light-duty trucks sold in California qualify as zero emission vehicles(“ZEV”),such as electric vehicles,hybrid electric vehicles or hydrogen fuel cell vehicles.Advanced Clear Car II Regulations(“ACC II”)requires that ZEV sales increase to 100 percent of new vehicle sales by the 2035 model year.Other states have adopted or are in the process of adopting CARB standards.Similarly,Quebec has amended its light-duty regulations to require that ZEV sales increase to 100 percent of new vehicle sales by the 2035 model year.EPA and CARB have also set heavy-duty vehicle criteria emissions standards.CARBs Omnibus Low NOx regulation took effect for 2024 model year and reflects a 75 percent reduction in NMOG NOx from prior levels,with a further reduction in 2027 m
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1DR.ING.H.C.F.PORSCHE AGS T U T TG A R T,M A R C H 1 22Disclaimer2This presentation contains forward-looking statements and information that reflect Dr.Ing.h.c.F.Porsche AGs current views about future events.These statements are subject to many risks,uncertainties,and assumptions.They are based on assumptions relating to the development of the economic,political,and legal environment in individual countries,economic regions,and markets,and in particular for the automotive industry,which we have made on the basis of the information available to us and which we consider to be realistic at the time of publication.If any of these risks and uncertainties materializes or if the assumptions underlying any of the forward-looking statementsprove to be incorrect,the actual results may be materially different from those Porsche AG expresses or implies by such statements.Forward-looking statements in this presentation are based solely on the circumstances at the date of publication.We do not update forward-looking statements retrospectively.Such statements are valid on the date of publication and can be superseded.This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.3Porsche A unique Story911 GT3 RS:Fuel consumption combined:13,2 l/100 km;CO emissions combined(WLTP):299 g/km;CO class:G3SUSTAINABLELUXURYICONICBRANDRESILIENTPERFORMANCEPERFORMANCECULTURE4 401PORSCHE 202402PORSCHE A UNIQUE STORY03BRAND&CUSTOMER04PRODUCT&INNOVATION05SUSTAINABILIT Y06TRANSFORMATION07FINANCIALS5015PORSCHE 20246 67Porsche Product Year 2024NEWNEWNEWNEWNEW78Cayenne E-Hybrid(WLTP):Fuel consumption weighted(PHEV model range):1,8-1,5 l/100 km;Fuel consumption cobined(sustaining)(model range):10,9-10,0 l/100 km;Electrical consumption combined(weighted)(model range):308-286 Wh/km;CO Emissions weighted combined(range):42-33 g/km;CO Class weighted combined:B;CO Class with discharged battery:G;Cayenne Turbo E-Hybrid(WLTP):Fuel consumption weighted(PHEV model range):2,0-1,7 l/100 km;Fuel consumption cobined(sustaining)(model range):12,1-11,3 l/100 km;Electrical consumption combined(weighted)(model range):317-300 Wh/km;CO Emissions weighted combined(range):45-39 g/km;CO Class weighted combined:B;CO Class with discharged battery:G891 kmCayenne E-Hybrid up toE-range WLTP(EAER city)HD matrixHeadlights739 PSMax.system powerCayenne Turbo E-Hybrid up to 544 kW Awards 2024(Ranked#1)9Panamera 4 E-Hybrid(WLTP):Fuel consumption weighted(PHEV model range):1,4-1,0 l/100 km;Fuel consumption cobined(sustaining)(model range):10,3-9,2 l/100 km;Electrical consumption combined(weighted)(model range):276-254 Wh/km;CO Emissions weighted combined(range):32-23 g/km;CO Class weighted combined:B;CO Class with discharged battery:GPanamera Turbo S E-Hybrid(WLTPFuel consumption weighted(PHEV model range):1,6-1,4 l/100 km;Fuel consumption cobined(sustaining)(model range):11,5-10,8 l/100 km;Electrical consumption combined(weighted)(model range):293-274 Wh/km;CO Emissions weighted combined(range):36-31 g/km;CO Class weighted combined:B;CO Class with discharged battery:G996 kmPanamera 4 E-Hybrid up toE-Range WLTP(EAER city)782 PSMax.System OutputPanamera Turbo S E-Hybrid up to 575 kW Awards 2024(Ranked#1)Active RideHighend-Suspension Porsche 10Taycan:Electrical consumption combined(WLTP):20,0-16,7 kWh/100 km;CO-emissions combined(WLTP):0 g/km;CO Class:ATaycan Turbo S:Electrical consumption combined(WLTP):20,5-17,9 kWh/100 km;CO-emissions combined(WLTP):0 g/km;CO Class:A10678 kmTaycan up toWLTP Range952 PSPeak Performance Launch ControlTaycan Turbo S up to 700 kWAwards 2024(Ranked#1)18 minCharging Speed 10-80%SoC11Taycan Turbo GT with Weissachpackage(WLTP):Electrical consumption combined(WLTP):21,3-20,6 kWh/100 km;CO-emissions combined(WLTP):0 g/km;CO Class:A11305 km/hUp to Top speed1,108 PSPeak Performance Launch Control Up to 815 kW Awards 2024(Ranked#1)2.2 s 0-100 km/h WITH WEISSACH PACKAGE 12Macan:Fuel consumption combined:10,7-10,1 l/100 km;CO-emissions combined(WLTP):243-228 g/km;CO Class:GMacan Turbo:Electrical consumption combined(WLTP):20,7-18,9 kWh/100 km;CO-emissions combined(WLTP):0 g/km;CO Class:A12641 kmMacan up to Range639 PSLaunch ControlMacan Turbo up to 470 kWAwards 2024(Ranked#1)3.3 sMacan Turbo 0-100 km/h 13911 Carrera GTS:Preliminary Fuel consumption combined:11,0-10,5 l/100 km;Preliminary CO-emissions combined(WLTP):251-239 g/km;Preliminary CO Class:G13312 km/hUp toTop speed541 PSUp to 398 kWAwards 2024(Ranked#1)3.0 s0-100 km/hCARRERA GTS1414Historically successful Motorsport season 2024FORMULA EWECIMSADrivers Championship1Team&Manufacturer1Drivers Championship1Team&Manufacturer2Drivers Championship1Manufacturer2150215PORSCHE A UNIQUE STORY16We continue to build on the core elements of our long-term strategyCUSTOMERPRODUCTSUSTAINABILITYTRANSFORMATIONStrategy 2030PLUSQUALITY17We have a strong foundation CUSTOMERPRODUCTSUSTAINABILITYStrong Customer BaseUnique CommunityGlobal Sales CoverageDesirable ProductsBalanced Drivetrain OfferingPerformance&MotorsportsStrong BrandHeritage&ExclusivityCustomer Loyalty1718TOP 10 MOST VALUABLE LUXURY AND PREMIUM BRANDS 2025Porsche as a leading luxury brandSource:Brand Finance Luxury&Premium 50 2025|Link:https:/ balanced geographical footprint1 Based on former Porsche SE fiscal year ended July 2008|2 Includes Africa,Asia(excl.China),Australia,Middle East,South America and Mexico|3 China includes Mainland China and Hong Kong|4 North America includes USA and CanadaGEOGRAPHIC EXPANSIONREGIONAL DELIVERY MIX18%Overseas and Emerging Markets228%North America436%Europe18%China3F Y 20081100 kVehicles Delivered34%North America419%Overseas and Emerging Markets240%Europe7%China313%Overseas and Emerging Markets226%North America429%Europe32%China3GEOGRAPHIC BALANCEF Y 2021300 kVehicles DeliveredF Y 2024310 kVehicles Delivered20Strong Average Sales Price Development based on Price,Mix and Value over VolumeVehicle sales,in the Porsche AG Group are designated as those sales of new and group used vehicles of the Porsche brand,which have left the automotive segment for the first time,provided there is no legal repurchase obligation by a company in the automotive segment.CAGR 4 19202497k117kPRICEMIXVALUE OVER VOLUME20Automotive Sales Revenue per vehicle sold21We continuously adapt our strategy to respond to the new situation with the greatest possible flexibilityStrategy 2030PLUSCUSTOMERPRODUCTSUSTAIN-ABILITYTRANS-FORMATIONGEOPOLITICAL TENSIONSBEV ADAPTIONSUPPLY CHAIN21QUALITY220322BRAND&CUSTOMER23ITS NOT WHAT YOU BUY,ITS WHAT YOU BUY INTO.Holistic Brand Experience as Top Priority2324360 CUSTOMER EXPERIENCEUnique Porsche Design Covers All Customer Touchpoints 25DESIRABILITYINDIVIDUALISATIONSPECIAL EDITIONSElevate Individualisation Experience2526BESPOKEPRE-DEFINEDO P T I O N SE Q U I P M E N TC L A S S I CPA R TSOFFER STRUCTUREIndividualisation&ClassicV E H I C L E S27BESPOKECLASSIC&RESTORATIONONE-OFFSSONDERWUNSCHIndividualisation&Classic2728EXCLUSIVE MANUFAKTURIndividualisation&ClassicV E H I C L E SMARKET LIMITED VEHICLESGLOBAL LIMITED VEHICLES29EXCLUSIVE MANUFAKTURIndividualisation&ClassicO P T I O N SEXTERIOR DESIGNINTERIOR DESIGNPAINT TO SAMPLEPanamera Turbo S E-Hybrid:Fuel consumption weighted(PHEV model range):1,6-1,4 l/100 km;Fuel consumption cobined(sustaining)(model range):11,5-10,8 l/100 km;Electrical consumption combined(weighted)(model range):293-274 Wh/km;CO2 Emissions weighted combined(range):36-31 g/km;CO2 Class weighted combined:B;CO2 Class with discharged battery:G2930EXCLUSIVE MANUFAKTURIndividualisation&ClassicE Q U I P M E N TCHARGINGUTILITYACCESSORIES31STRATEGY EVOLUTIONIndividualisation&Classic1.0REALIGNMENT3.0FULL POTENTIAL2025202320192.0UPSCALINGLets start the engine!Lets shift upwards!Lets32S C A L E E X I S T I N G I N D I V I D UA L I S AT I O N O F F E RC R E AT E N E W E X P E R I E N C E SM A X I M I S E I M PA C T O N B R A N DINDIVIDUALISATION&CLASSIC UPSCALING STRATEGY 3 times more SONDERWUNSCH PROJECTSSONDERWUNSCH EXPERIENCES as aWORLDWIDE offer33DEVELOPMENT OF AVERAGE TURNOVER FROM EXCLUSIVE MANUFAKTUR PER CAR(ILLUSTRATIVE)The average revenue from Exclusive Manufaktur options per car in 2024 continued the previous growth trend201920202021202220232024PROJECTION 100% 7%REALIGNMENTUPSCALINGFULL POTENTIAL34The current wait times for the SONDERWUNSCH products reflect the high demand and indicates the sales potentialONE-OFFS 8 YEARSRESTORATION 2 YEARSBESPOKE 1 YEARRE-COMMISSION 2 YEARSPAINT TO SAMPLELIMITED AVAILABILITYPRODUCT OFFERWAITING TIME&RESTRICTIONS35HOME OFINDIVIDUALISATION&CL ASSICExploiting the strong potential of Individualisation with a clear focus on exclusivity Paint to Sampleeven more“Halo-Vehicles“COREHERITAGEOFFROAD,Vehicles2024Vehicles2030Turnover per vehicle2024Turnover per vehicle2030Vehicles2024Vehicles2030363604PRODUCT&INNOVATION37Unique Product IDs While Keeping a Strong Brand ID BRAND IDENTITYRecognize,that it is a PorschePRODUCT IDENTITYRecognize,which Porsche it is3738Balanced offering of combustion engines,plug-in hybrids and purely electric drives well into the 2030s38ICEHYBRIDBEV39-ILLUSTRATIVE-Increasing our high flexibility for the transition period#model range#expected sales#model range#expected salesExtented and improved offering well into the 2030s incl.modernized E/E-architecture Broadening offering incl.selective portfolio expansionsStrengthening Porscheexclusive portfolioStrengthening BEV offering incl.modernized E/E-architecture Further development of Porsche BEV sports car identity and strengthening Porsche exclusive portfolioActive contribution to removingBEV-Market barriersINCREASING FLEXIBILITY DURING TRANSITIONWINNING THE LUXURY BEV RACEprevious planning current planningExpected effect of the measures takenICE/HEVBEVCurrently stronger andlonger-term ICE/HEVdemand than forecastedCurrently weakerBEV demandthan forecasted40Porsche derivative strategy with focus on a high level of exclusivity CORETRACKSTYLEPIONEER41Joint strategic technology development in the VW group ensures synergies and speed in the futureDIFFERENTIATING PORSCHELEVERAGING VOLKSWAGEN GROUP ECOSYSTEM&SCALEExclusive&performance experienceUnique&differentiating value propositionPorsche specific technologiesPorsche specific partnershipsJoint development&use of technologyBenefitting from purchasing powerStandardized technologiesLarge scale effects42A high-performance architecture is the key to future competitivenessWe are aiming for a Software Defined VehicleContinuous improvement through over-the-air updatesEnhanced securityComfort through connectivitySustainability&efficiencyPersonalized user experienceFuture readiness&flexibility43Meet our future BEV-architecture from the new joint ventureNew BEV-Architecture 50/50 Joint Venture of the VW Group and Rivian 2 Co-CEOs from VW Group and RivianHigh-performance&future-proof technology100cess to the developed hardware&softwareLow costs due to economies of scaleFast development based on industrialized architecture444405SUSTAINABILITY45Sustainability Strategic Pillars01020304050646In challenging times Porsche keeps on striving for decarbonisation of its value chain1 For example the use of renewable energy in the vehicle use phase|2 The Code of Conduct for Business Partners requires direct business partners of Porsche to take appropriate actions to reduce air emissions,including greenhouse gas emissions.In addition,they must also work towards reducing greenhouse gas emissions in their upstream supply chain,for example by increasing the use of renewable energy sources.Actions must also be taken to ensure that energy is used as efficiently as possible.|3 For example electricity from renewable energy sources such as solar,wind or hydropower and biomethane.|4 The goal of Porsche is to continuously reduce its emissions along the value chain of its vehicles while also making increasingly efficient use of energy in the companys own business activity.|5 Realizing Porsches ambition depends upon various factors,e.g.technological progress that has not yet been fully developed,and also on regulatory or economic developments that are outside the Porsche AG Groups direct control and may therefore not be realizable.Porsche monitors the individual global markets closely and continuously reviews its product strategy and product range structure for vehicles,including the drive types offered,depending on their development.It intends to pursue the target of a 1.5C reduction pathway as long as possible.VEHICLE PRODUCT STRATEGYIncreasing the proportion of electrified vehicles in the production portfolio,particularly in combination with actions in the use phase1SUPPLY CHAIN Demand for direct suppliers to use renewable energy in manufacturing processes for vehicle components2 Increasing use of more environmentally sustainable materials in vehiclesVEHICLE PRODUCTIONRenewable energies3 at Porsches own vehicle production and development sitesVEHICLE USE PHASE Renewable energies in the use phase Continuous increase in vehicle efficiencyASPIRATIONReduce the impact of the own activities on the environment and climate along the value chain of the vehicles.4AMBITIONMake an active contribution to limiting the rise in the global average temperature to a maximum of 2C compared to pre-industrial levels and,pursue efforts to limit the increase to 1.5C.547Being responsible.The new all-electric Macan1 Find more information on https:/ Turbo:Electrical consumption combined:20.7 18.9 kWh/100 km;CO emissions combined:0 g/km;CO class:A47PRODUCTION02Porsche reduces CO emissions during production of the Macan in Leipzig by using electricity from 100%renewable energy and largely meeting heating requirements with renewable energy.1USE PHASE03Porsche is supporting the development of wind and solar energy plants to cover the expected electricity demand of the Macan fleet based on a driving distance of 200,000 km at WLTP consumption.1RECYCLING04Porsche takes a resource-conserving approach to handling raw materials for high-voltage batteries.To pursue this,a dedicated repair concept was introduced,and an investment was made in a recycling company.1SUPPLY CHAIN01Porsche has taken measures to reduce the Macans CO emissions in the supply chain.This is why,for example,CO-reduced aluminum and electricity from renewable energy are used.148Porsche as a responsible Partner to Society1 The donation total for the reporting year also includes a donation in kind of around 2 million.PROMOTING SAFE WORKPorsche wants to support people along the vehicle value chain and advocates for responsible and safe working conditions.This includes occupational healthand safety and ensuring sustainable livelihoods.PROMOTING SAFE WORKFulfilling peoples dreams is a matter close to the heart of Porsche.Education and integration in particular aim to strengthen self-realization and secure prospects for the future.Porsche aims to specifically engage and support young people via sports projects.ENABLING A SELF-DETERMINED LIFEParticularly in the Global South,Porsche wants to help people secure their future livelihoods and lead a self-determined life.CORPORATE CITIZENSHIP INITIATIVES Intended to achieve long-term sustainable social added value in the aforementioned areas of impact.They aim to facilitate opportunities,participation and prospects and improve the lives of disadvantaged people.FUNDING PROJECTS 2024 Porsche sponsored 117 projects with a total of 9.8 million1,many of which it has been supporting for years.CREATING CHANCES492024 ACTUALS VS.TARGETPorsche exceeded the targets for the statutory gender quota2024 ACTUALS2024 TARGET22.0 .0%First management level18.8.0%Second management level50OVERVIEW OF RECENT RATING RESULTSExternal assessment of Sustainability Performance1 Scale D-to A (best),score as at date:12/03/2024 l 2 inverse scale 100 to 0(best),last full update 12/20/2024 l 3 scale CCC to AAA(best),rating action date:10/29/2024,4 Update 02/2025,scala D-to A(best)20241 C (PRIME)2 18.3(LOW RISK)3 BBA-4515106TRANSFORMATION52Porsche has only remained Porsche by constantly changingOLIVER BLUME Adaptability a key element in our Porsche performance cultureAGILIT YFlexibility and adaptabilityPIONEERING SPIRITInnovation and entre-preneurial mentalityPASSIONEnthusiasm andengagementONE FAMILYStrong team and attractive employerPERFORMANCE CULTURE A STRONG DRIVER FOR OUR FUTURE SUCCESS53Road to 20 as continued enabler for profitability resilience Continuation of Road to 20 as performance program with general,long-term,strategic ambition of 20%RoSRefocus of Road to 20 to strengthen resilience in challenging timesEmphasis now on sustainable optimisation of the cost structure,e.g.Personnel costs China rightsizing54Regulatory framework of rescaling on employee sideImmediate measures for personnel costsAgreement for the implementation of socially responsible staff reductionsSecuring the production program 20252025 MEASURESSTRUCTURAL PACKAGESustainable adaptation of personnel costsReview of the overall alignment of PAG&focus on core competenciesFlexibilization&optimisationof corporate structureI N N E G OT I AT I O NSTRUCTUREQUANTITYCOSTS55Socially responsible measures to optimise corporate structure and strengthening future resilience 1)Full Time Equivalent;Porsche AG 2)Sonder-ATZ=Special phased retirement programDEVELOPMENT OF POSITIONS&FTE1MEASURES010203Restrictive hiringSonder-ATZ“2 programUtilizing demografics202420292028202720262025FTE-Forecast56Our China strategy builds on three focus areas derived from our global strategyPRODUCT&SERVICESCUSTOMER&BRANDORGANISATION&EFFICIENCY5715001/202401/202501/2027144 1003101/202401/20272501/2024Q1/2025 450 40001/2024Q1/2025 200 100#Point of Sales#Investors#Internal Core Employees(FTE)1#External EmployeesFirst milestones of recalibrating our Chinese footprint have already been reachedNETWORK RECALIBRATIONINTERNAL REORGANIZATION 1)Without adjacent affiliates as PMAP,PDIG China,E-Satellite,B-Satellite,PLX58Potential Midterm Drivetrain Portfolio:LeipzigZuffenhausenBratislavaPanameraMacan911CayenneTaycanCayenne CoupTaycan CUV/STOsnabrck(until Q3 2025)718 Cayman718 BoxsterMacan electricCurrent Lean Production Footprint58MalaysiaCayenneWITH FULL FLEXIBILITY TO RESPOND TO FUTURE CUSTOMER DEMAND.BEVHEVICE59Porsche has implemented various measures to manage supply chain risks for production material 80.000Parts&Components2.000 Tier 1 Suppliers for production materialSupply Chain TransparencyEnhanced Cyber Security ConceptsArtificial IntelligenceMaterial Group StrategyRolling Review for New RisksMEASURES FOR TOP MATERIAL GROUPSRISK RADARRaw MaterialNatureEnergyPoliticsHRCurrencyTechnology/IPManipulation/AggressivenessLogisticsSUPPLY CHAIN RISK RADARFor all new components600760FINANCIALS61DESPITE CHALLENGING CONDITIONS AND ELEVATED SPENDINGPorsche AG Strong Top Line and Solid PerformanceTOPICMESSAGE2024GROUPEven under challenging conditions,Porsche is financially robust with a strong cash conversion benefiting from our“value over volume”approach and continued strong customer demand2024 AUTOMOTIVEPorsche successfully implemented the largest model offensive in its history and pushed ahead with the development of innovative products and services2025OUTLOOKPorsche has launched extensive measures,which are significantly impacting the 2025 performance 2025AUTOMOTIVEOUTLOOKIn view of the changing framework and global challenges,Porsche will invest in the product portfolio,software and our exclusive business to increase the companys profitability and business resilience in the mid and long-term62FINANCIAL PERFORMANCE OVERVIEW 2024Group and Automotive1 Not among most important performance indicatorsGROUP SALES REVENUE(-1.1%compared to previous year)GROUP RETURN ON SALES(-390 bps compared to previous year)GROUP OPERATING PROFIT1(-22.6%compared to previous year)AUTOMOTIVE EBITDA MARGIN(8.3 bn Automotive EBITDA)AUTOMOTIVE NET CASH FLOW MARGIN(3.7 bn Automotive Net Cash Flow)BEV SHARE(-10 bps compared to previous year)63AUTOMOTIVE OPERATING PROFIT(Automotive RoS 14.5%)AUTOMOTIVE NET LIQUIDITY( 18.6%compared to previous year)AUTOMOTIVE RESEARCHAND DEVELOPEMENT COSTS(6.9%of Automotive Sales Revenue)AUTOMOTIVE CAPITALEXPENDITURE(5.8%of Automotive Sales Revenue)RETURN ON INVESTMENTS(-670 bps compared to previous year)FINANCIAL PERFORMANCE OVERVIEW 2024Group and Automotive642023 VS.2024Group Sales Revenue and Operating ProfitExtensive renewal of product portfolio,the overall challenging economic and political environment,the slower transformation towards electromobility,tense supply chain and market developments in China continued to have an impact on the business situationMoving forward with the largest model offensive with elevated spending for product,innovation and Porsche brandOperating Profit in Financial Services at RoS of 7.1 23202440.140.5-1.1 2320245.67.3-22.6.1.0%RoSGROUP SALES REVENUE,IN BNGROUP OPERATING PROFIT,IN BN64652023 VS.2024Group Operating Profit DevelopmentEBIT 2023Gross margin without R&DR&DSG&AOtherEBIT 20247.3-1.0-0.3-0.3-0.15.618.0%RoS14.1%RoS-22.6%CONTRIBUTORS TO OPERATING PROFIT DEVELOPMENT,IN BNGroup Sales Revenues impacted by lower product availability and focus on globally balanced deliveriesPositive impact from increased pricing and beneficial individualisationElevated material costs,R&D expenses,D&A and launch costs related to the introduction of the new model linesSlightly higher SG&A from investing in digitalization and customer relation services6566662023 VS.2024Automotive Sales Revenue and DeliveriesLower Automotive Sales Revenues due to changeovers of Panamera,Taycan,Macan as well as the model launch of the 911Increased pricing and beneficial individualisationLower China volume due to value over volume strategyParts availability and a fragile supply chain impacted unit sales and mixSlower than expected BEV transition1 The performance indicator deliveries reflects the number of vehicles handed over to end customers.This may take place via group companies or independent importers and dealers.20232024117117Automotive Sales Revenue per Delivery1,in k2023202412.7V Share,in.8%AUTOMOTIVE SALES RE VENUE,IN BN36.437.3-2.410.7320.2-3.0LIVERIES,IN K UNITS6720242023 VS.2024Automotive Deliveries1 Excl.Mexico l 2 incl.Hong KongREGIONAL DISTRIBUTION320.221 DELIVERIES2023310.718 DELIVERIESPorsche has grown in four out of five world regions and achieved historic recordsPorsche is sticking to its value-based sales approach aiming to balance demand and supplySales structure across regions more balanced than everThe decline in China is mainly due to the continuing challenging economic situation in this regionThe Overseas and Emerging Markets again developed positively with growth of 6%in sales compared to previous year67North America1GermanyEurope(excl.GER)16%North America1GermanyEurope(excl.GER)18$(%Overseas and Emerging MarketsOverseas and Emerging MarketsChina2China2682023 VS.2024Automotive DeliveriesPorsche AG renewed four out of the six model lines in 2024New electric Macan has been successively introduced to the markets with over 18k unitsThe iconic 911 sports car continued to enjoy great popularity in 2024The Cayenne has become the bestseller after refresh in 2023The decline of 13%for the new Panamera due to lower demand in the Chinese marketThe 49cline in Taycan due to the slower than planned BEV transition and the product changeoverProduct Changeover 2024 Macan ElectricMacan Petrol MODEL DISTRIBUTION,IN K UNITS20.51834.02040.62950.14687.35587.55323.67029.58720.83650.94182.795102.88920242023 18%-5% 2%-49% 15%-13 2420232024202320242023202420232024202318.27864.51768692022 VS.2023 VS.2024Automotive Deep Dive on Vehicle Sales1 Vehicle sales,in the Porsche AG Group are designated as those sales of new and group used vehicles of the Porsche brand,which have left the automotive segment for the first time,provided there is no legal repurchase obligation by a company in the automotive segment.l 2 Excl.Mexico l 3 Incl.Hong Kong Automotive Sales Revenue per vehicle sold,in k1GermanyChina3Europe(excl.GER)Overseas and Emerging MarketsNorth America2REGIONAL DISTRIBUTION,%OF VEHICLE SALES112117110120)#2$ 2420232022313.721333.605312.620Vehicle sales70702023 VS.2024,IN BNAutomotive Operating ProfitAutomotive Sales Revenues impacted by lower product availability and value over volume strategy in ChinaPositive impact from increased pricing and beneficial individualisation Elevated material costs,R&D expenses,D&A and launch costs related to the introduction of the new model linesSlightly higher SG&A from investing in digitalization,brand and customer relation servicesLower product availability triggered unfavorable fixed cost coverage-23.8.6.5%Automotive RoS25.7.7%Automotive EBITDA Margin202320246.95.371-8.0q2023 VS.2024,IN BNFinancial Services Operating ProfitLower penetration rate due to high interest rate environment,shifts in market mix,and new model launchesUnchanged robust risk profileLess favorable valuation effects from interest rate derivatives outside of hedge accounting,along with a reduced release of the residual value risk reserve due to the normalization of market values40.19.6%Penetration rate,in%0.30.32023202472722023 VS.2024Automotive Net Cash Flow and LiquidityCash flow from operating activities decreased due to lower Automotive Operating Profit and lower profit before tax offset by inflows in working capitalCash flow from operating activities includes cash outflows of 250 million Euros in connection with pension plans fundingMid-three-digit million Euro investments in strategic partnerships,technology and digitalizationIncrease in net liquidity resulting primarily from cash inflows from the automotive net cash flow1 Termination of domination and profit and loss transfer agreement(“DPLTA”)at financial year-end 202420232024202320243.74.0-6.0%of Automotive Sales Revenue10.3.6%NE T CASH FLOW,IN BN7.2 18.6%NE T LIQUIDIT Y,IN BN8.673MOST IMPORTANT PERFORMANCE INDICATORSPorsche Financial OutlookIn its planning for 2025,the Porsche AG Group assumes slightly weaker global economic growth and a slight average increase in global demand for passenger cars compared to the reporting year.However,there are uncertainties in this regard,particularly due to the global geopolitical environment.Difficult market conditions due to protectionist tendencies and intensified competition in the important markets of the USA and China,coupled with a continuing high level of costs,amortization and depreciation,will make the 2025 fiscal year a challenging one for the Porsche AG Group,in which high one-off burdens are also expected as a result of additional planned measures.At the same time,the Porsche AG Group expects these activities to strengthen its earnings power in the short and medium term.Furthermore,the Porsche AG Group believes it is well positioned to exploit market potential with its existing product range in line with demand in individual regions and to further strengthen the Porsche brand worldwide.GROUPSales Revenue 40.1 bn 39-40 bnReturn on Sales(RoS)14.1-12%AUTOMOTIVEEBITDA Margin22.7-21%Net Cash Flow Margin10.2%7-9V Share12.7 -22 24OUTLOOK 2025Our general long-term strategic ambition20 %Group Return on Sales74Extensive measures have been initiated to strengthen the financial resilience and profitability in the short and medium term911 GT3:Fuel consumption combined:13,8-13,7 l/100 km;CO-emissions combined(WLTP):312-310 g/km;CO Class:G20242025Product AvailabilityOptimised Fixed Costs/Organisational BenefitsExpansion of ProductPortfolio/Halo projectsExpansion Exclusive ManufakturValue overVolumeRoSChallenging macro economic and geopolitical conditions,slower ramp-up of electric mobility,tense supply chainProduct changeover&Economic environmentStrategic initiatives/recalibration 0.8 bnFixed CostsIllustrative75Company Framework requires short-term Capex and R&D increase for strategic adaptation Illustrative20212025Extensive Product ChangeoverPortfolio Prioritisation and SoftwareFUTURE CAPEX&R&D76Capital Allocation PolicyDIVIDEND:20241:2.30/2.31 per ordinary/preferred shareMID-TERM TARGET:50%pay-out ratio2CAPEX&R&D:Focused investment programTECHNOLOGY&VENTURE:Select investments with preference for partnershipsPENSION:Commitment to partially fund the pension deficit in foreseeable time frameLIQUIDITY:Automotive net liquidity position of 15-20%of Automotive Revenue7677Group condensed consolidated Income StatementSALES REVENUE40,530100.040,083100.0-446-1.1(-)Cost of sales-28,924-71.4-29,756-74.2-8322.9(=)Gross profit11,60628.610,32725.8-1,278-11.0(-)Distribution expenses-2,869-7.1-3,099-7.7-2308.0(-)Administrative expenses-1,787-4.4-1,859-4.6-724.1( /-)Net other operating result 3350.82680.7-66-19.9(=)Operating profit7,28418.05,63714.1-1,647-22.6(=)Financial result910.2-409-1.0-500 100.0Equity21,66823,0561,3886.4Provisions for pensions and similar obligations4,3154,074-241-5.6Financial liabilities6,5377,1606239.5Other liabilities4,3604,89453512.3Non-current liabilities15,21116,1289176.0Financial liabilities3,8804,2533729.6Trade payables3,4903,378-111-3.2Other liabilities6,1926,7125208.4Liabilities associated with assets held for sale5-5-100.0Current liabilities13,56714,3437765.7Total equity and liabilities50,44753,5273,0806.1Group condensed consolidated Statement of Financial Position31.12.202331.12.2024DELTA%IN MN81APRIL 29,2025Quarterly Report January-March 2025MAY 21,2025Annual General Meeting 20251JULY 30,2025Half-Yearly Financial Report 2025OCTOBER 24,2025Quarterly Report January-September 2025Financial Calendar 2025The Annual General Meeting 2024 of Porsche AG is currently still in the planning stage.The format and venue of the Annual General Meeting 2024 will be announced ahead of the event on the Investor Relations website of Porsche AG82EXECUTION RUBBER ROAD.82
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Annual Financial StatementsDr.Ing.h.c.F.Porsche AktiengesellschaftFiscal year 2024911 Turbo 50 Years(WLTP):Fuel consumption combined 12.5 12.3 l/100 km,CO emissions combined 283 278 g/km;CO class G2The management report of Dr.Ing.h.c.F.Porsche Aktiengesellschaft,Stuttgart,and the group management report have been combined pursuant to section 315(5)of the Handelsgesetzbuch(HGB German Commercial Code)and published in the Annual and Sustainability Report for 2024.The annual financial statements and the management report of Dr.Ing.h.c.F.Porsche Aktiengesellschaft for fiscal year 2024,which has been combined with the group management report,have to be submitted electronically to the operator of the Unternehmensregister German Company Register and entered there.The annual financial statements of Dr.Ing.h.c.F.Porsche Aktiengesellschaft as well as the Annual and Sustainability Report for fiscal year 2024 are also available online at https:/.ANNUAL FINANCIAL STATEMENTS FOR FISCAL YEAR 2024DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT3Annual Financial Statements for Fiscal Year 20244 BALANCE SHEET5 INCOME STATEMENT6 NOTES TO THE ANNUAL FINANCIAL STATEMENTS46 RESPONSIBILITY STATEMENT47 INDEPENDENT AUDITORS REPORTTABLE OF CONTENT4 million Note Dec.31,2024 Dec.31,2023 Assets Fixed assets Intangible assets 1 2,100 2,438 Property,plant and equipment 1 7,458 6,898 Financial assets 1 7,799 6,144 17,357 15,480 Current assets Inventories 2 3,167 2,935 Receivables 3 5,766 5,777 Other assets 3 865 1,032 Cash on hand and bank balances 17 16 9,816 9,759 Prepaid expenses 151 154 Excess of covering assets over pension and similar obligations 1 0 27,325 25,393 Equity and liabilities Equity Subscribed capital 4 911 911 Capital reserves 4 3,822 3,822 Retained earnings 4 6,815 3,420 Distributable profit 4 2,100 3,420 13,648 11,573 Provisions Provisions for pensions and similar obligations 5 5,186 5,291 Miscellaneous provisions 5 4,305 3,881 9,492 9,172 Liabilities Liabilities to banks 6 765 1,074 Advance payments received on account of orders 6 55 46 Trade payables 6 950 1,069 Miscellaneous liabilities 6 1,814 1,907 3,583 4,096 Deferred income 7 603 553 27,325 25,393 BALANCE SHEETOF DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT AS OF DECEMBER 31.20245Annual Financial Statements for Fiscal Year 2024 Income Statement ANNUAL FINANCIAL STATEMENTS FOR million Note 2024 2023 Sales revenue Sales revenue 8 30,795 31,839 Changes in inventories and other own work capitalized 9 -45 84 Total operating performance 30,750 31,923 Other operating income 10 2,337 3,155 Cost of materials 11 -18,500 -18,993 Personnel expenses 12 -3,070 -3,336 Amortization and depreciation of intangible assets and property,plant and equipment -1,859 -1,662 Other operating expenses 13 -4,840 -4,580 Investment result 14 535 1,932 Interest result 15 -16 -37 Earnings before taxes 5,336 8,402 Income tax 16 -1,135 -1,525 Earnings after taxes 4,201 6,877 Other taxes 17 -26 -37 Net income for the year 4,175 6,840 Transfer to retained earnings -2,075 -3,420 Distributable profit 18 2,100 3,420 INCOME STATEMENTOF DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT FOR THE PERIOD FROM JANUARY 1,2022 TODECEMBER 31,20246NOTES TO THE ANNUAL FINANCIAL STATEMENTS Financial statements in accordance with German commercial law The annual financial statements of Dr.Ing.h.c.F.Porsche Aktiengesellschaft(“Porsche AG”),with registered offices in Stuttgart and entered in the commercial register of Stuttgart local court under HRB no.730623,are prepared in accordance with the provisions of the Handelsgesetzbuch(HGB German Commercial Code)and the special requirements of the Aktiengesetz(AktG German Stock Corporation Act)in euro.The fiscal year corresponds to the calendar year.In order to improve clarity,some items have been combined in the balance sheet and income statement.These items are broken down in the report below.Figures in the annual financial statements are rounded to the nearest million euro;this can lead to minor differences in total amounts.Notes are also disclosed in millions of euro(million),unless indicated otherwise.The income statement is classified using the nature of expense method.Volkswagen AG,Wolfsburg,indirectly holds,via Porsche Holding Stuttgart GmbH,75.4%of Porsche AGs share capital.Porsche Automobil Holding SE,Stuttgart,directly holds 12.5%of the share capital.The remaining share capital is in free float.Accordingly,the investment structure remains unchanged compared to fiscal year 2023.Porsche AG is included in the consolidated financial statements of Volkswagen AG which are published in the Unternehmensregister German Company Register.These consolidated financial statements represent the largest consolidated group in which the company is included.Porsche AG,itself a parent company,also prepares consolidated financial statements that are likewise published in the Unternehmensregister German Company Register.These consolidated financial statements represent the smallest consolidated group in which the company is included.Porsche AG is a dependent company of Porsche Holding Stuttgart GmbH,Volkswagen AG and Porsche Automobil Holding SE as defined by section 17(1)AktG.Pursuant to a consortium agreement,the Porsche and Pich families have direct and indirect control,respectively,over Porsche Automobil Holding SE.Therefore,relations with individuals and entities of the Porsche and Pich families are subject to the disclosure requirements.The Executive Board of Porsche AG has submitted to the Supervisory Board the report required by section 312 AktG and issued the concluding declaration presented in the combined management report.Declaration on the German Corporate Governance Code in accordance with section 161 AktG/section 285 no.16 HGB The Executive Board and Supervisory Board of Porsche AG issued the declaration of conformity in accordance with section 161 AktG in December 2024.The declaration has been made permanently available at https:/investor- NOTES TO THE ANNUAL FINANCIAL STATEMENTSOF DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT AS OF DECEMBER 31.20247Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements ACCOUNTING POLICIES All accounting policies applied in the prior year were retained.Fixed assets Purchased intangible assets are recognized at acquisition cost and,if they have a limited life,amortized over three to nine years using the straight-line method.The option to recognize internally generated intangible assets is not exercised.Property,plant and equipment are carried at acquisition or production cost and reduced by depreciation if they have a finite life.Depreciation of property,plant and equipment is based primarily on the following useful lives:Useful life Buildings 1450 years Leasehold improvements 1035 years Technical equipment and machinery 520 years Other equipment,furniture and fixtures 330 years The cost of self-constructed property,plant and equipment includes direct costs as well as a proportionate share of overheads and production-related depreciation expenses.Borrowing costs are not included in production cost.Write-downs are recognized if the impairment is expected to be permanent;write-downs are reversed up to the amount of amortized cost as soon as the reasons for the write-down no longer apply.Advance payments made for fixed assets are generally measured at their nominal value.Shares in affiliates,equity investments and securities classified as fixed assets are measured at the lower of acquisition cost or fair value if the impairment is expected to be permanent.By preference,fair values of the shares are calculated using the discounted cash flow method if a market value is not available.The basis for calculating fair value using the discounted cash flow method is managements current planning,which is based on expectations regarding future economic trends.The planning period generally covers five years.The discount rate used for the expected cash flows is the weighted average cost of capital(WACC),taking account of the planning and a terminal value.If the reasons for permanent impairment no longer exist,the write-down is reversed up to the amortized cost.Securities held as covering assets for post-employment benefit obligations are measured at fair value and offset against the corresponding provisions.These securities are assets that are exempt from attachment by all creditors and that exclusively serve to settle liabilities from post-employment benefit obligations.The new shares in Porsche Investments Management S.A.,Luxembourg,received in fiscal year 2024 were granted in return for the contribution of shares in MHP Management-und IT-Beratung GmbH,Ludwigsburg,and have been measured at the fair value of the contributed shares,exercising the accounting option.The fair value was determined using the discounted cash flow method.The basis for calculating fair value using the discounted cash flow method is managements current planning,which is based on expectations regarding future economic trends.The planning period covers a period of five years.8 Current assets Raw materials,consumables and supplies and merchandise carried in inventories are measured at the lower of average cost or replacement cost.In addition to direct materials and direct labor costs,the carrying amount of finished goods and work in progress also includes proportionate indirect materials and labor costs,including depreciation in the amount required.Adequate valuation allowances take account of all identifiable storage and inventory risks.Borrowing costs are not included in production cost.Advance payments of inventories are generally carried at nominal value.Porsche AG recognizes emissions certificates as of the date of acquisition.They are measured at the lower of cost or fair value.Receivables and other assets are carried at their nominal value.Write-downs to the lower fair value are recognized for identifiable specific risks.Non-interest-bearing receivables due after more than one year are carried at their present value as of the balance sheet date by applying an interest rate to match the maturity.Assets denominated in foreign currencies are converted at the mean spot rate prevailing at the balance sheet date.Assets denominated in foreign currencies with a term longer than one year are converted at the mean spot rate as of the date of initial recognition or at the lower exchange rate as of the balance sheet date.If receivables are hedged using forward exchange contracts or currency options,the receivables are also valued at the respective mean spot rate as of the reporting date in accordance with the gross method,and the corresponding hedging derivative is recognized at market value under other assets or under provisions for potential losses.Cash and bank balances are measured at their nominal amount.Expenditure prior to the reporting date that represents an expense for a specific period after this date is recognized under prepaid expenses on the assets side of the balance sheet.Provisions Provisions for pensions and similar obligations are measured in accordance with actuarial principles;the projected unit credit method is used for defined benefit plans.Future obligations are measured on the basis of benefit entitlements earned pro rata temporis as of the balance sheet date.In addition to the pension payments and vested entitlements known as of the balance sheet date,future increases in salaries and pensions are taken into consideration,along with other relevant parameters.For the discounting,the average market interest rate of the last ten years published by Deutsche Bundesbank as of the balance sheet date was taken into account in accordance with section 253(2)HGB for an assumed remaining maturity of 15 years.For pension obligations,the fair value of the respective plan assets is offset against the settlement amount of the obligations.The fair value of the plan assets is determined on the basis of market values.Provisions for long-service awards and death benefits are measured using the projected unit credit method.Provisions for obligations under phased retirement agreements are measured in accordance with actuarial principles,taking account of expected salary trends and the latest mortality tables.They are discounted using the discount rate published by Deutsche Bundesbank for the balance sheet date in accordance with section 253(2)HGB.This rate has been determined on the basis of a seven-year average and a remaining maturity of two years.For agreements entered into in the reporting year,it is assumed that the agreed benefits constitute remuneration.Consequently,the top-up amounts are accumulated pro rata temporis over the vesting period.Provisions for taxes and other provisions are calculated at the settlement value required according to prudent business judgment.Future price and cost increases expected at the time of settlement of the obligation are taken into account.Provisions that have an expected remaining maturity of more than one year are discounted to match the maturity at the average market interest rate of the past seven fiscal years as published by Deutsche Bundesbank.9Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Provisions for warranty obligations are recognized on the basis of the historical or estimated probability of claims affecting vehicles delivered.The estimation is based on incurred costs for reference vehicles and is updated annually.Provisions are also recognized for recall/service campaigns.Liabilities Liabilities are carried at their settlement amount.Liabilities denominated in foreign currencies are converted at the mean spot rate prevailing as of the date of initial recognition.Short-term foreign currency liabilities due within one year or less are measured at the mean spot rate.Long-term foreign currency liabilities are recognized at a higher carrying amount,with the difference recognized in the income statement if the closing rate is higher.Advance payments received are recognized at their nominal value.Receipts prior to the reporting date that represent income for a specific period after that date are reported under deferred income on the equity and liabilities side of the balance sheet.Deferred taxes and income tax Deferred taxes are recorded for temporary differences between the HGB carrying amounts of all assets and liabilities and their tax base,principally in respect of pension provisions,warranty provisions and provisions for potential losses in connection with derivative financial instruments.Porsche AG is also a partner in various partnerships.Deferred taxes also have to be reported at Porsche AG where these relate to corporation tax.The deferred taxes in respect of these differences are calculated on the basis of an average income tax rate of 30.2%or 15.8%for temporary differences that are attributable to different carrying amounts at partnerships in which Porsche AG is a partner.The option to recognize excess deferred tax assets in accordance with section 274(1)sentence 2 HGB is not exercised.The model rules published by the OECD on global minimum taxation(Pillar 2)were enacted or largely enacted in certain countries in which the Porsche Group operates.In Germany,the legislation came into force for the Porsche Group for the fiscal year beginning on January 1,2024.The Porsche Group falls within the scope of the enacted or largely enacted legislation and has assessed the expected tax burden of the Porsche Group with regard to global minimum taxation.The assessment of the potential risk arising from minimum taxation is based on the most recent country-by-country report and financial statements of Porsche AGs affiliates.In almost all countries in which the Porsche Group operates,the effective tax rates of Pillar 2 are over 15%.The United Arab Emirates and Ireland are the only countries where the temporary safe harbor exemption does not apply and the effective Pillar 2 tax rate is under 15%.The Porsche Groups expenses related to the introduction of global minimum taxation(Pillar 2)totaled 2 million in the fiscal year.Since the global minimum taxation has not been implemented locally in the United Arab Emirates,1 million of this amount has been reported as a tax liability at Porsche AG.10 Derivative financial instruments In accordance with section 254 HGB,derivative financial instruments are combined with an underlying transaction to form a hedge,provided there is a direct hedging relationship between the financial transaction and underlying transaction.These are recognized using the“net hedge presentation method”;i.e.,the items are not measured to the extent that and for as long as offsetting changes in fair value or cash flows are compensated.In some cases,the gross hedge presentation method is used,i.e.,offsetting changes in cash flows are recognized separately and compensate each other.Forward exchange contracts and commodity futures are measured by comparing the agreed rate with the forward rate for the same maturity as of the balance sheet date.A provision is recognized for any resulting unrealized loss.Any positive gains(remeasurement gains)are not recognized.Gains and losses are not offset.Derivatives not included in hedge accounting are measured individually at market value.Any resulting unrealized losses are recognized through profit or loss.Transactions denominated in foreign currencies are translated at the exchange rates prevailing at the transaction dates or at agreed exchange rates.Expected exchange rate losses as of the balance sheet date are reflected in the measurement of the items.11Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements NOTES TO THE BALANCE SHEET 1 Fixed assets Additions in the fiscal year amount to:million Dec.31,2024 Dec.31,2023 Intangible assets 685 749 Property,plant and equipment 1,704 1,364 Financial assets 2,373 3,198 4,762 5,311 The additions to financial assets of 2,373 million(prior year:3,198 million)are accompanied by disposals of 714 million(prior year:122 million).These additions are primarily the result of a change in the intragroup investment structure through the contribution of shares in MHP Management-und IT-Beratung GmbH,Ludwigsburg,in return for the granting of new shares in Porsche Investments Management S.A.,which led to additions of 1,592 million and disposals of shares of 266 million.In addition,there were reclassifications in securities investment funds,which resulted in disposals of shares in the UI-25 fund of 418 million and additions of shares in the UI-356 fund of 420 million.Amortization,depreciation and write-downs were charged on:million Dec.31,2024 Dec.31,2023 Intangible assets 792 693 Property,plant and equipment 1,067 969 Financial assets 33 53 1,893 1,716 Write-downs on financial assets mainly relate to the shares in Cetitec GmbH,Pforzheim(30 million),and OOO Porsche Russland,Moscow(3 million).Impairment losses on intangible assets were also recorded(60 million).DISCLOSURES IN ACCORDANCE WITH SECTION 285 NO.26 HGB Securities investment funds(values as of December 31,2024)million Carrying amount Market value Market value carrying amount Distribution in 2024 Daily redemption possible UI-356 fund 1,713 1,791 78 25 Yes UI-SP25 fund 3 4 1 9 Yes 1,716 1,795 79 34 Investments in the UI-356 and UI-SP25 investment funds are allocated to fixed assets and measured at acquisition cost.They aim to generate a return in line with risks in compliance with established investment guidelines and risk parameters.This involves using all common forms of investment such as shares,fixed-rate and variable-rate securities,derivatives,foreign currencies and other assets.All fund shares are calculated on a daily basis by the capital management company of the funds and can be redeemed on a daily basis.The investment strategies in the funds are implemented by several asset managers.12 Statement of changes in fixed assets:The list of shareholdings of Porsche AG is presented in note 29.Gross carrying amounts million Acquisition/production cost Jan.1,2024 Additions Re-classifications Disposals Acquisition/production cost Dec.31,2024 Intangible assets Purchased franchises,industrial and similar rights and assets,and licenses in such rights and assets 6,744 577 615 -189 7,747 Advance payments made 1,130 108 -596 -207 435 7,874 685 19 -396 8,182 Property,plant and equipment Land,land rights and buildings,including buildings on third-party land 4,353 58 109 -15 4,505 Technical equipment and machinery 1,769 139 261 -43 2,126 Other equipment,furniture and fixtures 9,437 901 484 -452 10,369 Advance payments and assets under construction 1,294 606 -872 -9 1,018 16,852 1,704 -19 -519 18,018 Financial assets Shares in affiliates 4,176 1,882 -296 5,763 Equity investments 349 42 390 Securities classified as fixed assets 1,686 449 -418 1,716 6,211 2,373 -714 7,869 30,937 4,762 -0 -1,629 34,069 13Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Amortization,depreciation and write-downs Accumulated amortization,depreciation and write-downs Jan.1,2024 Amortization,depreciation and write-downs current year Disposals Re-classifications Write-ups Accumulated amortization,depreciation and write-downs Dec.31,2024 Carrying amounts Dec.31,2024 Carrying amounts Dec.31,2023 xx 5,437 792 -146 -0 6,083 1,664 1,307 435 1,130 5,437 792 -146 -0 6,083 2,099 2,437 1,268 134 -4 1 1,400 3,106 3,085 1,011 152 -37 -1 1,125 1,001 757 7,675 781 -421 -0 8,035 2,333 1,762 1,018 1,294 9,954 1,067 -462 -0 10,560 7,458 6,898 66 33 -30 70 5,693 4,110 390 349 1,716 1,686 66 33 -30 70 7,799 6,144 15,458 1,893 -638 -0 16,713 17,357 15,479 14 2 Inventories million Dec.31,2024 Dec.31,2023 Raw materials,consumables and supplies 400 344 Work in progress(goods)298 268 Work in progress(services)4 38 Finished goods and merchandise 1,847 1,984 Advance payments made 619 301 3,167 2,935 3 Receivables and other assets million Dec.31,2024 Dec.31,2023 Trade receivables 251 366 thereof due in more than one year 1 1 Receivables from affiliates 5,514 5,409 thereof due in more than one year 529 371 Receivables from other investees and investors 1 2 thereof due in more than one year Other assets 865 1,032 thereof due in more than one year 72 101 6,631 6,809 Receivables from affiliates result from trade of 2,370 million(prior year:2,570 million),cash pooling of 2,062 million(prior year:1,015 million)as well as from loans issued of 537 million(prior year:382 million)and profit transfers of 254 million(prior year:1,151 million).As such,these relate to the item trade receivables.Loan receivables of 526 million(prior year:367 million)are due in more than one year.An impairment loss of 40 million was recognized on the loan receivables from Porsche Erste Beteiligungs-gesellschaft mbH,Stuttgart,due to an expected permanent impairment in accordance with section 253(3)sentence 5 HGB.Other assets primarily include receivables from taxes of 445 million(prior year:517 million),advance payments of 125 million(prior year:88 million),paid option premiums of 112 million(prior year:240 million)and CO2 certificates for the new vehicle business of 85 million(prior year:75 million).Of these,an amount of 72 million(prior year:101 million)is due in more than one year.4 Equity million Dec.31,2024 Dec.31,2023 Subscribed capital 911 911 Capital reserves 3,822 3,822 Retained earnings 6,815 3,420 Distributable profit 2,100 3,420 13,648 11,573 Porsche AGs subscribed capital amounts to 911 million and is divided into 455,500,000 no-par value ordinary shares and 455,500,000 no-par value preferred shares.Each share grants a notional share of 1.00 in share capital.The preferred shares carry the right to an additional dividend that is 0.01 higher than the ordinary shares,but are non-voting.15Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements In accordance with the resolution on the appropriation of net profit passed by the Annual General Meeting,a partial amount of 1,320 million was transferred from the prior-year distributable profit to retained earnings in accordance with section 58(3)AktG.After the transfer to retained earnings pursuant to section 58(2)AktG of 2,075 million,the companys distributable profit is 2,100 million(prior year:3,420 million).It will be proposed to the Annual General Meeting that a partial amount of 1,048 million(prior year:1,048 million)from the distributable profit of 2,100 million(prior year:3,420 million)be used to pay a dividend of 2.30 per ordinary share carrying dividend rights and a partial amount of 1,052 million(prior year:1,052 million)be used to pay a dividend of 2.31 per preferred share carrying dividend rights.5 Provisions million Dec.31,2024 Dec.31,2023 Provisions for pensions and similar obligations 5,186 5,291 Tax provisions 51 57 Other provisions 4,254 3,824 9,492 9,172 PENSION PROVISIONS Provisions for pensions largely relate to pension benefits for the employees of Porsche AG.The pension obligations are fully covered by provisions.Provisions for pension obligations(pension provisions)are discounted at the average market interest rate of the past ten fiscal years(section 253(2)sentence 1 HGB).These are 333 million(prior year:112 million;difference pursuant to section 253(6)HGB)lower than the carrying amount for pension provisions that would have been recorded as of December 31,2024 had the seven-year average interest rate been applied.A ban on distribution pursuant to section 253(6)sentence 2 HGB does not take effect as there are enough freely available reserves.The provisions for pensions and similar obligations are valued based on the following assumptions:c.31,2024 Dec.31,2023 Discount rate 1.90 1.83 Wage and salary trend 2.80 2.80 Increase in pensions 2.00 2.20 Turnover 0.80 0.80 Basis of calculation/mortality tables Heubeck 2018 G mortality tables Heubeck 2018 G mortality tables Age limits Early retirement age pursuant to the German Act to Adapt the Legal Age Limit According to the Demographic Development and to Strengthen the Financial Base of the Pension Scheme(RVAGAnpG 2007)Early retirement age pursuant to the German Act to Adapt the Legal Age Limit According to the Demographic Development and to Strengthen the Financial Base of the Pension Scheme(RVAGAnpG 2007)The percentage figure used to calculate the salary trend takes into account increases attributable to career development as a surcharge on regular salary increases.The discount rate is based on the average market interest rate resulting from the past ten fiscal years.16 The pension obligations recognized in the balance sheet break down as follows:million Dec.31,2024 Dec.31,2023 Pension plans Capital-market-oriented pension plan(securities-oriented benefit plan)Settlement amount of securities-oriented pension obligations 18 7 Fair value of associated plan assets -18 -7 Defined benefit plans Settlement amount of obligations from predefined benefit plans 5,418 5,291 Fair value of associated plan assets -250 Pension provisions unfunded 18 5,291 Provisions for pensions and similar obligations reported in the balance sheet 5,186 5,291 The cost of the plan assets presented above relating to the capital-market-oriented pension plan amounts to 16.5 million(prior year:7 million).The cost of the new plan assets relating to the defined benefit plans created in 2024 amounts to 250 million.OTHER PROVISIONS Significant provisions were recognized for warranties(1,351 million;prior year:1,234 million),personnel expenses(867 million;mainly for bonuses,phased retirement,long-service awards and other personnel expenses;prior year:885 million),outstanding invoices(772 million;prior year:748 million),exceeding emission limits(630 million;prior year:464 million)as well as legal and litigation risks(30 million;prior year:37 million).Also included as of the reporting date are supplier receivables of 382 million(prior year:270 million).Other provisions include phased retirement obligations of 279 million(prior year:289 million),comprising deferred performance of 147 million(prior year:148 million)and a top-up amount of 133 million(prior year:141 million).The deferred performance is counterbalanced by covering assets as defined by section 246(2)sentence 2 HGB of 1 million(prior year:128 million).The covering assets are recognized at fair value in accordance with sections 246(2)sentence 2,253(1)sentence 4 HGB and offset against the corresponding deferred performance.In the fiscal year 2024,the covering assets of 140 million previously used to secure phased retirement obligations were replaced by a bank guarantee of equal value for some of the phased retirement obligations.This resulted in cash of this amount being returned to Porsche AG.Offsetting in accordance with section 246(2)sentence 2 HGB is no longer possible in this regard.The recognition of covering assets pursuant to sections 246(2)sentence 2,253(1)sentence 4 HGB results in a difference between the amortized cost and fair value as of the balance sheet date of 0 million(prior year:0 million).A ban on distribution pursuant to section 268(8)sentence 3 HGB relating to the covering assets recognized at fair value of 1 million does not take effect as there are enough freely available reserves.17Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements 6 Liabilities million Dec.31,2024 due within one year due in more than one year thereof one to five years thereof more than five years Type of liability Liabilities to banks 765 164 601 601 Advance payments received on account of orders 55 49 6 6 Trade payables 950 950 Liabilities to affiliates 1,366 1,366 Liabilities to other investees and investors 25 25 Other liabilities 422 148 275 275 thereof for taxes 55 55 thereof for social security 10 10 3,583 2,702 881 881 million Dec.31,2023 due within one year due in more than one year thereof one to five years thereof more than five years Type of liability Liabilities to banks 1,074 320 755 665 90 Advance payments received on account of orders 46 46 Trade payables 1,069 1,069 Liabilities to affiliates 1,134 1,134 Liabilities to other investees and investors 44 44 Other liabilities 729 405 324 208 116 thereof for taxes 46 46 thereof for social security 12 12 4,096 3,017 1,078 872 206 Since June 2023,a 2,500 million revolving credit facility(0 million drawn)has been in place with a syndicate of 21 national and international banks.Liabilities to banks primarily include debenture bonds.These were placed in various tranches with fixed and variable interest rates.The total nominal value of the debenture bonds to banks amounts to 755 million(prior year:1,059 million).Of the advance payments received on account of orders,0 million(prior year:3 million)relates to prepayments to affiliates.Liabilities to affiliates of 1,366 million(prior year:1,134 million)mainly contain trade payables of 1,088 million(prior year:1,055 million)and loss absorptions of 167 million(prior year:2 million).Liabilities to other investees and investors contain trade payables of 25 million(prior year:44 million).Other liabilities include,among other things,debenture bonds placed with non-banks of 202 million(prior year:202 million)as well as option premiums received of 93 million(prior year:224 million).18 7 Deferred income Deferred income contains income received in advance for services rendered in future periods.This includes earned premiums of the used vehicle warranty of 450 million(prior year:413 million)as well as deferred income from the connected car business field of 152 million(prior year:140 million).NOTES TO THE INCOME STATEMENT 8 Sales revenue million 2024 23%By region Germany 4,389 14 4,028 13 Europe without Germany 8,709 28 8,192 26 North America 8,529 28 7,987 25 China 4,250 14 6,702 21 Rest of the world 4,918 16 4,930 15 30,795 100 31,839 100 By area of activity New vehicles 26,257 85 27,957 88 Used vehicles 552 2 503 2 Genuine parts 1,795 6 1,414 4 Other sales revenue 2,191 7 1,965 6 30,795 100 31,839 100 9 Changes in inventories and other own work capitalized million 2024 2023 Change in finished goods and work in progress -266 -152 Other own work capitalized 221 236 -45 84 10 Other operating income million 2024 2023 Other operating income 2,337 3,155 2,337 3,155 Other operating income relates to exchange gains of 136 million(prior year:227 million)and income from the reversal of provisions of 179 million(prior year:234 million).The contribution of shares in MHP Management-und IT-Beratung GmbH,Ludwigsburg,in return for the granting of new shares in Porsche Investments Management S.A.,Luxembourg,resulted in other operating income of 1,326 million.19Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements 11 Cost of materials million 2024 2023 Cost of raw materials,consumables and supplies and of purchased merchandise 15,413 16,141 Cost of purchased services 3,087 2,852 18,500 18,993 12 Personnel expenses million 2024 2023 Wages and salaries 2,643 2,720 Social security,pension and other benefit costs 428 616 thereof for old-age pensions 80 275 3,070 3,336 13 Other operating expenses million 2024 2023 Other operating expenses 4,840 4,580 4,840 4,580 Other operating expenses include exchange rate losses of 131 million(prior year:399 million).14 Investment result million 2024 2023 Income from equity investments 441 689 thereof from affiliates 438 687 Expenses from equity investments -73 -53 thereof from affiliates -73 -53 Income from profit and loss transfer agreements 372 1,299 Expenses from loss absorption -206 -4 535 1,932 Income from equity investments primarily comprises dividends from Porsche Hong Kong Ltd,Hong Kong(188 million),Porsche Cars Australia Pty Ltd,Collingwood(62 million),Porsche Brasil Importadora de Veculos Ltda,So Paulo(38 million),Porsche Asia Pacific Pty Ltd,Singapore(36 million),and Porsche Middle East and Africa FZE,Dubai(28 million).Expenses from equity investments mainly relate to the impairment losses of Cetitec GmbH,Pforzheim(30 million),and OOO Porsche Russland,Moscow(3 million).This also includes the impairment loss on the loan receivables from Porsche Erste Beteiligungsgesellschaft mbH,Stuttgart(40 million).Income from profit and loss transfer agreements which includes cross-charged taxes on income primarily contain income of Porsche Deutschland GmbH,Bietigheim-Bissingen,Porsche Leipzig GmbH,Leipzig,Porsche Consulting GmbH,Bietigheim-Bissingen,Porsche Engineering Group GmbH,Weissach,and Porsche Logistik GmbH,Stuttgart.20 Expenses from loss absorption which include cross-charged income-related taxes primarily contain expenses from Porsche Erste Beteiligungsgesellschaft mbH,Stuttgart,and Porsche Financial Services GmbH,Bietigheim-Bissingen.15 Interest result million 2024 2023 Interest and similar income 111 109 thereof from affiliates 84 79 Interest and similar expenses -127 -146 thereof to affiliates -9 -28 -16 -37 Interest and similar income primarily relates to interest income from affiliates.Interest and similar expenses largely comprise interest expenses from discounting long-term provisions as well as interest expenses for the debenture bonds issued.16 Income tax As the tax group parent,Porsche AG is also the tax debtor for its tax group subsidiaries,which are named in the list of shareholdings according to section 285 HGB and marked with a separate footnote.Income tax expenses amounts to 1,135 million(prior year:1,525 million).The 390 million decrease in tax expenses compared to the prior year is mainly due to a declined operating profit.Deferred taxes are not included in the tax result as the accounting option for deferred tax assets was not exercised.17 Other taxes Other taxes of 26 million(prior year:37 million)mainly contain motor vehicle tax and property tax.18 Distributable profit After the transfer to retained earnings of 2,075 million pursuant to section 58(2)AktG,the companys distributable profit is 2,100 million(prior year:3,420 million).21Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements OTHER INFORMATION ON THE FINANCIAL STATEMENTS 19 Contingent liabilities Contingent liabilities relate to potential future events,the occurrence of which would lead to an obligation.As of December 31,2024 contingent liabilities amount to 70 million(prior year:97 million),in particular from guarantees and warranties.Of this amount,13 million(prior year:35 million)relates to affiliates in Germany and abroad.They also include a financial guarantee to the joint venture Smart Press Shop GmbH&Co.KG,Halle,of 57 million(prior year:62 million).There are also contingent liabilities in connection with product liability matters of 45 million(prior year:39 million).As of the balance sheet date,Porsche AGs contingent liabilities were examined from a risk perspective taking into account all information available on the net assets,financial position and results of operations of the contractual partners.Based on past developments,Porsche AG considers the risk of a possible claim to be unlikely.Contingent liabilities as of December 31,2024 comprise liabilities from guarantees and warranty agreements.These largely relate to letters of comfort to third-party creditors in favor of affiliates.20 Other financial obligations million Dec.31,2024 Due in 2025 Due between 2026 and 2029 Due after 2029 Financial commitments 156 156 thereof to affiliates 156 156 Long-term rental and lease agreements 391 29 117 245 thereof to affiliates 116 7 28 81 thereof to associates 47 7 28 12 Other 247 98 33 116 thereof to affiliates 155 37 21 97 794 283 150 361 The obligation from financial commitments results exclusively from a letter of comfort in favor of Cellforce Group GmbH,Tbingen.Miscellaneous financial obligations include obligations from environmental protection measures,investment commitments as well as obligations from sponsorship and advertising agreements.21 Derivative financial instruments and hedges DERIVATIVE FINANCIAL INSTRUMENTS At Porsche AG,derivative financial instruments primarily relate to forward exchange contracts and currency options,commodity futures and interest rate derivatives.These are used to hedge interest rate,currency and commodity risks from existing balance sheet items or highly probable future transactions.22 Assets Equity and liabilities Nominal volume Market value Nominal volume Market value million Dec.31,2024 Dec.31,2023 Dec.31,2024 Dec.31,2023 Dec.31,2024 Dec.31,2023 Dec.31,2024 Dec.31,2023 Currency transactions Forward exchange contracts 11,519 22,086 595 1,054 22,222 12,508 -838 -492 thereof purchases of foreign currency 43 5 1 41 1,015 -8 thereof sales of foreign currency 11,476 22,081 594 1,054 22,181 11,493 -838 -484 Currency options 2,841 8,644 114 249 3,160 9,869 -47 -97 thereof purchases of foreign currency 11 1,374 1 10 1,672 -43 thereof sales of foreign currency 2,830 7,270 114 248 3,150 8,197 -47 -54 Interest rate transactions Interest rate swaps 287 562 13 34 Commodity transactions Commodity futures 338 421 27 16 109 56 -11 -6 The lower of cost or net realizable value of 112 million(prior year:240 million)was recognized under other assets;provisions of 18 million(prior year:29 million)were recognized for negative market values.Furthermore,93 million(prior year:224 million)was recognized as other liabilities for option premiums received.Currency options are calculated using a recognized option pricing model on the basis of current market data such as spot rates,volatilities and yield curves of the relevant currencies.The valuation of forward exchange contracts is based on the forward rate agreed in each case as well as yield curves of the relevant currencies.Interest rate swaps are valued on the basis of the standard EUR interest rate swap curve.Commodity futures are valued on the basis of current commodity market data,the agreed contract price and volume and the standard USD discount curve.HEDGES Derivative financial instruments contain forward exchange contracts and currency options(significant currencies:US dollar,Chinese renminbi and pound sterling)with a nominal volume of 36,137 million(prior year:38,204 million)and a market value of-177 million(prior year:650 million),which were included in a hedge in the form of a micro hedge and thus accounted for pursuant to section 254 HGB.This relates to currency hedges of highly probable revenue for the next four fiscal years(nominal volume of 35,188 million(prior year:36,562 million)and a negative market value of 200 million(prior year:607 million)as well as currency hedges of short-term foreign currency receivables(nominal value of 949 million(prior year:1,642 million)and a market value of 23 million(prior year:43 million).In addition,commodity futures(key commodities aluminum,copper,nickel)with a nominal volume of 447 million(prior year:477 million)and a market value of 15 million(prior year:10 million)were entered into.The hedges for highly probable revenue or for merchandise purchases are accounted for using the net method.This involves grouping the expected revenue/merchandise purchases for each currency/commodity and planning period in economically meaningful portfolios.Based on the critical terms match method used for the assessment,Porsche AG assumes that the future foreign currency risk can be fully offset by the hedging instruments used due to the identical nature of the hedges and the planned transactions in foreign currencies/commodities.Retrospective analysis of effectiveness is carried out using the dollar offset method.By the reporting date,the forecast cash flows from the transactions with foreign currencies/commodities planned for the future as well as the designated hedges had offset each other in full.As a result of the recognition of hedges for currency risks from revenue and commodity hedges,a negative change in value of 834 million(prior year:495 million)and 11 million(prior year:6),respectively,was not recognized as a provision for potential losses.This is offset by changes in value attributable to the hedged item in the same amount.The gross method was used to account for hedged currency risks on receivables denominated in foreign currencies.This involves revaluing the receivables and 23Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements the hedging transactions at the respective closing rate through profit or loss.As of the balance sheet date,a provision for potential losses of 17 million(prior year:13 million)was recognized.The nominal volume of the foreign currency receivables included in the hedge valued at the closing rate amounted to 1,992 million(prior year:2,775 million).22 Average number of employees at Porsche AG million 2024 2023 By group Direct area 9,956 11,028 Indirect area 13,611 12,709 Trainees 462 439 24,029 24,176 23 Auditors fees The total fees of the group auditor in Germany can be found in the notes to the consolidated financial statements of Porsche AG in the section“Total fees of the group auditor”45.The auditors fees are not published here on account of the exempting group clause pursuant to section 285 no.17 HGB.24 24 Related party disclosures In accordance with IAS 24,related parties are natural persons and companies that can be influenced by Porsche AG,that can exert influence on Porsche AG or are under the influence of another related party of Porsche AG.All transactions with related parties are regularly carried out at arms length conditions.Since August 1,2012,Volkswagen AG has held 100%of the shares in Porsche AG via Porsche Holding Stuttgart GmbH.On September 28,2022,Volkswagen AG placed 25%of the preferred shares(including surplus allocation)of Porsche AG with investors.Since the following day,these preferred shares have been traded on the stock exchange.The basis for the IPO was a comprehensive agreement on the conclusion of several contracts between Volkswagen AG and Porsche SE.In this connection,both parties agreed,among other things,that Porsche SE acquire 25%of the ordinary shares in Porsche AG plus one ordinary share of Volkswagen AG.The price per ordinary share was the placement price per preferred share plus a premium of 7.5%.These were acquired in two tranches.A first tranche of 17.5%of the ordinary shares plus one ordinary share was transferred to Porsche SE in October 2022.The second tranche of 7.5%of the ordinary shares in Porsche AG was concluded on December 30,2022.As of this day,ownership was transferred to Porsche SE.The other shares in ordinary share capital of 75.4%less one ordinary share in Porsche AG continue to be held by Porsche Holding Stuttgart GmbH as of the reporting date.As of the reporting date,Porsche AG remains a subsidiary of Porsche Holding Stuttgart GmbH.A domination and profit and loss transfer agreement was in place between Porsche AG and Porsche Holding Stuttgart GmbH in the reporting year.In connection with the IPO and the sale of ordinary shares in Porsche SE,Volkswagen AG and Porsche SE agreed on a significant participation of representatives of Porsche SE on the Supervisory Board of Porsche AG.Final decision-making rights of the shareholder representatives on the Supervisory Board determined by Volkswagen AG with regard to directing relevant activities within the meaning of IFRS 10 at Porsche AG continue to result in the control of Porsche AG by Volkswagen AG(de facto group).As of the balance sheet date,Porsche SE held the majority of voting rights in Volkswagen AG.The creation of rights of appointment for the State of Lower Saxony was resolved at the extraordinary general meeting of Volkswagen AG on December 3,2009.This means that Porsche SE,via the annual general meeting,cannot elect all shareholder representatives to Volkswagen AGs supervisory board as long as the State of Lower Saxony holds at least 15%of the ordinary shares.The Porsche SE group(Porsche SE)is therefore classified as a related party as defined by IAS 24.As part of the transfer of the operating business and,in turn,the transfer of Porsche Holding Stuttgart GmbH by Porsche SE to Volkswagen AG in fiscal year 2012,Porsche SE entered into the following agreements with Volkswagen AG and entities of the Porsche Holding Stuttgart GmbH group in particular:Under the transfer agreement,Porsche SE in certain circumstances holds Porsche Holding Stuttgart GmbH,Porsche AG and their legal predecessors harmless from tax disadvantages that exceed the obligations from periods up to and including July 31,2009 recognized at the level of these entities.In return,Volkswagen AG has undertaken to reimburse Porsche SE for any tax benefits of Porsche Holding Stuttgart GmbH,Porsche AG and its legal predecessors and subsidiaries relating to tax assessment periods up to July 31,2009.Porsche SE under certain circumstances holds its subsidiaries transferred under the contribution agreement,Porsche Holding Stuttgart GmbH and Porsche AG and its subsidiaries,harmless from certain obligations towards Porsche SE pertaining to the period up to and including December 31,2011 and that go beyond the obligations recognized for these entities for this period.It was also agreed to allocate any subsequent VAT receivables and/or VAT liabilities arising from transactions up to December 31,2009 between Porsche SE and Porsche AG to the entity concerned.Various information,conduct and cooperation duties were agreed between Porsche SE and the Volkswagen Group.Volkswagen AG assumed responsibility for general financing for Porsche AG in the same way as it does for other subsidiaries of Volkswagen AG.25Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements In connection with the IPO of Porsche AG,on September 5,2022,Porsche AG and Volkswagen AG concluded an agreement regulating future relations,in particular the cooperation,coordination and collaboration regarding certain matters.The agreement regarding collaboration in tax matters between Porsche AG and Volkswagen AG of September 18,2022,encompasses the following in particular:Volkswagen AG bears the tax risk of additional taxes,to the extent to which these are not already covered by corresponding risk provisioning.Volkswagen AG assumes all pre-IPO costs,which also include potential taxes from pre-IPO structuring.Balance sheet items that resulted in higher income taxes for assessment periods until the end of 2022,but can also lead to tax benefits in subsequent years from 2023 onwards through reversal effects,are reimbursed to Volkswagen AG as compensation to the extent that they exceed a certain allowance.Various information,conduct and cooperation duties were agreed between Porsche AG and Volkswagen AG.Furthermore,Porsche AG entered into an industrial cooperation agreement with Volkswagen AG on September 5,2022,which regulates the future design of the industrial and strategic cooperation between the Volkswagen Group and the Porsche AG Group.Under this agreement,Porsche AG and Volkswagen AG have agreed to further develop and detail out the existing cooperation between the contractual parties in the fields of purchase and procurement in a separate agreement.Therefore,and in accordance with the specifications of the Industrial Cooperation Agreement,Porsche AG and Volkswagen AG entered into a purchasing and procurement cooperation agreement.This agreement contains general principles for the continuation of the existing cooperation between the contractual parties,including rules on its general organization as well as specific provisions for certain essential areas of purchasing and procurement.25 Remuneration of the Executive Board and Supervisory Board as well as former board members The total remuneration granted to the members of the Executive Board as defined by section 285 no.9a HGB for their activities in fiscal year 2024 amounted to 30 million(prior year:25 million).The total remuneration granted to the members of the Executive Board contains share-based payments as defined by section 285 no.9a sentence 4 HGB of 13 million.Under the performance share plan,the active members of the Executive Board were allocated a total of 138,057 performance shares for fiscal year 2024,the fair value of which came to 13 million as of the date of allocation.The performance shares relate entirely to the performance share plan on the basis of Porsches preferred share.The remuneration for the activities of the members of the Supervisory Board of Porsche AG including attendance fees came to 3 million in the past fiscal year(prior year:3 million)and relates exclusively to short-term benefits.No advances,loans or similar benefits were granted to the members of the Executive Board or Supervisory Board during the reporting period or the comparative period.Pension claims and payments to former members of the Executive Board The former members of the Executive Board and their surviving dependents received payments of 2 million.For this group of people,there were provisions for pensions of 45 million.The individual remuneration of members of the Executive Board and the Supervisory Board is explained in the remuneration report.This also contains details of the individual remuneration components.26 26 Notifications of changes in the voting rights in Porsche AG pursuant to the German Securities Trading Act(WpHG)1)PUBLICATION PURSUANT TO SECTION 40(1)WPHG FROM DECEMBER 18,2024 1.Details of issuer Dr.Ing.h.c.F.Porsche Aktiengesellschaft,Porscheplatz 1,70435 Stuttgart,Germany 2.Reason for notification Other reason:Control relinquished 3.Details of party subject to the notification obligation Name:Ing.Hans-Peter Porsche City and country of registered office:4.Names of shareholder(s)holding directly 3%or more voting rights,if different from 3.5.Date on which threshold was crossed or reached:Dec.18,2024 6.Total positions%of voting rights attached to shares(total of 7.a.)%of voting rights through instruments(total of 7.b.1. 7.b.2.)Total of both%(7.a. 7.b.)Total number of voting rights of issuer Resulting situation 0.00%0.00%0.00E5,500,000 Previous notification 100.00%0.000.00%7.Notified details of the resulting situation a.Voting rights attached to shares(section 33,34 WpHG)ISIN absolute%Direct(section 33 WpHG)Indirect(section 34 WpHG)Direct(section 33 WpHG)Indirect(section 34 WpHG)DE000PAG9113 0 0 0.000.00%Total 0 0.00%b.1.Instruments according to section 38(1)no.1 WpHG Type of instrument Expiration or maturity date Exercise or conversion period Voting rights absolute Voting rights%0.00%Total 0.00Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements b.2.Instruments according to section 38(1)no.2 WpHG Type of instrument Expiration or maturity date Exercise or conversion period Cash or physical settlement Voting rights absolute Voting rights%Total 8.Information in relation to the party subject to the notification obligation Party subject to the notification obligation(3.)is not controlled nor does it control any other undertaking(s)that directly or indirectly hold(s)an interest in the(underlying)issuer(1.).9.In case of proxy voting according to section 34(3)WpHG Date of Annual General Meeting:%of voting rights attached to shares%of voting rights through instruments Total of both( 27 Subsequent events There were no subsequent events with a significant effect on the annual financial statements as of December 31,2024.28 Corporate bodies MEMBERS OF THE EXECUTIVE BOARD Members of the Executive Board Membership on supervisory boards and other control bodies Dr.OliverBlume(*1968)Membership of statutory supervisory boards in Germany Chairman(since 2015)Chairman of the Board of Management of Volkswagen AG Beginning of membership of the Executive Board:2013 Nationality:German CARIAD SE,Wolfsburg(Chairman)1 LutzMeschke(*1966)Membership of statutory supervisory boards in Germany Deputy Chairman(since 2015)Finance and IT Beginning of membership of the Executive Board:2009 Nationality:German,Croatian Porsche Leipzig GmbH,Leipzig(Chairman)2 VfB Stuttgart 1893 AG,Stuttgart(since February 7,2024,Deputy Chairman since September 27,2024)1 Comparable appointments in Germany and abroad European Transport Solutions S.r.l.,Luxembourg1 MHP Management und IT-Beratung GmbH,Ludwigsburg(Chairman)2 Porsche Consulting GmbH,Bietigheim-Bissingen(Chairman)2 Porsche Deutschland GmbH,Bietigheim-Bissingen2 Porsche Digital GmbH,Ludwigsburg2 Porsche eBike Performance GmbH,Ottobrunn(Chairman)2 Porsche Engineering Group GmbH,Weissach2 Porsche Engineering Services GmbH,Bietigheim-Bissingen2 Porsche Enterprises Inc.,Atlanta2 Porsche Financial Services GmbH,Bietigheim-Bissingen(Chairman)2 Porsche Investments Management S.A.,Luxembourg(Chairman)2 Porsche Lifestyle GmbH&Co.KG,Ludwigsburg(Chairman)2 Rimac Group d.o.o.,Sveta Nedelja1 Incharge Capital Partners GmbH,Hamburg(since March 19,2024)1 1 Appointment outside the group 2 Appointment within the group 29Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Members of the Executive Board Membership on supervisory boards and other control bodies BarbaraFrenkel(*1963)Comparable appointments in Germany and abroad Procurement Beginning of membership of the Executive Board:2021 Nationality:German Porsche Deutschland GmbH,Bietigheim-Bissingen2 Stiftung Mnchner Sicherheitskonferenz GmbH,Munich1 AndreasHaffner(*1965)Membership of statutory supervisory boards in Germany Human Resources and Social Affairs Beginning of membership of the Executive Board:2015 Nationality:German Porsche Leipzig GmbH,Leipzig2 Comparable appointments in Germany and abroad Porsche Dienstleistungs GmbH,Stuttgart(Chairman)2 Porsche Werkzeugbau GmbH,Schwarzenberg2 Porsche Consulting GmbH,Bietigheim-Bissingen2 MHP Management und IT-Beratung GmbH,Ludwigsburg2 Sajjad Khan(*1973)Comparable appointments in Germany and abroad Car-IT Beginning of membership of the Executive Board:2023 Nationality:German Porsche Digital GmbH,Ludwigsburg(Chairman)2 Porsche Engineering Group GmbH,Weissach2 Detlev vonPlaten(*1964)Membership of statutory supervisory boards in Germany Sales and Marketing Beginning of membership of the Executive Board:2015 Nationality:German,French,American Porsche Leipzig GmbH,Leipzig2 Comparable appointments in Germany and abroad Porsche Deutschland GmbH,Bietigheim-Bissingen(Chairman)2 Porsche Digital GmbH,Ludwigsburg2 Porsche Enterprises Inc.,Atlanta2 Porsche Financial Services GmbH Bietigheim-Bissingen2 Porsche Lifestyle GmbH&Co.KG,Ludwigsburg2 Porsche Logistik GmbH,Stuttgart2 AlbrechtReimold(*1961)Membership of statutory supervisory boards in Germany Production and Logistics Beginning of membership of the Executive Board:2016 Nationality:German Porsche Leipzig GmbH,Leipzig(Chairman)2 VfB Stuttgart 1893 AG,Stuttgart(since February 7,2024)1 Comparable appointments in Germany and abroad KS HUAYU AluTech GmbH,Neckarsulm1 Porsche Werkzeugbau GmbH,Schwarzenberg(Chairman)2 Porsche Logistik GmbH,Stuttgart(Chairman)2 Smart Press Shop GmbH&Co.KG,Halle1 Volkswagen Osnabrck GmbH,Osnabrck1 Dr.MichaelSteiner(*1964)Membership of statutory supervisory boards in Germany Research and Development Beginning of membership of the Executive Board:2016 Nationality:German CARIAD SE,Wolfsburg1 Comparable appointments in Germany and abroad Cellforce Group GmbH,Tbingen(Chairman)2 Group14 Technologies,Inc.,Woodinville1 HIF Global LLC,Delaware1 Porsche Digital GmbH,Ludwigsburg2 Porsche Engineering Group GmbH,Weissach(Chairman)2 Porsche Engineering Services GmbH,Bietigheim-Bissingen(Chairman)2 Porsche E-Bike Performance GmbH,Ottobrunn2 1 Appointment outside the group 2 Appointment within the group 30 MEMBERS OF THE SUPERVISORY BOARD AND COMPOSITION OF THE COMMITTEES Members of the Supervisory Board Membership on supervisory boards and other control bodies Dr.Wolfgang Porsche(*1943)Membership of statutory supervisory boards in Germany Chairman Business administration graduate Member since:2009 Nationality:Austrian Porsche Automobil Holding SE,Stuttgart(Chairman)1,3 Volkswagen AG,Wolfsburg1,3 AUDI AG,Ingolstadt1 Comparable appointments in Germany and abroad Porsche Holding Gesellschaft m.b.H.,Salzburg1 Familie Porsche AG Beteiligungsgesellschaft,Salzburg(Chairman)1 Schmittenhhebahn AG,Zell am See(until May 23,2024)1 Jordana Vogiatzi(*1976)Membership of statutory supervisory boards in Germany Deputy Chairwoman Managing Director of Members and Finance of IG Metall Stuttgart Member since:2014 Nationality:German,Greek Porsche Leipzig GmbH,Leipzig2 Dr.Arno Antlitz(*1970)Membership of statutory supervisory boards in Germany Member of the Board of Management of Volkswagen AG for Finance and Operations Member since:2021 Nationality:German Volkswagen Financial Services AG,Braunschweig(Chairman)1 PowerCo SE,Salzgitter1 Comparable appointments in Germany and abroad Volkswagen Group of America,Inc.,Herndon(Chairman)1 Volkswagen(China)Investment Co.,Ltd.,Beijing1 Porsche Austria Gesellschaft m.b.H.,Salzburg(Deputy Chairman)1 Porsche Holding Gesellschaft m.b.H.,Salzburg(Deputy Chairman)1 Porsche Retail Gesellschaft m.b.H.,Salzburg(Deputy Chairman)1 Dr.Christian Dahlheim(*1968)Membership of statutory supervisory boards in Germany Chairman of the Board of Volkswagen Financial Services AG Member since:2020 Nationality:German Volkswagen Bank GmbH,Braunschweig1 Comparable appointments in Germany and abroad Porsche Bank AG,Salzburg1 Volkswagen Finance(China)Co.,Ltd.,Beijing1 VW New Mobility Services Investment Co.,Ltd.,Shanghai1 VDF Faktoring A.S.,Istanbul(Chairman)1 VDF Filo Kiralama A.S.,Istanbul(Chairman)1 VDF Sigorta Aracilik Hizmetleri A.S.,Istanbul(Chairman)1 VDF Servis ve Ticaret A.S.,Istanbul(Chairman)1 Volkswagen Dogus Finansman A.S.,Istanbul(Chairman)1 Volkswagen Semler Finans Danmark A/S,Brndby(Chairman)1 Volkswagen Participaes Ltda.,So Paulo(Chairman)1 1 Appointment outside the group 2 Appointment within the group 3 Listed company 31Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Members of the Supervisory Board Membership on supervisory boards and other control bodies Micaela le Divelec Lemmi(*1968)Comparable appointments in Germany and abroad Non-executive member of the Board of Directors of De Longhi Group and Benetton S.p.A.Member since:2022 Nationality:Italian De Longhi S.p.A.,Treviso1,3 Benetton S.p.A.(until June 18,2024)1 Melissa Di Donato Roos(*1972)Comparable appointments in Germany and abroad Chair&Chief Executive Officer at Kyriba Corp.Member since:2022 Nationality:American,British J.P.Morgan Europe Limited1 Dr.Hans Michel Pich(*1942)Attorney at law Member since:2009 Nationality:Austrian Membership of statutory supervisory boards in Germany AUDI AG,Ingolstadt1 Volkswagen AG,Wolfsburg1,3 Porsche Automobil Holding SE,Stuttgart(Deputy Chairman)1,3 Comparable appointments in Germany and abroad Porsche Holding Gesellschaft m.b.H.,Salzburg1 Schmittenhhebahn AG,Zell am See1 Hans Dieter Ptsch(*1951)Chairman of the Board of Management of Porsche Automobil Holding SE Chairman of the Supervisory Board of Volkswagen AG Member since:2010 Nationality:Austrian Membership of statutory supervisory boards in Germany AUDI AG,Ingolstadt1 Volkswagen AG,Wolfsburg(Chairman)1,3 Bertelsmann Management SE,Gtersloh1 Bertelsmann SE&Co.KGaA,Gtersloh1 TRATON SE,Munich(Chairman)1,3 Wolfsburg AG,Wolfsburg1 Comparable appointments in Germany and abroad Autostadt GmbH,Wolfsburg1 Porsche Austria Gesellschaft m.b.H.,Salzburg(Chairman)1 Porsche Holding Gesellschaft m.b.H.,Salzburg(Chairman)1 Porsche Retail GmbH,Salzburg(Chairman)1 VfL Wolfsburg-Fuball GmbH,Wolfsburg(Deputy Chairman)1 Dr.Ferdinand Oliver Porsche(*1961)Membership of statutory supervisory boards in Germany Member of the Board of Management of Familie Porsche AG Beteiligungsgesellschaft Member since:2010 Nationality:Austrian Porsche Automobil Holding SE,Stuttgart1,3 AUDI AG,Ingolstadt1 Volkswagen AG,Wolfsburg1,3 Comparable appointments in Germany and abroad Porsche Holding Gesellschaft m.b.H.,Salzburg1 Porsche Lifestyle GmbH&Co.KG,Ludwigsburg2 Dr.Hans Peter Schtzinger(*1960)Membership of statutory supervisory boards in Germany Spokesperson for the management of Porsche Holding GmbH Member since:2017 Nationality:Austrian Volkswagen Financial Services AG,Braunschweig(Deputy Chairman)1 Comparable appointments in Germany and abroad Porsche Hungaria Kereskedelmi Kft.,Budapest1 Volkswagen Financn sluby Slovensko s.r.o.,Bratislava(until November 26,2024)1 Volkswagen Group Italia S.p.A.1(since July 1,2024;Chairman)Volkswagen Group Svergine AB1(since July 1,2024;Chairman)Porsche Versicherungs AG,Salzburg(Chairman)1 Porsche Bank AG,Salzburg(Chairman until September 23,2024)1 Din Bil Sverige AB,Stockholm1 Gletscherbahnen Kaprun AG,Kaprun1 Schmittenhhebahn AG,Zell am See(Chairman)1 1 Appointment outside the group 2 Appointment within the group 3 Listed company 32 Members of the Supervisory Board Membership on supervisory boards and other control bodies Hauke Stars(*1967)Membership of statutory supervisory boards in Germany Member of the Board of Management of Volkswagen AG for IT Member since:2022 Nationality:German AUDI AG,Ingolstadt1 CARIAD SE,Wolfsburg1 RWE AG,Essen1,3 PowerCo SE,Salzgitter1 Comparable appointments in Germany and abroad Khne Nagel International AG,Schindellegi1,3 Ibrahim Aslan(*1973)(until June 7,2024)(As of June 7,2024)Member of the works council Zuffenhausen/Ludwigsburg/Sachsenheim;head of representatives body Member since:2022 Nationality:German Harald Buck(*1962)Membership of statutory supervisory boards in Germany Chairman of the works council Zuffenhausen/Ludwigsburg/Sachsenheim Chairman of Porsche general and group works council Member since:2019 Nationality:German Volkswagen AG,Wolfsburg1,3 Wolfgang von Dhren(*1962)(until June 7,2024)(As of June 7,2024)Head of International VIP&Special Sales Porsche AG Member since:2014 Nationality:German Martina Holzbauer(*1983)Deputy Chairwoman of the works council Zuffen-hausen/Ludwigsburg/Sachsenheim;Member of Porsche general and group works council Member since:2024 Nationality:German Akan Isik(*1971)Works council Zuffenhausen Member of Porsche general and group works council Member since:2019 Nationality:German Nora Leser(*1981)(until June 7,2024)(As of June 7,2024)Trade union secretary of IG MetallStuttgart office Member since:2021 Nationality:German Comparable appointments in Germany and abroad Thales Deutschland GmbH,Ditzingen1 Knut Lofski(*1963)Chairman of the works council Porsche Leipzig;Member of Porsche group works council Member since:2019 Nationality:German Membership of statutory supervisory boards in Germany Porsche Leipzig GmbH,Leipzig(Deputy Chairman)2 1 Appointment outside the group 2 Appointment within the group 3 Listed company 33Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Members of the Supervisory Board Membership on supervisory boards and other control bodies Steffen Reiig(*1981)(since June 7,2024)Membership of statutory supervisory boards in Germany First Authorized Representative and Treasurer of IG Metall Leipzig Member since:2019 Nationality:German Porsche Leipzig GmbH,Leipzig2 Vera Schalwig(*1979)Head of Human Resources Zuffenhausen Member since:2021 Nationality:German Stefan Schaumburg(*1961)(until June 7,2024)(As of June 7,2024)Trade Union Secretary/Head of the Functional Area of Collective Bargaining at the Board of Management of IG Metall Member since:2021 Nationality:German Conny Schnhardt(*1978)(since June 7,2024)Head of the Mobility and Vehicle Construction Unit IG Metall Executive Board,Trade Union Secretary Member since:2024 Nationality:German Membership of statutory supervisory boards in Germany Volkswagen AG,Wolfsburg1,3 CARIAD SE,Wolfsburg1 PowerCo SE,Salzgitter1 Volkswagen Bank GmbH,Braunschweig(until June 30,2024)1 Carsten Schumacher(*1987)Membership of statutory supervisory boards in Germany Chairman of the works council Weissach Member of Porsche general and group works council Member since:2019 Nationality:German CARIAD SE,Wolfsburg1 Heidi Zink-Larson(*1977)(since June 7,2024)Deputy Chairwoman of the works council Weissach;Member of Porsche general works council Member since:2024 Nationality:German 1 Appointment outside the group 2 Appointment within the group 3 Listed company 34 COMMITTEES OF THE SUPERVISORY BOARD OF PORSCHE AG AS OF DECEMBER 31,2024 Members of the Executive Committee Dr.Wolfgang Porsche(Chairman)Dr.Arno Antlitz Hauke Stars Jordana Vogiatzi Harald Buck Carsten Schumacher Members of the Audit Committee Dr.Christian Dahlheim(Chairman)Micaela le Divelec Lemmi Dr.Ferdinand Oliver Porsche Carsten Schumacher Jordana Vogiatzi Harald Buck Members of the mediation committee pursuant to section 27(3)of the Mitbestimmungsgesetz(German Codetermination Act)Dr.Wolfgang Porsche(Chairman)Hauke Stars Jordana Vogiatzi Harald Buck Members of the Nomination Committee Dr.Wolfgang Porsche(Chairman)Dr.Arno Antlitz Hauke Stars Members of the Related Party Committee Dr.Hans Michel Pich Micaela le Divelec Lemmi Hauke Stars Knut Lofski Akan Isik 35Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements 29 List of shareholdings Shareholdings pursuant to sections 285 and 313 HGB for Porsche AG and the Porsche AG Group as well as presentation of the entities included in the consolidated financial statements of Porsche AG pursuant to IFRS 12 as of December 31,2024.Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year I.PARENT COMPANY Dr.Ing.h.c.F.Porsche AG Stuttgart II.SUBSIDIARIES A.Consolidated companies 1.Germany Manthey Racing GmbH Meuspath Germany EUR 51.00 -51.00 12,345 2,270 2023 MHP Management-und IT-Beratung GmbH Ludwigsburg Germany EUR -100.00 100.00 312,487 77,362 2023 Porsche Consulting GmbH Bietigheim-Bissingen Germany EUR 100.00 -100.00 700 -1 2023 Porsche Deutschland GmbH Bietigheim-Bissingen Germany EUR 100.00 -100.00 18,120 -1 2023 Porsche Dienstleistungs GmbH Stuttgart Germany EUR 100.00 -100.00 43 -1 2023 Porsche Digital GmbH Ludwigsburg Germany EUR 100.00 -100.00 20,025 -1 2023 Porsche Engineering Group GmbH Weissach Germany EUR 100.00 -100.00 4,000 -1 2023 Porsche Engineering Services GmbH Bietigheim-Bissingen Germany EUR 100.00 -100.00 1,601 -1 2023 Porsche Erste Beteiligungsgesellschaft mbH Stuttgart Germany EUR 100.00 -100.00 534,920 -1 2023 Porsche Financial Services GmbH Bietigheim-Bissingen Germany EUR 100.00 -100.00 26,608 -1 2023 Porsche Financial Services GmbH&Co.KG Bietigheim-Bissingen Germany EUR -100.00 100.00 184,474 14,502 2023 Porsche Financial Services Verwaltungsgesellschaft mbH Bietigheim-Bissingen Germany EUR -100.00 100.00 119 7 2023 Porsche Immobilien GmbH&Co.KG Stuttgart Germany EUR 100.00 -100.00 59,971 8,113 2023 Porsche Leipzig GmbH Leipzig Germany EUR 100.00 -100.00 2,500 -1 2023 Porsche Lifestyle GmbH&Co.KG Ludwigsburg Germany EUR 100.00 -100.00 10,539 22,090 2023 Porsche Logistik GmbH Stuttgart Germany EUR 100.00 -100.00 1,000 -1 2023 Porsche Niederlassung Berlin GmbH Berlin Germany EUR -100.00 100.00 2,500 -1 2023 36 Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Porsche Niederlassung Berlin-Potsdam GmbH Klein-machnow Germany EUR -100.00 100.00 1,700 -1 2023 Porsche Niederlassung Hamburg GmbH Hamburg Germany EUR -100.00 100.00 2,000 -1 2023 Porsche Niederlassung Stuttgart GmbH Stuttgart Germany EUR -100.00 100.00 2,500 -1 2023 Porsche Nordamerika Holding GmbH Ludwigsburg Germany EUR 100.00 -100.00 58,311 -1 2023 Porsche Sales&Marketplace GmbH Stuttgart Germany EUR 100.00 -100.00 2,200 2 1 2023 Porsche Verwaltungsgesellschaft mit beschrnkter Haftung Ludwigsburg Germany EUR 100.00 -100.00 43 5 2023 Porsche Werkzeugbau GmbH Schwarzen-berg Germany EUR 100.00 -100.00 70,881 2,688 2023 Porsche Zentrum Hoppegarten GmbH Stuttgart Germany EUR -100.00 100.00 2,556 -1 2023 UI-356 fund Frankfurt am Main Germany EUR 84.59 15.41 100.00 1,597,567 97,606 2 2023 UI-SP25 fund Frankfurt am Main Germany EUR 100.00 -100.00 412,175 17,974 2 2023 2.International Carrera Finance S.A.Luxembourg Luxembourg EUR -31 -2 2023 Carrera Italia SPV S.r.l.Conegliano Italy EUR -10 -2 2023 MHP Consulting Romania S.R.L.Cluj-Napoca Romania RON 4.9744 -100.00 100.00 31,044 10,390 2023 Nard Technical Center S.r.l.Santa Chiara di Nard Italy EUR -100.00 100.00 16,751 3,127 2023 PCREST II Holdings Ltd.Vancouver/BC Canada CAD 1.4972 -100.00 100.00 990 -2 2023 PCREST Ltd.Mississauga/ON Canada CAD 1.4972 -100.00 100.00 3 -3 2023 PCTX LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 506 -2023 PJOLT-1 LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 99,673 44,654 2,4 2023 Porsamadrid S.L.Madrid Spain EUR -100.00 100.00 11,611 4,897 2023 Porsche(China)Motors Ltd.Shanghai China CNY 7.5986 -100.00 100.00 5,294,453 2,141,019 2023 Porsche(Shanghai)Commercial Services Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 615,462 108,210 2023 Porsche Asia Pacific Pte.Ltd.Singapore Singapore SGD 1.4189 100.00 -100.00 101,454 21,647 2023 Porsche Auto Funding LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 49,000 -2 2023 Porsche Aviation Products,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 697 26 2023 Porsche Brasil Importadora de Veculos Ltda.So Paulo Brazil BRL 6.4314 100.00 -100.00 240,117 230,117 2023 Porsche Business Services,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 20,066 5,544 2023 Porsche Canadian Funding II L.P.Mississauga/ON Canada CAD 1.4972 -100.00 100.00 229,893 10,616 2 2023 37Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Porsche Canadian Funding L.P.Mississauga/ON Canada CAD 1.4972 -100.00 100.00 106,913 6,170 2023 Porsche Canadian Investment ULC Halifax/NS Canada CAD 1.4972 -100.00 100.00 616 -61 2023 Porsche Cars Australia Pty.Ltd.Collingwood Australia AUD 1.6761 100.00 -100.00 197,715 21,996 2023 Porsche Cars Canada Ltd.Toronto/ON Canada CAD 1.4972 -100.00 100.00 246,472 31,795 2023 Porsche Cars Great Britain Ltd.Reading Great Britain GBP 0.8302 -100.00 100.00 197,817 33,446 2023 Porsche Cars North America,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 2,141,374 635,917 2023 Porsche Central and Eastern Europe s.r.o.Prague Czech Republic CZK 25.1505 100.00 -100.00 169,196 17,502 2023 Porsche Centre Beijing Central Ltd.Beijing China CNY 7.5986 -100.00 100.00 42,458 37,267 2023 Porsche Centre Beijing Goldenport Ltd.Beijing China CNY 7.5986 -100.00 100.00 24,445 22,945 2023 Porsche Centre North Toronto Ltd.Toronto/ON Canada CAD 1.4972 -100.00 100.00 26,430 5,093 2023 Porsche Centre Shanghai Pudong Ltd.Shanghai China CNY 7.5986 -100.00 100.00 85,173 54,448 2023 Porsche Centre Shanghai Waigaoqiao Ltd.Shanghai China CNY 7.5986 -100.00 100.00 92,214 22,982 2023 Porsche Consulting Ltd.Shanghai China CNY 7.5986 -100.00 100.00 69,296 15,423 2023 Porsche Consulting S.r.l.Milan Italy EUR -100.00 100.00 22,372 3,621 2023 Porsche Consulting,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 5,205 489 2023 Porsche Design GmbH Zell am See Austria EUR -100.00 100.00 4,393 1,741 2023 Porsche Design of America,Inc.Ontario/CA USA USD 1.0410 -100.00 100.00 2,832 159 2023 Porsche Distribution S.A.S.Vlizy-Villacoublay France EUR -100.00 100.00 44,641 3,420 2023 Porsche Engineering Services s.r.o.Prague Czech Republic CZK 25.1505 -100.00 100.00 502,017 121,563 2023 Porsche Enterprises,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 246,660 1,016,969 2023 Porsche Financial Auto Securitization Trust 2023-1 Atlanta/GA USA USD 1.0410 -100.00 100.00 17,379 -6,621 2,4 2023 Porsche Financial Auto Securitization Trust 2023-2 Atlanta/GA USA USD 1.0410 -100.00 100.00 19,114 -1,886 2,4 2023 Porsche Financial Auto Securitization Trust 2024-1 Atlanta/GA USA USD 1.0410 -100.00 100.00 -2,4,5 2024 Porsche Financial Auto Securitization Trust 2025-1 Atlanta/GA USA USD 1.0410 -100.00 100.00 -2,4,5 2024 Porsche Financial Leasing Ltd.Shanghai China CNY 7.5986 -100.00 100.00 315,161 82 2023 Porsche Financial Services Australia Pty.Ltd.Collingwood Australia AUD 1.6761 -100.00 100.00 5,439 945 2023 Porsche Financial Services Canada G.P.Mississauga/ON Canada CAD 1.4972 -100.00 100.00 34,815 2,891 6 2023 38 Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Porsche Financial Services France S.A.S.Asnires-sur-Seine France EUR -100.00 100.00 25,286 3,649 2023 Porsche Financial Services Great Britain Ltd.Reading United Kingdom GBP 0.8302 -100.00 100.00 36,054 9,268 2023 Porsche Financial Services Italia S.p.A.Padua Italy EUR -100.00 100.00 101,020 10,796 2023 Porsche Financial Services Japan K.K.Tokyo Japan JPY 163.2300 -100.00 100.00 8,605,696 976,254 2023 Porsche Financial Services Korea Ltd.Seoul South Korea KRW 1,534.3200 -100.00 100.00 106,305,485 6,604,656 2023 Porsche Financial Services Schweiz AG Rotkreuz Switzerland CHF 0.9421 -100.00 100.00 22,001 3,332 2023 Porsche Financial Services,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 242,037 33,690 6 2023 Porsche France S.A.S.Asnires-sur-Seine France EUR -100.00 100.00 149,810 10,446 2023 Porsche Funding L.P.Atlanta/GA USA USD 1.0410 -100.00 100.00 257,844 489,752 2023 Porsche Hong Kong Ltd.Hong Kong Hong Kong HKD 8.0843 100.00 -100.00 2,297,711 532,180 2023 Porsche Ibrica S.A.Madrid Spain EUR 99.99 -99.99 128,115 13,140 2023 Porsche Innovative Lease Owner Trust 2016-A Atlanta/GA USA USD 1.0410 -100.00 100.00 44,848 -4,609 2 2023 Porsche Innovative Lease Owner Trust 2024-1 Atlanta/GA USA USD 1.0410 -100.00 100.00 -2,4,5 2024 Porsche Innovative Lease Owner Trust 2024-2 Atlanta/GA USA USD 1.0410 -100.00 100.00 -2,4,5 2024 Porsche International Financing DAC Dublin Ireland EUR 100.00 -100.00 189,105 4,408 2023 Porsche International Reinsurance DAC Dublin Ireland EUR -100.00 100.00 271,015 33,734 2023 Porsche Investments Management S.A.Luxembourg Luxembourg EUR 100.00 -100.00 2,726,057 -41,556 2023 Porsche Italia S.p.A.Padua Italy EUR -100.00 100.00 165,441 14,781 2023 Porsche Japan K.K.Tokyo Japan JPY 163.2300 100.00 -100.00 9,391,076 3,570,960 2023 Porsche Korea Ltd.Seoul South Korea KRW 1,534.3200 100.00 -100.00 72,823,155 43,081,379 2023 Porsche Latin America,Inc.Miami/FL USA USD 1.0410 -100.00 100.00 5,504 526 2023 Porsche Leasing Ltd.Atlanta/GA USA USD 1.0410 -100.00 100.00 -980,391 -589,915 2 2023 Porsche Logistics Services LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 5,003 161 2023 Porsche Middle East and Africa FZE Dubai United Arab Emirates USD 1.0410 100.00 -100.00 34,675 25,056 2023 Porsche Motorsport North America,Inc.Santa Ana/CA USA USD 1.0410 -100.00 100.00 18,075 2,928 2023 Porsche Norge AS Oslo Norway NOK 11.7832 75.00 -75.00 25,540 -40,460 2023 Porsche Retail Group Australia Pty.Ltd.Collingwood Australia AUD 1.6761 -100.00 100.00 76,145 14,452 2023 Porsche Retail Group Ltd.Reading United Kingdom GBP 0.8302 -100.00 100.00 88,341 16,622 2023 Porsche Retail Italia S.r.l.Milan Italy EUR -100.00 100.00 29,103 7,611 2023 Porsche Sales&Marketplace Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 -1,887 -227 2023 Porsche Schweiz AG Rotkreuz Switzerland CHF 0.9421 -100.00 100.00 52,602 10,831 2023 39Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Porsche Services Ibrica,S.L.Madrid Spain EUR -100.00 100.00 2,061 274 2023 Porsche Singapore Pte.Ltd.Singapore Singapore SGD 1.4189 -75.00 75.00 2,239 13 2023 Porsche Taiwan Motors Ltd.Taipei Taiwan TWD 34.1011 -100.00 100.00 1,375,395 1,193,730 2023 Porsche Zentrum Zug,Risch AG Rotkreuz Switzerland CHF 0.9421 -100.00 100.00 17,964 5,496 2023 PPF Holding AG Zug Switzerland CHF 0.9421 100.00 -100.00 6,632 -31 2023 PREV LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 79,378 3,952 2 2023 Shanghai Jie Gang Enterprise Management Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 23,642 -79 2023 B.Unconsolidated companies 1.Germany Cellforce Group GmbH Tbingen Germany EUR -100.00 100.00 -64,252 -79,956 1 2023 Cetitec GmbH Pforzheim Germany EUR 100.00 -100.00 5,838 1,701 2023 Dastera Grundstcksverwaltungsgesellschaft mbH&Co.Vermietungs KG Mainz Germany EUR 94.00 -94.00 -522 -74 2 2023 Datura Grundstcksverwaltungsgesellschaft mbH&Co.Vermietungs KG Mainz Germany EUR 94.00 -94.00 -172 15 2 2023 Initium GmbH Berlin Germany EUR -100.00 100.00 125 -1 2023 Manthey Servicezentrum GmbH Meuspath Germany EUR -100.00 100.00 1,493 625 2023 OverTake GmbH Cologne Germany EUR 100.00 -100.00 707 -994 2023 Porsche eBike Performance GmbH Ottobrunn Germany EUR -60.00 60.00 108,477 -31,436 2023 Porsche Sechste Beteiligungsgesellschaft mbH Stuttgart Germany EUR 100.00 -100.00 27 0 2023 serva GmbH,in liquidation Stuttgart Germany EUR -100.00 100.00 1,163 -24 7 2023 Smart Zero UG(haftungsbeschrnkt),in liquidation Berlin Germany EUR -100.00 100.00 -7 2024 2.International AFN Ltd.Reading United Kingdom GBP 0.8302 -100.00 100.00 0 -3 2023 Cetitec d.o.o.Cakovec Croatia EUR -100.00 100.00 469 466 2023 Cetitec USA Inc.,in liquidation Dublin/OH USA USD 1.0410 -100.00 100.00 177 -27 7 2023 Greyp ESOP d.d.,jsc Zagreb Croatia EUR -90.05 90.05 42 7 2 2023 MHP(Shanghai)Management Consultancy Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 32,808 1,598 2023 MHP Americas,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 438 -1,347 2023 MHP Consulting UK Ltd.Birmingham United Kingdom GBP 0.8302 -100.00 100.00 -83 38 2023 MHP Management and IT Consulting Mexico,S.de R.L.de C.V.Guadalajara Mexico MXN 21.5892 -100.00 100.00 6,209 1,005 2023 40 Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year OOO Porsche Center Moscow Moscow Russian Federation RUB 112.4384 -100.00 100.00 923,176 -82,121 2023 OOO Porsche Financial Services Russland Moscow Russian Federation RUB 112.4384 -100.00 100.00 292,344 4,072 2023 OOO Porsche Russland Moscow Russian Federation RUB 112.4384 99.00 1.00 100.00 2,291,165 -690,375 2023 Porsche(Shanghai)Investment Ltd.Shanghai China CNY 7.5986 -100.00 100.00 -5 2024 Porsche Arctic Center Oy Hanhimaa Finland EUR -100.00 100.00 2,554 242 8 2024 Porsche Consulting Canada Ltd.Toronto/ON Canada CAD 1.4972 -100.00 100.00 2,860 452 2023 Porsche Consulting Ltda.So Paulo Brazil BRL 6.4314 -100.00 100.00 1,500 -1,185 2023 Porsche Consulting S.A.S.Paris France EUR -100.00 100.00 1,000 1,451 2023 Porsche Design Asia Hong Kong Ltd.Hong Kong Hong Kong HKD 8.0843 -100.00 100.00 3,507 118 2023 Porsche Design Great Britain Ltd.Reading United Kingdom GBP 0.8302 -100.00 100.00 1 6,479 2023 Porsche Design Italia S.r.l.Padua Italy EUR -100.00 100.00 272 -4 2023 Porsche Design Netherlands B.V.Roermond Netherlands EUR -100.00 100.00 938 -53 2023 Porsche Design Sales(Shanghai)Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 660 -143 3 2023 Porsche Design Studio North America,Inc.Beverly Hills/CA USA USD 1.0410 -100.00 100.00 48 -3 2023 Porsche Design Timepieces AG Solothurn Switzerland CHF 0.9421 -100.00 100.00 5,717 1,103 2023 Porsche Digital China Ltd.Shanghai China CNY 7.5986 -100.00 100.00 33,394 10,506 2023 Porsche Digital Croatia d.o.o.Zagreb Croatia EUR -50.00 50.00 3,418 2,222 9 2023 Porsche Digital Espaa,S.L.Barcelona Spain EUR -100.00 100.00 465 285 2023 Porsche Digital Israel Ltd.Tel Aviv Israel ILS 3.7953 -100.00 100.00 2,783 784 2023 Porsche Digital,Inc.Atlanta/GA USA USD 1.0410 -100.00 100.00 22,578 -5,622 2023 Porsche Drive Canada,Ltd.Toronto/ON Canada CAD 1.4972 -100.00 100.00 777 -656 2023 Porsche Drive LLC Atlanta/GA USA USD 1.0410 -100.00 100.00 536 -5,001 2023 Porsche Drive S.r.l.Trento Italy EUR -100.00 100.00 1,582 369 2023 Porsche eBike Performance d.o.o.Sveta Nedelja Croatia EUR -68.17 68.17 1,716 -11,251 2023 Porsche Engineering(Shanghai)Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 122,533 50,465 2023 Porsche Engineering Romania S.R.L.Cluj-Napoca Romania RON 4.9744 -100.00 100.00 19,312 5,887 2023 Porsche Engineering Services North America,Inc.Carson/CA USA USD 1.0410 -100.00 100.00 505 5 4 2023 Porsche Investments Management I S.r.l.Luxembourg Luxembourg EUR -100.00 100.00 1,981 -19 4 2023 Porsche Motorsport Asia-Pacific Ltd.Shanghai China CNY 7.5986 -100.00 100.00 17,773 3,659 2023 Porsche Polska Sp.z o.o.Warsaw Poland PLN 4.2719 -100.00 100.00 -5 2024 41Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Porsche Private Markets GP S.r.l.Luxembourg Luxembourg EUR -100.00 100.00 -5 2024 Porsche Sales&Marketplace Canada,Ltd.Toronto/ON Canada CAD 1.4972 -100.00 100.00 1,690 632 2023 Porsche Services Korea LLC Seoul South Korea KRW 1,534.3200 -100.00 100.00 4,105,963 240,744 2023 Porsche Services Middle East&Africa FZE Dubai United Arab Emirates USD 1.0410 -100.00 100.00 1,356 473 2023 Porsche Services Singapore Pte.Ltd.Singapore Singapore SGD 1.4189 -100.00 100.00 -546 -150 2023 Porsche Smart Battery Shop s.r.o.Dubnica nad Vhom Slovakia EUR -100.00 100.00 31,540 466 2023 Porsche Werkzeugbau s.r.o.Dubnica nad Vhom Slovakia EUR -100.00 100.00 19,118 1,362 2023 Ruso IT Solutions Pvt.Ltd.Bangalore India INR 89.1080 -100.00 100.00 -10 2024 Shanghai Advanced Automobile Technical Centre Co.,Ltd.Shanghai China CNY 7.5986 -100.00 100.00 17,257 3,821 2023 III.JOINT VENTURES A.Equity-accounted companies 1.Germany 2.International B.Companies accounted for at cost 1.Germany Axel Springer Porsche GmbH&Co.KG Berlin Germany EUR -50.00 50.00 25,468 -3,016 2023 Axel Springer Porsche Management GmbH Berlin Germany EUR -50.00 50.00 31 19 2022 FlexFactory GmbH,in liquidation Stuttgart Germany EUR -50.00 50.00 240 -1,255 7 2023 Intelligent Energy System Services GmbH Ludwigsburg Germany EUR -50.00 50.00 3,364 1,136 2023 PDB-Partnership for Dummy Technology and Biomechanics GbR Gaimersheim Germany EUR 20.00 -20.00 -11,12 2023 Smart Press Shop GmbH&Co.KG Halle Germany EUR 50.00 -50.00 27,055 3,860 2023 Smart Press Shop Verwaltungs-GmbH Stuttgart Germany EUR 50.00 -50.00 39 3 2023 2.International Bugatti International Holding S.r.l.Luxembourg Luxembourg EUR 49.00 -49.00 92,829 -86 2023 Material Science Center Qatar QSTP-LLC,in liquidation Doha Qatar QAR 3.7948 25.00 -25.00 -3,7 2024 42 Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year IV.ASSOCIATES A.Equity-accounted associates 1.Germany Bertrandt AG Ehningen Germany EUR 28.97 -28.97 364,702 14,935 8 2023 IONITY Holding GmbH&Co.KG Munich Germany EUR -15.12 15.12 559,530 -36,516 2023 2.International Bugatti Rimac d.o.o.Sveta Nedelja Croatia EUR 45.00 -45.00 481,387 -18,776 2023 Group14 Technologies,Inc.Wilmington/DE USA USD 1.0410 -3.36 3.36 596,490 -40,304 13 2023 HIF Global LLC Houston/TX USA USD 1.0410 -10.98 10.98 67,708 -69,602 13 2023 Rimac Group d.o.o.Sveta Nedelja Croatia EUR -20.63 20.63 882,137 -10,043 2023 B.Associates accounted for at cost 1.Germany&Charge GmbH Frankfurt am Main Germany EUR -21.65 21.65 -1,051 -1,151 2023 Customcells Holding GmbH Itzehoe Germany EUR -11.33 11.33 -14 2023 cylib GmbH Aachen Germany EUR -5.48 5.48 -10 2024 Fanzone Media GmbH Berlin Germany EUR -4.99 4.99 -14 2023 New Horizon GmbH Berlin Germany EUR -16.64 16.64 -1,878 -4,852 2023 P2 eBike GmbH Stuttgart Germany EUR -40.00 40.00 535 -158 2023 The Business Romantic Society Verwaltungs GmbH Berlin Germany EUR -20.72 20.72 -2,245 -278 2023 VfB Stuttgart 1893 AG Stuttgart Germany EUR 10.41 -10.41 -10 2024 2.International Autounify,Inc.Wilmington/DE USA USD 1.0410 -33.33 33.33 -10 2024 BrainPower Energy,Inc.Wilmington/DE USA USD 1.0410 -33.33 33.33 -10 2024 IonRoad,Inc.Wilmington/DE USA USD 1.0410 -33.33 33.33 -10 2024 Pull Data Inc.Santa Monica/CA USA USD 1.0410 -33.33 33.33 -14 2023 Sensigo,Inc.Wilmington/DE USA USD 1.0410 -33.33 33.33 -4,14 2023 Stellar Telecommunications S.A.S.Meudon France EUR -20.00 20.00 -875 -434 2023 Vulog S.A.Nice France EUR -6.62 6.62 -10 2024 V.OTHER EQUITY INVESTMENTS 1.Germany 1KOMMA5 GmbH Hamburg Germany EUR -6.24 6.24 248,151 -12,126 2023 43Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year aware THE PLATFORM GmbH,in liquidation Berlin Germany EUR -5.00 5.00 -7,14 2023 Black Semiconductor GmbH Aachen Germany EUR -7.12 7.12 -10 2024 Denizen GmbH Berlin Germany EUR -5.00 5.00 -14 2023 e.ventures europe V GmbH&Co.KG Hamburg Germany EUR -7.91 7.91 66,630 5,599 2 2023 e.ventures europe VI GmbH&Co.KG Hamburg Germany EUR -3.33 3.33 107,134 -3,118 2 2023 Fiducia Mailing Services eG Karlsruhe Germany EUR 0.07 -0.07 -2024 Headline Europe VII GmbH&Co.KG Berlin Germany EUR -3.13 3.13 53,841 -8,369 2 2023 Heartfelt APX GmbH&Co.KG Berlin Germany EUR -14.41 14.41 3,626 -948 2023 HWW-Hchstleistungsrechner fr Wissenschaft und Wirtschaft GmbH Stuttgart Germany EUR 10.00 -10.00 1,450 49 2023 Impact Labs GmbH Hamburg Germany EUR -7.75 7.75 -1,266 -1,113 2023 My Inner Health Club GmbH,in liquidation Berlin Germany EUR -5.00 5.00 -7,14 2023 NitroBox GmbH Hamburg Germany EUR -7.35 7.35 -14 2023 onGRID Sports Technology GmbH Berlin Germany EUR -8.09 8.09 -1,126 -986 2023 Retorio GmbH Munich Germany EUR -7.99 7.99 4,433 -1,561 2023 RYDES GmbH Berlin Germany EUR -11.57 11.57 3,457 1,310 2023 Sharpist GmbH Berlin Germany EUR -3.70 3.70 -14 2023 Tomorrow GmbH Hamburg Germany EUR -3.14 3.14 -10 2024 Triple AI GmbH Berlin Germany EUR -5.69 5.69 900 -275 2023 WORKERBASE GmbH Munich Germany EUR -5.41 5.41 7,957 -1,972 2023 2.International actnano Inc.Dover/DE USA USD 1.0410 -3.59 3.59 -14 2023 AM Batteries LLC Billerica/MA USA USD 1.0410 -1.80 1.80 -14 2023 Anagog Ltd.Tel Aviv Israel ILS 3.7953 -4.74 4.74 -14 2023 Applied Intuition,Inc.Mountain View/CA USA USD 1.0410 -4.46 4.46 -10 2024 Atomic Industries Inc.Cleveland Heights/OH USA USD 1.0410 -5.35 5.35 -14 2023 Bcomp Ltd.Fribourg Switzerland CHF 0.9421 -3.50 3.50 11,033 -8,084 2023 Beijing Achievers Management Consulting Co.,Ltd.Beijing China CNY 7.5986 -14.90 14.90 7,596 -3,308 2023 BQ Holding Ltd.Weymouth United Kingdom GBP -0.30 0.30 -14 2023 Bumper International Ltd.London United Kingdom GBP 0.8302 -4.60 4.60 22,520 -368 2023 CarPutty Inc.Wilmington/DE USA USD 1.0410 -10.08 10.08 -14 2023 Chemix,Inc.Sunnyvale/CA USA USD 1.0410 -5.33 5.33 -10 2024 Connect IQ Labs,Inc.Redwood City/CA USA USD 1.0410 -4.90 4.90 -14 2023 Cresta Intelligence Inc.Wilmington/DE USA USD 1.0410 -0.79 0.79 -14 2023 44 Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Dream Machine Innovations Inc.Wilmington/DE USA USD 1.0410 -5.52 5.52 1 -908 2023 DSP Concepts,Inc.Dover/DE USA USD 1.0410 -4.17 4.17 -14 2023 e.ventures US V,L.P.San Francisco/CA USA USD 1.0410 -3.99 3.99 379,526 -52,463 2 2023 Eve One L.P.Grand Cayman Cayman Islands USD 1.0410 -4.64 4.64 465,017 -3,574 2 2023 Fontinalis Capital Partners III,L.P.Detroit/MI USA USD 1.0410 -9.64 9.64 78,774 -531 2 2023 Griiip Automotive Engineering Ltd.Petach Tikva Israel ILS 3.7953 -4.89 4.89 -14 2023 Grove Ventures II L.P.Grand Cayman Cayman Islands USD 1.0410 -2.50 2.50 85,811 -5,889 2 2023 Grove Ventures III L.P.Grand Cayman Cayman Islands USD 1.0410 -1.63 1.63 35,182 -3,833 2 2023 Grove Ventures L.P.Grand Cayman Cayman Islands USD 1.0410 -9.09 9.09 188,606 -38,085 2 2023 Hangzhou Wanxiang Culture Technology Co.,Ltd.Hangzhou China CNY 7.5986 -3.31 3.31 -14 2023 Intamsys Technology Ltd.Dongguan China CNY 7.5986 -4.78 4.78 -14 2023 KeySavvy,Inc.Big Lake/MN USA USD 1.0410 -7.44 7.44 -10 2024 LAKA Ltd.London United Kingdom GBP 0.8302 -4.10 4.10 5,077 -5,256 13 2023 Magma Growth Equity I L.P.Grand Cayman Cayman Islands USD 1.0410 -11.33 11.33 47,680 -11,939 2 2023 Nozomi Networks,Inc.San Francisco/CA USA USD 1.0410 -0.73 0.73 -14 2023 Playbook Technologies Inc.Ridgewood/NJ USA USD 1.0410 -6.04 6.04 245 -3,135 2023 RSE Markets,Inc.Dover/DE USA USD 1.0410 -4.61 4.61 -14 2023 RunBuggy OMI,Inc.Newark/DE USA USD 1.0410 -2.05 2.05 -14 2023 Semper Vivus Private Markets SCSp SICAV-RAIF Luxembourg Luxembourg EUR -0.01 0.01 -5 2024 Shanghai Powershare Tech Ltd.Shanghai China CNY 7.5986 -2.84 2.84 -14 2023 StretchMe Sp.z o.o.Krakow Poland PLN 4.2719 -9.00 9.00 -14 2023 Tactile Mobility Ltd.Haifa Israel USD 1.0410 -11.14 11.14 12,898 -6,786 2023 The Embassies of Good Living AG Zurich Switzerland CHF 0.9421 -7.15 7.15 -1,707 -835 2023 TriEye Ltd.Tel Aviv Israel USD 1.0410 -3.41 3.41 -14 2023 Urgent.ly Inc.Vienna/VA USA USD 1.0410 -2.08 2.08 9,604 74,169 13 2023 Valence Security Inc.Wilmington/DE USA USD 1.0410 -3.67 3.67 -14 2023 Via Transportation,Inc.New York/NY USA USD 1.0410 -0.03 0.03 -14 2023 Wayray AG Zurich Switzerland USD 1.0410 -7.90 7.90 -14 2023 Xuanlin(Shanghai)Information Technology Co.,Ltd.Shanghai China CNY 7.5986 -6.00 6.00 -14 2023 Zededa,Inc.San Jose/CA USA USD 1.0410 -2.13 2.13 -14 2023 45Annual Financial Statements for Fiscal Year 2024 Notes to the Annual Financial Statements 1 Profit and loss transfer agreement 2 Structured entity in accordance with IFRS 10 and IFRS 12 3 Currently not trading 4 Short fiscal year 5 Newly established/split off-company 6 Figures in accordance with IFRSs 7 In liquidation 8 Different fiscal year 9 Circumstance in accordance with 1 UmwG 10 Newly acquired company 11 Joint operation in accordance with IFRS 11 12 The parent company is shareholder with unlimited liability 13 Consolidated financial statement 14 No published financial statement Stuttgart,February 24,2025 Dr.Ing.h.c.F.Porsche Aktiengesellschaft The Executive Board Porsche AGs interest in capital%Name of company Domicile Country Currency Exchange rate(1=)Dec.31,2024 Direct Indirect Total Equity in thousands,local currency Profit/loss in thousands,local currency Foot-note Year Zync Inc.San Francisco/CA USA USD 1.0410 -5.00 5.00 -14 2023 46To the best of our knowledge,and in accordance with the applicable reporting principles,the annual financial statements prepared in accordance with German accepted accounting principles give a true and fair view of the net assets,financial position and results of operations of Porsche AG,and the combined management report includes a fair review of the development and performance of the business and the position of Porsche AG,together with a description of the material opportunities and risks associated with the expected development of Porsche AG.Stuttgart,February 24,2025 Dr.Ing.h.c.F.Porsche Aktiengesellschaft The Executive Board RESPONSIBILITY STATEMENT47Annual Financial Statements for Fiscal Year 2024 Independent auditors report“Report on the audit of the annual financial statements and of the combined management report OPINIONS We have audited the annual financial statements of Dr.Ing.h.c.F.Porsche Aktiengesellschaft,Stuttgart,which comprise the balance sheet as of December 31,2024,and the income statement for the fiscal year from January 1 to December 31,2024,and notes to the annual financial statements,including the recognition and measurement policies presented therein.In addition,we have audited the management report of Dr.Ing.h.c.F.Porsche Aktiengesellschaft,which is combined with the group management report(“combined management report”),for the fiscal year from January 1 to December 31,2024.In accordance with the German legal requirements,we have not audited the content of the parts of the combined management report specified in the appendix and the company information stated therein that is provided outside of the annual report and is referenced in the combined management report.In our opinion,on the basis of the knowledge obtained in the audit,the accompanying annual financial statements comply,in all material respects,with the requirements of German commercial law applicable to business corporations and give a true and fair view of the net assets and financial position of the company as of December 31,2024 and of its results of operations for the fiscal year from January 1 to December 31,2024 in compliance with German legally required accounting principles,and the accompanying combined management report as a whole provides an appropriate view of the companys position.In all material respects,this combined management report is consistent with the annual financial statements,complies with German legal requirements and appropriately presents the opportunities and risks of future development.We do not express an opinion on the parts of the combined management report listed in the appendix.Pursuant to section 322(3)sentence 1 of the German Commercial Code(HGB),we declare that our audit and our examination have not led to any reservations relating to the legal compliance of the annual financial statements and of the combined management report.BASIS FOR THE OPINIONS We conducted our audit of the annual financial statements and of the combined management report in accordance with section 317 HGB and the EU Audit Regulation(No.537/2014,referred to subsequently as“EU Audit Regulation”)and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprfer Institute of Public Auditors in Germany(IDW).Our responsibilities under those requirements and principles are further described in the“Auditors responsibilities for the audit of the annual financial statements and of the combined management report”section of our auditors report.We are independent of the company in accordance with the requirements of European law and German commercial and professional law,and we have fulfilled our other German professional responsibilities in accordance with these requirements.In addition,in accordance with article 10(2)f)of the EU Audit Regulation,we declare that we have not provided non-audit services prohibited under article 5(1)of the EU Audit Regulation.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements and on the combined management report.INDEPENDENT AUDITORS REPORTTO DR.ING.H.C.F.PORSCHE AKTIENGESELLSCHAFT48 KEY AUDIT MATTERS IN THE AUDIT OF THE ANNUAL FINANCIAL STATEMENTS Key audit matters are those matters that,in our professional judgment,were of most significance in our audit of the annual financial statements for the fiscal year from January 1 to December 31,2024.These matters were addressed in the context of our audit of the annual financial statements as a whole,and in forming our opinion thereon;we do not provide a separate opinion on these matters.Below,we describe what we consider to be the key audit matters:Realization of accounting gains in the course of the contribution in kind of shares in MHP Management-und IT-Beratung GmbH,Ludwigsburg,in return for shares in Porsche Investments Management S.A.,Luxembourg REASONS WHY THE MATTER WAS DETERMINED TO BE A KEY AUDIT MATTER At the beginning of the fiscal year 2024,Porsche AG was a direct 100%shareholder in both MHP Management-und IT-Beratung GmbH,Ludwigsburg(“MHP”),and in Porsche Investments Management S.A.,Luxembourg(“Porsche Investments”).As the sole shareholder,Dr.Ing.h.c.F.Porsche Aktiengesellschaft increased the capital of Porsche Investments by 1,591 million(159,000,000 new shares).The capital increase was carried out by way of a contribution in kind,in which all shares in MHP were contributed as of the valuation date June 19,2024.By measuring the acquisition cost of the shares received at the fair value of the shares given,other operating income from the realization of book gains amounting to 1,326 million was recognized at the level of Dr.Ing.h.c.F.Porsche Aktiengesellschaft.The fair value was determined on the basis of a valuation report prepared by an external expert in accordance with IDW S1,Principles for the Performance of Business Valuations.The determination of the fair value of the contributed shares and thus the acquisition cost entailed the use of considerable judgment,particularly with regard to the determination of future cash flows and the discount rates used.Against the background of the judgment exercised and the underlying complexity of the valuation of the contributed shares and due to the materiality of the other operating income recognized,the realization of book gains and the determination of the acquisition cost of the contributed shares in MHP at fair value was a key audit matter.AUDITORS RESPONSE As part of our audit,we developed an understanding of the background to the transaction
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SAMSUNG ELECTRONICS CO.,LTD.AND ITS SUBSIDIARIES Consolidated Financial StatementsDecember 31,2024 and 2023 (With Independent Auditors Report Thereon)Contents Page Independent Auditors Report1 Consolidated Statements of Financial Position4 Consolidated Statements of Profit or Loss7Consolidated Statements of Comprehensive Income 8Consolidated Statements of Changes in Equity 9 Consolidated Statements of Cash Flows13 Notes to the Consolidated Financial Statements15 152,Teheran-ro,Gangnam-gu,Seoul 06236(Yeoksam-dong,Gangnam Finance Center 27th Floor)Republic of Korea Independent Auditors Report To the Shareholders and Board of Directors of Samsung Electronics Co.,Ltd.:Opinion We have audited the accompanying consolidated financial statements of Samsung Electronics Co.,Ltd.and its subsidiaries(“the Group”),expressed in Korean won,which comprise the consolidated statements of financial position as of December 31,2024,and 2023 and the consolidated statements of profit or loss,comprehensive income,changes in equity and cash flows for the years then ended,and notes,comprising material accounting policy information and other explanatory information.In our opinion,the accompanying consolidated financial statements present fairly,in all material respects,the consolidated financial position of the Group as of December 31,2024 and 2023 and its consolidated financial performance and cash flows for the years then ended in accordance with Korean International Financial Reporting Standards(“Korean IFRS”).Basis for Opinion We conducted our audits in accordance with International Standards on Auditing(“ISAs”)and Korean Standards on Auditing(“KSAs”).Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Consolidated Financial Statements section of our report.We are independent of the Group in accordance with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants(including International Independence Standards)(“IESBA Code”)together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea,and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Key Audit Matters Key audit matters are those matters that,in our professional judgment,were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31,2024.These matters were addressed in the context of our audit of the consolidated financial statements as a whole,and in forming our opinion thereon,and we do not provide a separate opinion on these matters.1)Evaluation of commencement of depreciation related to construction in progress The Groups Device Solutions(DS)division is constructing factories for semiconductor production and begins depreciation of the production lines and equipment when they are available for use.Determining when the assets are available for use requires managements judgment,and as explained in Note 2,Material Accounting Policies,the Groups assessment of when the production lines and equipment are available for use requires managements subjective judgments on whether the assets are operating as intended.We identified the evaluation of commencement of depreciation related to construction in progress as a key audit matter because the DS divisions investments are significant and if the commencement of depreciation is determined contrary to the substance,the impact of depreciation amount on the consolidated financial statements would be significant.The primary audit procedures we performed to address this key audit matter are as follows:Understanding of the Groups accounting policies and the processes and internal controls applied to the evaluation of when the assets are available for use;Evaluating the design and testing the operating effectiveness of the internal controls over the approval on commencement of depreciation related to construction in progress;Evaluating the design and implementation of the operating effectiveness of the internal controls regarding identification and monitoring of aged construction in progress;Inspecting documentation supporting the appropriateness of the commencement of depreciation of construction in progress during the year and subsequent to year-end on a sample basis;and Observing,on a sample basis,whether the Groups construction in progress is in operation.2)Sales deduction related to sales promotion activities The Groups Device eXperience(DX)division performs sales promotion activities,which includes providing price or volume discounts and incentives to customers including retail and telecommunication companies,based on explicit or implicit agreements.As disclosed in Note 2,Material Accounting Policies,and Note 3,Material Accounting Estimates and Assumptions,of the consolidated financial statements,the Group estimates the expected expenditures and discounts resulting from sales promotion activities at the time of revenue recognition and deducts the amount from revenue.We identified the accuracy and completeness of sales deductions from promotional activities as a key audit matter because the calculation of sales deductions involves significant estimates and judgements by management and is subject to possible bias or error and the amount is material to the consolidated financial statements.The primary audit procedures we performed to address this key audit matter are as follows:Evaluating the Groups accounting policies and understanding the processes and internal controls relating to the applied to sales deductions;Evaluating the design and testing the operating effectiveness of internal controls over the approval of the sales deduction policy;Evaluating the design and testing the operating effectiveness of internal controls over the sales deduction estimates and the approval of post-settlement adjustments;Evaluating the reasonableness of the estimates by inspecting,on a sample basis,the documentation supporting sales deductions estimates;and Evaluating the accuracy and completeness of sales deductions by comparing,on a sample basis,the period-end estimates to amounts settled subsequent to the period-end and examining relevant documentation.Other Matters The procedures and practices utilized in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries.The accompanying consolidated financial statements as of and for the years ended December 31,2024 and 2023 have been translated into United States dollars solely for the convenience of the reader.We have audited the translation and,in our opinion,the consolidated financial statements expressed in Korean won have been translated into dollars on the basis set forth in Note 2.18 to the consolidated financial statements.Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Korean IFRS,and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,whether due to fraud or error.In preparing the consolidated financial statements,management is responsible for assessing the Groups ability to continue as a going concern,disclosing,as applicable,matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations,or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Groups financial reporting process.Auditors Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,whether due to fraud or error,and to issue an auditors report that includes our opinion.Reasonable assurance is a high level of assurance,but is not a guarantee that an audit conducted in accordance with ISAs and KSAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if,individually or in aggregate,they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.As part of an audit in accordance with ISAs and KSAs,we exercise professional judgment and maintain professional skepticism throughout the audit.We also:Identify and assess the risks of material misstatement of the consolidated financial statements,whether due to fraud or error,design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the override of internal control.Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the internal controls.Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and reasonableness of accounting estimates and related disclosures made by management.Conclude on the appropriateness of managements use of the going concern basis of accounting and,based on the audit evidence obtained,whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Groups ability to continue as a going concern.If we conclude that a material uncertainty exists,we are required to draw attention in our auditors report to the related disclosures in the consolidated financial statements or,if such disclosures are inadequate,to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors report.However,future events or conditions may cause the Group to cease to continue as a going concern.Evaluate the overall presentation,structure and content of the consolidated financial statements,including the disclosures,and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements.We are responsible for the direction,supervision and performance of the group audit.We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding,among other matters,the planned scope and timing of the audit and significant audit findings,including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,and where appliable,related safeguards.From the matters communicated with those charged with governance,we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when,in extremely rare circumstances,we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditors report is Han,Sang Hyun.Seoul,Korea February 18,2025 This report is effective as of February 18,2025.Certain subsequent events or circumstances which may occur between the audit report date and the time of reading this report,could have a material impact on the accompanying consolidated financial statements and notes thereto.Accordingly,the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances,if any.Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The above consolidated statements of financial position should be read in conjunction with the accompanying notes.-4-(In millions of Korean won,in thousands of US dollars(Note 2.18)December 31,December 31,December 31,December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Assets Current assets Cash and cash equivalents 4,28 53,705,579 69,080,893 39,399,770 50,679,489 Short-term financial instruments 4,28 58,909,334 22,690,924 43,217,376 16,646,635 Short-term financial assets at amortized cost 4,28-608,281-446,250 Short-term financial assets at fair value through profit or loss 4,6,28 36,877 27,112 27,054 19,890 Trade receivables 4,5,7,28 43,623,073 36,647,393 32,002,989 26,885,454 Non-trade receivables 4,7,28 9,622,974 6,633,248 7,059,657 4,866,318 Prepaid expenses 3,362,824 3,366,130 2,467,053 2,469,478 Inventories 8 51,754,865 51,625,874 37,968,677 37,874,046 Other current assets 4,28 6,046,740 5,038,838 4,436,043 3,696,620 Assets held-for-sale 33-217,864-159,831 227,062,266 195,936,557 166,578,619 143,744,011 Non-current assets Financial assets at fair value through other comprehensive income 4,6,28 10,580,932 7,481,297 7,762,439 5,488,469 Financial assets at fair value through profit or loss 4,6,28 1,175,749 1,431,394 862,559 1,050,107 Investments in associates and joint ventures 9 12,592,117 11,767,444 9,237,895 8,632,894 Property,plant and equipment 10 205,945,209 187,256,262 151,086,611 137,375,927 Intangible assets 11 23,738,566 22,741,862 17,415,212 16,684,005 Net defined benefit assets 14 3,089,571 4,905,219 2,266,587 3,598,593 Deferred income tax assets 25 14,236,468 10,211,797 10,444,233 7,491,632 Other non-current assets 4,7,28 16,111,070 14,174,148 11,819,488 10,398,513 287,469,682 259,969,423 210,895,024 190,720,140 Total assets 514,531,948 455,905,980 377,473,643 334,464,151 Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The above consolidated statements of financial position should be read in conjunction with the accompanying notes.-5-(In millions of Korean won,in thousands of US dollars(Note 2.18)December 31,December 31,December 31,December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Liabilities and Equity Current liabilities Trade payables 4,28 12,370,177 11,319,824 9,075,075 8,304,509 Short-term borrowings 4,5,12,28 13,172,504 7,114,601 9,663,682 5,219,451 Other payables 4,28 18,547,365 15,324,119 13,606,816 11,242,161 Advances received 17 1,841,420 1,492,602 1,350,912 1,095,011 Withholdings 4,28 991,812 892,441 727,618 654,717 Accrued expenses 4,17,28 29,613,258 26,013,273 21,725,035 19,083,995 Current income tax liabilities 4,340,171 3,358,715 3,184,059 2,464,038 Current portion of long-term liabilities 4,12,13,28 2,207,290 1,308,875 1,619,324 960,224 Provisions 15 8,216,469 6,524,876 6,027,809 4,786,814 Other current liabilities 4,17,28 2,025,833 2,308,472 1,486,202 1,693,553 Liabilities held-for-sale 33-61,654-45,231 93,326,299 75,719,452 68,466,532 55,549,704 Non-current liabilities Debentures 4,13,28 14,530 537,618 10,660 394,410 Long-term borrowings 4,12,28 3,935,860 3,724,850 2,887,446 2,732,644 Long-term other payables 4,28 5,510,455 5,488,283 4,042,609 4,026,343 Net defined benefit liabilities 14 521,410 456,557 382,520 334,942 Deferred income tax liabilities 25 528,231 620,549 387,524 455,250 Long-term provisions 15 3,120,044 2,878,450 2,288,943 2,111,704 Other non-current liabilities 4,17,28 5,383,049 2,802,356 3,949,141 2,055,879 19,013,579 16,508,663 13,948,843 12,111,172 Total liabilities 112,339,878 92,228,115 82,415,375 67,660,876 Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The above consolidated statements of financial position should be read in conjunction with the accompanying notes.-6-(In millions of Korean won,in thousands of US dollars(Note 2.18)December 31,December 31,December 31,December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Equity attributable to owners of the parent company Preference shares 18 119,467 119,467 87,644 87,644 Ordinary shares 18 778,047 778,047 570,795 570,795 Share premium 4,403,893 4,403,893 3,230,807 3,230,807 Retained earnings 19 370,513,188 346,652,238 271,817,840 254,312,844 Other components of equity 20,33 15,873,008 1,280,130 11,644,840 939,136 391,687,603 353,233,775 287,351,926 259,141,226 Non-controlling interests 31 10,504,467 10,444,090 7,706,342 7,662,049 Total equity 402,192,070 363,677,865 295,058,268 266,803,275 Total liabilities and equity 514,531,948 455,905,980 377,473,643 334,464,151 Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF PROFIT OR LOSS The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.-7-(In millions of Korean won,in thousands of US dollars(Note 2.18)For the years ended December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Revenue 29 300,870,903 258,935,494 220,726,499 189,961,623 Cost of sales 21 186,562,268 180,388,580 136,866,795 132,337,621 Gross profit 114,308,635 78,546,914 83,859,704 57,624,002 Selling and administrative expenses 21,22 81,582,674 71,979,938 59,851,112 52,806,302 Operating profit 29 32,725,961 6,566,976 24,008,592 4,817,700 Other non-operating income 23 1,960,338 1,180,448 1,438,154 866,006 Other non-operating expense 23 1,625,229 1,083,327 1,192,309 794,757 Share of net profit of associates and joint ventures 9 751,044 887,550 550,985 651,129 Financial income 24 16,703,304 16,100,148 12,253,966 11,811,476 Financial expense 24 12,985,684 12,645,530 9,526,626 9,277,080 Profit before income tax 37,529,734 11,006,265 27,532,762 8,074,474 Income tax expense(benefit)25 3,078,383(4,480,835)2,258,380(3,287,254)Profit for the year 34,451,351 15,487,100 25,274,382 11,361,728 Profit attributable to Owners of the parent company 33,621,363 14,473,401 24,665,482 10,618,053 Non-controlling interests 829,988 1,013,699 608,900 743,675 Earnings per share(in Korean won,in US dollars)26 -Basic 4,950 2,131 3.63 1.56-Diluted 4,950 2,131 3.63 1.56 Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.-8-(In millions of Korean won,in thousands of US dollars(Note 2.18)For the years ended December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Profit for the year 34,451,351 15,487,100 25,274,382 11,361,728 Other comprehensive income Items that will not be reclassified subsequently to profit or loss:Gain on valuation of financial assets at fair value through other comprehensive income,net of tax 6,20 2,300,166 1,481,091 1,687,460 1,086,566 Share of other comprehensive income(loss)of associates and joint ventures,net of tax 9,20(71,581)13,150(52,514)9,647 Remeasurement of net defined benefit liabilities(assets),net of tax 14,20(766,078)(828,298)(562,014)(607,659)Items that may be reclassified subsequently to profit or loss:Share of other comprehensive income of associates and joint ventures,net of tax 9,20 305,327 61,962 223,996 45,457 Foreign currency translation differences for foreign operations,net of tax 20 15,116,099 2,621,479 11,089,552 1,923,183 Gain(loss)on valuation of cash flow hedge derivatives 20(38,946)927(28,572)679 Other comprehensive income for the year,net of tax 16,844,987 3,350,311 12,357,908 2,457,873 Total comprehensive income for the year 51,296,338 18,837,411 37,632,290 13,819,601 Comprehensive income attributable to:Owners of the parent company 50,048,199 17,845,661 36,716,624 13,092,028 Non-controlling interests 1,248,139 991,750 915,666 727,573 Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.-13-(In millions of Korean won,in thousands of US dollars(Note 2.18)For the years ended December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Operating activities Profit for the year 34,451,351 15,487,100 25,274,382 11,361,728 Adjustments 27 42,947,079 36,519,534 31,507,063 26,791,653 Changes in assets and liabilities arising from operating activities 27(1,567,557)(5,458,745)(1,150,000)(4,004,673)Cash generated from operations 75,830,873 46,547,889 55,631,445 34,148,708 Interest received 4,008,359 4,786,010 2,940,633 3,511,138 Interest paid (675,049)(844,691)(495,233)(619,687)Dividends received 268,482 269,169 196,965 197,469 Income tax paid (6,450,044)(6,620,950)(4,731,914)(4,857,296)Net cash provided by operating activities 72,982,621 44,137,427 53,541,896 32,380,332 Investing activities Net decrease(increase)in short-term financial instruments (32,976,756)39,421,565(24,192,582)28,920,657 Net decrease(increase)in short-term financial assets at amortized cost 620,858(195,616)455,477(143,509)Net decrease(increase)in short-term financial assets at fair value through profit or loss (9,735)2,718(7,142)1,994 Disposal of long-term financial instruments 4,100,008 4,565,426 3,007,870 3,349,312 Acquisition of long-term financial instruments (3,987,279)(5,307,770)(2,925,169)(3,893,914)Disposal of financial assets at fair value through other comprehensive income 389,680 6,521,568 285,879 4,784,387 Acquisition of financial assets at fair value through other comprehensive income (185,876)(124,488)(136,363)(91,328)Disposal of financial assets at fair value through profit or loss 309,970 63,962 227,402 46,924 Acquisition of financial assets at fair value through profit or loss (70,982)(130,459)(52,074)(95,708)Disposal of investment in associates and joint ventures 33,178 33,457 24,340 24,545 Acquisition of investment in associates and joint ventures (11,710)(78,690)(8,591)(57,729)Disposal of property,plant and equipment 156,191 98,341 114,586 72,145 Acquisition of property,plant and equipment (51,406,355)(57,611,292)(37,713,001)(42,265,100)Disposal of intangible assets 15,869 11,744 11,642 8,616 Acquisition of intangible assets (2,335,284)(2,922,875)(1,713,223)(2,144,295)Cash outflow from business combination (142,156)(356,511)(104,289)(261,545)Cash inflow from disposal of held-for-sale assets 101,563-74,509-Cash inflow(outflow)from other investing activities 17,114(913,897)12,554(670,458)Net cash used in investing activities (85,381,702)(16,922,817)(62,638,175)(12,415,006)Samsung Electronics Co.,Ltd.and its subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.-14-(In millions of Korean won,in thousands of US dollars(Note 2.18)For the years ended December 31,Notes 2024 2023 2024 2023 KRW KRW USD USD Financing activities Net increase in short-term borrowings 27 5,871,346 2,145,400 4,307,368 1,573,920 Increase in long-term borrowings 27 404,954 354,712 297,084 260,226 Repayment of debentures and long-term borrowings 27(1,364,508)(1,219,579)(1,001,038)(894,714)Dividends paid (10,888,749)(9,864,474)(7,988,261)(7,236,827)Treasury shares purchased (1,811,775)-(1,329,164)-Transactions with non-controlling interests (8,511)(9,118)(6,244)(6,690)Net cash used in financing activities (7,797,243)(8,593,059)(5,720,255)(6,304,085)Reclassification to assets held-for-sale 32-(14,153)-(10,383)Effect of foreign exchange rate changes 4,821,010 792,785 3,536,815 581,607 Net increase(decrease)in cash and cash equivalents (15,375,314)19,400,183(11,279,719)14,232,465 Cash and cash equivalents Beginning of the year 69,080,893 49,680,710 50,679,489 36,447,024 End of the year 53,705,579 69,080,893 39,399,770 50,679,489 Samsung Electronics Co.,Ltd.and its subsidiariesNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-15-As of December 31,2024 and 2023,and For the years ended December 31,2024 and 2023 1.General Information 1.1 Company Overview Samsung Electronics Co.,Ltd.(“SEC”)was incorporated under the laws of the Republic of Korea in 1969 and listed its shares on the Korea Stock Exchange in 1975.SEC and its subsidiaries(collectively referred to as the“Company”)operate four business divisions:DX,DS,SDC and Harman.DX(Device eXperience)division comprises businesses for digital televisions,refrigerators,smartphones and network systems.DS(Device Solutions)division comprises businesses for memory,foundry,and system Large Scale Integration(LSI).SDC includes display panels products.Harman division includes connected car systems,audio and visual products,enterprise automation solutions and connected services.SEC is domiciled in the Republic of Korea and is located in Suwon,the Republic of Korea.These consolidated financial statements have been prepared in accordance with Korean International Financial Reporting Standards(“Korean IFRS”)1110,Consolidated Financial Statements.SEC,as the controlling company,consolidates its 228 subsidiaries,including Samsung Display and Samsung Electronics America.The Company also applies the equity method of accounting for its 35 associates and joint ventures,including Samsung Electro-Mechanics Co.,Ltd.1.2 Consolidated Subsidiaries The consolidated subsidiaries as of December 31,2024 are as follows:Region Subsidiaries Business Percentage of ownership(%)(*)America Samsung Electronics America,Inc.(SEA)Sale of electronic devices100.0 Samsung International,Inc.(SII)Manufacture of electronic devices 100.0 Samsung Mexicana S.A.de C.V(SAMEX)Manufacture of electronic devices 100.0 Samsung Electronics Home Appliances America,LLC(SEHA)Manufacture of home appliances100.0 Samsung Research America,Inc.(SRA)Research and Development(R&D)100.0 Samsung Next LLC(SNX)Management of overseas subsidiaries 100.0 Samsung Next Fund LLC(SNXF)Technology business,venture capital investments100.0NeuroLogica Corp.Manufacture and sale of medical equipment100.0Samsung Lennox HVAC North America,LLCSale of air conditioning products50.1Joyent,Inc.Cloud services100.0 SmartThings,Inc.Sale of smart home electronics 100.0 TeleWorld Solutions,Inc.(TWS)Deployment and optimization of network devices100.0 Samsung Semiconductor,Inc.(SSI)Sale of semiconductor and display panels100.0 Samsung Federal,Inc.(SFI)R&D 100.0 Samsung Austin Semiconductor LLC.(SAS)Manufacture of semiconductors 100.0 Samsung Oak Holdings,Inc.(SHI)Management of overseas subsidiaries 100.0 SEMES America,Inc.Maintenance of semiconductor equipment 100.0 Samsung Display America Holdings,Inc.(SDAH)Management of overseas subsidiaries 100.0 eMagin Corporation Development and manufacture of display panels 100.0 Samsung Electronics Canada,Inc.(SECA)Sale of electronic devices100.0 AdGear Technologies Inc.Digital advertising platforms100.0 Sonio CorporationSale of medical software 100.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-16-Region Subsidiaries Business Percentage of ownership(%)(*)America Samsung Eletronica da Amazonia Ltda.(SEDA)Manufacture and sale of electronic devices 100.0 Samsung Electronics Mexico S.A.De C.V.(SEM)Sale of electronic devices 100.0 Samsung Electronics Digital Appliance Mexico,SA de CV(SEDAM)Manufacture of home appliances 100.0 Samsung Electronics Latinoamerica(Zona Libre),S.A.(SELA)Sale of electronic devices 100.0 Samsung Electronics Latinoamerica Miami,Inc.(SEMI)Sale of electronic devices 100.0 Samsung Electronica Colombia S.A.(SAMCOL)Sale of electronic devices 100.0 Samsung Electronics Argentina S.A.(SEASA)Marketing and services 100.0 Samsung Electronics Chile Limitada(SECH)Sale of electronic devices 100.0 Samsung Electronics Peru S.A.C.(SEPR)Sale of electronic devices 100.0 Samsung Electronics Venezuela,C.A.(SEVEN)Marketing and services 100.0 Samsung Electronics Panama.S.A.(SEPA)Consulting 100.0 Harman International Industries,Inc.Management of overseas subsidiaries 100.0 Harman Becker Automotive Systems,Inc.Manufacture and sale of audio products and R&D 100.0 Harman Connected Services,Inc.Connected service provider 100.0 Harman Connected Services Engineering Corp.Connected service provider 100.0 Harman da Amazonia Industria Eletronica e Participacoes Ltda.Manufacture and sale of audio products 100.0 Harman de Mexico,S.de R.L.de C.V.Manufacture of audio products 100.0 Harman do Brasil Industria Eletronica e Participacoes Ltda.Sale of audio products and R&D 100.0 Harman International Industries Canada Ltd.Sale of audio products 100.0 Harman International Mexico,S.de R.L.de C.V.Sale of audio products 100.0 Harman KG Holding,LLC Management of overseas subsidiaries 100.0 Harman Professional,Inc.Sale of audio products and R&D 100.0 Roon Labs,LLC.Sale of audio products 100.0 Beijing Integrated Circuit Industry International Fund,L.P Venture capital investments 61.4 China Materialia New Materials 2016 Limited Partnership Venture capital investments 99.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-17-Region Subsidiaries Business Percentage of ownership(%)(*)Europe/CIS Samsung Electronics(UK)Ltd.(SEUK)Sale of electronic devices 100.0 Samsung Electronics Ltd.(SEL)Management of overseas subsidiaries 100.0 Samsung Semiconductor Europe Limited(SSEL)Sale of semiconductor and display panels 100.0 Samsung Electronics GmbH(SEG)Sale of electronic devices 100.0 Samsung Electronics Holding GmbH(SEHG)Management of overseas subsidiaries 100.0 Samsung Semiconductor Europe GmbH(SSEG)Sale of semiconductor and display panels 100.0 Samsung Electronics France S.A.S(SEF)Sale of electronic devices 100.0 Samsung Electronics Italia S.P.A.(SEI)Sale of electronic devices 100.0 Samsung Electronics Iberia,S.A.(SESA)Sale of electronic devices 100.0 Samsung Electronics Portuguesa,Unipessoal,Lda.(SEP)Sale of electronic devices 100.0 Samsung Electronics Hungarian Private Co.Ltd.(SEH)Manufacture and sale of electronic devices 100.0 Samsung Electronics Europe Logistics B.V.(SELS)Logistics 100.0 Samsung Electronics Benelux B.V.(SEBN)Sale of electronic devices 100.0 Samsung Electronics Europe Holding Cooperatief U.A.(SEEH)Management of overseas subsidiaries 100.0 Samsung Electronics Nordic Aktiebolag(SENA)Sale of electronic devices 100.0 Samsung Electronics Slovakia s.r.o(SESK)Manufacture of TV and monitors 100.0 Samsung Electronics Polska,SP.Zo.o(SEPOL)Sale of electronic devices 100.0 Samsung Electronics Poland Manufacturing SP.Zo.o(SEPM)Manufacture of home appliances 100.0 Samsung Electronics Romania LLC(SEROM)Sale of electronic devices 100.0 Samsung Electronics Austria GmbH(SEAG)Sale of electronic devices 100.0 Samsung Electronics Switzerland GmbH(SESG)Sale of electronic devices 100.0 Samsung Electronics Czech and Slovak s.r.o.(SECZ)Sale of electronic devices 100.0 Samsung Electronics Baltics SIA(SEB)Sale of electronic devices 100.0 Samsung Electronics Greece S.M.S.A(SEGR)Sale of electronic devices 100.0 Samsung Electronics Air Conditioner Europe B.V.(SEACE)Sale of air conditioning products 100.0 Samsung Nanoradio Design Center(SNDC)R&D 100.0 Samsung Denmark Research Center ApS(SDRC)R&D 100.0 Samsung Cambridge Solution Centre Limited(SCSC)R&D 100.0 SAMSUNG Zhilabs,S.L.Development and sale of network solutions 100.0 FOODIENT LTD.R&D 100.0 Oxford Semantic Technologies Limited(OST)R&D 100.0 Sonio SAS Sale of software and R&D 100.0 Samsung Electronics Rus Company LLC(SERC)Sale of electronic devices 100.0 Samsung Electronics Rus Kaluga LLC(SERK)Manufacture of TV 100.0 Samsung Electronics Ukraine Company LLC(SEUC)Sale of electronic devices 100.0 Samsung R&D Institute Ukraine(SRUKR)R&D 100.0 Samsung Electronics Central Eurasia LLP(SECE)Sale of electronic devices 100.0 Samsung R&D Institute Rus LLC(SRR)R&D 100.0 Samsung Electronics Caucasus Co.Ltd(SECC)Marketing 100.0 Samsung Electronics Uzbekistan Ltd.(SEUZ)Marketing 100.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-18-Region Subsidiaries Business Percentage of ownership(%)(*)Europe/CIS AKG Acoustics GmbH Manufacture and sale of audio products 100.0 Apostera UA,LLC Connected Service Provider 100.0 Harman Audio Iberia Espana Sociedad Limitada Sale of audio products 100.0 Harman Becker Automotive Systems GmbH Manufacture and sale of audio products and R&D 100.0 Harman Becker Automotive Systems Italy S.R.L.Sale of audio products 100.0 Harman Becker Automotive Systems Manufacturing Kft Manufacture of audio products and R&D 100.0 Harman Belgium SA Sale of audio products 100.0 Harman Connected Services AB.Connected service provider 100.0 Harman Finland Oy Connected service provider 100.0 Harman Connected Services GmbH Connected service provider 100.0 Harman Connected Services Poland Sp.zoo Connected service provider 100.0 Harman Connected Services UK Ltd.Connected service provider 100.0 Harman Consumer Nederland B.V.Sale of audio products 100.0 Harman Deutschland GmbH Sale of audio products 100.0 Harman France SNC Sale of audio products 100.0 Harman Holding GmbH&Co.KG Management company 100.0 Harman Hungary Financing Ltd.Financing company 100.0 Harman Inc.&Co.KG Management of overseas subsidiaries 100.0 Harman International Estonia OU R&D 100.0 Harman International Industries Limited Sale of audio products and R&D 100.0 Harman International Romania SRL R&D 100.0 Harman Management GmbH Management of overseas subsidiaries 100.0 Harman Professional Kft Manufacture of audio products and R&D 100.0 Harman Professional Denmark ApS Sale of audio products and R&D 100.0 Red Bend Software SAS Software design 100.0 Studer Professional Audio GmbH Sale of audio products and R&D 100.0 Harman Connected Services OOO Connected service provider 100.0 Harman RUS CIS LLC Sale of audio products 100.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-19-Region Subsidiaries Business Percentage of ownership(%)(*)Middle East&Africa Samsung Gulf Electronics Co.,Ltd.(SGE)Sale of electronic devices 100.0 Samsung Electronics Turkiye(SETK)Sale of electronic devices 100.0 Samsung Electronics Industry and Commerce Ltd.(SETK-P)Manufacture of electronic devices 100.0 Samsung Electronics Levant Co.,Ltd.(SELV)Sale of electronic devices 100.0 Samsung Electronics Maghreb Arab(SEMAG)Sale of electronic devices 100.0 Samsung Electronics Egypt S.A.E(SEEG)Manufacture and sale of electronic devices 100.0 Samsung Electronics Israel Ltd.(SEIL)Marketing 100.0 Samsung Electronics Tunisia S.A.R.L(SETN)Marketing 100.0 Samsung Electronics Pakistan(Private)Ltd.(SEPAK)Marketing 100.0 Samsung Electronics Middle East and North Africa(SEMENA)Management of overseas subsidiaries 100.0 Samsung Electronics Saudi Arabia Ltd.(SESAR)Sale of electronic devices 100.0 Samsung Semiconductor Israel R&D Center,Ltd.(SIRC)R&D 100.0 Corephotonics Ltd.R&D 100.0 Samsung Electronics South Africa(Pty)Ltd.(SSA)Sale of electronic devices 100.0 Samsung Electronics South Africa Production(Pty)Ltd.(SSAP)Manufacture of TV and monitors 100.0 Samsung Electronics West Africa Ltd.(SEWA)Marketing 100.0 Samsung Electronics East Africa Ltd.(SEEA)Marketing 100.0 Global Symphony Technology Group Private Ltd.Management of overseas subsidiaries 100.0 Harman Connected Services Morocco Connected service provider 100.0 Harman Industries Holdings Mauritius Ltd.Management of overseas subsidiaries 100.0 Red Bend Ltd.Manufacture of audio products 100.0 Asia(Excluding China)Samsung Asia Pte.Ltd.(SAPL)Management of overseas subsidiaries 100.0 Samsung Electronics Singapore Pte.Ltd.(SESP)Sale of electronic devices 100.0 Samsung Malaysia Electronics(SME)Sdn.Bhd.(SME)Sale of electronic devices 100.0 Samsung Electronics Display(M)Sdn.Bhd.(SDMA)Manufacture of electronic devices 100.0 Samsung Electronics(M)Sdn.Bhd.(SEMA)Manufacture of home appliances 100.0 Samsung Vina Electronics Co.,Ltd.(SAVINA)Sale of electronic devices 100.0 Samsung Electronics Vietnam Co.,Ltd.(SEV)Manufacture of electronic devices 100.0 Samsung Electronics Vietnam THAINGUYEN Co.,Ltd.(SEVT)Manufacture of communication equipment 100.0 Samsung Electronics HCMC CE Complex Co.,Ltd.(SEHC)Manufacture and sale of electronic devices 100.0 Samsung Display Vietnam Co.,Ltd.(SDV)Manufacture of display panels 100.0 PT Samsung Electronics Indonesia(SEIN)Manufacture and sale of electronic devices 100.0 PT Samsung Telecommunications Indonesia(STIN)Sale of electronic devices and services 100.0 Thai Samsung Electronics Co.,Ltd.(TSE)Manufacture and sale of electronic devices 91.8 Laos Samsung Electronics Sole Co.,Ltd(LSE)Marketing 100.0 Samsung Electronics Philippines Corporation(SEPCO)Sale of electronic devices 100.0 Samsung Electronics Australia Pty.Ltd.(SEAU)Sale of electronic devices 100.0 Samsung Electronics New Zealand Limited(SENZ)Sale of electronic devices 100.0 Samsung India Electronics Private Ltd.(SIEL)Manufacture and sale of electronic devices 100.0 Red Brick Lane Marketing Solutions Pvt.Ltd.Marketing 100.0 Samsung Display Noida Private Limited(SDN)Manufacture of display panels 100.0 Samsung R&D Institute India-Bangalore Private Limited(SRI-Bangalore)R&D 100.0 Samsung R&D Institute Bangladesh Limited(SRBD)R&D 100.0 Samsung Nepal Services Pvt,Ltd(SNSL)Service 100.0 Samsung Japan Corporation(SJC)Sale of semiconductor and display panels 100.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-20-Region Subsidiaries Business Percentage of ownership(%)(*)Asia(Excluding China)Samsung R&D Institute Japan Co.Ltd.(SRJ)R&D 100.0 Samsung Electronics Japan Co.,Ltd.(SEJ)Sale of electronic devices 100.0 Harman Connected Services Corp.India Pvt.Ltd.Connected service provider 100.0 Harman International(India)Private Limited Sale of audio products and R&D 100.0 Harman International Industries PTY Ltd.Management of overseas subsidiaries 100.0 Harman International(Thailand)Co.,Ltd.Manufacture and sale of audio products 100.0 Harman International Japan Co.,Ltd.Sale of audio products and R&D 100.0 Harman Singapore Pte.Ltd.Sale of audio products 100.0 China Samsung(CHINA)Investment Co.,Ltd.(SCIC)Sale of electronic devices 100.0 Samsung Electronics Hong Kong Co.,Ltd.(SEHK)Sale of electronic devices 100.0 Samsung Electronics Taiwan Co.,Ltd.(SET)Sale of electronic devices 100.0 Suzhou Samsung Electronics Co.,Ltd.(SSEC)Manufacture of home appliances 88.3 Samsung Suzhou Electronics Export Co.,Ltd.(SSEC-E)Manufacture of home appliances 100.0 Samsung Electronics Suzhou Computer Co.,Ltd.(SESC)R&D 100.0 Tianjin Samsung Telecom Technology Co.,Ltd.(TSTC)Manufacture of communication equipment 90.0 Beijing Samsung Telecom R&D Center(SRC-Beijing)R&D 100.0 Samsung Electronics China R&D Center(SRC-Nanjing)R&D 100.0 Samsung Mobile R&D Center China-Guangzhou(SRC-Guangzhou)R&D 100.0 Samsung R&D Institute China-Shenzhen(SRC-Shenzhen)R&D 100.0 Shanghai Samsung Semiconductor Co.,Ltd.(SSS)Sale of semiconductor and display panels 100.0 Samsung(China)Semiconductor Co.,Ltd.(SCS)Manufacture of semiconductors 100.0 Samsung SemiConductor Xian Co.,Ltd.(SSCX)Sale of semiconductor and display panels 100.0 Samsung Electronics Suzhou Semiconductor Co.,Ltd.(SESS)Toll processing of semiconductors 100.0 Tianjin Samsung LED Co.,Ltd.(TSLED)Manufacture of LED 100.0 Samsung Semiconductor(China)R&D Co.,Ltd.(SSCR)R&D 100.0 Samsung Display Dongguan Co.,Ltd.(SDD)Manufacture of display panels 100.0 Samsung Display Tianjin Co.,Ltd.(SDT)Manufacture of display panels 95.0 SEMES(XIAN)Co.,Ltd.Semiconductor/FPD equipment services 100.0 Samsung Semiconductor Technology business,Venture capital investments 99.0 Harman(China)Technologies Co.,Ltd.Manufacture of audio products 100.0 Harman(Suzhou)Audio and Infotainment Systems Co.,Ltd.Sale of audio products 100.0 Harman Automotive Electronic Systems(Suzhou)Co.,Ltd.Manufacture of audio products and R&D 100.0 Harman Commercial(Shanghai)Co.,Ltd.Sale of audio products 100.0 Harman Connected Services Solutions(Chengdu)Co.,Ltd.Connected service provider 100.0 Harman Holding Limited Sale of audio products 100.0 Harman International(China)Holdings Co.,Ltd.Sale of audio products and R&D 100.0 Harman Technology(Shenzhen)Co.,Ltd.Sale of audio products and R&D 100.0(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-21-Region Subsidiaries Business Percentage of ownership(%)(*)Domestic Samsung Display Co.,Ltd.Manufacture and sale of display panels 84.8 SU Materials Manufacture of display panel components 50.0 STECO Co.,Ltd.Manufacture of semiconductor components 70.0 SEMES Co.,Ltd.Manufacture and sale of semiconductor/FPD 91.5 Samsung Electronics Service Co.,Ltd.Repair services for electronic devices 99.3 Samsung Electronics Service Customer Satisfaction Co.,Ltd.Call center for repair services for electronic devices 100.0 Samsung Electronics Sales Co.,Ltd.Sale of electronic devices 100.0 Samsung Electronics Logitech Co.,Ltd.General logistics agency 100.0 Samsung Medison Co.,Ltd.Manufacture and sale of medical equipment 68.5 Stella Forest of Hope Manufacture of food 100.0 Mirero System Co.,Ltd.Development and supply of semiconductor process defect and quality control software 99.9 Harman International Korea Software development and supply 100.0 Samsung Venture Capital Union#21 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#22 Technology business,Venture capital investments 99.0 Samsung Venture Capital Union#26 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#28 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#32 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#33 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#37 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#42 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#43 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#45 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#52 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#55 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#56 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#57 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#62 Venture capital investments in technology business 99.0 Samsung Venture Capital Union#67 Venture capital investments in technology business 99.0 Growth Type Private Equity Trust Specialized in Semiconductors Investment in semiconductor industry 66.7 System LSI Mutual Benefit Private Equity Trust Investment in semiconductor industry 62.5 Semiconductor Ecosystem Private Equity Trust Investment in semiconductor industry 66.7(*)Ownership represents the Companys ownership of the voting rights in each entity,including subsidiaries ownerships.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-22-1.3 Summary of Financial Data of Major Consolidated Subsidiaries Summary of financial data of major consolidated subsidiaries is as follows:(1)2024(In millions of Korean won)As of December 31,2024 For the year ended December 31,2024 Major subsidiaries(*1)Assets Liabilities Sales Profit(loss)for the year Samsung Display Co.,Ltd.67,541,382 8,305,660 25,401,419 5,989,037 Samsung Electronics America,Inc.(SEA)50,777,503 18,653,435 40,650,074 1,628,652 Samsung Asia Pte.Ltd.(SAPL)31,226,978 353,722 -5,326,248 Samsung Austin Semiconductor LLC.(SAS)27,546,958 16,107,374 4,998,707 1,171,180 Samsung Semiconductor,Inc.(SSI)21,719,875 13,462,128 46,873,584 779,010 Harman and its subsidiaries(*2)20,934,732 6,714,174 14,257,130 1,003,560 Samsung(China)Semiconductor Co.,Ltd.(SCS)18,796,411 900,205 11,180,211 1,195,361 Samsung(CHINA)Investment Co.,Ltd.(SCIC)16,111,528 15,246,946 2,754,791 300,719 Samsung Electronics Vietnam THAINGUYEN Co.,Ltd.(SEVT)13,497,264 3,802,597 32,962,634 2,078,833 Samsung India Electronics Private Ltd.(SIEL)9,561,708 3,226,735 17,048,976 1,408,392 Samsung Electronics Europe Holding Cooperatief U.A.(SEEH)9,093,393 3,452,430 -195,012 Samsung Electronics Vietnam Co.,Ltd.(SEV)7,819,080 2,167,121 21,294,696 1,359,308 Samsung Display Vietnam Co.,Ltd.(SDV)7,724,664 1,955,376 20,394,839 841,058 Shanghai Samsung Semiconductor Co.,Ltd.(SSS)6,467,878 5,635,634 30,068,460 468,408 Samsung Electronics HCMC CE Complex Co.,Ltd.(SEHC)4,863,158 807,341 7,003,325 381,576 Samsung Eletronica da Amazonia Ltda.(SEDA)4,679,383 1,486,272 7,935,236 208,102 Samsung Electronics(UK)Ltd.(SEUK)3,267,763 2,042,914 6,158,787 181,457 Thai Samsung Electronics Co.,Ltd.(TSE)2,637,138 502,266 4,513,870 166,928 Samsung International,Inc.(SII)2,484,711 646,678 7,473,309 138,140 Samsung Electronics Taiwan Co.,Ltd.(SET)2,411,145 1,642,510 5,744,458 62,255 SEMES Co.,Ltd.2,365,712 705,818 2,432,656 144,665 Samsung Electronics GmbH(SEG)2,118,638 2,049,463 6,259,384 (1,661)Samsung Electronics Mexico S.A.De C.V.(SEM)2,017,910 845,480 4,086,721 125,857 Samsung Electronics Europe Logistics B.V.(SELS)1,928,760 1,710,124 15,682,546 (12,249)Samsung Electronics Benelux B.V.(SEBN)1,894,968 726,412 2,918,779 12,514 (*1)Summary of condensed financial information is based on separate financial statements of each subsidiary.(*2)Consolidated financial data of an intermediate company,Harman International Industries,Inc.and its subsidiaries.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-23-(2)2023(In millions of Korean won)As of December 31,2023 For the year ended December 31,2023 Major subsidiaries(*1)Assets Liabilities Sales Profit(loss)for the year Samsung Display Co.,Ltd.65,328,568 7,266,213 27,083,336 8,268,314 Samsung Electronics America,Inc.(SEA)41,926,899 15,322,780 39,551,809 477,338 Samsung Asia Pte.Ltd.(SAPL)22,234,942 282,614 -14,140,195 Harman and its subsidiaries(*2)17,956,557 6,009,675 14,367,766 896,384 Samsung Austin Semiconductor LLC.(SAS)16,714,945 7,791,914 4,109,744 301,778 Samsung(China)Semiconductor Co.,Ltd.(SCS)15,808,283 870,453 8,693,788 877,892 Samsung Semiconductor,Inc.(SSI)12,796,440 6,276,293 23,465,031 136,458 Samsung Electronics Vietnam THAINGUYEN Co.,Ltd.(SEVT)12,554,481 3,593,527 30,639,349 2,240,480 Samsung(CHINA)Investment Co.,Ltd.(SCIC)10,222,557 8,797,991 3,148,858 189,887 Samsung Electronics Europe Holding Cooperatief U.A.(SEEH)9,660,481 4,585,806 -103,387 Samsung India Electronics Private Ltd.(SIEL)7,738,259 3,373,730 15,216,331 1,153,256 Samsung Display Vietnam Co.,Ltd.(SDV)7,383,485 1,570,459 24,200,246 1,143,824 Samsung Electronics Vietnam Co.,Ltd.(SEV)7,301,860 2,215,062 20,154,119 1,476,382 Samsung Eletronica da Amazonia Ltda.(SEDA)5,542,627 1,587,911 7,222,304 333,812 Shanghai Samsung Semiconductor Co.,Ltd.(SSS)5,262,086 4,552,030 15,649,307 244,210 Samsung Electronics HCMC CE Complex Co.,Ltd.(SEHC)4,043,677 843,736 6,152,983 402,418 Thai Samsung Electronics Co.,Ltd.(TSE)3,039,379 640,512 4,213,492 150,510 Samsung Electronics(UK)Ltd.(SEUK)2,902,722 1,976,067 5,859,133 185,113 SEMES Co.,Ltd.2,187,919 659,607 2,502,143 58,754 Samsung Electronics Mexico S.A.De C.V.(SEM)2,153,032 1,038,115 3,638,080 148,873 Samsung Electronics GmbH(SEG)2,097,706 2,033,152 6,374,670 (3,157)Samsung International,Inc.(SII)1,879,442 383,763 6,553,383 141,226 Samsung Electronics Taiwan Co.,Ltd.(SET)1,797,627 1,139,056 4,108,479 56,467 Samsung Electronics Benelux B.V.(SEBN)1,794,552 639,120 2,833,717 140,313 Samsung Electronics Europe Logistics B.V.(SELS)1,639,004 1,443,005 15,462,852 4,984 (*1)Summary of condensed financial information is based on separate financial statements of each subsidiary.(*2)Consolidated financial data of an intermediate company,Harman International Industries,Inc.and its subsidiaries.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-24-1.4 Changes in Consolidation Scope Changes in consolidation scope during the year ended December 31,2024 are as follows:Change Region Subsidiary Description Newly included America Sonio Corporation Acquisition EuropeCIS Oxford Semantic Technologies Limited(OST)Acquisition Sonio SAS Acquisition Middle EastAfrica Samsung Electronics Middle East and North Africa(SEMENA)Establishment Asia(Excluding China)Harman International(Thailand)Co.,Ltd.Establishment Domestic Samsung Venture Capital Union#67 Establishment Excluded America Harman Financial Group LLC Liquidation EuropeCIS Samsung Display Slovakia,s.r.o.,v likvidacii(SDSK)Liquidation Samsung Electronics Overseas B.V.(SEO)Liquidation Asia(Excluding China)DOWOOINSYS VINA COMPANY LIMITED Sale China Tianjin Samsung Electronics Co.,Ltd.(TSEC)Liquidation Domestic Dowooinsys Co.,Ltd.Sale Gf-System Co.,Ltd.Sale Samsung Venture Capital Union#29 Liquidation Samsung Venture Capital Union#40 Liquidation Samsung Venture Capital Union#48 Liquidation 2.Material Accounting Policies The followings are material accounting policies applied on the consolidated financial statements.Unless mentioned otherwise,these policies are consistent throughout the accounting periods denoted.2.1 Basis of Presentation The Companys consolidated financial statements have been written in accordance with the Korean International Financial Reporting Standards(“Korean IFRS”).The Korean IFRS refers to standards selected by the Republic of Korea among accounting standards and interpretations published by International Accounting Standards Board(IASB).The Korean IFRS permits application of material accounting estimates on the financial statements and requires managements judgements in applying accounting policies.The areas involving a higher degree of judgment or complexity,or areas where assumptions and estimates are material to the financial statements are disclosed in Note 3.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-25-2.2 Changes in Accounting Policies and Disclosures (A)New and amended standards adopted by the Company The Company applied the following amended standards for the first time for the annual reporting period commencing on January 1,2024:Amendments to Korean IFRS 1001,Presentation of Financial Statements The amendments to Korean-IFRS 1001 clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and that the classification is unaffected by managements intentions or expectations about whether an entity will exercise its right to defer settlement of a liability.The amendments also introduce a definition of settlement to make clear that settlement includes the transfer to the counterparty of the entitys own equity instruments,however,it would be excluded if an option to settle the liability by the transfer of the entitys own equity instruments is recognized separately from the liability as an equity component of a compound financial instrument.The adoption of the amendments does not have a significant impact on the Companys consolidated financial statements.Amendments to Korean IFRS 1116,Leases The amendments add requirements for the subsequent measurement of sale-and-leaseback transactions that are accounted for as sales in accordance with Korean IFRS 1115,Revenue from Contracts with Customers.The amendments require the seller-lessee to calculate the lease payments or revised lease payments in a way that does not result in the seller-lessee recognizing any gain or loss for the rights of use that the seller-lessee continues to retain after the lease commences.The adoption of the amendments does not have a significant impact on the Companys consolidated financial statements.Amendments to Korean IFRS 1007,Statement of Cash Flows,and 1107,Financial Instruments:Presentation The amendments to Korean IFRS 1007,Statement of Cash Flows,introduce new disclosures,such as terms and conditions,balance payment due dates and the effects on cash flows,to help users of the financial statements to assess the effects of supplier financing arrangements on an entitys liabilities and cash flows.The amendments to Korean IFRS 1107,Financial Instruments:Presentation,requires disclosure of information about an entitys exposure to concentrations of liquidity related to supplier financing arrangement.The adoption of the amendments does not have a significant impact on the Companys separate financial statements.(B)New and amended standard not yet adopted by the Company The amended accounting standard that has been issued but not yet effective for the annual reporting period commencing on January 1,2024 and has not been early adopted by the Company is as follows:Amendments to Korean IFRS 1021,The Effects of Changes in Foreign Exchange Rates The amendments to Korea IFRS 1021 clarify how the Company estimates a spot rate,which is used for translation of foreign transaction into functional currency or translation of foreign operations financial statements into reporting currency,when a currency lacks exchangeability.The amendments are applied for annual periods beginning on or after January 1,2025,with early application permitted.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-26-2.3 Consolidation The Company prepares its consolidated financial statements in accordance with Korean IFRS 1110,Consolidated Financial Statements.(A)Non-controlling interests Each component of profit or loss and other comprehensive income is attributable to the owners of the parent and the non-controlling interests,and total comprehensive income is attributable to the owners of the parent and the non-controlling interests,even if the non-controlling interests have a negative balance.(B)Elimination of intercompany transactions Intercompany transactions,balances,income and expenses and unrealized gains and losses(excluding foreign exchange gains and losses)are eliminated on consolidation.The Companys share of unrealized losses on transactions with associates accounted for using the equity method are eliminated in the same way as unrealized gains unless there is evidence of impairment of the asset.2.4 Functional and Presentation Currency (A)Functional and presentation currency The Company measures the items included in the financial statements of each component using the currency of the primary economic environment in which each it operates(“functional currency”).The functional currency of the parent company is Korean won(KRW)and the consolidated financial statements are presented in Korean won(KRW).(B)Translation into the presentation currency The results and financial position of all entities subjected to consolidation that have a functional currency different from the parents presentation currency are translated into the parents presentation currency as follows:(1)Assets and liabilities are translated at the closing rate at the end of the reporting date.(2)Income and expenses in the statement of profit or loss are translated at average exchange rates for the period.However,if this average rate is not a reasonable approximation of the cumulative effect of the exchange rates at the dates of the transactions,the transactions are translated at the exchange rates at the dates of transactions.(3)Exchange differences arising on translation in(1)and(2)above are recognized in other comprehensive income.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-27-2.5 Cash and Cash Equivalents Cash and cash equivalents include cash on hand,deposits held at call with banks,and highly liquid short-term investment assets that are readily convertible to known amounts of cash at the date of acquisition and which are subject to an insignificant risk of changes in value.2.6 Financial Assets (A)Classification Financial instruments are classified based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.The Company considers the contractual terms of the relevant financial instrument and assesses whether the contractual cash flows consist solely of payments of principal and interest on the principal amount outstanding.(B)Impairment The Company assesses the expected credit losses of debt instruments carried at amortized cost or fair value through other comprehensive income on a forward-looking basis.However,the Company applies the simplified approach for trade receivables,which requires expected credit losses to be recognized over the life of the receivable from initial recognition.2.7 Trade Receivables Trade receivables are recognized at initial transaction price,unless they contain a significant financing component,and are subsequently measured at amortized cost using the effective interest method less any allowance for impairment.2.8 Inventories The Company determines the unit cost of inventories,except for materials in transit,using the average cost method.The cost of finished goods and work in progress comprises raw materials,direct labor,other direct costs and related production overheads based on normal operating capacity,excluding the cost of idle production equipment and scrapping costs.The Company measures inventories at the lower of cost and net realizable value.Net realizable value is the estimated selling price in the ordinary course of business less the applicable variable selling expenses,and reflects the decrease in selling price,the increase in costs to completion,or decrease in value due to excess or obsolete inventory.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-28-2.9 Property,Plant and Equipment Depreciation of property,plant and equipment begins when assets are considered by management to be available for their intended use,such as in the production of products.The Companys property,plant and equipment is depreciated on a straight-line method over the estimated useful lives of the assets,less any residual values.Land is not depreciated.Costs that are directly attributable to the acquisition,construction of a qualifying asset,including capitalized interest costs,are depreciated over the estimated useful lives.The estimated useful lives of property,plant and equipment used by the Company for each asset category are as follows:Estimated useful lives Buildings and structures 15,30 years Machinery and equipment 5 years Other 5 years 2.10 Intangible Assets Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets of subsidiaries,associates and joint ventures,businesses and other entities acquired at the date of acquisition and is recognized as an intangible assets in respect of acquisitions of businesses of subsidiaries and as an investment in associates and joint ventures in respect of acquisitions of interests in associates and joint ventures.Intangible assets,other than goodwill,are initially recognized at their historical cost and are subsequently stated at cost less accumulated amortization and accumulated impairment losses.Membership rights are regarded as intangible assets with indefinite useful life and not amortized as there are no foreseeable restrictions on their use.However,whenever there is an indication of impairment,such as a decline in the market value of membership rights,a reasonable estimate is made to reflect the impairment.Intangible assets with finite useful lives,such as patents,trademarks and other intangible assets,are amortized on a straight-line method over their estimated useful lives.The estimated useful lives of intangible assets used by the Company are as follows:Estimated useful lives Patents,trademarks and other intangible assets 3-25 years 2.11 Financial Liabilities The Company classifies financial liabilities into financial liabilities at fair value through profit or loss and other financial liabilities and recognizes them on the consolidated statement of financial position when the Company becomes a party to a contract,depending on the substance of the contractual terms.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-29-2.12 Employee Benefits The Company operates various types of post-employment benefit plans,including defined benefit plans and defined contribution plans.The defined benefit liability(asset)recognized in the consolidated statement of financial position in respect of defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets,less any deficit(excess of plan assets over the asset recognition threshold)and is calculated annually by an independent actuary using the projected unit credit method.2.13 Income Tax Expense The global minimum top-up tax in accordance with the Pilar Two tax legislation is subject to Korean IFRS 1012,Corporate Income Tax.The Company accounts for the amount of global minimum top-up tax as a current tax when it is incurred,and applies the exception for the recognition and disclosure of deferred income tax related to the global minimum top-up tax.The Company recognizes deferred tax liabilities for taxable temporary differences associated with investments in subsidiaries,associates and joint ventures,except where the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.Deferred tax assets are recognized for deductible temporary differences arising on these assets only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.2.14 Derivative Instruments The Company recognizes its rights and obligations under derivative contracts as assets and liabilities at fair value and records gains and losses on these contracts in the statement of profit or loss.However,effective portion of changes in the fair value of cash flow hedges are deferred in equity.The Company applies cash flow hedge accounting for hedges of risks including changes in the price of inventories.The effective portion of the change in fair value of a derivative that is designated as a cash flow hedge is recognized in other comprehensive income,while the ineffective portion is recognized in financial income or financial expense.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-30-2.15 Revenue Recognition The Companys revenue primarily represents the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Companys activities.Revenue is net of value-added tax,returns,sales incentives,discounts and others.(A)Identification of performance obligations The Company is required to transfer control of goods and services under contracts with customers.For the export of products and goods under Incoterms Group C terms(such as CIF),the Company recognizes the transportation services(including insurance)provided after the control of the goods has passed to the customer as a separate performance obligation.(B)Performance obligations satisfied at a point of time The Companys revenue is primarily derived from the sale of goods and is recognized when control of the goods passes to the customer.(C)Performance obligations satisfied over time The Company recognizes revenue over time for sales of software,transportation services,installation services,and etc.where the customer has direct control over the outcome during the performance of the service.(D)Variable consideration The Company provides a variety of sales promotions including incentives,promotion and sales allowances.Where these sales promotion policies result in variability in the consideration promised to customers,the Company estimates the variable consideration using either the expected value or the most likely amount whichever method the Company expects to better predict the amount of consideration to which it will be entitled.The estimate of variable consideration is included in transaction price only to the extent that it is highly probable that a significant portion of the cumulative revenue already recognized will not be reversed when the related uncertainties are resolved.Revenue and contract liabilities are recognized when the related revenue is earned or when the decision to pay the variable consideration to the customer is made,whichever is later.The Company recognizes contract liabilities(refund liabilities)after the sale of products to customers by estimating the return rate using the expected value methods based on historical experience.When the customer exercises its right to return the product,the Company recognizes the asset as a refund asset and adjusts cost of sales by the amount of the right to collect the product from the customer.The right to collect the product is measured by deducting the cost of collecting the product from the historical carrying amount of the product.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-31-2.16 Leases (A)Lessee accounting The Company applies the practical expedient of Korean IFRS 1116,Leases,and does not separate the non-lease elements from the lease elements and accounts for the non-lease elements relating to each lease element as a single lease element.At the commencement date of a lease,the Company recognizes a right-of-use asset(the lease asset)representing the right to use the underlying asset and a lease liability representing the obligation to make lease payments.The right-of-use asset is presented in the consolidated statement of financial position as property,plant and equipment and the lease liability is presented as current portion of long-term liabilities or long-term borrowings.Lease liabilities are measured at the inception of the lease at the present value of the lease payments outstanding at that date,discounted at the Companys incremental borrowing rate.For short-term leases(lease terms of 12 months or less at the inception of the lease)and low value assets(underlying assets of USD 5,000 or less),lease payments are recognized as expenses on a straight-line basis over the lease term applying the simplified practical expedient.(B)Lessor accounting The Company,as a lessor,determines whether a lease is a finance or an operating lease at the inception of the lease.Leases that transfer substantially all the risk and rewards of ownership of the leased assets are classified as finance leases and all leases other than finance leases are classified as operating leases.Lease income from operating leases is recognized on a straight-line basis over the lease term,while initial direct costs incurred during the negotiation and contracting phase of an operating lease are added to the carrying amount of the leased asset and expensed over the lease term against the lease income.2.17 Government Grants Government grants relating to revenues are deferred and recognized in the consolidated statement of profit or loss in the same period in which they are matched with revenues or expenses related to the purpose for which the grant was made.Government grants received related to the acquisition of assets are treated as deferred income and credited to the consolidated statement of profit or loss over the useful lives of the related assets.2.18 Convenience Translation into United States Dollar Amounts The US dollar amounts provided in the consolidated financial statements represent supplementary information solely for the convenience of the reader.All Korean won amounts are expressed in US dollar at the rate of W1,363.09 to$1,the average exchange rate for the year ended December 31,2024.Such presentation is not in accordance with generally accepted accounting principles and should not be construed as a representation that the Korean won amounts shown could be readily converted,realized or settled in US dollars at this or any other rate.2.19 Approval of the Consolidated Financial Statements The consolidated financial statements of the Company were approved by the Board of Directors on January 31,2025,and may be approved as amended at the Annual General Shareholders Meetings.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-32-3.Material Accounting Estimates and Assumptions The Company makes estimates and assumptions concerning the future.Estimates and assumptions are continuously evaluated and are based on historical experience and future events that are reasonably foreseeable under the circumstances.These estimates may differ from actual results.The estimates and assumptions that have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year are as follows.(A)Revenue recognition The Company recognizes a liability for a product return and a right to the returned goods that are expected to be returned by customers following the sale of products to customers.At the point of sale,the Company estimates the return using the expected value method based on accumulated experience at the portfolio level and the Companys revenue is affected by changes in the expected return.Revenue from the sale of goods recognized at the point of transfer of control is the contractual consideration less consideration paid to customers in relation to certain sales promotion activities.Based on the historical experience and terms of contracts,the Company makes reasonable estimates of the sales deductions which affect the Companys revenue (B)Provision for warranty The Company provides warranties for products sold.At the end of each reporting period,the Company recognizes a provision for warranties based on its best estimate of the amount it believes is necessary to provide for future and current warranty obligations.These best estimates are based on historical experience.(C)Fair value of financial instruments The fair value of financial instruments that are not traded in an active market is determined by using various valuation techniques and assumptions based on market conditions prevailing at the end of each reporting period.(D)Impairment of financial assets In measuring the allowance for impairment losses on financial assets,the Company makes assumptions about the risk of default and expected credit rates.In making these assumptions and selecting the inputs for the impairment calculations,the Company makes judgment based on past experience and current and forecast of future economic conditions at the reporting date.(E)Lease In determining the lease term,the Company considers all relevant facts and circumstances that provide an economic incentive to exercise a renewal option,or not to exercise a termination option.The period covered by the renewal option(or the period covered by the termination option)is included in the lease term only if it is reasonably certain that the lessee will exercise(or not exercise)the renewal option.The lease term is reassessed when the option is actually exercised(or not exercised)or when the Company becomes committed to exercise(or not exercise)the option.The Company only changes its assessment of whether it is reasonably certain the renewal option will be exercised(or not)if there is a significant event or change in circumstances within the lessees control that affects the calculation of the lease term.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-33-(F)Net defined benefit liabilities(assets)The net defined benefit liabilities(assets)are dependent on a number of factors which are determined using actuarial methods based on a number of assumptions.Among the assumptions used to determine the net defined benefit liabilities(assets)is the discount rate,and changes in these assumptions will affect the carrying amount of the net defined benefit liability(asset).At the end of each year the Company determines an appropriate discount rate,taking into account the interest rates on high-quality corporate bonds,which represents the interest rate that should be used to determine the present value of the estimated future cash outflows expected to be required to settle the net defined benefit liability(asset).Some other key assumptions relating to the net defined benefit liability(asset)are based on current market conditions.(G)Impairment of goodwill and intangible assets that have indefinite useful life The Company tests goodwill and intangible assets with indefinite useful life for impairment annually.The recoverable amount of a cash-generating unit or asset,including goodwill,is determined based on a value-in-use calculation.These calculations are based on estimates.(H)Income taxes Income taxes on the Companys taxable income are calculated by applying tax laws and decisions of tax authorities in various countries,and,therefore,there is uncertainty in determining the final tax effect.The Company has recognized current and deferred tax based on its best estimate of the tax consequences expected to be payable in future periods as a result of the Companys operating activities up to the reporting date.However,the actual future final tax liability may not be consistent with the related assets and liabilities recognized,and such differences may affect the current and deferred tax assets and liabilities when the final tax effect is determined.The Company is subject to additional income taxes,calculated in accordance with the method prescribed by tax laws,when a certain amount is not used for investment,wage growth,etcetera,in a given period.The related tax effect is reflected in the measurement of current and deferred income taxes for the period,and the amount of income tax payable by the Company depends on the level of investment,wage growth,etcetera in each year,resulting in uncertainty in determining the final tax effects.The Company assesses uncertainty over its tax positions and,if the Company concludes that it is not probably that the tax authorities will accept an uncertain tax position,the effect of the uncertainty is recognized in the consolidated financial statements for each uncertain tax position using the method that is expected to provide a better estimate of the resolution of the uncertainty,which is more likely of the following methods.(1)Most likely amount:the single most probable amount within a range of possible outcomes.(2)Expected value:the sum of the probability-weighted amounts in a range of possible outcomes.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-34-4.Financial Instruments by Category (A)Categorizations of financial assets and liabilities as of December 31,2024 and 2023 are as follows:(1)As of December 31,2024 (In millions of Korean won)Financial assets measured at amortized cost Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value through profit or loss Other financial assets(*)Total Financial assets Cash and cash equivalents 53,705,579-53,705,579 Short-term financial instruments 58,909,334-58,909,334 Short-term financial assets at fair value through profit or loss-36,877-36,877 Trade receivables 43,623,073-43,623,073 Financial assets at fair value through other comprehensive income -10,580,932-10,580,932 Financial assets at fair value through profit or loss -1,175,749-1,175,749 Other 14,378,224-476,394 44,262 14,898,880 Total 170,616,210 10,580,932 1,689,020 44,262 182,930,424 (*)Other financial assets include derivatives designated as hedging instruments.(In millions of Korean won)Financial liabilities measured at amortized cost Financial liabilities measured at fair value through profit or loss Other financial liabilities(*)Total Financial liabilities Trade payables 12,370,177-12,370,177 Short-term borrowings 338,058-12,834,446 13,172,504 Other payables 17,390,861-17,390,861 Current portion of long-term liabilities 1,106,764-1,100,526 2,207,290 Debentures 14,530-14,530 Long-term borrowings 6,537-3,929,323 3,935,860 Long-term other payables 4,779,141-4,779,141 Other 13,698,485 36,795 57,764 13,793,044 Total 49,704,553 36,795 17,922,059 67,663,407 (*)Other financial liabilities include lease liabilities,which are not subject to categorization,collateralized borrowings and derivatives designated as hedging instruments.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-35-(2)As of December 31,2023 (In millions of Korean won)Financial assets measured at amortized cost Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value through profit or loss Other financial assets(*)Total Financial assets Cash and cash equivalents 69,080,893-69,080,893 Short-term financial instruments 22,690,924-22,690,924 Short-term financial assets at amortized cost 608,281-608,281 Short-term financial assets at fair value through profit or loss-27,112-27,112 Trade receivables 36,647,393-36,647,393 Financial assets at fair value through other comprehensive income -7,481,297-7,481,297 Financial assets at fair value through profit or loss -1,431,394-1,431,394 Other 14,294,254-475,244 70,777 14,840,275 Total 143,321,745 7,481,297 1,933,750 70,777 152,807,569 (*)Other financial assets include derivatives designated as hedging instruments.(In millions of Korean won)Financial liabilities measured at amortized cost Financial liabilities measured at fair value through profit or loss Other financial liabilities(*)Total Financial liabilities Trade payables 11,319,824 -11,319,824 Short-term borrowings 504,552 -6,610,049 7,114,601 Other payables 13,996,395 -13,996,395 Current portion of long-term liabilities 310,436 -998,439 1,308,875 Debentures 537,618 -537,618 Long-term borrowings-3,724,850 3,724,850 Long-term other payables 4,907,875 -4,907,875 Other 11,330,545 49,904 33,559 11,414,008 Total 42,907,245 49,904 11,366,897 54,324,046 (*)Other financial liabilities include lease liabilities,which are not subject to categorization,collateralized borrowings and derivatives designated as hedging instruments.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-36-(B)Net gains or losses on each category of financial assets and liabilities for the years ended December 31,2024 and 2023 are as follows:(1)2024 (In millions of Korean won)Financial assets measured at amortized cost Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value through profit or loss Other financial assets(*)Total Financial assets Gain on valuation (other comprehensive income)-2,300,166 -39,303 2,339,469 Gain(loss)on valuation/disposal(profit or loss)(111,124)-144,453 (4,524)28,805 Reclassification from other comprehensive income to profit or loss-(4,590)(4,590)Interest income 4,818,923 -205 -4,819,128 Foreign exchange differences (profit or loss)1,415,673 -1,415,673 Dividend income-133,681 1,271 -134,952 Impairment(profit or loss)(64,352)-(64,352)(*)Other financial assets include derivatives designated as hedging instruments.(In millions of Korean won)Financial liabilities measured at amortized cost Financial liabilities measured at fair value through profit or loss Other financial liabilities(*)Total Financial liabilities Loss on valuation (other comprehensive income)-(48,540)(48,540)Gain on valuation/disposal (profit or loss)-66,514 5,587 72,101 Reclassification from other comprehensive income to profit or loss-5,669 5,669 Interest expense(176,503)-(727,415)(903,918)Foreign exchange differences (profit or loss)(1,169,716)-(161,064)(1,330,780)(*)Other financial liabilities include lease liabilities,which are not subject to categorization,collateralized borrowings and derivatives designated as hedging instruments.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-37-(2)2023 (In millions of Korean won)Financial assets measured at amortized cost Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value through profit or loss Other financial assets(*)Total Financial assets Gain on valuation (other comprehensive income)-1,481,091 -58,290 1,539,381 Gain(loss)on valuation/disposal(profit or loss)(64,758)-213,308 436 148,986 Reclassification from other comprehensive income to profit or loss-1,169 1,169 Interest income 4,357,792 -230 -4,358,022 Foreign exchange differences (profit or loss)(98,522)-(98,522)Dividend income-161,509 2,694 -164,203 Impairment(profit or loss)(74,594)-(74,594)(*)Other financial assets include derivatives designated as hedging instruments.(In millions of Korean won)Financial liabilities measured at amortized cost Financial liabilities measured at fair value through profit or loss Other financial liabilities(*)Total Financial liabilities Loss on valuation (other comprehensive loss)-(16,809)(16,809)Loss on valuation/disposal (profit or loss)-(116,167)(126)(116,293)Reclassification from other comprehensive income to profit or loss-(337)(337)Interest expense(510,865)-(419,388)(930,253)Foreign exchange differences (profit or loss)162,844 -61,920 224,764 (*)Other financial liabilities include lease liabilities,which are not subject to categorization,collateralized borrowings and derivatives designated as hedging instruments Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-38-5.Transfer of Financial Assets The Company discounted trade receivables through factoring arrangements with banks during the years ended December 31,2024 and 2023.Trade receivables provided as collaterals in factoring transactions have not been derecognized as they do not meet the requirements for derecognition of financial assets as the Company retains substantially all the risks and rewards,including the recourse in the event of default by the debtor.Financial liabilities recognized in these transactions are classified as short-term borrowings on the consolidated statement of financial position(refer to Note 12).The carrying amount of the discounted trade receivables and the associated liabilities as of December 31,2024 and 2023 are as follows:(In millions of Korean won)December 31,2024 December 31,2023 Carrying amount of the discounted trade receivables(*)12,834,446 6,610,049 Carrying amount of the associated liabilities 12,834,446 6,610,049 (*)Discounted trade receivables includes trade receivables between consolidated entities.6.Financial Assets at Fair Value (A)Details of financial assets at fair value as of December 31,2024 and 2023 are as follows:(1)Financial assets at fair value through other comprehensive income (In millions of Korean won)December 31,2024 December 31,2023 Non-current Equity instruments 10,580,932 7,481,297 (2)Financial assets at fair value through profit or loss (In millions of Korean won)December 31,2024 December 31,2023 Current Debt instruments 36,877 27,112 Non-current Equity instruments 544,374 812,358 Debt instruments 631,375 619,036 Subtotal 1,175,749 1,431,394 Total 1,212,626 1,458,506 Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-39-(B)Changes in financial assets at fair value for the years ended December 31,2024 and 2023 are as follows:(1)Financial assets at fair value through other comprehensive income (In millions of Korean won)2024 2023 Balance as of January 1 7,481,297 11,397,012 Acquisition 182,655 124,897 Disposal(409,434)(5,918,616)Fair value valuation gain 3,106,853 1,548,022 Other 219,561 329,982 Balance as of December 31 10,580,932 7,481,297 (2)Financial assets at fair value through profit or loss (In millions of Korean won)2024 2023 Balance as of January 1 1,431,394 1,405,468 Acquisition 74,699 146,392 Disposal(343,374)(81,113)Fair value valuation loss(26,515)(38,110)Other 39,545 (1,243)Balance as of December 31 1,175,749 1,431,394 (C)Changes in gain(loss)on valuation of financial assets at fair value through other comprehensive income for the years ended December 31,2024 and 2023 are as follows:(In millions of Korean won)2024 2023 Balance as of January 1 249,121 3,636,478 Fair value valuation gain 2,571,076 1,548,022 Reclassification to retained earnings due to disposals(49,887)(4,935,379)Balance as of December 31 2,770,310 249,121 Income tax effects on equity(614,995)(54,702)Total 2,155,315 194,419 Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-40-(D)Details of listed equity securities of financial assets at fair value as of December 31,2024 and 2023 are as follows:(In millions of Korean won,number of shares and percentage)December 31,2024 December 31,2023 Number of shares owned Percentage of ownership(*)(%)Acquisition cost Carrying amount(Market value)Carrying amount(Market value)Samsung Heavy Industries Co.,Ltd.134,027,281 15.2 932,158 1,514,508 1,038,711 Hotel Shilla Co.,Ltd.2,004,717 5.1 13,957 73,974 131,108 iMarketKorea Inc.647,320 1.9 324 5,179 5,560 Wonik Holdings Co.,Ltd.3,518,342 4.6 30,821 8,972 11,857 Wonik IPS Co.,Ltd.3,701,872 7.5 32,428 82,737 125,679 Wacom Co.,Ltd.8,398,400 5.8 62,013 57,021 50,358 Corning Incorporated 74,000,000 8.6 3,831,362 5,169,226 3,140,978 Other 557,554 861,115 1,093,963 Total 5,460,617 7,772,732 5,598,214 (*)Ownership represents the Companys ownership of the ordinary shares issued by each entity.7.Trade and Non-Trade Receivables (A)Trade and non-trade receivables as of December 31,2024 and 2023 are as follows:December 31,2024 December 31,2023(In millions of Korean won)Trade Non-trade Trade Non-trade Receivables 44,071,714 10,491,746 37,026,738 7,474,967 Less:Loss allowance(421,000)(84,945)(355,456)(82,224)Subtotal 43,650,714 10,406,801 36,671,282 7,392,743 Less:Non-current (27,641)(783,827)(23,889)(759,495)Current 43,623,073 9,622,974 36,647,393 6,633,248 (B)Movements in the loss allowance for receivables for the years ended December 31,2024 and 2023 are as follows:2024 2023(In millions of Korean won)Trade Non-trade Trade Non-trade Balance as of January 1 355,456 82,224 312,221 78,101 Bad debt expense(reversal)61,705 1,413 62,964 (297)Write-off(9,404)(3,458)(18,875)(124)Other 13,243 4,766 (854)4,544 Balance as of December 31 421,000 84,945 355,456 82,224 Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-41-(C)The details of trade and non-trade receivables classified by past due date for the purpose of measuring expected credit losses as of December 31,2024 and 2023 are as follows:December 31,2024 December 31,2023(In millions of Korean won)Trade Non-trade Trade Non-trade Receivables not past due 40,986,584 10,089,887 33,633,006 7,077,413 Past due:Less than 31 days past due(*)2,619,575 253,962 2,262,296 269,390 31 days to 90 days past due 124,204 24,623 478,371 15,369 More than 90 days past due 341,351 123,274 653,065 112,795 Subtotal 3,085,130 401,859 3,393,732 397,554 Total 44,071,714 10,491,746 37,026,738 7,474,967 (*)The Company does not consider the credit risk of non-trade receivables that are overdue for less than or equal to 31 days has been significantly increased.(D)The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as of December 31,2024.The Company has entered into insurance contracts with insurers for its major receivables.8.Inventories Inventories as of December 31,2024 and 2023 are as follows:December 31,2024 December 31,2023(In millions of Korean won)Gross amount Valuation allowance Carrying amount Gross amount Valuation allowance Carrying amount Finished goods 15,061,526 (1,219,250)13,842,276 16,120,367 (1,567,353)14,553,014 Work in process 24,808,183 (2,467,701)22,340,482 26,501,664 (4,303,216)22,198,448 Raw materials and supplies 15,442,327 (1,296,048)14,146,279 15,222,937 (1,525,583)13,697,354 Materials in transit 1,425,828 -1,425,828 1,177,058 -1,177,058 Total 56,737,864 (4,982,999)51,754,865 59,022,026 (7,396,152)51,625,874 Inventories recognized as an expense for the year ended December 31,2024 amount to W181,242,363 million and 2023:W177,539,372 million,respectively.The amount includes a loss on the valuation of inventories.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-42-9.Investments in Associates and Joint Ventures (A)Changes in investments in associates and joint ventures for the years ended December 31,2024 and 2023 are as follows:(In millions of Korean won)2024 2023 Balance as of January 1 11,767,444 10,893,869 Acquisition 11,710 78,690 Disposal(33,208)(33,464)Share of profit 751,044 887,550 Other(*)95,127 (59,201)Balance as of December 31 12,592,117 11,767,444 (*)Other consists of dividends,(reversal of)impairment,and reclassification.(B)Major investments in associates and joint ventures as of December 31,2024 are as follows:(1)Investments in associates Investee Nature of relationship with associate Percentage of ownership(%)(*1)Principal business location Fiscal period-end Samsung Electro-Mechanics Co.,Ltd.Manufacture and supply electronic components including passive components,circuit boards,and modules 23.7 Korea December Samsung SDS Co.,Ltd.Provide Information Technology services including computer programming,system integration and management and logistical services 22.6 Korea December Samsung Biologics Co.,Ltd.Investment in new business 31.2 Korea December Samsung SDI Co.,Ltd.(*2)Manufacture and supply electronic parts including secondary cell batteries 19.6 Korea December Cheil Worldwide,Inc.Advertising agency 25.2 Korea December(*1)Ownership represents the Companys ownership of the ordinary shares issued by each entity.(*2)The Companys ownership of ordinary shares outstanding is 20.6%.(2)Investments in joint ventures Investee Nature of relationship with joint venture Percentage of ownership(%)(*1)Principal business location Fiscal period-end Samsung Corning Advanced Glass,LLC Manufacture and supply industrial glass products 50.0 Korea December(*1)Ownership represents the Companys ownership of the ordinary shares issued by each entity.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-43-(C)Details of investments in associates and joint ventures as of December 31,2024 and 2023 are as follows:(1)Investments in associates(In millions of Korean won)December 31,2024 Investee Acquisition cost Net asset value of equity shares(*)Carrying amount Samsung Electro-Mechanics Co.,Ltd.359,237 2,058,412 2,067,669 Samsung SDS Co.,Ltd.147,963 2,108,195 2,120,417 Samsung Biologics Co.,Ltd.1,424,358 3,403,947 3,406,062 Samsung SDI Co.,Ltd.1,242,605 3,979,333 2,923,991 Cheil Worldwide,Inc.506,162 418,029 718,561 Other 674,721 844,623 1,131,648 Total 4,355,046 12,812,539 12,368,348 (*)The Companys portion of net asset value of associates is based on the Companys percentage of ownership.(In millions of Korean won)December 31,2023 Investee Acquisition cost Net asset value of equity shares(*)Carrying amount Samsung Electro-Mechanics Co.,Ltd.359,237 1,837,925 1,841,393 Samsung SDS Co.,Ltd.147,963 1,955,699 1,966,206 Samsung Biologics Co.,Ltd.1,424,358 3,068,636 3,073,595 Samsung SDI Co.,Ltd.1,242,605 3,726,675 2,912,564 Cheil Worldwide,Inc.506,162 368,875 669,363 Other 690,481 844,645 1,093,799 Total 4,370,806 11,802,455 11,556,920 (*)The Companys portion of net asset value of associates is based on the Companys percentage of ownership.(2)Investments in joint ventures (In millions of Korean won)December 31,2024 Investee Acquisition cost Net asset value of equity shares(*)Carrying amount Samsung Corning Advanced Glass LLC 215,000 143,198 143,178 Other 259,994 74,075 80,591 Total 474,994 217,273 223,769 (*)The Companys portion of net asset value of joint ventures is based on the Companys percentage of ownership.(In millions of Korean won)December 31,2023 Investee Acquisition cost Net asset value of equity shares(*)Carrying amount Samsung Corning Advanced Glass LLC 215,000 138,939 138,938 Other 259,994 72,215 71,586 Total 474,994 211,154 210,524 (*)The Companys portion of net asset value of joint ventures is based on the Companys percentage of ownership.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-44-(D)Details of the changes in investments in associates and joint ventures using the equity method are as follows:(1)For the year ended December 31,2024 (In millions of Korean won)Balance as of January 1 Share of profit Share of other comprehensive income(loss)Other(*)Balance as of December 31 Samsung Electro-Mechanics Co.,Ltd.1,841,393 164,841 81,782 (20,347)2,067,669 Samsung SDS Co.,Ltd.1,966,206 172,708 28,678 (47,175)2,120,417 Samsung Biologics Co.,Ltd.3,073,595 336,256 (3,789)-3,406,062 Samsung SDI Co.,Ltd.2,912,564 (37,454)62,344 (13,463)2,923,991 Cheil Worldwide,Inc.669,363 59,476 21,954 (32,232)718,561 Samsung Corning Advanced Glass LLC 138,938 4,389 (130)(19)143,178 Other 1,165,385 50,828 42,908 (46,882)1,212,239 Total 11,767,444 751,044 233,747 (160,118)12,592,117 (*)Other includes acquisitions,disposals,and dividends.(2)For the year ended December 31,2023 (In millions of Korean won)Balance as of January 1 Share of profit Share of other comprehensive income(loss)Other(*)Balance as of December 31 Samsung Electro-Mechanics Co.,Ltd.1,764,249 106,455 7,844 (37,155)1,841,393 Samsung SDS Co.,Ltd.1,870,338 154,282 (2,503)(55,911)1,966,206 Samsung Biologics Co.,Ltd.2,808,673 267,614 (2,692)-3,073,595 Samsung SDI Co.,Ltd.2,691,223 214,702 20,506 (13,867)2,912,564 Cheil Worldwide,Inc.649,161 53,690 (94)(33,394)669,363 Samsung Corning Advanced Glass LLC 137,745 1,336 (124)(19)138,938 Other 972,480 89,471 52,175 51,259 1,165,385 Total 10,893,869 887,550 75,112 (89,087)11,767,444 (*)Other includes acquisitions,disposals,and dividends.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-45-(E)Summary of the condensed financial information of major associates and joint ventures (1)Summary of condensed financial information of major associates and dividends received from associates as of December 31,2024 and 2023 and for the years then ended are as follows:2024(In millions of Korean won)Samsung Electro-Mechanics Co.,Ltd.Samsung SDS Co.,Ltd.Samsung Biologics Co.,Ltd.Samsung SDI Co.,Ltd.Cheil Worldwide,Inc.1.Condensed financial information Condensed statements of financial position:Current assets 5,891,746 9,003,787 5,518,118 10,334,313 2,754,194 Non-current assets 6,900,656 4,234,543 11,818,179 30,263,032 568,459 Current liabilities 3,056,861 2,495,409 3,853,188 10,855,694 1,594,190 Non-current liabilities 719,688 1,037,472 2,578,432 8,174,413 251,659 Non-controlling interests 226,693 372,330 -1,800,842 18,806 Condensed statements of comprehensive income:Revenue 10,294,103 13,828,232 4,547,322 16,592,249 4,344,257 Profit from continuing operations,net of tax(*1)640,865 756,997 1,083,316 544,239 207,515 Profit from discontinued operations,net of tax(*1)38,265 -55,051 -Other comprehensive income(loss)(*1)349,340 144,625 (9,132)722,676 76,571 Total comprehensive income(*1)1,028,470 901,622 1,074,184 1,321,966 284,086 2.Reconciliation to the carrying amount of investments in associates Net assets(a)8,789,161 9,333,119 10,904,676 19,766,396 1,457,998 Ownership percentage(b)(*2)23.4.61.2 .1(.7%Net assets of equity shares(a x b)2,058,412 2,108,195 3,403,947 3,979,333 418,029 Goodwill 7,081 26,801 3,645 -298,779 Intercompany transactions and other(*3)2,176 (14,579)(1,530)(1,055,342)1,753 Carrying amount of associates 2,067,669 2,120,417 3,406,062 2,923,991 718,561 3.Dividends from associates Dividends 20,347 47,175 -13,463 32,232 (*1)Profit(loss)attributable to owners of the investee.(*2)Ownership percentage includes ordinary and preference shares.(*3)Consists of unrealized gains and losses and other differences.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-46-2023(In millions of Korean won)Samsung Electro-Mechanics Co.,Ltd.Samsung SDS Co.,Ltd.Samsung Biologics Co.,Ltd.Samsung SDI Co.,Ltd.Cheil Worldwide,Inc.1.Condensed financial information Condensed statements of financial position:Current assets 5,208,418 8,160,300 5,521,988 9,187,029 2,372,420 Non-current assets 6,449,453 4,160,724 10,524,209 24,851,831 517,085 Current liabilities 2,900,460 2,391,861 4,157,861 8,518,933 1,375,034 Non-current liabilities 727,087 953,592 2,057,844 5,612,677 216,707 Non-controlling interests 182,613 317,562-1,395,877 11,206 Condensed statements of comprehensive income:Revenue 8,892,412 13,276,844 3,694,589 21,436,788 4,138,275 Profit from continuing operations,net of tax(*1)449,857 693,422 857,691 1,921,820 187,302 Profit(loss)from discontinued operations,net of tax(*1)(26,900)-87,387 -Other comprehensive income(loss)(*1)45,053 (11,085)(11,673)85,394 3,685 Total comprehensive income(*1)468,010 682,337 846,018 2,094,601 190,987 2.Reconciliation to the carrying amount of investments in associates Net assets(a)7,847,711 8,658,009 9,830,492 18,511,373 1,286,558 Ownership percentage(b)(*2)23.4.61.2 .1(.7%Net assets of equity shares(a x b)1,837,925 1,955,699 3,068,636 3,726,675 368,875 Goodwill 7,081 26,801 3,645 -298,779 Intercompany transactions and other(*3)(3,613)(16,294)1,314 (814,111)1,709 Carrying amount of associates 1,841,393 1,966,206 3,073,595 2,912,564 669,363 3.Dividends from associates Dividends 37,155 55,911-13,867 33,394(*1)Profit(loss)attributable to owners of the investee.(*2)Ownership percentage includes ordinary and preference shares.(*3)Consists of unrealized gains and losses and other differences.Samsung Electronics Co.,Ltd.and its subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-47-(2)Summary of condensed financial information of major joint ventures and dividends received from joint ventures as of December 31,2024 and 2023 and for the years then ended are as follows:Samsung Corning Advanced Glass,LLC(In millions of Korean won)2024 2023 1.Condensed financial information Condensed statements of financia
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 Form20-F(Mark one)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR(g)OF THE SECURITIES EXCHANGE ACT OF 1934ORANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ORSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Commission file number 001-32575Shell plc(Exact name of registrant as specified in its charter)England and Wales(Jurisdiction of incorporation or organization)Shell CentreLondon,SE1 7NAUnited Kingdom(Address of principal executive offices)Sean Ashley,Company SecretaryShell Centre London,SE1 7NAUnited KingdomTelephone Number:0044-20-7934-1234E-mail Address:(Name,Telephone,E-mail and/or Facsimile number and Address of Company Contact Person)1Shell Form 20-F 2024Securities registered pursuant to Section12(b)of the Act Title of Each ClassTrading SymbolsName of Each Exchange on Which RegisteredAmerican Depositary Shares representing two ordinary shareswith a nominal value of 0.07 eachSHELNew York Stock Exchange*3.25%Guaranteed Notes due 2025SHEL/25New York Stock Exchange2.5%Guaranteed Notes due 2026SHEL/26New York Stock Exchange2.875%Guaranteed Notes due 2026SHEL/26ANew York Stock Exchange3.875%Guaranteed Notes due 2028SHEL/28New York Stock Exchange2.375%Guaranteed Notes due 2029SHEL/29New York Stock Exchange2.375%Guaranteed Notes due 2029SHEL/29ANew York Stock Exchange2.75%Guaranteed Notes due 2030SHEL/30New York Stock Exchange2.750%Guaranteed Notes due 2030SHEL/30ANew York Stock Exchange4.125%Guaranteed Notes due 2035SHEL/35New York Stock Exchange4.125%Guaranteed Notes due 2035SHEL/35ANew York Stock Exchange6.375%Guaranteed Notes due 2038SHEL/38New York Stock Exchange5.5%Guaranteed Notes due 2040SHEL/40New York Stock Exchange2.875%Guaranteed Notes due 2041SHEL/41New York Stock Exchange3.625%Guaranteed Notes due 2042SHEL/42New York Stock Exchange4.55%Guaranteed Notes due 2043SHEL/43New York Stock Exchange4.550%Guaranteed Notes due 2043SHEL/43ANew York Stock Exchange4.375%Guaranteed Notes due 2045SHEL/45New York Stock Exchange4.375%Guaranteed Notes due 2045SHEL/45ANew York Stock Exchange3.75%Guaranteed Notes due 2046SHEL/46New York Stock Exchange4.00%Guaranteed Notes due 2046SHEL/46ANew York Stock Exchange4.000%Guaranteed Notes due 2046SHEL/46BNew York Stock Exchange3.750%Guaranteed Notes due 2046SHEL/46CNew York Stock Exchange3.125%Guaranteed Notes due 2049SHEL/49New York Stock Exchange3.25%Guaranteed Notes due 2050SHEL/50New York Stock Exchange3.250%Guaranteed Notes due 2050SHEL/50ANew York Stock Exchange3.00%Guaranteed Notes due 2051SHEL/51New York Stock Exchange*Not for trading,but only in connection with the registration of the American Depositary Shares issued in respect thereof,pursuant to the requirements of the Securities and Exchange Commission.Securities registered pursuant to Section12(g)of the Act:none Securities for which there is a reporting obligation pursuant to Section15(d)of the Act:none Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report.Outstanding as of December 31,2024:6,084,228,376 ordinary shares with a nominal value of 0.07 each.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule405 of the Securities Act.YesNoIf this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934.YesNoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90days.YesNoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).YesNo2Shell Form 20-F 2024Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See definition of large accelerated filer,accelerated filer,and emerging growth company in Rule12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-acceleratedfilerEmerging growth companyIf an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.The term new or revised financial accounting standards refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAPInternational Financial Reporting Standards as issued by the International Accounting Standards Board.OtherIf Other has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.Item 17Item 18If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule12b-2 of the Exchange Act).YesNoCopies of notices and communications from the Securities and Exchange Commission should be sent to:Shell plc Shell CentreLondon,SE1 7NAUnited KingdomAttn:Sean Ashley3Shell Form 20-F 2024 TABLE OF CONTENTSCover1Cross reference to Form 20-F8Terms and abbreviations10About this Report11Chairs message13Chief Executive Officers review15Shells Strategy17This is Shell 17Our strategy19Outlook 23Risk factors and risk management25Performance in the year35Performance indicators35Generating shareholder value37Group Results38Liquidity and capital resources41Market overview45Integrated Gas48Upstream55Oil and gas information64Marketing72Chemicals and Products77Renewables and Energy Solutions85Corporate89Other central activities91Our journey to net zero93Energy transition strategy94Climate-related metrics and targets110Other regulatory disclosures122Respecting Nature124Powering Lives129Our People130Contribution to society135Safety137Living by our values 140Our approach to sustainability142The Board of Shell plc1495Shell Form 20-F 2024Executive Committee154Board Activities 156Governance framework157Nomination and Succession Committee163Sustainability Committee167Audit and Risk Committee Report168Directors Remuneration Report180Annual Report on Remuneration183Directors Remuneration Policy200Other regulatory and statutory information208Report of Independent Registered Public Accounting Firm(ID:1438)219Consolidated Statement of Income223Consolidated Statement of Comprehensive Income223Consolidated Balance Sheet224Consolidated Statement of Changes in Equity225Consolidated Statement of Cash Flows226Notes to the Consolidated Financial Statements2271.Basis of preparation2272.Material accounting policies,judgements and estimates2273.Changes to IFRS not yet adopted2374.Climate change and energy transition2375.Emission schemes and related environmental plans2506.Capital management2527.Segment information2528.Operating Revenues2579.Interest and other income25810.Interest expense25811.Goodwill and other Intangible assets25812.Property,plant and equipment25913.Impairment of property,plant and equipment,goodwill and other intangible assets 26114.Joint ventures and associates26415.Investments in securities26516.Trade and other receivables26617.Inventories26618.Cash and cash equivalents26719.Assets held for sale26720.Trade and other payables26721.Debt2686Shell Form 20-F 202422.Leases27023.Taxation27124.Retirement benefits27425.Decommissioning and other provisions28126.Financial instruments28227.Share capital28928.Share-based compensation plans and shares held in trust28929.Other reserves29030.Dividends29231.Earnings per share29232.Legal proceedings and other contingencies29233.Employees29534.Directors and Senior Management29535.Auditors remuneration29636.Post-balance sheet events296Supplementary information-oil and gas(unaudited)297Supplementary information-EU Taxonomy disclosure317Shareholder information331Section 13(r)of the US Securities Exchange Act of 1934 disclosure336Non-GAAP measures reconciliations337Index to the exhibits345Signatures346Financial calendar3477Shell Form 20-F 2024CROSS REFERENCE TO FORM 20-F Part IPagesItem 1.Identity of Directors,Senior Management and AdvisersN/AItem 2.Offer Statistics and Expected TimetableN/AItem 3.Key InformationA.ReservedB.Capitalization and indebtednessN/AC.Reasons for the offer and use of proceedsN/AD.Risk factors25-32Item 4.Information on the CompanyA.History and development of the company12-28,39-79,114-138,291-309B.Business overview13-32,35-36,48-92,124-148,297-316C.Organizational structure18,Exhibit 8.1D.Property,plants and equipment25-32,38-40,48-92,124-128,137-141,297-316Item4A.Unresolved Staff CommentsN/AItem 5.Operating and Financial Review and ProspectsA.Operating results25-32,35-44,48-92,282-294B.Liquidity and capital resources38-44,48-49,55-56,72-73,77-78,85-86,89-90,227-237,252,258-271C.Research and development,patents and licences,etc.13,92,107,223,228,253-255D.Trend information23-32,35-63,72-88,93-148E.Critical Accounting EstimatesN/AItem 6.Directors,Senior Management and EmployeesA.Directors and senior management149-156,211-213B.Compensation180-183,185-207,295C.Board practices33-34,149-199,208-218D.Employees130-134,295E.Share ownership134,156,193,210,289-290,331F.Disclosure of a registrants action to recover erroneously awarded compensationN/AItem 7.Major Shareholders and Related Party TransactionsA.Major shareholders 332 B.Related party transactions209,264,295C.Interests of experts and counselN/AItem 8.Financial InformationA.Consolidated Statements and Other Financial Information24,43-44,219-296B.Significant Changes 296 Item 9.The Offer and ListingA.Offer and listing details 331 B.Plan of distributionN/AC.Markets 331 D.Selling shareholdersN/AE.DilutionN/AF.Expenses of the issueN/AItem10.Additional InformationA.Share capitalN/AB.Memorandum and articles of association211-218C.Material contractsN/AD.Exchange controls 333 E.Taxation333-3358Shell Form 20-F 2024F.Dividends and paying agentsN/AG.Statement by expertsN/AH.Documents on display 12 I.Subsidiary InformationN/AJ.Annual Report to Security HoldersSee Form 6-K,furnished March 25,2025Item11.Quantitative and Qualitative Disclosures About Market Risk41,234-236,265,282-288Item 12.Description of Securities Other than Equity SecuritiesA.Debt SecuritiesExhibit 2.6B.Warrants and RightsN/AC.Other SecuritiesN/AD.American Depositary Shares331-333,Exhibit 2.6Part IIItem13.Defaults,Dividend Arrearages and DelinquenciesN/AItem 14.Material Modifications to the Rights of Security Holders and Use of ProceedsN/AItem 15.Controls and Procedures208,222Item 16.ReservedItem16A.Audit committee financial expert169Item16B.Code of Ethics210Item16C.Principal Accountant Fees and Services179Item16D.Exemptions from the Listing Standards for Audit Committees210-211Item16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers43-44,208Item16F.Change in Registrants Certifying AccountantN/AItem16G.Corporate Governance210-218Item16H.Mine Safety DisclosureN/AItem 16I.Disclosure Regarding Foreign Jurisdictions that Prevent InspectionsN/AItem 16J.Insider trading policies210,Exhibits 11.1 and 11.2Item 16K.Cybersecurity30,91-92Part IIIItem 17.Financial StatementsN/AItem 18.Financial Statements219-296Item 19.Exhibits3459Shell Form 20-F 2024Terms and abbreviationsCurrencies$US dollareurosterlingUnits of measurement acreapproximately 0.004square kilometresb(/d)barrels(per day)bblbarrelboe(/d)barrels of oil equivalent(per day);natural gas volumes are converted into oil equivalent using a factor of 5,800 scf perbarrelGJgigajouleGWgigawattkboe(/d)thousand barrels of oil equivalent(per day);natural gas volumesare converted into oil equivalent using a factor of5,800 scf per barrelkWhkilowatt-hoursmb/dmillion barrels per daymegajoulea unit of energy equal to one million joulesMMBtumillion British thermal unitsmtpamillion tonnes per annumMWmegawattMWhmegawatt-hoursNm3normal cubic metreperdayvolumes are converted into a daily basis using a calendaryearscf(/d)standard cubic feet(per day)TWhterawatt-hoursProducts GTLgas-to-liquidsLNGliquefied natural gasLPGliquefied petroleum gasNGLnatural gas liquidsMiscellaneousActUK Companies Act 2006ADSAmerican Depositary ShareAGMAnnual General MeetingAPIAmerican Petroleum InstituteAPMAlternative performance measureARCAudit and Risk CommitteeCCScarbon capture and storageCCS earnings earnings on a current cost of supplies basisCFFOcash flow from operating activitiesCISOChief Information Security OfficerCMDCapital Markets DayCMFcarbon management frameworkCO2carbon dioxideCO2ecarbon dioxide equivalentCRCCarbon Reporting CommitteeCRTCommercial Road TransportCSRDCorporate Sustainability Reporting DirectiveDE&IDiversity,equity,and inclusionECExecutive CommitteeEMTNEuro medium-term noteEPSearnings per shareEPSAexploration and production sharing agreementEPTBEnvironmental Products Trading BusinessESRSEuropean Sustainability Reporting StandardsETS24Energy Transition Strategy 2024EVElectric vehicleFCFfree cash flowFIDfinal investment decisionGAAPgenerally accepted accounting principlesGHGgreenhouse gasHSSEhealth,safety,security and environmentIASInternational Accounting StandardsIEAInternational Energy AgencyIFRSInternational Financial Reporting Standard(s)IOGPInternational Association of Oil&Gas ProducersIPCCIntergovernmental Panel on Climate ChangeIpiecaInternational Petroleum Industry Environmental Conservation Association IRMInformation Risk ManagementISOInternational Organisation for StandardisationISSBInternational Sustainability Standards BoardKPIKey performance indicatorLGBT Lesbian,gay,bisexual and transgenderLTIPLong-term Incentive PlanNBSNature-Based SolutionsNCInet carbon intensityNGONon-governmental organisationNOMCONomination and Succession CommitteeNZENet zero emissionsOECDOrganisation for Economic Co-operation and DevelopmentOFCForganic free cash flow OGCIOil and Gas Climate InitiativeOMLoil mining leaseOPECOrganization of the Petroleum Exporting CountriesOPEC 12 members of the OPEC and 11 other non-OPEC membersOPLoil prospecting licencePSCproduction-sharing contractPSPPerformance Share PlanQRAQuarterly Results AnnouncementR&DResearch and developmentREMCORemuneration CommitteeRNGRenewable natural gasRTreal termsSEAMSafety,Environment and Asset ManagementSECUS Securities and Exchange CommissionSGBPShell General Business PrinciplesSIAIShell Internal Audit and InvestigationsSPsocial performanceSUSCOSustainability CommitteeTCFDTask Force on Climate-related Financial DisclosuresTSRtotal shareholder returnWACCweighted average cost of capitalWTIWest Texas Intermediate Indicates information that supports TCFD disclosure 10Shell Form 20-F 2024This Form 20-F as filed with the US Securities and Exchange Commission for the year ended December 31,2024(this Report)presents the Consolidated Financial Statements of Shell plc(the Company)and its subsidiaries(collectively referred to as Shell)(pages 223-296).Except for these Financial Statements,the numbers presented throughout this Report may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures due to rounding.Cross-references to Form 20-F are set out on pages 8-9 of this Report.The Consolidated Financial Statements of Shell plc and its subsidiaries contained in this Report have been prepared in accordance with international accounting standards in conformity with the requirements ofthe UK Companies Act 2006(the Act),and therefore in accordance with UK-adopted international accounting standards.As applied to Shell,there are no material differences from International Financial Reporting Standards(IFRS)as issued by the International Accounting Standards Board(IASB);therefore,the Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB.IFRS as defined above includes interpretations issued by the IFRS Interpretations Committee.Financial reporting terms used in this Report are in accordance with IFRS.This Report contains certain forward-looking non-GAAP measures such as cash capital expenditure and divestments.We are unable to provide a reconciliation ofthese forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell,such as oil and gas prices,interest rates and exchange rates.Moreover,estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort.Non-GAAP measures in respect of future periods which cannot bereconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plcs consolidated financial statements.The companies in which Shell plc directly and indirectly owns investments are separate legal entities.In this report Shell,Shell Group and Group are sometimes used for convenience to reference Shell plc and its subsidiaries in general.Likewise,the words we,us and our are also used to refer to Shell plc and its subsidiaries in general or to those who work for them.These terms are also used where no usefulpurpose is served by identifying the particular entity or entities.Subsidiaries,Shell subsidiaries and Shell companies as used in this report refer to entities over which Shell plc either directly or indirectly has control.The terms joint venture,joint operations,joint arrangements,and associates may also be used to refer to a commercial arrangement in which Shell has a direct or indirect ownership interest with one or more parties.The term Shell interest is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement,after exclusion of all third-party interest.As used in this Report,Accountable is intended to mean:required or expected to justify actions or decisions.The Accountable person does not necessarily implement the action or decision(implementation is usually carried out by the person who is Responsible)but must organise the implementation and verify that the action has been carried out as required.This includes obtaining requisite assurance from Shell companies that the framework is operating effectively.Responsible is intended to mean:required or expected to implement actions or decisions.Each Shell company and Shell-operated venture is responsible for its operational performance and compliance with the Shell General Business Principles,Code of Conduct,Statement on Risk Management and Risk Manual,andStandards and Manuals.This includes responsibility for the operationalisation and implementation of Shell Group strategies andpolicies.Shells net carbon intensity referred to in this Report includes Shells carbon emissions from the production of our energy products,our suppliers carbon emissions in supplying energy for that production,andour customers carbon emissions associated with their use of the energy products we sell.Shells NCI also includes the emissions associated with the production and use of energy products produced byothers which Shell purchases for resale.Shell only controls its own emissions.The use of the terms Shellsnet carbon intensity or NCI is for convenience only and not intended tosuggest these emissions are those of Shell plc or its subsidiaries.Shells operating plan and outlook are forecasted for a three year period and 10-year period,respectively,and are updated every year.They reflect the current economic environment and what we can reasonably expect to see over the next three and tenyears.Accordingly,the outlook reflects our Scope 1,Scope 2 and NCI targets over the next 10 years.However,Shells operating plan and outlook cannot reflect our 2050 net-zero emissions target,as this target is outside ourplanning period.Such future operating plans and outlooks could include changes to our portfolio,efficiency improvements and the use of carbon capture and storage and carbon credits.In the future,as society moves towards net-zero emissions,we expect Shells operating plans and outlooks to reflect this movement.However,if society is not net zero in 2050,as of today,there would besignificant risk that Shell may not meet this target.Except where indicated,the figures shown in the tables in this Report are in respect of subsidiaries only,without deduction of any non-controlling interest.However,the term Shell share is used for convenience to refer to the volumes of hydrocarbons that are produced,processed or sold through subsidiaries,joint ventures and associates.All of a subsidiarys production,processing or sales volumes(including the share of joint operations)are included in the Shell share,even if Shell owns less than 100%of the subsidiary.In the case of joint ventures and associates,however,Shell-share figures are limited only to Shells entitlement.In allcases,royalty payments in kind are deducted from the Shell share.Except where indicated,the figures shown in this Report are stated in USdollars.As used herein all references to dollars or$are to the UScurrency.This Report contains forward-looking statements(within the meaning of the USPrivate Securities Litigation Reform Act of 1995)concerning the financial condition,results of operations and businesses of Shell.All statements other than statements of historical fact are,or may be deemed to be,forward-looking statements.Forward-looking statements are statements of future expectations that are based on managements current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results,performance or events to differ materially from those expressed or implied in these statements.Forward-looking statements include,among other things,statements concerning the potential exposure of Shell to market risks and statements expressing managements expectations,beliefs,estimates,forecasts,projections and assumptions.These forward-looking statements are identified by their use of terms and phrases such as aim,ambition,anticipate,aspire,aspiration,believe,commit,commitment,could,desire,estimate,expect,goals,intend,may,milestones,objectives,outlook,plan,probably,project,risks,schedule,seek,should,target,vision,will,would and similar terms and phrases.There are anumber of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this Report,including(without limitation):(a)price fluctuations in crude oil and natural gas;(b)changes in demand for Shells products;(c)currency fluctuations;(d)drilling and production results;(e)reserves estimates;(f)loss of market share and industry competition;(g)environmental and physical risks,including climate change;(h)risks associated with the identification of suitable potential acquisition properties and targets,and successful negotiation and completion of such transactions;(i)the risk of doing business in developing countries and countries subject to international sanctions;(j)legislative,judicial,fiscal and regulatory developments including tariffs and regulatory measures addressing climate change;(k)economic and financial market conditions in various countries and regions;(l)political risks,including the risks of expropriation and renegotiation of About this Report11Shell Form 20-F 2024the terms of contracts with governmental entities,delays or advancements in the approval of projects and delays in the reimbursement for shared costs;(m)risks associated with the impact of pandemics,regional conflicts,such as the Russia-Ukraine war and the conflict in the Middle East,and a significant cyber security,data privacy or IT incident;(n)the pace of the energy transition;and(o)changes in trading conditions.Also see Risk factors and risk management on page 25-34 for additional risks and further discussion.No assurance is provided that future dividend payments will match or exceed previous dividend payments.All forward-looking statements contained in this Report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.Readers should not place undue reliance on forward-looking statements.Each forward-looking statement speaks only as of the date of this Report.Neither the Company nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information,future events or other information.In light of these risks,results could differ materially from those stated,implied or inferred fromthe forward-looking statements contained in this Report.Past performance cannot be relied on as a guide to future performance.This Report contains references to Shells website,the Shell Energy Transition Strategy 2024 Report,Tax Contribution Report,Shell Climate and Energy Transition Lobbying Report and our report on Payments to Governments.These references are for the readers convenience only.Shell is not incorporating by reference into this Report any information posted on or in the Shell Energy Transition Strategy 2024 Report,Tax Contribution Report,Shell Climate and Energy Transition Lobbying Report or our report on Payments to Governments.The content of any other websites referred to in this Report does not form part of this Report.With effect from January 29,2022,Shells A shares and B shares wereassimilated into a single line of ordinary shares.Shells A and B American Depositary Shares(ADSs)were assimilated into a single line ofADSs on the same date.This Report continues to refer to A shares,Bshares,A ADSs and B ADSs when describing the position prior to January 29,2022.Shell V-Power and Shell LiveWire are Shell trademarks.Documents on display The SEC maintains an Internet site that contains reports,proxy and information statements,and other information regarding issuers that file electronically with the SEC.All of the SEC filings made electronically by Shell are available to the public on the SEC website at sec.gov(commission file number 001-32575).This Report is also available,free of charge,at or at the offices of Shell in London,United Kingdom and The Hague,the Netherlands.Copies of this Report also may be obtained,free of charge,by mail.About this Report continued12Shell Form 20-F 2024In 2024,we continued to do what Shell does best,connecting energy and people.In total,we served around 33 million customers at Shell-branded retail sites every day,and around 1 million business customers across more than 70 countries.We used the power of our people,brand,technology and trading network to provide our customers with the oil and gas they need today.At the same time,we increasingly helped them to makelow-carbon choices,from biofuels to charging for electric vehicles.In this second year under our Chief Executive Officer,Wael Sawan,Shell went from strength to strength.We improved Shells operational performance,and made good progress against the financial and climate targets and ambition we set out at our Capital Markets Day in2023 and in our Energy Transition Strategy 2024.We demonstrated that our strategy to deliver more value with less emissions is producing strong results,and compelling shareholder returns.By the beginning of 2025,we had announced$3 billion ormore in buybacks for 13 consecutive quarters.New projectsShell has pioneered ways to provide energy for more than a century.As the energy system and energy mix keep evolving,we will continue to provide the energy people need through the complex transition to low-carbon energy.We will help to keep the world moving with oil and gas,while developing the low-carbon alternatives our customers need to decarbonise.To that end,we have built on our leadership positions in A Based on a five-year average 20162020 for Brent Charlie emissions,and the highest expected emissions for Penguins.liquefied natural gas(LNG)and deep-water oil and gas production with some important new projects.We announced a final investment decision for Manatee,an undeveloped gas field in Trinidad and Tobago,which will have a key role in providing gas to the countrys Atlantic LNG facility.Our deep-water Whale platform in the Gulf of America started production in January 2025.At its peak,we expect that Whale will produce around 100,000 barrels of oil equivalent a day,enough to fuel the daily journeys of 2.7 million cars in the USA.It will operate with 30%lower carbon intensity over its life cycle than Vito,another US deep-water platform.In February 2025,our next-generation Penguins facility started production in the North Sea.It will produce mostly oil but also enough gas to heat around 700,000 UK homes a year,with around 30%lower operational emissions than its predecessor,Brent Charlie A.Less emissionsWe kept our focus on reducing emissions as we worked to become a net-zero emissions energy business by 2050.In 2024,we achieved our short-term target to reduce the net carbon intensity of the products we sell,compared with 2016.We achieved this mainly by reducing sales of oil products and growing power sales.By the end of 2024,we had achieved 60%of our target to halve Scope 1 and 2 emissions from our operations by 2030,compared with2016 levels.We continued to transform our business.In January 2024,we announced the decision to stop processing crude oil into petrol,jet fueland diesel at the Wesseling site of our Energy and Chemicals Park Rheinland,Germany,and to produce premium oils instead.In April 2024,we opened our bioLNG liquefaction plant in Germany,which can produce enough bioLNG to fuel around 5,000 LNG trucks a year.Technology and innovationInnovation remains vital for a successful transition to low-carbon energy.In 2024,we spent around$500 million on projects that contributed to decarbonisation,almost half of our total spending on research and development.In December,I saw some of that work for myself when I visited the Energy Transition Campus Amsterdam in the Netherlands.I was especially excited to see how our research is building on Shells leadership in gas-to-liquids(GTL)technology,something we pioneered almost half a century ago.Today,the Pearl GTL gas-to-liquids plant in Qatar uses natural gas to produce an alternative fuel to conventional diesel for transport,as well as oils and lubricants.We have also used GTL technology to develop immersion cooling fluids for data centres.These fluids reduce costs,energy consumption and emissions compared with conventional cooling.Thiswill be increasingly important as the growth in artificial intelligence leads to greater use of energy-intensive data centres.Now our scientists in Amsterdam are researching how to use that sameGTL technology to produce sustainable aviation fuel made fromrenewable power and captured carbon on a commercial scale.Inanother exciting development for the energy transition,they are also Strategic ReportChairs message13Shell Form 20-F 2024looking at how to produce synthetic methane,made from renewable hydrogen and captured carbon,to decarbonise the production of LNG.We are creating the business case for other pioneering solutions,such as carbon capture and storage,which will be critical for the energy transition.In 2024,we took a final investment decision for two projects in Canada that will capture and store carbon from our Shell Energy and Chemicals Park Scotford in Alberta.These build on the success ofour Quest CCS project in Canada which has captured more than 9million tonnes of CO since 2015.The Northern Lights joint venture with Equinor and TotalEnergies in Norway is developing the worlds first project to offer commercial carbon transport and storage as a service.The first CO2 shipments areexpected in 2025.Unique capabilitiesOur strengths go way beyond production.Through our integrated portfolio,we can buy and blend energy products to meet our customers needs.We can use our unique capabilities,including trading,to connect energy to our customers through the energy transition.For example,we became one of the worlds largest traders and suppliers of sustainable aviation fuel in 2024.We achieved this because of our long-term agreements with producers,the strength ofour customer relationships,and strategic investments in logistics around key terminals and airports.In 2024,we continued to build an organisation with an outstanding brand,as well as outstanding people,and trading,technology and innovation capabilities.Today,we sell nearly three times the energy products that we produce,meeting our customers demand for oil andgas and low-carbon products through our integrated model.Working togetherWe believe that the energy transition will be achieved by governments,companies like Shell,and customers all working together.Governments need to put in place effective policies to progress the energy transition,and energy producers need to help develop the solutions of the future.The transition also requires demand from customers who are willing to pay for low-carbon energy.We are playing our part.I am confident that Shell can continue to bring its deep experience to help advance the energy transition.In 2024,we demonstrated that you can still be sure of Shell.As a customer,you can be sure that Shell will provide you with the right products and solutions today and through the energy transition.And asan investor you can be sure that this is the right management team with the right strategy,setting Shell up for success in the years to come.Sir Andrew Mackenzie Chair1.The Whale deep-water platform started production in January 2025.2.The Northern Lights joint venture in Norway is developing the worlds first project todeliver commercial carbon transport and storage as a service.3.The Penguins facility in the North Sea will produce enough gas to heat around 700,000 UK homes a year.Strategic Report|Chairs message continued14Shell Form 20-F 20242024 at a glance1.590.0Serious injury,illness and fatality frequency(SIF-F)in Shell-operated venturesTier 1 and Tier 2 processsafety incidents(2023:63.0)(2023:2.6)$16.5 billion$23.7 billionIncome for the periodAdjusted Earnings*(2023:$19.6)(2023:$28.3)$54.7 billion$39.5 billionCash flow from operating activities(2023:$54.2)Free cash flow*(2023:$36.5)$19.6 billion$21.1 billionCapital expenditureCash capital expenditure(2023:$23.0)(2023:$24.4)$13.9 billion$8.7 billionShare buyback programmeDividends paid(2023:$14.6)(2023:$8.4)58 million tonnes71 gCO2e/MJScope 1 and 2 emissions CO2eNet carbon intensity(NCI)(2023:57)(2023:72)Key performance indicators(see pages 35-36).*Non-GAAP measure(see page 337).In 2024,the world experienced continued geopolitical volatility.The Russia-Ukraine war entered its third year and conflict escalated in the Middle East,bringing personal tragedy to many.It was a time of political change,with elections in more than 60 countries.Energy security and affordability rose higher on political agendas,even as the share of renewable energy grew.This came into sharp focus during Europes winter of 2024.Wind and solar power reached record levels in the region,while liquefied natural gas(LNG)played a critical role in keeping homes and businesses running when there was not enough wind or sunlight.With global demand for energy increasing,coupled with the challenge of climate change,Shell continues to focus on its strategy todeliver more value with less emissions.We believe the world needs to maintainsecure and affordable energy supplies while moving tolow-carbon energy.In 2024,my second year as Chief Executive Officer,I am proud of theprogress we have made in putting our strategy into action.I want to thank everyone at Shell for their contribution.We are growing shareholder returns,while working to reduce emissions from our operations and products.We are positioning Shell to win through the energy transition on our journey to become a net-zero emissions energy business by 2050.Integrated energy companyOur strategy aims to grow our world-leading LNG business,which provides flexibility alongside renewable energy,and a lower-carbon alternative to coal.We expect that supplying LNG will be the biggest contribution we will make to the energy transition over the next decade,as we help to build the energy system of the future.Building on our deep knowledge and strong partnerships,we are also responsibly producing the oil that will be needed for decades to come,with a focus on cost and carbon competitiveness.We intend to be the most customer-focused energy marketer and trader in the world,providing people with the energy they need to power their lives and businesses.We are developing commercial models for low-carbon solutions,such as biofuels.My vision is for Shell to become the worlds leading integrated energy company,delivering impact at scale,connecting energy and people,matching supply to demand.We have set out to transform Shell into a more focused and more competitive energy business,and I am pleased to say that in 2024,wemoved forward at pace in that direction.Following our principles ofperformance,discipline and simplification,we have made good progress against the targets and ambition we presented at our Capital Markets Day in 2023 and in our Energy Transition Strategy 2024.Strategic ReportChief ExecutiveOfficers review15Shell Form 20-F 2024More valueIn 2024,we achieved our target to reduce structural costs*by$2-3 billion by the end of 2025,against 2022,one year ahead of time.Wecontinued to make disciplined investments,and difficult choices,such as pausing construction of our biofuels plant in Rotterdam,the Netherlands,to assess the most commercial way forward.We are building a strong track record of performance.Shell reported the second-highest cash flow from operations in our history in 2024,outperforming our target for free cash flow growth.By the end of the year,we had delivered at the top end of our target to distribute 30-40%of cash flow from operations to our shareholders*,mainly through buybacks.Our Prelude floating LNG facility off the coast of Australia had recordproduction in 2024,as did our QGC natural gas business in Queensland,Australia,boosting our operational performance.We added major new projects.We took a final investment decision on Bonga North,off the coast of Nigeria,which is expected to start up by the end of the decade and reach peak production of 110,000 barrels of oil equivalent a day.Our US deep-water platform Whale started production in January 2025,with estimated peak production of 100,000 barrels of oil equivalent a day.Our agreement to acquire Pavilion Energy in Singapore further strengthened our LNG portfolio with more sales and flexibility.I also signed an agreement in Abu Dhabi to invest in the Ruwais LNG project A,which is designed to operate with lower carbon intensity than traditional LNG plants.LNG Canada is expected to start producing in the middle of 2025,the largest private-sector energy investment in Canadas history.Another example of our transformation is the sale of Shell Pakistan,which is helping us to achieve our aim to divest around 500 retail sites every year until 2025.Less emissionsIn 2024,we worked hard towards our climate goals.We abated more than 1 million tonnes of CO2 from our operations through projects such as reduced flaring and the use of renewable electricity.This allowed us to keep our Scope 1 and 2 emissions roughly flat compared with 2023,despite increased oil and gas production and asset utilisation.By the end of 2024,we had achieved 60%of the reduction required to meet our 2030 Scope 1 and 2 target.Shell remains a leader in reducing emissions of methane,a potent greenhouse gas that can be released during oil,gas and LNG production.By the end of 2024,we had reduced total methane emissions from assets under our operational control by 76%compared with 2016.Total routine flaring from our upstream oil and gas assets remained stable in 2024,and,as of January 1,2025,we no longer routinely flare from these assets.A Subject to completion.*Non-GAAP measure(see page 337).When it comes to our sales,we achieved our short-term target to reduce the net carbon intensity of the energy products we sell with a9%reduction compared with 2016,moving us closer to our target ofa15-20%reduction by 2030 compared with 2016 levels.By the end of 2024,we had installed more than 70,000 public charge points for electric vehicles,a year ahead of schedule.I am encouraged by the progress we are making in carbon capture and storage,with plans for two linked projects in Canada.In Norway,our Northern Lights joint venture is ready to offer commercial carbon transport and storage as aservice.I saw for myself another exciting initiative,our first megawatt charger for electric trucks and ships in Amsterdam.Beyond our operations,2024 was an important year because the Court of Appeal of The Hague dismissed Milieudefensies claim against Shell.I believe the decision was the right one for the energy transition and our company.On February 11,2025,Milieudefensie announced that it was taking its case to the Netherlands Supreme Court.I am confident in the strength of our position.Shell peopleThe safety of everyone at Shell remains our top priority.I am deeply saddened by the deaths of four people working for Shell in 2024 andearly 2025.These tragic incidents took place in India,Malaysia,the Netherlands and Nigeria.My heart goes out to the families and friends of these four people.We must continue to protect everyone working for Shell,and we will learn from these and other incidents.Shells success depends on our people.I experienced the dynamism and diversity of our teams when I visited our operations in Brazil,China,India,Kuwait,Oman,Poland,Qatar,and the USA.I was impressed by how they are embracing the principles of performance,discipline and simplification in their everyday work.I also spent Safety Day with our team at the Shell Polymers Monaca chemical plant in the USA.Once again,I had the opportunity to witness first-hand how far we have advanced our safety culture and processes in recent years.Investment case and partner of choiceI am convinced that we are the best positioned energy company to navigate the energy transition because of our people,our connections tocustomers,and our portfolio of world-class assets.We are building on these strengths by transforming Shell.We are becoming a more focused and competitive business,so that we are the investment case and partner of choice through the energy transition.We had another strong year in 2024,and we have more to do.I am confident that our strategy,executed with conviction and determination,is working.We are on the path to becoming the worlds leading integrated energy company.Wael SawanChief Executive OfficerStrategic Report|Chief Executive Officers review continued16Shell Form 20-F 2024Shell is a global group of energy and petrochemical companies,employing around 96,000 people A across more than 70 countries.We have activities ranging from oil and gas exploration and production tothe marketing of fuels and lubricants,and research and development.We are increasingly offering our customers low-carbon energy solutions.For more than a century,Shell has connected people and energy.We provide the energy people need to fuel their homes,hospitals,schools,vehicles,machinery and factories.Our purpose is to power progress together,by working with each other,our customers and our partners.Our vision B is to be the worlds leading integrated energy company-delivering impact at scale,connecting energy and people,matching supply to demand.Shells strategy is to deliver more value with less emissions as we work to become a net-zero emissions business by 2050.As we navigate the energy transition through the next decade,we will leverage our global footprint,the trust in our brand,and our innovation and technology capabilities to be the energy company that customers and countries choose to be their partner.Our people and valuesWhether they work on our platforms and pipelines,or in our offices andresearch labs,people are key to our success.They collectively determine our culture and we expect them to behave according toourvalues:honesty,integrity and respect for people.We expect everyone at Shell to also comply with relevant laws and regulations to help us conduct business in an ethical and transparent manner.We firmly believe in the fundamental importance of trust,openness,teamwork and professionalism.The Board assesses and monitors our culture and how it is embedded in our attitudes and behaviours,including in our activities and stakeholder relationships.To realise our vision,we are transforming Shell to become a more focused and competitive business.Our extraordinary community of talent will approach the next decade of the energy transition with courage and determination.We expect Shells people to care about each other,our work,and about doing business the right way with a focus on safety,people and sustainability.The Shell General Business Principles set out our responsibilities to all our stakeholders.As part of these principles,we commit to contribute tosustainable development,and we have embedded this commitment into our strategy,our processes and decision-making.This requires balancing short-and long-term interests,integrating economic,environmental and social considerations into business decision-making.As we implement our strategy,we will also maintain our relentless focus on achieving our Goal Zero ambition:to do no harm to people and to have no leaks across operations.The Shell Code of Conduct explains how employees,contractors and anyone else acting on behalf of Shell must behave.Strong relationshipsWe seek to build strong,trusted relationships with all our stakeholders,including our approximately 1 million commercial and industrial customers,and the around 33 million people we serve daily at our Shell-branded retail stations.Our stakeholders include:our employees,contractors and pensioners;the investor community;customers;our suppliers and strategic partners;regulators and governments;non-governmental organisations,civil society,academia and think tanks;and the communities where we work.A At December 31,2024,and including portfolio companies.B A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Our core valuesOur guiding principlesHonestyIntegrityRespect for peoplePerformanceDisciplineSimplificationWe encourage our employees and business partners tospeak up and celebrate those who do the right thing.We empower our employees and business partners tomake the right decisions.We embrace diversity,equality andinclusivity.We maintain a relentless focus onimproving operational andfinancial performance.We allocate shareholders capital with discipline and make clear choices about where we can create value.We streamline the way we do things,removing complexity,and manage the portfolio to support disciplined capital allocation.Our Goal Zero ambitionWe aim to do no harm to people and to have no leaks across our operations.We call this our Goal Zero ambition.Everyone working for Shell strives to achieve Goal Zero each day.Strategic Report|Shells strategyThis is Shell17Shell Form 20-F 2024Our business directorates in 2024Reporting segmentsIntegrated Gas and UpstreamIntegrated Gas explores for and extracts natural gas which we then process to produce liquefied natural gas(LNG)or convert into gas-to-liquids(GTL)products.Our activities include the operation of the upstream and midstream infrastructure that is needed to deliver gas and gas products to the market.We earn revenues from the trading and optimisation,marketing and distribution of LNG,GTL and natural gas.See pages 48-54 fora review of our performance.Upstream explores for and extracts crude oil,natural gas and natural gas liquids.Shell has activities in deep water and conventional oil and gas.The business also operates the infrastructure necessary to transport the oil and gas to the market or to process it in our integrated energy and chemicals parks.See pages 55-63 for a review of our performance.Downstream,Renewablesand Energy Solutions Marketing supplies fuels and lubricants,for transport,manufacturing,mining,power generation,agriculture and construction.Shell is also a major blender and trader of biofuels.Shell Mobility operates our retail network,including electric vehicle charging andconvenience retail.See pages 72-76 for a review of our performance.Chemicals and Products includes manufacturing plants and refineries which we are repurposing into energy and chemicals parks.We turn crude oil and other feedstocks into products for households,industry and transport.The segment also includes the pipeline business,trading and optimisation of crude oil,oil products and petrochemicals,and oil sands activities.See pages 77-84 for a review of our performance.Renewables and Energy Solutions generates,markets and trades power from wind,solar and pipeline gas.The business also includes hydrogen production and marketing,commercial carbon capture and storage(CCS)hubs,carbon credits and nature-based solutions to avoid or reduce carbon emissions.See pages 85-88 for a review of our performance.What sets us apartDeep-water expertiseWe have almost five decades of deep-water expertise and continue to develop innovative designs for oil and gas assets,replicating successful projects to deliver more value with less emissions.Our deep-water business has a track record of sustained cash flow.Integrated gas and LNG capabilityWe have a world-leading LNG business with a sizeable portfolio,a global network of customers,extensive shipping and storage assets,and access to regasification plants.Our diversified and global portfolio of plants and terminals enhances our resilience to market shocks and allows us to capitalise on price volatility.Technology and innovationShell has a long history in technology and innovation.We have a global network of R&D centres and work closely with our customers,suppliers and partners.We also collaborate with some of the worlds leading technology companies to deploy digital solutions at scale across our business.Integrated business model trading and optimisationShell produces energy and is also one of the worlds largest and most experienced energy traders and suppliers.We can identify and meet a customers needs quickly.Our value chains are enhanced by purchases from third parties,and we have a leading global position in energy markets.Strategic Report|Shells strategy|This is Shell continued18Shell Form 20-F 2024Our strategy is to deliver more value with less emissions.Our vision A is to be the worlds leading integrated energy company and our strategy is to deliver more value with less emissions.We are positioning Shell to become the investment case and partner of choice through theenergy transition.More value We are committed to enhancing value for our investors through disciplined investments,enhanced shareholder distributions and maintaining a strong balance sheet.Our focus remains on providing secure and reliable products,both now and throughout the energy transition,to meet the evolving needs of our customers.At Capital Markets Day 2023(CMD23),we outlined our specific targets,and the progress we have made against these targets can be found on .Less emissionsWe are committed to becoming a net-zero emissions energy business by 2050.We have set climate targets and an ambition,outlined in our Energy Transition Strategy 2024(ETS24),to help us reach net zero.ETS24 was approved by 78%of shareholders who voted at our Annual General Meeting(AGM)in May.Progress against our climate targets and ambition is presented on page 121.Shell aims to lead in the energy transition where we have competitive strengths,see strong customer demand,and identify clear regulatory support from governments.We will continue to provide our customers with the energy and other products they need,and we will provide this affordably and reliably,while also increasingly offering them low-carbon energy solutions to help them decarbonise their activities.Moving forwardIn 2024,we delivered our strategy against the four themes of generating shareholder value,achieving net-zero emissions,respecting nature and powering lives.These themes are presented on pages 21-22.Like all businesses,we will continue to adapt how we implement our strategy as the world evolves.This adaptability is crucial for navigating the dynamic energy landscape enabling long-term success.Capital Markets Day on March 25,2025,presents an update to our financial targets for investors.See pages 23-24.A A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Photo:Staff at Shell QGCs training centre in Chinchilla,Queensland,Australia.We will deliver more value with less emissions by:Growing our integrated gas and LNG business Sustaining liquids production Focusing Downstream,Renewables and Energy Solutions.Growing our integrated gas and LNG businessWe are investing in our gas production and growing our LNG business to deliver the secure energy the world needs.LNG is a critical fuel for the energy transition because it is a lower-carbon alternative to coal in power generation and can be easily transported to where it is needed.Sustaining liquids production We aim to sustain liquids production of at least 1.4 million barrels a day through to 2030 with increasingly lower carbon intensity.We are focusing our exploration activities in locations where hydrocarbons have already been discovered.Focusing Downstream,Renewables and Energy Solutions:We are expanding our premium marketing businesses while streamlining our portfolio with a focus on value over volume.We will build on the options we have invested in for low-carbon growth through the energy transition.Our global customer reach and our supply and trading capabilities position us well to deliver the low-carbon solutions people and businesses need.Strategic Report|Shells strategyOur strategy19Shell Form 20-F 2024We are seeking to change the mix of energy products we sell to our customers as their needs for energy change.We believe we can make the greatest contribution to the energy transition by helping to enable our customers to switch to low-carbon energy products and services.This is reflected in Shells strategy to build a portfolio that seeks to:develop low-and zero-carbon alternatives to traditional fuel,including biofuels,and other low-and zero-carbon gases;provide more renewable power solutions to customers in select markets;work with customers across different sectors to help them decarbonise their use of energy,for example by substituting the useof coal with LNG;and address any remaining emissions from conventional fuels with solutions such as CCS and high-quality carbon credits.As we implement our strategy,we will continue to focus on performance,discipline and simplification.This applies not only to our financial and operational outcomes,but also to safety and sustainability.Our Goal Zero ambition is fundamental to the success of our company.See Safety on page 137.We believe that no business can succeed without an unwavering commitment to respecting the environment and the communities within which it works.At Shell,we seek to protect the environment,increase our reuse and recycling,make a positive contribution to biodiversity and use water and other resources efficiently.We also work to make apositive impact on people around the world,and power lives through our products and activities,andby supporting an inclusive society.See Respecting nature on page 124 and Powering lives on page 129.Strategic Report|Shells strategy|Our strategy continued20Shell Form 20-F 2024Generating shareholder valueWe aim to generate more value for shareholders throughdisciplined capital allocation,strong financial performance and by maintaining a strong balance sheet.We seek to provide enhanced shareholder distributions through ourprogressive dividend policy and share buyback programmes.2024 performance Total shareholder distributions*were$23 billion,comprising$9billion in cash dividends and$14 billion in share buybacks.Total shareholder distributions*were 41%of cash flow from operating activities.Cash flow from operating activities was$55 billion.Cash capital expenditure was$21 billion.Total debt was reduced to$77 billion and net debt*was$39 billion as of December 31,2024.Net debt excluding leases*was$10 billion.Structural cost reductions*were$3.1 billion from a 2022 baseline and against a$2-3 billion target by the end of 2025.The annual dividend was$1.390 per share,and the quarterly dividend increased to$0.358 per share for the fourth quarter.Progress on our longer-term business targets can be found on SAs we implement our strategy,we will work to:Enhance shareholder distributions from 30-40%to 40-50%of cash flow from operating activities*through the cycle.Increase the structural cost reduction*target from$2-3 billion by the end of 2025 to a cumulative$5-7 billion by end of 2028,compared to 2022.Invest for growth while maintaining capital discipline,with spend of cash capital expenditure lowered to$20-22 billion per year from 2025-2028.Grow normalised free cash flow per share*on average by more than 10%per year through to 2030.*Non-GAAP measure(see page 337).Achieving net-zero emissionsWe have a target to become a net-zero emissions energy business by 2050 and will work with customers to help them decarbonise.We are transforming our business,including selling more low-carbon products and services.We are working with our customers and others to help accelerate the energy transition.We advocate policies,legislation and regulation that will generate demand for investment in a low-carbon energy system.2024 performance Scope 1 and 2 emissions were down by 30%compared with the 2016 reference year A.Methane emissions intensity of 0.04%continued to be below our 0.2%target.Net carbon intensity(NCI)decreased by 9.0%compared with the 2016 reference year and was within the 2024 target range.Routine flaring from upstream operations remained stable at 0.1 million tonnes and,with effect from January 1,2025,Shell no longer carries out any routine flaring at its upstream operations.Customer emissions from the use of our oil products(Scope 3,Category 11)were reduced by 5%in 2024 to a total of 14%compared with 2021 B.As we implement our strategy,we will work to:Achieve net-zero emissions by 2050(Scope 1,2 and 3).Reduce by 50%Scope 1 and 2 absolute emissions from activities under operational control by 2030,compared with 2016 levels onanet basis.Achieve near-zero methane emissions intensity by 2030.Reduce net carbon intensity by 15-20%by 2030,compared with the2016 reference year.Reduce customer emissions from the use of our oil products by 15-20%by 2030,Scope 3,Category 11 B,compared with the 2021 reference year.Progress against our longer-term emissions targets can be found in Ourjourney to net zero on page 121.A Reduced from 83 million tonnes of CO2e in2016to 58 million tonnes of CO2e in 2024.B Customer emissions from the use of our oil products(Scope 3,Category 11)were 517million tonnes CO2e in 2023 and 569 million tonnes CO2e in 2021.Strategic Report|Shells strategy|Our strategy continued21Shell Form 20-F 2024PoweringlivesWe power lives through our products and activities,andby supporting an inclusive society.We provide vital energy for homes,businesses and transport.We also aim to create a desirable workplace that is accepting and inclusive and representative of the communities we are a part of.Additionally,our activities generate revenues for governments through the taxes and royalties we pay,and the taxes wecollect on their behalf.2024 performance In 2024,we spent around$42 billion on goods and services*fromsuppliers around the world.Total spend on capital expenditure was$20 billion.In 2024,taxes paid*were$18 billion.Corporate income tax paid was$12 billion.In 2024,representation of women in Senior Leadership A grew to33%.As of December 31,2024,15%of Shells Senior Management B identifies as being from an ethnic minority group.Our 2024 Shell People Survey showed a result of 81 points out of 100 for all questions relating to diversity,equity and inclusion(DE&I).As we implement our strategy,we will work to:Collaborate with suppliers that behave in an economically,environmentally and socially responsible manner.Be a good neighbour through strong community engagement,managing negative impacts from our activities and seeking to enhance positive impacts C.Respect human rights as set out in the UN Universal Declaration of Human Rights.Continue to achieve 15%ethnic minority group representation in Senior Management B by2027.Have at least one Board member from an ethnic minority background.Increase representation of women in senior leadership positions to 40%by 2030.Achieve gender balance on the Board,with at least one senior Board position held by a woman.A Senior Leadership is a Shell measure based on compensation grade levels.This measure is distinct from senior manager as per statutory disclosure requirements.See Our people on page 132B As per the latest Parker Review recommendations,Senior Management refers to Senior Leadership based in the UK and is a Shell measure based on compensation grade levelsC See Powering Lives for examples of how we seek to be a good neighbour.*Non-GAAP measure(see page 337).RespectingnatureWe seek to protect the environment,increase our reuse and recycling,make a positive contribution to biodiversity and use water and other resources efficiently.Our businesses use natural resources such as land and water for their operations.Our activities can impact nature through discharges and emissions to the environment,and through changes to the use of land and water.We assess and manage the impact of our operations on local ecosystems and communities.2024 performance We continued to embed respect for nature into our activities,standards and business processes,including by ensuring that theseare reflected in our Safety,Environment and Asset Management(SEAM)Standards.In partnership with Monash University,we are executing an ecological restoration programme on Browse Island,Australia,toeradicate invasive alien species,improve reef health and promotethe return of breeding seabirds.At the Pearl GTL gas-to-liquids facility in Qatar,we diverted wastetolocal cement kilns for use as clinker in cement production,thereby reducing use of raw materials and the amount of waste sentto landfill.As we implement our strategy,we will work to:Achieve net-zero deforestation from new activities by replanting forests,while maintaining biodiversity and conservation value.Achieve a net positive impact on biodiversity,based on reference year 2021,for new projects in critical habitats.Better understand the types of waste we generate and identify options to increase circular approaches.Implement water stewardship principles across our businesses,including the sustainable management of fresh-water resources,particularly in water-stressed areas.Strategic Report|Shells strategy|Our strategy continued22Shell Form 20-F 2024Capital Markets Day on March 25,2025,presents anupdate to our financial targets forinvestors.Our vision A is tobethe worlds leading integrated energy company.Shell is transforming to become simpler,more resilient and competitive.We want to become the worlds leading integrated gas and LNG business and the most customer-focused energy marketer and trader,while sustaining a material level of liquids production.We are building on the significant progress we have made in executing our strategy to deliver more value with less emissions.As we do this,wewill maintain our focus on performance,discipline and simplification.We aim to grow returns for shareholders,while reducing our emissions and helping our customers reduce theirs.To successfully implement our strategy,we will take a value-led approach through a financial framework which enhances shareholder distributions,and maintains discipline in capital allocation and a balance sheet with a strong investment grade rating.Financial discipline and strategic focusWe will maintain our focus on performance,cost and capital discipline,investing in areas of competitive strength to maximise returns.Updates to our financial targets:Enhance shareholder distributions from 30-40%to 40-50%of cash flow from operations*through the cycle,continuing to prioritise share buybacks while maintaining the 4%a year progressive dividend policy B.Increase the structural cost reduction*target from$2-3 billion by theend of 2025 to a cumulative$5-7 billion by the end of 2028,compared with 2022.Invest for growth while maintaining capital discipline with cash capital expenditure lowered to$20-22 billion a year for 2025-2028 compared with$21 billion in 2024.Grow normalised free cash flow per share*on average by more than 10%a year through to 2030.A A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Shell financial framework:Capital Markets Day 2025 Balanced capital allocation Total distributionsEnhanced shareholder distributions40-50%of CFFO*through the cycleCash capital expenditure(cash capex)Disciplined investment$20-22 billion p.a.2025-2028 Prioritising buybacks13 consecutive quarters$3 billionDividend consistency 4%announced at Q424Integrated Gas and Upstream cash capex$12-14 billionDownstream,Renewables and Energy Solutions cashcapex$8 billion Intrinsic value creation10%p.a.normalised free cash flow growth per share*through to 2030Progressive dividend4%annual increase BCapital reallocation10%ROACE*across all segments CBalance sheetMaintain strong investment grade ratingB Subject to Board approval as well as shareholder approval at the 2025 Annual General Meeting.C Price normalised ROACE on an Adjusted Earnings plus non-controlling interest basis.*Non-GAAP measure(see page 337).Strategic Report|Shells strategyOutlook23Shell Form 20-F 2024The Board intends to enhance shareholder distributions through a combination of dividends and share buybacks,maintaining a 4%progressive dividend policy.When the Board sets the level of shareholder distributions,it looksat a range of factors including the macro environment,underlying business earnings and Group cash flows,the current balance sheet,future investment,acquisition and divestment plans,and existingcommitments.Growth and resilience through the energy transition Shell believes the world is facing a complex,multi-decade energy transition in which there will be growing demand for secure,affordable and,increasingly,low-carbon energy.In liquefied natural gas(LNG),we will reinforce our leadership position by growing sales 4-5%a year through to 2030.We will also grow production across our combined Upstream and Integrated Gas business by 1%a year to 2030,sustaining our 1.4 million barrels a day of liquids production with increasingly lower carbon intensity.And,we will drive cash flow resilience and higher returns in Downstream,Renewables and Energy Solutions by:Pursuing focused growth in our high-return Mobility and Lubricants businesses.Leveraging competitive strengths to drive profitable and scalable businesses across our lower-carbon platforms A where we expect to have up to 10%of capital employed by 2030.Unlocking more value from our strong portfolio of Chemicals assets.This will be done by exploring strategic and partnership opportunities in the USA and through high-grading and selective closures in Europe.We believe this will enable the business to prosper while improving returns and reducing capital employed by2030.A Shells lower-carbon platforms include low-carbon fuels,carbon capture and storage,and hydrogen,as well as power which includes renewable generation and gas fired power.Shell will continue to deliver more value with less emissions,growing inareas where we have competitive strengths.We believe we are providing a compelling investment case for our shareholders,now,andinto the future.Performance culture and commitment We will continue to embed a performance culture,empowering our people with greater ownership and faster decision-making,helping toensure safe and responsible operations.Shell is committed to delivering on our promises,transforming to become more resilient and competitive,and driving growth and valuecreation through disciplined execution of our strategy.Weareconfident in our ability to navigate the energy transition anddeliverenhanced returns for our shareholders.Photo:Shell employees and contractors on the Vito deep-water platform in Ingleside,Texas,USA.Strategic Report|Shells strategy|Outlook continued24Shell Form 20-F 2024Risk factors and risk managementRisk factorsThe risks discussed below could have a material adverse effect separately,orin combination,on our earnings,cash flows and financial condition.Accordingly,investors should carefully consider theserisks.Further background on each risk is set out in the relevant sections of this Report,indicated by way of cross references.1.Portfolio risksRisk type:Strategic risk Operational risk Conduct and culture riskWe are exposed to risks that could adversely affect the resilience of our overall portfolio of businesses.These include external risks such as macroeconomic risks,including fluctuating commodity prices and competitive forces.Our future performance depends on the successful development and deployment of new technologies that provide newproducts and solutions.In addition,our future hydrocarbon production depends on the delivery of integrated projects and our ability to replace proved oil and gas reserves.Many of our major projects and operations are conducted in joint arrangements or with associates.This could reduce our degree of control and our ability to identify and manage risks.Risk descriptionWe are exposed to various external risks,such as macroeconomic and competitive risks,and internal risks associated with growing and maturing our business opportunities through our portfolio of businesses and joint arrangements,as follows:Macroeconomic risks:The prices of crude oil,natural gas,oil products and chemicals can be volatile and are affected by supply and demand,both globally and regionally.Factors that influence supply and demand include operational issues;natural disasters;pandemics;political instability;conflicts,such as the Russia-Ukraine war and the conflict in the Middle East;economic conditions,including inflation;and actions by major oil and gas producing countries.These have in the past resulted in,and similar events could in the future result in,material price fluctuations.In addition,macroeconomic,geopolitical and technological uncertainties have affected,and could affect in the future,production costs and demand for our products.Government actions may affect the prices of crude oil,natural gas,oil products and chemicals.These include price caps on gas,tariffs,the promotion of electric vehicle sales or the phasing-out of future sales of new diesel or petrol vehicles.Oil and gas prices have moved independently of each other and could do so in the future.Under high oil andgas prices,our entitlement to proved reserves under some production-sharing contracts has been,and could be in the future,reduced.Higher prices could also reduce demand for our products which could result in lower profitability in certain businesses in the Group,particularly in our Chemicals and Products,and Marketing businesses.Some of the reduction in demand could be permanent.Higher prices can also lead to more capacity being built,potentially resulting in an oversupplied market which would negatively affect our businesses.In the past,ahigh oil and gas price environment has generally led to sharp increases in costs and this could happen in the future.In a low oil and gas price environment,we have generated,and could in the future again generate,less revenue from our Upstream and Integrated Gas businesses,and parts of those businesses could become less profitable or incur losses.Low oil and gas prices have also resulted,and could result in the future,in the debooking of proved oil or gas reserves,if they become uneconomic in this type of price environment.Prolonged periods of low oil and gas prices,or rising costs,have resulted,and could result in the future,in projects being delayed or cancelled.Assets have been impaired in the past,and there could be impairments in the future.Low oil and gas prices have affected,and could affect in the future,our ability tomaintain our long-term capital investment and shareholder distribution programmes.We use a range of commodity price and margin assumptions to evaluate the robustness of our capital allocation across our different projects and commercial opportunities.Due to volatility in macroeconomic conditions,our assumptions have proven to be incorrect in the past,yielding returns that are less than what we planned,and could prove incorrect in the future.Strategic Report25Shell Form 20-F 2024Competitive risks:We face competition in all our businesses.We seek to differentiate our services and products,though many of our products are competing in commodity-type markets.Accordingly,a failure to manage our costs and our operational performance could result in a material adverse effect on our earnings,cash flows and financial condition.We also compete with state-owned hydrocarbon entities and state-backed utility entities with access to financial resources and local markets.Such entities could be motivated by political or other factors in making their business decisions and may not require competitive returns.Accordingly,when bidding on new leases or projects,we could find ourselves at a competitive disadvantage or unable to obtain competitive returns.Technology risks:Technology and innovation are essential to our efforts to help meet the worlds energy demands competitively.If we fail to effectively develop and/or deploy new technology,products and solutions,there could be a material adverse effect on the delivery of our strategy.We operate inenvironments where advanced technologies are used.In developing new technologies,products and solutions,unknown or unforeseeable technological failures or environmental and health effects could harm our reputation and licence to operate or expose us to litigation or sanctions.The associated costs of new technology are sometimes underestimated.We have faced delays in developing new technology in the past,and such delays could happen again in the future.If we are unable to develop our technology and products in a timely and cost-effective manner,we may fail to realise commercially viable products.Delivery of capital projects and our ability to replace proved oil and gas reserves:We face numerous challenges in developing capital projects,especially those which are integrated.Challenges include:uncertain geology;frontier conditions;drilling at significant depths,the existence and availability of necessary technology and engineering resources;supply chain constraints;the availability of skilled labour;the existence of transport infrastructure;the expiration of licences;project delays,including delays in obtaining required permits;potential cost overruns;and technical,fiscal,regulatory,political and other conditions.We may fail to assess or manage these and other risks properly.Such potential obstacles have impaired,and could in the future impair,our delivery of these projects,our ability to realise the full potential value of the project as assessed when the investment was approved,and our ability to fulfil related contractual commitments.This has led,and could in the future lead,to impairments.Our future oil and gas production depends on our access to new proved reserves through exploration,negotiations with governments and other owners of proved reserves and acquisitions,and through developing and applying new technologies and recovery processes to existing fields.A failure to replace proved reserves would result in an accelerated decrease of future production.Oil and gas production available for saleMillion boe A202420232022Shell subsidiaries956937938Shell share of joint ventures and associates8282108Total 1,0381,0191,046A Natural gas volumes are converted into oil equivalent using a factor of 5,800 scf per barrel.Proved developed and undeveloped oil and gas reserves ABMillion boe CDec 31,2024Dec 31,2023Dec 31,2022Shell subsidiaries8,1568,2838,317Shell share of joint ventures and associates1,4641,5041,261Total D E F9,6209,7879,578Attributable to non-controlling interest of Shell subsidiaries370378 365 A We manage our total proved reserves base without distinguishing between proved reserves from subsidiaries and those from joint ventures and associates.B Includes proved reserves associated with future production that will be consumed in operations.C Natural gas volumes are converted into oil equivalent using a factor of 5,800 scf per barrel.D On March 13,2025,Shell completed the sale of its Nigerian onshore subsidiary The Shell Petroleum Development Company of Nigeria Limited(SPDC)which holds a 30%interest in the SPDC JV to Renaissance.As of December 31,2024,Shell had proved reserves of 453 million boe in SPDC.E Pursuant to Shells 2017 agreement with Canadian Natural Resources Limited,its remaining mining interest and associated synthetic crude oil reserves will be swapped for an additional 10%interest in the Scotford Upgrader and Quest CCS project.The transaction is expected to close by the end of the first half of 2025,subject to regulatory approvals.The associated proved reserves as of December 31,2024 were 741 million barrels(of which 50%attributable to non-controlling interest).F On December 5,2024,Shell and Equinor ASA,announced the combination of their UK offshore oil and gas assets and expertise to form a new company which will be the UK North Seas biggest independent producer.On deal completion,the new independent producer will be jointly owned by Equinor(50%)and Shell(50%)and 157 million boe(as of December 31,2024)of Shells proved reserves will be contributed to the new joint venture alongside proved reserves contributed by Equinor.Subsequently,Shell will report 50%of the proved reserves of the new joint venture as part of Shells share of proved reserves from joint ventures and associates.The estimation of proved oil and gas reserves involves subjective judgements and determinations based on available geological,technical,contractual and economic information.Estimates can change over time because of new information from production or drilling activities,changes in economic factors,such as oil and gas prices,alterations in the regulatory policies of host governments,or other events.Estimates also change to reflect acquisitions,divestments,new discoveries,extensions of existing fields and mines,and improved recovery techniques.Published proved oil and gas reserves estimates could also be subject to correction because of errors in the application of rules and changes inregulatory guidance.Downward adjustments could indicate lower future production volumes and could also lead to impairment of assets.Strategic Report|Risk factors and risk management continued26Shell Form 20-F 2024Joint arrangements:When we are not the operator,we have less influence and control over the behaviour,performance and operating costs of joint arrangements or associates.Despite having less control,we could still be exposed to the risks associated with these operations,including environmental,reputational,legal(where joint and several liability could apply)and government sanction risks.For example,our partners or members of a joint arrangement or an associate(particularly local partners in developing countries)may be unable to meet their financial or other obligations to projects,threatening the viability of a given project.Where we are the operator of a joint arrangement,the other partner(s)could still be able toveto or block certain decisions,which could be detrimental to the joint arrangement.If any of the risks above materialise,it could have a material adverse effect on our earnings,cash flows and financial condition.See Market overview on pages 45-47,Other central activities on pages 91-92,Oil and gas information on pages 64-71 and Supplementary information-oil and gas(unaudited)on pages 297-316.2.Climate change and the energy transitionRisk type:Strategic risk Operational risk Conduct and culture riskRising concerns about climate change and the effects of the energy transition pose multiple risks to Shell,including declines in the demand for and prices of our products,commercial risks from growing our low-carbon business,andadverse litigation and regulatory developments.The physical impacts of climate change could also adversely affect our assets and supply chains.Risk descriptionSocietal demand for urgent action on climate change has increased,especially since the Intergovernmental Panel on Climate Change(IPCC)Special Report on Global Warming of 1.5C in 2018 effectively made the more ambitious goal of the Paris Agreement to limit the rise in global average temperature this century to 1.5C the default target for the parties to the agreement.Societys increasing focus on climate change anddrive for an energy transition is contributing to a rapidly changing risk environment and a wide range of stakeholder actions against our organisation.The risks and impacts include the following:Commercial risks:Changing customer sentiment favouring the use of renewable and sustainable energy products may reduce demand for our oil and gas products.An excess of fossil fuel supply over demand could in the future result in reduced fossil fuel prices.This could result in lower earnings,cancelled projects and the potential impairment of certain assets.If we fail to stay in step with the pace and extent of change or customers and other stakeholders demand for low-carbon products,this could adversely affect our reputation and future earnings.If we move much faster than society,we risk investing in technologies,markets or low-carbon products for which there may be insufficient demand.Therefore,we cannot transition too quickly,or we may offer products that customers do not want.If we are slower than society,customers may prefer a different supplier,which would reduce demand for our products adversely affecting our reputation and materially affect our financial results.Low-carbon technology and innovation are essential to our efforts to help meet the worlds energy demands competitively.If we are unable to develop the right technologies and products in a timely and cost-effective manner,there could be an adverse effect on our future earnings.The operating margins for our low-carbon products and services have been,and could be in the future,lower than the margins we have experienced historically in our oil and gas operations.Certain investors have decided to divest their interest in fossil fuel companies and,if this were in to increase significantly,this could have a material adverse effect on the price of our securities and our ability to access capital markets.Some financial institutions have been aligning their portfolios to low-carbon and net-zero opportunities,driven by both regulatory and broader stakeholder pressures.A failure to decarbonise our business portfolios in line with investor and lender expectations could have a material adverse effect on our ability to access financing for certain types of projects.This could also adversely affect our partners ability to finance their portion of costs,either through equity or debt.Regulatory risks:The transition to a low-carbon economy has increased,and is likely to continue to increase the cost of compliance for our assets and/or products.Shells annual carbon cost exposure is expected to increase over the next decade because of evolving carbon regulations.Governments may set regulatory frameworks inthe future that could further restrict our exploration and production of hydrocarbons and introduce controls to limit the use of such products,which could also affect the timing and standards associated with the decommissioning of our exploration assets.The lack of net-zero-aligned global and national policies and frameworks increases the uncertainty around how carbon pricing and other regulatory mechanisms will be implemented in the future.This makes it harder to determine the appropriate assumptions to be taken into account in our financial planning and investment decision processes which could impair our ability to evaluate the robustness of our plans andopportunities.Changing net-zero policies and regulations could also lead to impairments of our existing oil and gas assets.Strategic Report|Risk factors and risk management continued27Shell Form 20-F 2024Societal risks,including litigation:In some countries,governments,regulators,non-governmental organisations(NGOs)and individuals have filed lawsuits seeking to hold fossil fuel companies liable for costs associated with climate change.If successful,these claims may have wide-ranging consequences,including forcing entities to hand over strategic autonomy in part to regulators,or to divest from hydrocarbon assets and technologies.We have also been subjected to climate activism that has caused disruptions to our operations and such disruptions could happen again in the future.Climate change lawsuits that have been filed against us could have a material adverse effect on our reputation.In the Netherlands,in a case against Shell brought by agroup of environmental NGOs and individual claimants(referred to herein as Milieudefensie),the Hague District Court in 2021 found that while Shell was not acting unlawfully,Shell had the obligation to reduce the aggregate annual volume of CO2 emissions of Shell operations and energy-carrying products sold across Scope 1,2 and 3 by 45%(net)by the end of 2030 relative to its 2019 emissions levels.For Scope 2 and 3,this was a significant best-efforts obligation.Shell appealed that ruling.On November 12,2024,the Hague Court of Appeal upheld Shells appeal and dismissed the claim against Shell.In doing so,the Court of Appeal annulled the earlier judgment of the District Court in its entirety with immediate effect.On February 11,2025,Milieudefensie filed an appeal to the Supreme Court of the Netherlands.Societal expectations of businesses are increasing,with a focus on business ethics,quality of products,contribution to society,safety and minimising damage to the environment.There is a focus on the role of the oil and gas sector in the context of climate change and the energy transition.This has negatively affected,and in the future could negatively affect,our brand and reputation,which could limit our ability to deliver our strategy,reduce consumer demand for our products,harm our ability to secure new resources and contracts,and restrict our ability to access capital markets or attract employees.Physical risks:The physical effects of climate change,such as,but not limited to,increases in temperature,sea levels and fluctuations in water availability,could also adversely affect our assets,operations,supply chains,employees and markets.In summary,rising climate change concerns,the pace at which we decarbonise our operations relative to society and effects of the energy transition pose multiple challenges to our business.These could result in,for example,increased costs,financial penalties,payments of financial damages in the event of losses of lawsuits,cancelled projects and potential impairment of certain assets,and adverse impacts on our supply chains and licence to operate.Individually or collectively,these risks could have a material adverse effect on our earnings,cash flows and financial condition.See Our journey to net zero on pages 93-123,Energy Transition Strategy on pages 94-109,Renewables and energy solutions on pages 85-88,Note 32 Legal proceedings and other contingencies on pages 292-294 and Note 4 Climate change and energy transition on pages 237-249.3.Country risks Risk type:Strategic risk Operational risk Conduct and culture riskWe operate in more than 70 countries which have differing degrees of political,legal and fiscal stability.This has exposed,and could expose,us to a wide range of political developments that could result in changes to contractual terms,laws and regulations.We also face various risks from the business and operating environment in Nigeria which could have a material adverse effect on us.Risk descriptionDevelopments in politics,laws and regulations can and do affect our supply chains and operations.Potential impacts,whichwe have experienced in the past,include:forced divestment of assets;expropriation of property;cancellation or forced renegotiation of contract rights;delay of new projects;additional tariffs and taxes,including windfall taxes(especially during periods of prolonged high oil and gas prices experienced in recentyears,such as 2022);restrictions on deductions and retroactive tax claims;antitrust claims;changes to trade compliance regulations;price controls;local content requirements;foreign exchange controls;changes to environmental regulations;changes to regulatory interpretations and enforcement;and changes to disclosure requirements.Many parts of the world are facing economic and fiscal challenges and growing pressure on cost-of-living standards.These issues impact our business as governments,in response to political and social pressures,pursue policies that could have a material adverse effect on our earnings,cash flows and financial condition.The world is also facing continued geopolitical instability,including the Russia-Ukraine war,which impacts market conditions and our operations.The broader consequences of the ongoing crisis in the Middle East remain uncertain,and a wider escalation could have greater impacts on our operations in the region and beyond.We also face risks and adverse conditions in our Nigerian operations.These include security incidents affecting the safety of our people,host communities and operations;sabotage and crude theft;ongoing litigation;limited infrastructure;challenges presented by delayed government and partner funding and budget delays;and regional instability created by militant activities.Some of these risks and adverse conditions,such assecurity issues affecting the safety of our people,sabotage and theft,have occurred in the past and are likely to occur in the future.Such developments and outcomes have had,and could have in the future,a material adverse effect on our earnings,cash flows and financial condition.See Upstream onpages 55-63.Strategic Report|Risk factors and risk management continued28Shell Form 20-F 20244.Financial risks Risk type:Strategic risk Operational risk Conduct and culture riskWe are exposed to treasury risks,including liquidity risk,interest rate risk,foreign exchange risk and credit risk.Weare affected bythe global macroeconomic environment and the conditions of financial markets.These,and changes to certain demographic factors,also impact our pension assets and liabilities.Risk descriptionWe are subject to differing economic and financial market conditions around the world.Political or economic instability affects such markets.We use debt instruments,such as bonds and commercial paper,to raise significant amounts of capital.Should access to debt markets become more challenging,the impact on our liquidity could have a material adverse effect on our operations.For example,some financial institutions have started to limit their exposure to fossil fuel projects.Group financing costs could also be adversely affected by interest rate fluctuations or any credit rating deterioration.We are exposed to changes in currency values and to exchange controls as a result of our substantial international operations.Our reporting currency is the US dollar,although,to a significant extent,we also hold assets and are exposed to liabilities in other currencies.While we undertake some foreign exchange hedging,we do not do so for all our activities.Evenwhere hedging is in place,it may not function as expected.We are also exposed to financial losses from credit risk.Some of our counterparties have,from time to time,not met their payment and/or performance obligations under contractual arrangements and this could happen in the future.We operate a number of defined benefit pension plans with significant associated liabilities.Volatility in capital markets or changes to government policies could affect inflation,interest rates and investment performance,causing significant changes to the funding level of future liabilities.Changes in assumptions for mortality,retirement age or pensionable remuneration at retirement could also cause significant changes to the funding level of future liabilities.In the case of a funding shortfall,we could be required to make substantial cash contributions(depending on theapplicable local regulations).If any of the above risks materialise,they could have a material adverse effect on our earnings,cash flows and financial condition.See Liquidity and capital resources on pages 41-44 and Note 24 Retirement benefits on page 274.5.Trading risks Risk type:Strategic risk Operational risk Conduct and culture riskWe are exposed to market,regulatory and conduct risks in our trading operations.Risk descriptionCommodity trading is an important component of our business which involves processing,managing and monitoring many transactions across different countries,exposing us to operational risks,market risks including commodity price risk,regulatory and conduct risks.Weuse physical and financial instruments,including derivatives such as futures and options to hedge market risks.It is not possible to eliminate all market risks we are exposed to.Therefore,our hedging has occasionally not performed as expected and may not do so in the future.We utilise commodity trading to optimise commercial margins from market price movements.Consequently,this activity could expose us to the risk of incurring significant losses if prices develop unfavourably.Our commodity trading entities are subject to many regulations,including requirements for standards of conduct.Due to the high volume of trades we execute,commodity trading gives rise to the risk of ineffective controls,failure in oversight of trading activities and a risk that traders could deliberately operate outside our internal operating limits.These risks have materialised in the past,and could materialise in the future,resulting in financial losses.The rapidly changing regulatory environment also creates a risk of insufficient,delayed or incorrect implementation of new regulatory requirements or changes to existing regulatory requirements.Violations of such regulatory requirements could expose us and our employees to regulatory fines.If any of the above risks materialise,it could harm our reputation and licence to operate and have a material adverse effect on our earnings,cashflows and financial condition.See Liquidity and capital resources on pages 41-44 and Living by our values on page 140-148.Strategic Report|Risk factors and risk management continued29Shell Form 20-F 20246.Health,safety,security and the environment Risk type:Strategic risk Operational risk Conduct and culture riskThe nature of our operations exposes us,and the communities in which we work,to a wide range of health,safety,security and environment risks.Risk descriptionThe health,safety,security and environment(HSSE)risks to which we and the communities in which we work are potentially exposed cover a widespectrum,given the geographical range,operational diversity and technical complexity of our operations.These risks include the effects ofsafety lapses,natural disasters(including weather events and earthquakes)and pandemic diseases.If a major safety risk materialises,such asan explosion or hydrocarbon leak or spill,which we have experienced in the past,this could result in injuries,loss of life,environmental harm(including biodiversity loss),disruption of business activities,loss or suspension of permits,loss of our licence to operate and loss of our ability tobid on mineral rights.Social instability,criminality,civil unrest,terrorism,cyber disruption and acts of war have also negatively impacted,and could negatively impact,our operations,our assets,our employees and contractors,and the communities in which we operate.Risks which have materialised in the past include:acts of terrorism;acts of criminality,including maritime criminality and piracy;crude oil theft,illegal oil refining,sabotage of pipelines and militant activities in Nigeria;cyber espionage or disruptive cybersecurity attacks;conflicts and civil unrest;malicious acts carried out by individuals within Shell,such as data exfiltration;and environmental and climate activism(including disruptions by NGOs especially in the USA and north-west Europe).For example,activists have boarded and protested on our vessels,assets and work sites,such as the Penguins floating production and storage andoffloading(FPSO)vessel in 2023.Financial losses and remediation costs from safety and environmental incidents are partially,but not fully,covered by our Group insurance companies(wholly owned subsidiaries)or third-party insurers.Accordingly,in the event of a significant incident,we may have to meet our obligations without access to proceeds from third-party insurers.We have in the past incurred adverse impacts and costs from events,such asHurricane Ida in 2021.Our operations are subject to extensive HSSE regulatory requirements that often change and are expected to become more stringent over time,particularly in the areas of environment.Governments could require operators to adjust their future production plans,affecting production and costs.We have incurred,and could incur,significant extra costs in the futu
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In anticipation of the Netherlands transposition of the EU Corporate Sustainability Reporting Directive(CSRD)into national law,Shell has for the first time in this report included a Sustainability Statements section(pages 341-440),prepared on a voluntary basis in accordance with the CSRD and European Sustainability Reporting Standards(ESRS).The Sustainability Statements section forms an integral part of the management report.AThe CSRD requires certain European and non-European companies(including Shell plc due to its listing on Euronext Amsterdam)to make disclosures on environmental,social andgovernance topics in accordance with the ESRS.We haveapplied the structure proposed in the ESRS,adopted incorporation by reference and sought to integrate the disclosures in other sections of this report where appropriate andpermitted.Section headers in the Sustainability Statements follow the structure of the ESRS.Terms and definitions used in thetext are defined by Shell unless explicitly stated otherwise.A The consolidated management report,as referenced in the CSRD,includes the strategic report and governance sections of the Annual Report and Accounts.ContentsIntroductioniiiTerms and abbreviationsStrategic Report2Chairs message4Chief Executive Officers review6Shells strategy6This is Shell 8How we create value 10Our strategy14Progress against our longer-term businesstargets 16Outlook18Performance in the year18Performance indicators20Generating shareholder value21Group results24Liquidity and capital resources28Market overview31Integrated Gas38Upstream47Oil and gas information55Marketing60Chemicals and Products68Renewables and Energy Solutions72Corporate74Other central activities76Our journey to net zero77Energy transition plans93Climate-related metrics andtargets107Other regulatory disclosures109Respecting nature114Powering lives115Our people 120Contribution to society 122Safety125Living by our values127Our approach to sustainability134Risk management and risk factors145Principal decisions&stakeholders(Section 172(1)statement)Governance150Introduction from the Chair152The Board of Shell plc157Executive Committee159Governance framework161Board activities165Understanding and engaging with our stakeholders167Workforce engagement169Board evaluation170Statement of compliance with the UK Corporate Governance Code171Nomination and Succession Committee175Sustainability Committee176Audit and Risk Committee Report188Directors Remuneration Report191Annual Report on Remuneration208Directors Remuneration Policy216Other regulatory and statutory informationFinancial Statements and Supplements225Independent Auditors Report related to the Consolidated and Parent Company Financial Statements240Consolidated Financial Statements313Supplementary information-oil and gas(unaudited)333Parent Company Financial StatementsSustainability Statements342General342General disclosures(ESRS 2)364Environment364Climate change377EU Taxonomy391Pollution395Water and marine resources397Biodiversity and ecosystems404Resource use and circular economy409Social409Own workforce414Workers in the value chain419Affected communities425Governance425Business conduct427Tax and other payments togovernments429Safety434Supplementary data438Independent Auditors report related to the Sustainability StatementsAdditional Information442Shareholder information445Non-GAAP measures reconciliations454Appendix:Significant subsidiaries and other related undertakings(audited)vAbout this ReportviiFinancial calendarTerms and abbreviationsCurrencies$US dollareurosterlingUnits of measurement acreapproximately 0.004square kilometresb(/d)barrels(per day)bblbarrelboe(/d)barrels of oil equivalent(per day);natural gas volumes are converted into oil equivalent using a factor of 5,800 scf perbarrelGJgigajouleGWgigawattkboe(/d)thousand barrels of oil equivalent(per day);natural gas volumesare converted into oil equivalent using a factor of5,800 scf per barrelkWhkilowatt-hoursmb/dmillion barrels per daymegajoulea unit of energy equal to one million joulesMMBtumillion British thermal unitsmtpamillion tonnes per annumMWmegawattMWhmegawatt-hoursNm3normal cubic metreperdayvolumes are converted into a daily basis using a calendaryearscf(/d)standard cubic feet(per day)TWhterawatt-hoursProducts GTLgas-to-liquidsLNGliquefied natural gasLPGliquefied petroleum gasNGLnatural gas liquidsMiscellaneousActUK Companies Act 2006ADSAmerican Depositary ShareAGMAnnual General MeetingAPIAmerican Petroleum InstituteAPMAlternative performance measureARCAudit and Risk CommitteeCCScarbon capture and storageCCS earnings earnings on a current cost of supplies basisCFFOcash flow from operating activitiesCISOChief Information Security OfficerCMDCapital Markets DayCMFcarbon management frameworkCO2carbon dioxideCO2ecarbon dioxide equivalentCRCCarbon Reporting CommitteeCRTCommercial Road TransportCSRDCorporate Sustainability Reporting DirectiveDE&IDiversity,equity,and inclusionECExecutive CommitteeEMTNEuro medium-term noteEPSearnings per shareEPSAexploration and production sharing agreementEPTBEnvironmental Products Trading BusinessESRSEuropean Sustainability Reporting StandardsETS24Energy Transition Strategy 2024EVElectric vehicleFCFfree cash flowFIDfinal investment decisionGAAPgenerally accepted accounting principlesGHGgreenhouse gasHSSEhealth,safety,security and environmentIASInternational Accounting StandardsIEAInternational Energy AgencyIFRSInternational Financial Reporting Standard(s)IOGPInternational Association of Oil&Gas ProducersIPCCIntergovernmental Panel on Climate ChangeIpiecaInternational Petroleum Industry Environmental Conservation Association IRMInformation Risk ManagementISOInternational Organisation for StandardisationISSBInternational Sustainability Standards BoardKPIKey performance indicatorLGBT Lesbian,gay,bisexual and transgenderLTIPLong-term Incentive PlanNBSNature-Based SolutionsNCInet carbon intensityNGONon-governmental organisationNOMCONomination and Succession CommitteeNZENet zero emissionsOECDOrganisation for Economic Co-operation and DevelopmentOFCForganic free cash flow OGCIOil and Gas Climate InitiativeOMLoil mining leaseOPECOrganization of the Petroleum Exporting CountriesOPEC 12 members of the OPEC and 11 other non-OPEC membersOPLoil prospecting licencePSCproduction-sharing contractPSPPerformance Share PlanQRAQuarterly Results AnnouncementR&DResearch and developmentREMCORemuneration CommitteeRNGRenewable natural gasRTreal termsSEAMSafety,Environment and Asset ManagementSECUS Securities and Exchange CommissionSGBPShell General Business PrinciplesSIAIShell Internal Audit and InvestigationsSPsocial performanceSUSCOSustainability CommitteeTCFDTask Force on Climate-related Financial DisclosuresTSRtotal shareholder returnWACCweighted average cost of capitalWTIWest Texas Intermediate Indicates information that supports TCFD disclosure iiiShell Annual Report and Accounts 2024 Strategic Report2Chairs message4Chief Executive Officers review6Shells strategy6This is Shell8How we create value10Our strategy 14Progress against our longer-term business targets 16Outlook18Performance in the year18Performance indicators20Generating shareholder value21Group results24Financial framework28Market overview31Integrated Gas38Upstream47Oil and gas information55Marketing60Chemicals and Products68Renewables and Energy Solutions72Corporate74Other central activities76Our journey to net zero77Energy transition plans93Climate-related metrics and targets107Other regulatory disclosures109Respecting nature114Powering lives115Our people 120Contribution to society 122Safety125Living by our values127Our approach to sustainability134Risk Management and Risk factors145Principal decisions&stakeholders Section 172(1)statement1Shell Annual Report and Accounts 2024In 2024,we continued to do what Shell does best,connecting energy and people.In total,we served around 33 million customers at Shell-branded retail sites every day,and around 1 million business customers across more than 70 countries.We used the power of our people,brand,technology and trading network to provide our customers with the oil and gas they need today.At the same time,we increasingly helped them to makelow-carbon choices,from biofuels to charging for electric vehicles.In this second year under our Chief Executive Officer,Wael Sawan,Shell went from strength to strength.We improved Shells operational performance,and made good progress against the financial and climate targets and ambition we set out at our Capital Markets Day in2023 and in our Energy Transition Strategy 2024.We demonstrated that our strategy to deliver more value with less emissions is producing strong results,and compelling shareholder returns.By the beginning of 2025,we had announced$3 billion ormore in buybacks for 13 consecutive quarters.New projectsShell has pioneered ways to provide energy for more than a century.As the energy system and energy mix keep evolving,we will continue to provide the energy people need through the complex transition to low-carbon energy.We will help to keep the world moving with oil and gas,while developing the low-carbon alternatives our customers need to decarbonise.To that end,we have built on our leadership positions in A Based on a five-year average 20162020 for Brent Charlie emissions,and the highest expected emissions for Penguins.liquefied natural gas(LNG)and deep-water oil and gas production with some important new projects.We announced a final investment decision for Manatee,an undeveloped gas field in Trinidad and Tobago,which will have a key role in providing gas to the countrys Atlantic LNG facility.Our deep-water Whale platform in the Gulf of America started production in January 2025.At its peak,we expect that Whale will produce around 100,000 barrels of oil equivalent a day,enough to fuel the daily journeys of 2.7 million cars in the USA.It will operate with 30%lower carbon intensity over its life cycle than Vito,another US deep-water platform.In February 2025,our next-generation Penguins facility started production in the North Sea.It will produce mostly oil but also enough gas to heat around 700,000 UK homes a year,with around 30%lower operational emissions than its predecessor,Brent Charlie A.Less emissionsWe kept our focus on reducing emissions as we worked to become a net-zero emissions energy business by 2050.In 2024,we achieved our short-term target to reduce the net carbon intensity of the products we sell,compared with 2016.We achieved this mainly by reducing sales of oil products and growing power sales.By the end of 2024,we had achieved 60%of our target to halve Scope 1 and 2 emissions from our operations by 2030,compared with2016 levels.We continued to transform our business.In January 2024,we announced the decision to stop processing crude oil into petrol,jet fueland diesel at the Wesseling site of our Energy and Chemicals Park Rheinland,Germany,and to produce premium oils instead.In April 2024,we opened our bioLNG liquefaction plant in Germany,which can produce enough bioLNG to fuel around 5,000 LNG trucks a year.Technology and innovationInnovation remains vital for a successful transition to low-carbon energy.In 2024,we spent around$500 million on projects that contributed to decarbonisation,almost half of our total spending on research and development.In December,I saw some of that work for myself when I visited the Energy Transition Campus Amsterdam in the Netherlands.I was especially excited to see how our research is building on Shells leadership in gas-to-liquids(GTL)technology,something we pioneered almost half a century ago.Today,the Pearl GTL gas-to-liquids plant in Qatar uses natural gas to produce an alternative fuel to conventional diesel for transport,as well as oils and lubricants.We have also used GTL technology to develop immersion cooling fluids for data centres.These fluids reduce costs,energy consumption and emissions compared with conventional cooling.Thiswill be increasingly important as the growth in artificial intelligence leads to greater use of energy-intensive data centres.Now our scientists in Amsterdam are researching how to use that sameGTL technology to produce sustainable aviation fuel made fromrenewable power and captured carbon on a commercial scale.Inanother exciting development for the energy transition,they are also Strategic ReportChairs message2Shell Annual Report and Accounts 2024looking at how to produce synthetic methane,made from renewable hydrogen and captured carbon,to decarbonise the production of LNG.We are creating the business case for other pioneering solutions,such as carbon capture and storage,which will be critical for the energy transition.In 2024,we took a final investment decision for two projects in Canada that will capture and store carbon from our Shell Energy and Chemicals Park Scotford in Alberta.These build on the success ofour Quest CCS project in Canada which has captured more than 9million tonnes of CO since 2015.The Northern Lights joint venture with Equinor and TotalEnergies in Norway is developing the worlds first project to offer commercial carbon transport and storage as a service.The first CO2 shipments areexpected in 2025.Unique capabilitiesOur strengths go way beyond production.Through our integrated portfolio,we can buy and blend energy products to meet our customers needs.We can use our unique capabilities,including trading,to connect energy to our customers through the energy transition.For example,we became one of the worlds largest traders and suppliers of sustainable aviation fuel in 2024.We achieved this because of our long-term agreements with producers,the strength ofour customer relationships,and strategic investments in logistics around key terminals and airports.In 2024,we continued to build an organisation with an outstanding brand,as well as outstanding people,and trading,technology and innovation capabilities.Today,we sell nearly three times the energy products that we produce,meeting our customers demand for oil andgas and low-carbon products through our integrated model.Working togetherWe believe that the energy transition will be achieved by governments,companies like Shell,and customers all working together.Governments need to put in place effective policies to progress the energy transition,and energy producers need to help develop the solutions of the future.The transition also requires demand from customers who are willing to pay for low-carbon energy.We are playing our part.I am confident that Shell can continue to bring its deep experience to help advance the energy transition.In 2024,we demonstrated that you can still be sure of Shell.As a customer,you can be sure that Shell will provide you with the right products and solutions today and through the energy transition.And asan investor you can be sure that this is the right management team with the right strategy,setting Shell up for success in the years to come.Sir Andrew Mackenzie Chair1.The Whale deep-water platform started production in January 2025.2.The Northern Lights joint venture in Norway is developing the worlds first project todeliver commercial carbon transport and storage as a service.3.The Penguins facility in the North Sea will produce enough gas to heat around 700,000 UK homes a year.Strategic Report|Chairs message continued3Shell Annual Report and Accounts 20242024 at a glance1.590.0Serious injury,illness and fatality frequency(SIF-F)in Shell-operated venturesTier 1 and Tier 2 processsafety incidents(2023:63.0)(2023:2.6)$16.5 billion$23.7 billionIncome for the periodAdjusted Earnings*(2023:$19.6)(2023:$28.3)$54.7 billion$39.5 billionCash flow from operating activities(2023:$54.2)Free cash flow*(2023:$36.5)$19.6 billion$21.1 billionCapital expenditureCash capital expenditure*(2023:$23.0)(2023:$24.4)$13.9 billion$8.7 billionShare buyback programmeDividends paid(2023:$14.6)(2023:$8.4)58 million tonnes71 gCO2e/MJScope 1 and 2 emissions CO2eNet carbon intensity(NCI)(2023:57)(2023:72)Performance against our longer-term targets(see pages 14-15).Key performance indicators(see pages 18-19).*Non-GAAP measure(see page 445).In 2024,the world experienced continued geopolitical volatility.The Russia-Ukraine war entered its third year and conflict escalated in the Middle East,bringing personal tragedy to many.It was a time of political change,with elections in more than 60 countries.Energy security and affordability rose higher on political agendas,even as the share of renewable energy grew.This came into sharp focus during Europes winter of 2024.Wind and solar power reached record levels in the region,while liquefied natural gas(LNG)played a critical role in keeping homes and businesses running when there was not enough wind or sunlight.With global demand for energy increasing,coupled with the challenge of climate change,Shell continues to focus on its strategy todeliver more value with less emissions.We believe the world needs to maintainsecure and affordable energy supplies while moving tolow-carbon energy.In 2024,my second year as Chief Executive Officer,I am proud of theprogress we have made in putting our strategy into action.I want to thank everyone at Shell for their contribution.We are growing shareholder returns,while working to reduce emissions from our operations and products.We are positioning Shell to win through the energy transition on our journey to become a net-zero emissions energy business by 2050.Integrated energy companyOur strategy aims to grow our world-leading LNG business,which provides flexibility alongside renewable energy,and a lower-carbon alternative to coal.We expect that supplying LNG will be the biggest contribution we will make to the energy transition over the next decade,as we help to build the energy system of the future.Building on our deep knowledge and strong partnerships,we are also responsibly producing the oil that will be needed for decades to come,with a focus on cost and carbon competitiveness.We intend to be the most customer-focused energy marketer and trader in the world,providing people with the energy they need to power their lives and businesses.We are developing commercial models for low-carbon solutions,such as biofuels.My vision is for Shell to become the worlds leading integrated energy company,delivering impact at scale,connecting energy and people,matching supply to demand.We have set out to transform Shell into a more focused and more competitive energy business,and I am pleased to say that in 2024,wemoved forward at pace in that direction.Following our principles ofperformance,discipline and simplification,we have made good progress against the targets and ambition we presented at our Capital Markets Day in 2023 and in our Energy Transition Strategy 2024.Strategic ReportChief ExecutiveOfficers review4Shell Annual Report and Accounts 2024More valueIn 2024,we achieved our target to reduce structural costs*by$2-3 billion by the end of 2025,against 2022,one year ahead of time.Wecontinued to make disciplined investments,and difficult choices,such as pausing construction of our biofuels plant in Rotterdam,the Netherlands,to assess the most commercial way forward.We are building a strong track record of performance.Shell reported the second-highest cash flow from operations in our history in 2024,outperforming our target for free cash flow growth.By the end of the year,we had delivered at the top end of our target to distribute 30-40%of cash flow from operations to our shareholders*,mainly through buybacks.Our Prelude floating LNG facility off the coast of Australia had recordproduction in 2024,as did our QGC natural gas business in Queensland,Australia,boosting our operational performance.We added major new projects.We took a final investment decision on Bonga North,off the coast of Nigeria,which is expected to start up by the end of the decade and reach peak production of 110,000 barrels of oil equivalent a day.Our US deep-water platform Whale started production in January 2025,with estimated peak production of 100,000 barrels of oil equivalent a day.Our agreement to acquire Pavilion Energy in Singapore further strengthened our LNG portfolio with more sales and flexibility.I also signed an agreement in Abu Dhabi to invest in the Ruwais LNG project A,which is designed to operate with lower carbon intensity than traditional LNG plants.LNG Canada is expected to start producing in the middle of 2025,the largest private-sector energy investment in Canadas history.Another example of our transformation is the sale of Shell Pakistan,which is helping us to achieve our aim to divest around 500 retail sites every year until 2025.Less emissionsIn 2024,we worked hard towards our climate goals.We abated more than 1 million tonnes of CO2 from our operations through projects such as reduced flaring and the use of renewable electricity.This allowed us to keep our Scope 1 and 2 emissions roughly flat compared with 2023,despite increased oil and gas production and asset utilisation.By the end of 2024,we had achieved 60%of the reduction required to meet our 2030 Scope 1 and 2 target.Shell remains a leader in reducing emissions of methane,a potent greenhouse gas that can be released during oil,gas and LNG production.By the end of 2024,we had reduced total methane emissions from assets under our operational control by 76%compared with 2016.Total routine flaring from our upstream oil and gas assets remained stable in 2024,and,as of January 1,2025,we no longer routinely flare from these assets.A Subject to completion.*Non-GAAP measure(see page 445).When it comes to our sales,we achieved our short-term target to reduce the net carbon intensity of the energy products we sell with a9%reduction compared with 2016,moving us closer to our target ofa15-20%reduction by 2030 compared with 2016 levels.By the end of 2024,we had installed more than 70,000 public charge points for electric vehicles,a year ahead of schedule.I am encouraged by the progress we are making in carbon capture and storage,with plans for two linked projects in Canada.In Norway,our Northern Lights joint venture is ready to offer commercial carbon transport and storage as aservice.I saw for myself another exciting initiative,our first megawatt charger for electric trucks and ships in Amsterdam.Beyond our operations,2024 was an important year because the Court of Appeal of The Hague dismissed Milieudefensies claim against Shell.I believe the decision was the right one for the energy transition and our company.On February 11,2025,Milieudefensie announced that it was taking its case to the Netherlands Supreme Court.I am confident in the strength of our position.Shell peopleThe safety of everyone at Shell remains our top priority.I am deeply saddened by the deaths of four people working for Shell in 2024 andearly 2025.These tragic incidents took place in India,Malaysia,the Netherlands and Nigeria.My heart goes out to the families and friends of these four people.We must continue to protect everyone working for Shell,and we will learn from these and other incidents.Shells success depends on our people.I experienced the dynamism and diversity of our teams when I visited our operations in Brazil,China,India,Kuwait,Oman,Poland,Qatar,and the USA.I was impressed by how they are embracing the principles of performance,discipline and simplification in their everyday work.I also spent Safety Day with our team at the Shell Polymers Monaca chemical plant in the USA.Once again,I had the opportunity to witness first-hand how far we have advanced our safety culture and processes in recent years.Investment case and partner of choiceI am convinced that we are the best positioned energy company to navigate the energy transition because of our people,our connections tocustomers,and our portfolio of world-class assets.We are building on these strengths by transforming Shell.We are becoming a more focused and competitive business,so that we are the investment case and partner of choice through the energy transition.We had another strong year in 2024,and we have more to do.I am confident that our strategy,executed with conviction and determination,is working.We are on the path to becoming the worlds leading integrated energy company.Wael SawanChief Executive OfficerStrategic Report|Chief Executive Officers review continued5Shell Annual Report and Accounts 2024Shell is a global group of energy and petrochemical companies,employing around 96,000 people A across more than 70 countries.We have activities ranging from oil and gas exploration and production tothe marketing of fuels and lubricants,and research and development.We are increasingly offering our customers low-carbon energy solutions.For more than a century,Shell has connected people and energy.We provide the energy people need to fuel their homes,hospitals,schools,vehicles,machinery and factories.Our purpose is to power progress together,by working with each other,our customers and our partners.Our vision B is to be the worlds leading integrated energy company-delivering impact at scale,connecting energy and people,matching supply to demand.Shells strategy is to deliver more value with less emissions as we work to become a net-zero emissions business by 2050.As we navigate the energy transition through the next decade,we will leverage our global footprint,the trust in our brand,and our innovation and technology capabilities to be the energy company that customers and countries choose to be their partner.Our people and valuesWhether they work on our platforms and pipelines,or in our offices andresearch labs,people are key to our success.They collectively determine our culture and we expect them to behave according toourvalues:honesty,integrity and respect for people.We expect everyone at Shell to also comply with relevant laws and regulations to help us conduct business in an ethical and transparent manner.We firmly believe in the fundamental importance of trust,openness,teamwork and professionalism.The Board assesses and monitors our culture and how it is embedded in our attitudes and behaviours,including in our activities and stakeholder relationships.To realise our vision,we are transforming Shell to become a more focused and competitive business.Our extraordinary community of talent will approach the next decade of the energy transition with courage and determination.We expect Shells people to care about each other,our work,and about doing business the right way with a focus on safety,people and sustainability.The Shell General Business Principles set out our responsibilities to all our stakeholders.As part of these principles,we commit to contribute tosustainable development,and we have embedded this commitment into our strategy,our processes and decision-making.This requires balancing short-and long-term interests,integrating economic,environmental and social considerations into business decision-making.As we implement our strategy,we will also maintain our relentless focus on achieving our Goal Zero ambition:to do no harm to people and to have no leaks across operations.The Shell Code of Conduct explains how employees,contractors and anyone else acting on behalf of Shell must behave.Strong relationshipsWe seek to build strong,trusted relationships with all our stakeholders,including our approximately 1 million commercial and industrial customers,and the around 33 million people we serve daily at our Shell-branded retail stations.Our stakeholders include:our employees,contractors and pensioners;the investor community;customers;our suppliers and strategic partners;regulators and governments;non-governmental organisations,civil society,academia and think tanks;and the communities where we work.A At December 31,2024,and including portfolio companies.B A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Our core valuesOur guiding principlesHonestyIntegrityRespect for peoplePerformanceDisciplineSimplificationWe encourage our employees and business partners tospeak up and celebrate those who do the right thing.We empower our employees and business partners tomake the right decisions.We embrace diversity,equality andinclusivity.We maintain a relentless focus onimproving operational andfinancial performance.We allocate shareholders capital with discipline and make clear choices about where we can create value.We streamline the way we do things,removing complexity,and manage the portfolio to support disciplined capital allocation.Our Goal Zero ambitionWe aim to do no harm to people and to have no leaks across our operations.We call this our Goal Zero ambition.Everyone working for Shell strives to achieve Goal Zero each day.Strategic Report|Shells strategyThis is Shell6Shell Annual Report and Accounts 2024Our business directorates in 2024Reporting segmentsIntegrated Gas and UpstreamIntegrated Gas explores for and extracts natural gas which we then process to produce liquefied natural gas(LNG)or convert into gas-to-liquids(GTL)products.Our activities include the operation of the upstream and midstream infrastructure that is needed to deliver gas and gas products to the market.We earn revenues from the trading and optimisation,marketing and distribution of LNG,GTL and natural gas.See pages 31-37 fora review of our performance.Upstream explores for and extracts crude oil,natural gas and natural gas liquids.Shell has activities in deep water and conventional oil and gas.The business also operates the infrastructure necessary to transport the oil and gas to the market or to process it in our integrated energy and chemicals parks.See pages 38-46 for a review of our performance.Downstream,Renewablesand Energy Solutions Marketing supplies fuels and lubricants,for transport,manufacturing,mining,power generation,agriculture and construction.Shell is also a major blender and trader of biofuels.Shell Mobility operates our retail network,including electric vehicle charging andconvenience retail.See pages 55-59 for a review of our performance.Chemicals and Products includes manufacturing plants and refineries which we are repurposing into energy and chemicals parks.We turn crude oil and other feedstocks into products for households,industry and transport.The segment also includes the pipeline business,trading and optimisation of crude oil,oil products and petrochemicals,and oil sands activities.See pages 60-67 for a review of our performance.Renewables and Energy Solutions generates,markets and trades power from wind,solar and pipeline gas.The business also includes hydrogen production and marketing,commercial carbon capture and storage(CCS)hubs,carbon credits and nature-based solutions to avoid or reduce carbon emissions.See pages 68-71 for a review of our performance.What sets us apartDeep-water expertiseWe have almost five decades of deep-water expertise and continue to develop innovative designs for oil and gas assets,replicating successful projects to deliver more value with less emissions.Our deep-water business has a track record of sustained cash flow.Integrated gas and LNG capabilityWe have a world-leading LNG business with a sizeable portfolio,a global network of customers,extensive shipping and storage assets,and access to regasification plants.Our diversified and global portfolio of plants and terminals enhances our resilience to market shocks and allows us to capitalise on price volatility.Technology and innovationShell has a long history in technology and innovation.We have a global network of R&D centres and work closely with our customers,suppliers and partners.We also collaborate with some of the worlds leading technology companies to deploy digital solutions at scale across our business.Integrated business model trading and optimisationShell produces energy and is also one of the worlds largest and most experienced energy traders and suppliers.We can identify and meet a customers needs quickly.Our value chains are enhanced by purchases from third parties,and we have a leading global position in energy markets.Strategic Report|Shells strategy|This is Shell continued7Shell Annual Report and Accounts 2024Our inputs AFinancial capitalEquity attributable to Shell plc shareholders($billion)B:178 2023:187Total debt($billion)B:77 2023:82Net debt*($billion)B:39 2023:44 Average capital employed*($billion)B E:225 2023:234Cash capital expenditure*($billion):21 2023:24OperationsRefinery and chemical plant availability:92 23:91%Oil&gas production available for sale(kboe/d):2,836 2023:2,791LNG liquefaction volumes(million tonnes):29 2023:28Our PeopleNumber of employees(thousands)B:96 2023:103Number of training days(thousands):264 2023:295RelationshipsRanking in the Global 500 list of most valuable oil and gas companies C:1 2023:1Customers,joint arrangements,government relations,suppliers.Number of operating countries B:70 2023:70Intellectual capitalResearch and development expenses($million):1,099 2023:1,287Number of patents BD:8,677 2023:8,829Natural resourcesProved oil and gas reserves(million boe)B:9,620 2023:9,787Energy consumed(million MWh):212 2023:205*Non-GAAP measure(see page 445).A In 2024 unless stated otherwise.B At December 31,2024.C Source:Brand Finance Global 500.D Includes patents granted and pending patent applications.E Reporting methodology has been changed,see Non-GAAP measures(page 445).Strategic Report|Shells strategyHow we createvalue8Shell Annual Report and Accounts 2024Outcomes and impacts forourstakeholders ACash flow from operating activities($billion):552023:54Free cash flow*($billion):402023:36Shareholder distributions*B($billion):232023:23Adjusted Earnings*($billion):24 2023:28Absolute emissions(Scope 1 and 2 million tonnes of CO equivalent):58 2023:57|2016:83Net carbon intensity C(grams of CO equivalent per megajoule):712023:72|2016:78Methane emissions intensity:0.04 23:0.05%Customer emissions from the use of our oil products D(million tonnes CO equivalent)491 2023:517 l 2021:569Women employees in senior leadership positions E:33 23:32%Total spend on goods and services*($billion):42 2023:49Total waste disposed(million tonnes):1.92023:2.3Operational spills of more than 100 kilograms(thousand tonnes):1.23 2023:0.37*Non-GAAP measure(see page 445).A In 2024 unless stated otherwise.B Total shareholder distributions*were$23 billion,comprising$9billion in cash dividends and$14 billion in share buybacks.C In 2024,we revised NCI from 79gCO2e/MJ(g)to 78g for 2016,and from 74g to 72g for 2023.See page 98 for details.D Scope 3,Category 11.E At December 31,2024.Strategic Report|Shells strategy|How we create value continued9Shell Annual Report and Accounts 2024 Business activities178 2023:187Total debt($billion)B:77 2023:82Net debt*($billion)B:39 2023:44 Average capital employed*($billion)B E:225 2023:234Cash capital expenditure*($billion):21 2023:24OperationsRefinery and chemical plant availability:92 23:91%Oil&gas production available for sale(kboe/d):2,836 2023:2,791LNG liquefaction volumes(million tonnes):29 2023:28Our PeopleNumber of employees(thousands)B:96 2023:103Number of training days(thousands):264 2023:295RelationshipsRanking in the Global 500 list of most valuable oil and gas companies C:1 2023:1Customers,joint arrangements,government relations,suppliers.Number of operating countries B:70 2023:70Intellectual capitalResearch and development expenses($million):1,099 2023:1,287Number of patents BD:8,677 2023:8,829Natural resourcesProved oil and gas reserves(million boe)B:9,620 2023:9,787Energy consumed(million MWh):212 2023:205*Non-GAAP measure(see page 445).A In 2024 unless stated otherwise.B At December 31,2024.C Source:Brand Finance Global 500.D Includes patents granted and pending patent applications.E Reporting methodology has been changed,see Non-GAAP measures(page 445).Strategic Report|Shells strategyWe aim to meet the worlds growing need for more andsustainable energy solutions in ways that are economically,environmentally and socially responsible.Through our business activities we create value for our shareholders,customers and wider society.This is a non-exhaustive illustration of Shells key business activities that deliver the energy needed for today.Key performance indicators see page 18-19.Performance against our longer-term targets see page 14-15.Our strategy is to deliver more value with less emissions.Our vision A is to be the worlds leading integrated energy company and our strategy is to deliver more value with less emissions.We are positioning Shell to become the investment case and partner of choice through theenergy transition.More value We are committed to enhancing value for our investors through disciplined investments,enhanced shareholder distributions and maintaining a strong balance sheet.Our focus remains on providing secure and reliable products,both now and throughout the energy transition,to meet the evolving needs of our customers.At Capital Markets Day 2023(CMD23),we outlined our specific targets,and the progress we have made against these targets is presented on page 14.Less emissionsWe are committed to becoming a net-zero emissions energy business by 2050.We have set climate targets and an ambition,outlined in our Energy Transition Strategy 2024(ETS24),to help us reach net zero.ETS24 was approved by 78%of shareholders who voted at our Annual General Meeting(AGM)in May.Progress against our climate targets and ambition is presented on page 93.Shell aims to lead in the energy transition where we have competitive strengths,see strong customer demand,and identify clear regulatory support from governments.We will continue to provide our customers with the energy and other products they need,and we will provide this affordably and reliably,while also increasingly offering them low-carbon energy solutions to help them decarbonise their activities.Moving forwardIn 2024,we delivered our strategy against the four themes of generating shareholder value,achieving net-zero emissions,respecting nature and powering lives.These themes are presented on pages 12-13.Like all businesses,we will continue to adapt how we implement our strategy as the world evolves.This adaptability is crucial for navigating the dynamic energy landscape enabling long-term success.Capital Markets Day on March 25,2025,presents an update to our financial targets for investors.See pages 16-17.A A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Photo:Staff at Shell QGCs training centre in Chinchilla,Queensland,Australia.We will deliver more value with less emissions by:Growing our integrated gas and LNG business.Sustaining liquids production.Focusing Downstream,Renewables and Energy Solutions.Growing our integrated gas and LNG businessWe are investing in our gas production and growing our LNG business to deliver the secure energy the world needs.LNG is a critical fuel for the energy transition because it is a lower-carbon alternative to coal in power generation and can be easily transported to where it is needed.Sustaining liquids production We aim to sustain liquids production of at least 1.4 million barrels a day through to 2030 with increasingly lower carbon intensity.We are focusing our exploration activities in locations where hydrocarbons have already been discovered.Focusing Downstream,Renewables and Energy Solutions We are expanding our premium marketing businesses while streamlining our portfolio with a focus on value over volume.We will build on the options we have invested in for low-carbon growth through the energy transition.Our global customer reach and our supply and trading capabilities position us well to deliver the low-carbon solutions people and businesses need.Strategic Report|Shells strategyOur strategy10Shell Annual Report and Accounts 2024We are seeking to change the mix of energy products we sell to our customers as their needs for energy change.We believe we can make the greatest contribution to the energy transition by helping to enable our customers to switch to low-carbon energy products and services.This is reflected in Shells strategy to build a portfolio that seeks to:develop low-and zero-carbon alternatives to traditional fuel,including biofuels,and other low-and zero-carbon gases;provide more renewable power solutions to customers in select markets;work with customers across different sectors to help them decarbonise their use of energy,for example by substituting the useof coal with LNG;and address any remaining emissions from conventional fuels with solutions such as CCS and high-quality carbon credits.As we implement our strategy,we will continue to focus on performance,discipline and simplification.This applies not only to our financial and operational outcomes,but also to safety and sustainability.Our Goal Zero ambition is fundamental to the success of our company.See Safety on page 122.We believe that no business can succeed without an unwavering commitment to respecting the environment and the communities within which it works.At Shell,we seek to protect the environment,increase our reuse and recycling,make a positive contribution to biodiversity and use water and other resources efficiently.We also work to make apositive impact on people around the world,and power lives through our products and activities,andby supporting an inclusive society.See Respecting nature on page 109,and Powering lives on page 114.Strategic Report|Shells strategy|Our strategy continued11Shell Annual Report and Accounts 2024Generating shareholder valueWe aim to generate more value for shareholders throughdisciplined capital allocation,strong financial performance and by maintaining a strong balance sheet.We seek to provide enhanced shareholder distributions through ourprogressive dividend policy and share buyback programmes.2024 performance Total shareholder distributions*were$23 billion,comprising$9billion in cash dividends and$14 billion in share buybacks.Total shareholder distributions*were 41%of cash flow from operating activities.Cash flow from operating activities was$55 billion.Cash capital expenditure*was$21 billion.Total debt was reduced to$77 billion and net debt*was$39 billion as of December 31,2024.Net debt excluding leases*was$10 billion.Structural cost reductions*were$3.1 billion from a 2022 baseline and against a$2-3 billion target by the end of 2025.The annual dividend was$1.390 per share,and the quarterly dividend increased to$0.358 per share for the fourth quarter.Information on our progress against our longer-term targets included atCapital Markets Day 2023 can be found on page 14.As we implement our strategy,we will work to:Enhance shareholder distributions from 30-40%to 40-50%of cash flow from operating activities*through the cycle.Increase the structural cost reduction*target from$2-3 billion by the end of 2025 to a cumulative$5-7 billion by end of 2028,compared to 2022.Invest for growth while maintaining capital discipline,with spend of cash capital expenditure lowered to$20-22 billion*per year from 2025-2028.Grow normalised free cash flow per share*on average by more than 10%per year through to 2030.*Non-GAAP measure(see page 445).Achieving net-zero emissionsWe have a target to become a net-zero emissions energy business by 2050 and will work with customers to help them decarbonise.We are transforming our business,including selling more low-carbon products and services.We are working with our customers and others to help accelerate the energy transition.We advocate policies,legislation and regulation that will generate demand for investment in a low-carbon energy system.2024 performance Scope 1 and 2 emissions were down by 30%compared with the 2016 reference year A.Methane emissions intensity of 0.04%continued to be below our 0.2%target.Net carbon intensity(NCI)decreased by 9.0%compared with the 2016 reference year and was within the 2024 target range.Routine flaring from upstream operations remained stable at 0.1 million tonnes and,with effect from January 1,2025,Shell no longer carries out any routine flaring at its upstream operations.Customer emissions from the use of our oil products(Scope 3,Category 11)were reduced by 5%in 2024 to a total of 14%compared with 2021 B.As we implement our strategy,we will work to:Achieve net-zero emissions by 2050(Scope 1,2 and 3).Reduce by 50%Scope 1 and 2 absolute emissions from activities under operational control by 2030,compared with 2016 levels onanet basis.Achieve near-zero methane emissions intensity by 2030.Reduce net carbon intensity by 15-20%by 2030,compared with the2016 reference year.Reduce customer emissions from the use of our oil products by 15-20%by 2030,Scope 3,Category 11 B,compared with the 2021 reference year.Progress against our longer-term emissions targets can be found onpage 14 and in Ourjourney to net zero on page 93.A Reduced from 83 million tonnes of CO2e in2016to 58 million tonnes of CO2e in 2024.B Customer emissions from the use of our oil products(Scope 3,Category 11)were 517million tonnes CO2e in 2023 and 569 million tonnes CO2e in 2021.Strategic Report|Shells strategy|Our strategy continued12Shell Annual Report and Accounts 2024PoweringlivesWe power lives through our products and activities,andby supporting an inclusive society.We provide vital energy for homes,businesses and transport.We also aim to create a desirable workplace that is accepting and inclusive and representative of the communities we are a part of.Additionally,our activities generate revenues for governments through the taxes and royalties we pay,and the taxes wecollect on their behalf.2024 performance In 2024,we spent around$42 billion on goods and services*fromsuppliers around the world.In 2024,taxes paid*were$18 billion.In 2024,representation of women in Senior Leadership A grew to33%.As of December 31,2024,15%of Shells Senior Management B identifies as being from an ethnic minority group.Our 2024 Shell People Survey showed a result of 81 points out of 100 for all questions relating to diversity,equity and inclusion(DE&I).As we implement our strategy,we will work to:Collaborate with suppliers that behave in an economically,environmentally and socially responsible manner.Be a good neighbour through strong community engagement,managing negative impacts from our activities and seeking to enhance positive impacts C.Respect human rights as set out in the UN Universal Declaration of Human Rights.Continue to achieve 15%ethnic minority group representation in Senior Management B by2027.Have at least one Board member from an ethnic minority background.Increase representation of women in senior leadership positions to 40%by 2030.Achieve gender balance on the Board,with at least one senior Board position held by a woman.A Senior Leadership is a Shell measure based on compensation grade levels.This measure is distinct from senior manager as per statutory disclosure requirements.See Our people on page 117.B As per the latest Parker Review recommendations,Senior Management refers to Senior Leadership based in the UK and is a Shell measure based on compensation grade levels.C See Powering Lives for examples of how we seek to be a good neighbour.*Non-GAAP measure(see page 445).RespectingnatureWe seek to protect the environment,increase our reuse and recycling,make a positive contribution to biodiversity and use water and other resources efficiently.Our businesses use natural resources such as land and water for their operations.Our activities can impact nature through discharges and emissions to the environment,and through changes to the use of land and water.We assess and manage the impact of our operations on local ecosystems and communities.2024 performance We continued to embed respect for nature into our activities,standards and business processes,including by ensuring that theseare reflected in our Safety,Environment and Asset Management(SEAM)Standards.In partnership with Monash University,we are executing an ecological restoration programme on Browse Island,Australia,toeradicate invasive alien species,improve reef health and promotethe return of breeding seabirds.At the Pearl GTL gas-to-liquids facility in Qatar,we diverted wastetolocal cement kilns for use as clinker in cement production,thereby reducing use of raw materials and the amount of waste sentto landfill.As we implement our strategy,we will work to:Achieve net-zero deforestation from new activities by replanting forests,while maintaining biodiversity and conservation value.Achieve a net positive impact on biodiversity,based on reference year 2021,for new projects in critical habitats.Better understand the types of waste we generate and identify options to increase circular approaches.Implement water stewardship principles across our businesses,including the sustainable management of fresh-water resources,particularly in water-stressed areas.Strategic Report|Shells strategy|Our strategy continued13Shell Annual Report and Accounts 2024In 2024,we continued to make good progress in delivering on the longer-term targets as set out at our Capital Markets Day in June 2023 and in our Energy Transition Strategy 2024.We are ahead of schedule across the majority of our key targets,delivering more value with less emissions.More valueTargets included at Capital Markets Day 2023 AShareholder distributions 30-40%ofCFFO*through thecycle B(%)Shareholder distributions as%of CFFO is used to demonstrate Shell plcs progress on increasing returns to shareholders through the cycle.Total shareholder distributions*in 2024 of$23 billion comprised of$9 billion in dividends and$14 billion in share buybacks,representing 41%of CFFO.Average shareholder distributions since the end of 2022 of 42%of CFFO,at the top of our target range of 30-40%.Structural cost reduction*of$2-3 billion byend of2025 D($billion)Structural cost reduction is used to demonstrate how management drives cost discipline across the entire organisation by simplifying ourprocesses and portfolio,and streamlining the way we work.Structural cost reduction*of$3.1 billion delivered since the end of 2022,one year ahead of our target date of end of 2025 and above the range of$2-3 billion set in 2023.Of the cost reduction delivered,$1.2 billion relates to portfolio changes and$1.9 billion relates to operational efficiencies across our businesses,a leaner corporate centre,and faster decision-making in project development.Price-normalised FCF growth*6%per year through2030 C($billion)Price-normalised FCF growth demonstrates the growth in underlying business performance and removes the impact of macroeconomic pricemovements for a more comparable figure.Average annual growth in price-normalised FCF of 27%since 2022 continued to outperform our targeted growth of more than 6%per year.This reflects our improved operational performance,discipline incash capital expenditure and structural cost reduction.Price-normalised FCF growth/share*10%per year through 2025 C($/share)The price-normalised FCF growth per share demonstrates the increase in cash distribution to shareholders and removes the impact of macroeconomic price movements for a more comparable figure.Average annual growth in price-normalised FCF per share of 36%since 2022 continued to outperform our targeted growth of more than 10%per year.This reflects our price-normalised FCF growth as well as a lower number of shares in issue as a result of our ongoing share buyback programme.Strategic Report|Shells strategyProgress against ourlonger-term targets14Shell Annual Report and Accounts 2024*Non-GAAP measure(see page 445).A Targets announced at our Capital Markets Day 2025 are included in Outlook(See page 16)B CFFO:cash flow from operating activities.C FCF:free cash flow.D 2025 target reflects annualised savings achieved by end-2025.FCF and shareholder distributions(taken into account as part of Total shareholder return)are used when calculating Executive Directors remuneration.Less emissionsTargets included in our Energy Transition Strategy 2024Net-zero emissions by2050(Scope 1,2and 3)D,E(million tonnes of CO2e)Net-zero emissions demonstrate our progress towards achieving our target to become a net-zero emissions energy business by 2050.Net absolute emissions continued to decrease in 2024,principally driven by a reduction in our sales of oil products.Reduce the net carbonintensity(NCI)of the products we sell by 15-20%by 2030 D,F(gCO2e/MJ)The NCI metric is used to track progress in reducing the overall carbon intensity of the energy products we sell,compared with a 2016 baseline.NCI is the average intensity,weighted by sales volume of the energy products we sell.With a reduction of 9.0%compared with the 2016 baseline,our interim target to reduce our NCI by 9-12%in 2024 is met.The decrease in NCI compared with 2023 is mainly driven by a reduction in our sales of oil products,continued growth in our power sales and a reduction in average oil product intensity.Halving Scope 1 and 2 emissions by 2030 under operational control(2016 baseline)D(million tonnes of CO2e)We have set a target to halve the emissions from our operations(Scope 1)and the energy we buy to run them(Scope 2)by2030 compared with 2016 levels,on a net basis.Combined Scope 1 and 2 emissions in 2024 reflect a 30%reduction compared with the 2016 baseline.The slightly higher emissions compared to 2023 were due to higher utilisation and production,offsetby reductions from abatement projects.Eliminate routing flaring from upstream operations by 2025 D,G and achieve near-zero methane emissions by2030 D,HRoutine flaring(million tonnes)Methane emissions intensity(%)IIn 2024,total routine flaring from our upstream oil and gas assets remained stable compared with 2023.From January 1,2025,our target of ending routine flaring from upstream operations has been met(independent of the March 13,2025 completion of the sales of SPDC).We continued to deliver methane emissions intensities well below our 0.2%target.In addition to these targets we have an ambition to reduce the customer emissions from the use of our oil products by 15-20%by 2030,compared with 2021(Scope 3,Category 11).See Our journey to net zero on page 102.Strategic Report|Shells strategy|Progress against our longer-term targets continued15Shell Annual Report and Accounts 2024D See Our journey to net zero on pages 76-108.E Estimated total GHG emissions included in NCI(net)were revised from 1,645 to 1,615 million tonnes of CO2e for 2016,from 1,240 to 1,220 million tonnes of CO2e for 2022 and from 1,185 to 1,158 million tonnes of CO2e for 2023.See page 98 for details.F Grams of carbon dioxide equivalent per megajoule.In 2024,we revised NCI from 79gCO2e/MJ(g)to 78g for the 2016 base year,from 76g to 75g for 2022 and from 74g to 72g for 2023.See page 98 for details.G Subject to completion of the sale of SPDC.H On an intensity basis.IMethane emissions intensity of Shell-operated oil and gas assets with marketed gas.This target is used to determine Executive Directors remuneration.Capital Markets Day on March 25,2025,presents anupdate to our financial targets forinvestors.Our vision A is tobethe worlds leading integrated energy company.Shell is transforming to become simpler,more resilient and competitive.We want to become the worlds leading integrated gas and LNG business and the most customer-focused energy marketer and trader,while sustaining a material level of liquids production.We are building on the significant progress we have made in executing our strategy to deliver more value with less emissions.As we do this,wewill maintain our focus on performance,discipline and simplification.We aim to grow returns for shareholders,while reducing our emissions and helping our customers reduce theirs.To successfully implement our strategy,we will take a value-led approach through a financial framework which enhances shareholder distributions,and maintains discipline in capital allocation and a balance sheet with a strong investment grade rating.Financial discipline and strategic focusWe will maintain our focus on performance,cost and capital discipline,investing in areas of competitive strength to maximise returns.Updates to our financial targets:Enhance shareholder distributions from 30-40%to 40-50%of cash flow from operations*through the cycle,continuing to prioritise share buybacks while maintaining the 4%a year progressive dividend policy B.Increase the structural cost reduction*target from$2-3 billion by theend of 2025 to a cumulative$5-7 billion by the end of 2028,compared with 2022.Invest for growth while maintaining capital discipline with cash capital expenditure*lowered to$20-22 billion a year for 2025-2028 compared with$21 billion in 2024.Grow normalised free cash flow per share*on average by more than 10%a year through to 2030.A A vision statement defines the desired future state of a company rather than a series offirm,binding commitments.Shell financial framework:Capital Markets Day 2025 Balanced capital allocation Total distributionsEnhanced shareholder distributions40-50%of CFFO*through the cycleCash capital expenditure*(cash capex)Disciplined investment$20-22 billion p.a.2025-2028 Prioritising buybacks13 consecutive quarters$3 billionDividend consistency 4%announced at Q424Integrated Gas and Upstream cash capex$12-14 billionDownstream,Renewables and Energy Solutions cashcapex$8 billion Intrinsic value creation10%p.a.normalised free cash flow growth per share*through to 2030Progressive dividend4%annual increase BCapital reallocation 10%ROACE*across all segments CBalance sheetMaintain strong investment grade ratingB Subject to Board approval as well as shareholder approval at the 2025 Annual General Meeting.C Price normalised ROACE on an Adjusted Earnings plus non-controlling interest basis.*Non-GAAP measure(see page 445).Strategic Report|Shells strategyOutlook16Shell Annual Report and Accounts 2024The Board intends to enhance shareholder distributions through a combination of dividends and share buybacks,maintaining a 4%progressive dividend policy.When the Board sets the level of shareholder distributions,it looksat a range of factors including the macro environment,underlying business earnings and Group cash flows,the current balance sheet,future investment,acquisition and divestment plans,and existingcommitments.Growth and resilience through the energy transition Shell believes the world is facing a complex,multi-decade energy transition in which there will be growing demand for secure,affordable and,increasingly,low-carbon energy.In liquefied natural gas(LNG),we will reinforce our leadership position by growing sales 4-5%a year through to 2030.We will also grow production across our combined Upstream and Integrated Gas business by 1%a year to 2030,sustaining our 1.4 million barrels a day of liquids production with increasingly lower carbon intensity.And,we will drive cash flow resilience and higher returns in Downstream,Renewables and Energy Solutions by:Pursuing focused growth in our high-return Mobility and Lubricants businesses.Leveraging competitive strengths to drive profitable and scalable businesses across our lower-carbon platforms A where we expect to have up to 10%of capital employed by 2030.Unlocking more value from our strong portfolio of Chemicals assets.This will be done by exploring strategic and partnership opportunities in the USA and through high-grading and selective closures in Europe.We believe this will enable the business to prosper while improving returns and reducing capital employed by2030.A Shells lower-carbon platforms include low-carbon fuels,carbon capture and storage,and hydrogen,as well as power which includes renewable generation and gas fired power.Shell will continue to deliver more value with less emissions,growing inareas where we have competitive strengths.We believe we are providing a compelling investment case for our shareholders,now,andinto the future.Performance culture and commitment We will continue to embed a performance culture,empowering our people with greater ownership and faster decision-making,helping toensure safe and responsible operations.Shell is committed to delivering on our promises,transforming to become more resilient and competitive,and driving growth and valuecreation through disciplined execution of our strategy.Weareconfident in our ability to navigate the energy transition anddeliverenhanced returns for our shareholders.Photo:Shell employees and contractors on the Vito deep-water platform in Ingleside,Texas,USA.Strategic Report|Shells strategy|Outlook continued17Shell Annual Report and Accounts 2024Performancein the yearPerformance indicatorsThese indicators enable management to evaluate Shellsperformance against our annual Operating Plan.They are also usedas part of determining Executive Directors remuneration.See Directors Remuneration Report on pages 188-190.SafetyPersonal safety(SIF-F cases per 100million working hours)Serious injury,illness and fatality(SIF)is defined as a serious work-related injury or illness that resulted in a fatality or permanent impairment.ForSIF Frequency(SIF-F),the number ofSIF employee andcontractor incidents is divided by 100 million working hours.2024 performanceDespite improvement,the result reflects two fatalities and five serious injuries reported in 2024,which is too many.We will continue to strengthen the safety culture among ouremployees and contract staff.Process safety(number of Tier 1 and Tier 2 events)Operational process safety events are defined as the unplanned or uncontrolled release of any material from a process with the greatest actual consequence resulting in harm to employees,contract staff,a neighbouring community,or damage to equipment,or exceeding a threshold quantity.2024 performanceThe increase in process safety tiered events was driven by our Downstream and Renewables businesses.We are actively addressing these challenges by refining our operational strategies,renewing our focus on fundamentals and leveraging new technologies to return to the downward trend of previous years.For details on our safety performance see Safety on pages 122-124A 2022 adjustment on SIF-F from 1.7 to 2.0 is due to a change in classification for one injury after publication of the 2023 Annual Report and Accounts.Financial deliveryCash flow from operatingactivities($billion)Total cash receipts and payments associated with oil,gas,chemicals and other product sales.This reflects our ability to generate cash to service and reduce debt,invest and make shareholder distributions.2024 performanceDriven mainly by a strong operational performance.See Liquidity and capital resources on pages 24-27.Shells journey in the energy transitionLNG volumes(million tonnes)Shells share of sales of equity LNG volumes from liquefaction plants owned by Shell subsidiaries,Shell joint ventures and associates,and Shells share of LNG produced from liquefaction plants which operate under tolling arrangements with Shell.2024 performanceLNG liquefaction volumes increased mainly due to lower maintenance in Australia.See Integrated Gas on page 31.Reducing operational emissions(Scope 1 and 2;thousand tonnes CO2)Operational emission reductions achieved from GHG abatement projects(e.g.reduced flaring,increased energy efficiency,and use ofrenewable electricity),site closures and decommissioning or transformations,resulting in sustained GHG reductions.2024 performanceThis was mainly due to catalyst improvements at Pearl GTL in Qatar,routine flaring reduction(Forcados Yokri Gas Project)in Nigeria and optimisation of the liquefaction control system at QGC in Australia.See Our journey to net zero on pages 76-108.Electric vehicle(EV)charge points(thousand)Number of public electric vehicle charge points owned,controlled,or Shell branded.The definition has been revised to exclude operated only charge points.Prior year figures have been restated.2024 performancePerformance was largely due to growth in top adoption markets,and we achieved our goal of installing 70,000 public charge points a year ahead of schedule.See Marketing on pages 55-59.Strategic Report18Shell Annual Report and Accounts 2024Operational excellenceProject deliveryon schedule(%)Our capability to complete major projects on time,measured as the percentage of projects delivered on schedule.2024 performanceHighlights for this year include the successful start-up of 10 projects,halfof which came on-stream ahead of schedule.Project deliveryon budget(%)Aggregate cost against the aggregate baseline for those projects,where a figure greater than 100%means over budget.2024 performanceThe result was impacted by the decision to pause on-site construction atour biofuels plant in Rotterdam.Customer satisfaction(index)This quantitative measurement of customer experience performance iscalculated as a simple average of customer satisfaction scores from the global business-to-business transactional survey programme.2024 performanceThe result reflects focus on prioritisation,continuous improvement ofe-commerce platforms,and the resilience of our teams.Brand SharePreference(%)The percentage of customers answering Shell when asked:Assuming that all the fuel station companies that you would consider are conveniently located,which one company do you prefer most?The responses are taken from survey respondents in more than 60 countries covering both fuel and non-fuel retail consumers.2024 performanceOur Brand Share Preference continued to rise,performing ahead of expectations in all regions.Upstream controllableavailability(%)Reflects our ability to optimally run our Upstream assets and includes all Shell-operated assets and selected assets not operated by Shell butfor which Shell has strategic influence.It excludes the impact of extreme unexpected events that are outside our control,such as government restrictions and hurricanes.Reliability issues,turnarounds and maintenance at own-operated or third-party facilities impact controllable availability.2024 performancePerformance improved,particularly in Kazakhstan,Nigeria,Norway,Oman and the USA,partially offset by lower performance in the UK.Midstreamavailability(%)The extent to which LNG assets are ready to process product as a comparison with capacity,considering the impact of planned and unplanned maintenance.2024 performanceImproved performance,especially in Australia,Qatar and Oman.Refinery and chemical plant availability(%)Weighted average of plants actual uptime,as a percentage of their maximum possible uptime,is a measure of the operational excellence of our refinery and chemical plant facilities.The weighting is based on the capital employed,adjusted for cash and non-current liabilities.2024 performanceImprovements this year were mainly in Shell Polymers Monaca in the USA and Bukom Refinery in Singapore.See Chemicals and Products on page 60.Strategic Report|Performance in the year|Performance indicators continued19Shell Annual Report and Accounts 2024Generating shareholder valueWe are committed to enhancing shareholder distributions with a focuson performance,discipline and simplification.Strategic Report|Performance in the year20Shell Annual Report and Accounts 2024Group results Key metrics$million,except where indicated202420232022Income attributable to Shell plc shareholders 16,094 19,359 42,309 Income for the period 16,521 19,63642,874Total segment earnings*A B 16,792 20,281 41,562 Adjusted Earnings*A C 23,716 28,25039,870Adjusted EBITDA*A 65,803 68,53884,289Cash flow from operating activities 54,687 54,19168,414Cash flow from investing activities(15,155)(17,734)(22,448)Free cash flow*39,533 36,45745,965Cash capital expenditure*21,085 24,39224,833Operating expenses*D 36,917 39,96039,476Underlying operating expenses*D 35,707 39,20139,456ROACE on an Adjusted Earnings plus Non-controlling interest basis*E 11.3.8.0%Total debt at December 31 F 77,078 81,541 83,795 Net debt*at December 31 F 38,809 43,542 44,837Gearing*at December 31 17.7.8.9%Oil and gas production available for sale(thousand boe/d)2,836 2,791 2,864 Proved oil and gas reserves at December 31(million boe)9,620 9,787 9,578 Basic earnings per share($)2.55 2.88 5.76 Adjusted Earnings per share*($)3.76 4.20 5.43 Dividend per share($)1.3900 1.2935 1.0375 A Segment earnings,Adjusted Earnings and Adjusted EBITDA are presented on a current cost of supplies basis.B See Note 7 to the Consolidated Financial Statements which includes an explanation of the reporting segment changes applicable from 2024.C Adjusted Earnings exclude the non-controlling interest component.D The most comparable GAAP financial measure is Production and manufacturing expenses(2024:$23 billion;2023:$25 billion).E Effective first quarter 2024,the definition has been amended and comparative information has been revised.Refer to Non-GAAP measures section for details.F See Note 21 to the Consolidated Financial Statements.*Non-GAAP measure(see page 445).2024 was another year of strong performance across Shell,with significant progress against all our financial targets.Sinead GormanChief Financial Officer Segment earnings*A B$million Segment Adjusted Earnings*A B$millionStrategic Report|Performance in the year|Generating shareholder value21Shell Annual Report and Accounts 2024We made significant progress towards the financial targets that we set at Capital Markets Day 2023.Our focus on performance,discipline and simplification has been key to achieving these results,enabling us to deliver more value with less emissions.In 2024,we reported the second-highest cash flow from operations in our history.Our operational performance has also improved.We have brought a number of projects online and we have taken disciplined final investment decisions that will help strengthen Shell further.Earnings 2024-2023Income attributable to Shell plc shareholders in 2024 was$16,094 million,compared with$19,359 million in 2023.With non-controlling interest included,income for the period in 2024 was$16,521 million,compared with$19,636 million in 2023.After current costof supplies adjustment,total segment earnings*in 2024 were$16,792 million,compared with$20,281 million in 2023.Adjusted Earnings*in 2024 were$23,716 million,compared with$28,250 million in 2023.The decrease was mainly driven by lower LNG trading and optimisation margins,lower realised prices,lower refining margins as well as lower trading and optimisation margins ofpower and pipeline gas in Renewables and Energy Solutions,partlyoffset by lower operating expenses and higher realised Chemicals margins.2024 income attributable to Shell plc shareholders also included net impairment charges and reversals of$4,371 million,reclassifications from equity to profit and loss of cumulative currency translation differences related to funding structures,unfavourable movements relating to an accounting mismatch due to fair value accounting ofcommodity derivatives,and charges related to redundancy and restructuring.These charges,reclassifications and movements are included in identified items amounting to a net loss of$7,365million.Integrated GasIntegrated Gas segment earnings*in 2024 were$9,590 million,compared with$7,057 million in 2023.The increase was mainly driven by lower unfavourable movements relating to an accounting mismatch due to fair value accounting of commodity derivatives,lower net impairment charges and reversals,higher volumes,lower operating expenses,and favourable deferred tax movements,partly offset by the combined effect of lower contributions from trading and optimisation and lowerrealised prices.See Integrated Gas on page 31.UpstreamUpstream segment earnings*in 2024 were$7,772 million,compared with$8,540 million in 2023.The decrease was mainly driven by unfavourable tax movements,lower realised prices and higher exploration well write-offs,partly offset by the comparative favourableimpact relating to gas storage effects.SeeUpstream on page 38.*Non-GAAP measure(see page 445).MarketingMarketing segment earnings*in 2024 were$1,894 million,compared with$3,057 million in 2023.The decrease was mainly driven by higher net impairment charges and reversals,net losses related to sale of assets,unfavourable tax movements and higher depreciation charges.These were partly offset by higher Marketing margins including higher unit margins in Lubricants and Mobility,partly compensated by lower Sectors and Decarbonisation margins.Segment earnings also reflectedlower operating expenses.See Marketing on page 55.Chemicals and ProductsChemicals and Products segment earnings*in 2024 were$1,757 million,compared with$1,482 million in 2023.The increase was mainly drivenby lower net impairment charges and reversals,lower operatingexpenses and higher Chemicals margins.These were partly offset by lower Products margins,largely due to lower refining margins,unfavourable movements relating to an accounting mismatch due tofair value accounting of commodity derivatives and unfavourable tax movements.See Chemicals and Products on page 60.Renewables and Energy SolutionsRenewables and Energy Solutions segment earnings*in 2024 were an expense of$1,229 million,compared with a gain of$3,089 million in 2023.The decrease was mainly driven by lower favourable movements relating toan accounting mismatch due to fair value accounting of commodity derivatives,lower margins,largely from trading and optimisation primarily in Europe due to lower volatility and higher netimpairment charges and reversals,partly offset by lower operatingexpenses.See Renewables and Energy Solutions on page 68.CorporateCorporate segment earnings*in 2024 were an expense of$2,992million,compared with an expense of$2,944 million in 2023.The increase was mainly driven by reclassifications from equity to profit and loss of cumulative currency translation differences related tofunding structures,partly offset by favourable tax movements,favourable net interest movements and favourable currency exchangerate effects.See Corporate on page 72.Strategic Report|Performance in the year|Generating shareholder value|Group results continued22Shell Annual Report and Accounts 2024Prior year earnings summaryOur earnings summary for the financial year ended December 31,2023,compared with the financial year ended December 31,2022,can be found in the Annual Report and Accounts(page 32)and Form20-F(page 30)for the year ended December 31,2023,asfiledwith the Registrar of Companies for England and Wales andthe US Securities and Exchange Commission,respectively.Cash flow from operating activitiesCash flow from operating activities was$54,687 million in 2024,compared with$54,191 million in 2023.Cash flow from operating activities in 2024 was primarily driven by Adjusted EBITDA,and working capital inflow of$2,062 million,partly offset by tax payments of$12,002 million.Cash capital expenditureCash capital expenditure*was$21,085 million in 2024,comparedwith$24,392 million in 2023.See Our journey to net zero on page 87.Operating expenses and Underlying operating expensesOperating expenses*were$36,917 million in 2024,compared with$39,960 million in 2023.Underlying operating expenses*were$35,707 million,compared with$39,201 million in 2023.Thedecrease in both Operating expenses and Underlying operating expenses was mainly driven by structural cost reductions delivered through operational efficiencies across our businesses,a leaner corporate centre,faster decision-making in project development,andportfolio changes.Return on average capital employed on an Adjusted Earnings plus Non-controlling interest(NCI)basisOur ROACE on an Adjusted Earnings plus Non-controlling interest basis*decreased to 11.3%,compared with 12.8%in 2023,mainly driven by lower earnings.Significant accounting estimates and judgementsSee Note 2 to the Consolidated Financial Statementson pages 245-255.Legal proceedingsSee Note 32 to the Consolidated Financial Statementson pages 308-310.*Non-GAAP measure(see page 445).Production available for saleOil and gas production available for sale in 2024 was 2,836 thousand boe/d,compared with 2,791 thousand boe/d in 2023.This increase was mainly driven by growth from new fields and partly offset by divestments.Oil and gas production available for sale AB Thousand boe/d202420232022Crude oil and natural gas liquids1,452 1,454 1,460 Synthetic crude oil51 52 46 Natural gas C 1,333 1,285 1,357 Total2,836 2,791 2,864 Of which:Integrated Gas954 939 921 Upstream1,831 1,800 1,897 Oil sands(part of Chemicals and Products)51 52 46 A See Oil and gas information.B Reflects 100%of production of subsidiaries except in respect of PSCs,where the figures shown represent the entitlement of the subsidiaries concerned under those contracts.C Natural gas volumes are converted into oil equivalent using a factor of 5,800 scfper barrel.Proved reservesThe proved oil and gas reserves of Shell subsidiaries and the Shellshare of the proved oil and gas reserves of joint ventures and associates are summarised in Oil and gas information on pages 47-54 and set out in more detail in Supplementary information oil and gas(unaudited)on pages 313-332.Before taking production into account,our proved reserves increased by 917 million boe in 2024.Total oil and gas production was1,084 million boe.Accordingly,after taking production into account,our proved reserves decreased by 167 million boe in 2024,to 9,620million boe at December 31,2024.Strategic Report|Performance in the year|Generating shareholder value|Group results continued23Shell Annual Report and Accounts 2024Liquidity and capital resources Liquidity and capital resourcesShell generated free cash flow*of$39.5 billion in 2024,aided bydisciplined capital management,portfolio simplification and operational performance improvements.Net debt*decreased to$38.8 billion at December 31,2024(December 31,2023:$43.5 billion).Total debt decreased to$77.1 billion at December 31,2024(December 31,2023:$81.5 billion).Gearing*decreased to 17.7%atDecember 31,2024,compared with 18.8%at December 31,2023.See Note21 to the Consolidated Financial Statements on pages 284-285.LiquidityShell satisfies its funding,liquidity and working capital requirements by using cash generated from our operations,taking on debt and through divestments.In 2024,access to the international debt capital markets remained strong,withShells debt principally financed from thesemarkets through central debt programmes consisting of:a$10 billion global commercial paper(CP)programme,with maturities between 183 days and 364 days;a$10 billion US CP programme,with maturities not exceeding 397days;an unlimited Euro medium-term note(EMTN)programme(also referred to as the Multi-Currency Debt Securities Programme).Thisprogramme lapsed in November 2024,and will be renewed inthe first half of 2025 or as required to issue debt;and an unlimited US universal shelf(US shelf)registration.The debt issued under the CP,EMTN and US shelf has been issued by Shell International Finance B.V.,the issuance company for Shell,with its debt being guaranteed by Shell plc.In 2023,Shell incorporated a new US subsidiary,Shell Finance US Inc.,and in 2024 a portion of the debt issued by Shell International Finance B.V.was moved into this entity through an exchange offer.This debt remains guaranteed by Shell plc,as will any new debt issued by Shell Finance US Inc.under the US shelf.We also maintain an$8 billion committed credit facility maturing in 2026.This remained fully undrawn at December 31,2024.This facility was reduced from$10 billion in the third quarter of 2024 due to the strong liquidity position of the Group.Thisreduced core facility and cash on balance sheet provide back-up coverage for our CP programmes.Other than certain borrowings by subsidiaries in their local jurisdictions,we do nothave any other committed credit facilities.Our total debt decreased by$4.5 billion to$77.1 billion at December 31,2024.The total debt excluding lease liabilities matures as follows:14%in 2025;8%in 2026;5%in 2027 and 73%in 2028 and beyond.The portion of debt maturing in 2025 is expected to be repaidfrom somecombination of cash balances,cash generated from operations,divestments and the issuance of new debt.In 2024,wedid not issue anydebt under our US shelf registration,EMTN programme or CP programmes.The Group had no CP outstanding at December 31,2024.While our subsidiaries are subject to restrictions,such as foreign withholding taxes on the transfer of funds in the form of cash dividends,loans or advances,such restrictions are not expected to have a material impact on our ability to meet our cash obligations.*Non-GAAP measure(see page 445).Market risk,credit risk and pension commitmentsFinancial risksWe use various financial instruments for managing exposure to foreign exchange and interest rate movements.Our treasury operations are highly centralised and seek to manage credit exposures associated with our substantial cash,foreign exchange and interest rate positions.Our portfolioof cash investments is diversified to avoid concentrating risk in any one instrument,country or counterparty.Other than in exceptional cases,the use of external derivative instruments is confined to specialist trading and central treasury organisations that have the appropriate skills,experience,supervision,control and reporting systems.We operate with procedures and policies designed to ensure that trading risks are managed within a prescribed control framework.The framework sets out authorised limits and requirements that trading should only be performed by employees with the appropriate skills and experience.Senior management regularly reviews these authorised trading limits.In addition,a department that is independent from our tradersmonitors our market risk exposures daily,using techniques such as value-at-risk alongside other risk metrics.We have counterparty credit risk policies in place which seek to ensure that products are sold to customers withappropriate creditworthiness.These policies include detailed credit analysis and monitoring ofcustomers against counterparty credit limits.Where appropriate,netting arrangements,credit insurance,prepayments and collateral are used to manage credit risk.Management believes it has access to sufficient debt funding sources(capital markets)and to undrawn committed borrowing facilities to meet foreseeable requirements.A pensions forum chaired by the CFO oversees Shells input to pension strategy,policy and operation.A risk committee supports the forum in reviewing the results of assurance processes with respect to pension risk.Local trustees manage the funded defined benefit pension plans and set the strategic asset allocation for the plans,including the extent to which currency,interest rate and inflation risks are hedged,and the contributions paid are based on independent actuarial valuations that align with applicable local regulations.Pension fund liquidity is managed by holding appropriate liquid assets and maintaining credit facilities.Where appropriate,transactions to transfer pension liabilities to third parties are also considered.Ourtotal employer contributions were$0.4billion in2024and areestimated to be$0.9 billion in2025.See Risk factors on page 139,Note24 and Note 26 to the Consolidated Financial Statements onpages 290-296 and 298-304.Strategic Report|Performance in the year|Generating shareholder value24Shell Annual Report and Accounts 2024Capitalisation table$millionDecember 31,2024December 31,2023Equity attributable to Shell plc shareholders 178,307 186,607 Current debt 11,630 9,931 Non-current debt 65,448 71,610 Total debt A 77,078 81,541 Total capitalisation 255,385 268,148 A Of total debt of$77.1 billion(2023:$81.5billion),$48.1 billion(2023:$53.4 billion)wasunsecured and$29.0 billion(2023:$28.2billion)was secured;$46.0 billion is fully and unconditionally guaranteed by Shell plc(December 31,2023:$51.3 billion),with the following amounts issued by Shell Group subsidiaries:$31.8 billion by Shell International Finance B.V.,a wholly owned finance subsidiary of Shell plc(December 31,2023:$48.4 billion);$11.4 billion by Shell Finance US Inc.,a wholly owned finance subsidiary of Shell plc(December 31,2023:$nil billion);and$2.8 billion by BG Energy Capital plc(December 31,2023:$2.9 billion).See Note 21 to the Consolidated Financial Statements for further disclosure on total debtand net debt.Guarantees and other off-balance sheet arrangementsThere were no guarantees or other off-balance sheet arrangements atDecember 31,2024,or December 31,2023,that were reasonably likely to have a material impact on Shell.See Note 32 to the Consolidated Financial Statements on page 308 for further details on guarantees where the potential obligations related to issuance are assessed to be remote.Consolidated Statement of Cash FlowsCash flow from operating activities in 2024 was$54.7billion,compared with$54.2 billion in 2023.The cash flow from operating activities in 2024 was primarily driven by Adjusted EBITDA and working capital inflow of$2.1 billion(compared with working capitalinflow of$7.1 billion in 2023),partly offset by tax payments of$12.0billion(compared with tax payments of$13.7 billion in 2023).The cash flow from operating activities in 2024 also included favourable commodity-related derivative financial instrument movementof$2.5 billion(compared with unfavourablemovement of$5.7 billion in 2023).Cash flow from investing activities in 2024 was an outflow of$15.2billion,compared with an outflow of$17.7 billion in 2023.Thecash flow from investing activities in 2024 included cash capital expenditure*of$21.1billion(compared with cash capital expenditure of$24.4 billion in 2023),partly offset by divestment proceeds*of$2.8billion(compared with divestment proceeds*of$3.1 billion in 2023)and interest received of$2.4 billion(compared with interest received of$2.1 billion in 2023).Cash flow from financing activities in 2024 was an outflow of$38.4billion,compared with outflows of$38.2 billion in 2023,mainly due to lower repurchases of sharesof$13.9 billion(2023:$14.6 billion)and unfavourable debt-related derivative financial instrument movements of$0.6 billion(2023:$0.7 billion favourable movement)andlowernetrepayment of debt of$9.6billion(2023:$9.8 billion netrepayment).Cash and cash equivalents were$39.1 billion at December 31,2024(December 31,2023:$38.8 billion).*Non-GAAP measure(see page 445).Prior year Consolidated Statement of Cash FlowsOur Consolidated Statement of Cash Flows for the financial year ended December 31,2023,compared with the financial year ended December 31,2022,can be found in the Annual Report and Accounts(page 35)and Form 20-F(page 33)for the year ended December 31,2023,as filed with the Registrar of Companies for England and Wales and the US Securities and Exchange Commission,respectively.See Consolidated Statement of Cash Flows on page 244.Cash flow from operating activitiesThe most significant factors affecting Shells cash flow from operating activities are earnings,which are mainly impacted by:realised prices for crude oil,natural gas and LNG;production levels of crude oil,natural gas and LNG;chemicals,refining and marketing margins;andmovements in working capital and derivative financial instruments.The impact on earnings from changes in market prices depends on:theextent to which contractual arrangements are tied to market prices;the dynamics of production-sharing contracts;the existence of agreements with governments or state-owned oil and gas companies that have limited sensitivity to crude oil and natural gas prices;tax impacts;andthe extent to which changes in commodity prices flow through intooperating expenses.Changes in benchmark prices of crude oil and natural gas in any particular period provide only a broad indicator of changes in our Integrated Gas and Upstream earnings inthat period.Changes in any factors,from within the industry or the broader economic environment,can influence refining and marketing margins.The precise impact of any changes depends on how the oil markets respond to them.The market response is affected by factors such as:whether the change affects all crude oil types or only a specific grade;regional and global crude oil and refined products inventories;and the collective speed ofresponse of refiners and product marketers in adjusting their operations.As a result,margins fluctuate from region to region andfrom period to period.Divestment and cash capital expenditureThe levels of divestment proceeds and cash capital expenditure in 2024 and 2023 reflect our discipline and focus as we implement our strategy.Proceeds from sale of property,plant and equipment and businesses were$1.6 billion for 2024,compared with$2.6 billion in 2023.Divestment proceeds*for 2024 were$2.8 billion,compared with$3.1 billion in 2023.Cash capital expenditure split by segment is presented in the table below:Cash capital expenditure*A$million202420232022Integrated Gas 4,767 4,196 4,265 Upstream 7,890 8,343 8,143 Marketing B 2,445 5,790 4,978 Chemicals and Products 3,290 3,014 3,691 Renewables and Energy Solutions C 2,549 2,681 3,469 Corporate 144 368 287 Total cash capital expenditure 21,085 24,392 24,833 A See Note 7 to the Consolidated Financial Statements which includes an explanation of the reporting segment changes applicable from 2024.B Includes acquisition of Nature Energy in 2023.C Includes acquisition of Sprng in 2022.Strategic Report|Performance in the year|Generating shareholder value|Liquidity and capital resources continued25Shell Annual Report and Accounts 2024Contractual obligationsThe table below summarises Shells principal contractual obligations at December 31,2024,by expected settlement period.The amounts presented have not been offset by any committed third-party revenue in relation to these obligations.Contractual obligations$billionLess than 1 yearBetween1 and 3 yearsBetween3 and 5 years5 yearsand laterTotalDebt A 6.9 6.4 7.9 27.6 48.8 Leases6.4 9.5 6.3 19.8 42.0 Purchase obligations B 28.8 22.1 13.5 55.2 119.6 Other long-term contractual liabilities C 0.1 1.0 0.2 0.7 2.1 Total 42.2 39.0 27.9 103.4 212.4 A See Note21 to the Consolidated Financial Statements.Debt contractual obligations exclude interest,which is estimated to be$1.4 billion payable in less than one year,$2.4billion between one and three years,$2.2 billion between three and five years,and$12.2billion in five years and later.For this purpose,we assume that interest rates with respect to variable interest rate debt remain constant at the rates in effect at December 31,2024,and that there is no change in the aggregate principal amount of debt other than repayment at scheduled maturity as reflected in the table.Lease contractual obligations include interest.B Purchase obligations disclosed in the above table exclude commodity purchase obligations that are not fixed or determinable and are principally intended to be resold in a short period of time through sale agreements with third parties.Examples include long-term non-cancellable LNG and natural gas purchase commitments and commitments to purchase refined products or crude oil at market prices.Inclusion of such commitments would not be meaningful in measuring liquidity and cash flow,as the cash outflows generated by these purchases will generally be offset in the same periods by cash received from the related sales transactions.C Includes obligations included in Trade and other payables and provisions related to onerous contracts included in Decommissioning and other provisions in Non-current liabilities in the Consolidated Balance Sheet that are contractually fixed as to timing and amount.In addition to these amounts,Shell has certain obligations that are not contractually fixed as to timing and amount,including contributions to defined benefit pension plans(see Note24 to the Consolidated Financial Statements)and obligations associated with decommissioning and restoration(see Note25 to the Consolidated Financial Statements).Shareholder distributionsWe returned$8.7 billion to our shareholders through dividends and$13.9billion through share buybacks in 2024.Total shareholder distributions represented 41%of cash flow from operating activities*.The fourth quarter 2024 dividend of$0.358 per share was paidon March 24,2025,to shareholders on the register at February 14,2025,and represents an increase of 4%compared with the third quarter of 2024.See Note 30 to the Consolidated Financial Statements on page 308.Purchases of securitiesThe intent to purchase shares was announced alongside the quarterly results during 2024,and covered the period up until the next quarterly announcement.In 2024,share buybacks of$3.5 billion were announced on February 1,$3.5 billion on May 2,$3.5 billion on August 1 and$3.5billion on October 31(finalised in the first quarter of2025).Inaddition,on January 30,2025,a further buyback of$3.5billion wasannounced along with the fourth quarter 2024 results;it is intended that this will be completed by the announcementdate of the first quarter 2025 results.During 2024,409.1 million ordinary shares were purchased andcancelled.Overall,a total nominal share value of 29 million($34million),6.3%of the Companys total issued share capital at December 31,2023,was purchased and cancelled during 2024 for atotal cost of$13.9 billion,including expenses,at an average price of$34.36 per share.*Non-GAAP measure(see page 445).The buybacks completed in the first half of 2024 were in accordance with the authorities granted by shareholders at the 2023 Annual General Meeting(AGM).The buybacks completed in the second halfof 2024 were in accordance with the authorities granted by shareholders at the 2024 AGM.At the 2024 AGM,authority was granted for the Company to repurchase up to a maximum of 10%of itsissued ordinary shares,excluding treasury shares,(644.2 million ordinary shares),both on and off market,allowing purchases on the Amsterdam as well as London exchanges.As at December 31,2024,468 million ordinary shares could still be repurchased under the current AGM authorities.The purpose of the share repurchases in 2024 was to reduce the issued share capital of the Company.New resolutions will be proposed at the 2025 AGM to renew the authority for the Company to purchase its own share capital,up to specified limits,for a further year.These proposals will be described inmore detail in the 2025 Notice of Annual General Meeting.Shares are also purchased by the employee share ownership trustsandtrust-like entities(see Note 28 to the Consolidated FinancialStatements on page 305)to meet delivery commitments under employee share plans.All share purchases are made in open market transactions.The table on the next page provides information on purchases of shares in 2024 and January 2025 by the Company and affiliated purchasers.Purchases in euros and sterling are converted into dollars using the exchange rate on each transaction date.Strategic Report|Performance in the year|Generating shareholder value|Liquidity and capital resources continued26Shell Annual Report and Accounts 2024Purchases of equity securities by issuer and affiliated purchasers in 2024 AEuro SharesGBP SharesADSs BPurchase periodNumberpurchasedfor employeeshare plansNumberpurchasedfor cancellation CWeightedaverageprice($)DNumberpurchasedfor employeeshare plansNumber purchased for cancellation CWeightedaverageprice($)DNumberpurchasedfor employeeshare plansWeightedaverageprice($)DJanuary 3,187,890 2,992,417 32.32 1,189,886 20,282,994 31.54 650,966 66.03February 20,209,031 31.72 20,594,628 31.35 March 11,550,631 32.41 11,495,330 32.05 67,764 67.37 April 13,500,349 35.93 27,822,393 35.43 May 18,389,736 36.02 17,661,025 35.86 June 14,235,749 35.05 16,234,749 34.93 34,819 71.43 July 9,320,167 36.30 22,056,649 36.27 August 17,386,007 35.89 16,989,085 35.59 September 18,341,974 33.96 19,439,076 25.70 36,136 69.48 October 15,538,143 33.74 15,598,083 33.40 November 3,161,027 15,370,794 33.00 773,600 23,427,791 32.71 December 5,290,944 15,272,833 31.53 1,261,616 23,175,726 31.28 514,913 61.24 Total 2024 11,639,861 172,107,831 33.91 3,225,102 234,777,529 33.66 1,304,597 64.45 January 5,446,429 13,269,767 32.91 1,271,425 19,923,745 32.68 2,047,363 64.83 Total 2025 5,446,429 13,269,767 32.91 1,271,425 19,923,745 32.68 2,047,363 64.83 A Reported as at transaction date.B American Depositary Shares.C Under the share buyback programme.D Includes stamp duty and brokers commission.Financial information relating to the Royal Dutch Shell Dividend Access TrustThe results of the Royal Dutch Shell Dividend Access Trust(the Trust)are included in the consolidated results of operations and financial position of Shell.Certain condensed financial information in respect ofthe Trust is given below.The Shell Transport and Trading Company Limited and BG Group Limited have each issued a dividend access share to Computershare Trustees(Jersey)Limited(the Trustee).For the years 2024,2023 and2022,the Trust recorded income before tax of nil,nil and nil respectively.In each period,this reflected the amount ofdividends payable on the dividend access shares.Dividends arealsoclassified asunclaimed where amounts have not cleared recipient bank accounts.At December 31,2024,the Trust had total equity of nil(December 31,2023:nil;December 31,2022:nil),reflecting assets of 3 million(December 31,2023:4 million;December 31,2022:6 million)and unclaimed dividends of 3 million(December 31,2023:4 million;December 31,2022:6 million).The Trust only records a liability for anunclaimed dividend to the extent that dividend cheque payments have not been presented within 12 months,have expired or have beenreturned unpresented.As these unclaimed dividends relate to dividends that were announced by the Company during the period the Company was still named Royal Dutch Shell plc,and it is expected that the Company will not announce any further dividends on the dividend access shares,the Trust continues to be named the Royal Dutch Shell Dividend Access Trust.On January 29,2022,one line of shares was established through assimilation of each A share and each B share into one ordinary share of the Company.This assimilation had no impact on voting rights or dividend entitlements.Dutch withholding tax,applied previously on dividends on A shares,no longer applies on dividends paid on the ordinary shares following the assimilation.In relation to the assimilation of the Companys A and B shares,the Trust will continue in existence for the foreseeable future to facilitate thepayment of unclaimed dividend liabilities for shareholders of the former B shares until these are either claimed or forfeited in line with theterms outlined.Dividends which are unclaimed after six years are forfeited and unconditionally revert to The Shell Transport and Trading Company Limited and BG Group Limited,as appropriate.Strategic Report|Performance in the year|Generating shareholder value|Liquidity and capital resources continued27Shell Annual Report and Accounts 2024Market overviewShell maintains a large and diversified business portfolio across anintegrated value chain.We are exposed to fluctuating prices of crude oil,natural gas,oilproducts,chemicals and power.However,our diversified portfolio provides resilience when prices are volatile.Our annual planning cycle and periodic portfolio reviews aim to ensurethat our levels of capital investment and operating expenses areappropriate in the context of a volatile price environment.See Risk factors on page 135.We prepare an annual financial plan that tests different scenarios,and their impact on prices,on our businesses and organisation as a whole.These scenarios help us determine which issues could affect our operating environment and have implications for our strategy.They also help us to identify potential interventio
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Shell plc|January 30,2025Fourth quarter 2024 resultsSolid cash flow generation;resilient distributionsShell plcJanuary 30,2025Shell plc|January 30,20252Definitions&cautionary note This presentation includes certain measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles(GAAP)such as IFRS,including Adjusted Earnings,Adjusted EBITDA,CFFO excluding working capital movements,Cash capital expenditure,free cash flow,Divestment proceeds and Net debt.This information,along with comparable GAAP measures,is useful to investors because it provides a basis for measuring Shell plcs operating performance and ability to retire debt and invest in new business opportunities.Shell plcs management uses these financial measures,along with the most directly comparable GAAP financial measures,in evaluating the business performance.This presentation may contain certain forward-looking non-GAAP measures such as capital expenditure and divestments.We are unable to provide a reconciliation of these forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell,such as oil and gas prices,interest rates and exchange rates.Moreover,estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort.Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plcs consolidated financial statements.“Adjusted Earnings”is the income attributable to Shell plc shareholders for the period,adjusted for the after-tax effect of oil price changes on inventory and for identified items,and excludes earnings attributable to non-controlling interest.In this presentation,“earnings”refers to“Adjusted Earnings”unless stated otherwise.We define“Adjusted EBITDA“as“Income/(loss)for the period“adjusted for current cost of supplies;identified items;tax charge/(credit);depreciation,amortisation and depletion;exploration well write-offs and net interest expense.All items include the non-controlling interest component.In this presentation,“operating expenses”,“costs”and“underlying costs”refer to“Underlying operating expenses”unless stated otherwise.Underlying operating expenses represent“operating expenses excluding identified items”.Operating expenses consist of the following lines in the Consolidated Statement of Income:(i)production and manufacturing expenses;(ii)selling,distribution and administrative expenses;and(iii)research and development expenses.Cash flow from operating activities excluding working capital movements is defined as“Cash flow from operating activities”less the sum of the following items in the Consolidated Statement of Cash Flows:(i)(increase)/decrease in inventories,(ii)(increase)/decrease in current receivables,and(iii)increase/(decrease)in current payables.In this presentation,“capex”refers to“Cash capital expenditure”unless stated otherwise.Cash capital expenditure comprises the following lines from the Consolidated Statement of Cash Flows:Capital expenditure,Investments in joint ventures and associates and Investments in equity securities.Free cash flow is defined as the sum of“Cash flow from operating activities”and“Cash flow from investing activities”.Organic free cash flow is defined as free cash flow excluding inorganic cash capital expenditure,divestment proceeds,and tax paid on divestments.In this presentation,“divestments”refers to“divestment proceeds”unless stated otherwise.Divestment proceeds are defined as the sum of(i)proceeds from sale of property,plant and equipment and businesses,(ii)proceeds from sale of joint ventures and associates,and(iii)proceeds from sale of equity securities.Net debt is defined as the sum of current and non-current debt,less cash and cash equivalents,adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt,and associated collateral balances.Reconciliations of the above non-GAAP measures are included in the Shell plc Unaudited Condensed Financial Report for the fourth quarter and the full year ended December 31,2024.The companies in which Shell plc directly and indirectly owns investments are separate legal entities.In this presentation“Shell”,“Shell Group”and“Group”are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general.Likewise,the words“we”,“us”and“our”are also used to refer to Shell plc and its subsidiaries in general or to those who work for them.These terms are also used where no useful purpose is served by identifying the particular entity or entities.Subsidiaries,“Shell subsidiaries”and“Shell companies”as used in this presentation refer to entities over which Shell plc either directly or indirectly has control.The term“joint venture”,“joint operations”,“joint arrangements”,and“associates”may also be used to refer to a commercial arrangement in which Shell has a direct or indirect ownership interest with one or more parties.The term“Shell interest”is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement,after exclusion of all third-party interest.This presentation contains forward-looking statements(within the meaning of the U.S.Private Securities Litigation Reform Act of 1995)concerning the financial condition,results of operations and businesses of Shell.All statements other than statements of historical fact are,or may be deemed to be,forward-looking statements.Forward-looking statements are statements of future expectations that are based on managements current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results,performance or events to differ materially from those expressed or implied in these statements.Forward-looking statements include,among other things,statements concerning the potential exposure of Shell to market risks and statements expressing managements expectations,beliefs,estimates,forecasts,projections and assumptions.These forward-looking statements are identified by their use of terms and phrases such as“aim”;“ambition”;anticipate;believe;“commit”;“commitment”;could;estimate;expect;goals;intend;may;“milestones”;objectives;outlook;plan;probably;project;risks;“schedule”;seek;should;target;will;“would”and similar terms and phrases.There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation including(without limitation):(a)price fluctuations in crude oil and natural gas;(b)changes in demand for Shells products;(c)currency fluctuations;(d)drilling and production results;(e)reserves estimates;(f)loss of market share and industry competition;(g)environmental and physical risks;(h)risks associated with the identification of suitable potential acquisition properties and targets,and successful negotiation and completion of such transactions;(i)the risk of doing business in developing countries and countries subject to international sanctions;(j)legislative,judicial,fiscal and regulatory developments including regulatory measures addressing climate change;(k)economic and financial market conditions in various countries and regions;(l)political risks,including the risks of expropriation and renegotiation of the terms of contracts with governmental entities,delays or advancements in the approval of projects and delays in the reimbursement for shared costs;(m)risks associated with the impact of pandemics,such as the COVID-19(coronavirus)outbreak,regional conflicts,such as the Russia-Ukraine war,and a significant cybersecurity breach;and(n)changes in trading conditions.No assurance is provided that future dividend payments will match or exceed previous dividend payments.All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.Readers should not place undue reliance on forward-looking statements.Additional risk factors that may affect future results are contained in Shell plcs Form 20-F for the year ended December 31,2023(available at https:/ and www.sec.gov).These risk factors also expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader.Each forward-looking statement speaks only as of the date of this presentation-January 30,2025.Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information,future events or other information.In light of these risks,results could differ materially from those stated,implied or inferred from the forward-looking statements contained in this presentation.All amounts shown throughout this presentation are unaudited.The numbers presented throughout this presentation may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures,due to rounding.Also,in this presentation we may refer to Shells“Net Carbon Intensity”(NCI),which includes Shells carbon emissions from the production of our energy products,our suppliers carbon emissions in supplying energy for that production and our customers carbon emissions associated with their use of the energy products we sell.Shells NCI also includes the emissions associated with the production and use of energy products produced by others which Shell purchases for resale.Shell only controls its own emissions.The use of the terms Shells“Net Carbon Intensity”or NCI are for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.Shells operating plan,outlook and budgets are forecasted for a ten-year period and are updated every year.They reflect the current economic environment and what we can reasonably expect to see over the next ten years.Accordingly,they reflect our Scope 1,Scope 2 and NCI targets over the next ten years.However,Shells operating plans cannot reflect our 2050 net-zero emissions target,as this target is currently outside our planning period.In the future,as society moves towards net-zero emissions,we expect Shells operating plans to reflect this movement.However,if society is not net zero in 2050,as of today,there would be significant risk that Shell may not meet this target.The contents of websites referred to in this presentation do not form part of this presentation.We may have used certain terms,such as resources,in this presentation that the United States Securities and Exchange Commission(SEC)strictly prohibits us from including in our filings with the SEC.Investors are urged to consider closely the disclosure in our Form 20-F,File No 1-32575,available on the SEC website www.sec.gov.The financial information presented in this presentation does not constitute statutory accounts within the meaning of section 434(3)of the Companies Act 2006(“the Act”).Statutory accounts for the year ended December 31,2023,were published in Shells Annual Report and Accounts,a copy of which was delivered to the Registrar of Companies for England and Wales,and in Shells Form 20-F.The auditors report on those accounts was unqualified,did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2)or 498(3)of the Act.The statutory accounts for the year ended December 31,2024 will be delivered to the Registrar of Companies for England and Wales in due course.The information in this presentation does not constitute the unaudited condensed consolidated financial statements which are contained in Shells fourth quarter 2024 and full year 2024 unaudited results available on 207 934 5550;USA 1 832 337 4355Shell plc|January 30,20253Key messages APM reconciliations are available in the Q4 2024 Quarterly Databook here.1 Income attributable to shareholders is$0.9 billion in Q4 2024.2 Cash dividends paid to Shell plc shareholders$8.7 billion,repurchases of shares$13.9 billion.3 Q1 2024 to Q4 2024.4 Expected to be completed by Q1 2025 results announcement.Fourth quarter and full year 2024 results Providing energy security,Enabling the energy transition$3.7 billionAdjusted Earnings1$13.2 billionCFFO$0.358Dividend per share$3.5 billionNew buyback programme4Adjusted earnings reflect lower prices and margins,higher exploration well write-offs,and non-cash impact of expiring LNG hedging contracts2024 Cash capex:$21 billion versus$22-25 billion guidance,while also delivering$3 billion of structural cost reductions since 2022Strong balance sheet,with net debt of$39 billion including LNG Canada pipeline lease recognition.Net debt excluding lease liabilities$10 billionDividend increased by 4%,as per our progressive dividend policy Announced buybacks$3 billion for the 13th consecutive quarterTotal shareholder distributions in 2024:$23 billion2;distributing 41%of CFFO3AttractiveShareholder ReturnsPerformance DisciplineSimplificationShell plc|January 30,202520222023202420302.93.85.320222023202430-40 222023202441 232023-20242023-20254Progress on CMD 2023 targetsMore value,attractive distributions Shareholder distributions 30-40%of CFFO through the cycle%$billionPrice-normalised FCF growth1 6%p.a.through 2030$billion,cumulativeStructural cost reduction of$2-3 billion by end-2025$/sharePrice-normalised FCF growth/share1 10%p.a.through 20251For price-normalised FCF and FCF/share assumptions,see appendix.6%reduction of shares outstanding in 2024(13%reduction over the 2023&2024 period).2-31.03.1ActualsCMD 2023 targetsShell plc|January 30,20255Key price markers and inputsData based on monthly averages.Macro environment6080100120BrentJCC-301020Henry HubEU TTF01002003000102030IRMICM(RHS)$/bbl$/MMBtu$/tonne$/bblOilShell Indicative Refining Margin(IRM)and Indicative Chemical Margin(ICM)GasIRM:2024:$7.72023:$12.4ICM:2024:$1522023:$133Henry Hub:2024:$2.22023:$2.5EU TTF:2024:$10.92023:$13.0Brent:2024:$812023:$83JCC-3:2024:$882023:$89Shell plc|January 30,20256Solid Q4 cash flow underpins a strong 2024APM reconciliations are available in the Q4 2024 Quarterly Databook here.Fourth quarter and full year 2024 results$0.9 billionIncome attributable to Shell plc shareholdersAdjusted EarningsAdjusted EBITDACash flow from operationsCash capital expenditureFree cash flow Net debt$16.1 billion$3.7 billion$23.7 billion$14.3 billion$65.8 billion$13.2 billion$54.7 billion$6.9 billion$21.1 billion$8.7 billion$39.5 billion$38.8 billion$38.8 billionQ4 2024Full year 2024Shell plc|January 30,20257Solid cash flow generation despite lower earningsAPM reconciliations are available in the Q4 2024 Quarterly Databook here.1 The wholesale commercial fuels business,previously reported in Chemicals&Products,is reported in the Marketing segment(Mobility)with effect from Q1 2024.Comparative information for Marketing and Chemicals&Products has been revised.2 Non-controlling interest.Fourth quarter and full year 2024 results Adjusted EarningsAdjusted EBITDACFFO$billionQ4 2024Q3 2024Q4 2024Q3 2024Q4 2024Q3 2024Integrated Gas2.22.94.65.24.43.6Upstream1.72.47.77.94.55.3Marketing10.81.21.72.11.42.7Chemicals&Products1(0.2)0.50.51.22.03.3R&ES(0.3)(0.2)(0.1)(0.1)0.8(0.4)Corporate&NCI2(0.5)(0.8)(0.0)(0.3)0.00.1Total3.76.014.316.013.214.7Shell plc|January 30,20256.03.702468108Fourth quarter and full year 2024 results Solid cash flow generation despite lower earningsAdjusted Earnings Q3 2024 to Q4 2024$billionIGU prices&margins:$(0.5)billion Downstream margins:$(0.9)billionVolume&mix1:$0.1 billion Other:$(1.0)billion(0.7)(0.8)(0.3)(0.7)(0.1)0.3Cash conversion Q4 2024$billion3.714.313.20481216206.50.73.50.50.3(4.3)0.10.02.31 Integrated Gas and Upstream.2 Non-controlling interest.3 AR/AP&other includes initial margin.Working capital movement$2.4 billionShell plc|January 30,20259Improved operational performance underpins a strong 2024 Fourth quarter and full year 2024 results Adjusted EarningsAdjusted EBITDACFFO$billion202420232024202320242023Integrated Gas11.413.921.023.816.917.5Upstream8.49.831.330.621.221.5Marketing13.93.37.56.37.45.6Chemicals&Products12.93.66.87.57.37.5R&ES(0.5)0.8(0.0)1.53.83.0Corporate&NCI2(2.4)(3.2)(0.7)(1.2)(1.9)(0.8)Total23.728.365.868.554.754.2APM reconciliations are available in the Q4 2024 Quarterly Databook here.1 The wholesale commercial fuels business,previously reported in Chemicals&Products,is reported in the Marketing segment(Mobility)with effect from Q1 2024.Comparative information for Marketing and Chemicals&Products has been revised.2 Non-controlling interest.Shell plc|January 30,202510Fourth quarter and full year 2024 results Weaker macro,strong operational performance&cash generationAdjusted Earnings 2023 to 2024$billion28.323.7102030400.1Cash conversion full year 2024$billionWorking capital movement$2.1 billion23.765.854.702040608024.32.315.5(0.3)1.5(14.3)1.4(0.1)0.81All segments,excl.Marketing 2Integrated Gas,Upstream volumes&C&P operations 3Non-controlling interest 4AR/AP&other includes initial margin.(1.0)2.40.90.5(7.2)Shell plc|January 30,202511Continued progress across the portfolioClick on the icons on map for further details on the deal/project.2024 deliveryGrowthFor additional portfolio information visit our investors page on Shell Pakistan Limited divestment completedSingapore Energy and Chemicals Park divestment agreedLongevityHigh-gradingMap not to scaleNigerian onshore(SPDC)divestment agreedFID to repurpose Rheinland Energy and Chemicals ParkSouthCoast Wind divestmentRydberg start-upFID of Atapu-2 in BrazilAgreement to acquire Pavilion EnergyFID to build carbon capture&storage projectsFID of Manatee in Trinidad and TobagoAgreement to invest in Ruwais LNG projectTemporarily paused the construction of Pernis biofuels facility First gas achieved at Jerun gas fieldFID of Phase 2 for Surat GasFID on water injection at VitoCompleted acquisition of combined-cycle power plantShell and Equinor to create the UKs largest independent oil and gas companyMero-3 start-upFID of Bonga North deep-water projectShell starts production at WhaleCSPC(Shell-CNOOC JV)invests in petrochemical complex expansionDeliver 500 kboe/d new peak production by 2025 in Integrated Gas and Upstream 2024:New projects on stream with over 400 kboe/d peak productionShell plc|January 30,202512$billion39.5Underlying operating expensesDelivered$3.1 billion of structural cost reductions1 Growth reflects changes in activity levels and costs associated with new operations.$3.1 billion of structural cost reductions deliveredNon-portfolio activities delivered$1.9 billion since 2022Operational,maintenance and supply chain efficiencies$0.7 billion Leaner corporate centre$0.7 billionFaster decision making(organic projects)$0.4 billionPortfolio activities delivered$1.2 billion since 2022Portfolio high-grading through focused divestments like Home Energy retail business(UK),Aera Energy JV(California)&Shell Pakistan.Progress since CMD 202335.72.11.0PortfolioNon-portfolioShell plc|January 30,202580 21202220232024UpstreamLNGStrong availabilityContinued progress towards 500k boe/dStrong operational performance&project deliveryIntegrated gas&upstream13Upstream controllable availabilityLNG midstream availabilityOman block 10VitoTimiMero 2JerunArrowPierceWhaleMero 3Other projectsPenguinsMero 4Other projects500k boe/dOnlineTotal400k boe/dConventional oil&gasDeep waterIntegrated gasOther projects on stream include Gorgon and Jansz Infill(AU),Salman(BN),KGP(KZ),Rydberg(GOM),Marmul AK Polymer(OM).Other projects still to come online include projects in for example Malaysia,Norway&US.Shell plc|January 30,2025APM reconciliations are available in the Q4 2024 Quarterly Databook here.1 Subject to Board approval.2 Expected to be completed by Q1 2025 results announcement.A pragmatic approach to capital allocationFinancial framework3040%of CFFO through the cycle4%progressive dividend annually1Enhanced Shareholder DistributionsDisciplined InvestmentCash capex:$2225 billion p.a.for 2024AA credit metricsthrough the cycleBalanced Capital AllocationStrong Balance SheetNet debt Net debt of$38.8 billion at the end of Q4,includes$28.7 billion of lease liabilitiesAttractive distributions Dividend increased by 4%in Q4 2024$3.5 billion of share buybacks for the next 3 months214Capital discipline 2024 Cash capex$21.1 billion Cash capex 2025 range is expected to be lower than the 2024 range,with more guidance to come at the Capital Markets Day in March.Shell plc|January 30,202515Focused investment in the energy transition1Products for which usage does not cause Scope 3,Category 11 emissions:Lubricants,Chemicals,Convenience Retailing,Agriculture&Forestry,Construction&Road.2E-Mobility and Electric Vehicle Charging Services,Low-Carbon Fuels,Renewable Power Generation,Environmental Solutions,Hydrogen,CCS.We define low-carbon energy products as those that have an average carbon intensity that is lower than conventional hydrocarbon products,assessed on a life-cycle basis.3LNG Production&Trading,Gas&Power Trading,and Energy Marketing.4Upstream segment,GTL,Refining&Trading,Marketing fuel and hydrocarbon sales,Shell Ventures,Corporate segment.Capital expenditure$21.1 billionTotal cash capital expenditure in 2024in low-carbon energy solutions2023 2025:$10-15 billionLNG,gas and power marketing and trading3$5.0 billionOil,oil products and other4$11.5 billionNon-energy Products1$2.2 billionLow-carbon energy solutions2$2.4 billionin low-carbon energy solutions2023-2024:$8.0 billionShell plc|January 30,2025Upcoming events:Corporate reports:Energy Transition Strategy 2024Annual Report 2023Payments to Governments Report 2023Sustainability Report 2023Nigeria Briefing Notes 2023Useful links:Capital Markets DayAnnual and Quarterly DatabookShell Energy Transition StrategyESG Performance DataShell Investment Case16Feb 25,2025LNG Outlook publicationMar 25,2025Capital Markets DayMay 2,2025Q1 2025 resultsMay 20,2025Annual General MeetingJul 31,2025Q2 2025 resultsOct 30,2025Q3 2025 resultsShell plc|January 30,2025Profitably transitioning towards Net Zero by 20501 FCF 2022 to 2025/2030,price-normalised(refer to CMD23 materials for price assumptions).2 2016 reference year.3 From upstream operations;subject to completion of the sale of Shell Petroleum Development Company of Nigeria Limited.4On an intensity basis.5Compared to 2021.These emissions were 517 million tonnes CO2e in 2023 and 569 million tonnes CO2e in 2021.More value,less emissions6%p.a.absolute free cash flow growth through 20301Shareholder distributions of 30-40%of CFFO through the cycle10%p.a.FCF/share growth through 20251 Structural cost reductions of$2-3 billion by end-2025Halve Scope 1 and 2 emissions under operational control by 2030,on a net basis2Eliminate routine flaring by 20253 and achieve near-zero methane emissions by 20304Reduce the net carbon intensity(NCI)of the products we sell by 15-20%by 20302Ambition to reduce customer emissions from the use of our oil products by 15-20%by 20305(Scope 3,category 11)Emissions from our operations(Scope 1&2)Emissions from the products we sell(Scope 3)18Shell plc|January 30,202519Injuries(TRCF)per million working hoursMillion working hoursOperational spillsThousand tonnesNumber of spillsGHG emissionsMillion tonnes CO2eMillion tonnes CO2eProcess safetyNumber of incidentsGoal Zero on safetyHSSE performanceAll information on this slide relates to assets and activities under Shell operational control.GHG emissions starting in 2023 were calculated using global warming potential(GWP)factors from the IPCC Fifth Assessment Report(AR5).GHG emissions from prior years were calculated using GWP factors from the IPCC Fourth Assessment Report.Preliminary results TRCFWorking hours(RHS)Volume of spillsNumber of spills(RHS)0350700012201620172018201920202021202220232024075150012201620172018201920202021202220232024024050100201620172018201920202021202220232024Scope 1Scope 1-Methane only(RHS)Scope 2Tier 1 Tier 20100200201620172018201920202021202220232024Shell plc|January 30,202520Reserves performance in 2024Proved reserves 2024 vs 2023billion boeSEC proved reserves positionPreliminary results9.89.6024681012billion boe202220232024Production1.11.11.1SEC proved reserves9.69.89.6Reserves/Production(years)8.89.28.9RRR 120% 120% 85%RRR(excl.A&D) 80%RRR 3-year average(excl.A&D) 68%RRR 3-year average 85%( 106%ex Groundbirch1) 108%Reserves/Production(3%)vs 20238.9 yearsRRR(1.1)0.00.9Note that pursuant to our 2017 agreement with Canadian Natural Resources Limited,Shells remaining mining interest and associated synthetic crude oil reserves will be swapped for an additional 10%interest(20%in total)in the Scotford upgrader and Quest CCS project.Subject to regulatory approvals,the transaction is expected to close in 2025.See preliminary reserves update in the Q4&FY 2024 unaudited results here.1Groundbirch debooking occurred in 2024 because of the exceptionally low AECO prices.Shell plc|January 30,202521Pipeline of major projects Further details are available on our investors page on KEYLow-carbon fuelsMap not to scaleProjects under constructionPeak production/Capacity/Products(100%)Shellshare%CountryStart-up 2025-2026Mero-4 A180 kboe/d19.3BrazilLNG Canada T1-214 mtpa40CanadaSprng Energy(multiple)B1,900 MW100IndiaSavion(multiple)B411 MW100USAShell Friesian350,000 MMBtu RNG100USAQatarEnergy LNG NFE(2)C8 mtpa25 DQatarMarjoram/Rosmari100 kboe/d80MalaysiaStart-up 2027 Sparta90 kboe/d51USAAtapu-2 A225 kboe/d17BrazilBonga North Tranche 1110 kboe/d55NigeriaNLNG T77.6 mtpa25.6NigeriaQatarEnergy LNG NFS(2)6 mtpa25 DQatarRuwais LNG E9.6 mtpa10UAEHEFA Biofuels Plant Rotterdam(paused)820,000 tonnes of renewable fuels100NetherlandsHolland Hydrogen I200 MW100NetherlandsEcowende/HKW B760 MW60NetherlandsRepurposing Rheinland E&C Park300 ktpa100GermanyPolaris0.65 mtpa CO2 captured and/or stored100CanadaCSPC expansion project 1.6 million tonnes per year of ethylene50ChinaUpstreamLiquefaction plantsHydrogen electrolyserCCSSolarOffshore windA Subject to unitisation agreements,production shown is FPSO oil capacity as per operator.B Renewable generation capacity under construction and/or committed for sale,with multiple start-up dates.C Planned start up in 2026.D A 25%share in a JV company which will own 25%of the QatarEnergy LNG NFE(2)expansion project and a 25%share in a JV company which will own 37.5%of the QatarEnergy LNG NFS(2)expansion project.E Subject to completion.Project updates:Final investment decision on Bonga North&China petrochemical expansionProduction start at Mero-3&Whale Chemicals&ProductsShell plc|January 30,202522Additional definitionsAppendixMetricDefinitionPrice-normalised free cash flow(FCF)FCF 2022 has been normalised to prices of Brent$65/bbl,Henry Hub(and related gas markers)$4/MMBtu and historical average chemical and refining margins.FCF 2023/2024 normalised to prices of$65/bbl Brent and$4/MMBtu Henry Hub(both real 2022),indicative chemical margins of$150 to$250 per tonne(nominal)and indicative refining margins of$4 to$6 per barrel(nominal).2025/2030 projections$65/bbl Brent and$4/MMBtu Henry Hub(both real 2022),indicative chemical margins of$150 to$250 per tonne(nominal)and indicative refining margins of$4 to$6 per barrel(nominal).Price-normalised FCF/sharePrice-normalised FCF divided by shares outstanding at the end of the period.The outstanding number of shares excludes shares held in trust.(2022:6,971 million shares,2023:6,486 million shares,2024:6,084 million shares).Structural cost reductionStructural cost reduction describes decreases in underlying operating expenses as a result of operational efficiencies,divestments,workforce reductions and other cost-saving measures that are expected to be sustainable compared with 2022 levels.The total change between periods in underlying operating expenses will reflect both structural cost reductions and other changes in spend,including market factors,such as inflation and foreign exchange impacts,as well as changes in activity levels and costs associated with new operations.Estimates of cumulative annual structural cost reduction may be revised depending on whether cost reductions realised in prior periods are determined to be sustainable compared with 2022 levels.Structural cost reductions are stewarded internally to support managements oversight of spending over time.2025 target reflects annualised saving achieved by end-2025.
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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended December 28,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934.For the transition period from toCommission File Number 001-07882 ADVANCED MICRO DEVICES,INC.(Exact name of registrant as specified in its charter)Delaware94-1692300(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)2485 Augustine DriveSanta Clara,California 95054(Address of principal executive offices)(Zip Code)(408)749-4000(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:(Title of each class)(Trading symbol)(Name of each exchange on which registered)Common Stock,$0.01 par value per shareAMDThe NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the ExchangeAct.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject tosuch filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit suchfiles):Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerginggrowth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of itsinternal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accountingfirm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant includedin the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-basedcompensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined by Rule 12b-2 of the Exchange Act).Yes No As of June 28,2024,the aggregate market value of the registrants common stock held by non-affiliates of the registrant was approximately$261.4 billion based on the reported closing sale price of$162.21 per share as reported on The NASDAQ Global Select Market(NASDAQ)onJune 28,2024,which was the last business day of the registrants most recently completed second fiscal quarter.Indicate the number of shares outstanding of each of the registrants classes of common stock,as of the latest practicable date:1,620,477,962shares of common stock,$0.01 par value per share,as of January 30,2025.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants proxy statement for the 2025 Annual Meeting of Stockholders(2025 Proxy Statement)are incorporated into Part IIIhereof.The 2025 Proxy Statement will be filed with the U.S.Securities and Exchange Commission within 120 days after the registrants fiscal yearended December 28,2024.INDEXPART I1ITEM 1.Business1ITEM 1A.Risk Factors13ITEM 1B.Unresolved Staff Comments39ITEM 1C.Cybersecurity39ITEM 2.Properties40ITEM 3.Legal Proceedings40ITEM 4.Mine Safety Disclosures40PART II41ITEM 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities41ITEM 6.Reserved42ITEM 7.Managements Discussion and Analysis of Financial Condition and Results of Operations43ITEM 7A.Quantitative and Qualitative Disclosure About Market Risk52ITEM 8.Financial Statements and Supplementary Data53ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure90ITEM 9A.Controls and Procedures91ITEM 9B.Other Information92ITEM 9C.Disclosures Regarding Foreign Jurisdictions that Prevent Inspections92PART III93ITEM 10.Directors,Executive Officers and Corporate Governance93ITEM 11.Executive Compensation93ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters93ITEM 13.Certain Relationships and Related Transactions and Director Independence93ITEM 14.Principal Accountant Fees and Services93PART IV94ITEM 15.Exhibits and Financial Statement Schedules94ITEM 16.Form 10-K Summary100SIGNATURES.101Table of ContentsPART IITEM 1.BUSINESSCautionary Statement Regarding Forward-Looking StatementsThe statements in this report include forward-looking statements within the meaning of the Private SecuritiesLitigation Reform Act of 1995.These forward-looking statements are based on current expectations and beliefs andinvolve numerous risks and uncertainties that could cause actual results to differ materially from expectations.Theseforward-looking statements speak only as of the date hereof or as of the dates indicated in the statements andshould not be relied upon as predictions of future events,as we cannot assure you that the events or circumstancesreflected in these statements will be achieved or will occur.You can identify forward-looking statements by the use offorward-looking terminology including“believes,”“expects,”“may,”“will,”“should,”“seeks,”“intends,”“plans,”“proforma,”“estimates,”“anticipates,”or the negative of these words and phrases,other variations of these words andphrases or comparable terminology.The forward-looking statements relate to,among other things:possible impactof future accounting rules on AMDs consolidated financial statements;demand for AMDs products;AMDs strategyand expected benefits;the growth,change and competitive landscape of the markets in which AMD participates;international sales will continue to be a significant portion of total sales in the foreseeable future;that AMDs cash,cash equivalents,and short-term investment balances together with the availability under that certain revolving creditfacility(the Revolving Credit Agreement)made available to AMD and certain of its subsidiaries,our commercialpaper program,and our cash flows from operations will be sufficient to fund AMDs operations including capitalexpenditures and purchase commitments,and acquisitions over the next 12 months and beyond;AMDs ability toobtain sufficient external financing on favorable terms,or at all;AMDs expectation that actions associated with the2024 Restructuring Plan will be substantially completed by the end of the first quarter of fiscal year 2025;AMDsexpectation that based on managements current knowledge,the potential liability related to AMDs current litigationwill not have a material adverse effect on its financial position,results of operation or cash flows;anticipated ongoingand increased costs related to enhancing and implementing information security controls;revenue allocated toremaining performance obligations that are unsatisfied which will be recognized in the next 12 months;a smallnumber of customers will continue to account for a substantial part of AMDs revenue and receivables in the future;the expected implications from the development of the legal and regulatory environment relating to emergingtechnologies such as AI;AMDs expectation that it will not pay dividends in the near future;AMDs ability to achieveits corporate responsibility initiatives;expected future AI technology trends and developments;the expected benefitsof AMDs acquisition of Silo AI Oy(Silo AI);AMDs anticipated acquisition of ZT Group Intl,Inc.(ZT Systems)andthe anticipated timing of the transaction;AMDs intention to seek a strategic partner to acquire ZT Systemsmanufacturing business;and AMDs expectation to fund stock repurchases through cash generated from operations.For a discussion of the factors that could cause actual results to differ materially from the forward-lookingstatements,see“Part I,Item 1A-Risk Factors”and the“Financial Condition”section set forth in“Part II,Item 7-Managements Discussion and Analysis of Financial Condition and Results of Operations,”or MD&A,and such otherrisks and uncertainties as set forth below in this report or detailed in our other Securities and Exchange Commission(SEC)reports and filings.We assume no obligation to update forward-looking statements.Additionally,we make certain voluntary disclosures in this report and on our website,which are informed by variousstandards and frameworks(including standards for the measurement of underlying data),and the interests of variousstakeholders.As such,these voluntary disclosures may not necessarily be“material”under the federal securitieslaws for SEC reporting purposes.Furthermore,much of this information is subject to methodological considerationsor information,including from third-parties,that is still evolving and subject to change,and which AMD does notindependently verify.For example,our disclosures based on any standards may change due to revisions inframework requirements,availability of information,changes in our business or applicable government policies,orother factors,some of which may be beyond our control.1Table of ContentsReferences in this Annual Report on Form 10-K to“AMD,”“we,”“us,”“management,”“our”or the“Company”meanAdvanced Micro Devices,Inc.and our consolidated subsidiaries.OverviewAMD is the high performance and adaptive computing leader,powering the products and services that help solve theworlds most important challenges.Our technologies advance the future of data centers,powering the cloud servicesthat have become an essential part of how we work,game,and connect to network,PCs,edge computing,andartificial intelligence(AI).We drive innovation through high-performance and adaptive computing technology,software and product leadership.With our high-performance product portfolios,we deliver differentiated solutions,such as our semi-custom System-on-Chip(SoCs),Adaptive SoCs,and accelerated processing units(APUs),and platform level client computingdevices,embedded platforms and servers for our customers.We offer a deep portfolio of data center computingsolutions including AI accelerators,microprocessors(CPUs),graphic processing units(GPUs),data processing units(DPUs),Smart Network Interface Cards(SmartNICs),and field programmable gate arrays(FPGAs),to meet the vastcomputing performance requirements of todays data centers,supercomputers,AI and Machine Learning(ML)datacenter environments and cloud environments.We drive innovation with our line-up of CPUs,APUs and chipsets fordesktops and notebooks,to bring performance,efficiency,AI capabilities and modern security features to gamers,creators,consumers and enterprises.AMD was the first company to integrate a dedicated neural processing unit(NPU)on the same SoC as an x86 CPU for AI PCs.Our GPUs,including discrete GPUs,semi-custom SoC productsand development services,work together with software to power immersive gaming experiences for PCs,gameconsoles and cloud gaming services.We are a leader in embedded computing,where we deliver high-performanceand scalability across a full portfolio of CPUs,APUs,FPGAs,system on modules(SOMs)and Adaptive SoCs thatare used in a variety of markets,including automotive,industrial,healthcare,storage and networking.We alsoincorporate dedicated AI processing capabilities into our embedded portfolio.We develop world-class software stacks that are used to enable our high-performance products.Our software stacksinclude development tools,compilers,and drivers for our CPUs,APUs,GPUs and FPGAs.We work closely with ourcustomers to define and develop customized solutions to precisely match their requirements.We enable this bycombining our broad portfolio of high-performance IP with our leadership design and packaging to deliver world-classcustomized solutions to our customers.We invest in innovative technology and solutions such as our custom-readychiplet platform and AMD Infinity Architecture to maintain our leadership position as a custom-design silicon providerof choice.Our StrategyWe believe that AI is defining the next era of computing and that the full potential of AI will be realized when thetechnology is pervasive across cloud,edge and end devices.We believe AMD has the compute engines,intellectualproperty,software capabilities and expertise to be a leader in this next computing era with a broad,portfolio of high-performance compute engines spanning across supercomputing,cloud,edge,embedded and end devices.Webelieve we have a unique opportunity to make AMD the end-to-end AI leader based on the breadth of our technologyand product portfolios.Our AI strategy is focused on three priorities.The first is delivering a broad portfolio of high-performance adaptivehardware and software solutions.The second is expanding the deep and collaborative partnerships we haveestablished across the ecosystem to accelerate deployments of AMD based AI solutions at scale.And the third isproviding compelling user experiences to extend the open and proven software platform we have established thatenables our AI hardware to be deployed more broadly and easily.One of our priorities in 2024 was to accelerate growth in our Data Center segment.The demand for our data centerAI accelerator products was very strong as large hyperscaler customers,OEMs and ODMs deployed our AMDInstinct MI300X GPUs.During the year,we announced that we have accelerated our AMD AI accelerator roadmapto deliver an annual cadence of leadership AMD Instinct solutions.We announced our 5th Gen AMD EPYC familyof server processors,providing leadership performance and capabilities for a wide range of data center workloads.During the year,we completed the acquisition of Silo AI Oy(Silo AI),an AI lab based in Finland.The acquisition ofSilo AI expanded our capability to accelerate development and deployment of AI models on AMD hardware.Silo AIhas also developed a software stack used to train multiple state-of-the-art large language models(LLMs)on AMDInstinct accelerators that can accelerate the development of highly-performant AMD training solutions.2Table of ContentsWe also focused on building our data center AI rack and data center-scale solutions capabilities by entering into anagreement to acquire ZT Group Intl,Inc.(ZT Systems),a provider of AI and general purpose compute infrastructurefor hyperscale computing companies in August 2024.We believe that with the acquisition of ZT Systems,we candeliver leadership training and inferencing solutions that can accelerate time to deployment for our AMD Instinctplatforms.The acquisition is expected to close in the first half of fiscal year 2025,subject to certain regulatoryapprovals and other customary closing conditions.We intend to seek a strategic partner to acquire ZT Systemsmanufacturing business.We continued to invest in driving software capabilities and the open ecosystem to deliver powerful new features andcapabilities in the AMD ROCm open software stack,bringing the latest features to highly-performant AI trainingand inference on AMD platforms.During the year,we made several key optimizations and additional features in thelatest AMD ROCm software that increases performance in key generative AI workloads,adds expanded support andoptimization for additional frameworks and libraries,and simplifies the overall developer experience.Our BusinessOur four reportable segments are:the Data Center segment,which primarily includes AI accelerators,server CPUs,GPUs,APUs,DPUs,FPGAs,SmartNICs,and Adaptive SoC products for data centers;the Client segment,which primarily includes CPUs,APUs,and chipsets for desktops and notebooks;the Gaming segment,which primarily includes discrete GPUs,semi-custom SoC products and developmentservices;andthe Embedded segment,which primarily includes embedded CPUs,GPUs,APUs,FPGAs,SOMs,andAdaptive SoC products.In addition to these reportable segments,we have an All Other category,which is not a reportable segment.Beginning with our fiscal year ending December 27,2025,we plan to combine the Client and Gaming segments intoone reportable segment to align with how we manage our business.As a result,we will have three reportablesegments:Data Center,Client and Gaming,and Embedded.Data Center SegmentData Center MarketThe Data Center segment primarily includes server-class CPUs,GPUs,AI accelerators,DPUs,FPGAs,SmartNICs,and Adaptive SoC products.We leverage our technology to address the computational,visual data processing andAI workload acceleration needs in the data center market.Modern data centers require high performance,energyefficient,scalable and adaptable compute engines to meet the demand driven by the growing amount of data thatneeds to be stored,accessed,analyzed and managed.Different combinations of CPUs,GPUs,DPUs,FPGAs,SmartNICs,and Adaptive SoCs enable the optimization of performance and power for a diverse set of workloads.Data Center ProductsServer CPUs.Our CPUs for server platforms currently include the AMD EPYC Series processors.EPYC CPUs,which are based on the x86 architecture,are server-specific processors designed for high-performance computing,enterprise IT,supercomputing,and large data centers.We recently announced our 5th generation AMD EPYC familyof server processors,further expanding our high-performance server CPU portfolio.Data Center GPUs.Our AMD Instinct family of GPU accelerator products,including AMD Instinct MI200,MI300 andMI325 series,are based on AMD CDNA architecture.AMD Instinct accelerators are designed to address thegrowing demand for AI training and inferencing and exascale-class scientific computing.Our visual cloud GPUofferings include products in the Radeon PRO V families.Our visual cloud data center GPUs include a range ofsolutions tailored towards workloads requiring remote visualization,such as Desktop-as-a-Service,Workstation-as-a-Service and Cloud Gaming.3Table of ContentsFPGAs and Adaptive SoCs.We offer a wide range of FPGAs,Adaptive SoCs and acceleration cards for the datacenter.Devices include the Virtex and Kintex,Artix,and Spartan FPGA products,as well as Zynq,ZynqMPSoC,and Versal Adaptive SoC products.Our Alveo accelerator cards provide a platform for acceleratingmultiple data center workloads at the edge or the cloud.Networking Products.Our Pensando DPUs and comprehensive networking software stack offload data centerinfrastructure services from the host CPU,are used by large Infrastructure as a Service(IaaS)cloud providers toaccelerate workload performance for hosted virtualized and bare-metal offerings.The AMD Solarflare portfolio offers a comprehensive low latency networking solution that combines hardwareadapters with the Onload family of user space networking libraries.AMD Solarflare products are the preferrednetworking solution for capital markets,enabling customers to develop a wide range of high-performanceapplications across the entire trading ecosystem.Client SegmentClient MarketOur CPUs and APUs power PCs that have become an integral part of how customers work,learn and play.Client ProductsDesktop CPUs.Our CPUs and APUs for desktop platforms currently include the AMD Ryzen and AMD RyzenThreadripper processors.We launched the Ryzen 9000 series processors featuring“Zen 5”cores,along with X3Dmodels featuring 2nd generation AMD 3D V-Cache technology for leadership gaming performance.Our 7000-series Ryzen desktop processors also feature models which include our 1 generation AMD 3D V-Cache technology.Our latest AMD Ryzen G-Series processors integrate advanced graphics.Notebook CPUs.Our AMD Ryzen mobile processors offer a leadership combination of performance,battery life,and immersive visual experiences for PCs.We released AMD Ryzen AI 300 Series processors featuring a NPU fornext-generation AI PCs featuring our latest“Zen 5”architecture in 2024.Our AMD Ryzen 8000 Series mobileprocessors,built on the“Zen 4”feature our first generation NPU,and AMD Ryzen 6000 and 5000 Series mobileprocessors,which are powered by both our“Zen 2”and“Zen 3 ”core architectures,address mainstream consumerand commercial markets.Our AMD Ryzen Z1 Series deliver immersive experiences for handheld gaming systems.Commercial CPUs.The AMD PRO solutions include mobile laptops,desktops and workstations for large enterprise,mid-market and the small and medium business(SMB)customers.Our AMD PRO technology solution offersenterprise-class security features manageability,reliability and extended image stability,for commercial client PCs.We launched our AMD Ryzen AI PRO 300 series,bringing world-class security and manageability and leadershipproductivity,battery life,and AI capabilities to business notebooks and mobile workstations.Our commitment to highperformance leadership continued with the launch of AMD Ryzen PRO 200 Series mobile processors that expandour commercial CPU portfolio to enable PCs spanning a range of price points.The AMD Ryzen PRO 8000G seriesdesktops offer an integrated AI desktop solution for enterprises,and our AMD Ryzen Threadripper PRO CPUenables leadership performance for premium workstations.Chipsets.We offer a full suite of chipset products to support our AMD Ryzen and AMD Threadripper platforms,forentry level through professional workstation desktop systems.Gaming SegmentGraphics MarketGraphics processing is a fundamental component across many of our products.Our customers generally use ourgraphics solutions to enable immersive visualization and to process AI/ML based workloads.We develop ourgraphics products for use in various computing devices and entertainment platforms,including data centers,desktopPCs,notebook PCs,handheld devices,All-in-Ones,and professional workstations.In addition,we leverage our coreIP,including graphics and processing technologies,to develop semi-custom solutions deeply co-engineered with ourcustomers which has enabled many of todays leading gaming consoles and handheld gaming products.st4Table of ContentsSemi-Custom Products.Our semi-custom products are tailored,high-performance,customer-specific solutionsbased on CPU,GPU and multi-media technologies.We work closely with our customers to define solutions toprecisely match the requirements of the device or application.AMD semi-custom SoC products power the SonyPlayStation 5,the Microsoft Xbox Series S and X game consoles,as well as the Valve Steam Deck PC.In2024,Sony launched the PlayStation 5 Pro with additional graphics performance and AI capabilities compared to theoriginal PlayStation 5.Discrete Desktop and Notebook GPUs.Our AMD Radeon discrete GPU processors for desktop and notebook PCssupport current generation application programming interfaces(APIs)like DirectX 12 Ultimate and Vulkan,supporthigh-refresh rate displays and include the latest technologies for immersive gaming experiences and high-performance AI/ML computing.Our current Radeon RX 7000 Series graphics,based on the AMD RDNA 3architecture,deliver high performance for the latest gaming and creation workloads.All of our graphics products aresupported by the AMD Software:Adrenalin Edition application that is regularly enhanced to provide the latest inperformance,features,and stability.Professional GPUs.Our AMD Radeon PRO family of professional graphics products are designed for integration indesktop workstations,optimized through hardware and software for demanding use cases such as 3D rendering,design and manufacturing for Computer-Aided Design(CAD),and media and entertainment for broadcast andanimation pipelines on high resolution displays.Embedded SegmentThe Embedded MarketThe Embedded segment primarily includes embedded CPUs,GPUs,APUs,FPGAs,and Adaptive SoC products.Embedded products address computing needs in aerospace and defense,automotive,industrial,vision andhealthcare,communications infrastructure,test measurement,emulation and prototyping,audio,video andbroadcasting,and data center.Typically,our embedded products are used in applications that require varying levelsof performance,where key features may include relatively low power,small form factors,and 24x7 operations.High-performance graphics are important in some embedded systems.Support for Linux,Windows and other operatingsystems as well as for increasingly sophisticated applications are also critical for some customers.Otherrequirements may include meeting rigid specifications for industrial temperatures,shock,vibration and reliability.Theembedded market has moved from developing proprietary,custom designs to leveraging industry-standardinstruction set architectures and processors as a way to help reduce costs and speed time to market.Embedded ProductsEmbedded CPUs,APUs and GPUs.Our products for embedded platforms include AMD EPYC Embedded CPUs,AMD Ryzen Embedded series processors including V-Series APUs and CPUs and R-Series APUs and CPUs,andRadeon Embedded GPUs.Our embedded processors and GPUs are designed to support high performancecompute,high-bandwidth network connectivity and security,high-performance storage requirements for enterpriseand cloud infrastructure,3D graphics performance and 4K multimedia requirements of automotive infotainmentsystems.FPGAs and Adaptive SoCs.Our FPGA products are hardware-customizable devices that can be tailored to meetthe specific needs of each customer,enabling them to differentiate their products and accelerate time to market.OurFPGA families include AMD UltraScale ,UltraScale 7 Series,and other older series.Adaptive SoC productsinclude the AMD Zynq SoC and Zynq UltraScale Multi-Processing System-on-a-Chip(MPSoC),which combineFPGA technology with a heterogeneous processing system,as well as the industrys first RFSoC architecture withintegrated radio frequency(RF)data converters(Zynq UltraScale RFSoC).The AMD Versal portfolio,composedof software-programmable Adaptive SoCs,is a heterogeneous compute platform that combines a processingsystem,programmable logic,AI Engines,and digital signal processing(DSP)Engines to achieve dramatic system-level performance improvements over todays fastest FPGA competitors solutions and accelerates applications in awide variety of markets,including aerospace and defense,automotive,industrial,vision and healthcare,communications infrastructure,test measurement,emulation and prototyping,audio,video and broadcasting,anddata center.5Table of ContentsDevelopment Boards,Kits and Configuration Products.We offer development kits for all our FPGA and AdaptiveSoCs.These kits include hardware,development tools,IP,and reference designs that streamline and accelerate thedevelopment of domain-specific and market-specific applications.Our AMD Kria K24 SOM provides highdeterminism and low latency for powering electric drives and motor controllers used in compute-intensive DSPapplications at the edge.Coupled with our Kria KD240 Drives Starter Kit,an out-of-the-box-ready motor control-based development platform,the products offer a seamless path to production deployment.Legacy Product Families.We offer prior generation high-end Virtex and low-end Spartan FPGA families aswell as the original Virtex and Spartan families.Our prior generations of Complex Programmable Logic Devices(CPLD)include the CoolRunner and XC9500 product families.CPLDs are single-chip,nonvolatile solutionscharacterized by instant-on and universal interconnect and operate on the lowest end of the programmable logicdensity spectrum.Design Platforms and ServicesAdaptable Platforms.We offer two types of platforms that support our customers designs and reduce theirdevelopment efforts:FPGAs and Adaptive SoCs.FPGAs feature reconfigurable hardware as well as integratedmemory,DSP,analog mixed signal,high-speed serial transceivers,and networking cores coupled with advancedsoftware for a broad range of applications in all of our end markets.Our Adaptive SoCs feature a heterogeneousprocessing system with integrated programmable hardware fabric targeting embedded systems that need real-timecontrol,analytics,sensor fusion,and adaptable hardware for differentiation and acceleration.Our Zynq UltraScale RFSoCs feature integrated high-performance RF data converters targeting wireless,radar,and cable accessapplications.Enabled by both hardware and software design tools and an extensive operating system,middleware,software stack,and IP ecosystem,Adaptive SoCs target software developers as well as traditional hardwaredesigners.Our Versal portfolio combines a processing system,programmable logic,AI Engines,and DSP Engineswith leading-edge memory and interfacing technologies to deliver powerful heterogeneous acceleration for anyapplication.This product portfolio is ideally suited to accelerate a broad set of applications in the emerging era of bigdata and AI.Software Development Platform.Our AMD Vivado Design Suite provides hardware design teams with the toolsand methodology needed to program FPGAs and Adaptive SoCs.Our Vitis unified software platform enables thedevelopment and deployment of embedded software and accelerated applications,on our FPGAs and AdaptiveSoCs.Our Vitis AI unified software platform enables the development and deployment of AI software on our FPGAsand Adaptive SoCs.Sales and MarketingWe sell our products through our direct sales force and through independent distributors and sales representatives inboth domestic and international markets.Our sales arrangements generally operate on the basis of productforecasts provided by the particular customer,but do not typically include any commitment or requirement forminimum product purchases.We primarily use product quotes,purchase orders,sales order acknowledgments andcontractual agreements as evidence of our sales arrangements.Our agreements typically contain standard termsand conditions covering matters such as payment terms,warranties and indemnities for issues specific to ourproducts.We generally warrant that our products sold to our customers will conform to our approved specifications and be freefrom defects in material and workmanship under normal use and conditions for one year.We offer up to three-yearlimited warranties for certain product types,and sometimes provide other warranty periods based on negotiatedterms with certain customers.We market and sell our latest products under the AMD trademark.Our product brand for server microprocessors is AMD EPYC processors.Our product brands for data center graphics are AMD Instinct accelerators,and Radeon PRO V-series.Our client product brands for desktop and notebook PCs include:AMD Ryzen,AMD Ryzen AI,AMD RyzenPRO,AMD Ryzen Threadripper,AMD Ryzen Threadripper PRO,AMD Athlon,and AMD PRO A-Seriesprocessors.Our product brand for the consumer graphics market is AMD Radeon graphics,and AMD Embedded Radeongraphics is our product brand for the embedded graphics market.6Table of ContentsOur product brand for professional graphics products is AMD Radeon PRO graphics.We also market and sell our chipsets under AMD trademarks.Our FPGA products are Virtex-6,Virtex-7,Virtex UltraScale ,Kintex-7,Kintex UltraScale,Kintex UltraScale ,Artix-7,Artix UltraScale ,Spartan-6,and Spartan-7 brands.Our product brands for Adaptive SoCs are Zynq-7000,Zynq UltraScale MPSoC,Zynq UltraScale RFSoCs,VersalHBM,Versal Premium,Versal Prime,Versal AI Core,Versal AI Edge,Vitis,and Vivado.Our product for System-on-Module(SOM)is Kria brand.We also sell low-power versions of our AMD Athlon,as well as AMD Geode,AMD Ryzen,AMD EPYC,AMD R-Series and G-Series processors as embedded processor solutions.Our compute and network acceleration board products are sold under the Alveo and Pensando brands.We market our products through direct marketing and co-marketing programs.In addition,we have cooperativeadvertising and marketing programs with customers and third parties,including market development programs,pursuant to which we may provide product information,training,marketing materials and funds.Under our co-marketing development programs,eligible customers can use market development funds as reimbursement foradvertisements and marketing programs related to our products and third-party systems integrating our products,subject to meeting defined criteria.CustomersOur Data Center Segment customers consist primarily of hyperscale data centers,original equipment manufacturers(OEMs),original design manufacturers(ODMs),system integrators and independent distributors in both domesticand international markets.ODMs provide design and/or manufacturing services to branded and unbranded privatelabel resellers,OEMs and system builders.Our Client Segment customers consist primarily of PC OEMs,a network of independent distributors and,for chipsetproducts,ODMs that manufacture motherboards.Our Gaming Segment customers include PC OEMs and independent distributors as well as add-in-boardmanufacturers(AIBs),independent game console and portable gaming devices manufacturers and contractmanufacturers for AMD branded graphics cards.Our Embedded Segment products are sold to customers in a very wide range of markets such as aerospace anddefense,automotive,industrial,vision and healthcare,communications infrastructure,test measurement,emulationand prototyping,audio,video and broadcasting,and data center.For these products,we either sell directly to ourcustomers or through a network of distributors and OEM partners.We are also developing a network of Value AddedResellers(VARs)and Integrated Solution Vendors(ISVs)for our Alveo products.We work closely with our customers to define product features,performance and timing of new products so that theproducts we are developing meet our customers needs.We also employ application engineers to assist ourcustomers in designing,testing and qualifying system designs that incorporate our products.We believe that ourcommitment to customer service and design support improves our customers time-to-market and fostersrelationships that encourage customers to use the next generation of our products.We also work with our customers to create differentiated products that leverage our CPU,GPU,APU,DPU andFPGA technology.Certain customers pay us non-recurring engineering fees for design and development servicesand a purchase price for the resulting products.7Table of ContentsOriginal Equipment ManufacturersWe focus on three types of OEM partners:multi-nationals,selected regional accounts and selected global and localsystem integrators,who target commercial and consumer end customers of all sizes.Large multi-nationals andregional accounts are the core of our OEM partners business;however,we are increasingly focused on the VARchannel which resells OEM systems to the mid-market and the small and medium business(SMB)segments.Additionally,we have increased our focus on global system integrators,which resell OEM systems,coupled withtheir software and services solutions into Enterprise,high performance computing(HPC)and Cloud Service Providercustomers.Our OEM customers include numerous foreign and domestic manufacturers of servers and workstations,desktops,notebooks,PC motherboards and game consoles.Hyperscale Data CentersLarge multi-national public cloud service providers and hyperscale private data centers directly and indirectlypurchase a substantial portion of our data center-focused products,including server CPUs,GPU accelerators,DPUs,FPGAs and Adaptive SOCs.These products are incorporated into servers and other data center appliancessold by OEMs to the hyperscale customers or into custom servers or hardware designed by or for these customersand manufactured by ODMs or contract manufacturers.Hyperscale data centers use these products to operate web-based applications or to support public cloud computing and storage service offerings,including but not limited to AIworkloads such as generative AI models.Third-Party DistributorsOur authorized channel distributors resell to sub-distributors,OEMs,ODMs,and other customers.Typically,distributors handle a wide variety of products,and may include products from other manufacturers that compete withour products.Distributors typically maintain an inventory of our products.In most instances,our agreements withdistributors protect their inventory of our products against price reductions and provide certain return rights withrespect to any product that we have removed from our price book or otherwise subject to discontinuation.In addition,some agreements with our distributors may contain standard stock rotation provisions permitting limited productreturns.Add-in-Board(AIB)Manufacturers and System IntegratorsWe offer component-level graphics and chipset products to AIB manufacturers who in turn build and sell board-levelproducts using our technology to system integrators(SIs),retailers and sub distributors.In most instances,ouragreements with AIBs protect their inventory of our products against price reductions.We also sell directly to someSI customers.SIs typically sell from positions of regional or product-based strength in the market.They usuallyoperate on short design cycles and can respond quickly with new technologies.SIs often use discrete graphicssolutions as a means to differentiate their products and add value to their customers.CompetitionThe markets in which our products are sold are highly competitive and delivering the latest and best products tomarket on a timely basis is critical to achieving revenue growth.We believe that the main factors that determine ourproduct competitiveness are total cost of ownership,timely product introductions,product quality,product featuresand capabilities(including accelerations for key workloads such as AI),energy efficiency(including powerconsumption and battery life,given their impact on total cost of ownership),reliability,performance,size(or formfactor),selling price,cost,adherence to industry standards(and the creation of open industry standards),level ofintegration,software and hardware compatibility,ease of use and functionality of software design tools,completeness of applicable software solutions,security and stability,brand recognition and availability.We expectthat competition will continue to be intense due to rapid technological changes,frequent product introductions by ourcompetitors or new competitors of products that may provide better performance or experiences or that may includeadditional features that render our products comparatively less competitive.8Table of ContentsCompetition in Data Center SegmentIn the Data Center segment,we compete primarily against Intel Corporation(Intel)and NVIDIA Corporation(NVIDIA)with our CPU,GPU and DPU server products.In addition,we compete against Intel with our FPGA and AdaptiveSoC server products.A variety of smaller fabless silicon companies offer proprietary accelerator solutions and Armbased CPUs targeting data center use-cases.In addition,some of our customers are internally developing their owndata center microprocessor products and accelerator products which could impact the available market for ourproducts.Competition in Client SegmentOur primary competitor in the supply of CPUs and APUs is Intel.A variety of companies provide or have developedArm-based microprocessors and platforms which could lead to further adoption of Arm-based PC solutions.Competition in Gaming SegmentIn the graphics market,our principal competitor in the supply of discrete graphics is NVIDIA,who is the discrete GPUmarket share leader,and Intel,who manufactures and sells integrated graphics processors and gaming-focuseddiscrete GPUs.With respect to integrated graphics,higher unit shipments of our APUs and Intels integratedgraphics may drive computer manufacturers to reduce the number of systems they build paired with discretegraphics components,particularly for notebooks,because they may offer satisfactory graphics performance for mostmainstream PC users at a lower cost.We are the market share leader in semi-custom game console products,where graphics performance is critical.Competition in Embedded SegmentWe expect continued competition from our primary FPGA competitors such as Intel,Lattice SemiconductorCorporation and Microsemi Corporation,and from ASSP vendors such as Broadcom Corporation,MarvellTechnology Group,Ltd.,Analog Devices,Texas Instruments Incorporated and NXP Semiconductors N.V.,and fromQualcomm Incorporated and NVIDIA.In addition,we expect continued competition from the ASIC market,which hasbeen ongoing since the inception of FPGAs.Intel is our main competitor for embedded CPUs.Other competitorsinclude manufacturers of high-density programmable logic products characterized by FPGA-type architectures;high-volume and low-cost FPGAs as programmable replacements for ASICs and ASSPs;ASICs and ASSPs withincremental amounts of embedded programmable logic;high-speed,low-density CPLDs;high-performance DSPdevices;products with embedded processors;products with embedded multi-gigabit transceivers;discrete general-purpose GPUs targeting data center and automotive applications;and other new or emerging programmable logicproducts.Research and DevelopmentWe focus our research and development(R&D)activities on designing and developing products.Our main area offocus is on delivering the next generation of processors(CPU and GPU),FPGAs and Adaptive SoCs,accelerators(adaptive,graphics and DPU),SOMs and SmartNICs and associated software.We focus on designing,with securityin mind,new integrated circuits(ICs)with improved performance and performance-per-watt in advancedsemiconductor manufacturing processes,the design of logic and interface IP,advanced packaging technologies,andheterogeneous integration technologies.We also focus on software as part of the development of our products,including design automation tools for hardware,embedded software,optimized software tools and libraries thatextend the reach of our platforms to software and AI developers.Through our R&D efforts,we were able to introducea number of new products and enhance our IP core offerings and software.We also work with industry leaders on process technology,design tools,intellectual property,software and otherindustry consortia to conduct early-stage R&D.We are also actively contributing to numerous industry open-sourcesoftware initiatives across a broad range of technologies.We conduct product and system R&D activities for ourproducts in the United States with additional design and development engineering teams located in various countrieswho undertake specific activities at the direction of our U.S.headquarters.9Table of ContentsManufacturing Arrangements and Assembly and Test FacilitiesThird-Party Wafer Foundry FacilitiesWe utilize Taiwan Semiconductor Manufacturing Company Limited(TSMC)for the production of wafers for our HPC,FPGA and Adaptive SoC products and GLOBALFOUNDRIES Inc.(GF),with respect to wafer purchases for our HPCproducts at the 12 nm and 14 nm technology nodes.Additionally,we utilize TSMC,United MicroelectronicsCorporation(UMC)and Samsung Electronics Co.,Ltd.for the production of our ICs in the form of programmablelogic devices.Other Third-Party ManufacturersWe outsource board-level graphics product manufacturing to third-party manufacturers.Assembly,Test,Mark and Packaging FacilitiesWafers for our products are either sorted by the foundry or delivered by the foundry to our assembly,test,mark andpackaging(ATMP)partners or subcontractors located in the Asia-Pacific region who package and test our finalsemiconductor products.We are party to two ATMP joint ventures(collectively,the ATMP JVs)with TongfuMicroelectronics Co.,Ltd.The ATMP JVs,Siliconware Precision Industries Ltd.(SPIL)and King Yuan ElectronicsCompany(KYEC)provide ATMP services for our products.Intellectual Property and LicensingWe rely on contracts and intellectual property rights to protect our products and technologies from unauthorizedthird-party copying and use.Intellectual property rights include copyrights,patents,patent applications,trademarks,trade secrets and mask work rights.As of December 28,2024,we had approximately 7,500 patents in the UnitedStates and approximately 1,900 patent applications pending in the United States.In certain cases,we have filedcorresponding applications in foreign jurisdictions.Including United States and foreign matters,we haveapproximately 18,800 patent matters worldwide consisting of approximately 13,200 issued patents and 5,600 patentapplications pending.We expect to file future patent applications in both the United States and abroad on significantinventions,as we deem appropriate.We do not believe that any individual patent,or the expiration of any patent,isor would be material to our business.As is typical in the semiconductor industry,we have numerous cross-licensingand technology exchange agreements with other companies under which we both transfer and receive technologyand intellectual property rights.We have acquired various licenses from external parties to certain technologies thatare implemented in our products,including our IP cores and devices.These licenses support our continuing ability tomake and sell our products.We have also acquired licenses to certain proprietary software,open-source software,and related technologies,such as compilers,for our design tools.Continued use of such software and technology isimportant to the operation of the design tools upon which our customers depend.BacklogSales are made primarily pursuant to purchase orders for current delivery or agreements covering purchases over aperiod of time.Although such orders or agreements may provide visibility into future quarters,they may notnecessarily be indicative of actual sales for any succeeding period as some of these orders or agreements may berevised or canceled without penalty.SeasonalityOur operating results tend to vary seasonally.Historically,our net revenue has been generally higher in the secondhalf of the year than in the first half of the year,although market conditions and product transitions could impactthese trends.Human CapitalAs of December 28,2024,we had approximately 28,000 employees in our global workforce.We believe we are atour best when our culture of innovation,creative minds and people from all kinds of backgrounds work together in anengaging and open environment.Areas of focus for us include the following:Mission,Culture,and EngagementOur History-Founded in 1969 as a Silicon Valley start-up,the AMD journey began with dozens of employeesfocused on leading-edge semiconductor products.From those modest beginnings,we have grown into a global10Table of Contentscompany achieving many important industry firsts along the way.Today,we develop high-performance and adaptivecomputing to solve some of the worlds toughest and most interesting challenges.Our Vision-High performance and adaptive computing is transforming our lives.Our Mission-Build great products that accelerate next-generation computing experiences.Our employees are driven by this vision and mission.Innovation occurs when creative minds and diverseperspectives from all over the world work together.This is the foundation of our unique culture and the reason webelieve our employees are among the most engaged in our industry.We conduct an annual survey of our global workforce to measure our culture,engagement,and workplaceexperience.The results are reviewed by our Board of Directors and acted upon by our senior leadership team.Results from our 2024 survey reported scores that continued to be among the very best for global companies in thetechnology industry.Our employees described our culture as inclusive,innovative,open,and respectful,and ratedthe quality of our managers high,and employment engagement is among the top 10%of our high-performingtechnology industry peers.Diversity,Belonging and Inclusion(DB&I)Our diverse and inclusive workforce encourages employees to share their opinions and different perspectives.Webelieve that building a diverse talent pipeline,encouraging a culture of respect and belonging,and increasinginclusion of unique and underrepresented voices makes our company stronger.Our Employee Resource Groups(ERGs),which are open to all our employees,encourage employee engagement and play an important role in ourculture.More than 85%of all new hires join at least one of AMDs ERGs when starting employment.In 2024,wecontinued to focus on developing our female engineering community through mentoring opportunities and expandingthe program,“Advancing Women in Technology,”that aims to support the career development of women in technicalcareers at AMD.Total RewardsWe invest in our workforce by offering competitive salaries,incentives,and benefits to ensure that we continue toattract and retain the industrys best and brightest in an equitable manner.We regularly review our compensationpractices,considering factors relevant to ensuring equitable pay such as an employees role,experience,skills,andperformance.We also benchmark set pay ranges based on relevant market data and our overall workforce.Wefocus on flexibility and choice in our benefits that resonate with a multi-generational workforce as well as offeringinclusive benefits that support our DB&I objectives,such as global parental and bereavement leave,and financialassistance to build a family through adoption or surrogacy.While we believe that there is unique collaboration thatcan occur when employees meet in person,we embrace flexibility with hybrid and remote work as options for ouremployees.We have a strong pay for performance culture that we believe drives superior results.Our employees have benefitedfrom our robust financial results through our strong short-term and long-term incentive programs.Our rewardsprograms enable us to attract,retain and motivate our workforce.DevelopmentWe offer our employees opportunities to advance their careers at the Company and the majority of our new leadersare promoted from within.We are focused on leadership progression and encourage our employees to takeadvantage of new opportunities.Our manager and leadership development programs are highly rated,and weprovide specialized development programs for our employees as well as educational assistance in the form of tuitionreimbursement for eligible employees to continue their university education or achieve advanced certifications.We have an enterprise-wide mentoring program where employees have the opportunity to learn from experiencedcolleagues,develop new skills,and build their professional networks.The program also supports effectiveonboarding,helping new hires more quickly acclimate to our company culture and work processes.We believe thatour mentoring program is a valuable investment in our workforce,and we are committed to its ongoing success.11Table of ContentsEmployee VoiceAt AMD,we value the importance of employee voice and actively engage in efforts to ensure that our employeesopinions and perspectives are heard and considered.Our employee voice strategy includes an annual AMDerSurvey(engagement survey).Our scores rank AMD in the top 10%of high-tech firms on similar questions,categories and overall score.Additionally,we measure effectiveness across all elements of the employee lifecycle,including onboarding,exit,and regularly seek out employee feedback on areas including benefits and total rewardssatisfaction.Further,our executive team holds frequent employee roundtables,town halls and global team meetingswith question-and-answer segments which facilitate open communication and feedback from our workforce.Government RegulationsOur global operations are subject to various United States and foreign laws and regulations,including,but not limitedto,those relating to export control,customs,intellectual property,data privacy and security,climate,environmental,health and safety requirements,cybersecurity,tax,employment,competition and anti-trust,anti-corruption,anti-bribery,conflict minerals,corporate governance,financial and other disclosures,and AI.Compliance with thesegovernmental laws and regulations do not presently have a material adverse impact on our capital expenditures,results of operations or competitive position.However,compliance with changes to existing or new regulations mayhave a material adverse impact on our future capital expenditures,results of operations or competitive position.Inaddition,the failure to comply with government laws and regulations may subject us to consequences includingfines,limits on our ability to sell our products,suspension of certain of our business activities,reputational damage,criminal and civil liabilities,and sanctions,which may have a material adverse effect on our capital expenditures,results of operations or competitive position.For additional information about government regulations applicable toour business,and their potential impacts see Risk Factors in Item 1A.Environmental RegulationsOur operations and properties are subject to various United States and foreign laws and regulations,including thoserelating to materials used in our products and the manufacturing processes of our products,discharge of pollutantsinto the environment,the treatment,transport,storage and disposal of solid and hazardous wastes and remediationof contamination.These laws and regulations require our suppliers to obtain permits for operations in making ourproducts,including the discharge of air pollutants and wastewater.Environmental laws are complex,changefrequently and tend to become more stringent over time.For example,the European Union(EU)and China areamong a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials inelectronic products.These regulations affect semiconductor devices and packaging.Jurisdictions including the EU,Australia,California and China are developing or have finalized market entry or public procurement regulations forcomputers and servers based on ENERGY STAR specifications as well as additional energy consumption limits.Certain environmental laws,including the United States Comprehensive,Environmental Response,Compensationand Liability Act of 1980,or the Superfund Act,impose strict or,under certain circumstances,joint and severalliability on current and previous owners or operators of real property for the cost of removal or remediation ofhazardous substances and impose liability for damages to natural resources.These laws often impose liability evenif the owner or operator did not know of,or was not responsible for,the release of such hazardous substances.These environmental laws also assess liability on persons who arrange for hazardous substances to be sent todisposal or treatment facilities when such facilities are found to be contaminated.Such persons can be responsiblefor cleanup costs even if they never owned or operated the contaminated facility.We have been named as aresponsible party on Superfund clean-up orders for three sites in Sunnyvale,California that are on the NationalPriorities List.Since 1981,we have discovered hazardous material releases to the groundwater from formerunderground tanks and proceeded to investigate and conduct remediation at these three sites.The chemicalsreleased into the groundwater were commonly used in the semiconductor industry in the United States in the waferfabrication process prior to 1979.In 1991,we received Final Site Clean-up Requirements Orders from the California Regional Water Quality ControlBoard relating to the three sites.We have entered into settlement agreements with other responsible parties on twoof the orders.During the term of such agreements,other parties have agreed to assume most of the foreseeablecosts as well as the primary role in conducting remediation activities under the orders.We remain responsible foradditional costs beyond the scope of the agreements as well as all remaining costs in the event that the other partiesdo not fulfill their obligations under the settlement agreements.12Table of ContentsTo address anticipated future remediation costs under the orders,we have computed and recorded an estimatedenvironmental liability of approximately$5.5 million and have not recorded any potential insurance recoveries indetermining the estimated costs of the cleanup.The progress of future remediation efforts cannot be predicted withcertainty and these costs may change.We believe that any amount in addition to what has already been accruedwould not be material.Additional InformationAMD was incorporated under the laws of Delaware on May 1,1969 and became a publicly held company in 1972.Our common stock is currently listed on The NASDAQ Global Select Market(NASDAQ)under the symbol“AMD”.Our mailing address and executive offices are located at 2485 Augustine Drive,Santa Clara,California 95054,andour telephone number is(408)749-4000.For financial information about geographic areas and for segmentinformation with respect to revenues and operating results,refer to the information set forth in Note 4 of ourconsolidated financial statements.We use a 52-or 53-week fiscal year ending on the last Saturday in December.References in this report to 2024,2023 and 2022 refer to the fiscal year unless explicitly stated otherwise.AMD,the AMD Arrow logo,3D V-Cache,AMD Athlon,AMD CDNA,AMD FidelityFX,AMD FirePro,AMD FreeSync,AMD Instinct,AMD RDNA,Alveo,Artix,CoolRunner,EPYC,Geode,Infinity Fabric,Kinex,Kria,Opteron,Pensando,Radeon,ROCm,Ryzen,Spartan,Threadripper,UltraScale,UltraScale ,Versal,Virtex,Vitis,Vivado,XDNA,Xilinx,Zynq and combinations thereof are trademarks of Advanced Micro Devices,Inc.Microsoft,Windows,DirectX and Xbox One are registered trademarks of Microsoft Corporation in the United Statesand/or other countries.Linux is the registered trademark of Linus Torvalds in the United States and/or othercountries.PlayStation is a registered trademark of Sony Interactive Entertainment,Inc.Arm is a registered trademarkof Arm Limited(or its subsidiaries)in the United States and/or other countries.Vulkan and the Vulkan logo areregistered trademarks of Khronos Group Inc.Steam Deck and the Steam Deck logo are trademarks and/orregistered trademarks of Valve Corporation in the United States and/or other countries.Other names are for informational purposes only and are used to identify companies and products and may betrademarks of their respective owners.Website Access to Our SEC Filings and Corporate Governance DocumentsOn the Investor Relations pages of our website,http:/,we post links to our filings with the SEC,ourPrinciples of Corporate Governance,our Code of Ethics for our executive officers,all other senior finance executivesand certain representatives from legal and internal audit,including our Chief Executive Officer,Chief FinancialOfficer,Chief Accounting Officer and persons performing similar functions,our Worldwide Standards of BusinessConduct,which applies to our Board of Directors and all of our employees,and the charters of the committees of ourBoard of Directors.Our filings with the SEC are posted on our website as soon as reasonably practical after they are electronically filedwith,or furnished to,the SEC.The SEC website,www.sec.gov,contains reports,proxy and information statements,and other information regarding issuers that file electronically with the SEC.You can also obtain copies of thesedocuments by writing to us at:Corporate Secretary,AMD,2485 Augustine Drive,Santa Clara,California 95054,oremailing us at:Corporate.S.All of these documents and filings are available free of charge.If we make substantive amendments to our Code of Ethics or grant any waiver,including any implicit waiver,to ourprincipal executive officer,principal financial officer,principal accounting officer,controller or persons performingsimilar functions,we intend to disclose the nature of such amendment or waiver on our website.The information contained on our website is not incorporated by reference in,or considered to be a part of,thisreport.13Table of ContentsITEM 1A.RISK FACTORSThe risks and uncertainties described below are not the only ones we face.If any of the following risks actuallyoccurs,our business,financial condition or results of operations could be materially adversely affected.In addition,you should consider the interrelationship and compounding effects of two or more risks occurring simultaneously.Risk Factors SummaryThe following is a summary of the principal risks that could adversely affect our business,financial condition andresults of operations.Economic and Strategic RisksIntel Corporations dominance of the microprocessor market and its aggressive business practices may limit ourability to compete effectively on a level playing field.Nvidias dominance in the graphics processing unit market and its aggressive business practices may limit ourability to compete effectively on a level playing field.The markets in which our products are sold are highly competitive and rapidly evolving.The semiconductor industry is highly cyclical and has experienced severe downturns.The demand for our products depends in part on the market conditions in the industries into which they are sold.The success of our business depends on our ability to introduce products on a timely basis with features andperformance levels that provide value to our customers while supporting significant industry transitions.The loss of a significant customer may have a material adverse effect on us.Economic and market uncertainty may adversely impact our business and operating results.Our operating results are subject to quarterly and seasonal sales patterns.If we cannot adequately protect our technology or other intellectual property through patents,copyrights,tradesecrets,trademarks and other measures,we may lose a competitive advantage and incur significant expenses.Unfavorable currency exchange rate fluctuations could adversely affect us.Operational and Technology RisksWe rely on third parties to manufacture our products,and if they are unable to do so on a timely basis insufficient quantities and using competitive technologies,our business could be materially adversely affected.Essential equipment,materials,substrates or manufacturing processes may not be available to us.We may fail to achieve expected manufacturing yields for our products.Our revenue from our semi-custom System-on-Chip(SoC)products is dependent upon our semi-custom SoCproducts being incorporated into customers products and the success of those products.Our products may be subject to security vulnerabilities that could have a material adverse effect on us.IT outages,data loss,data breaches and cyberattacks could disrupt operations and compromise our intellectualproperty or other sensitive information,be costly to remediate or cause significant damage to our business,reputation,financial condition and results of operations.Uncertainties involving the ordering and shipment of our products could materially adversely affect us.Our ability to design and introduce new products includes the use of third-party intellectual property.We depend on third-party companies for the design,manufacture and supply of motherboards,software,memory and other computer platform components to support our business and products.14Table of ContentsIf we lose Microsoft Corporations support for our products or other software vendors do not design and developsoftware to run on our products,our ability to sell our products could be materially adversely affected.Our reliance on third-party distributors and add-in-board(AIB)partners subjects us to certain risks.Our business depends on the proper functioning of our internal business processes and information systems.Our products may not be compatible with some or all industry-standard software and hardware.Costs related to defective products could have a material adverse effect on us.We may fail to maintain the efficiency of our supply chain as we respond to changes in customer demand.We outsource to third parties certain supply-chain logistics functions.We may be unable to effectively control the sales of our products on the gray market.Climate change may have a long-term impact on our business.Legal and Regulatory RisksGovernment actions and regulations may limit our ability to export our products to certain customers.If we cannot realize our deferred tax assets,our results of operations could be adversely affected.Our business is subject to potential tax liabilities,including as a result of tax regulation changes.We are party to litigation and may become a party to other claims or litigation.We are subject to environmental laws,conflict minerals regulations,as well as a variety of other laws orregulations.Evolving expectations from governments,investors,customers and other stakeholders regarding corporateresponsibility matters could result in additional costs,harm to our reputation and a loss of customers.Issues related to the responsible use of AI may result in reputational,competitive and financial harm and liability.The agreements governing our notes,our guarantee of Xilinxs notes,and our Revolving Credit Agreementimpose restrictions on us that may adversely affect our ability to operate our business.Merger,Acquisition,Divestiture,and Integration RisksAcquisitions,joint ventures,and/or strategic investments,and the failure to integrate acquired businesses mayfail to materialize their anticipated benefits and could disrupt our business.Our ability to complete the acquisition of ZT Systems is subject to closing conditions.Any impairment of our tangible,definite-lived intangible or indefinite-lived intangible assets,including goodwill,may adversely impact our financial position and results of operations.General RisksOur worldwide operations are subject to political,legal and economic risks and natural disasters.We may incur future impairments of our technology license purchases.Our inability to continue to attract and retain qualified personnel may hinder our business.Our stock price is subject to volatility.For a more complete discussion of the material risks facing our business,see below.15Table of ContentsEconomic and Strategic RisksIntel Corporations dominance of the microprocessor market and its aggressive business practices maylimit our ability to compete effectively on a level playing field.Intels microprocessor market share position,significant financial resources,introduction of competitive newproducts,and existing relationships with top-tier OEMs have enabled it to market and price its products aggressively,to target our customers and our channel partners with special incentives and to influence customers who dobusiness with us.These aggressive activities have in the past resulted in lower unit sales and a lower averageselling price for many of our products and adversely affected our margins and profitability.Intel also dominates thecomputer system platform and has a heavy influence on PC manufacturers,other PC industry participants,andbenchmarks.It is able to drive de facto standards and specifications for x86 microprocessors that could cause usand other companies to have delayed access to such standards.We may be materially adversely affected by Intelsbusiness practices,including rebating and allocation strategies and pricing actions designed to limit our market shareand margins;product mix and introduction schedules;product bundling,marketing and merchandising strategies;and exclusivity payments to its current and potential customers,retailers and channel partners.We expect Intel tocontinue to heavily invest substantial resources in marketing,research and development,new manufacturingfacilities and other technology companies.Nvidias dominance in the graphics processing unit market and its aggressive business practices may limitour ability to compete effectively on a level playing field.Nvidias Data Center GPU market share position,significant financial resources,introduction of competitive newproducts and proprietary software ecosystem have enabled it to market and price its products in a manner toencourage the selection of Nvidia-based systems and to influence customers who do business with us.We may bematerially adversely affected by Nvidias business practices,including allocation strategies and pricing actions;product mix and introduction schedules;and product bundling strategies.Nvidias practices can limit customersability to choose non-Nvidia products,including our products,and in turn,may limit our market share and decreaseour margins and profitability,which could have a material adverse effect on our business.We expect Nvidia tocontinue to heavily invest substantial resources in research and development,marketing and other technologycompanies.The markets in which our products are sold are highly competitive and rapidly evolving.The markets in which our products are sold are highly competitive and rapidly evolving.We expect that competitionwill continue to be intense due to rapid technological changes,new and evolving industry standards,changingcustomer preferences and requirements,and frequent introductions by our competitors or new competitors ofproducts that may provide better performance/experience or that may include additional features that render ourproducts comparatively less competitive.In addition,we are entering markets with current and new competitors who may be able to adapt more quickly tocustomer requirements and emerging technologies.For example,the AI market is subject to rapid technologicalchange,product obsolescence,frequent new product introductions and feature enhancements,changes in end-userrequirements and evolving industry trends and legal standards.We cannot guarantee that we will be able to competesuccessfully against current or new competitors who may have stronger positions in these new markets or superiorability to anticipate customer requirements and emerging industry trends.While we see significant opportunity in AI,we expect intense competition from companies such as Nvidia in the supply of GPUs and other accelerators for theAI market.We may face competition from some of our customers who internally develop the same products as us.Increased adoption of Arm-based semiconductor designs could lead to further growth and development of the Armecosystem.We may also face delays or disruptions in research and development efforts,or we may be required toinvest significantly greater resources in research and development than anticipated.In addition,the semiconductorindustry has seen several mergers and acquisitions over the last number of years.Further consolidation couldadversely impact our business due to there being fewer suppliers,customers and partners in the industry.16Table of ContentsWe believe that the main factors that determine our product competitiveness are total cost of ownership,timelyproduct introductions,product quality,product features and capabilities(including accelerations for key workloadssuch as AI,energy efficiency(including power consumption and battery life,given their impact on total cost ofownership),reliability,performance,size(or form factor),selling price,cost,adherence to industry standards(and thecreation of open industry standards),level of integration,software and hardware compatibility,ease of use andfunctionality of software design tools,completeness of applicable software solutions,security and stability,brandrecognition and availability.If competitors introduce competitive new products into the market before us,demand forour products could be adversely impacted and our business could be adversely affected.Further,our competitorshave significant marketing and sales resources which could increase the competitive environment in a decliningmarket or during challenging economic times,leading to lower prices and a reduction in our margins.To the extentour competitors introduce competitive new products and technologies into the market before we do,or introduceproducts and technologies that provide better performance/experience or at better prices,our products andtechnologies may be comparatively less competitive and our competitive position may weaken,which couldadversely harm our business and results of operations.From time to time,governments provide incentives or make other investments that could benefit and give acompetitive advantage to our competitors.For example,the United States government enacted the Creating HelpfulIncentives to Produce Semiconductors for America and Science Act(CHIPS Act)of 2022 to provide financialincentives to the U.S.semiconductor industry.Government incentives,including the CHIPS Act,may not be availableto us on acceptable terms or at all.If our competitors can benefit from such government incentives and we cannot,itcould strengthen our competitors relative position and have a material adverse effect on our business.The semiconductor industry is highly cyclical and has experienced severe downturns that have materiallyadversely affected,and may continue to materially adversely affect,our business in the future.The semiconductor industry is highly cyclical and has experienced significant downturns,often in conjunction withconstant and rapid technological change,wide fluctuations in supply and demand,continuous new productintroductions,price erosion and declines in general economic conditions.We have incurred substantial losses inprevious downturns,due to substantial declines in average selling prices;the cyclical nature of supply and demandimbalances in the semiconductor industry;a decline in demand for end-user products that incorporate our products;and excess inventory levels and periods of inventory adjustment.Such industry-wide fluctuations may materiallyadversely affect us in the future.Global economic uncertainty and weakness have in the past impacted thesemiconductor market as consumers and businesses have deferred purchases,which negatively impacted demandfor our products.Our financial performance has been,and may in the future be,negatively affected by thesedownturns.The growth of our business is also dependent on continued demand for our products from high-growthadjacent emerging global markets.Our ability to be successful in such markets depends in part on our ability toestablish adequate local infrastructure,as well as our ability to cultivate and maintain local relationships in thesemarkets.If demand from these markets is below our expectations,sales of our products may decrease,which wouldhave a material adverse effect on us.The demand for our products depends in part on the market conditions in the industries into which they aresold.Fluctuations in demand for our products or a market decline in any of these industries could have amaterial adverse effect on our results of operations.Industry-wide fluctuations in the computer marketplace have materially adversely affected us in the past and maymaterially adversely affect us in the future.We offer products that are used in different end markets and the demandfor our products can vary among our Data Center,Client,Gaming and Embedded end markets.For instance,in ourData Center segment,we offer products that are optimized for generative AI applications and since the fourth quarterof 2023,we have experienced significant demand for our AI accelerators.The demand for such products in part willdepend on the extent to which our customers utilize generative AI solutions in a wide variety of applications,andboth the near-term and long-term trajectory of such generative AI solutions is unknown.Also,our Client segmentrevenue is focused on the consumer desktop and notebook PC segments and will depend in part on the marketsadoption of AI PCs.We are actively building AI capabilities into all our Client products,such as Ryzen AI PCprocessors,but there can be no assurance about the rate and pace of adoption of such product offerings.In thepast,revenues from the Client and Gaming segments have experienced a decline driven by,among other factors,the adoption of smaller and other form factors,increased competition and changes in replacement cycles.17Table of ContentsIn addition,our GPU revenue in the past has been affected in part by the volatility of the cryptocurrency miningmarket.If we are unable to manage the risks related to the volatility of the cryptocurrency mining market(includingpotential actions by global monetary authorities),our GPU business could be materially adversely affected.Thesuccess of our semi-custom SoC products in our Gaming segment is dependent on securing customers for our semi-custom design pipeline and consumer market conditions,including the success of game console systems and nextgeneration consoles for Sony and Microsoft.Our Embedded segment primarily includes embedded CPUs andGPUs,APUs,FPGAs and Adaptive SoC products some of which are subject to macroeconomic trends and volatilebusiness conditions.To the extent our embedded customers are faced with higher inventory levels,they may chooseto draw down their existing inventory and order less of our products.For example,our Embedded segment revenuedecreased in 2024 as customers continued to normalize their inventory levels.The success of our business depends on our ability to introduce products on a timely basis with featuresand performance levels that provide value to our customers while supporting and coinciding with significantindustry transitions.Our success depends to a significant extent on the development,qualification,implementation and acceptance ofnew product designs and improvements that provide value to our customers.Our ability to identify industry changes,and adapt our strategy to develop,qualify and distribute,and have manufactured,new products and relatedtechnologies to meet evolving industry trends and requirements,at prices acceptable to our customers and on atimely basis,are significant factors in determining our competitiveness in our target markets.We cannot assure youthat we will be able to meet the evolving needs of industry changes or that our efforts to execute our productroadmap will result in innovative products and technologies that provide value to our customers.If we fail to or aredelayed in identifying,developing,qualifying or shipping new products or technologies that provide value to ourcustomers and address these new trends,or if we fail to predict which new form factors,product featurespreferences or requirements consumers will adopt and adapt our business accordingly,we may lose competitivepositioning,which could cause us to lose market share and require us to discount the selling prices of our products.Although we make substantial investments in research and development,we cannot be certain that we will be ableto develop,obtain or successfully implement new products and technologies on a timely basis or that they will bewell-received by our customers.Moreover,our investments in new products and technologies involve certain risksand uncertainties and could disrupt our ongoing business.New investments may not generate sufficient revenue,may incur unanticipated liabilities and may divert our limited resources and distract management from our currentoperations.We cannot be certain that our ongoing investments in new products and technologies will be successful,will meet our expectations and will not adversely affect our reputation,financial condition and operating results.Forexample,as part of our pervasive AI strategy,we have a portfolio of hardware products and software tools to allowour customers to develop scalable and pervasive AI solutions.We are actively building AI capabilities into ourproducts,but there can be no assurance about the rate and pace of adoption of such product offerings.In our DataCenter segment,we offer products that are optimized for generative AI applications and since the fourth quarter of2023,we have experienced significant demand for our AI accelerators.The demand for such products in part willdepend on the extent to which our customers utilize generative AI solutions in a wide variety of applications,andboth the near-term and long-term trajectory of such generative AI solutions is unknown.If we fail to develop andtimely offer or deploy such products and technologies,keep pace with the product offerings of our competitors,oradapt to unexpected changes in industry standards or disruptive technological innovation,our business could beadversely affected.Additionally,our efforts in developing new AI technology solutions are inherently risky and maynot always succeed.We may incur significant costs,resources,investments and delays and not achieve a return oninvestment or capitalize on the opportunities presented by demand for AI solutions.Moreover,while AI adoption islikely to continue and may accelerate,the long-term trajectory of this technological trend is uncertain.18Table of ContentsDelays in developing,qualifying or shipping new products can also cause us to miss our customers product designwindows or,in some cases,breach contractual obligations.If our customers do not include our products in the initialdesign of their computer systems or products,they will typically not use our products in their systems or productsuntil at least the next design configuration.The process of being qualified for inclusion in a customers system orproduct can be lengthy and could cause us to further miss a cycle in the demand of end-users,which also couldresult in a loss of market share and harm our business.We also depend on the success and timing of our customersplatform launches.If our customers delay their product launches or if our customers do not effectively market theirplatforms with our products,it could result in a delay in bringing our products to market and cause us to miss a cyclein the demand of end-users,which could materially adversely affect our business.The increasing frequency andcomplexity of our newly introduced products may result in unanticipated quality or production issues that could resultin product delays.In addition,market demand requires that products incorporate new features and performancestandards on an industry-wide basis.Over the life of a specific product,the sale price is typically reduced over time.The introduction of new products and enhancements to existing products is necessary to maintain the overallcorporate average selling price.If we are unable to introduce new products with sufficiently high sale prices or toincrease unit sales volumes capable of offsetting the reductions in the sale prices of existing products over time,ourbusiness could be materially adversely affected.The loss of a significant customer may have a material adverse effect on us.We depend on a small number of customers for a substantial portion of our business,and we expect that a smallnumber of customers will continue to account for a significant part of our revenue and receivables in the future.If oneof our key customers decides to stop buying our products,materially reduces its operations or its demand for ourproducts,or has operations that are materially impaired for a significant period of time such that it is unable toreceive or utilize our products,or pay its liabilities,our business would be materially adversely affected.Economic and market uncertainty may adversely impact our business and operating results.Uncertain global or regional economic conditions have and may in the future adversely impact our business.Uncertainty in the economic environment or other unfavorable changes in economic conditions,such as inflation,higher interest rates,recession,slowing growth,increased unemployment,tighter credit markets,changes in fiscalmonetary or trade policy,or currency fluctuations,may negatively impact consumer confidence and spendingcausing our customers to stop or postpone purchases.For example,our Embedded segment revenue decreased in2024 as customers continued to normalize their inventory levels.During challenging economic times,our current orpotential future customers may experience cash flow problems and as a result may modify,delay or cancel plans topurchase our products.Additionally,if our customers are not successful in generating sufficient revenue or areunable to secure financing,they may not be able to pay,or may delay payment of,accounts receivable that they oweus.The risk related to our customers potentially defaulting on or delaying payments to us is increased because weexpect that a small number of customers will continue to account for a substantial part of our revenue.Any inability ofour current or potential future customers to pay us for our products may adversely affect our earnings and cash flow.Moreover,our key suppliers may reduce their output or become insolvent,thereby adversely impacting our ability tomanufacture our products.Adverse changes in economic conditions could increase costs of memory,equipment,materials or substrates and other supply chain expenses.If we are not able to procure a stable supply of materialson an ongoing basis and at reasonable costs to meet our production requirements,we could experience a supplyshortage or an increase in production costs,which could negatively impact our gross margin and materiallyadversely affect our business.Our ability to forecast our operating results,make business decisions and execute ourbusiness strategy could be adversely impacted by challenging macroeconomic conditions.In addition,uncertaineconomic conditions could lead to higher borrowing costs and reduced availability of capital and credit markets,making it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities.An economic downturn or increased uncertainty could also lead to failures of counterparties including financialinstitutions and insurers,asset impairments and declines in the value of our financial instruments.If a bankinginstitution in which we hold funds fails or is subject to significant adverse conditions in the financial or credit markets,we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessingall or a portion of such uninsured funds,which in turn could adversely impact our short-term liquidity and ability tomeet our operating expense obligations.19Table of ContentsOur operating results are subject to quarterly and seasonal sales patterns.The profile of our sales may be weighted differently during the year.A large portion of our quarterly sales havehistorically been made in the last month of the quarter.This uneven sales pattern makes prediction of revenue foreach financial period difficult and increases the risk of unanticipated variations in quarterly results and financialcondition.In addition,our operating results tend to vary seasonally with the markets in which our products are sold.For example,historically,our net revenue has been generally higher in the second half of the year than in the firsthalf of the year,although market conditions and product transitions could impact these trends.Many of the factorsthat create and affect quarterly and seasonal trends are beyond our control.If we cannot adequately protect our technology or other intellectual property in the United States andabroad,through patents,copyrights,trade secrets,trademarks and other measures,we may lose acompetitive advantage and incur significant expenses.We rely on a combination of protections provided by contracts,including confidentiality and nondisclosureagreements,copyrights,patents,trademarks and common law rights,such as trade secrets,to protect ourintellectual property.However,we cannot assure you that we will be able to adequately protect our technology orother intellectual property from third-party infringement or from misappropriation in the United States and abroad.Any patent licensed by us or issued to us could be challenged,invalidated,expire,or circumvented or rights grantedthereunder may not provide a competitive advantage to us.Furthermore,patent applications that we file may not result in issuance of a patent or,if a patent is issued,the patentmay not be issued in a form that is advantageous to us.Despite our efforts to protect our intellectual property rights,others may independently develop similar products,duplicate our products or design around our patents and otherrights.In addition,it is difficult to monitor compliance with,and enforce,our intellectual property on a worldwide basisin a cost-effective manner.In jurisdictions where foreign laws provide less intellectual property protection thanafforded in the U.S.and abroad,our technology or other intellectual property may be compromised,and ourbusiness would be materially adversely affected.Unfavorable currency exchange rate fluctuations could adversely affect us.We have costs,assets and liabilities that are denominated in foreign currencies.As a consequence,movements inexchange rates could cause our foreign currency denominated expenses to increase as a percentage of revenue,affecting our profitability and cash flows.Whenever we believe appropriate,we hedge a portion of our foreigncurrency exposure to protect against fluctuations in currency exchange rates.We determine our total foreigncurrency exposure using projections of long-term expenditures for items such as payroll.We cannot assure you thatthese activities will be effective in reducing foreign exchange rate exposure.Failure to do so could have an adverseeffect on our business,financial condition,results of operations and cash flow.In addition,the majority of our productsales are denominated in U.S.dollars.Fluctuations in the exchange rate between the U.S.dollar and the localcurrency can cause increases or decreases in the cost of our products in the local currency of such customers.Anappreciation of the U.S.dollar relative to the local currency could reduce sales of our products.Operational and Technology RisksWe rely on third parties to manufacture our products,and if they are unable to do so on a timely basis insufficient quantities and using competitive technologies,our business could be materially adverselyaffected.We utilize third-party wafer foundries to fabricate the silicon wafers for all of our products.We rely on TaiwanSemiconductor Manufacturing Company Limited(TSMC)for the production of all wafers for microprocessor andGPU products at 7 nanometer(nm)or smaller nodes,and we rely primarily on GLOBALFOUNDRIES Inc.(GF)forwafers for microprocessor and GPU products manufactured at process nodes larger than 7 nm.We also utilizeTSMC,United Microelectronics Corporation(UMC)and Samsung Electronics Co.,Ltd.for our integrated circuits(IC)in the form of programmable logic devices.We also rely on third-party manufacturers to assemble,test,mark andpack(ATMP)our products.Our third-party package assembly partners are responsible for packaging technologyused to fabricate our products.It is important to have reliable relationships with all of these third-party manufacturingsuppliers to ensure adequate product supply to respond to customer demand.20Table of ContentsWe cannot guarantee that these manufacturers or our other third-party manufacturing suppliers will be able to meetour near-term or long-term manufacturing requirements.If we experience supply constraints from our third-partymanufacturing suppliers,we may be required to allocate the reduced quantities of affected products amongst ourcustomers,which could have a material adverse effect on our relationships with these customers and on ourfinancial condition.In addition,if we are unable to meet customer demand due to fluctuating or late supply from ourmanufacturing suppliers,it could result in lost sales and have a material adverse effect on our business.Forexample,if TSMC is not able to manufacture wafers for our microprocessor and GPU products at 7 nm or smallernodes and our newest IC products in sufficient quantities to meet customer demand,it could have a material adverseeffect on our business.We do not have long-term commitment contracts with some of our third-party manufacturing suppliers.We obtainmany of these manufacturing services on a purchase order basis and these manufacturers are not required toprovide us with any specified minimum quantity of product beyond the quantities in an existing purchase order.Accordingly,we depend on these suppliers to allocate to us a portion of their manufacturing capacity sufficient tomeet our needs,to produce products of acceptable quality and at acceptable manufacturing yields and to deliverthose products to us on a timely basis and at acceptable prices.The manufacturers we use also fabricate wafers andATMP products for other companies,including certain of our competitors.They could choose to prioritize capacity forother customers,increase the prices that they charge us on short notice,require onerous prepayments,or reduce oreliminate deliveries to us,which could have a material adverse effect on our business.If we overestimate ourcustomer demand or experience a decrease in customer demand,either could result in excess inventory and anincrease in our production costs.We are party to a wafer supply agreement with GF where GF will provide aminimum annual capacity allocation to us and set pricing through 2026.If our actual wafer requirements are lessthan the number of wafers required to meet the applicable annual wafer purchase target,we could have excessinventory or higher inventory unit costs,both of which may adversely impact our gross margin and our results ofoperations.Other risks associated with our dependence on third-party manufacturers include limited control over deliveryschedules,yield,cycle times,quality assurance,price increases,lack of capacity in periods of excess demand,misappropriation of our intellectual property,dependence on several subcontractors,and limited ability to manageinventory and parts.Moreover,if any of our third-party manufacturers(or their subcontractors)suffer any damage tofacilities,lose benefits under material agreements,experience power outages,water shortages,or high heat events,lack sufficient capacity to manufacture our products,encounter financial difficulties,are unable to secure necessaryraw materials from their suppliers,suffer any other disruption or reduction in efficiency,or experience uncertainenvironmental,social,atmospheric or natural,economic or political circumstances or conditions,we may encountersupply delays or disruptions.For example,in the first quarter of 2024,we experienced some inventory loss due to anincident at a contract manufacturer.If we are unable to secure sufficient or reliable supply of products,our ability tomeet customer demand may be adversely affected and this could materially affect our business.If we transition the production of some of our products to new manufacturers,we may experience delayed productintroductions,lower yields or poorer performance of our products.If we experience problems with product quality orare unable to secure sufficient capacity from a particular third-party manufacturer,or if we for other reasons ceaseutilizing one of those manufacturers,we may be unable to timely secure an alternative supply for any specificproduct.We could experience significant delays in the shipment of our products if we are required to find alternativethird-party manufacturers,which could have a material adverse effect on our business.We are party to two ATMP joint ventures(collectively,the ATMP JVs)with affiliates of Tongfu Microelectronics Co.,Ltd.The majority of our ATMP services are provided by the ATMP JVs and there is no guarantee that the ATMP JVswill be able to fulfill our long-term ATMP requirements.If we are unable to meet customer demand due to fluctuatingor late supply from the ATMP JVs,it could result in lost sales and have a material adverse effect on our business.21Table of ContentsIf essential equipment,materials,substrates or manufacturing processes are not available to manufactureour products,we could be materially adversely affected.We may purchase equipment,materials and substrates for use by our back-end manufacturing service providersfrom a number of suppliers and our operations depend upon obtaining deliveries of adequate supplies of equipmentand materials of acceptable quality on a timely basis.Our third-party suppliers also depend on the same timelydelivery of adequate quantities of equipment and materials of acceptable quality in the manufacture of our products.In addition,as many of our products increase in technical complexity,we rely on our third-party suppliers to updatetheir processes in order to continue meeting our back-end manufacturing needs.Certain equipment and materialsthat are used in the manufacture of our products are available only from a limited number of suppliers,or in somecases,a sole supplier.We also depend on a limited number of suppliers to provide the majority of certain types of ICpackages for our microprocessors,including our APU products.Similarly,certain non-proprietary materials orcomponents such as memory,printed circuit boards(PCBs),interposers,substrates and capacitors used in themanufacture of our products are currently available from only a limited number of suppliers.If we are unable toprocure a stable supply of memory,equipment,materials or substrates of acceptable quality on an ongoing basisand at reasonable costs to meet our production requirements,we could experience a shortage in memory,equipment,materials or substrate supply or an increase in production costs,which could have a material adverseeffect on our business.We have long-term purchase commitments and prepayment arrangements with some of oursuppliers.If the delivery of such supply is delayed or does not occur for any reason,it could materially impact ourability to procure and process the required volume of supply to meet customer demand.Conversely,if weoverestimate our customer demand or experience a decrease in customer demand,either because customerscancel orders or choose to purchase from our competitors,it could result in excess inventory and an increase in ourproduction costs,particularly since we have prepayment arrangements with certain suppliers.Because some of theequipment and materials that we and our third-party manufacturers purchase are complex,it is sometimes difficult tosubstitute one equipment or materials supplier for another.From time to time,suppliers may extend lead times,limit supply or increase prices due to capacity constraints orother factors.Also,some of these materials and components may be subject to rapid changes in price,quality andavailability.Interruption of supply or increased demand in the industry could cause shortages and price increases invarious essential materials.Dependence on a sole supplier or a limited number of suppliers exacerbates these risks.If we are
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Unleash InnovationTSMC,Ltd02025TSMC PropertyUnleash Innovation2024 Fourth Quarter Earnings Conference January 16,2025Unleash InnovationTSMC,Ltd12025TSMC PropertyAgendaWelcomeJeff Su,IR Director4Q24 Financial Results and 1Q25 OutlookWendell Huang,CFOKey Messages Wendell Huang,CFO C.C.Wei,Chairman&CEOQ&AUnleash InnovationTSMC,Ltd22025TSMC PropertySafe Harbor NoticeTSMCs statements of its current expectations are forward-looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forward-looking statements.Information as to those factors that could cause actual results to vary can be found in TSMCs 2023 Annual Report on Form 20-F filed with the United States Securities and Exchange Commission(the“SEC”)on April 18,2024 and such other documents as TSMC may file with,or submit to,the SEC from time to time.Except as required by law,we undertake no obligation to update any forward-looking statement,whether as a result of new information,future events,or otherwise.Unleash InnovationTSMC,Ltd32025TSMC PropertyStatements of Comprehensive IncomeSelected Items from Statements of Comprehensive Income 4Q24(In NT$billions unless otherwise noted)GuidanceNet Revenue(US$billions)26.8826.1-26.923.5019.62 14.4% 37.0%Net Revenue868.46759.69625.53 14.3% 38.8%Gross Margin59.0W.0%-59.0W.8S.0% 1.2 ppts 6.0 pptsOperating Expenses(86.34)(79.08)(71.62) 9.2% 20.6%Operating Margin49.0F.5%-48.5G.5A.6% 1.5 ppts 7.4 pptsNon-Operating Items23.0923.4218.07-1.4% 27.7%Net Income Attributable to Shareholders of the Parent Company374.68325.26238.71 15.2% 57.0%Net Profit Margin43.1B.88.2% 0.3 ppt 4.9 pptsEPS(NT Dollar)14.4512.549.21 15.2% 57.0%ROE36.23.4(.1% 2.8 ppts 8.1 pptsShipment(Kpcs,12-equiv.Wafer)3,4183,3382,957 2.4% 15.6%Average Exchange Rate-USD/NTD32.3032.032.3231.88-0.1% 1.3%*Diluted weighted average outstanding shares were 25,929mn units in 4Q24*ROE figures are annualized based on average equity attributable to shareholders of the parent company4Q243Q244Q234Q24Over3Q244Q24Over4Q23Unleash InnovationTSMC,Ltd42025TSMC Property-50 100 150 200 250 300 350 400 450 500 550 6001Q222Q223Q224Q221Q232Q233Q234Q231Q242Q243Q244Q24Revenue(NT$B)7nm5nm3nm4Q24 Revenue by Technology7nm and Below Revenue0.11/0.13um 2nm 1%0.25um and above 0/45nm 3(nm6nm 7%0.15/0.18um 3enm 4%7nm14%5nm34%3nm26%Unleash InnovationTSMC,Ltd52025TSMC Property0.11/0.13um 2nm 1%0.25um and above 1/45nm 6(nm10nm 10%0.15/0.18um 5enm 6%7nm19%5nm33%3nm6 nm 1%Revenue by Technology202320240.11/0.13um 2nm 1%0.25um and above 1/45nm 4(nm7nm 8%0.15/0.18um 4enm 4%7nm17%5nm34%3nm18 nm 0%Unleash InnovationTSMC,Ltd62025TSMC Property4Q24 Revenue by Platform 19% 17%-15% 6%-6% 2%Growth Rate by Platform(QoQ)Automotive4E1%Others2%IoT5%SmartphoneAutomotiveOthersHPCIoTDCEHPC53%Smartphone35%Unleash InnovationTSMC,Ltd72025TSMC Property 58% 23% 2% 4% 2%-14%Growth rate by Platform(YoY)2024 Revenue by PlatformSmartphoneAutomotiveOthersHPCIoTDCESmartphone35%Automotive5E1%Others2%IoT6%HPC51%Unleash InnovationTSMC,Ltd82025TSMC PropertyBalance Sheets&Key IndicesSelected Items from Balance Sheets(In NT$billions)Amount%Amount%Amountsh&Marketable Securities2,422.02 36.2%2,167.60 35.2%1,687.65 30.5counts Receivable272.09 4.1$9.974.1 1.943.7%Inventories287.864.3)2.884.7%0.994.5%Long-term Investments149.042.27.332.19.442.3%Net PP&E3,234.98 48.3%3,071.60 49.8%3,064.48 55.4%Total Assets6,691.94 100.0%6,165.66 100.0%5,532.37 100.0%Current Liabilities1,264.53 18.9%1,080.40 17.53.5816.5%Long-term Interest-bearing Debts958.4314.36.1615.28.2816.6%Total Liabilities2,368.36 35.4%2,143.74 34.8%2,049.11 37.0%Total Shareholders Equity4,323.58 64.6%4,021.92 65.2%3,483.26 63.0%Key IndicesA/R Turnover DaysInventory Turnover DaysCurrent Ratio(x)Asset Productivity(x)*Total outstanding shares were 25,933mn units at 12/31/24*Asset productivity=Annualized net revenue/Average net PP&E804Q243Q244Q2327283187852.42.62.41.11.00.8Unleash InnovationTSMC,Ltd92025TSMC Property(In NT$billions)4Q243Q244Q23Beginning Balance1,886.781,799.131,311.81Cash from operating activities620.21391.99394.83Capital expenditures(361.95)(207.08)(170.16)Cash dividends(103.73)(90.76)(77.80)Bonds payable(1.75)(5.25)9.80Investments and others88.07(1.25)(3.05)Ending Balance2,127.631,886.781,465.43Free Cash Flow258.26184.91224.67Cash Flows*Free cash flow =Cash from operating activities Capital expenditures*Unleash InnovationTSMC,Ltd102025TSMC Property2024 Financial Highlights (In NT$billions unless otherwise noted)Net Revenue(US$billions)90.0869.30 30.0%Net Revenue2,894.312,161.74 33.9%Gross Margin56.1T.4% 1.7 pptsOperating Margin45.7B.6% 3.1 pptsIncome before Tax1,405.84979.17 43.6%EPS-Diluted(NT$)45.2532.34 39.9%Operating Cash Flow1,826.181,241.97 47.0pital Expenditures956.01949.82 0.7%Free Cash Flow(FCF)870.17292.15 197.9sh Dividends363.05291.72 24.5sh&Marketable Securities2,422.021,687.65 43.5%ROE30.3&.2% 4.1 pptsYoY20232024Unleash InnovationTSMC,Ltd112025TSMC Property1Q25 GuidanceRevenue to be between US$25.0 billion and US$25.8 billionBased on our current business outlook,management expects:And,based on the exchange rate assumption of 1 US dollar to 32.8 NT dollars,management expects:Gross profit margin to be between 57%and 59%Operating profit margin to be between 46.5%and 48.5%Unleash InnovationTSMC,Ltd122025TSMC PropertyPlease visit TSMCs website(https:/)and Market Observation Post System(https:/.tw)for details and other announcementsTSMC 2024 Supply Chain Management Forum Presents Awards to Outstanding Suppliers(2024/12/02)TSMC Marked a Significant Milestone in Sustainable Manufacturing with the Inauguration of the Taichung Zero Waste Manufacturing Center(2024/11/13)TSMC Board of Directors Approved NT$4.50 Cash Dividend for the Third Quarter of 2024 and Set March 18,2025 as Ex-Dividend Date,March 24,2025 as the Record Date and April 10,2025 as the Distribution Date(2024/11/12)Recap of Recent Major EventsUnleash InnovationTSMC,Ltd132025TSMC Propertyhttps:/
2025-03-24
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Fourth Quarter and AMD Full Year 2024 FINANCIAL RESULTS February 4,2025 -2CAUTIONARY STATEMENT This.
2025-03-24
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-1-English Translation of a Report and Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLYFINANCIAL STATEMENTSWITHREPORT OF INDEPENDENT ACCOUNTANTSFOR THE YEARS ENDEDDECEMBER 31,2024 AND 2023Notice to ReadersThe reader is advised that these financial statements have been prepared originally in Chinese.In the event of a conflictbetween these financial statements and the original Chinese version or difference in interpretation between the twoversions,the Chinese language financial statements shall prevail.A member firm of Ernst&Young Global Limited-2-安永聯合會計師事務所30078 新市新科學園區路1號E-3E-3,No.1,Lixing 1st Rd.,Hsinchu Science ParkHsinchu City,Taiwan,R.O.C.電話 Tel:886 3 688 5678傳真 Fax:886 3 688 Translation of a Report Originally Issued in ChineseIndependent Auditors ReportTo the Board of Directors and Shareholdersof MediaTek Inc.OpinionWe have audited the accompanying parent company only balance sheets of MediaTek Inc.as ofDecember 31,2024 and 2023,and the related parent company only statements of comprehensiveincome,changes in equity and cash flows for the years ended December 31,2024 and 2023,and notesto the parent company only financial statements,including the summary of material accountingpolicies(together“the parent company only financial statements”).In our opinion,the parent company only financial statements referred to above present fairly,in allmaterial respects,the parent company only financial position of MediaTek Inc.as of December 31,2024 and 2023,and the parent company only financial performance and the parent company onlycash flows for the years ended December 31,2024 and 2023,in conformity with the requirements ofthe Regulations Governing the Preparation of Financial Reports by Securities Issuers.Basis for OpinionWe conducted our audits in accordance with the Regulations Governing Financial Statement Auditand Attestation Engagements of Certified Public Accountants and the Standards on Auditing of theRepublic of China.Our responsibilities under those standards are further described in the AuditorsResponsibilities for the Audit of the Parent Company Only Financial Statements section of our report.We are independent of MediaTek Inc.in accordance with the Norm of Professional Ethics forCertified Public Accountant of the Republic of China(the“Norm”),and we have fulfilled our otherethical responsibilities in accordance with the Norm.We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.A member firm of Ernst&Young Global Limited-3-Key Audit MattersKey audit matters are those matters that,in our professional judgment,were of most significance inour audit of 2024 parent company only financial statements.These matters were addressed in thecontext of our audit of the parent company only financial statements as a whole,and in forming ouropinion thereon,and we do not provide a separate opinion on these matters.Revenue recognitionMediaTek Inc.recognized NT$280,438,884 thousand as net sales,which includes sale of goods inthe amount of NT$269,578,696 thousand and services and other operating revenues in the amount ofNT$10,860,188 thousand for the year ended December 31,2024.Main source of revenue comes fromsales of chips.Due to the fact that the product portfolio and the pricing methods are varied and salesdiscounts are usually directly included or indirectly implied in purchase orders or in practice,it isnecessary for the Company to judge and determine the performance obligation of a contract,thetiming of its satisfaction,and the estimate of the variable considerations.As a result,we determinedthe matter to be a key audit matter.Our audit procedures include(but are not limited to)assessing the appropriateness of the accountingpolicy for revenue recognition;evaluating and testing the effectiveness of internal control which isrelated to the timing of revenue recognition;performing test of details on samples selected fromdetails of sales,reviewing the significant terms of sales agreements,testing five steps of revenuerecognition and tracing to relevant documentation of transactions;performing test for contractmodification,test for contract consolidation and test for principal and agent;adopting audit samplingon trade receivables and performing confirmation procedures on final balance and key terms of salesagreements;and reviewing transactions for certain period before and after the reporting date,analyzing the reasonableness of fluctuations and selecting samples to perform cutoff procedures,tracing to relevant documentation to verify that revenue has been recorded in the correct accountingperiod.Besides,we also reviewed if there are any significant revenue reversals in subsequent periods.We also considered the appropriateness of the disclosures of sales.Please refer to Note 4,Note 5 andNote 6 in notes to the parent company only financial statements.A member firm of Ernst&Young Global Limited-4-Responsibilities of Management and Those Charged with Governance for the Parent CompanyOnly Financial StatementsManagement is responsible for the preparation and fair presentation of the parent company onlyfinancial statements in accordance with the requirements of the Regulations Governing thePreparation of Financial Reports by Securities Issuers and for such internal control as managementdetermines is necessary to enable the preparation of parent company only financial statements thatare free from material misstatement,whether due to fraud or error.In preparing the parent company only financial statements,management is responsible for assessingthe ability to continue as a going concern of MediaTek Inc.,disclosing,as applicable,matters relatedto going concern and using the going concern basis of accounting unless management either intendsto liquidate MediaTek Inc.or to cease operations,or has no realistic alternative but to do so.Those charged with governance,including audit committee,are responsible for overseeing thefinancial reporting process of MediaTek Inc.Auditors Responsibilities for the Audit of the Parent Company Only Financial StatementsOur objectives are to obtain reasonable assurance about whether the parent company only financialstatements as a whole are free from material misstatement,whether due to fraud or error,and to issuean auditors report that includes our opinion.Reasonable assurance is a high level of assurance,butis not a guarantee that an audit conducted in accordance with the Standards on Auditing of theRepublic of China will always detect a material misstatement when it exists.Misstatements can arisefrom fraud or error and are considered material if,individually or in the aggregate,they couldreasonably be expected to influence the economic decisions of users taken on the basis of these parentcompany only financial statements.As part of an audit in accordance with the Standards on Auditing of the Republic of China,weexercise professional judgment and professional skepticism throughout the audit.We also:A member firm of Ernst&Young Global Limited-5-1.Identify and assess the risks of material misstatement of the parent company only financialstatements,whether due to fraud or error,design and perform audit procedures responsive to thoserisks,and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for oneresulting from error,as fraud may involve collusion,forgery,intentional omissions,misrepresentations,or the override of internal control.2.Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances,but not for the purpose of expressing an opinion on theeffectiveness of the internal control of MediaTek Inc.3.Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.4.Conclude on the appropriateness of managements use of the going concern basis of accountingand,based on the audit evidence obtained,whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the ability to continue as a going concern ofMediaTek Inc.If we conclude that a material uncertainty exists,we are required to draw attentionin our auditors report to the related disclosures in the parent company only financial statementsor,if such disclosures are inadequate,to modify our opinion.Our conclusions are based on theaudit evidence obtained up to the date of our auditors report.However,future events or conditionsmay cause MediaTek Inc.to cease to continue as a going concern.5.Evaluate the overall presentation,structure and content of the parent company only financialstatements,including the accompanying notes,and whether the parent company only financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.6.Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within MediaTek Inc.and its subsidiaries to express an opinion on the parentcompany only financial statements.We are responsible for the direction,supervision andperformance of the group audit.We remain solely responsible for our audit opinion.A member firm of Ernst&Young Global Limited-6-We communicate with those charged with governance regarding,among other matters,the plannedscope and timing of the audit and significant audit findings,including any significant deficiencies ininternal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence,and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence,and where applicable,related safeguards.From the matters communicated with those charged with governance,we determine those mattersthat were of most significance in the audit of 2024 parent company only financial statements and aretherefore the key audit matters.We describe these matters in our auditors report unless law orregulation precludes public disclosure about the matter or when,in extremely rare circumstances,wedetermine that a matter should not be communicated in our report because the adverse consequencesof doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.Hsu,Hsin-MinHuang,Chien-CheErnst&Young,TaiwanFebruary 27,2025Notice to ReadersThe accompanying financial statements are intended only to present the financial position,results of operations and cashflows in accordance with accounting principles and practices generally accepted in the Republic of China and not thoseof any other jurisdictions.The standards,procedures and practices to audit such financial statements are those generallyaccepted and applied in the Republic of China.Accordingly,the accompanying financial statements and report of independent accountants are not intended for use bythose who are not informed about the accounting principles or the Standards on Auditing of the Republic of China,andtheir applications in practice.As the financial statements are the responsibility of the management,Ernst&Young cannotaccept any liability for the use of,or reliance on,the English translation or for any errors or misunderstandings that mayderive from the translation.ASSETSNotesCurrent assets Cash and cash equivalents4,6(1)89,141,863$1447,975,519$9 Financial assets at fair value through profit or loss-current4,5,6(2)1,815,248 -2,430,520-Financial assets measured at amortized cost-current4,6(4)199,487 -361,079-Trade receivables,net4,6(5),6(20)20,514,957333,354,3416 Trade receivables from related parties,net4,6(5),6(20),7639,358 -529,579-Finance lease receivables,net4,6(20),6(21)727,892 -727,892-Other receivables6(6)4,052,30612,921,4181 Other receivables from related parties722,475,4813304,451-Current tax assets4,5,6(28)1,114,792 -Inventories4,5,6(7)27,613,619425,078,7694 Prepayments6(8),97,865,43922,755,2721 Other current assets93,616,3661853,426-Total current assets179,776,80828117,292,26621Non-current assets Financial assets at fair value through profit or loss-noncurrent4,5,6(2)33,500 -708,472-Financial assets at fair value through other comprehensive income-noncurrent4,5,6(3)5,996,29716,892,3651 Financial assets measured at amortized cost-noncurrent4,6(4),82,163,12312,363,0831 Investments accounted for using the equity method4,6(9)350,291,66354308,672,20155 Property,plant and equipment4,6(10)33,511,820530,714,7416 Right-of-use assets4,6(21)2,163,104 -2,325,926-Intangible assets4,6(11),6(12)61,487,848962,090,85911 Deferred tax assets4,5,6(28)8,383,668110,028,6182 Refundable deposits91,179,962 -5,834,1851 Long-term finance lease receivables,net4,6(20),6(21)-727,892-Other non-current assets-others94,582,424112,264,9542Total non-current assets469,793,40972442,623,29679Total assets649,570,217$100559,915,562$100English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLY BALANCE SHEETSAs of December 31,2024 and 2023(Amounts in thousands of New Taiwan Dollars)December 31,2024cember 31,2023%The accompanying notes are an integral part of the parent company only financial statements.-7-LIABILITIES AND EQUITYNotesCurrent liabilities Financial liabilities at fair value through profit or loss-current4,5,6(2)-$-301,272$-Contract liabilities-current4,5,6(19),74,019,70413,225,7951 Trade payables23,244,485424,113,4884 Trade payables to related parties71,805,816-1,470,994-Other payables6(13)90,405,0961476,542,38014 Other payables to related parties72,147,167-21,151,9654 Current tax liabilities4,5,6(28)2,624,279-8,740,8331 Lease liabilities-current4,6(21)281,600-255,038-Current portion of long-term liabilities5,106,28213,701,8761 Other current liabilities4,5,6(14),741,742,160635,480,0096Total current liabilities171,376,58926174,983,65031Non-current liabilities Long-term payables1,742,737-2,892,8901 Long-term payables to related parties768,485,12012-Net defined benefit liabilities-noncurrent4,6(15)426,982-485,127-Deposits received756,359-56,677-Deferred tax liabilities4,5,6(28)8,056,08016,225,4071 Lease liabilities-noncurrent4,6(21)1,944,099-2,101,208-Other non-current liabilities-others4,6(16),9855,174-4,964,8211Total non-current liabilities81,566,5511316,726,1303Total liabilities252,943,14039191,709,78034Equity Share capital6(17)Common stock16,016,880215,996,4753 Capital surplus6(17),6(18)31,636,053528,350,4385 Retained earnings6(17)Legal reserve89,308,5241475,782,94814 Undistributed earnings210,598,74332212,669,73638 Other equity6(18)49,122,847835,462,1556 Treasury shares4,6(17)(55,970)-(55,970)-Total equity396,627,07761368,205,78266Total liabilities and equity649,570,217$100559,915,562$100December 31,2024(Amounts in thousands of New Taiwan Dollars)%The accompanying notes are an integral part of the parent company only financial statements.December 31,2023As of December 31,2024 and 2023English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLY BALANCE SHEETS-8-English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOMEFor the years ended December 31,2024 and 2023(Amounts in thousands of New Taiwan Dollars,except for earnings per share)DescriptionNotes2024 23%Net sales4,5,6(19),7280,438,884$100268,685,527$100Operating costs4,5,6(7),6(22),7(130,183,997)(46)(131,565,573)(49)Gross profit150,254,88754137,119,95451Unrealized gross profit on sales(371,226)-(207,605)-Realized gross profit on sales211,658-189,921-Gross profit,net150,095,31954137,102,27051Operating expenses6(20),6(21),6(22),7Selling expenses(9,510,994)(3)(9,013,919)(3)Administrative expenses(6,561,734)(2)(5,135,942)(2)Research and development expenses(101,953,456)(37)(80,592,743)(30)Expected credit impairment gains(losses)56,125-(56,293)-Total operating expenses(117,970,059)(42)(94,798,897)(35)Operating income32,125,2601242,303,37316Non-operating income and expensesInterest income4,6(23)2,874,8891966,082-Other income4,6(24),7350,857-312,893-Other gains and losses4,6(25)1,698,3601790,848-Finance costs6(26),7(154,822)-(172,510)-Share of profit of subsidiaries,associates and joint ventures accounted for using the equity method473,749,0102639,455,19415 Total non-operating income and expenses78,518,2942841,352,50715Net income before income tax110,643,5544083,655,88031Income tax expense4,5,6(28)(4,256,976)(2)(6,677,243)(2)Net income106,386,5783876,978,63729Other comprehensive income4,6(9),6(15),6(27),6(28)Items that may not be reclassified subsequently to profit or lossRemeasurements of the defined benefit plan57,171-118,934-Unrealized gains(losses)from equity instrument investments measured at fair value through other comprehensive income(110,215)-(327,518)-Share of other comprehensive income of subsidiaries,associates and joint ventures accounted for using the equity method which may not be reclassified to profit or loss(1,788,803)(1)8,283,3613Income tax relating to those items not to be reclassified to profit or loss(11,434)-(23,787)-Items that may be reclassified subsequently to profit or lossExchange differences resulting from translating the financial statements of foreign operations17,005,5045(1,251,022)(1)Unrealized gains(losses)from debt instrument investments measured at fair value through other comprehensive income104-164-Share of other comprehensive income of subsidiaries,associates and joint ventures accounted for using the equity method which may be reclassified to profit or loss16,700-3,068-Other comprehensive income,net of tax15,169,02746,803,2002Total comprehensive income121,555,605$4283,781,837$31Basic Earnings Per Share(in New Taiwan Dollars)6(29)66.92$48.51$Diluted Earnings Per Share(in New Taiwan Dollars)6(29)66.78$48.34$The accompanying notes are an integral part of the parent company only financial statements.-9-CommonstockCapital collectedin advanceLegalreserve UndistributedearningsOthersBalance as of January 1,202315,994,353$113$47,185,281$62,058,498$286,688,675$7,359,676$23,079,555$(2,200,891)$(55,970)$440,109,290$Distribution of earnings:Legal reserve-13,724,450(13,724,450)-Cash dividends-(138,529,355)-(138,529,355)Total-13,724,450(152,253,805)-(138,529,355)Cash dividends distributed from capital surplus-(22,395,132)-(22,395,132)Profit for the year ended December 31,2023-76,978,637-76,978,637Other comprehensive income for the year ended December 31,2023-106,934(1,251,022)7,947,288-6,803,200Total comprehensive income-77,085,571(1,251,022)7,947,288-83,781,837Share-based payment transactions2,273(113)81,354-83,514Adjustments due to dividends that subsidiaries received from parent company-592,402-592,402Changes in associates and joint ventures accounted for using the equity method-32,879-32,879The differences between the fair value of the consideration paid or received from acquiring or disposing subsidiaries and the carrying amounts of the subsidiaries-(2,356,639)-(2,356,639)Changes in ownership interests in subsidiaries-5,061,315-5,061,315Issuance of restricted stock for employees(151)-107,552-9,537-1,667,307-1,784,245Changes in other capital surplus-41,426-41,426Proceeds from disposal of equity instruments measured at fair value through other comprehensive income-1,139,758-(1,139,758)-Balance as of December 31,202315,996,475-28,350,43875,782,948212,669,7366,108,65429,887,085(533,584)(55,970)368,205,782Distribution of earnings:Legal reserve-13,525,576(13,525,576)-Cash dividends-(95,077,504)-(95,077,504)Total-13,525,576(108,603,080)-(95,077,504)Profit for the year ended December 31,2024-106,386,578-106,386,578Other comprehensive income for the year ended December 31,2024-68,41617,005,504(1,904,893)-15,169,027Total comprehensive income-106,454,99417,005,504(1,904,893)-121,555,605Adjustments due to dividends that subsidiaries received from parent company-428,674-428,674Changes in associates and joint ventures accounted for using the equity method-327,309-327,309The differences between the fair value of the consideration paid or received from acquiring or disposing subsidiaries and the carrying amounts of the subsidiaries-(177,867)-(177,867)Changes in ownership interests in subsidiaries-112,798-112,798Issuance of restricted stock for employees20,405-2,585,863-22,840-(1,385,666)-1,243,442Changes in other capital surplus-8,838-8,838Proceeds from disposal of equity instruments measured at fair value through other comprehensive income-54,253-(54,253)-Balance as of December 31,202416,016,880$-$31,636,053$89,308,524$210,598,743$23,114,158$27,927,939$(1,919,250)$(55,970)$396,627,077$English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITYFor the years ended December 31,2024 and 2023(Amounts in thousands of New Taiwan Dollars)DescriptionShare capitalCapitalsurplusRetained earningsOther equityTreasurysharesTotal equity Exchange differencesresulting fromtranslatingthe financial statementsof foreign operationsUnrealized gains(losses)from financial assets measured at fair value through othercomprehensive incomeThe accompanying notes are an integral part of the parent company only financial statements.-10-20242023Cash flows from operating activities:Profit from continuing operations before tax110,643,554$83,655,880$Adjustments for:The profit or loss items which did not affect cash flows:Depreciation expenses7,912,6126,683,855 Amortization expenses5,270,2374,456,803 Expected credit impairment(gains)losses(56,125)56,293 Net(gains)losses on financial assets or liabilities at fair value through profit or loss(623,993)118,593 Interest expenses154,822172,510 Net gains arising from derecognition of financial assets measured at amortized cost(32,397)-Interest income(2,874,889)(966,082)Dividend income(133,709)(117,011)Share-based payment expenses970,1961,430,641 Share of profit of subsidiaries,associates and joint ventures accounted for using the equity method(73,749,010)(39,455,194)Gains on disposal of property,plant and equipment(6,966)(3,440)Gains on disposal of investments accounted for using the equity method(871,693)-Unrealized gross profit(loss)on sales207,718(724)Realized gross profit on sales(211,658)(189,921)Changes in operating assets and liabilities:Financial assets mandatorily measured at fair value through profit or loss1,614,4781,177,029 Trade receivables12,895,509(8,397,655)Trade receivables from related parties(109,779)(21,303)Other receivables1,504,832987,563 Other receivables from related parties(214,780)95,313 Inventories(2,534,850)14,329,905 Prepayments40,59382,927 Other current assets(739,516)311,506 Other non-current assets-others3,311,405-Contract liabilities793,9091,103,566 Trade payables(869,003)12,045,141 Trade payables to related parties334,82284,887 Other payables6,799,9631,278,930 Other payables to related parties980,752311,167 Other current liabilities6,262,1519,990,101 Net defined benefit liabilities(974)(3,119)Other non-current liabilities-others(3,230,481)4,079,654Cash inflows generated from operations:73,437,73093,297,815 Interest received1,791,202992,019 Dividends received29,555,10655,034,008 Interest paid(154,822)(172,510)Income tax paid(8,024,133)(2,007,582)Net cash flows from operating activities96,605,083147,143,750Cash flows from investing activities:Acquisition of financial assets at fair value through other comprehensive income(77,504)-Proceeds from disposal of financial assets at fair value through other comprehensive income868,4617,827 Acquisition of financial assets measured at amortized cost(536)(710,091)Proceeds from repayments of financial assets measured at amortized cost391,88220,000 Acquisition of investments accounted for using the equity method(2,231,441)-Proceeds from disposal of investments accounted for using the equity method25,000-Acquisition of property,plant and equipment(10,207,411)(4,849,045)Proceeds from disposal of property,plant and equipment7,0514,191 Decrease in refundable deposits300,221804,239 Acquisition of intangible assets(5,493,966)(4,943,961)Decrease in finance lease receivables727,892-Net cash flows used in investing activities(15,690,351)(9,666,840)Cash flows from financing activities:Repayment of long-term borrowings-(827,660)(Decrease)increase in deposits received(318)368 Other payables to related parties48,499,57010,710,838 Payment of lease liabilities(303,548)(329,658)Exercise of employee stock options-79,477 Cash dividends paid(87,979,466)(121,573,573)Other financing activities35,37421,093 Net cash flows used in financing activities(39,748,388)(111,919,115)Net increase in cash and cash equivalents41,166,34425,557,795Cash and cash equivalents at the beginning of the year47,975,51922,417,724Cash and cash equivalents at the end of the year89,141,863$47,975,519$The accompanying notes are an integral part of the parent company only financial statements.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.PARENT COMPANY ONLY STATEMENTS OF CASH FLOWSFor the years ended December 31,2024 and 2023(Amounts in thousands of New Taiwan Dollars)Description-11-English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-12-1.Organization and OperationAs officially approved,MediaTek Inc.(“the Company”)was incorporated at Hsinchu Science-based Industrial Park on May 28,1997.Since then,it has been specialized in the R&D,production,manufacturing and marketing of multimedia integrated circuits(ICs),computer peripheralsoriented ICs,high-end consumer-oriented ICs and other ICs of extraordinary application.Meanwhile,it has rendered design,test runs,maintenance and repair and technologicalconsultation services for software&hardware of the aforementioned products,import and exporttrades for the aforementioned products,sale and delegation of patents and circuit layout rights forthe aforementioned products.2.Date and Procedures of Authorization of Financial Statements for IssueThe parent company only financial statements were authorized for issue in accordance with aresolution of the Board of Directors on February 27,2025.3.Newly Issued or Revised Standards and Interpretations(1)Changes in accounting policies resulting from applying for the first time certain standards andamendmentsThe Company applied for the first time International Financial Reporting Standards(IFRS),International Accounting Standards(IAS),IFRIC Interpretations(IFRIC),and SICInterpretations(SIC)(collectively,“IFRSs Accounting Standards”),revised or amendedwhich are recognized by Financial Supervisory Commission(“FSC”)and became effectivefor annual periods beginning on or after January 1,2024.The application of these newstandards and amendments had no material effect on the Company.(2)Standards or interpretations issued,revised or amended,by International AccountingStandards Board(“IASB”)which were endorsed by FSC but not yet adopted by the Companyas at the end of the reporting period are listed below:Standards orInterpretations NumbersThe Projects of Standards or InterpretationsEffectiveDate issuedby IASBIAS 21“Lack of Exchangeability”(Amendment)January 1,2025The abovementioned standards and interpretations were issued by IASB and endorsed by FSCso that they are applicable for annual periods beginning on or after January 1,2025.Allstandards and interpretations have no material impact on the Company.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-13-(3)Standards or interpretations issued,revised or amended,by IASB but not yet endorsed byFSC,and not yet adopted by the Company as at the end of the reporting period are listedbelow:Standards orInterpretations Numbers The Projects of Standards or InterpretationsEffective Dateissued by IASBIFRS 10 and IAS 28“Consolidated Financial Statements”and“Investments in Associates and JointVentures”-Sale or Contribution ofAssets between an Investor and itsAssociate or Joint Ventures(Amendment)To be determinedby IASBIFRS 17“Insurance Contracts”January 1,2023IFRS 18“Presentation and Disclosure in FinancialStatements”January 1,2027IFRS 19“Disclosure Initiative Subsidiaries withoutPublic Accountability:Disclosures”January 1,2027IFRS 9 and IFRS 7“Financial Instruments”and“FinancialInstruments:Disclosures”-Classificationand Measurement(Amendment)January 1,2026Annual Improvements to IFRSs Accounting Standards Volume 11:IFRS 1“First-time Adoption of InternationalFinancial Reporting Standards”January 1,2026IFRS 7“Financial Instruments:Disclosures”January 1,2026IFRS 9“Financial Instruments”January 1,2026IFRS 10“Consolidated Financial Statements”January 1,2026IAS 7“Statement of Cash Flows”January 1,2026IFRS 9 and IFRS 7“Financial Instruments”and“FinancialInstruments:Disclosures”ContractsReferencing Nature-dependent Electricity(Amendment)January 1,2026The abovementioned standards and interpretations issued by IASB have not yet been endorsed byFSC at the date of issuance of the Companys financial statements,the local effective dates are tobe determined by FSC.As the Company is currently determining the potential impact of the newor amended standards and interpretations of IFRS 10 and IAS 28“Consolidated FinancialStatements”and“Investments in Associates and Joint Ventures”,IFRS 18“Presentation andDisclosure in Financial Statements”,and IFRS 9 and IFRS 7“Financial Instruments”and“Financial Instruments:Disclosures”.All other standards and interpretations have no materialimpact on the Company.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-14-4.Summary of Material Accounting PoliciesStatement of ComplianceThe parent company only financial statements have been prepared in accordance with theRegulations Governing the Preparation of Financial Reports by Securities Issuers(“theRegulations”).Basis of PreparationAccording to article 21 of the Regulations,the profit or loss and other comprehensive incomepresented in the parent company only financial reports will be the same as the allocations of profitor loss and of other comprehensive income attributable to owners of the parent presented in thefinancial reports prepared on a consolidated basis,and the owners equity presented in the parentcompany only financial reports will be the same as the equity attributable to owners of the parentpresented in the financial reports prepared on a consolidated basis.Therefore,the investments insubsidiaries will be disclosed under“Investments accounted for using the equity method”in theparent company only financial report and change in value will be adjusted.The parent company only financial statements have been prepared on a historical cost basis,exceptfor financial instruments that have been measured at fair value.The parent company only financialstatements are expressed in thousands of New Taiwan Dollars(“NT$”)unless otherwise stated.Foreign currency transactionsThe Companys parent company only financial statements are presented in NT$.Transactions in foreign currencies are initially recorded by the Companys functional currencyrates prevailing at the date of the transaction.Monetary assets and liabilities denominated inforeign currencies are retranslated at the rate prevailing at the reporting date.Non-monetary itemsmeasured at fair value in a foreign currency are translated using the exchange rates at the datewhen the fair value is determined.Non-monetary items that are measured at historical cost in aforeign currency are translated using the exchange rates as at the dates of the initial transactions.All exchange differences arising on the settlement of monetary items or on translating monetaryitems are taken to profit or loss in the period in which they arise except for the following:(1)Exchange differences arising from foreign currency borrowings for an acquisition of aqualifying asset to the extent that they are regarded as an adjustment to interest costs areincluded in the borrowing costs that are eligible for capitalization.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-15-(2)Foreign currency items within the scope of IFRS 9“Financial Instruments”are accounted forbased on the accounting policy for financial instruments.(3)Exchange differences arising on a monetary item that forms part of a reporting entitys netinvestment in a foreign operation is recognized initially in other comprehensive income andreclassified from equity to profit or loss on disposal of the net investment.When a gain or loss on a non-monetary item is recognized in other comprehensive income,anyexchange component of that gain or loss is recognized in other comprehensive income.When again or loss on a non-monetary item is recognized in profit or loss,any exchange component ofthat gain or loss is recognized in profit or loss.Translation of financial statements in foreign currencyThe assets and liabilities of foreign operations are translated into New Taiwan Dollars at the rateprevailing at the reporting date and their income and expenses are translated at an average rate forthe period.The exchange differences arising on the translation are recognized in othercomprehensive income.On the disposal of a foreign operation,the cumulative amount of theexchange differences relating to that foreign operation,recognized in other comprehensive incomeand accumulated in the separate component of equity,is reclassified from equity to profit or losswhen the gain or loss on disposal is recognized.On the partial disposal of foreign operations thatresult in a loss of control,loss of significant influence or joint control but retain partial equity isconsidered a disposal.On the partial disposal of a subsidiary that includes a foreign operation that does not result in aloss of control,the proportionate share of the cumulative amount of the exchange differencesrecognized in other comprehensive income is adjusted in“investments accounted for using theequity method”.In partial disposal of an associate or jointly controlled entity that includes aforeign operation that does not result in a loss of significant influence or joint control,only theproportionate share of the cumulative amount of the exchange differences recognized in othercomprehensive income is reclassified to profit or loss.Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilitiesarising on the acquisition of a foreign operation are treated as assets and liabilities of the foreignoperation and expressed in its functional currency.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-16-Current and non-current distinctionAn asset is classified as current when:(1)the Company expects to realize the asset,or intends to sell or consume it,in its normaloperating cycle.(2)the Company holds the asset primarily for the purpose of trading.(3)the Company expects to realize the asset within twelve months after the reporting period.(4)the asset is cash or cash equivalent unless the asset is restricted from being exchanged or usedto settle a liability for at least twelve months after the reporting period.All other assets are classified as non-current.A liability is classified as current when:(1)the Company expects to settle the liability in its normal operating cycle.(2)the Company holds the liability primarily for the purpose of trading.(3)the liability is due to be settled within twelve months after the reporting period.(4)the Company does not have the right at the end of the reporting period to defer settlement ofthe liability for at least twelve months after the reporting period.All other liabilities are classified as non-current.Cash and cash equivalentsCash and cash equivalents comprise cash on hand,demand deposits and short-term,highly liquidtime deposits or investments that are within twelve months and are readily convertible to knownamounts of cash with values subject to an insignificant risk of changes.Financial instrumentsFinancial assets and financial liabilities are recognized when the Company becomes a party to thecontractual provisions of the instrument.Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments arerecognized initially at fair value plus or minus,in the case of a financial asset or financial liabilitynot at fair value through profit or loss,transaction costs that are directly attributable to theacquisition or issue of the financial asset or financial liability.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-17-(1)Financial instruments:Recognition and MeasurementThe Company accounts for regular way purchase or sales of financial assets on the trade date.The Company classified financial assets as subsequently measured at amortized cost,fairvalue through other comprehensive income or fair value through profit or loss on the basis of:A.the Companys business model for managing the financial assets andB.the contractual cash flow characteristics of the financial asset.a.Financial assets measured at amortized costA financial asset is measured at amortized cost if both of the following conditions aremet and presented as trade receivables,financial assets measured at amortized cost andother receivables etc.,on balance sheet as at the reporting date:(a)the financial asset is held within a business model whose objective is to hold financialassets in order to collect contractual cash flows and(b)the contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amountoutstanding.Such financial assets are subsequently measured at amortized cost and is not part of ahedging relationship.A gain or loss is recognized in profit or loss when the financialasset is derecognized,through the amortization process or in order to recognize theimpairment gains or losses.Interest revenue is calculated by using the effective interest method.This is calculated byapplying the effective interest rate to the gross carrying amount of a financial asset exceptfor:(a)purchased or originated credit-impaired financial assets.For those financial assets,the Company applies the credit-adjusted effective interest rate to the amortized costof the financial asset from initial recognition.(b)financial assets that are not purchased or originated credit-impaired financial assetsbut subsequently have become credit-impaired financial assets.For those financialassets,the Company applies the effective interest rate to the amortized cost of thefinancial asset in subsequent reporting periods.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-18-b.Financial asset measured at fair value through other comprehensive incomeA financial asset is measured at fair value through other comprehensive income if bothof the following conditions are met:(a)the financial asset is held within a business model whose objective is achieved byboth collecting contractual cash flows and selling financial assets and(b)the contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amountoutstanding.Recognitions of gain or loss on a financial asset measured at fair value through othercomprehensive income are described as below:(a)A gain or loss on a financial asset measured at fair value through othercomprehensive income recognized in other comprehensive income,except forimpairment gains or losses and foreign exchange gains and losses,until the financialasset is derecognized or reclassified.(b)When the financial asset is derecognized the cumulative gain or loss previouslyrecognized in other comprehensive income is reclassified from equity to profit orloss as a reclassification adjustment.(c)Interest revenue is calculated by using the effective interest method.This iscalculated by applying the effective interest rate to the gross carrying amount of afinancial asset except for:I.purchased or originated credit-impaired financial assets.For those financialassets,the Company applies the credit-adjusted effective interest rate to theamortized cost of the financial asset from initial recognition.II.financial assets that are not purchased or originated credit-impaired financialassets but subsequently have become credit-impaired financial assets.For thosefinancial assets,the Company applies the effective interest rate to the amortizedcost of the financial asset in subsequent reporting periods.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-19-Besides,at initial recognition,the Company makes an irrevocable election to present inother comprehensive income subsequent changes in the fair value of an investment inan equity instrument within the scope of IFRS 9 that is neither held for trading norcontingent consideration recognized by an acquirer in a business combination to whichIFRS 3 applies.Amounts presented in other comprehensive income are not subsequentlytransferred to profit or loss(when disposal of such equity instrument,its cumulatedamount included in other components of equity is transferred directly to the retainedearnings)and should be recorded as financial assets measured at fair value through othercomprehensive income on balance sheet.Dividends on such investment are recognizedin profit or loss unless the dividend clearly represents a recovery of part of the cost ofinvestment.c.Financial assets measured at fair value through profit or lossFinancial assets were measured at amortized cost or measured at fair value through othercomprehensive income only if they met particular conditions.All other financial assetswere measured at fair value through profit or loss and presented on the balance sheet asfinancial assets measured at fair value through profit or loss and trade receivables.Such financial assets are measured at fair value,the gains or losses resulting fromremeasurement is recognized in profit or loss which includes any dividend or interestreceived on such financial assets.(2)Impairment of financial assetsThe Company recognizes a loss allowance for expected credit losses on debt instrumentinvestments measured at fair value through other comprehensive income and financial assetsmeasured at amortized cost.The loss allowance on debt instrument investments measured atfair value through other comprehensive income is recognized in other comprehensive incomeand does not reduce the carrying amount in the statement of financial position.The Company measures expected credit losses of a financial instrument in a way that reflects:A.an unbiased and probability-weighted amount that is determined by evaluating a range ofpossible outcomes;B.the time value of money;andC.reasonable and supportable information that is available without undue cost or effort at thereporting date about past events,current conditions and forecasts of future economicconditions.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-20-The loss allowance is measured as follows:A.at an amount equal to 12-month expected credit losses:the credit risk on a financial assethas not increased significantly since initial recognition or the financial asset is determinedto have low credit risk at the reporting date.In addition,the Company measures the lossallowance for a financial asset at an amount equal to lifetime expected credit losses in theprevious reporting period,but determines at the current reporting date that condition is nolonger met.B.at an amount equal to the lifetime expected credit losses:the credit risk on a financial assethas increased significantly since initial recognition or financial asset that is purchased ororiginated credit-impaired financial asset.C.for trade receivables or contract assets arising from transactions within the scope of IFRS15,the Company measures the loss allowance at an amount equal to lifetime expectedcredit losses.D.for finance lease receivables arising from transactions within the scope of IFRS 16,theCompany measures the loss allowance at an amount equal to lifetime expected creditlosses.At each reporting date,the Company needs to assess whether the credit risk on a financialasset has been increased significantly since initial recognition by comparing the risk of adefault occurring at the reporting date and the risk of default occurring at initial recognition.Please refer to Note 12 for further details on credit risk.(3)Derecognition of financial assetsA financial asset is derecognized when:A.the rights to receive cash flows from the asset have expired.B.the Company has transferred the asset and substantially all the risks and rewards of theasset have been transferred.C.the Company has neither transferred nor retained substantially all the risks and rewards ofthe asset,but has transferred control of the asset.On derecognition of a financial asset in its entirety,the difference between the carryingamount and the consideration received or receivable including any cumulative gain or lossthat had been recognized in other comprehensive income,is recognized in profit or loss.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-21-(4)Financial liabilities and equityA.Classification between liabilities or equityThe Company classifies the instrument issued as a financial liability or an equity instrumentin accordance with the substance of the contractual arrangement and the definitions of afinancial liability,and an equity instrument.B.Equity instrumentsAn equity instrument is any contract that evidences a residual interest in the assets of anentity after deducting all of its liabilities.The transaction costs of an equity transaction areaccounted for as a deduction from equity to the extent they are incremental costs directlyattributable to the equity transaction that otherwise would have been avoided.C.Financial liabilitiesFinancial liabilities within the scope of IFRS 9 Financial Instruments are classified asfinancial liabilities at fair value through profit or loss or financial liabilities measured atamortized cost upon initial recognition.a.Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include financial liabilities heldfor trading and financial liabilities designated as at fair value through profit or loss.Gains or losses on the subsequent measurement of liabilities held for trading includinginterest paid are recognized in profit or loss.A financial liability is classified as held for trading if:(a)it is acquired or incurred principally for the purpose of selling or repurchasing it inthe near term;(b)on initial recognition it is part of a portfolio of identified financial instruments thatare managed together and for which there is evidence of a recent actual pattern ofshort-term profit-taking;or(c)it is a derivative(except for a derivative that is a financial guarantee contract or adesignated and effective hedging instrument).If a contract contains one or more embedded derivatives,the entire hybrid(combined)contract may be designated as a financial liability at fair value through profit or loss;ora financial liability may be designated as at fair value through profit or loss when doingso results in more relevant information,because either:English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-22-(a)it eliminates or significantly reduces a measurement or recognition inconsistency;or(b)a group of financial liabilities or financial assets and financial liabilities is managedand its performance is evaluated on a fair value basis,in accordance with adocumented risk management or investment strategy,and information about thecompany is provided internally on that basis to the key management personnel.b.Financial liabilities at amortized costFinancial liabilities measured at amortized cost include interest bearing loans andborrowings that are subsequently measured using the effective interest rate method afterinitial recognition.Gains and losses are recognized in profit or loss when the liabilitiesare derecognized as well as through the effective interest rate method amortizationprocess.Amortized cost is calculated by taking into account any discount or premium onacquisition and fees or transaction costs.c.Derecognition of financial liabilitiesA financial liability is derecognized when the obligation under the liability is dischargedor cancelled or expires.(5)Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the balancesheet if,and only if,there is a currently enforceable legal right to offset the recognizedamounts and there is an intention to settle on a net basis,or to realize the assets and settle theliabilities simultaneously.Derivative instrumentThe Company uses derivative instruments to hedge its foreign currency risks and interest rate risks.A derivative is classified in the balance sheet as financial assets or liabilities at fair value throughprofit or loss except for derivatives that are designated as effective hedging instruments which areclassified as financial assets or liabilities for hedging.Derivative instruments are initially recognized at fair value on the date on which a derivativecontract is entered into and are subsequently remeasured at fair value.Derivatives are carried asfinancial assets when the fair value is positive and as financial liabilities when the fair value isnegative.The changes in fair value of derivatives are taken directly to profit or loss,except for theeffective portion of hedges,which is recognized in either profit or loss or equity according to typesof hedges used.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-23-When the host contracts are either non-financial assets or liabilities,derivatives embedded in hostcontracts are accounted for as separate derivatives and recorded at fair value if their economiccharacteristics and risks are not closely related to those of the host contracts and the host contractsare not designated at fair value through profit or loss.Fair value measurementFair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date.The fair valuemeasurement is based on the presumption that the transaction to sell the asset or transfer theliability takes place either:(1)in the principal market for the asset or liability;or(2)in the absence of a principal market,in the most advantageous market for the asset or liability.The principal or the most advantageous market must be accessible to by the Company.The fair value of an asset or a liability is measured using the assumptions that market participantswould use when pricing the asset or liability,assuming that market participants act in theireconomic best interest.A fair value measurement of a non-financial asset takes into account a market participants abilityto generate economic benefits by using the asset in its highest and best use or by selling it toanother market participant that would use the asset in its highest and best use.The Company uses valuation techniques which are appropriate in the circumstances and for whichsufficient data are available to measure fair value,maximizing the use of relevant observable inputsand minimizing the use of unobservable inputs.InventoriesInventory costs include costs incurred in bringing each inventory to its present location andcondition.Raw materials are valued at purchase cost.Finish goods and work in progress includecost of direct materials and related manufacturing overheads.Inventories are valued at lower ofcost and net realizable value item by item.Net realizable value is the estimated selling price in theordinary course of business,less estimated costs of completion and the estimated costs necessaryto make the sale.Inventories that were not sold or moved for further production were assessedallowance and set aside to reflect the potential loss from stock obsolescence.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-24-Rendering of services is accounted in accordance with IFRS 15 but not within the scoping ofinventories.Investments accounted for using the equity methodThe Companys investment in its associates is accounted for using the equity method other thanthose that meet the criteria to be classified as held for sale.An associate is an entity over whichthe Company has significant influence.A joint venture is a joint arrangement whereby the partiesthat have joint control of the arrangement have rights to the net assets of the arrangement.Under the equity method,the investment in the associate or an investment in a joint venture iscarried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in theCompanys share of net assets of the associate or joint venture.After the interest in the associateor joint venture is reduced to zero,additional losses are provided for,and a liability is recognized,only to the extent that the Company has incurred legal or constructive obligations or madepayments on behalf of the associate or joint venture.Unrealized gains and losses resulting fromtransactions between the Company and the associate or joint venture are eliminated to the extentof the Companys related interest in the associate or joint venture.When changes in the net assets of an associate or a joint venture occur and not those that arerecognized in profit or loss or other comprehensive income and do not affect the Companyspercentage of ownership interests in the associate or joint venture,the Company recognizes suchchanges in equity based on its percentage of ownership interests.The resulting capital surplusrecognized will be reclassified to profit or loss at the time of disposing the associate or joint ventureon a pro rata basis.When the associate or joint venture issues new shares,and the Companys interest in an associateor a joint venture is reduced or increased as the Company fails to acquire shares newly issued inthe associate or joint venture proportionately to its original ownership interest,the increase ordecrease in the interest in the associate or joint venture is recognized in capital surplus andinvestments accounted for using the equity method.When the interest in the associate or jointventure is reduced,the cumulative amounts previously recognized in other comprehensive incomeare reclassified to profit or loss or other appropriate items.The aforementioned capital surplusrecognized is reclassified to profit or loss on a pro rata basis when the Company disposes of theassociate or joint venture.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-25-The financial statements of the associate or joint venture are prepared for the same reporting periodas the Company.Where necessary,adjustments are made to bring the accounting policies in linewith those of the Company.The Company determines at each reporting date whether there is any objective evidence that theinvestment in the associate or an investment in a joint venture is impaired.If this is the case theCompany calculates the amount of impairment as the difference between the recoverable amountof the associate or joint venture and its carrying value and recognizes the amount in the share ofprofit or loss of an associate in the statement of comprehensive income.Upon loss of significant influence over the associate or joint venture,the Company measures andrecognizes any retaining investment at its fair value.Any difference between the carrying amountof the associate or joint venture upon loss of significant influence and the fair value of the retaininginvestment and proceeds from disposal is recognized in profit or loss.Property,plant and equipmentProperty,plant and equipment is stated at cost,net of accumulated depreciation and accumulatedimpairment losses,if any.Such cost includes the cost of dismantling and removing the item andrestoring the site on which it is located and borrowing costs for construction in progress if therecognition criteria are met.Each part of an item of property,plant and equipment with a cost thatis significant in relation to the total cost of the item is depreciated separately.When significantparts of property,plant and equipment are required to be replaced in intervals,the Companyrecognizes such parts as individual assets with specific useful lives and depreciation,respectively.The carrying amount of those parts that are replaced is derecognized in accordance with thederecognition provisions of IAS 16“Property,plant and equipment”.When a major inspection isperformed,its cost is recognized in the carrying amount of the plant and equipment as areplacement if the recognition criteria are satisfied.All other repair and maintenance costs arerecognized in profit or loss as incurred.Depreciation is calculated on a straight-line basis over the estimated economic lives of thefollowing assets:Buildings and facilities3-50 yearsMachinery and equipment3-5 yearsComputer and telecommunication equipment3-5 yearsTesting equipment3-5 yearsMiscellaneous equipment2-5 yearsEnglish Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-26-An item of property,plant and equipment and any significant part initially recognized isderecognized upon disposal or when no future economic benefits are expected from its use ordisposal.Any gain or loss arising on derecognition of the asset is recognized in profit or loss.The residual values,useful lives and methods of depreciation of property,plant and equipment arereviewed at each financial year end and adjusted prospectively,if appropriate,and are treated aschanges in accounting estimates.LeasesThe Company assesses whether the contract is,or contains,a lease.A contract is,or contains,alease if the contract conveys the right to control the use of an identified asset for a period of timein exchange for consideration.To assess whether a contract conveys the right to control the use ofan identified asset for a period of time,the Company assesses whether the contract,throughout theperiod of use,has both of the following:(1)the right to obtain substantially all of the economic benefits from use of the identified asset;and(2)the right to direct the use of the identified asset.For a contract that is,or contains,a lease,the Company accounts for each lease component withinthe contract as a lease separately from non-lease components of the contract.For a contract thatcontains a lease component and one or more additional lease or non-lease components,theCompany allocates the consideration in the contract to each lease component on the basis of therelative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.The relative stand-alone price of lease and non-lease components shall bedetermined on the basis of the price the lessor,or a similar supplier,would charge the Companyfor that component,or a similar component,separately.If an observable stand-alone price is notreadily available,the Company estimates the stand-alone price,maximising the use of observableinformation.A.The Company as a lesseeExcept for leases that meet and elect short-term leases or leases of low-value assets,theCompany recognizes right-of-use asset and lease liability for all leases which the Company isthe lessee of those lease contracts.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-27-At the commencement date,the Company measures the lease liability at the present value ofthe lease payments that are not paid at that date.The lease payments are discounted using theinterest rate implicit in the lease,if that rate can be readily determined.If that rate cannot bereadily determined,the Company uses its incremental borrowing rate.At the commencementdate,the lease payments included in the measurement of the lease liability comprise thefollowing payments for the right to use the underlying asset during the lease term that are notpaid at the commencement date:a.fixed payments(including in-substance fixed payments),less any lease incentivesreceivable;b.variable lease payments that depend on an index or a rate,initially measured using the indexor rate as at the commencement date;c.amounts expected to be payable by the lessee under residual value guarantees;d.the exercise price of a purchase option if the Company is reasonably certain to exercise thatoption;ande.payments of penalties for terminating the lease,if the lease term reflects the lessee exercisingan option to terminate the lease.After the commencement date,the Company measures the lease liability on an amortised costbasis,which is increasing the carrying amount to reflect interest on the lease liability by usingan effective interest method;and reducing the carrying amount to reflect the lease paymentsmade.At the commencement date,the Company measures the right-of-use asset at cost.The cost ofthe right-of-use asset comprises:a.the amount of the initial measurement of the lease liability;b.any lease payments made at or before the commencement date,less any lease incentivesreceived;c.any initial direct costs incurred by the lessee;andd.an estimate of costs to be incurred by the lessee in dismantling and removing the underlyingasset,restoring the site on which it is located or restoring the underlying asset to thecondition required by the terms and conditions of the lease.For subsequent measurement of the right-of-use asset,the Company measures the right-of-useasset at cost less any accumulated depreciation and any accumulated impairment losses.Thatis,the Company measures the right-of-use asset applying a cost model.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-28-If the lease transfers ownership of the underlying asset to the Company by the end of the leaseterm or if the cost of the right-of-use asset reflects that the Company will exercise a purchaseoption,the Company depreciates the right-of-use asset from the commencement date to the endof the useful life of the underlying asset.Otherwise,the Company depreciates the right-of-useasset from the commencement date to the earlier of the end of the useful life of the right-of-useasset or the end of the lease term.The Company applies IAS 36“Impairment of Assets”to determine whether the right-of-useasset is impaired and to account for any impairment loss identified.Except for leases that meet and elect short-term leases or leases of low-value assets,theCompany presents right-of-use assets and lease liabilities in the balance sheet and presentsinterest expense separately from the depreciation charge associated with those leases in theconsolidated income statement.For short-term leases or leases of low-value assets,the Company elects to recognize the leasepayments associated with those leases as an expense on either a straight-line basis over the leaseterm or another systematic basis.B.The Company as a lessorAt inception of a contract,the Company classifies each of its leases as either an operating leaseor a finance lease.A lease is classified as a finance lease if it transfers substantially all the risksand rewards incidental to ownership of an underlying asset.A lease is classified as an operatinglease if it does not transfer substantially all the risks and rewards incidental to ownership of anunderlying asset.At the commencement date,the Company recognizes assets held under afinance lease in its balance sheet and presents them as a receivable at an amount equal to thenet investment in the lease.For a contract that contains lease components and non-lease components,the Companyallocates the consideration in the contract applying IFRS 15.The Company recognizes lease payments from operating leases as rental income on either astraight-line basis or another systematic basis.Variable lease payments for operating leases thatdo not depend on an index or a rate are recognized as rental income when incurred.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-29-Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost.The cost ofintangible assets acquired in a business combination is its fair value as at the date of acquisition.Following initial recognition,intangible assets are carried at cost less any accumulatedamortization and accumulated impairment losses,if any.Internally generated intangible assets,excluding capitalized development costs,are not capitalized and expenditure is reflected in profitor loss for the year in which the expenditure is incurred.Expenditures related to research activities as well as those expenditures not meeting the criteriafor capitalization are expensed when incurred.Expenditures related to development activitiesmeeting the criteria for capitalization are capitalized.The Companys intangible assets mainly include trademarks,patents,software,IPs and otherswhich are acquired from third parties or business combinations.A summary of the amortizationpolicies applied to the Companys intangible assets is as follows:TrademarksPatentsSoftwareIPs and others6 years2-7 years2-5 years2-7 yearsThe Companys intangible assets with finite lives are amortized over the useful economic life andassessed for impairment whenever there is an indication that the intangible asset may be impaired.The amortization period and the amortization method for an intangible asset with a finite usefullife is reviewed at least at the end of each financial year.Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset is accountedfor by changing the amortization period or method,as appropriate,and are treated as changes inaccounting estimates.Gains or losses arising from derecognition of an intangible asset arerecognized in profit or loss.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-30-Impairment of non-financial assetsThe Company assesses at the end of each reporting period whether there is any indication that anasset in the scope of IAS 36“Impairment of Assets”may be impaired.If any such indication exists,or when annual impairment testing for an asset is required,the Company estimates the assetsrecoverable amount.An assets recoverable amount is the higher of an assets or cash-generatingunits(“CGU”)fair value less costs to sell and its value in use and is determined for an individualasset,unless the asset does not generate cash inflows that are largely independent of those fromother assets or groups of assets.Where the carrying amount of an asset or CGU exceeds itsrecoverable amount,the asset is considered impaired and is written down to its recoverableamount.For assets excluding goodwill,an assessment is made at each reporting date as to whether there isany indication that previously recognized impairment losses may no longer exist or may havedecreased.If such indication exists,the Company estimates the assets or cash-generating unitsrecoverable amount.A previously recognized impairment loss is reversed only if there has beenan increase in the estimated service potential of an asset which in turn increases the recoverableamount.However,the reversal is limited so that the carrying amount of the asset does not exceedits recoverable amount,nor exceed the carrying amount that would have been determined,net ofdepreciation,had no impairment loss been recognized for the asset in prior years.A cash generating unit,or groups of cash-generating units,to which goodwill has been allocatedis tested for impairment annually at the same time,irrespective of whether there is any indicationof impairment.If an impairment loss is to be recognized,it is first allocated to reduce the carryingamount of any goodwill allocated to the cash generating unit(group of units),then to the otherassets of the unit(group of units)pro rata on the basis of the carrying amount of each asset in theunit(group of units).Impairment losses relating to goodwill cannot be reversed in future periodsfor any reason.An impairment loss of continuing operations or a reversal of such impairment loss is recognizedin profit or loss.Treasury sharesOwn equity instruments which are reacquired(treasury shares)are recognized at cost and deductedfrom equity.Any difference between the carrying amount and the consideration is recognized inequity.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-31-ProvisionsProvisions are recognized when the Company has a present obligation(legal or constructive)as aresult of a past event,it is probable that an outflow of resources embodying economic benefits willbe required to settle the obligation and a reliable estimate can be made of the amount of theobligation.Where the Company expects some or all of a provision to be reimbursed,thereimbursement is recognized as a separate asset but only when the reimbursement is virtuallycertain.If the effect of the time value of money is material,provisions are discounted using acurrent pre-tax rate that reflects the risks specific to the liability.Where discounting is used,theincrease in the provision due to the passage of time is recognized as a finance cost.Sales allowances and returns(Refund liabilities)The Company estimates sales allowances and returns based on past experience and other knownfactors in accordance with IFRS 15,which are recognized as deduction of operating revenue andrefund liabilities.Provision for onerous contractsA contract is considered as onerous contract when the unavoidable costs of meeting the obligationsunder the contract exceed the economic benefits expected to be received from it.If the Companyhas any such onerous contracts,it recognizes the present obligation of the contract and measuresit as provision.Revenue recognitionThe Companys revenue arising from contracts with customers mainly includes sale of goods andrendering of services.The accounting policies for the Companys types of revenue are explainedas follows:Sale of goodsThe Company manufactures and sells goods.Sales are recognized when goods have been shippedand the customers have obtained the control(the customer has the ability to direct the use of thegoods and obtain substantially all of the remaining benefits from the goods).The main productsof the Company are integrated circuit design products for multimedia and mobile phone chips.Revenue is recognized based on the consideration stated in the contract.However,salestransactions are usually accompanied by volume discounts(based on the accumulated total salesamount for a specified period).Therefore,revenue from these sales is recognized based on theprice specified in the contract,net of the estimated volume discounts.Based on previousexperience,the Company uses the expected value method to estimate volume discounts.Revenueis only recognized to the extent that it is highly probable that a significant reversal in the amountof cumulative revenue recognized will not occur when the uncertainty associated with the variableconsideration is subsequently resolved.Refund liability is also recognized during the periodspecified in the contract.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-32-The credit period of the Companys sale of goods is from 45 to 60 days.For most of the contracts,when the Company transfers the goods to customers and has a right to an amount of considerationthat is unconditional,these contracts are recognized as trade receivables.The period between theCompany transfers the goods to customers and when the customers pay for that goods is usuallyshort and there is no significant financing component to the contract.For a small part of thecontracts,the Company has the right to transfer the goods to customers but does not have a rightto an amount of consideration that is unconditional,these contacts should be presented as contractassets.Besides,in accordance with IFRS 9,the Company measures the loss allowance for acontract asset at an amount equal to the lifetime expected credit losses.Rendering of servicesThe Company provides non-recurring engineering services.Revenue is recognized based on thestage of completion of the contracts.Besides,if there are sale transactions included in the servicecontracts,they are usually accompanied by volume discounts(based on the accumulated total salesamount for a specified period).Therefore,revenue from these sales is recognized based on theprice specified in the contracts,net of the estimated volume discounts.Based on previousexperience,the Company uses the expected value method to estimate volume discounts.However,revenue is only recognized to the extent that it is highly probable that a significant reversal in theamount of cumulative revenue recognized will not occur when the uncertainty associated with thevariable consideration is subsequently resolved.Contract liabilities are also recognized during theperiod specified in the contract.The contractual considerations of the Company are received in accordance with the paymentschedule set by the contracts.When the Company has performed the services to customers butdoes not have a right to an amount of consideration that is unconditional,these contacts should bepresented as contract assets.Besides,in accordance with IFRS 9,the Company measures the lossallowance for a contract asset at an amount equal to the lifetime expected credit losses.However,for some rendering of services contracts,part of the consideration was received from customersupon signing the contract,then the Company has the obligation to provide the servicessubsequently and it should be recognized as contract liabilities.The period between the transfers of contract liabilities to revenue is usually within one year,thus,no significant financing component is arisen.Silicon intellectual property licenseLicensing is to provide customers the right to use intellectual properties.The amount allocated toperformance obligation-licenses of intellectual property is recognized as revenue at a point in timein which the license is granted.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-33-Post-employment benefitsAll regular employees of the Company are entitled to a pension plan that is managed by anindependently administered pension fund committee.Fund assets are deposited under thecommittees name in the specific bank account and hence,not associated with the Company.Therefore,fund assets are not included in the Companys parent company only financialstatements.For the defined contribution plan,the Company will make a monthly contribution of no less than6%of the monthly wages of the employees subject to the plan.The Company recognizes expensesfor the defined contribution plan in the period in which the contribution becomes due.Post-employment benefit plan that is classified as a defined benefit plan uses the Projected UnitCredit Method to measure its obligations and costs based on actuarial assumptions.Re-measurements,comprising of the effect of the actuarial gains and losses,the effect of the assetceiling(excluding net interest)and the return on plan assets,excluding net interest,are recognizedas other comprehensive income with a corresponding debit or credit to retained earnings in theperiod in which they occur.Past service costs are recognized in profit or loss on the earlier of:A.the date of the plan amendment or curtailment;orB.the date that the Company recognizes the related restructuring costs or termination benefits.Net interest is calculated by applying the discount rate to the net defined benefit liability or asset,both as determined at the start of the annual reporting period,taking account of any changes in thenet defined benefit liability(asset)during the period as a result of contribution and benefitpayment.Share-based payment transactionsThe cost of equity-settled transactions between the Company and its employees is recognizedbased on the fair value of the equity instruments granted.The fair value of the equity instrumentsis determined by using an appropriate pricing model.The cost of equity-settled transactions is recognized,together with a corresponding increase inother capital reserves in equity,over the period in which the performance and/or service conditionsare fulfilled.The cumulative expense recognized for equity-settled transactions at each reportingdate until the vesting date reflects the extent to which the vesting period has expired and theCompanys best estimate of the number of equity instruments that will ultimately vest.Theexpense or credit in the statement of profit or loss for a period represents the movement incumulative expense recognized as at the beginning and end of that period.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-34-No expense is recognized for awards that do not ultimately vest,except for equity-settledtransactions where vesting is conditional upon a market or non-vesting condition,which are treatedas vesting irrespective of whether or not the market or non-vesting condition is satisfied,providedthat all other performance and/or service conditions are satisfied.Where the terms of an equity-settled transaction award are modified,the minimum expenserecognized is the expense as if the terms had not been modified,if the original terms of the awardare met.An additional expense is recognized for any modification that increases the total fair valueof the share-based payment transaction,or is otherwise beneficial to the employee as measured atthe date of modification.Where an equity-settled award is cancelled,it is treated as if it fully vested on the date ofcancellation,and any expense not yet recognized for the award is recognized immediately.Thisincludes any award where non-vesting conditions within the control of either the entity or theemployee are not met.However,if a new award substitutes for the cancelled award,and designatedas a replacement award on the date that it is granted,the cancelled and new awards are treated asif they were a modification of the original award,as described in the previous paragraph.The dilutive effect of outstanding options is reflected as additional share dilution in thecomputation of diluted earnings per share.The cost of restricted shares issued is recognized as salary expense based on the fair value of theequity instruments on the grant date,together with a corresponding increase in other capitalreserves in equity,over the vesting period.The Company recognizes unearned employee salarywhich is a transitional contra equity account;the balance in the account will be recognized assalary expense over the passage of vesting period.Income taxesIncome tax expense(income)is the aggregate amount included in the determination of profit orloss for the period in respect of current tax and deferred tax.A.Current income taxCurrent income tax assets and liabilities for the current and prior periods are measured at theamount expected to be recovered from or paid to the taxation authorities,using the tax rates andtax laws that have been enacted or substantively enacted by the end of the reporting period.Current income tax relating to items recognized in other comprehensive income or directly inequity is recognized in other comprehensive income or equity and not in profit or loss.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-35-The income tax for undistributed earnings is recognized as income tax expense in thesubsequent year when the distribution proposal is approved by shareholders.B.Deferred taxDeferred tax is provided on temporary differences between the tax bases of assets and liabilitiesand their carrying amounts for financial reporting purposes at the reporting date.Deferred tax liabilities are recognized for all taxable temporary differences,except:a.where the deferred tax liability arises from the initial recognition of goodwill or of an assetor liability in a transaction that is not a business combination;at the time of the transaction,affects neither the accounting profit nor taxable profit or loss;and at the time of thetransaction,does not give rise to equal taxable and deductible temporary differences.b.in respect of taxable temporary differences associated with investments in subsidiaries,associates and interests in joint arrangements,where the timing of the reversal of thetemporary differences can be controlled and it is probable that the temporary differences willnot reverse in the foreseeable future.Deferred tax assets are recognized for all deductible temporary differences,carry forward ofunused tax credits and unused tax losses,to the extent that it is probable that taxable profit willbe available against which the deductible temporary differences,and the carry forward ofunused tax credits and unused tax losses can be utilized,except:a.where the deferred tax asset relating to the deductible temporary difference arises from theinitial recognition of an asset or liability in a transaction that is not a business combination;at the time of the transaction,affects neither the accounting profit nor taxable profit or loss;and at the time of the transaction,does not give rise to equal taxable and deductibletemporary differences.b.in respect of deductible temporary differences associated with investments in subsidiaries,associates and interests in joint arrangements,deferred tax assets are recognized only to theextent that it is probable that the temporary differences will reverse in the foreseeable futureand taxable profit will be available against which the temporary differences can be utilized.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in theyear when the asset is realized or the liability is settled,based on tax rates and tax laws thathave been enacted or substantively enacted at the reporting date.The measurement of deferredtax assets and deferred tax liabilities reflects the tax consequences that would follow from themanner in which the Company expects,at the end of the reporting period,to recover or settlethe carrying amount of its assets and liabilities.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-36-Deferred tax relating to items recognized outside profit or loss is recognized outside profit orloss.Deferred tax items are recognized in correlation to the underlying transaction either inother comprehensive income or directly in equity.Deferred tax assets are reassessed at eachreporting date and are recognized accordingly.Deferred tax assets and deferred tax liabilities are offset,if a legally enforceable right exists tooffset current income tax assets against current income tax liabilities and the deferred taxesrelate to the same taxable entity and the same taxation authority.According to the temporary exception in the International Tax Reform-Pillar Two Model Rules(Amendments to IAS 12),information about deferred tax assets and liabilities related to PillarTwo income tax will neither be recognized nor be disclosed.Business combinations and goodwillBusiness combinations are accounted for using the acquisition method.The considerationtransferred,the identifiable assets acquired and liabilities assumed are measured at acquisition datefair value.For each business combination,the acquirer measures any non-controlling interest inthe acquiree either at fair value or at the non-controlling interests proportionate share of theacquirees identifiable net assets.Acquisition-related costs are accounted for as expenses in theperiods in which the costs are incurred and are classified under administrative expenses.When the Company acquires a business,it assesses the assets and liabilities assumed forappropriate classification and designation in accordance with the contractual terms,economiccircumstances and pertinent conditions as at the acquisition date.This includes the separation ofembedded derivatives in host contracts by the acquiree.If the business combination is achieved in stages,the acquisition date fair value of the acquirerspreviously held equity interest in the acquiree is remeasured to fair value at the acquisition datethrough profit or loss.Any contingent consideration to be transferred by the acquirer will be recognized at theacquisition-date fair value.Subsequent changes to the fair value of the contingent considerationwhich is deemed to be an asset or liability,will be recognized in accordance with IFRS 9“FinancialInstruments”either in profit or loss or as a change to other comprehensive income.However,ifthe contingent consideration is classified as equity,it should not be remeasured until it is finallysettled within equity.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-37-Goodwill is initially measured as the amount of the excess of the aggregate of the considerationtransferred and the non-controlling interest over the net fair value of the identifiable assets acquiredand the liabilities assumed.If this aggregate is lower than the fair value of the net assets acquired,the difference is recognized in profit or loss.After initial recognition,goodwill is measured at cost less any accumulated impairment losses.Goodwill acquired in a business combination is,from the acquisition date,allocated to each of theCompanys cash-generating units that are expected to benefit from the combination,irrespectiveof whether other assets or liabilities of the acquiree are assigned to those units.Each unit or groupof units to which the goodwill is so allocated represents the lowest level within the Company atwhich the goodwill is monitored for internal management purpose and is not larger than anoperating segment before aggregation.5.Significant Accounting Judgments,Estimates and AssumptionsThe preparation of the Companys parent company only financial statements requires managementto make judgments,estimates and assumptions that affect the reported amounts of revenue,expenses,assets and liabilities,and the disclosure of contingent liabilities,at the end of thereporting period.The judgments and estimates made by the Company are based on historicalexperience and other related factors and continuously being evaluated and adjusted.Please referto below description:Estimates and assumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at thereporting date that may cause a material adjustment to the carrying amounts of assets and liabilitieswithin the next financial year are discussed below:A.Fair value of Level 3 financial instrumentsWhere the fair value of financial assets and financial liabilities recorded in the balance sheetcannot be derived from active markets,they are determined using valuation techniquesincluding the income approach(for example the discounted cash flows model)or marketapproach.Changes in assumptions about these factors could affect the reported fair value ofthe financial instruments.Please refer to Note 12 for more details.B.Valuation of inventory-estimation of obsolescence provisionInventories are stated at the lower of cost or net realizable value,and the Company usesjudgment and estimate to determine the net realizable value of inventory at the end of eachreporting period.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-38-Due to the rapid technological changes,the Company estimates the net realizable value ofinventory for obsolescence and unmarketable items at the end of reporting period and thenwrites down the cost of inventories to net realizable value.The net realizable value of theinventory is mainly determined based on assumptions of future demand within a specific timeperiod,therefore it may cause material adjustments.C.Income taxUncertainties exist with respect to the interpretation of complex tax regulations and the amountand timing of future taxable income.Given the wide range of international businessrelationships and the long-term nature and complexity of existing contractual agreements,differences arising between the actual results and the assumptions made,or future changes tosuch assumptions,could cause future adjustments to tax income and expense already recorded.The Company establishes provisions,based on reasonable estimates,for possible consequencesof audits by the tax authorities of the respective countries in which it operates.The amount ofsuch provisions is based on various factors,such as experience of previous tax audits anddiffering interpretations of tax regulations by the taxable entity and the responsible taxauthority.Such differences of interpretation may arise on a wide variety of issues dependingon the conditions prevailing in the respective companys domicile.Deferred tax assets are recognized for all carryforward of unused tax losses and unused taxcredits and deductible temporary differences to the extent that it is probable that taxable profitwill be available or there are sufficient taxable temporary differences against which the unusedtax losses,unused tax credits or deductible temporary differences can be utilized.The amountof deferred tax assets determined to be recognized is based upon the likely timing and the levelof future taxable profits and taxable temporary differences together with future tax planningstrategies.D.Revenue recognition-sales discounts and returnsThe Company estimates sales allowance and returns based on historical experience and otherknown factors at the time of sale,which reduces the operating revenue.In assessing theaforementioned sales allowance and returns,on the basis of highly probable that a significantreversal in the amount of cumulative revenue recognized will not occur.Please refer to Note 6.(14)for more details.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-39-6.Contents of Significant Accounts(1)Cash and cash equivalentsDecember 31,2024December 31,2023Checking and savings accounts$1,149,005$1,532,441Time deposits87,992,85841,443,078Repurchase agreements-5,000,000Total$89,141,863$47,975,519Time deposits and repurchase agreements were those securities whose maturities are withintwelve months and are readily convertible to known amounts of cash with values subject to aninsignificant risk of changes.(2)Financial assets and financial liabilities at fair value through profit or lossDecember 31,2024December 31,2023CurrentFinancial assets mandatorily measured at fairvalue through profit or lossFunds$1,052,502$1,910,145Linked deposits497,340520,375Forward exchange contracts265,406-Total$1,815,248$2,430,520Held for trading financial liabilitiesForward exchange contracts$-$301,272NoncurrentFinancial assets mandatorily measured at fairvalue through profit or lossStocks$33,500$120,330Linked deposits-588,142Total$33,500$708,472English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-40-(3)Financial assets at fair value through other comprehensive incomeDecember 31,2024December 31,2023NoncurrentDebt instrument investments measured at fairvalue through other comprehensive incomeBonds$201,216$201,113Equity instrument investments measured at fairvalue through other comprehensive incomeListed company stocks3,162,7492,853,482Funds2,627,9473,836,590Unlisted company stocks4,3851,180Subtotal5,795,0816,691,252Total$5,996,297$6,892,365No loss allowance was recognized for debt instrument investments measured at fair valuethrough other comprehensive income.Please refer to Note 12 for more details on credit risk.The Company has equity instrument investments measured at fair value through othercomprehensive income.Details on dividends recognized for the years ended 2024 and 2023were as follows:For the years endedDecember 3120242023Related to investments held at the end of thereporting period$133,709$117,011(4)Financial assets measured at amortized costDecember 31,2024December 31,2023CurrentBonds$199,487$361,079English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-41-December 31,2024December 31,2023NoncurrentBonds$2,050,544$2,251,040Time deposits112,579112,043Total$2,163,123$2,363,083No loss allowance was recognized for financial assets measured at amortized cost.Please referto Note 8 for more details on financial assets measured at amortized cost under pledge andNote 12 for more details on credit risk.(5)Trade receivables and trade receivables from related partiesDecember 31,2024December 31,2023Trade receivables$20,516,765$33,412,274Less:loss allowance(1,808)(57,933)Subtotal20,514,95733,354,341Trade receivables from related parties639,358529,579Less:loss allowance-Subtotal639,358529,579Total$21,154,315$33,883,920Trade receivables are generally on 45 to 60-day terms.Please refer to Note 6.(20)for moredetails on the loss allowance of trade receivables for the years ended December 31,2024and 2023.Please refer to Note 12 for more details on credit risk.Among trade receivables,the amount attributed to financial assets measured at fair valuethrough profit or loss due to regular factoring without recourse were NT$653,192 thousandand NT$1,186,678 thousand as of December 31,2024 and 2023,respectively.English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-42-(6)Other receivablesDecember 31,2024December 31,2023Factoring receivables$1,315,686$1,426,120Others2,736,6201,495,298Total$4,052,306$2,921,418The Company entered into several factoring agreements without recourse with financialinstitutions.According to those agreements,the Company does not take the risk ofuncollectible trade receivables,but only the risk of loss due to commercial disputes.TheCompany did not provide any collateral,and the factoring agreements met the criteria offinancial asset derecognition.The Company derecognized such trade receivables afterdeducting the estimated value of commercial disputes.As of December 31,2024 and 2023,trade receivables derecognized were summarized(bytransferee)as follows:A.As of December 31,2024:The Factor(Transferee)InterestRate(%)Tradereceivablesderecognized(US$000)Cashwithdrawn(US$000)Unutilized(US$000)Credit line(US$000)TaishinInternational Bank-$30,381$-$30,381$164,000BNP Paribas-7,291-7,291105,000CHB-388-3881,200CTBC-300SinoPac-2,092-2,09210,000Total$40,152$-$40,152$280,500English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)-43-B.As of December 31,2023:The Factor(Transferee)InterestRate(%)Tradereceivablesderecognized(US$000)Cashwithdrawn(US$000)Unutilized(US$000)Credit line(US$000)TaishinInternational Bank-$32,730$-$32,730$200,000BNP Paribas-12,050-12,050105,000CHB-384-3841,200CTBC-400SinoPac-1,218-1,21810,000Total$46,382$-$46,382$316,600(7)InventoriesDecember 31,2024December 31,2023Raw materials$566,052$1,671,403Work in progress18,004,85116,702,037Finished goods9,042,7166,705,329Net amount$27,613,619$25,078,769The Companys operating costs include the reversals of write-downs recognized when thecircumstances that previously caused inventories to be written down below cost no longerexisted,were as follows:For the years endedDecember 3120242023The reversal of write-down of inventories$2,797,048$13,769,854English Translation of Financial Statements Originally Issued in ChineseMEDIATEK INC.NOTES TO FINANCIAL STATEMENTS-(Continued)(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise s
2025-03-24
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1Public Information onsemi 2024Public Information onsemi 2024Quarterly Investor PresentationFourth Q.
2025-03-21
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Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2024 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number:001-35703PUMA BIOTECHNOLOGY,INC.(Exact name of registrant as specified in its charter)Delaware77-0683487(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)10880 Wilshire Boulevard,Suite 2150Los Angeles,CA 90024(424)248-6500(Address,including zip code,and telephone number,including area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbolName of each exchange on which registeredCommon Stock,par value$0.0001 per sharePBYIThe NASDAQ Stock Market LLC(NASDAQ Global Select Market)Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filingrequirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit suchfiles).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,oremerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Table of Contents Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internalcontrol over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared orissued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in thefiling reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensationreceived by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of voting stock held by non-affiliates of the registrant was approximately$134.4 million as of June 30,2024,based uponthe closing price of$3.26 per share of the registrants common stock on the NASDAQ Global Select Market on Thursday,June 30,2024,the last business dayof the registrants most recently completed second fiscal quarter.Shares of common stock held by each executive officer,director and holder of 10%or more ofthe outstanding common stock have been excluded in that such persons may be deemed to be affiliates.This determination of affiliate status is not necessarily aconclusive determination for other purposes.As of February 24,2025,there were 49,610,799 shares of the registrants common stock outstanding.Documents Incorporated by Reference:Portions of the Proxy Statement for the registrants 2025 Annual Meeting of Stockholders(the“2025 Proxy Statement”),are incorporated by referenceinto Part III of the Form 10-K to the extent stated herein.Table of Contents TABLE OF CONTENTS PagePart I Item 1.Business 3Item 1A.Risk Factors 30Item 1B.Unresolved Staff Comments 57Item 1C.Cybersecurity 57Item 2.Properties 58Item 3.Legal Proceedings 58Item 4.Mine Safety Disclosure 61 Part II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities 61Item 6.Reserved 62Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations 63Item 7A.Quantitative and Qualitative Disclosures About Market Risk 73Item 8.Financial Statements and Supplementary Data 73Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 73Item 9A.Controls and Procedures 73Item 9B.Other Information 74Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 74 Part III Item 10.Directors,Executive Officers and Corporate Governance 74Item 11.Executive Compensation 74Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 74Item 13.Certain Relationships and Related Transactions,and Director Independence 74Item 14.Principal Accounting Fees and Services 74 Part IV Item 15.Exhibits,Financial Statement Schedules 75Item 16.Form 10-K Summary 75 Exhibit Index 76 Signatures 80 Index to Consolidated Financial Statements F-1 Table of Contents CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended(“Exchange Act”).Any statements about our expectations,beliefs,plans,objectives,assumptions,future events or performance are not historical facts and maybe forward looking.These forward-looking statements include,but are not limited to,statements about:the commercialization of NERLYNX(neratinib)tablets(“NERLYNX”);the development of our drug candidates,including when we expect to undertake,initiate and complete clinical trials of our drug candidates;the anticipated timing of regulatory filings;the regulatory approval of our drug candidates;our use of clinical research organizations(“CRO”)and other contractors;our ability to find collaborative partners for research,development and commercialization of potential products;efforts of our sub-licensees to obtain regulatory approval and commercialize NERLYNX in areas outside the United States;our ability to market any of our products;our expectations regarding our costs and expenses;our anticipated capital requirements and estimates regarding our needs for additional financing;our ability to compete against other companies and research institutions;our ability to secure adequate protection for our intellectual property;our intention and ability to vigorously defend against any litigation to which we are or may become party;our ability to in-license additional drugs;our ability to attract and retain key personnel;and our ability to obtain adequate financing on favorable terms or at all.These statements are often,but not always,made through the use of words or phrases such as“anticipate,”“estimate,”“plan,”“project,”“continuing,”“ongoing,”“expect,”“believe,”“intend”and similar words or phrases.Accordingly,these statements involve estimates,assumptions and uncertainties thatcould cause actual results to differ materially from those expressed in them.Discussions containing these forward-looking statements may be found throughoutthis Annual Report,including the sections entitled“Item 1.Business”in Part I and“Item 7.Managements Discussion and Analysis of Financial Condition andResults of Operations”in Part II of this Annual Report.These forward-looking statements involve risks and uncertainties,including the risks discussed in thesection entitled“Item 1A.Risk Factors”in Part I of this Annual Report that could cause our actual results to differ materially from those in the forward-lookingstatements.We undertake no obligation to update the forward-looking statements or to reflect events or circumstances after the date of this document,except asrequired by law.The risks discussed in this Annual Report should be considered in evaluating our prospects and future financial performance.1Table of Contents SUMMARY OF RISK FACTORS Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock,including thosedescribed in the section entitled“Item 1A.Risk Factors”in Part I of this Annual Report.These risks include,among others,the following:While we have reported net income in the years ended December 31,2024,2023 and 2022,we cannot assure that we will continue to do so andmay not be able to maintain profitability.We are currently a single product company with limited commercial sales experience.We may not be able to successfully commercialize NERLYNX in the future.We may not be able to secure additional financing on favorable terms,or at all,to meet our future capital needs and our failure to obtainadditional financing when needed on acceptable terms,or at all,could force us to delay,limit,reduce or terminate our product development orcommercialization efforts or other operations.The terms of our Note Purchase Agreement place restrictions on our ability to operate our business and on our financial flexibility,and we may beunable to achieve the revenue necessary for us to incur additional borrowings under the Note Purchase Agreement or to satisfy the minimumrevenue and cash balance covenants.We have in-licensed alisertib,a drug candidate for which we have assumed all responsibility for global development and commercialization.Ourdevelopment of alisertib will be expensive,lengthy and unpredictable,and any failure to successfully develop alisertib will have a materialadverse effect on our business and financial position.Interim,“topline”and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient databecome available and are subject to audit and verification procedures that could result in material changes in the final data.NERLYNX,alisertib or other drug candidates may cause undesirable side effects or have other properties when used alone or in combination withother approved products or investigational new drugs that could delay or prevent their regulatory approval,limit the commercial profile of anapproved label,or result in significant negative consequences following marketing approval,if any,as applicable.We are in the early stages of development of alisertib,and we cannot be certain that we will be successful if we seek regulatory approvals for ourdrug candidates.We have limited experience as a company in marketing or distributing pharmaceutical products.If we are unable to expand our marketing andsales capabilities in the commercialization of NERLYNX,our business,results of operations and financial condition may be materially adverselyaffected.We are exposed to the risks associated with reliance on a direct sales force to commercialize NERLYNX in the United States.Our NERLYNX commercialization efforts may fail to achieve the degree of market acceptance by patients and physicians necessary forcommercial success.We depend on a limited number of customers for a significant amount of our total revenue,and if we lose any of our significant customers,ourbusiness could be harmed.Even though the United States Food and Drug Administration(“FDA”)and the European Commission(“EC”)have granted approval ofNERLYNX for the extended adjuvant treatment of certain patients with early stage,HER2-positive breast cancer and the FDA has grantedapproval for NERLYNX for the treatment of certain patients with metastatic HER2-positive breast cancer,the terms of the approvals may limit itscommercial potential.We are dependent on international third-party sub-licensees for the development and commercialization of NERLYNX in several countriesoutside the United States.The failure of these sub-licensees to meet their contractual,regulatory or other obligations could adversely affect ourbusiness.We have no experience in drug formulation or manufacturing and rely exclusively on third parties to formulate and manufacture NERLYNX,alisertib and our other drug candidates,and any disruption or loss of these relationships could delay our development and commercializationefforts.Our business,financial condition,results of operations and ongoing clinical trials have been,and could continue to be,harmed by the effects ofpublic health emergencies or outbreaks of epidemics,pandemics or contagious diseases.We rely significantly on information technology and any failure,inadequacy,interruption or security lapse of that technology,including anycybersecurity incidents,could harm us.We depend significantly on in-licensed intellectual property,and the termination of these licenses would significantly harm our business andfuture prospects.Our proprietary rights may not adequately protect our intellectual property and potential products,and if we cannot obtain adequate protection ofour intellectual property and potential products,we may not be able to successfully market our potential products.2Table of Contents PART I ITEM 1.BUSINESS Company Overview Unless otherwise provided in this Annual Report,references to the“Company,”“we,”“us,”and“our”refer to Puma Biotechnology,Inc.and our whollyowned subsidiary.We are a biopharmaceutical company that develops and commercializes innovative products to enhance cancer care and improve treatment outcomes forpatients.We are currently commercializing NERLYNX,an oral version of neratinib,for the treatment of HER2-positive breast cancer.Additionally,we havein-licensed,and are responsible for global development and commercialization of,alisertib.Alisertib is a selective,small-molecule inhibitor of Aurora KinaseA that is designed to disrupt mitosis leading to apoptosis of rapidly proliferating tumor cells that are dependent on Aurora Kinase A.Prior to our licensingalisertib from Takeda,alisertib was tested in over 1,300 patients who were treated across 22 company-sponsored trials resulting in a large,well-characterizedclinical safety database.Based on information in this database,we believe alisertib has potential application in the treatment of range of different cancer types,including hormone receptor positive breast cancer,triple negative breast cancer,small cell lung cancer and head and neck cancer.We intend to pursuedevelopment of alisertib initially in small cell lung cancer and hormone receptor positive breast cancer.The following figure provides an overview of our commercial product and drug candidates.*EBC:Early breast cancer*MBC:Metastatic breast cancer*HRc :Hormone receptor positive*NSCLC:Non-small cell lung cancer Neratinib Breast cancer is the leading cause of cancer death among women worldwide,with approximately one million new cases reported each year and morethan 400,000 deaths per year.Up to 20%of breast cancer tumors show over-expression of the HER2 protein.Women with breast cancer that over-expressesHER2,referred to as HER2-positive breast cancer,are at greater risk for disease progression and death than women whose tumors do not over-express HER2.Therapeutic strategies have been developed to block HER2 in order to improve the treatment of this type of breast cancer.Trastuzumab,pertuzumab,lapatinib,T-DM1,famtrastuzumab deruxtecan and tucatinib are all drugs that are used as single agents,in combination with other drugs and in combination withchemotherapy to treat patients with HER2-positive breast cancer at various stages.Neratinib is a potent irreversible tyrosine kinase inhibitor(“TKI”)that blocks signal transduction through the epidermal growth factor receptors,HER1,HER2 and HER4.Based on pre-clinical studies and clinical trials to date,we believe that neratinib may offer an advantage over existing treatments that areused in the treatment of patients with HER2-positive breast cancer.We believe that by more potently inhibiting HER2 at a different site and acting via amechanism different from other agents,neratinib may have therapeutic benefits in breast cancer patients who have been previously treated with these existingtreatments,most notably due to its irreversible inhibition of the HER2 target enzyme.3Table of Contents NERLYNX,the commercial name for neratinib,is currently approved in the United States for two indications:the extended adjuvant treatment of adultpatients with early stage HER2-overexpressed/amplified breast cancer following adjuvant trastuzumab-based therapy and for use in combination withcapecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in the metastatic setting.We also believe neratinib has potential clinical application in the treatment of several other cancers as well,includingother tumor types that over-express or have a mutation in HER2 or epidermal growth factor receptor(“EGFR”),such as cervical cancer,lung cancer or othersolid tumors.We currently market NERLYNX in the United States using our direct specialty sales force consisting of approximately 35 sales specialists as ofDecember 31,2024.Our sales specialists are supported by an experienced sales leadership team consisting of regional managers and directors,as well as acommercial team of experienced professionals in marketing,access and reimbursement,managed markets,marketing research,commercial operations andsales force planning and management.Outside the United States,we have entered into exclusive sub-license agreements with third parties to pursue regulatoryapproval,if necessary,and commercialize NERLYNX,if approved.As of December 31,2024,NERLYNX has received approval for the treatment of certainpatients with extended adjuvant and/or metastatic HER2-positive breast cancer in more than 40 countries outside the United States,including the EuropeanUnion(“EU”),China,Latin America,Australia,Canada,and Hong Kong.We are currently a party to several sub-licenses in various regions outside the UnitedStates,including Europe(excluding Russia and Ukraine),Australia,Canada,China,Southeast Asia,Israel,South Korea,and various countries and territories inCentral America,South America,Africa and the Middle East.Alisertib In September 2022,we entered into an exclusive license agreement with a subsidiary of Takeda Pharmaceutical Company Limited(“Takeda”)to licensethe worldwide research and development and commercial rights to alisertib.Alisertib is an investigational,reversible,ATP-competitive inhibitor that isdesigned to be highly selective for Aurora Kinase A.Inhibition of Aurora Kinase A leads to disruption of mitotic spindle apparatus assembly,disruption ofchromosome segregation,and inhibition of cell proliferation.In clinical trials to date,alisertib had shown single agent activity and activity in combination withother cancer drugs in the treatment of many different types of cancers,including hormone receptor positive breast cancer,triple negative breast cancer,smallcell lung cancer and head and neck cancer.Alisertib has also shown activity in previous clinical trials in peripheral T cell lymphoma and non-Hodgkinslymphoma.Prior to our licensing alisertib from Takeda,the drug was tested in over 1,300 patients who were treated across 22 company-sponsored trialsresulting in a large well-characterized clinical safety database.Strategy Our goal is to become a leading provider of advanced therapies for the treatment of various forms of cancer.The following elements comprise ourstrategy to achieve this objective:Successfully execute our NERLYNX commercial plan.An important near-term objective is to continue to execute our NERLYNX commercialplan by driving market penetration and duration of therapy consistent with the current NERLYNX label.We continue to focus our efforts oncommercializing NERLYNX in the United States.In addition,we have entered into exclusive sub-license agreements with various parties topursue regulatory approval,if necessary,and commercialize NERLYNX,if approved,in additional countries worldwide.Advance the development of alisertib.We intend to pursue the development of alisertib in hormone receptor positive breast cancer,as well assmall cell lung cancer based on the prior clinical data that has been generated.We also plan to evaluate alisertib in biomarker focused populationswhere it has shown a higher degree of activity,such as patients with c-Myc amplification and RB1 loss/RB1 mutations,as we believe that thismay provide a point of differentiation from the other drugs being developed in the treatment of these diseases.Maximize the value of our programs by maintaining the flexibility to commercialize our drug candidates independently or through collaborativerelationships with third parties.We are currently commercializing NERLYNX using a direct sales force in the United States and using sub-licensees in certain countries outside the United States.As we move additional drug candidates through development toward regulatory approval,we plan to evaluate several options for each drug candidates commercialization strategy.These options include building upon or leveraging ourown internal sales force;entering into a joint marketing partnership with another pharmaceutical or biotechnology company,whereby we jointlysell and market the product;and out-licensing our product,whereby another pharmaceutical or biotechnology company sells and markets ourproduct and pays us a royalty on sales.Our decision may be different for each product that reaches commercialization and will be based on anumber of factors including capital necessary to execute on each option,size of the market to be addressed and terms of potential offers fromother pharmaceutical and biotechnology companies.In-license or acquire additional commercial drugs and/or drug candidates and technologies in order to build a sustainable product pipeline byemploying multiple therapeutic approaches and disciplined decision criteria based on clearly defined proof of principal goals.We seek to build asustainable portfolio including commercial drugs where we can successfully leverage our existing commercial infrastructure and a productpipeline by employing multiple therapeutic approaches and by acquiring drug candidates belonging to known drug classes.In addition,weemploy disciplined decision criteria to assess drug candidates.A decision by us to license a drug candidate will depend on a variety of factors,including the scientific merits of the technology;the costs of the transaction and other economic terms of the proposed license;the amount ofcapital required to develop the technology;and the economic potential of the drug candidate,should it be commercialized.We believe thisstrategy minimizes our clinical development risk and allows us to accelerate the development and potential commercialization of current andfuture drug candidates.4Table of Contents Neratinib HER2-Positive Breast Cancer Overview Breast cancer is the leading cause of cancer death among women worldwide,with approximately 1 million new cases reported each year and more than400,000 deaths per year.Up to 20%of breast cancer tumors show over-expression of the HER2 protein.Women with breast cancer that over-expresses HER2are at greater risk for disease recurrence,progression and death than women whose tumors do not over-express HER2.Therapeutic strategies have beendeveloped to block HER2 in order to improve the treatment of this type of breast cancer.Trastuzumab,pertuzumab,lapatinib,T-DM1,famtrastuzumab deruxtecan and tucatinib are all drugs that are used as single agents,in combination withother drugs and in combination with chemotherapy to treat patients with HER2-positive breast cancer at various stages.Currently,the only treatment approved by the FDA for the treatment of neoadjuvant(newly diagnosed)HER2-positive breast cancer is the combinationof pertuzumab plus trastuzumab and taxane chemotherapy.The FDA-approved treatments for the adjuvant treatment of HER2-positive early stage breastcancer are the combination of trastuzumab and chemotherapy,the combination of pertuzumab plus trastuzumab and chemotherapy,or KADCYLA,which isapproved specifically in patients with HER2-positive early stage breast cancer with residual disease after neoadjuvant treatment.In addition,we are aware ofnumerous additional ongoing clinical trials involving other drug candidates used alone or in combination with existing drugs to treat patients with breastcancer.In addition,we are also aware of a Phase III trial in patients with high risk HER2-positive early stage breast cancer with residual disease afterneoadjuvant treatment that is testing the combination of KADCYLA plus tucatinib versus KADCYLA alone(the CompassHER2 RD Trial),as well as a PhaseIII trial in patients with high risk HER2-positive early stage breast cancer with residual disease after neoadjuvant treatment that is testing fam-trastuzumabderuxtecan versus KADCYLA alone(the DESTINY-Breast05 Trial).We believe that there are approximately 30,000 patients in the United States and 37,000 patients in the EU with early stage HER2-positive breast cancerthat get treated with adjuvant treatment.We also believe that there are approximately 6,400 patients in the United States with third-line and 4,700 patients inthe United States with fourth-line HER2-positive metastatic breast cancer.The number of patients with third-line or later HER2-positive metastatic breastcancer may decrease in future years as the introduction of new neoadjuvant,adjuvant and extended adjuvant treatments may reduce the number of patients withrecurrence of HER2-positive breast cancer and therefore reduce the number of patients with HER2-positive metastatic breast cancer.Background on Neratinib Neratinib is a potent irreversible TKI that blocks signal transduction through the epidermal growth factor receptors,HER1,HER2 and HER4.Based onpre-clinical studies and clinical trials to date,we believe that neratinib may offer an advantage over existing treatments that are used in the treatment of patientswith HER2-positive breast cancer.We believe that by more potently inhibiting HER2 at a different site and acting via a mechanism different from other agents,neratinib may have therapeutic benefits in patients who have been previously treated with these existing treatments,most notably due to its irreversibleinhibition of the HER2 target enzyme.In addition,we believe neratinib has clinical application in the treatment of several other cancers as well,including other tumor types that over-expressor have a mutation in HER2 or EGFR,such as breast cancer,cervical cancer,lung cancer or other solid tumors.NeratinibEarly Stage Breast Cancer Extended Adjuvant Breast Cancer In 2017,the FDA approved NERLYNX(neratinib)for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplifiedbreast cancer following adjuvant trastuzumab-based therapy.In 2018,the EC granted marketing authorization for NERLYNX in the EU for the extendedadjuvant treatment of adult patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer and who are less than one yearfrom the completion of prior adjuvant trastuzumab-based therapy.These approvals were obtained based on the two-year data obtained in our ExteNET trial.Two-Year ExteNET Data.In July 2014,we announced top line results from our ExteNET trial,a Phase III clinical trial of neratinib for the extendedadjuvant treatment of early stage HER2-positive breast cancer.The data from this trial were presented in an oral presentation at the American Society ofClinical Oncology(“ASCO”)Annual Meeting in June 2015 and were published online in The Lancet Oncology in February 2016.The ExteNET trial was adouble-blind,placebo-controlled,Phase III trial of neratinib versus placebo after adjuvant treatment with Herceptin in women with early stage HER2-positivebreast cancer.More specifically,the ExteNET trial enrolled 2,840 patients in 41 countries with early stage HER2-positive breast cancer who had undergonesurgery and adjuvant treatment with trastuzumab.After completion of adjuvant treatment with trastuzumab,patients were randomized to receive extendedadjuvant treatment with either neratinib or placebo for a period of one year.Patients were then followed for recurrent disease,ductal carcinoma in situ(“DCIS”),or death for a period of two years after randomization in the trial.The safety results of the study showed that the most frequently observed adverse event for the neratinib-treated patients was diarrhea,withapproximately 39.9%of the neratinib-treated patients experiencing grade 3 or higher diarrhea(one patient,0.1%,had grade 4 diarrhea).Patients who receivedneratinib in this trial did not receive any prophylaxis with antidiarrheal agents to prevent the neratinib-related diarrhea.The primary endpoint of the ExteNET trial was invasive disease-free survival(“DFS”).The results of the trial demonstrated that treatment withneratinib resulted in a 33%reduction of risk of invasive disease recurrence or death versus placebo(hazard ratio=0.67,p=0.009).The two-year DFS rate forthe neratinib arm was 93.9%and the two-year DFS rate for the placebo arm was 91.6%.The secondary endpoint of the trial was disease-free survival includingductal carcinoma in situ(“DFS-DCIS”).The results of the trial demonstrated that treatment with neratinib resulted in a 37%reduction of risk of diseaserecurrence including DCIS or death versus placebo(hazard ratio=0.63,p=0.002).The two-year DFS-DCIS rate for the neratinib arm was 93.9%and the two-year DFS-DCIS rate for the placebo arm was 91.0%.5Table of Contents As an inclusion criteria for the ExteNET trial,patients needed to have tumors that were HER2-positive using local assessment.In addition,as a pre-defined subgroup in the trial,patients had centralized HER2 testing performed on their tumor as well.At the time the two-year data was compiled,centralizedHER2 testing had been performed on 1,704(60%)of the patients in the ExteNET trial and further central testing on available samples was ongoing.For the1,463 patients whose tumors were HER2-positive by central confirmation,the results of the trial demonstrated that treatment with neratinib resulted in a 49%reduction of risk of invasive disease recurrence or death versus placebo(hazard ratio=0.51,p=0.002).The two-year DFS rate for the centrally confirmedpatients in the neratinib arm was 94.7%and the 2-year DFS rate for the centrally confirmed patients in the placebo arm was 90.6%.For the patients in the trialwhose tumors were HER2-positive by central confirmation,the results of the trial demonstrated that treatment with neratinib resulted in a 51%reduction of riskof disease recurrence including DCIS or death versus placebo(hazard ratio=0.49,p 0.001).The two-year DFS-DCIS rate for the centrally confirmedpatients in the neratinib arm was 94.7%and the two-year DFS rate for centrally confirmed patients in the placebo arm was 90.2%.For the pre-defined subgroup of patients with hormone receptor positive disease,the results of the trial demonstrated that treatment with neratinibresulted in a 49%reduction of risk of invasive disease recurrence or death versus placebo(hazard ratio=0.51,p=0.001).The two-year DFS rate for theneratinib arm was 95.4%and the two-year DFS rate for the placebo arm was 91.2%.For the patients in the trial whose tumors were HER2-positive by centralconfirmation,the results of the trial demonstrated that treatment with neratinib resulted in a 75%reduction of risk of invasive disease recurrence or death(hazard ratio=0.25,p 0.001).The two-year DFS rate for the centrally confirmed patients in the neratinib arm was 97.0%and the two-year DFS rate forcentrally confirmed patients in the placebo arm was 88.4%.Five-Year ExteNET Data.In September 2017,we presented updated data from the ExteNET trial at the European Society of Medical Oncology(“ESMO”)2017 Congress in Madrid,Spain.The data represented a predefined five-year invasive disease-free survival(“iDFS”)analysis as a follow-up to theprimary two-year iDFS analysis of the Phase III ExteNET trial.The results of the trial demonstrated that after a median follow up of 5.2 years,treatment withneratinib resulted in a 27%reduction of risk of invasive disease recurrence or death versus placebo(hazard ratio=0.73,p=0.008).The five-year iDFS rate forthe neratinib arm was 90.2%and the 5-year iDFS rate for the placebo arm was 87.7%.The secondary endpoint of the trial was invasive disease-free survivalincluding ductal carcinoma in situ(“iDFS-DCIS”).The results of the trial demonstrated that treatment with neratinib resulted in a 29%reduction of risk ofdisease recurrence,including DCIS or death versus placebo(hazard ratio=0.71,p=0.004).The five-year iDFS-DCIS rate for the neratinib arm was 89.7%and the five-year iDFS-DCIS rate for the placebo arm was 86.8%.For the pre-defined subgroup of patients with hormone receptor positive disease,the results of the trial demonstrated that treatment with neratinibresulted in a 40%reduction of risk of invasive disease recurrence or death versus placebo(hazard ratio=0.60,p=0.002).The five-year iDFS rate for theneratinib arm was 91.2%and the five-year iDFS rate for the placebo arm was 86.8%.For the pre-defined subgroup of patients with hormone receptor negativedisease,the results of the trial demonstrated that treatment with neratinib resulted in a hazard ratio of 0.95(p=0.762).The results of the ExteNET trial showed that after two years of follow-up,for patients with hormone receptor positive,HER2-positive early stage breastcancer patients who were treated within one year after the completion of trastuzumab based adjuvant therapy,iDFS was 95.3%in the patients treated withneratinib compared with 90.8%in those receiving placebo(hazard ratio=0.49;95%CI:(0.30,0.78);p=0.002).The safety results were unchanged from the primary two-year iDFS analysis of the study that showed the most frequently observed adverse event for theneratinib-treated patients was diarrhea,with approximately 39.9%of the neratinib-treated patients experiencing grade 3 or higher diarrhea(one patient,or0.1%,had grade 4 diarrhea).Patients who received neratinib in this trial did not receive any prophylaxis with antidiarrheal agents to prevent the neratinib-related diarrhea.In October 2020,we announced that efficacy results of neratinib in HER2-positive,hormone receptor positive,or HR ,early stage breast cancer,(“eBC”)from the Phase III ExteNET trial were published in Clinical Breast Cancer.The manuscript presented data focusing on HR patients who initiatedtreatment within a year of completing an adjuvant trastuzumab containing treatment(HR /1 yr)and subgroups of clinical interest including patients who didnot achieve a pathological complete response(no pCR)after neoadjuvant treatment and therefore were at a high risk of disease recurrence(HR /1 yr,nopCR).In the HR /1 yr patient population,the absolute 5-year invasive disease-free survival benefit versus placebo was 5.1%(HR=0.58,95%CI 0.410.82)and absolute 8-year overall survival benefit was 2.1%.(HR=0.79,95%CI 0.551.13).The 5-year cumulative incidence of central nervous system(“CNS”)metastases was 0.7%in the neratinib arm and 2.1%in the placebo arm.In the HR /1 yr,no pCR subgroup of patients that were at a high risk of disease recurrence the absolute 5-year iDFS benefit in the neratinib armversus placebo was 7.4%(HR=0.60;95%CI 0.331.07)and the 8-year overall survival benefit was 9.1%(HR=0.47;95%CI 0.23 0.92).NERLYNX is included in the body of the National Comprehensive Cancer Network(“NCCN”)Practice Guidelines for Breast Cancer for the treatmentof adjuvant HER2-positive Breast Cancer(BINV-16&BINV-L)under the heading Useful in Certain Circumstances,with a recommendation for consideringextended adjuvant neratinib for patients with HR-positive,HER2-positive disease with a perceived high risk of recurrence.Dose escalation of neratinib isincluded as an approach to improve the tolerability of neratinib in the treatment of adjuvant HER2-positive breast cancer.CONTROL.In February 2015,we initiated the CONTROL trial,which is an international,open-label,Phase II study investigating the use ofantidiarrheal prophylaxis or dose escalation in the prevention and reduction of neratinib-associated diarrhea and,more specifically,grade 3 diarrhea.In theCONTROL trial,patients with HER2-positive early stage breast cancer who had completed trastuzumab-based adjuvant therapy received neratinib daily for aperiod of one year.6Table of Contents In December 2021,final results from the CONTROL trial were presented at the CTRC-AACR San Antonio Breast Cancer Symposium.Final results showed the incidence of grade 3 diarrhea for the 137 patients who received the loperamide prophylaxis was 31%,the incidence of grade 3diarrhea for the 64 patients who received the combination of loperamide plus budesonide was 28%,the incidence of grade 3 diarrhea for the 136 patients whoreceived the combination of loperamide plus colestipol was 21%,the incidence of grade 3 diarrhea for the 104 patients who received colestipol alone withloperamide as needed was 33%,the incidence of grade 3 diarrhea for the 60 patients who used the dose escalation 1 regimen(DE 1)was 13%,and theincidence of grade 3 diarrhea for the 62 patients who used dose escalation regimen 2(DE 2)was 27%.Further information is provided in Table 1 below:Table 1:Incidence of Treatment-Emergent Diarrhea Colestipol Neratinib Dose Neratinib Dose Loperamide Escalation Escalation Loperamide Budesonide Colestipol LoperamidePRN Scheme 1 Scheme 2(N=137)(N=64)(N=136)(N=104)(N=60)(N=62)Patient incidence of diarrhea by worst grade-n(%)Any grade109(80)55(86)113(83)99(95)59(98)61(98)Grade 133(24)15(23)38(28)34(33)24(40)23(37)Grade 234(25)22(34)47(35)31(30)27(45)21(34)Grade 342(31)18(28)28(21)34(33)8(13)17(27)Grade 40 0 0 0 0 0 Diarrhea leading to discontinuation28(20)7(11)5(4)8(8)2(3)4(6)Hospitalization(due to diarrhea)2(1)0 0 0 0 0 Adoption of neratinib dose escalation at the initiation of treatment,particularly the 2-week DE schedule(“DE1”),most markedly reduced the incidence,severity,and duration of neratinib-associated grade 3 diarrhea in CONTROL compared to other treatment cohorts.Both DE strategies showed a lowerincidence of grade 3 diarrhea(DE1 13%;DE2 27%)compared with that observed in the ExteNET trial(historical control:39.8%).No grade 4 diarrhea wasreported in any cohort.The median cumulative duration of grade 3 diarrhea ranged from 2 2.5 days across the CONTROL DE study cohorts for the entire 12-month treatment period(compared with 5.0 days for ExteNET).The proportion of patients discontinuing neratinib because of diarrhea was decreased in bothDE cohorts(DE1 3%;DE2 6%)compared with ExteNET(17%).The adoption of neratinib DE loperamide PRN during the first 2 weeks of treatment(DE1cohort)was associated with the lowest rate of grade 3 diarrhea during the trial compared with all other anti-diarrheal strategies investigated in CONTROL.These final findings from the CONTROL study showed improved tolerability of neratinib with all diarrhea prophylaxis strategies and suggest that neratinibDE1 with loperamide PRN may allow patients to stay on treatment longer and receive the full benefit of neratinib therapy.This study is complete,and theresults have been submitted to multiple global Health Authorities to support the addition of a dose escalation regimen to approved package inserts.Dose escalation as an approach to improve the tolerability of neratinib in the treatment of adjuvant HER2-positive Breast Cancer(BINV-L)is includedin the NCCN treatment guidelines.This inclusion aligns with the labeling supplement to the U.S.Prescribing Information approved by the FDA in June 2021,which incorporated the use of NERLYNX dose escalation as evaluated in the Phase II CONTROL study.NeratinibMetastatic Breast Cancer In February 2020,the FDA approved our supplemental New Drug Application(“NDA”)for the use of neratinib in combination with capecitabine for thetreatment of adult patients with advanced or metastatic HER2-positive breast cancer who have received two or more prior anti-HER2-based regimens in themetastatic setting.This approval was based on the results from our NALA trial.Trials of Neratinib as a Single Agent.In 2009,Pfizer Inc.(“Pfizer”)presented data at the CTRC-AACR San Antonio Breast Cancer Symposium from aPhase II trial of neratinib administered as a single agent to patients with HER2-positive metastatic breast cancer.Final results from this trial were published inthe Journal of Clinical Oncology in March 2010.The trial involved a total of 136 patients,66 of whom had received prior treatment with trastuzumab and 70 of whom had not received prior treatmentwith trastuzumab.The results of the study showed that neratinib was reasonably well-tolerated among both the pretreated patients and the patients who had notreceived prior treatment with trastuzumab.Diarrhea was the most common side effect but was manageable with antidiarrheal agents and dose modification.Efficacy results from the trial showed that the objective response rate was 24%for patients who had received prior trastuzumab treatment and 56%for patientswith no prior trastuzumab treatment.Furthermore,the median progression free survival(“PFS”)was 22.3 weeks for the patients who had received priortrastuzumab and 39.6 weeks for the patients who had not received prior trastuzumab.Data from a second Phase II study,in which patients with confirmed HER2-positive metastatic breast cancer who had failed treatment with trastuzumaband taxane chemotherapy were given neratinib in combination with capecitabine,was presented at the 2011 CTRC-AACR San Antonio Breast CancerSymposium.The results of the study showed that the combination of neratinib and capecitabine had acceptable tolerability.The efficacy results from the trialshowed that for the 61 patients in the trial who had not been previously treated with the HER2 targeted anti-cancer drug lapatinib,there was an overall responserate of 64%and a clinical benefit rate of 72%.In addition,for the seven patients in the trial who had previously been treated with lapatinib,there was an overallresponse rate of 57%and a clinical benefit rate of 71%.The median PFS for patients who had not received prior treatment with lapatinib was 40.3 weeks andthe median PFS for the patients who had received prior lapatinib treatment was 35.9 weeks.7Table of Contents NALA.In February 2013,we reached agreement with the FDA under a Special Protocol Assessment(“SPA”)for our Phase III clinical trial(PUMA-NER-1301 or the NALA trial)of neratinib in patients with HER2-positive metastatic breast cancer who have failed two or more prior treatments(third-linedisease).An SPA is a written agreement between the trials sponsor and the FDA regarding the design,endpoints,and planned statistical analysis of the PhaseIII trial with respect to the effectiveness of neratinib for the indication to be studied to support an NDA.The European Medicines Agency(“EMA”)alsoprovided follow-on Scientific Advice(“SA”)consistent with that of the FDA regarding our Phase III trial design and endpoints used for such design to supportthe submission of a marketing authorization application(“MAA”)in the EU.Pursuant to the SPA and SA,the Phase III NALA trial was designed as a randomized controlled trial of neratinib plus capecitabine versus Tykerb(lapatinib)plus capecitabine in patients with third-line HER2-positive metastatic breast cancer.The trial enrolled 621 patients who were randomized(1:1)toreceive either neratinib plus capecitabine or lapatinib plus capecitabine.The trial was conducted globally at sites in North America,Europe,Asia-Pacific andSouth America.The co-primary endpoints of the trial were centrally confirmed PFS and overall survival(“OS”).An alpha level of 1%was allocated to the PFSand 4%allocated to OS.In June 2019,we announced that results from the Phase III NALA trial were presented at the ASCO 2019 Annual Meeting in Chicago.For the primaryanalysis of centrally confirmed PFS,treatment with neratinib plus capecitabine resulted in a statistically significant improvement in centrally confirmed PFS(hazard ratio=0.76,p=0.0059)compared to treatment with lapatinib plus capecitabine.Because the hazard ratio was found to not be constant over time(i.e.,theproportional hazard assumption did not hold),the statistical analysis plan for the NALA trial prespecified that a restricted means survival analysis at 24 monthswould be performed.In this prespecified analysis,the mean PFS for the patients treated with neratinib plus capecitabine was 8.8 months and the mean PFS forthe patients treated with lapatinib plus capecitabine was 6.6 months.For the primary analyses of OS,neratinib plus capecitabine resulted in an improvement in OS that,although not statistically significant,trendednumerically in favor of the neratinib plus capecitabine arm of the study(hazard ratio=0.88,p=0.21).The median OS for the patients treated with neratinib pluscapecitabine was 21.0 months and the median OS for the patients treated with lapatinib plus capecitabine was 18.7 months.In the prespecified restricted meansanalysis,the mean OS at 48 months for the patients treated with neratinib plus capecitabine was 24.0 months and the mean OS for the patients treated withlapatinib plus capecitabine was 22.2 months.For the secondary endpoint of time to intervention for symptomatic central nervous system disease(also referred to as brain metastases),the results ofthe trial showed that treatment with neratinib plus capecitabine led to an improvement over the combination of lapatinib plus capecitabine.The overallcumulative incidence of CNS metastases was 22.8%for the neratinib plus capecitabine arm and 29.2%for the lapatinib plus capecitabine arm(p=0.043).Forthe secondary endpoint of duration of response,neratinib plus capecitabine treatment resulted in a longer duration of response compared to lapatinib andcapecitabine treatment,with a median response of 8.54 months compared to a median response of 5.55 months(HR=0.495,p=0.0004).Treatment-emergent adverse events(“TEAEs”)were similar between arms:TEAEs leading to neratinib/lapatinib discontinuation were lower withneratinib(10.9%)than with lapatinib(14.5%).There was a higher rate of grade 3 diarrhea with neratinib plus capecitabine compared to lapatinib pluscapecitabine(24.4%vs 12.5%);however,the discontinuations due to diarrhea(neratinib plus capecitabine:2.6%,lapatinib plus capecitabine:2.3%)weresimilar in both arms.NERLYNX plus capecitabine is included in the body of the NCCN Practice Guidelines for Breast Cancer for the treatment of recurrent unresectable(local or regional)or stage IV(M1)HER2-positive Breast Cancer(BINV-Q),with a recommendation for Fourth Line and Beyond(optimal sequence is notknown).Dose escalation of neratinib is included as an approach to improve the tolerability of neratinib in the treatment of metastatic HER2-positive breastcancer.Metastatic Breast Cancer with Brain Metastases Approximately one-half of the patients with HER2-positive metastatic breast cancer develop metastases that spread to their brain.The current antibody-based treatments,including trastuzumab and pertuzumab,do not enter the brain and therefore are not believed to be effective in treating these patients.Neratinib was evaluated in a clinical trial with the Translational Breast Cancer Research Consortium,referred to as TBCRC 022.The purpose of thestudy was to determine how well neratinib worked in treating breast cancer that had spread to the brain.In this research study,the investigators looked to seehow well neratinib worked to decrease the size of or stabilize breast cancer that had metastasized to the brain.In June 2017,we presented interim data from TBCRC 022 at the ASCO 2017 Annual Meeting.The multicenter Phase II clinical trial enrolled patientswith HER2-positive metastatic breast cancer who had brain metastases.The trial initially enrolled three cohorts of patients.Patients in the second cohort(n=5)represent patients who had brain metastases which were amenable to surgery and who were administered neratinib monotherapy prior to and after surgicalresection.The third cohort(target enrollment=60)enrolled two sub-groups of patients(prior lapatinib-treated and no prior lapatinib)with progressive brainmetastases who were administered neratinib in combination with the chemotherapy drug capecitabine.The oral presentation reflected only the patients in thethird cohort of patients without prior lapatinib exposure(cohort 3A,n=37),who all had progressive brain metastases at the time of enrollment and whoreceived the combination of capecitabine plus neratinib.In cohort 3A,30%of the patients had received prior craniotomy,65%of the patients had received prior whole brain radiotherapy,and 35%had receivedprior stereotactic radiosurgery to the brain.No patients had received prior treatment with lapatinib.The primary endpoint of the trial was CNS Objective Response Rate according to composite criteria that included volumetric brain MRI measurements,steroid use,neurological signs and symptoms,and Response Evaluation Criteria in Solid Tumors(“RECIST”)evaluation for non-CNS sites.The secondaryendpoint of the trial was CNS response by Response Assessment in Neuro-Oncology-Brain Metastases(“RANO-BM”)criteria.The efficacy results from thetrial showed that 49%of patients experienced a CNS Objective Response by the composite criteria.The results also showed that the CNS response rate usingthe RANO-BM criteria was 24%.The median time to CNS progression was 5.5 months and the median overall survival was 13.5 months,though 49%ofpatients remain alive and survival data are immature.The results for cohort 3A showed that the most frequently observed severe adverse event for the 37 patients evaluable for safety was diarrhea.Patientsreceived antidiarrheal prophylaxis consisting of high dose loperamide,given together with the combination of capecitabine plus neratinib for the first cycle oftreatment in order to try to reduce the neratinib-related diarrhea.Among the 37 patients evaluable for safety,32%of the patients had grade 3 diarrhea and 41%had grade 2 diarrhea.8Table of Contents Updated results from an additional TBCRC 022 cohort were presented in December 2022 at the 2022 San Antonio Breast Cancer Symposium.Thispresentation outlined updates from three sub-cohorts of cohort 4:4A patients with previously untreated Breast Cancer Brain Metastases(“BCBM”);4B patients with BCBM progressing after prior local CNS-directed therapy without prior T-DM1 exposure;and 4C patients with BCBM progressing after priorlocal CNS-directed therapy with previous T-DM1 exposure.Patients with measurable HER2-positive BCBM received neratinib 160 mg orally once daily plusT-DM1 3.6 mg/kg intravenously every 21 days in the three parallel-enrolling cohorts.Diarrhea prophylaxis with colestipol and loperamide was required duringcycle 1.All enrolled patients underwent a brain MRI plus CT scan of the chest/abdomen/pelvis every six weeks for 18 weeks,followed by every nine weeksthereafter.The primary endpoint,Response Assessment in Neuro-Oncology-Brain Metastases(“RANO-BM”),was evaluated in each cohort separately.Theefficacy results from the trial showed that CNS Objective Response Rate by RANO-BM was 33.3%of patients in cohort 4A,29.4%in cohort 4B,and 28.6%incohort 4C.Rates of response stable disease greater than or equal to six months were 50%in cohort 4A,35.3%in cohort 4B,and 33.3%in cohort 4C.Intracranial activity was observed for the combination of neratinib plus T-DM1 in all three cohorts,including in patients with prior T-DM1 exposure,suggesting a reversal of resistance to T-DM1.Overall,the most frequently observed adverse event was diarrhea,grade 2(32%)and grade 3(23%).In April 2018,we announced that NERLYNX has been included as a recommended treatment option in the latest NCCN Clinical Practice Guidelines inOncology Central Nervous System Cancers for patients with breast cancer and brain metastases.The NCCN designated NERLYNX in combination withcapecitabine as a category 2A treatment option and NERLYNX in combination with paclitaxel as a category 2B treatment option.Use of NERLYNX for breastcancer patients with brain metastases is outside the FDA-approved indication for NERLYNX and considered investigational,and we do not market or promoteNERLYNX for these uses.NeratinibOther Potential Applications While we believe neratinib has potential applications in other diseases,such as HER2-mutated solid tumors,as well as EGFR exon 18-mutated non-small cell lung cancer,we are not currently pursuing additional development in these indications at this time.NERLYNX combinations are included in the body of the NCCN Practice Guidelines for Breast Cancer for patients with HER2-negative metastatic(stage IV)breast cancer and activating mutations in the HER2 gene as detected by next generation sequencing of tumor tissue or ctDNA under the headingUseful in Certain Circumstances(BINV-Q).NERLYNX is included(i)with or without fulvestrant and(ii)with or without trastuzumab/fulvestrant.Thisinclusion is described in a table entitled,“Emerging Biomarkers to Identify Novel Therapies for Patients with Stage IV(M1)Disease,”within the NCCNPractice Guidelines for Breast Cancer.Dose escalation of neratinib is included as an approach to improve the tolerability of neratinib in the treatment ofmetastatic HER2-positive breast cancer.NERLYNX monotherapy is also included in the body of the NCCN Practice Guidelines for Cervical Cancer for use as a second-line or subsequenttherapy for patients with recurrent or metastatic cervical cancer and a mutation in the HER2 gene.NERLYNX is included in CERV-F under the heading Usefulin Certain Circumstances and designated as a category 2A treatment option.Use of NERLYNX in cervical cancer patients is outside the FDA-approvedindication for NERLYNX and considered investigational,and we may not market or promote NERLYNX for these uses.Neratinib is also being investigated in an ongoing Phase 1 trial(NCT05372614)that is sponsored by the National Cancer Institute to evaluate thecombination of neratinib and fam-trastuzumab deruxtecan(Enhertu)in patients with metastatic solid tumors.The Phase 1 trial includes patients with metastaticsolid tumors harboring HER2-overexpression(immunohistochemistry 3 ),ERBB2 amplifications,or activating HER2 mutations.The primary objectives areto assess safety and tolerability of the combination,and the secondary objectives include evaluating pharmacokinetics,preliminary efficacy,and potentialbiomarkers of response.Alisertib Alisertib is an investigational reversible,ATP-competitive inhibitor that is designed to be highly selective for Aurora Kinase A.Inhibition of AuroraKinase A leads to disruption of mitotic spindle apparatus assembly,disruption of chromosome segregation,and inhibition of cell proliferation.In clinical trialsto date,alisertib had shown single agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancers,including hormone receptor positive breast cancer,triple negative breast cancer,small cell lung cancer and head and neck cancer.The drug has also shownactivity in previous clinical trials in peripheral T cell lymphoma and non-Hodgkins lymphoma.Prior to our licensing alisertib from Takeda the drug was testedin over 1,300 patients who were treated across 22 company sponsored trials resulting in a large well characterized clinical safety database.We intend to pursue the development of alisertib in hormone receptor positive.HER2-negative,breast cancer as well as small cell lung cancer based onthe prior clinical data that has been generated.We also plan to evaluate alisertib in biomarker focused populations where it has shown a higher degree ofactivity,such as patients with c-Myc amplification and RB1 loss/RB1 mutations,as we believe that this may provide a point of differentiation from the otherdrugs being developed in the treatment of these diseases.During 2023,we met with the FDA to discuss our alisertib clinical development plan in both proposedindications and discussed potential dosing schedules for alisertib.Following comments from the FDA on the proposed clinical development plans,we initiatedclinical trials for both small cell lung cancer and breast cancer in 2024 and are currently enrolling.Alisertib in Small Cell Lung Cancer In a Phase II trial that was published in Lancet Oncology in 2015,alisertib was tested as a single agent in several cohorts of patients with solidtumors.These included small cell lung cancer as well as breast cancer.In small cell lung cancer,the study design involved the administration of alisertib topatients with small cell lung cancer who had previously received up to two prior cytotoxic regimens in the metastatic setting.Patients were administeredalisertib monotherapy at a dose of 50 mg twice a day(“BID”)for seven days followed by a 14-day break.In patients with chemotherapy sensitive disease,alisertib resulted in a response rate of 19%and a duration of response of 3.1 months.For the patientswith chemotherapy refractory disease or chemotherapy resistant disease,alisertib resulted in a response rate of 25%and a duration of response of 4.3months.The main grade 3 or higher adverse events(“AEs”)seen in the trial were neutropenia,anemia,leukopenia and thrombocytopenia.Alisertib was also tested in a randomized Phase II trial of paclitaxel plus alisertib versus paclitaxel plus placebo in patients with second line small celllung cancer,the results of which were published in the Journal of Thoracic Oncology in 2020.In the trial,alisertib was dosed at 40 mg BID for 3 weeks ondays 13,810,and 1517 plus paclitaxel(60 mg/m2 intravenously on days 1,8,and 15)whereas the comparator arm received placebo plus paclitaxel(80mg/m2 intravenously on days 1,8,and 15)in 28-day cycles.9Table of Contents Randomization was stratified by type of relapse after primary treatment,based on the common definition for each type(with sensitive defined asrelapsed greater than 90 but less than 180 days after primary treatment and resistant or refractory defined as relapsed less than or equal to 90 days after primarytreatment).The protocol was initially written by the sponsor to record relapse type as the time from initial response.The protocol was corrected approximatelymidway through the trial to correct the stratification definition of relapse type after primary treatment so that relapses were recorded“from last administrationof platinum-based chemotherapy,”which is in line with the NCCN treatment guidelines and clinical treatment practice rather than“from initial response.”Tomaintain balance,the primary end point of PFS was analyzed by using the original stratification definition of relapse type.However,a sensitivity analysiswhich used the corrected stratification definition was also performed.The trial also incorporated an extensive biomarker analysis with a prespecified analysisof c-Myc expression and an exploratory,retrospective analysis of genetic alterations in circulating tumor DNA(“ctDNA”)with clinical outcome.The primary endpoint in the trial was PFS.For the intent to treat(“ITT”)population the hazard ratio using the original definition was 0.77 with a p valueof 0.113.Using the corrected definition of relapse type,the hazard ratio was 0.71 with a p value of 0.038.For the patients with chemotherapy resistant orrefractory relapse the hazard ratio was 0.66 with a p value of 0.037.For the ITT population the OS data showed a hazard ratio of 0.87 with a p value of 0.714and using the corrected definition the hazard ratio was 0.79 with a p value of 0.209.Higher rates of grade 3 or higher AEs were seen in the alisertib arm forneutropenia,anemia and decreased neutrophil count.For the patients in the trial who were found to be positive for c-Myc expression by immunohistochemistry the hazard ratio in the trial was 0.29 with amedian PFS for the paclitaxel plus alisertib arm of 4.64 months and a median PFS for the placebo plus paclitaxel arm of 2.27 months.The trial alsoincorporated an analysis of patients with alterations in cell cycle genes including cyclin-dependent kinase 6 gene(CDK6),retinoblastoma-like 1 gene(RBL1),retinoblastoma-like 2 gene(RBL2),and retinoblastoma 1 gene(RB1).Of note RB1 mutations were the most frequent mutation with approximately 60%of thepatients having RB1 mutations while CDK6,RBL1 and RBL2 mutations were found with very low frequency.For patients with cell cycles mutations(RB1,CDK6,RBL1 and RBL2),the PFS in the paclitaxel plus alisertib arm was 3.68 months while the placebo plus paclitaxel arm was 1.8 months and the hazardratio was 0.395 with a p value of 0.003.The overall survival in this subgroup of patients was 7.2 months for the alisertib arm and 4.47 months for the placeboarm with a hazard ratio of 0.427 and a p value of 0.00085.Development plan.In the United States the incidence of small cell lung cancer is approximately 31,000 to 33,000 patients per year with approximately17,000 to 18,000 deaths per year.There are two biomarkers of interest,c-Myc amplifications and RB1 mutations/deletions,that we intend to study withalisertib based on the previous clinical trial results which may provide differentiation from the other drugs in development.According to the publishedbiomarker data from the alisertib clinical trial,approximately 72%of small cell lung cancer patient samples had c-Myc amplifications and approximately 60-80%of small cell lung cancer patient samples had RB1 mutations.In August 2023,we announced that we had been notified by the FDA that we can proceed under our Investigational New Drug application(“IND”)withthe clinical development of alisertib monotherapy for the treatment of patients with extensive stage small cell lung cancer.Our Phase II trial ALISertib inCAncer(ALISCA-Lung1)Phase II trial(PUMA-ALI-4201)will enroll up to 60 patients with extensive stage small cell lung cancer who have progressedafter first-line platinum-based chemotherapy and immunotherapy.Patients must provide tissue-based biopsies so that biomarkers can be analyzed.Alisertib willbe dosed at 50 mg BID on days 1-7 of every 21-day cycle.In February 2024 we announced that we initiated the Phase II ALISCATM-Lung1 trial.This study isongoing and actively recruiting.The primary endpoint of the trial is objective response rate with secondary endpoints of duration of response,disease control rate,PFS and overallsurvival.We will look at each of these endpoints within selected pre-specified biomarker subgroups to assess whether there is enhanced efficacy in anybiomarker subgroup.We will perform a biomarker analysis of the ALI-4201 trial in parallel with the execution of the clinical trial.We plan to perform an initialinterim analysis for the evaluation of the biomarkers as well as an evaluation of the efficacy.Based upon the outcomes of the study,we anticipate meeting withthe FDA to explore the potential for an accelerated approval pathway for alisertib in small cell lung cancer.Alisertib in Breast Cancer In the same Phase II trial of alisertib monotherapy that was published in Lancet Oncology in 2015,alisertib was also tested in patients with HER2-negative,hormone receptor positive breast cancer,HER2-positive breast cancer and triple negative breast cancer.Patients were administered alisertibmonotherapy at a dose of 50 mg BID for seven days followed by a 14-day break.In the cohort of patients with HER2-negative,hormone receptor positivebreast cancer,treatment with alisertib resulted in a response rate of 23%with a PFS of 7.9 months.The main grade 3/4 AEs seen were neutropenia,leukopenia,stomatitis and fatigue.Alisertib was also tested in a randomized Phase II trial in hormone receptor positive,HER2-negative metastatic breast cancer patients that was presentedat the San Antonio Breast Cancer Symposium in 2020 and published in JAMA Oncology in March 2023.In this trial alisertib was dosed at 50 mg BID on days1-3,8-10 and 15-17 on a 28 day cycle while fulvestrant was dosed at its approved dose of 500 mg IM on days 1 and 15.The baseline characteristics from thetrial were well balanced although a higher percentage of patients with prior chemotherapy given in the metastatic setting were present in the alisertib plusfulvestrant arm.Of note,patients were required to have been treated with prior fulvestrant as an inclusion criteria for the trial.10Table of Contents The results from the trial showed a response rate of 19.6%in the alisertib alone arm and 20.0%in the alisertib plus fulvestrant arm.The median durationof response was 15.1 months for the alisertib alone arm and 8.5 months for the alisertib plus fulvestrant arm.The PFS was 5.6 months in the alisertib alone armand 5.4 months in the alisertib plus fulvestrant arm.The main AEs seen in the trial were similar to the prior monotherapy trial with incidences of neutropenia,anemia,and decreases in white blood cells and lymphocytes seen.Alisertib was also tested in a randomized Phase II trial in hormone receptor positive,HER2-negative metastatic breast cancer and triple negative breastcancer patients,which was published in JAMA Network Open in 2021,in which patients were randomized to receive either paclitaxel plus alisertib orpaclitaxel alone.In this trial alisertib was dosed at 40 mg BID on days 1-3,8-10 and 15-17 on a 28-day cycle while paclitaxel was dosed at 60 mg/m2 on days1,8 and 15 of a 28-day cycle.In the control arm paclitaxel was dosed at 90 mg/m2 on days 1,8 and 15 of a 28-day cycle.The combination of paclitaxel plus alisertib resulted in a statistically significant improvement in PFS with a hazard ratio of 0.56 and a p value of 0.005.The median PFS in the paclitaxel plus alisertib arm was 10.2 months and the median PFS in the paclitaxel alone arm was 7.1 months.Treatment with paclitaxelplus alisertib resulted in a numerically higher but not statistically significant improvement in overall survival where the median OS for the paclitaxel plusalisertib arm was 26.3 months versus 25.1 months for the single agent paclitaxel arm of the trial which resulted in a hazard ratio of 0.89 and a p value of 0.61.The standard of care for the first line treatment of hormone receptor positive,HER2-negative metastatic breast cancer in the United States is treatmentwith Cyclin-dependent kinases(CDK)4/6 inhibitors(CDK 4/6 inhibitors).In the cohort of patients in the trial who were treated with CDK 4/6 inhibitors,thecombination of paclitaxel plus alisertib resulted in a median PFS of 13.9 months while paclitaxel alone resulted in a median PFS of 5.6 months.The hazardratio was 0.59 with a p value of 0.19.In the cohort of patients with triple negative breast cancer,the combination of paclitaxel plus alisertib resulted in an improvement in PFS with a hazardratio of 0.35 and a p value of 0.022.The median PFS in the paclitaxel plus alisertib arm was 9.6 months and the median PFS in the paclitaxel plus placebo armwas 5.7 months.Treatment with paclitaxel plus alisertib resulted in a higher but not statistically significant improvement in overall survival where the medianOS for the paclitaxel plus alisertib arm was 16 months versus 12.7 months for the paclitaxel alone arm of the trial which resulted in a hazard ratio of 0.51 and ap value of 0.09.Higher rates of grade 3 or higher AEs were seen in the paclitaxel plus alisertib arm for neutropenia,leukopenia,diarrhea,mucositis and stomatitis.Archival tissue samples from patients enrolled in the clinical study were analyzed as part of a biomarker evaluation strategy.Of the 140 patients enrolledin the trial,45 from the alisertib plus paclitaxel arm and 51 from the paclitaxel arm had sufficient tissue available for next generation sequencing,and 31 fromthe alisertib plus paclitaxel arm and 35 from the paclitaxel arm had enough for RNA sequencing/gene set enrichment analysis.The most frequently mutatedgenes were PIK3CA(45%)and TP53(44%).No mutations were significantly associated with response or resistance to alisertib plus paclitaxel,including thosein PIK3CA,TP53,AKT1,HER2,and CDH1.Increased MYC RNA expression was observed in tumors from patients who did not derive clinical benefit from paclitaxel alone(defined as PFS lessthan six months)compared to those with benefit from paclitaxel alone(defined as PFS greater than or equal to six months).Increased MYC RNA expressionwas not observed in patients who did not appear to benefit from alisertib plus paclitaxel.Elevated expression of genes involved in MYC activation and inunfolded protein response(a pro-survival mechanism)were enriched in alisertib plus paclitaxel responders compared to paclitaxel responders and wereassociated with poor response to paclitaxel alone.In 12 patients with exceptional response to alisertib plus paclitaxel(defined as PFS greater than or equal to12 months),increased expression of genes involved in MYC activation and in epithelial to mesenchymal transition(a hallmark of cancer progression andmetastasis)was observed in comparison to cancers from patients whose disease progressed within six months of initiating alisertib paclitaxel(n=11)or thosewith exceptional response to paclitaxel alone(n=4).Development plan.In the United States the incidence of hormone receptor positive HER2-negative breast cancer is 40,000 patients per year with 29,700deaths per year.There are two biomarkers of interest that we intend to study with alisertib,c-Myc amplifications and RB1 mutations/deletions.According tobiomarker analyses from clinical trials,approximately 50%of hormone receptor positive breast cancer tumors may have c-Myc amplifications andapproximately 2-9%of hormone receptor positive HER2-negative breast cancer samples have RB1 mutations detected at the time of resistance to CDK 4/6inhibitors.Based on our interactions with the FDA,we initiated a Phase II trial of alisertib in combination with endocrine treatment(consisting of eitheranastrozole,exemestane,letrozole,fulvestrant or tamoxifen)in patients with chemotherapy-nave HER2-negative,hormone receptor-positive metastatic breastcancer(ALISCA-Breast1).Patients must have been previously treated with CDK 4/6 inhibitors and received at least two prior lines of endocrine therapy inthe recurrent or metastatic setting to be eligible for the trial.In November 2024,we announced that we initiated the Phase II ALISCATM-Breast1 trial,and thestudy is actively enrolling patients.The ALISCATM-Breast1 trial is designed to dose patients with alisertib given at either 30 mg,40 mg or 50 mg twice daily(BID)on days 1-3,8-10 and15-17 on a 28-day cycle in combination with the endocrine therapy of the investigators choice.Patients must not have been previously treated with theendocrine treatment that will be given in combination with alisertib in the trial.Each dose level is expected to enroll up to 50 patients.Patients must provideblood samples and tissue-based biopsies so that biomarkers can be evaluated.The primary objective is to determine the optimal alisertib dose leveladministered in combination with selected endocrine therapy to be used in future studies.The primary efficacy end points include objective response rate,duration of response,disease control rate and PFS.As a secondary objective,we will evaluate each of these efficacy endpoints within biomarker subgroups inorder to determine whether any biomarker subgroup correlates with more favorable efficacy results,such as through observed in preclinical and clinical studiesin other cancers including breast cancer and small cell lung cancer.Pending the outcome of this study,we may then look to focus the future clinicaldevelopment of alisertib in combination with endocrine therapy for patients with HER2-negative hormone receptor-positive breast cancer in patients with anypotential biomarkers.Based on our interactions with the FDA,we believe that this trial design could find the optimal dose of alisertib in combination with endocrine therapyin patients with HER2-negative,hormone receptor-positive metastatic breast cancer,and pending sufficiently positive results,allow us to move into a pivotalPhase III trial.Once the optimal alisertib dose is identified,we plan to engage with global regulatory agencies regarding the design of a pivotal Phase III trial,which we anticipate will be a randomized trial of alisertib plus investigators choice endocrine therapy versus placebo plus investigators choice endocrinetherapy in patients with chemotherapy nave HER2-negative,hormone receptor-positive metastatic breast cancer.11Table of Contents Clinical Testing of Our Drug Candidates Any drug candidates we seek to develop will require extensive pre-clinical and clinical testing to determine its safety and efficacy in the potentialapplications before seeking and obtaining regulatory approval.This process is expensive and time consuming.In completing these trials,we are dependentupon third-party consultants,consisting mainly of investigators and collaborators,who will conduct such trials.We and our third-party consultants conduct pre-clinical testing in accordance with Good Laboratory Practices(“GLP”)and clinical testing in accordancewith Good Clinical Practice standards(“GCP”),which are international ethical and scientific quality standards utilized for pre-clinical and clinical testing,respectively.GCP is the standard for the design,conduct,performance,monitoring,auditing,recording,analysis and reporting of clinical trials and the FDArequires compliance with GCP regulations in the conduct of clinical trials.Additionally,our pre-clinical and clinical testing completed in the EU is conductedin accordance with applicable EU standards,such as the EU Clinical Trials Regulation(Regulation(EU)No 536/2014 of April 16,2014),and applicablenational laws of the 27 EU member states.We have entered into,and may enter into in the future,master service agreements with CROs with respect to initiating,managing and conducting theclinical trials of our products.These contracts contain standard terms for the type of services provided that contain cancellation clauses requiring between 30and 45 days written notice and that obligate us to pay for any services previously rendered with prepaid,unused funds being returned to us.Competition The development and commercialization of new products to treat cancer is highly competitive.Significant financial resources are invested in research,development and commercialization of new cancer products.We have faced and will likely continue to face considerable competition from majorpharmaceutical,biotechnology and specialty cancer companies.Our competitors include,but are not limited to,Genentech,Novartis,Roche,BoehringerIngelheim,Lilly,Amgen,Daiichi Sankyo,Jazz and Seagen.Amgen,Daiichi Sankyo and Jazz are developing their drugs for the treatment of small cell lungcancer.All of the other competitors are developing their drugs for the treatment of early stage and/or metastatic HER2-positive breast cancer and/or for cancersthat have a HER2 mutation.We are aware of the DESTINY-Breast11 neoadjuvant trial and DESTINY-Breast05 adjuvant trial of trastuzumab deruxtecan inearly stage HER2-positive breast cancer,as well as the CompassHER2 RD trial of tucatinib in early stage HER2-positive breast cancer.In addition,we are alsocompeting with academic institutions,governmental agencies and private organizations that are conducting research in the field of cancer.We are a small biotechnology company with a limited history of sales,marketing,operations and commercial manufacturing.Many of the companiesagainst which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research anddevelopment,manufacturing,preclinical testing,conducting clinical trials,obtaining regulatory approvals and marketing approved drugs than we do.Mergersand acquisitions in the pharmaceutical,biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller numberof our competitors.Smaller or early stage companies may also prove to be significant competitors,particularly through collaborative arrangements with largeand established companies.These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishingclinical trial sites and enrolling subjects for our clinical trials,as well as in acquiring technologies complementary to,or necessary for,our programs.We could see a reduction or elimination of our commercial opportunity if our competitors develop and commercialize products that are safer,moreeffective,have fewer or less severe side effects,are more convenient or are less expensive than any products that we or our collaborators may develop.Ourcompetitors also may obtain FDA or foreign regulatory approval for their products more rapidly than we may obtain approval for ours,which could result inour competitors establishing a strong market position before we or our collaborators are able to enter the market.We anticipate that we will continue to face significant competition in the ongoing commercialization of NERLYNX and the commercialization of any ofour drug candidates that receive marketing approval.Our competition will be determined by several factors including but not limited to the specific indicationsapproved,the timing of any approvals as well as competitive activity and entrants within this space.We expect that competition among products approved forsale will be based on various factors,including safety,efficacy,pricing and contracting,patient support services,access and reimbursement,formulary andpathway adoption as well as patent position.Sales and Marketing United States We currently have an oncology sales force in the United States comprised of approximately 35 sales specialists,three clinical nurse educators,two strategic account managers and one national account director who are focused on promoting NERLYNX to oncologists and the oncology care team.Thissales force is supported by an experienced leadership team consisting of six regional business leaders and a VP of sales.In addition,the broader commercialteam is comprised of experienced professionals in marketing,training,sales operations,global product strategy as well as access and reimbursement.Ourcommercial infrastructure includes capabilities in manufacturing,regulatory,quality control,and compliance.It is also supported from a clinical and cancerlandscape perspective by our medical affairs group.We launched NERLYNX in the United States in July 2017 with the goal of establishing NERLYNX as the standard of care for the extended adjuvanttreatment of adult patients with early stage HER2-positive breast cancer to follow adjuvant trastuzumab-based therapy.In Feb 2020,NERLYNX was alsoapproved in the United States in combination with capecitabine for the treatment of adult patients with advanced or metastatic HER2-positive breast cancerwho have received two or more prior anti-HER2 based regimens in the metastatic setting.We believe that the key commercial priorities for NERLYNX include:Educating healthcare providers about the evolving clinical data for NERLYNX and its ability to reduce the risk of recurrence in the extendedadjuvant setting for patients battling HER2-positive breast cancer;Educating HER2-positive breast cancer patients about the risks of recurrence and empowering them to ask their MDs if NERLYNX is anappropriate option for them;Removing access barriers by ensuring broad insurance coverage;and Providing patients with appropriate co-pay support as well as tools and resources to better maintain persistency and compliance.12Table of Contents In the United States,we sell our products through a specialty pharmacy network and special distributor network.The specialty pharmacy network sellsdirectly to patients and consists of Acaria Health,Accredo,CVS,ONCO 360,Optum and Biologics.Our specialty distributor network sells to hospitals,physician practices and other sites of care and consists of McKesson,ASD/Oncology Supply,Cardinal Health and DMS Pharmaceutical Group.International Outside the United States,we seek to enter into exclusive sub-license agreements with third parties to pursue regulatory approval,if necessary,andcommercialize NERLYNX,if approved.In 2018,the EC granted a marketing authorization for NERLYNX in the EU for the extended adjuvant treatment ofadult patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer and who completed adjuvant trastuzumab-based therapyless than one year ago.In December 2021,NERLYNX(neratinib)was included in the updated National Reimbursement Drug List(“NRDL”)by the ChinaNational Healthcare Security Administration for patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer afteradjuvant trastuzumab based therapy.The addition of NERLYNX to the China NRDL now enables broad access to neratinib to more women throughout China.We continue to pursue commercialization of NERLYNX in Europe and other countries outside the United States,where approved.The following table showsthe HER2-positive breast cancer approvals for NERLYNX by disease and country:Extended adjuvantMetastaticUnited StatesJuly 2017United StatesFebruary 2020European UnionAugust 2018ArgentinaJanuary 2021AustraliaMarch 2019PeruMarch 2021CanadaJuly 2019ChileMay 2021ArgentinaAugust 2019CanadaJune 2021Hong KongOctober 2019TaiwanOctober 2021SingaporeNovember 2019IsraelJuly 2022SwitzerlandMarch 2020EcuadorAugust 2022BruneiApril 2020SingaporeSeptember 2022ChinaApril 2020ColombiaMarch 2023ChileApril 2020MalaysiaSeptember 2023New ZealandJune 2020MexicoOctober 2023TaiwanJune 2020BrazilMay 2024EcuadorJuly 2020ThailandDecember 2024MalaysiaJuly 2020 PeruMarch 2021 MacauAugust 2021 South KoreaOctober 2021 BrazilDecember 2021 MexicoJanuary 2022 PhilippinesJune 2022 IsraelJuly 2022 South AfricaJanuary 2023 MoroccoFebruary 2023 UAESeptember 2023 SyriaJanuary 2024 Saudi ArabiaJuly 2024 AlgeriaJuly 2024 TurkeyNovember 2024 ThailandDecember 2024 We currently have sub-licenses in each of these regions with third parties that are commercializing NERLYNX in their respective geography.Intellectual Property and License Agreements Neratinib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Pfizer,as amended(the“Pfizer Agreement”)to 21 granted U.S.patents andthree pending U.S.patent applications,as well as foreign counterparts thereof,and other patent applications and patents claiming priority therefrom to developand commercialize certain compounds,including neratinib.In the United States,we have a license to an issued patent,which is set to expire in 2030,for the composition of matter of neratinib,our lead compound.We also have a license to an issued U.S.patent for the use of neratinib in the treatment of breast cancer,which is currently set to expire on October 8,2025,anissued patent for the use of neratinib in the extended adjuvant treatment of early stage HER2-positive breast cancer that has previously been treated with atrastuzumab containing regimen that expires in 2030,two issued patents for the use of neratinib in combination with capecitabine,the latter of which is set toexpire in 2031,and two issued patents for the formulation of NERLYNX that are set to expire in 2030,two issued patents for the polymorphic forms ofneratinib which are set to expire in 2028,one issued patent for the preparation of the polymorphic forms of neratinib which is set to expire in 2028,and threeissued patents for the use of the polymorphic forms of neratinib in the treatment of breast cancer which are set to expire in 2028.In jurisdictions which permitsuch,we will seek patent term extensions where possible for certain of our patents(discussed further below,including in“Government Regulation”).We planto pursue additional patents in and outside the United States,based on our existing neratinib patent portfolio,that covers neratinib composition,formulations,and combinations and uses thereof,and additional therapeutic uses of neratinib.In addition,we will pursue patent protection for any new discoveries orinventions made in the course of our development of neratinib.13Table of Contents In the United States,marketing approval for neratinib was obtained on July 17,2017,which provided five years of regulatory exclusivity.Marketingapproval in the United States for neratinib in combination with capecitabine was obtained on February 25,2020,which provided three years of regulatoryexclusivity.Requests for patent term extension under the Hatch-Waxman Act have been filed for two patents in the United States:U.S.Patent No.7,399,865and U.S.Patent No.9,211,291.We elected to apply patent term extension to U.S.Patent No.7,399,865.The U.S.Patent and Trademark Office(“USPTO”)hasdetermined that U.S.Patent No.7,399,865 is eligible for five years of patent term extension.U.S.Patent No.7,399,865 Patent Term Extension(PTE)Certificate was issued on November 19,2021.U.S.Patent No.7,399,865 will expire December 29,2030.See“Government Regulation”below.If we obtainmarketing approval in the United States for new uses or combination therapies for neratinib,we may be eligible for additional periods of regulatory exclusivity,such as three-year market exclusivity covering the new use.If we obtain market approval for neratinib or other drug candidates or in certain jurisdictionsoutside the United States,we may be eligible for regulatory protection,such as eight to eleven years of data and marketing exclusivity potentially available fornew drugs in the EU;up to five years of patent extension potentially available in Europe(Supplemental Protection Certificate),and eight years of dataexclusivity potentially available in Japan.In Europe,marketing approval for neratinib was obtained on August 31,2018,which provided 10 years of regulatoryexclusivity.Between 2019 and 2024,marketing approval for neratinib was obtained in Argentina,Brazil,Brunei,Canada,Chile,China,Ecuador,Hong Kong,Israel,Malaysia,Mexico,Singapore,Taiwan,Brazil and Thailand.Where available and eligible,regulatory or data exclusivity has been obtained,or iscurrently being pursued in these jurisdictions outside the United States and Europe.Patent term extension or supplemental protection certificate are being,orwill be,pursued in jurisdictions where available and eligible,including Chile,Europe and Taiwan.We are pursuing patent term extension in the form of patentterm adjustment(PTA),in market approved jurisdictions where PTA is available.Where PTA requests require proceedings in a court setting,there is noguarantee that such PTA requests will be granted.Current market approved jurisdictions where patent term extensions or supplemental protection certificatesare not available,not eligible,or not pursued,include Argentina,Brunei,Canada,China,Ecuador,Hong Kong,Israel,Malaysia and Singapore.There can be noassurance that we will qualify for any such regulatory exclusivity,or that any such exclusivity will prevent competitors from seeking approval solely on thebasis of their own studies.See“Government Regulation”below.On November 28,2011,a Boehringer Ingelheim entity filed an opposition to European Patent No.EP1848414,which was licensed from Pfizer in 2011,and which included specific claims to a pharmaceutical composition for use in treating cancer in a subject with a cancer having a mutation in epidermal growthfactor receptor with a T790M mutation.Oral proceedings were held before the Opposition Division of the European Patent Office in Munich,Germany onFebruary 4,2014.The decision of the Opposition Division was to uphold the granted claims of the European patent that relate to the T790M mutation withoutany modification.This included specific claims to a pharmaceutical composition comprising an irreversible epidermal growth factor receptor inhibitor for usein treating cancer in a subject having a T790M mutation and claims for the pharmaceutical composition for use in the treatment of numerous cancers,includinglung cancer and non-small cell lung cancer.Both parties appealed this decision.The opposition was rejected as inadmissible by the Board of Appeal of theEuropean Patent Office on December 1,2020,and the EP1848414 patent was upheld as originally granted.We have filed Supplemental Protection Certificateapplications in the countries the EP1848414 patent was validated.Of these Supplemental Protection Certificate applications,seven have been granted,one isundergoing appeal proceedings,six have been abandoned,five proceedings have been stayed,and the remaining six are in active prosecution.An Opposition was filed by Hexal AG(“Hexal”)on August 3,2016 against European Patent No.EP2416774 which was licensed from Pfizer in 2011,and which claims neratinib for use in a method for treating HER-2/neu overexpressed/amplified cancer and improving IDFS,wherein the method comprisesdelivering neratinib therapy to HER-2/neu overexpressed/amplified cancer patients following the completion of at least one year of trastuzumab adjuvanttherapy,and wherein the neratinib therapy comprises treating the cancer patients with neratinib for at least twelve months.An oral hearing was held December8,2017,wherein the patent was maintained as granted.Following an appeal filed by Hexal,the Board of Appeal of the European Patent Office rejected theclaims as granted and all pending auxiliary requests during the oral hearing of September 2,2021.Before issuance of a decision,we withdrew approval of thetext in which the patent was granted and all pending auxiliary requests,thereby revoking the patent and concluding the appeal.One European divisionalapplication,namely EP15188350.1,was granted with the European patent number EP3000467 on March 1,2023.Oppositions against EP3000467 were filedby Hexal AG(“Hexal”)on November 3,2023,by Alfred E.Tiefenbacher(GmbH&Co.KG)on November 28,2023 and by Generics(UK)Limited(“Generics”)on December 1,2023.EP3000467 is used as the basic patent for Supplementary Protection Certificate applications for the EMA-approvedNERLYNX product,17 of which have been granted,three proceedings have been stayed,and eleven are in active prosecution.The patentee response to thenotice of opposition was filed on April 15,2024,following which,all three opponents filed additional arguments in reply to the patentees submission.OnFebruary 6,2025,we filed our response to the summons to attend oral proceedings.Oral proceedings are currently scheduled for April 9,2025.One Europeandivisional application is pending in the same family,namely EP 23157078.8.A response to the European Search Opinion(ESO)for this application was filedFebruary 14,2024.On October 6,2017,Hexal also filed an Opposition against European Patent No.EP2326329 which was licensed from Pfizer in 2011,and which claimsa combination of neratinib and pharmaceutically acceptable salts thereof with capecitabine for use in a method of treating an Erb-2 positive metastatic breastcancer.An oral hearing was held on February 13,2019,wherein the patent was maintained as granted.Hexal then appealed,the Board of Appeal of theEuropean Patent Office rejected the claims as granted and the pending auxiliary request during the oral hearing of November 16,2022.Before issuance of adecision,we withdrew approval of the text in which the patent was granted and the pending auxiliary request,thereby revoking the patent and concluding theappeal.A divisional application,EP16203986.1 was granted with the patent number EP3175853 on November 1,2023.This patent was also opposed bySandoz AG on July 2,2024.The patentees response was filed on December 12,2024.On December 19,2024,Sandoz AG requested the opposition division todelay issuance of their preliminary opinion by two months since they intend to respond to the patentees submission.A divisional application,EP23206402.2,remains pending in this family.Substantive examination has commenced and a response to the European Search Opinion(ESO)is due by May 20,2025.On May 21,2020,Dr.Richard Cooke at the firm Elkington and Fife LLP filed an Opposition against European Patent No.EP2498756,which waslicensed from Pfizer in 2011,and which claims,inter alia,tablet formulations of neratinib maleate comprising intragranular and extragranular components.Anoral hearing was held on April 6,2022,wherein the patent has been maintained in amended form.The Interlocutory Decision of the Opposition Division wasissued on July 25,2022.Hexal,has not appealed the decision within the prescribed time and the Interlocutory Decision became final.A divisional applicationfor EP19154710.8 has been granted as EP3566697,and EP22169771.7 has received a decision to grant,taking effect on March 5,2025.An Opposition was filed by Generics on September 3,2015 against European Patent No.EP2656844,which was licensed from Pfizer in 2011,andwhich claims,inter alia,a pharmaceutical pack containing 50 to 300 mg of neratinib and pharmaceutically acceptable salts thereof and vinorelbine for use in amethod of treating a neoplasm.An oral hearing was held July 3,2017,wherein the patent was maintained as granted.Generics then appealed.The appeal wasdismissed by the Board of Appeal of the European Patent Office on August 11,2020,and the EP2656844 patent was upheld as originally granted.Unipharm filed a pre-grant opposition to Israeli Patent Application No.IL210616 on January 31,2016.This application was licensed from Pfizer in2011.An oral hearing was held in Jerusalem before the Israeli Patent Office on January 22,2018.The patent was granted by the Israeli Patent Office uponfiling of amendments to the claims.No opposition to the patent has been filed within the allowed opposition period.The granted claims are directed to use of acombination of neratinib and capecitabine in the manufacture of a medicament for treating a neoplasm.14Table of Contents Alisertib Patent Portfolio We hold a worldwide exclusive license under our license agreement with Takeda(the“Takeda Agreement”),to 22 granted U.S.patents and five pendingU.S.patent applications,as well as foreign counterparts thereof,and other patent applications and patents claiming priority thereof for a total of approximately368 foreign patents and patent applications to develop and commercialize alisertib.We have a license to issued U.S.patents that include species claims and genus claims to the composition of matter of alisertib which are set to expire in2029 and 2027,respectively,not including any extension for Hatch-Waxman exclusivity.We also have issued U.S.patents for the use of alisertib incombination with certain other agents in the treatment of certain proliferative disorders,small-cell lung cancer and breast cancer,which are currently set toexpire in 2032,2033 and 2034,respectively,not including any extension for Hatch-Waxman exclusivity.We plan to pursue additional patents in and outside the United States,based on our existing alisertib patent portfolio,that covers alisertib composition,formulations,combinations and uses thereof,and additional therapeutic uses of alisertib.In addition,we will pursue patent protection for any new discoveriesor inventions made in the course of our development of alisertib.Our goal is to obtain,maintain and enforce patent protection for our products,formulations,processes,methods and other proprietary technologies,preserve our trade secrets,and operate without infringing on the proprietary rights of other parties,both in the United States and in other countries.Our policyis to actively seek to obtain,where appropriate,the broadest intellectual property protection possible for our current drug candidates and any futuredrug candidates,proprietary information and proprietary technology through a combination of contractual arrangements and patents,both in the United Statesand abroad.However,even patent protection may not always provide us with complete protection against competitors who seek to circumvent our patents.See“Risk FactorsRisks Related to Our Intellectual PropertyOur proprietary rights may not adequately protect our intellectual property and potential products,and if we cannot obtain adequate protection of our intellectual property and potential products,we may not be able to successfully market our potentialproducts.”We depend upon the skills,knowledge and experience of our scientific and technical personnel,as well as that of our advisors,consultants and othercontractors,none of which is patentable.To help protect our proprietary know-how,which is not patentable,and inventions for which patents may be difficultto obtain or enforce,we rely on trade secret protection and confidentiality agreements to protect our interests.To this end,we require all of our employees,consultants,advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure of confidential information and,whereapplicable,require disclosure and assignment to us of the ideas,developments,discoveries and inventions important to our business.In-License Agreements Pfizer License Agreement We license the worldwide exclusive rights for the development,manufacture and commercialization of neratinib(oral),neratinib(intravenous),PB357,and certain related compounds from Pfizer.Under the Pfizer Agreement,Pfizer was obligated to transfer to us certain information,records,regulatory filings,materials and inventory controlled by Pfizer and relating to or useful for developing these compounds and to continue to conduct certain ongoing clinicalstudies until a certain time.After that time,we were obligated to continue such studies pursuant to an approved development plan,including after the licenseagreement terminates for reasons unrelated to Pfizers breach of the license agreement,subject to certain specified exceptions.We were also obligated tocommence a new clinical trial for a product containing one of these compounds within a specified period of time and use commercially reasonable efforts tocomplete such trial and achieve certain milestones as provided in a development plan.If certain of our out-of-pocket costs in completing such studies exceededa mutually agreed amount,Pfizer was obligated to pay for certain additional out-of-pocket costs to complete such studies.We must use commerciallyreasonable efforts to develop and commercialize products containing these compounds in specified major-market countries and other countries in which webelieve it is commercially reasonable to develop and commercialize such products.In July 2021,we entered into a confirmatory agreement with Pfizer andWyeth LLC(“Wyeth”),confirming that the rights granted to us by Pfizer under the Pfizer Agreement included Wyeths rights in neratinib(oral),neratinib(intravenous),PB357,and certain related compounds.As consideration for the license,we are required to make payments totaling$187.5 million upon the achievements of certain milestones if all
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UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024.OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period from to .Commission file number 001-37713 eBay Inc.(Exact name of registrant as specified in its charter)Delaware77-0430924(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)2025 Hamilton AvenueSan Jose,California95125(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(408)376-7108 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbolName of exchange on which registeredCommon stockEBAYThe Nasdaq Global Select MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No As of June 30,2024,the aggregate market value of the registrants common stock held by non-affiliates of the registrant was$26,462,543,018 based on the closing sale price as reported on The Nasdaq Global Select Market.466 million shares of common stock issued and outstanding as of February 21,2025.DOCUMENTS INCORPORATED BY REFERENCE Part III incorporates information by reference from the definitive proxy statement for the registrants 2025 Annual Meeting of Stockholders.eBay Inc.Form 10-K For the Fiscal Year Ended December 31,2024 TABLE OF CONTENTS PagePart IItem 1.Business5Item 1A.Risk Factors11Item 1B.Unresolved Staff Comments35Item 1C.Cybersecurity35Item 2.Properties36Item 3.Legal Proceedings37Item 4.Mine Safety Disclosures37Part IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities38Item 6.Reserved39Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations40Item 7A.Quantitative and Qualitative Disclosures About Market Risk56Item 8.Financial Statements and Supplementary Data58Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure58Item 9A.Controls and Procedures58Item 9B.Other Information59Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.59Part IIIItem 10.Directors,Executive Officers and Corporate Governance60Item 11.Executive Compensation60Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters60Item 13.Certain Relationships and Related Transactions,and Director Independence60Item 14.Principal Accountant Fees and Services60Part IVItem 15.Exhibits and Financial Statement Schedule61Item 16.Form 10-K Summary613PART I FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,including statements that involve expectations,plans or intentions(including,but not limited to,those relating to future business,future results of operations or financial condition,inflationary pressure,foreign exchange rate volatility and geopolitical events,new or planned features or services,or management strategies).You can generally identify these forward-looking statements by words such as“aim,”“anticipate,”“believe,”“commit,”“continue,”“could,”“design,”“develop,”“estimate,”“expect,”“forecast,”“future,”“goal,”“intend,”“likely,”“maintain,”“may,”“ongoing,”“opportunity,”“plan,”“possible,”“potential,”“pursue,”“probable,”“remain,”“seek,”“should,”“strategy,”“strive,”“target,”“will,”“would”and other similar expressions.These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements.Such risks and uncertainties include,among others:fluctuations in,and our ability to predict,our results of operations and cash flows;our ability to convert visits into sales for our sellers,attract and retain sellers and buyers,and execute on our business strategy;our ability to compete in the markets in which we participate;our ability to generate revenue from our foreign operations and expand in international markets;the impact of inflationary pressure,fluctuations in foreign currency exchange rates,elevated interest rates,geopolitical events such as the ongoing wars in Ukraine and in the Middle East,terrorist activities,and public health events;our ability to keep pace with rapid technological developments or continue to innovate and create new initiatives to provide new programs,products and services;our ability to operate and continuously develop our payments system and financial services offerings;the impact of new and evolving domestic and foreign government laws,regulations,rules and standards that affect us,our business and/or our industry,including the impact of potential changes in tariffs or sanctions and escalating trade wars;our reliance on third-party providers;our ability to protect or enforce our intellectual property rights;our ability to deal effectively with fraudulent activities on our Marketplace platforms;the impact of any security breaches,cyberattacks or system failures and resulting interruptions;our ability to attract,retain and develop highly skilled employees;our ability to identify,complete and integrate suitable acquisitions and other strategic transactions needed to meet our goals;our ability to accomplish or accurately track and report results related to our environmental,sustainability,and similar goals;current and potential litigation and regulatory and government inquiries,investigations and disputes involving us or our industry;our ability to generate sufficient cash flow to service our indebtedness;the impact of evolving sales and other tax regimes in various jurisdictions and anticipated tax liabilities;andthe success of our recent and potential acquisitions,dispositions,joint ventures,strategic partnerships and strategic investments.A more complete description of these risks and uncertainties is included in“Item 1A:Risk Factors”of this Annual Report on Form 10-K,as well as in our consolidated financial statements,related notes,and the other information appearing elsewhere in this report and our other filings with the Securities and Exchange Commission(“SEC”).We do not intend,and undertake no obligation,to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances.Given these risks and uncertainties,readers are cautioned not to place undue reliance on such forward-looking statements.Table of Contents4WEBSITE DISCLOSURESWe use our website()to announce material non-public information to the public and to comply with our disclosure obligations under Regulation Fair Disclosure(Reg FD).We also use our website to communicate with the public about our Company,our services and other matters.Our SEC filings,press releases and recent public conference calls and webcasts can also be found on our website.The information we post on our website could be deemed to be material information under Reg FD.We encourage investors and others interested in our Company to review the information we post on our website.Information contained in or accessible through our website is not a part of this Annual Report on Form 10-K.ITEM 1:BUSINESSUnless otherwise expressly stated or the context otherwise requires,when we refer to“we,”“our,”“us,”“eBay”or the“Company”in this Annual Report on Form 10-K,we mean eBay Inc.and its consolidated subsidiaries.OverviewFounded in 1995 in San Jose,California,eBay Inc.is a global commerce leader that connects people and builds communities to create economic opportunity for all.Our technology empowers millions of buyers and sellers in more than 190 markets around the world,providing everyone the opportunity to grow and thrive.Our Marketplace platforms,including our online marketplace located at and its localized counterparts,our off-platform marketplaces and our suite of mobile apps,together,create one of the worlds largest and most vibrant marketplaces for discovering great value and unique selection.In 2024,eBay enabled$75 billion of Gross Merchandise Volume(“GMV”).Our StrategyAs a global commerce leader and third-party marketplace,our technologies and services are designed to provide buyers choice and a breadth of relevant inventory from around the globe,and to enable sellers access to eBays 134 million buyers worldwide.Our business model and pricing are designed so our business is successful when our sellers are successful.We earn revenue primarily through fees collected on paid sales,inclusive of payment processing and first-party advertising.eBays strategy is to leverage technology to enhance the marketplace experience for our customers,drive growth in GMV,increase the rate of revenue growth through our advertising initiatives,and deliver healthy operating margins.Beginning in 2020,we embarked on a multi-year journey to build more compelling category experiences for enthusiastic consumers,to become the partner of choice for sellers,and to strengthen trust in relationships with buyers on our Marketplace platforms.In 2023,we evolved our strategy to focus on reinventing the future of ecommerce for enthusiasts.We derived a majority of GMV in 2024 from the following product categories:parts&accessories,collectibles,fashion,electronics,and home&garden.Since late 2021,eBay has managed payments for all transactions on our Marketplace platforms,delivering intuitive end-to-end payment experiences for our current and next-generation customers.Our customers enjoy significant choice and flexibility in how they pay and get paid on our Marketplace platforms.Additionally,we are continuing to launch and expand services such as eBay Balance,Express Payouts,and Seller Capital to cater to the needs of our customers and drive greater marketplace engagement.We are focused on growing our first-party advertising revenue while reducing our focus on non-strategic,third-party advertising.We currently offer several advertising solutions to our sellers,including:Promoted Listings,Promoted Offsite,and Promoted Stores.Through these offerings,we aim to provide sellers with data-driven recommendations to improve their conversion and drive velocity.We are also actively testing and building more technology features to simplify the advertising experience,increase listing visibility,and drive continued business growth.We have acquired and disposed of a significant number of businesses,technologies,services and products,and we maintain investments in certain businesses.We regularly review and manage our investments to ensure they support eBays strategic direction and complement our disciplined approach to value creation,profitability,and capital allocation.We expect to continue to evaluate and consider potential strategic transactions as part of our Table of Contents5strategy,including business combinations,acquisitions and dispositions of businesses,technologies,services,products and other assets,as well as strategic investments and joint ventures.Our Customer OfferingsWe provide a number of features for our sellers and buyers that align with our approach of leveraging technology,including generative AI(“Gen AI”),to enhance the marketplace experience for our customers.These offerings are designed to build trust and confidence on our Marketplace platforms and drive GMV.For sellers,we are focused on simplifying their business processes to help drive their sales effectively and efficiently,and we continuously invest in technology to enhance the quality of selling experiences and products to expand the seller tools ecosystem.In 2024,we expanded our new magical listing experience to more sellers in more markets,saving them time and effort as they create their listings.We also launched a redesigned advertising dashboard across our global markets to enable sellers to have a more cohesive,streamlined view of their advertising reach,spend,and other metrics,giving them more tools to make the best decisions for their businesses.The dashboard enhances the advertising experience for sellers,providing artificial intelligence(“AI”)driven insights and personalized recommendations to help sellers grow their businesses.Additionally,we offer the eBay International Shipping program for sellers in the United States,surfacing millions of listings to buyers across more than 190 markets while removing the friction of international shipping and customs formalities.For buyers,we are changing the way they find inventory through discovery,personalization and other innovative experiences.We are utilizing AI to transform the shopping experience for buyers.In 2024,we launched Shop the Look,which leverages Gen AI to create shoppable content and fashion recommendations.We also launched Explore,an AI-powered shopping feed enabling users to browse a nearly unlimited list of personalized recommendations based on their interests,style preferences,and sizes.We intend to continue to invest in AI and Gen AI to improve the quality of our buying and selling experiences.Additionally,we have continued to strengthen our buyers confidence and trust in our services.We offer“eBay Money Back Guarantee,”which allows buyers to receive their money back if the item they ordered does not arrive,is faulty or damaged,or does not match the listing.eBay Money Back Guarantee covers most items purchased on the eBay Marketplace platforms in the United States,the United Kingdom,Germany,Australia,Canada,France,Italy and Spain through a qualifying payment method.In addition,eBay authenticates eligible luxury and collectible items in six categories through“Authenticity Guarantee,”an authentication service available in the United States,the United Kingdom,Germany,Australia,Canada,and Japan.In our parts&accessories category,we offer tools that drive trusted and convenient transactions,including fitment to ensure that buyers can find the right parts to fit their vehicles and select installation services that make maintenance and repairs easier.We also continue to expand our eBay Refurbished offering,a dedicated destination that brings inventory from pre-selected brands and top-rated sellers with standardized condition grading,to meet consumer demand for top products backed by a warranty.Our Impact and ResponsibilityeBays purpose is to empower people and create economic opportunity for all through our technology for our global community of users.Every day,people build businesses on our Marketplace platforms.With a low cost of entry for sellers,we offer a highly accessible way for all types of users to interact in a global marketplace thats inclusive and connects people of all backgrounds.Accordingly,we prioritize our corporate responsibility efforts to impact the areas of economic empowerment and sustainable commerce.Key economic programs include eBay for Charity,the eBay Foundation and our small business enablement efforts,such as our Up&Running Grants program.eBay for Charity empowers buyers and sellers to support charities around the world.In 2024,eBay for Charity partnered with the GLIDE Foundation,the Elton John AIDS Foundation,World Central Kitchen,Six Degrees Org,Deckaid,and Homes for Our Troops,amongst others.In 2024,more than$192 million was raised by buyers and sellers to support charities via eBay for Charity.The eBay Foundation helps to build economically vibrant and thriving communities.During 2024,the eBay Foundation granted nearly$18 million through strategic grantmaking and our employee gift-matching program,primarily to support historically excluded entrepreneurs.To date,the eBay Foundation has awarded nearly$140 million to more than 1,800 nonprofits.Table of Contents6Recommerce has been an integral part of eBays purpose since the Company was founded in 1995.As a pioneer of the circular economy,eBay has created an online marketplace where people can buy and sell pre-owned goods.This helps preserve the worlds natural resources by avoiding a portion of the carbon emissions,water,energy and waste typically used in producing new goods.In 2024,eBay sourced 100%of its electricity consumption for eBay-controlled offices and data centers from renewable sources,reaching our 2025 renewable energy goal one year early.eBay has also set emissions reduction targets,including near-and long-term science-based targets,and a 2045 net-zero target,that have been validated by the Science Based Targets initiative.In 2024,eBay was ranked in the United States Environmental Protection Agencys Green Power Partnership National Top 100 and Top 30 Tech&Telecom for the fifth year.In 2024,eBay was also recognized for its commitment to sustainability and responsible business by its inclusion in the Dow Jones Best-in-Class World and North American Indices(formerly known as the Dow Jones Sustainability Indices)for the sixth straight year.Financial InformationWe measure our footprint in our addressable market according to GMV.GMV consists of the total value of all paid transactions between users on our Marketplace platforms during the applicable period inclusive of shipping fees and taxes.In 2024,we generated$75 billion in GMV,of which 49 percent was generated outside the United States.We believe that GMV provides a useful measure of the overall volume of paid transactions that flow through our Marketplace platforms in a given period.At the end of 2024,eBay had 134 million active buyers and 2.3 billion live listings globally.The term“active buyer”means,as of any date,all buyer accounts that paid for a transaction on our Marketplace platforms within the previous 12-month period.Buyers may register more than once and,as a result,may have more than one account.We generate net revenues through two activities,Marketplace activities which primarily consist of commissions from the service of connecting buyers and sellers on our secure and trusted Marketplace platforms and Advertising activities,which primarily consist of fees charged to sellers to promote their listings.The majority of our revenue comes from a take rate on the GMV of transactions paid on our Marketplace platforms.We define“take rate”as net revenues divided by GMV.Our Marketplace platforms are designed to enable our buyers and sellers to leverage our economies of scale and capital investments in sales and marketing,mobile,customer acquisition,technology innovation and customer service.CompetitionWe encounter vigorous competition in our business from numerous sources.Our users can list,sell,buy,and pay for similar items through a variety of competing online,mobile and offline channels.These include,but are not limited to,retailers,distributors,liquidators,import and export companies,auctioneers,catalog and mail-order companies,directories,search engines,commerce participants(consumer-to-consumer,business-to-consumer and business-to-business),shopping channels and networks.As our product offerings continue to broaden into new categories of items and new commerce formats,we expect to face additional competition from other online,mobile and offline channels for those new offerings.We compete on the basis of numerous factors,including price,product selection and services,and geographical reach.For more information regarding competitive factors impacting our business,see the information in“Item 1A:Risk Factors”under the captions“Substantial and increasingly intense competition worldwide in ecommerce may harm our business”and“We could be subject to regulatory or agency investigations and/or court proceedings under unfair competition laws that could adversely impact our business.”Government RegulationGovernment regulation impacts key aspects of our business.In particular,we are subject to laws and regulations that affect the ecommerce industry in many countries where we operate.Table of Contents7Our business is subject to payments reporting requirements for our sellers in many jurisdictions.For example,in the United States,legislation was passed in 2021 requiring all businesses that process payments to issue a Form 1099-K for all sellers who receive more than$600 in gross payments in a year,a decrease from the previous reporting threshold of$20,000 and 200 transactions.The Internal Revenue Service(“IRS”)delayed the enforcement of this rule twice until 2024,when it announced a phase-in threshold of$5,000 for 2024 and$2,500 for 2025.As a result,Form 1099-Ks for the$5,000 threshold were issued in January 2025 for 2024 transactions and Form 1099-Ks for the$2,500 threshold will be issued beginning in January 2026 for 2025 transactions,subject to potential new federal legislation raising the threshold and/or future IRS action.Outside the United States,we have complied with reporting requirements in the European Union and United Kingdom,among other jurisdictions,and more countries and jurisdictions continue to enact similar requirements.Tax collection and/or reporting responsibilities and the additional costs associated with compliance with complex sales and use tax collection,remittance and audit requirements,could create additional burdens for buyers and sellers on our Marketplace platforms.The E.U.Digital Services Act(the“DSA”)took effect for all online platforms in February 2024.The DSA imposes legal obligations on online marketplaces operating in Europe,requiring them to verify and ensure the accuracy and disclosure of required information,as well as the safety and authenticity of products posted by third-party merchants.The DSA also enforces new content moderation obligations,notice obligations,advertising restrictions and other requirements on digital platforms that created additional operational burdens and compliance costs for us.Additionally,in late 2023,the United Kingdoms Online Safety Act(the“OSA”)became law,and in 2024 the United Kingdoms Digital Markets,Competition and Consumers Act(the“DMCCA”)became law.The OSA created requirements around monitoring and handling harmful content and required us to expend resources to comply with the new regulations.The DMCCA expands the investigative and enforcement powers of the Competition and Markets Authority,modifies the United Kingdom merger control rules,and creates a new consumer protection regime.We may expend additional resources to comply with the DMCCA.For more information regarding the regulations that impact our business and our legal and regulatory risks,see the information in“Item 1A:Risk Factors”under the category“Regulatory and Legal Risks.”Seasonality Transaction activity patterns on our Marketplace platforms generally trend in line with consumer buying patterns.Seasonal trends have been influenced by macroeconomic conditions,foreign exchange rate fluctuations,as well as the introduction and scaling of new products by us and our competitors.Please see the additional information in“Item 7:Managements Discussion and Analysis of Financial Condition and Results of Operations”under the caption“Seasonality.”TechnologyThe eBay Marketplace platforms use a combination of proprietary technologies and services as well as technologies and services provided by others.We have developed intuitive user interfaces;buyer,seller and developer tools;and transaction processing,database and network applications that help enable our users to reliably and securely complete transactions on our Marketplace platforms.Our technology infrastructure simplifies the storage and processing of large amounts of data,eases the deployment and operation of large-scale global products and services and automates much of the administration of large-scale clusters of computers.Our infrastructure has been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences.In support of our commitment to innovation and a better customer experience,we have been on a multi-year evolution to modernize our Marketplace platforms.Through technologies like AI,including Gen AI,we are anticipating the needs of buyers,sellers and developers,empowering entrepreneurs looking to grow their business,and making the Marketplace platforms more accessible to everyone.We aim to create highly personalized and inspiring shopping experiences powered by advanced technologies.For information regarding technology-related risks,see the information in“Item 1A:Risk Factors”under the captions“Cyberattacks and data security breaches and incidents could significantly damage our reputation,reduce our revenues,increase our costs,result in litigation and regulatory penalties,and otherwise harm our business,”“Systems failures and resulting interruptions in the availability of or degradation in the performance of our websites,applications,products or services could harm our business”and“New laws and increasing levels of regulation in the areas of privacy and protection of user data could harm our business.”Table of Contents8Intellectual Property We regard the protection of our intellectual property,including our trademarks(particularly those covering the eBay name),patents,copyrights,domain names,trade dress and trade secrets as critical to our success.We protect our intellectual property rights by relying on federal,state and common law rights in the United States and internationally,as well as a variety of administrative procedures.We also rely on contractual restrictions to protect our proprietary rights in products and services.We routinely enter into confidentiality and invention assignment agreements with our employees and contractors and nondisclosure agreements with parties with whom we conduct business to limit access to and disclosure of our proprietary information.We routinely pursue registration of our domain names,trademarks and patents in the United States and internationally.Additionally,we have filed patent applications in the United States and internationally covering certain aspects of our proprietary technology.Effective trademark,copyright,patent,domain name,trade dress and trade secret protection is typically expensive to maintain and may require litigation.We must protect our intellectual property rights and other proprietary rights in an increasing number of jurisdictions,a process that is expensive and time consuming and may not be successful.We have registered our core brands as trademarks and domain names in the United States and internationally and have in place an active program to continue to secure trademarks and domain names that correspond to our brands in markets of interest.If we are unable to register or protect our trademarks or domain names,we could be adversely affected in any jurisdiction in which our trademarks or domain names are not registered or protected.We have licensed in the past,and expect to license in the future,certain of our proprietary rights,such as trademarks,to others.From time to time,third parties have claimed and others will likely claim in the future that we have infringed their intellectual property rights.We are typically involved in a number of such legal proceedings at any time.Please see the information in“Item 1A:Risk Factors”under the captions“The listing or sale by our users of certain items,including items that allegedly infringe the intellectual property rights of rights owners,including pirated or counterfeit items,illegal items or items used in an illegal manner,may harm our business,”and“We may be unable to adequately protect or enforce our intellectual property rights and face ongoing allegations by third parties that we are infringing their intellectual property rights.”Human Capital ManagementAs of December 31,2024,we employed approximately 11,500 people globally,of which,approximately 7,000 were located in the United States.eBay has robust people-focused programs to attract,support and retain our employees globally.Our recruitment,development,compensation and benefits,wellness,and our eBay DNA are designed to reflect our values,ensure eBays competitiveness in the talent market and ensure we support our employees well-being.eBays management is focused on delivering programs that develop and support our people and connect them with our customers,our community,and each other.We believe that our employees are important to our overall success.The Compensation and Human Capital Committee of our Board of Directors oversees our human capital management strategy and practices,including our talent recruitment,development and retention,employee engagement,succession planning,and company culture.Culture and the eBay DNAeBays purpose is to connect people and build communities to create economic opportunity for all,which continues to serve as the backbone of our culture.We bring this purpose to life through five core elements that make up the eBay DNA:Empower our Community,Innovate Boldly,Deliver with Impact,Be for Everyone,and Act with Integrity.Our human capital management programs tend to focus on the two elements described below,but these programs are designed and intended to support each of our five core elements.Be For EveryoneAt eBay,our core value “Be for Everyone”fuels our commitment to diversity,inclusion,and belonging.We strive to create a workplace where every employee feels valued,empowered,and able to bring their best,most innovative selves to work.This commitment fosters creativity,strengthens engagement,and cultivates a deep sense Table of Contents9of belonging,which we believe is essential for driving corporate performance,achieving business goals,and delivering shareholder value.As a global marketplace connecting millions of buyers and sellers,eBays purpose is to build communities and create economic opportunity for all.By embracing diverse perspectives and fostering an inclusive culture,we enhance innovation,deepen our understanding of customers,and strengthen the connections that drive our business.We believe that fostering belonging and reflecting the diversity of our global community helps us attract and retain consumers,expand the breadth of inventory on our Marketplace platforms,and create long-term value for our shareholders.We engage with our people on an ongoing basis to support their physical,financial,and mental well-being for them and their families through expanded wellness resources.As part of these efforts,we have continued our focus on ensuring our employees and their families have access to high quality care.We also seek to make that care affordable.Throughout the year,we emphasize the importance of our employees well-being and continue to provide mental health training for managers and peers.In 2024,we introduced Thrive Global,a wellness program to encourage small habit changes that positively impact overall well-being,and launched a global financial well-being education campaign to promote financial literacy and health.We believe our commitment to well-being support programs strengthens our ability to attract and retain the top talent we need to achieve our business goals and drive shareholder value by supporting eBay employees and their families in moments that matter.Act With IntegrityWe are committed to ethics and acting with integrity.We regularly communicate about the importance of being open,honest,ethical and authentic with ongoing trainings and“tone from the top”topics that encourage conversations between leaders and our employees.We also host an annual Ethics and Compliance Week focused on celebrating ethical decision making and conduct and educating employees about our programs and the resources available to them to support them in acting with integrity.By fostering an ethical culture,where speaking up is encouraged,we believe that we reduce company risk,protect our business and ultimately serve our shareholders best interests.In addition to multiple channels for sharing feedback,we also regularly survey our employees through our eBay Listens program.We ask about trust and engagement,their experience with diversity,inclusion and belonging,ethics and integrity,and we also ask for upward feedback about managers.We believe our employees welcome sharing their points of view with us and are encouraged by how their input molds several strategic programs and our values,including our commitments in critical areas such as Impact and Responsibility.We believe these programs increase employee engagement and cohesion and allow for creativity and innovation in achieving our business goals and driving shareholder value.Available Information Our Internet address is .Our investor relations website is located at .We make available free of charge on our investor relations website under the heading“Financial Information-SEC Filings”our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with(or furnished to)the SEC at www.sec.gov.We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website.Additionally,we provide notifications of news or announcements regarding our financial performance,including SEC filings,investor events,press and earnings releases,and blogs on our investor relations website,as well as our company website and social media channels including LinkedIn and X.Company sustainability information for investors is available on our investor relations website under the heading“ESG Investors.”Corporate governance information,including our governance guidelines for our Board of Directors(our“Board”),Board committee charters and code of conduct,is also available on our investor relations website under the heading“Corporate Governance.”The contents of our websites and webcasts and information that can be accessed through our websites,webcasts and social media channels are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with(or furnish to)the SEC,and any references to our websites and webcasts are intended to be inactive textual references only.Table of Contents10Item 1A:RISK FACTORSRisk Factors SummaryThe summary of risks below provides an overview of the principal risks we are exposed to in the normal course of our business activities:Business,Economic,Market and Operating RisksOur operating and financial results are subject to various risks and uncertainties that could adversely affect our business,financial condition,results of operations and cash flows,as well as the trading price of our common stock and debt securities.Substantial and increasingly intense competition worldwide in ecommerce may harm our business.We are exposed to fluctuations in foreign currency exchange rates,which could negatively impact our financial results.Our international operations and engagement in cross-border trade are subject to risks,which could harm our business.Our business may be adversely affected by geopolitical events,natural disasters,seasonal factors and other factors,including increased usage of other websites,that could cause our users to spend less time,or transact less,on our websites or mobile platforms and applications.If we cannot keep pace with rapid technological developments or continue to innovate and create new initiatives to provide new programs,products and services,the use of our products and our revenues could decline.Changes to our programs to protect buyers and sellers could increase our costs and loss rate,and failure to manage such programs effectively can result in harm to our reputation.Operations and continued development of our payments system and financial services offerings require ongoing investment,are subject to evolving laws,regulations,rules,and standards,and involve risk,including risks related to our dependence on third-party providers.We may be unable to adequately protect or enforce our intellectual property rights and face ongoing allegations by third parties that we are infringing their intellectual property rights.Failure to deal effectively with fraudulent activities on our Marketplace platforms would increase our loss rate and harm our business and could severely diminish merchant and consumer confidence in and use of our services.Cyberattacks and data security breaches and incidents could significantly damage our reputation,reduce our revenues,increase our costs,result in litigation and regulatory penalties,and otherwise harm our business.Systems failures and resulting interruptions in the availability of or degradation in the performance of our websites,applications,products or services could harm our business.Our success largely depends on key employees.Because competition for key employees is intense,we may not be able to attract,retain,and develop the highly skilled employees we need to support our business.The loss of senior management or other key employees could harm our business.Problems with or price increases by third parties who provide services to us or to our sellers could harm our business.Regulatory and Legal RisksOur business is subject to extensive and increasing government regulation and oversight,which could adversely impact our business.New laws and increasing levels of regulation in the areas of privacy,protection of user data and cybersecurity could harm our business.We are subject to laws and regulations that are not primarily intended for online commerce,and interpretations of these laws and regulations could harm our business.Our disclosures and stakeholder expectations related to environmental,social and governance matters may impose additional costs and expose us to new risks.We are regularly subject to litigation and regulatory and government inquiries,investigations and disputes,as our business evolves and as governments and regulators seek to extend new and existing laws to reach our business model.We could be subject to regulatory or agency investigations and/or court proceedings under unfair competition laws that could adversely impact our business.Table of Contents11The listing or sale by our users of certain items,including items that allegedly infringe the intellectual property rights of rights owners,including pirated or counterfeit items,illegal items or items used in an illegal manner,may harm our business.We are subject to risks associated with information disseminated through our services.Interest Rate and Indebtedness RisksFluctuations in interest rates,and changes in regulatory guidance related to such interest rates,could adversely impact our financial results.We have substantial indebtedness,and we may incur substantial additional indebtedness in the future,and we may not generate sufficient cash flow from our business to service our indebtedness.Failure to comply with the terms of our indebtedness could result in the acceleration of our indebtedness,which could have an adverse effect on our cash flow and liquidity.Tax RisksOur business and our sellers and buyers may be subject to evolving sales and other tax regimes in various jurisdictions,which may harm our business.We may have exposure to greater than anticipated tax liabilities.Transactional RisksAcquisitions,dispositions,joint ventures,strategic partnerships and strategic investments could result in operating difficulties and could harm our business or impact our financial results.We may be exposed to claims and liabilities as a result of the Distribution of PayPal.Risk FactorsYou should carefully review the following discussion of the risks that may affect our business,results of operations and financial condition,as well as our consolidated financial statements and notes thereto and the other information appearing in this report,for important information regarding risks that affect us.Current global economic events and conditions as well as evolving regulatory scrutiny may amplify many of these risks.These risks are not the only risks that may affect us.Additional risks that we are not aware of or do not believe are material at the time of this filing may also become important factors that adversely affect our business.Business,Economic,Market and Operating RisksOur operating and financial results are subject to various risks and uncertainties that could adversely affect our business,financial condition,results of operations and cash flows,as well as the trading price of our common stock and debt securities.Our operating and financial results have varied on a quarterly basis during our operating history and may continue to fluctuate significantly as a result of a variety of factors,including the following risks and other risks set forth in this“Risk Factors”section:our ability to convert visits into sales for our sellers;the amount and timing of expenses;our success in attracting and retaining sellers and buyers;changes in consumer confidence and discretionary spending trends,including shifts in interests away from any of our major categories;our success in executing on our strategy and the impact of any changes in our strategy;the timing and success of product launches,including new services and features we may introduce;the success of our marketing efforts;andthe impact of competitive and industry developments,including changes in the legal and regulatory landscape,and our response to those developments.In view of the rapidly evolving nature of our business,period-to-period comparisons of our operating results may not be meaningful,and you should not rely upon them as an indication of future performance.It is difficult for us to forecast the level or source of our revenues or earnings(loss)accurately,particularly given that substantially Table of Contents12all of our net revenues each quarter come from transactions involving sales during that quarter.Due to the inherent difficulty in forecasting revenues,it is also difficult to forecast expenses as a percentage of net revenues.Quarterly and annual expenses as a percentage of net revenues reflected in our consolidated financial statements may be significantly different from historical or projected percentages.Because our business model is dependent upon consumer spending,our results of operations are sensitive to changes in or uncertainty about macro-economic conditions.Our buyers have at times had,and may in the future have,less capacity for discretionary purchases and may reduce their purchases from our sellers as a result of various factors,including job losses,inflation or inflationary pressure,higher taxes,reduced access to credit,changes in federal economic policy,public health issues such as a pandemic,global economic uncertainty,foreign exchange rate volatility,lower consumer confidence and demand for discretionary goods,elevated interest rates,changes in international tariff and trade policies,and geopolitical events such as the ongoing wars in Ukraine and in the Middle East.Substantial and increasingly intense competition worldwide in ecommerce may harm our business.The businesses and markets in which we operate are intensely competitive.We currently and potentially compete with a wide variety of online and offline companies providing similar goods and services to consumers and merchants,some of which are well-established brands with greater resources and larger user communities than our own.The Internet and mobile networks provide new,rapidly evolving and intensely competitive channels for the sale of all types of goods and services.We compete as a two-sided marketplace,and we must attract both buyers and sellers to use our platforms.Consumers who purchase or sell goods and services through us have many and increasing alternatives,and merchants have more channels to reach consumers.We expect competition to continue to intensify.The barriers to entry into these channels can be low,and businesses can easily launch online sites or mobile platforms and applications at nominal cost by using commercially available software or partnering with any of a number of successful ecommerce,search,advertising or social media companies.As we respond to changes in the competitive environment,we have made,and expect in the future to make pricing,service,policy or marketing decisions or acquisitions that may be controversial with and lead to dissatisfaction among sellers or buyers.Any increase in seller or buyer dissatisfaction could negatively impact our revenue generation model,our costs or our business operations,any of which could reduce activity on our platform and harm our reputation and profitability.We face increased competitive pressure online and offline.In particular,the competitive norm for,and the expected level of service from,ecommerce and mobile commerce has significantly increased due to,among other factors,improved user experience,greater ease of buying goods,lower(or no)shipping costs,faster shipping times and more favorable return policies.In addition,certain platform businesses,such as Alibaba,Alphabet(Google),Amazon,Apple and Meta(Facebook and Instagram),are larger than we are,have greater resources,have a dominant and secure position in other industries or certain significant markets,or offer other goods and services to consumers and merchants that we do not offer,which can drive consumers to,and keep them locked-in to,their platforms instead of ours.If we are unable to change our products,offerings and services in ways that reflect the changing demands of ecommerce and mobile commerce marketplaces,including if our sellers are unable to source items or we are unable to provide service levels(some of which depend on services provided by sellers on our platforms)in line with consumer expectations,we may not compete effectively with and adapt to changes in larger platform businesses,and our business and reputation could suffer.Competitors with other revenue sources or greater resources may also be able to devote more resources to marketing and promotional campaigns and buyer acquisition,adopt more aggressive pricing policies and devote more resources to website,mobile platforms and applications and systems development than we can.Other competitors may offer faster and/or free shipping,same-day delivery,more favorable return policies and other superior transaction-related services that improve the user experience on their sites,which could be impractical or inefficient for our sellers to match.Competitors may be more narrowly focused on particular types of goods and create compelling communities and may be able to innovate more quickly and efficiently,and new technologies may increase these competitive pressures by enabling competitors to offer more efficient or lower-cost services.Some of our competitors control products and services that are important to our success,including payment processing,Internet search,social media,Gen AI features powered by large language models,shipping and delivery resources and mobile operating systems.Such competitors could manipulate pricing,availability,terms or operation of service related to their products and services in a manner that impacts our competitive offerings.For example,Alphabet,which operates a shopping platform service,has from time to time made changes to its search algorithms that have reduced the amount of search traffic directed to us from searches on Google.If we are unable to use or adapt to operational changes in such services,we may face higher costs for such services,face integration or technological barriers or lose customers,which could harm our business.Table of Contents13Consumers that buy goods on our platforms have a wide variety of alternatives that compete against us regardless of their size or resources,including traditional department,warehouse,boutique,discount and general merchandise stores(as well as the online and mobile operations of these traditional retailers),online retailers and their related mobile offerings,direct-to-consumer offerings by makers of goods,online aggregation and classified services,social media platforms and other shopping channels,such as offline and online home shopping networks.In addition to generalist retailers,consumers may also use a large number of online and offline channels that are focused on one or more of the categories of products offered on our sites.Consumers that buy goods on our platforms can also turn to many companies that offer a variety of services that provide other channels to find what they are looking for,including social media,online aggregation and classifieds platforms,such as Facebook Marketplace or craigslist.These consumers can also turn to shopping-comparison sites,such as Google Shopping,or social networks that enable purchases such as Instagram and TikTok.Our competitors may partner with one another and create product offerings or implement advertising or marketing strategies that may be more compelling to customers than our standalone experience.In certain markets,our fixed-price listing and traditional auction-style listing formats are increasingly being challenged by other formats,such as social commerce and business models,such as free-to-sell marketplaces.We use product search engines and paid search advertising to help users find our sites,but these services also have the potential to divert users to other online shopping destinations.These consumers may choose to search for products and services with a horizontal search engine or shopping comparison website,and such sites may also send users to other shopping destinations.In addition,sellers are increasingly utilizing multiple sales channels,including search-related advertisements on horizontal search engine sites,such as Google,to attract new customers.We expect Gen AI to have a significant impact on the future of ecommerce,as AI technologies become increasingly important for consumers buying and selling goods online.If we are unable to identify popular Gen AI providers and AI technologies,or if we fail to utilize those technologies or develop our own technologies,our business may be harmed.For example,consumers may increasingly search for products using chatbots,virtual assistants or other Gen AI technologies powered by large language models instead of using traditional search engines.If current and future AI technologies do not send referrals to eBay at the rate of traditional search engines for any reason,the amount of buyer and seller traffic using our platforms could decrease,which could negatively impact on our business and results of operations.Consumers and merchants that sell goods on our platforms also have many alternatives,including general ecommerce marketplaces,such as Amazon and Alibaba,and more specialized marketplaces that focus on discrete categories of products.Sellers may also choose to sell their goods through alternative channels,such as multi-channel services like Shopify or social media platforms.Consumers and merchants also can create and sell through their own sites and may choose to purchase online advertising instead of using our services.Any of these alternatives or specialists may be able to more quickly and efficiently deliver attractive consumer experiences,which could drive consumers away from our Marketplace platforms and harm our business.Although eBay has global reach,there are ecommerce businesses in many locations that have larger local customer bases or greater brand recognition than we do in those locations and markets.Regardless of their size or brand recognition,local competitors may have a better understanding of local culture and commerce and be better positioned to quickly and effectively deliver the experiences that these local consumers want,which could drive down consumer traffic to our Marketplace platforms and harm our business.We expect to increasingly compete with local competitors in developing countries that have these or other unique advantages,such as a greater familiarity with,and ability to operate efficiently under,local regulatory authorities.Our business is designed to appeal broadly to a diverse global community of buyers and sellers.In recent years,our growth strategy has increasingly emphasized certain specialized categories that we call Focus Categories.Examples of these Focus Categories include motor parts and accessories,collectibles,refurbished goods,and authenticated luxury items.However,buyers and sellers in our Focus Categories often have unique product and service needs.We devote substantial time and resources to ensuring that we provide the platform experiences that our focus category consumers and consumers broadly want.In doing so,we compete with smaller,specialized ecommerce sites that cater to the buyers and sellers in these product categories.Because of the size and complexity of our Marketplace platforms,we may fail to address the unique needs of focus category buyers and sellers as quickly and efficiently as specialist competitors.If we fail to timely deliver the product features desired in our focus and other categories,we may lose customers to the specialist competitors that serve these categories,which could reduce our consumer base and harm our business and operating results.Table of Contents14We generate a meaningful amount of our revenue from our Promoted Listings(a first-party advertising offering)and,to a lesser extent,third-party advertising.To sustain or increase our advertising revenue,we must continue to provide customers with compelling advertising products to maintain or increase the amount of advertising purchased through our platform.If we are unable to compete effectively for advertising spend,our business and operating results could be harmed.In addition,certain manufacturers or brands may seek to limit or cease distribution of their products through online channels,such as our sites.Manufacturers may attempt to use contractual obligations or existing or future government regulations to prohibit or limit ecommerce in certain categories of goods or services.Manufacturers may also attempt to enforce minimum resale price maintenance or minimum advertised price arrangements to prevent distributors from selling on our platforms or on the Internet generally,or drive distributors to sell at prices that would make us less attractive relative to other alternatives.The adoption of those or other policies could adversely affect our results of operations and result in loss of market share and diminished value of our brands.The principal competitive factors for us include the following:ability to attract,retain and engage buyers and sellers;volume of transactions and price and selection of goods;trust in the seller and the transaction;customer service;brand recognition;community cohesion,interaction and size;website,mobile platform and application ease-of-use and accessibility;system reliability and security;reliability of delivery and payment,including customer preference for fast delivery and free shipping and returns;level of service fees;andquality of search tools.While we believe we compete effectively across these factors,our competitors,including any of the businesses,channels and buying and selling alternatives discussed above,may be more successful across these factors either globally or in important local markets,which could reduce the number of buyers and sellers on our Marketplace platforms,and materially adversely affect our results of operations and business.We are exposed to fluctuations in foreign currency exchange rates,which could negatively impact our financial results.Because we generate approximately half of our net revenues outside the United States but report our financial results in U.S.dollars,our financial results are impacted by fluctuations in foreign currency exchange rates,or foreign exchange rates.The results of operations of many of our internationally focused platforms are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S.dollars for financial reporting purposes.While from time to time we enter into transactions to hedge portions of our foreign currency translation exposure,it is impossible to predict or eliminate the effects of this exposure.Fluctuations in foreign exchange rates could significantly impact our financial results,which may have a significant impact on the trading price of our common stock and debt securities.Our international operations and engagement in cross-border trade are subject to risks,which could harm our business.Our international businesses,especially in the United Kingdom,Germany and Australia,and cross-border business from greater China,have generated approximately half of our net revenues in recent years.In addition to uncertainty about our ability to generate revenues from our foreign operations and expand into international markets,there are risks inherent in doing business internationally,including:uncertainties and instability in economic and market conditions resulting from inflationary pressures,increasing interest rates and the ongoing wars in Ukraine and in the Middle East;Table of Contents15uncertainties caused by decreasing consumer confidence and demand for discretionary goods;expenses associated with localizing our products and services and customer data,including offering customers the ability to transact business in the local currency and adapting our products and services to local preferences(e.g.,payment methods)with which we may have limited or no experience;economic and trade sanctions,trade barriers or other restrictions on foreign trade and changes in trade regulations and restrictions,including between the United States and other countries;difficulties in developing,staffing,and simultaneously managing a large number of varying foreign operations as a result of distance,language,and cultural differences;stringent local labor laws and regulations;credit risk and higher levels of payment fraud;profit repatriation restrictions,foreign currency exchange restrictions or extreme fluctuations in foreign currency exchange rates for a particular currency;global or regional economic conditions that impact companies and customers with which we do business;political or social unrest,economic instability,repression,or human rights issues;geopolitical events,including natural disasters,public health issues(including pandemics),acts of war(such as the ongoing wars in Ukraine and in the Middle East),and terrorism;supply chain challenges,including fluctuations in shipping costs,limitations on shipping and receiving capacity,and other supply chain disruptions;import or export regulations,including the complexities of seller compliance with“de minimis thresholds,”trade policies and tariffs in any of the countries where we operate or our users exist,customs and other parallel regulations across the broad range of categories and products offered on our platforms;compliance with U.S.laws such as the Foreign Corrupt Practices Act,and foreign laws prohibiting corrupt payments to government officials,as well as U.S.and foreign laws designed to combat money laundering and the financing of terrorist activities;antitrust and competition regulations;potentially adverse tax developments and consequences;economic uncertainties relating to sovereign and other debt;different,uncertain,or more stringent user protection,data protection,data localization,privacy,AI and other data and consumer protection and environmental laws;risks related to other government regulation or required compliance with local laws;national or regional differences in macroeconomic growth rates;payment intermediation regulations;local licensing and reporting obligations;andincreased difficulties in collecting accounts receivable.Violations of the complex foreign and U.S.laws and regulations that apply to our international operations may result in fines,criminal actions,or sanctions against us,our officers,or our employees;prohibitions on the conduct of our business;and damage to our reputation.The United States government(including the Department of Treasurys Office of Foreign Assets Control and the Department of Commerces Bureau of Industry and Security)and other jurisdictions and international bodies have imposed sanctions and export controls that prohibit us and our customers from engaging in trade or financial transactions with certain countries,businesses,organizations and individuals.In addition to the aforementioned adverse effects,these restrictions could also require us to divest certain of our businesses and assets and restrict our ability to operate in certain jurisdictions.Export control and economic sanctions laws and regulations are complex and likely subject to frequent changes,and the interpretation and enforcement of the relevant regulations involve substantial uncertainties,which may be driven by political and/or other factors that are out of our control or heightened by national security concerns.Although we have implemented policies and procedures designed to promote compliance with these laws,there can be no assurance that our employees,contractors,agents,or customers will not violate our policies.These risks inherent in our international operations and expansion increase our costs of doing business internationally and could harm our business.Cross-border trade is an important source of both revenue and profits for us.Cross-border trade also represents our primary(or in some cases,only)presence in certain important markets,such as China,and various other countries.The interpretation and/or application of laws,such as those related to intellectual property rights of authentic products,selective distribution networks,and sellers in other countries listing items on the Internet,could impose restrictions on,or increase the costs of,purchasing,selling,shipping,or returning goods across national borders.The shipping of goods across national borders is often more expensive and complicated than domestic shipping.Changes to customs authorities“de minimis”thresholds,as well as increased costs or fees for third party sellers,logistics providers,or online marketplaces associated with changes in customs policy,tariffs,and any other Table of Contents16trade policies that increase the costs of cross-border trade or restrict,delay,or make cross-border trade more difficult or impractical would lower our revenues and profits and could negatively affect cross-border trade in countries where we conduct our business,which could reduce the number of consumers using our platforms and harm our business and results of operations.Several countries are considering or have implemented tariffs or other trade barriers or restrictions,as well as other measures impacting cross-border commerce,which could negatively affect our business and our users.The United States has implemented tariffs on certain foreign goods and may implement additional tariffs in the future.For example,in February 2025,the U.S.administration issued three Executive Orders imposing tariffs of 25%on goods imported from Canada and Mexico and an additional 10%on goods imported from China(including Hong Kong).The tariffs on imports from China took effect on February 4,2025,while the tariffs on imports from Canada and Mexico were suspended until March 4,2025.Such tariffs would eliminate the“de minimis”exemption from customs duties and taxes for imported goods falling below a threshold value.The elimination of the“de minimis”rule is paused pending the implementation of a system to collect tariffs on such imports.Such actions could give rise to an escalation of trade measures by the United States and impacted countries.For example,after the tariffs on goods imported from China went into effect,China announced retaliatory tariffs on certain goods imported from the United States.In addition,in February 2025,the U.S.administration announced plans to levy reciprocal tariffs against countries taxing U.S.imports.Developments with regard to the timing and manner in which tariffs will be implemented,the amount,scope and nature of tariffs,the countries subject to new or additional tariffs imposed by the United States,and tariffs imposed by other countries on goods imported from the United States are rapidly evolving and may change unexpectedly at any time.Trade policy developments in the countries in which our buyers and sellers operate or procure their items,could significantly impact the cost of items sold internationally on our Marketplace platforms,limit our ability and the ability of our sellers to offer and deliver products on a timely or cost-effective basis,or otherwise adversely impact our consumers ability to sell products on our platforms.Further,adapting to new and changed trade restrictions can be expensive,time-consuming and very disruptive to our buyers and sellers.For example,tariffs generally apply based on the manufacturing location,rather than the selling location,of goods.These distinctions can be confusing for our sellers and lead to platform solutions that fail to satisfy all of our consumers.If we fail to quickly develop compliant shipping services that take manufacturing location into account when calculating tariff payments,our business to consumer sellers may be dissuaded from using our platforms.However,those same services may dissuade our consumer to consumer sellers from using our platforms,because they serve to increase the cost of the items they are selling.Any change to the cost of buying and selling goods internationally,or even the public perception that such changes are imminent or could occur in the future,may reduce consumer confidence and the number of consumers using our platforms,drive consumers to alternative competitors or buying and selling channels and lead to a decrease in buying and selling on our platforms.Any such outcome could materially harm our consumers and our business,financial performance and results of operations.Although we are closely monitoring these developments to adapt to changing trade policies,there can be no assurances that we will be successful in mitigating any negative impacts.Our business may be adversely affected by geopolitical events,natural disasters,seasonal factors and other factors,including increased usage of other websites,that could cause our users to spend less time,or transact less,on our websites or mobile platforms and applications.Our users may spend less time on our websites and our applications for mobile devices as a result of a variety of diversions and other factors,including:geopolitical events,such as war(including the ongoing wars in Ukraine and in the Middle East),the threat of war,social or political unrest,or terrorist activity;natural disasters;the physical effects of climate change(such as drought,flooding,wildfires,increased storm severity and sea level rise);and potential increases in the cost of energy due to climate change;power shortages or outages;major public health issues,including pandemics;less discretionary consumer spending;social networking or other entertainment websites or mobile applications;significant local,national or global events capturing the attention of a large part of the population;and seasonal fluctuations due to a variety of factors.If any of these,or any other factors,divert or otherwise prevent our users from using or transacting on our websites or mobile applications,our business could be materially adversely affected.Table of Contents17If we cannot keep pace with rapid technological developments or continue to innovate and create new initiatives to provide new programs,products and services,the use of our products and our revenues could decline.Rapid,significant technological changes continue to confront the industries in which we operate,and we cannot predict the effect of technological changes on our business.We continuously strive to create new initiatives and innovations that promote growth,such as our financial services and advertising offerings,and other features that enhance the customer experience.Developing new features can be complex,time-consuming and costly,and our investments in new innovations may not yield the expected business or financial benefits.If we fail to anticipate or identify technological trends or fail to devote appropriate resources to adapt to such trends,our business could be harmed.For example,the role of AI technologies,including Gen AI,in ecommerce is increasing.We expect the importance of platform referrals from AI technologies to increase over time,as buyers and sellers increasingly rely on AI to help with buying and selling decisions.In particular,we are devoting significant capital and management time and resources to use large language models to improve our products and services and to build and expand our capabilities,including our processing capacity,proprietary datasets,machine learning models and systems.While we have substantial proprietary datasets that we believe can help us develop effective capabilities,like many companies,we are new entrants into the Gen AI space.We may be slower and less efficient than our competitors in developing our Gen AI capabilities and in optimizing and utilizing our dataset assets with other AI technologies.We may also fail to identify the AI technologies that consumers want,fail to invest sufficiently in those AI technologies,or otherwise fail to incorporate those technologies into our products and services in a timely,effective and compliant manner.Any of these outcomes could place our business at a competitive disadvantage compared to our competitors,many of whom may not yet exist or be identified.If we fail,for any reason,to receive sufficient AI referrals to our Marketplace platforms,to acquire,develop or license AI technology capabilities,to utilize our proprietary datasets effectively,or to provide our buyers and sellers the AI features that matter to them,our buyers and sellers or both may choose alternatives to eBay,which could reduce our platform traffic or profits or both,and harm our business.In addition to our own initiatives and innovations,we rely in part on third parties,including some of our competitors,for the development of and access to new technologies.We expect that new services and technologies applicable to the industries in which we operate will continue to emerge.These new services and technologies may be superior to,or render obsolete,the technologies we currently use in our products and services.Incorporating new technologies into our products and services may require substantial expenditures and take considerable time and ultimately may not be successful.For example,Gen AI is a rapidly developing technology in its early stages of commercial use and presents certain inherent risks.There is a risk that our algorithms could produce false outcomes(e.g.,Gen AI hallucinatory behavior)or other unexpected results or behaviors that could harm our reputation,business,or buyers and sellers,such as containing third party copyrighted or other protected content.In some cases,we use open source Gen AI software and datasets,which may lead to intellectual property disputes,including intellectual property ownership or copyright infringement disputes.New and changing technologies,industry-wide standards,and laws and regulations can also impact our ability to develop and implement the programs,products and services that our consumers want in a timely,effective and compliant manner.For example,the AI regulatory landscape is still uncertain and evolving,and the development and use of AI technologies,including Gen AI,in new or existing products and features may be subject to new or enhanced governmental or regulatory restrictions and scrutiny,litigation,ethical concerns or other complications over time.Our future success depends not only on our ability to develop new technologies,but also on our ability to identify and adapt to the technological changes that matter to our consumers and evolving legal,regulatory and industry standards that will govern those technologies.A shift in industry standards or laws and regulations could render some of our products and services obsolete or place them at a competitive disadvantage against other consumer buying and selling alternatives.We may lack the time,resources or experience to deliver the products and services that our consumers need when they need them,which could impact our ability to attract buyer and sellers to our platforms and harm our business.For example,our AI technologies will need to comply with AI regulations in all of our markets.We expect AI regulations in certain markets,such as the European Union and the United States,to be more restrictive than in other markets,which can place us at a disadvantage compared to companies that do not focus on markets with the most restrictive AI regulations.It may be more expensive or time consuming to develop an AI technology that satisfies AI regulations in each market that we serve and we cannot guarantee we will have the time or resources to develop multiple,compliant versions of these technologies.Table of Contents18Changes to our programs to protect buyers and sellers could increase our costs and loss rate,and failure to manage such programs effectively can result in harm to our reputation.Our eBay Money Back Guarantee program is intended to compensate users who believe that they have not received the item that they purchased or have received an item different from what was described.We expect to continue to receive communications from users requesting reimbursement or threatening or commencing legal action against us if no reimbursement is made.Litigation,legislation,or regulation involving liability for any seller fraud or non-performance could result in increased costs of doing business,lead to adverse judgments or settlements or otherwise harm our business.In addition,affected users may complain to regulatory agencies that could take action against us,including imposing fines or seeking injunctions.Since transitioning to our payments platform,we have experienced and may continue to experience increased costs from chargebacks on payments,due to instances of forced transaction reversals initiated by buyers through their payment card issuers.These forced transaction reversals can be initiated for a number of reasons,including,but not limited to,alleged seller fraud or nonperformance.Additionally,to further strengthen our buyers confidence and trust in our services and the goods offered on our Marketplace platforms,we offer authentication services,including our Authenticity Guarantee program.These services are available in certain of our categories and markets.If we are unable to effectively manage the authentication process,including the third-party service providers on which we rely for a significant volume of our item authentication,or if our buyers and sellers do not value these processes,we may suffer harm to our reputation and may be subject to litigation,which could be costly and time consuming for us and harm our business.Operations and continued development of our payments system and financial services offerings require ongoing investment,are subject to evolving laws,regulations,rules,and standards,and involve risk,including risks related to our dependence on third-party providers.We have invested and plan to continue to invest internal resources into our payments tools in order to maintain existing availability,expand into additional markets and offer new payment methods and other types of financial services to our buyers and sellers.If we fail to invest adequate resources into payments on our platform,or if our investment efforts are unsuccessful,unreliable or result in system failure,our payments and financial services may not function properly or keep pace with competitive offerings,which could negatively impact their usage and our Marketplace platforms.Future errors,failures or outages could cause our buyers and sellers to lose confidence in our payments system and could cause them to cease using our Marketplace platforms.If we transition to new third-party payment service providers for any reason,we may be required to invest significant financial and personnel resources to support such transition or could be unable to find a suitable replacement service provider.As we offer new payment methods and financial services to our sellers and buyers,we are now subject to additional regulations and compliance requirements,and exposed to heightened fraud and regulatory risk,which could lead to an increase in our operating expenses.We rely on third-party service providers to perform services,including,among others credit card processing,payment disbursements,currency exchange,identity verification,sanctions screening,and fraud analysis and detection.As a result,we are subject to a number of risks related to our dependence on third-party service providers.If any or some of these service providers fail to perform adequately or if any such service provider were to terminate or modify its relationship with us unexpectedly,our sellers ability to use our platform to receive orders or payments could be adversely affected,which could increase our costs,drive sellers away from our marketplaces,result in potential legal liability,and harm our business.In addition,we and our third-party service providers may experience service outages from time to time that could adversely impact payments made on our platform.Additionally,any unexpected termination or modification of those third-party services could lead to a lapse in the effectiveness of certain fraud prevention and detection tools.Our third-party service providers may increase the fees they charge us in the future,which would increase our operating expenses.This could,in turn,require us to increase the fees we charge and cause some buyers or sellers to reduce purchases or listings on our Marketplace platforms or to leave our platform altogether by closing their accounts.Table of Contents19Payments and other financial services are governed by complex and continuously evolving laws and regulations that are subject to change and vary across different jurisdictions in the United States globally.As a result,we are required to spend significant time and effort to determine whether various licensing and registration laws as well as privacy and secrecy laws relating to payments and other financial services we offer apply to us and to comply with applicable laws and licensing and registration regulations.In addition,there can be no assurance that we will be able to obtain or retain any necessary licenses or registrations.Any failure or claim of failure by us or our third-party service providers to comply with applicable laws and regulations relating to payments or financial services could require us to expend significant resources,result in liabilities,limit or preclude our ability to enter or continue to operate in certain markets and harm our reputation.In addition,changes in payment regulations,or other financial regulation,including changes to the credit or debit card interchange rates in the United States or other markets,could adversely affect payments on our platform and make our payments systems less profitable.Further,we are indirectly subject to payment card association operating rules and certification requirements pursuant to agreements with our third-party payment processors.These rules and requirements,including the Payment Card Industry Data Security Standard and rules governing electronic funds transfers,are subject to change or reinterpretation,making it difficult for us to comply.Any failure to comply with these rules and certification requirements could impact our ability to meet our contractual obligations to our third-party payment processors and could result in potential fines.In addition,changes in these rules and requirements,including any change in our designation by major payment card providers,could require a change in our business operations and could result in limitations on or loss of our ability to accept payment cards or other forms of payment,any of which could negatively impact our business.Such changes could also increase our costs of compliance,which could lead to increased fees for us or our sellers and adversely affect payments on our platform or usage of our payments services and Marketplace platforms.Our payments system is susceptible to illegal uses,including money laundering,terrorist financing,fraud and payments to sanctioned parties.If our compliance program and internal controls to limit such illegal activity are ineffective,government authorities could bring legal action against us or otherwise suspend our ability to offer payments or financial services in one or more markets.We may be unable to adequately protect or enforce our intellectual property rights and face ongoing allegations by third parties that we are infringing their intellectual property rights.We believe the protection of our intellectual property,including our trademarks,patents,copyrights,domain names,trade dress,and trade secrets,is important to our success.We seek to protect our intellectual property rights by relying on applicable laws and regulations in the United States and internationally,as well as a variety of administrative procedures.We also rely on contractual restrictions to protect our proprietary rights when offering or procuring products and services,including confidentiality and invention assignment agreements entered into with our employees and contractors and confidentiality agreements with parties with whom we conduct business.However,effective intellectual property protection may not be available in every country in which our products and services are made available,and contractual arrangements and other steps we have taken to protect our intellectual property may not prevent third parties from infringing or misappropriating our intellectual property or deter independent development of equivalent or superior intellectual property rights by others.Trademark,copyright,patent,domain name,trade dress and trade secret protections are very expensive to maintain and may require litigation.Patent protection may not be available or obtainable for our proprietary rights,or patent applications may not issue.We must protect our intellectual property rights and other proprietary rights in a significant number of jurisdictions,a process that is expensive and time consuming and may not be successful in every jurisdiction.Also,we may not be able to discover or determine the extent of any unauthorized use of our proprietary rights.We have licensed in the past,and expect to license in the future,certain of our proprietary rights,such as trademarks or copyrighted material,to others.These licensees may take actions that diminish the value of our proprietary rights or harm our reputation.Any failure to adequately protect or enforce our intellectual property rights,or significant costs incurred in doing so,could materially harm our business.Third parties have from time to time claimed,and others may claim in the future,that we have infringed their intellectual property rights.Additionally,we have repeatedly been sued for allegedly infringing other parties patents.We are a defendant in various patent suits and we are likely to be named as a defendant in other patent suits,or other intellectual property suits,in the future.These claims involve various aspects of our business as our products and services continue to expand in scope and complexity.Such claims may be brought directly or indirectly against us and/or against our customers(who may be entitled to contractual indemnification under their contracts with us),Table of Contents20and we are subject to increased exposure to such claims as a result of our acquisitions and divestitures or where we are entering new lines of business.We also face the risk that third parties will claim that we are responsible for seller content that infringes their intellectual property rights.We may become more vulnerable to these types of third-party claims as laws such as the Digital Millennium Copyright Act,the Lanham Act and the Communications Decency Act are interpreted by the courts,and as we expand the scope of our business(both in terms of the range of products and services that we offer and our geographical operations)and become subject to laws in jurisdictions where the underlying laws with respect to the potential liability of online intermediaries like ourselves are either unclear or less favorable.Any such claims,whether meritorious or not,are time consuming and costly to defend and resolve,could require expensive changes in our methods of doing business or could require us to enter into costly royalty or licensing agreements on unfavorable terms.As the number of intellectual property owners and products in the software industry increases and the functionality of these products further overlaps,and as we acquire technology through acquisitions or licenses,we may become increasingly subject to patent suits and other infringement claims,including copyright,and trademark infringement claims.For example,the intellectual property ownership and license rights surrounding AI technologies,including Gen AI,have not been fully addressed by U.S.courts or by U.S.or international laws or regulations,and the use or adoption of third-party Gen AI technologies,and their related datasets,into our products and services may result in claims of intellectual property infringement or misappropriation,or in the inability to enforce our rights against third parties,which could in each case harm our business and financial results.Our use of“open source”software may subject us to certain unfavorable conditions,including conditions that:(i)we make publicly available the source code for any modifications or derivative works we create based upon,incorporating or using the open source software,(ii)we license such modifications or derivative works under the terms of the particular open source license,(iii)we waive intellectual property rights in any innovation that is derived using the open source software,or(iv)we offer our products that incorporate the open source software for low or no cost.There is little legal precedent or guidance governing the interpretation of the terms of some open-source licenses,so the potential impact of these terms on our business is uncertain and enforcement of these terms may result in unanticipated obligations or restrictions regarding our products or services.If an author of open source software or other third party that distributes open source software that we use or license were to allege that we had not complied with the conditions of the applicable license,we could incur significant legal expenses defending against such allegations and could be subject to significant damages,enjoined from offering our products that make use of or are distributed with open source software,required to release proprietary source code,required to obtain licenses from third parties or otherwise be required to comply with the unfavorable conditions unless and until we can re-engineer the product so that it either complies with the open source license or does not incorporate the open source software.Any of the foregoing could disrupt our ability to offer our products and harm our business,revenue and financial results.These or other intellectual property claims may be brought directly against us and/or against our customers whom we may indemnify either because we are contractually obligated to or because we choose to do so as a business matter.Such claims,whether or not meritorious,may be time-consuming and costly to defend and resolve,and could require us to make expensive changes in our methods of doing business,enter into costly royalty or licensing agreements,cease conducting certain operations,or make substantial payments to satisfy adverse judgments or settle claims,any of which could harm our business.Failure to deal effectively with fraudulent activities on our Marketplace platforms would increase our loss rate and harm our business and could severely diminish merchant and consumer confidence in and use of our services.We face reputational and other risks with respect to fraudulent activities on our platforms and periodically receive complaints from buyers and sellers who may not have received the goods that they had contracted to purchase or payment for the goods that a buyer had contracted to purchase.In some European and Asian jurisdictions,buyers may also have the right to withdraw from a sale made by a professional seller within a specified time period.While we can,in some cases,suspend the accounts of users who fail to fulfill their obligations to other users,we do not always have the ability to require users to make payment(such as when a payment method on file fails)or deliver goods,or otherwise make users whole other than through our protection programs.We have implemented measures to detect and reduce the occurrence of fraudulent activities,combat bad buyer and seller experiences and increase buyer and seller satisfaction,such as evaluating sellers based on identity and both buyers and sellers based on transaction history.These measures allow us to restrict or suspend buyer and seller activity when fraudulent activities are detected and they are intended to reduce situations in which sellers fail to Table of Contents21receive payments for sold items.However,there can be no assurance that our efforts,now or in the future,will be effective in combating all fraudulent transactions or improving overall satisfaction among sellers,buyers,and other participants.If these measures fail to address fraud effectively,buyers and sellers could lose trust in our Marketplace platforms,and our reputation and results of operations could suffer as a result.Additional measures to address fraud could negatively affect the attractiveness of our services to buyers or sellers,resulting in a reduction in the ability to attract new users or retain current users,damage to our reputation,or a diminution in the value of our brand names.Cyberattacks and data security breaches and incidents could significantly damage our reputation,reduce our revenues,increase our costs,result in litigation and regulatory penalties,and otherwise harm our business.We and our service providers collect,store,use,retain,disclose,transfer and process a significant amount of confidential,personal and sensitive information from our users and employees,including transaction,identity,biometric,health,payments and financial information.In addition,a significant number of our users authorize us to bill their payment card accounts directly for all transactions and other fees charged by us or,in certain cases,third-party service providers utilized in our financial services.We and our service providers face a variety of cybersecurity threats and risks or inadvertent or intentional data breaches and incidents.Cybersecurity threats can take a variety of forms,including malicious software programs that attack our networks and data centers or those of our service providers,social engineering,phishing,credential stuffing,ransomware,denial or degradation of service attacks and similar types of attacks against us,our employees,users and our service providers.Due to the size of our company and the volume of confidential information we possess,we are also at risk from inadvertent and intentional data disclosure,system or access misuse,unauthorized access or other improper actions by employees and service providers.Our increasing use of Generative AI tools could also result in a greater likelihood of cybersecurity incidents,privacy violations and inadvertent disclosures of our intellectual property or other confidential information,any of which could either directly or indirectly harm our business,operations and reputation.Further,if our internal security policies,procedures and practices fail for any reason,improper access,use or disclosure of data may result.We have seen an increase in cyberattacks against us and other companies in our industry,and these attacks are increasing in sophistication.We provide cybersecurity training to our workforce.For example,we regularly train our workforce,upskill teams that handle sensitive data,and carry out bespoke trainings and tabletop exercises for leaders.We have also implemented policy,procedural,technical,physical and administrative controls intended to protect our systems from such incidents.However,no training or program can offer absolute protection against such attacks and incidents.For example,in 2014 we experienced a significant data breach involving unauthorized access to a database containing records of up to 145 million users.In the last two years,we have experienced and reported data breaches to regulators,but we do not believe these recent events were material and they did not result in any penalties or sanctions.However,future events could have a material impact on our business,results of operations or reputation.For more information about our cybersecurity risk management,governance and oversight,see“Item 1C:Cybersecurity.”Future attacks are likely to be increasingly sophisticated and highly targeted,particularly due to rapid developments in AI.Within the last year,hackers unsuccessfully targeted us using an AI-generated voice impersonation of a company leader.We expect these types of attacks to continue and evolve.Our information technology and infrastructure have at times been,and may in the future be,vulnerable to cyberattacks,including ransomware attacks,or security incidents and third parties may be able to access our employee and user data,including payment and financial data,that are stored on or accessible through our systems.Any actual or attempted cyberattack,breach or data incident,or even an unfounded public rumor regarding such an attack,breach or incident,could have a material adverse effect on our business,reputation,financial condition or results of operation.eBay does not need to be the direct target of such attacks,breaches or incidents for them to have a material adverse effect on our operations.For example,a cyberattack on a key service provider,or a vulnerability in software that they use,could disrupt our services or compromise user and employee data entrusted to that service provider.We perform risk-based assessments of our service providers,but we do not control our service providers and our ability to monitor their data security is limited,so we cannot guarantee that their security measures will be adequate.In addition,we and our employees,users and service providers also may not discover a cyberattack,breach or other incident for a significant period after the incident occurs,which could amplify any adverse outcomes resulting from such incidents.Table of Contents22We maintain cybersecurity insurance and seek to include reasonable contractual and indemnity protections in the contracts we have with our service providers.However,the amounts,if any,that we recover under an insurance policy or service provider contract may not be sufficient to adequately reimburse us from cybersecurity and data breach liabilities and losses,and the reputational damage to our business that such incidents cause.Systems failures and resulting interruptions in the availability of or degradation in the performance of our websites,applications,products or services could harm our business.Our systems may experience service interruptions or degradation due to hardware and software defects or malfunctions,computer denial-of-service and other cyberattacks,human error,earthquakes,hurricanes,floods,fires,natural disasters,sustained drought,power losses,disruptions in telecommunications services,fraud,military or political conflicts,terrorist attacks,computer viruses,or other events.Our systems are also subject to compromise,sabotage and intentional acts of vandalism.Some of our systems are not fully redundant and our disaster recovery planning is not sufficient for all eventualities.We have experienced and will likely continue to experience system failures,denial-of-service attacks,human error and other events or conditions from time to time that interrupt the availability or reduce the speed or functionality of our Marketplace platforms,including our payments services.These events have resulted in the past,and likely will result in the future,in loss of revenue.In addition,our use of AI involves significant technical complexity and requires specialized expertise.Any disruption or failure in our AI systems or infrastructure,or those of our third-party providers,could result in delays or errors in our operations,which could harm our business and financial results.A prolonged interruption in the availability or reduction in the speed or other functionality of our websites and mobile applications or payments services could materially harm our business.Frequent or persistent interruptions in our services could cause current or potential users to believe that our systems are unreliable,leading them to switch to our competitors or to avoid our sites,and could p
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