Basis of Preparation of the Half-Year Financial Statements and Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2025

Corporate information and statement of IFRS compliance [abstract]

International Financial Reporting Standards (IFRS)

The half-year consolidated financial statements have been prepared and presented in condensed format in accordance with IAS 34 (Interim Financial Reporting). The accompanying notes therefore relate to significant events and transactions of the period, and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2024.

The accounting policies used in the preparation of the consolidated financial statements as of June 30, 2025 comply with international financial reporting standards (IFRS) as endorsed by the European Union and as issued by the International Accounting Standards Board (IASB). IFRS as endorsed by the European Union as of June 30, 2025 are available via the following web link:

https://www.efrag.org/Endorsement

The accounting policies applied effective January 1, 2025 are identical to those presented in the consolidated financial statements for the year ended December 31, 2024.

On August 15, 2023, the IASB issued “Lack of Exchangeability”, an amendment to IAS 21 (The Effects of Changes in Foreign Exchange Rates), relating to how to determine the exchange rate when a currency is not exchangeable. The amendment became applicable on January 1, 2025, and does not have a material impact on the Sanofi financial statements.

In its 2025 half-year financial statements, Sanofi has used an average effective tax rate that takes into account the Pillar Two

top-up

tax applicable from January 1, 2024. The effective tax rate also includes a

one-off

impact from the 2024 component of the exceptional contribution in respect of French corporate income taxes (see Note B.19.).

Use of Estimates

The preparation of financial statements requires management to make reasonable estimates and assumptions based on information available at the date the financial statements are finalized. Those estimates and assumptions may affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements, and disclosures of contingent assets and contingent liabilities as of the date of the review of the financial statements. Examples of estimates and assumptions include:

•

amounts deducted from sales for projected sales returns, chargeback incentives, rebates and price reductions;

•

impairment of property, plant and equipment and intangible assets;

•

the valuation of goodwill and the valuation and useful life of acquired intangible assets;

•

the measurement of contingent consideration receivable in connection with asset divestments and of contingent consideration payable;

•

the measurement of financial assets and financial liabilities at amortized cost;

•

the amount of post-employment benefit obligations;

•

the amount of liabilities or provisions for restructuring, litigation, tax risks relating to corporate income taxes, and environmental risks; and

•

the amount of deferred tax assets resulting from tax losses available for carry-forward and deductible temporary differences.

Actual results could differ from these estimates.

For half-year financial reporting purposes, and as allowed under IAS 34, Sanofi has determined income tax expense on the basis of an estimate of the effective tax rate for the full financial year. That rate is applied to business operating income plus financial income and minus financial expenses, and before (i) the share of profit/loss of investments accounted for using the equity method and (ii) net income attributable to

non-controlling

interests. The estimated full-year effective tax rate is based on the tax rates that will be applicable to projected

pre-tax

profits or losses arising in the various tax jurisdictions in which Sanofi operates.

Seasonal Trends

Sanofi’s activities are not subject to significant seasonal fluctuations.

Consolidation and Foreign Currency Translation of the Financial Statements of Subsidiaries in Hyperinflationary Economies

In 2025, Sanofi continues to account for subsidiaries based in Venezuela using the full consolidation method, on the basis that

the

criteria for control as specified in IFRS 10 (Consolidated Financial Statements) are still met. The contribution of the Venezuelan subsidiaries to the consolidated financial statements is immaterial.

In Argentina, the cumulative rate of inflation over the last three years is in excess of 100%, based on a combination of indices used to measure inflation in that country. Consequently, Sanofi has (since July 1, 2018) treated Argentina as a hyperinflationary economy and has applied IAS 29. The impact of the resulting restatements is immaterial at Sanofi group level.

In Turkey, the cumulative rate of

inflation

over the last three years is in excess of 100%, based on a combination of indices used to measure inflation in that country. Consequently, Sanofi has (since January 1, 2022) treated Turkey as a hyperinflationary economy and has applied IAS 29. The impact of the resulting restatements is immaterial at Sanofi group level.

Fair Value of Financial Instruments

Under IFRS 13 (Fair Value Measurement) and IFRS 7 (Financial Instruments: Disclosures), fair value measurements must be classified using a hierarchy based on the inputs used to measure the fair value of the instrument. This hierarchy has three levels:

•

Level 1: quoted prices in active markets for identical assets or liabilities (without modification or repackaging);

•

Level 2: quoted prices in active markets for similar assets or liabilities, or valuation techniques in which all important inputs are derived from observable market data; and

•

Level 3: valuation techniques in which not all important inputs are derived from observable market data.

The table below shows the disclosures required under IFRS 7 relating to the measurement principles applied to financial instruments.

Note

Type of financial

instrument

Measurement

principle

Level in
fair value
hierarchy

Valuation
technique

Method used to determine fair value

Market data

Valuation
model

Exchange

rate

Interest rate

Volatilities

B.6.

Financial assets
measured at fair value (quoted equity instruments)

Fair value

Market value

Quoted market price

N/A

B.6.

Financial assets measured at fair value (quoted debt instruments)

Fair value

Market value

Quoted market price

N/A

B.6.

Financial assets measured at fair value (unquoted equity instruments)

Fair value

Amortized cost/ Peer comparison (primarily)

If cost ceases to be a representative measure of fair value, an internal valuation based primarily on peer comparison is used.

B.6.

Financial assets measured at fair value (contingent consideration receivable)

Fair value

Revenue-based approach

The fair value of contingent consideration receivable is determined by adjusting the contingent consideration at the end of the reporting period using the method described in Note D.7.3. to the consolidated financial statements for the year ended December 31, 2024.

B.6.

Long-term loans

and advances and

other non-current

receivables

Amortized

cost

N/A

The amortized cost of long-term loans and advances and other

non-current

receivables at the end of the reporting period is not materially different from their fair value.

B.6.

Financial assets measured at fair value held to meet obligations under

post-employment

benefit plans

Fair value

Market value

Quoted market price

N/A

B.6.

Financial assets designated at fair value held to meet obligations under deferred compensation plans

Fair value

Market value

Quoted market price

N/A

B.9.

Investments in mutual funds

Fair value

Market value

Net asset value

N/A

B.9.

Negotiable debt instruments, commercial paper, instant access deposits and term deposits

Amortized

cost

N/A

Because these instruments have a maturity of less than 3 months, amortized cost is regarded as an acceptable approximation of fair value as disclosed in the notes to the consolidated financial statements.

B.9.

B.12.

Financial liabilities

Amortized cost

(a)

N/A

In the case of financial liabilities with a maturity of less than 3 months, amortized cost is regarded as an acceptable approximation of fair value as reported in the notes to the consolidated financial statements.

For financial liabilities with a maturity of more than 3 months, fair value as reported in the notes to the consolidated financial statements is determined either by reference to quoted market prices at the end of the reporting period (quoted instruments) or by discounting the future cash flows based on observable market data at the end of the reporting period (unquoted instruments).

For financial liabilities based on variable payments such as royalties, fair value is determined on the basis of discounted cash flow projections.

B.9.

Lease liabilities

Amortized

cost

N/A

Future lease payments are discounted using the incremental borrowing rate.

B.10.

Forward currency contracts

Fair value

Revenue-based approach

Present value of future cash flows

Mid

Market Spot

< 1 year: Mid Money Market

> 1 year: Mid Zero Coupon

N/A

B.10.

Interest rate swaps

Fair value

Revenue-

based

approach

Present value of future cash flows

Mid

Market

Spot

< 1 year: Mid Money

Market and Euronext

interest rate futures

> 1 year: Mid Zero

Coupon

N/A

B.10.

Cross-currency

swaps

Fair value

Revenue-

based

approach

Present value of future cash flows

Mid

Market

Spot

< 1 year: Mid Money

Market and Euronext

interest rate futures

> 1 year: Mid Zero

Coupon

N/A

B.11.

Liabilities related to business combinations and to

non-controlling

interests

Fair value

Revenue-

based

approach

Under IAS 32, contingent consideration payable in a business combination is a financial liability. The fair value of such liabilities is determined by adjusting the contingent consideration at the end of the reporting period using the method described in Note B.11.

(a)	In the case of debt designated as a hedged item in a fair value hedging relationship, the carrying amount in the consolidated balance sheet includes changes in fair value attributable to the hedged risk(s).

New Pronouncements Issued by the IASB and Applicable from 2024

On April 9, 2024, the IASB issued IFRS 18 (Presentation and Disclosure in Financial Statements), applicable from January 1, 2027 (subject to endorsement by the European Union). An impact assessment is currently under way. Sanofi will not early adopt this new standard.

On May 30, 2024, the IASB issued amendments to IFRS 9 and IFRS 7 relating to the classification and measurement of financial instruments, applicable no earlier than January 1, 2026. Sanofi does not expect any material impact, and will not early adopt these amendments.

On July 18, 2024, the IASB issued Volume 11 of “Annual Improvements to IFRS”, applicable from January 1, 2026. Sanofi does not expect any material impact from those improvements to various standards, which are essentially in the nature of clarifications, and will not early adopt them.

On December 18, 2024, the IASB issued “Contracts referencing nature-dependent electricity”, amendments to IFRS 9 and IFRS 7, applicable from January 1, 2026. The amendments clarify the application of the ‘own use’ exemption to Power Purchase Agreements (PPAs) with physical delivery of renewable electricity, and modify the hedge accounting requirements for contracts without physical delivery (VPPAs). Sanofi does not expect any material impact and will not early adopt these amendments. Renewable energy purchase contracts entered into by Sanofi as of December 31, 2024 are described in Note D.21. to the consolidated financial statements included in the 2024 Form

20-F

for the year ended December 31, 2024 (the “2024

20-F”).