UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2023

Commission File Number: 001-41411

Haleon plc

(Translation of registrant’s name into English)

Building 5, First Floor, The Heights,

Weybridge, Surrey, KT13 0NY

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F


INCORPORATION BY REFERENCE

This report on Form 6-K shall be deemed to be filed and incorporated by reference in the registration statement on Form F-3 (No. 333-273103) and the registration statement on Form S-8 (No. 333-267647) of Haleon plc and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

EXHIBIT INDEX


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HALEON PLC

(Registrant)

Date: August 2, 2023

By: 

/s/ Amanda Mellor

Name: 

Amanda Mellor

Title:

Company Secretary


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Exhibit 99.1

2 August 2023

Graphic

2023 Half year results

Six months ended 30 June 2023 (unaudited)

Strong growth, driven by price with another quarter of positive volume mix

H1 revenue +10.6% to £5,738m, organic growth1 +10.4% with 7.5% price and 2.9% volume/mix
55% of our business gained or maintained market share2 year to date

Increased operating profit given positive operational leverage

H1 Reported operating profit increased 26.8% to £1,141m
H1 Adjusted operating profit1 increased 6.7% to £1,271m, up 8.9% constant currency
H1 Reported operating profit margin 19.9%, up 260bps
H1 Adjusted operating profit margin1 22.2%, down 80bps and 40bps constant currency

Strong execution in delivering on deleveraging commitment

H1 net cash flow from operating activities was £749m with Free cash flow of £369m
Total borrowings as at 30 June 2023 were £9,865m, with 7.6x total borrowings/profit after tax
Net debt at 30 June 2023 was £9,525m, representing 3.4x last 12 months net debt/adjusted EBITDA1
Agreed disposal of Lamisil for aggregate consideration of £235m; we expect total cash realised in connection with the disposal to be around £250m.3 Completion expected in Q4
Interim dividend declared of 1.8 pence per ordinary share

Well placed for future growth, updated guidance

FY2023 organic revenue growth1 now expected to be 7-8%
FY2023 adjusted operating profit growth of 9-11% constant currency
Well placed to deliver on medium term guidance

Reported results

Adjusted results1

Six months ended 30 June

2023

vs 2022

2023

vs 2022

Revenue

£5,738m

10.6%

Organic revenue growth

10.4%

Operating profit

£1,141m

26.8%

Adjusted operating profit

£1,271m

8.9%5

Operating profit margin

19.9%

260 bps

Adjusted operating profit margin

22.2%

(40)bps5

Diluted earnings per share

7.4p

32.1%

Adjusted diluted earnings per share

8.5p

(8.3)%5

Net cash flow from operating activities

£749m

£69m

Free cash flow

£369m

£(184)m

1.Organic revenue growth, Adjusted operating profit, Adjusted operating profit margin, Adjusted diluted earnings per share, Adjusted EBITDA, net debt and Free cash flow are non-IFRS measures; definitions and calculations of non-IFRS measures can be found on pages 29 to 37.
2.Market share statements throughout this report are estimates based on the Group’s analysis of third party market data of revenue for ytd May 2023 including IQVIA, IRI and Nielsen data. Represents % of brand-market combinations gaining or maintaining share (this analysis covers c.90% of Haleon’s total revenue).
3.This includes an additional c.£15m expected to be realised from the release of working capital allocated to Lamisil.
4.The commentary in this announcement contains forward-looking statements and should be read in conjunction with the cautionary note on page 29. Please note that we are unable to present reconciliations of forward-looking information for adjusted operating profit margin, organic revenue growth and metrics presented at constant currency because we are unable to forecast accurately certain adjusting items required to present a meaningful comparable IFRS forward-looking financial measure.
5.Change at constant currency.

Interim results announcement

Six months ended 30 June 2023

Graphic

Outlook

For FY 2023 the Company now expects:

Organic revenue growth to be 7-8%. This compares with “towards the upper end of the 4-6% range” as shared in the Q1 Trading Statement on 3 May 2023.
Adjusted operating profit growth to be 9-11% constant currency
Net interest expense of c.£350m
Adjusted effective tax rate of 23-24%

Please note that we are unable to present reconciliations of forward-looking information for adjusted EBITDA, adjusted effective tax rate, adjusted operating profit margin, organic revenue growth and metrics presented at constant currency because we are unable to forecast accurately certain adjusting items required to present a meaningful comparable IFRS forward-looking financial measure.

Dividend

Consistent with our previous guidance, the Board has declared a H1 2023 interim dividend of 1.8 pence per ordinary share.

This interim dividend is expected to be paid on 5 October 2023 to holders of ordinary shares and US American Depositary Shares (ADS) on the register as of 25 August 2023 (the record date). The ex-dividend date is expected to be 24 August 2023. For ordinary shareholders wishing to participate in the Dividend Reinvestment Programme (DRIP), the election deadline for the DRIP is 14 September 2023.

Foreign exchange

Whilst we do not guide specifically on foreign exchange, translational foreign exchange based on spot rates as at 30 June 2023 and using FY2022 results as a base, would have a negative impact of c.4% on revenue and negative impact of c.6.5% on Adjusted operating profit.

Presentation for analysts and shareholders:

A recorded results presentation by Brian McNamara, Chief Executive Officer, and Tobias Hestler, Chief Financial Officer, will be available shortly after 7am BST (8am CET) on 2 August 2023 and can be accessed at www.haleon.com/investors. This will be followed by a Q&A session at 10:00am BST (11:00am CET).

For analysts and shareholders wishing to ask questions, please use the dial-in details below which will have a Q&A facility:

UK

0800 358 1035

US

+1 646 664 1960

All other:

+44 204 587 0498

Passcode:

01 70 24

An archived webcast of the presentation will be available later on the day of the results and can be accessed at https://www.haleon.com/investors/

Financial reporting calendar

Q3 2023 trading statement

2 November 2023

FY 2023 results

February 2024

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Interim results announcement

Six months ended 30 June 2023

Graphic

Enquiries

Investors

Media

Sonya Ghobrial

+44 7392 784784

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+44 7736 746167

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+44 7552 484646

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+44 7841 400607

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+44 7792 750133

Email: investor-relations@haleon.com

Email: corporate.media@haleon.com

About Haleon plc

Haleon (LSE/NYSE: HLN) is a global leader in consumer health, with a purpose to deliver better everyday health with humanity. Haleon’s product portfolio spans five major categories – Oral Health, Pain Relief, Respiratory Health, Digestive Health and Other, and Vitamins, Minerals and Supplements (VMS). Its long-standing brands – such as Advil, Sensodyne, Panadol, Voltaren, Theraflu, Otrivin, Polident, parodontax and Centrum – are built on trusted science, innovation and deep human understanding.

For more information please visit www.haleon.com

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Interim results announcement

Six months ended 30 June 2023

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Guiding strategy

Haleon is led by its purpose to deliver better everyday health with humanity.

A clear approach to deliver on our growth ambitions is built on a world class portfolio of category leading brands in a growing sector across an attractive geographic footprint. This leverages competitive capabilities combining deep human understanding with trusted science, brand building and innovation, leading route to market and leading digital capabilities.

Haleon aims to outperform through a focus on increasing household penetration and capitalising on new and emerging growth opportunities across channels and geographies, underpinned by a strong focus on execution and financial discipline to improve profitability and sustain reinvestment in growth. Critically, running a responsible business, which is integral to all that we do, allows Haleon to reduce risk and support performance.

Taken together, over the medium term, this is expected to drive organic annual sales growth of 4-6%, sustainable moderate adjusted operating margin expansion constant currency per annum. All of this, whilst supporting our investment for growth, delivering consistent high cash conversion and maintaining a focus on our clear and disciplined capital allocation policy.

Business review – Maximising growth

The strength of Haleon’s portfolio resulted in 10.6% reported revenue growth and 10.4% organic growth during H1 2023. Throughout the half, Haleon’s strategy continued to deliver strong performance, underpinned by the Company’s ability to leverage its deep human understanding combined with its trusted science capabilities.

Haleon continued to make strong progress against its four key strategic pillars during H1 2023.

Leading portfolio – performance driven by innovation, brand building and geographic and channel expansion

Across the portfolio for the year to date (to the end of May 2023), 55% of Haleon’s business gained or maintained market share with momentum improved in recent months.

In Oral Health revenue increased 10.5% on a reported basis and 10.8% organically (excluding a 0.3% decrease as a result of foreign exchange rates). Haleon sustained its track record of outperformance, driven by growth in the three Power Brands (Sensodyne, parodontax and Polident/Poligrip), and all three gained share. This very strong growth was driven by successful brand building campaigns and activation, innovation and continued geographic expansion. There were a number of launches in the first half, particularly leveraging our trusted science capabilities, including Sensodyne Pronamel Active Shield which uses our most advanced enamel protection technology. This product builds on existing Pronamel technology by optimising the formulation to drive more fluoride into enamel, creating a remineralised surface that improves resistance to acidity. Having launched in the first half in the US, this innovation will be rolled out in a number of markets during the second half of the year. We also launched parodontax Active Gum Repair which has been clinically proven to help bleeding, swollen and inflamed gums to repair, reversing early gum problems. Early results show strong consumer uptake. Additionally, we continued to see strong success from previous launches such as Polident Max Hold Plus which we launched in 2022 driving strong growth of fixatives in the first half with consumption growing faster than the market, and now present in 20 markets.

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Interim results announcement

Six months ended 30 June 2023

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In Vitamins, Minerals and Supplements revenue was flat on a reported basis and declined 0.5% organically (excluding a 0.4% increase as result of foreign exchange rates and a 0.1% increase as result of the effect of acquisitions).  As expected, the tough comparatives from capacity coming on stream and subsequent re-piping in the prior year impacted results as did the change in consumer behaviour in the immunity subcategory, particularly in the US, as consumers became less concerned about COVID-19.  Centrum organic growth in the first half increased low single digit overall, driven by strength in EMEA and LatAm and to a lesser extent in Asia Pacific. Haleon continued to leverage its trusted science focus through the clinical studies completed in 2022 and earlier this year on Centrum Silver, which demonstrated positive results on cognitive function of adults 65 years and older, thereby providing a new claim and activation for the product. During the half, we activated this claim across a number of markets leading to double digit growth and market share gains in the multi-vitamin segment in the US and China.

We also continued to expand our Centrum offering to new markets. Having launched Centrum in India through the e-commerce channel in October 2022 with a campaign to build awareness around multivitamin deficiency, we further expanded the portfolio to include Benefit Blends. Centrum remained the number one multivitamin on Amazon in India (by revenue), where 70% of new Centrum consumers are also new to the multivitamin subcategory. Similarly in Egypt, where we launched the brand in November 2022, Haleon continued to drive further market share gains helped by strong awareness campaigns using both traditional and non-traditional channels.

Haleon remains focused on using its unique consumer insight to evolve delivery formats and deliver new use occasions to make it easier for consumers to use our products. In the US, in Q2 2023, Haleon launched Emergen-C crystals, a ‘no-water needed’ solution delivering key immune-supporting nutrients for adults and children which has seen strong initial consumer feedback.

In Pain Relief, revenue increased 12.6% on a reported basis and was up 12.9% organically (excluding a 0.1% decrease as a result of foreign exchange, a 0.5% decrease from the impact of divestments and a 0.3% increase from the effect of acquisitions). Fenbid and Panadol were standout performers, with double digit and high single digit growth respectively.

Fenbid growth was driven by the cessation of selling restrictions following the end of COVID-19 lockdowns in China. Panadol benefited from exceptional growth in EMEA and LatAm as a result of the success of the new ‘Release starts here’ campaign, which leverages the overall brand franchise at the same time as addressing specialist need states such as migraine, body pain, night and headache.

In line with our purpose and strategy to identify and support new and emerging health trends, we launched natural variants across a number of markets to expand our reach, as our natural launches are designed to engage with a younger consumer base. Recent launches included Panadol PanaNatra which we launched in Australia with strong early results providing a platform for future innovation.

Haleon also launched Voltaren 24 hour medicated patch in a number of markets which delivered 60% incremental new sales and gained leading market share in the 24 hour patch segment. In addition, we further extended the range of Advil Dual Action to Back Pain, the third most common pain indication, and an underserved consumer need with only 20% of consumers currently “very satisfied” with current back pain treatments. The product has received positive early feedback with convenience, value and back pain efficacy highlighted by users.

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Interim results announcement

Six months ended 30 June 2023

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In Respiratory Health revenue increased 22.8% on a reported basis and organic revenue was up 22.0% (excluding a 0.8% increase a result of foreign exchange). This growth was largely delivered in the first quarter given the strong cold and flu season and by growth in China of Contac following the end of COVID-19 lockdowns. Cold and flu added 2% to the Group’s first half organic sales.

Theraflu growth was strong, supported by successful innovation as well as strong execution in market.  Theraflu Max + saw particularly strong growth in its markets and is now c.25% of Theraflu sales in the US. Beyond this, we continued to see strong uplift from natural products launched in previous years, such as Theraflu ProNaturals.

In allergy, we enhanced our offering in allergy with Flonase Nighttime Allergy Relief, providing up to six hours relief from night time allergy symptoms. We also expanded our Robitussin range with Robitussin Medi-Soothers, a dual-action liquid-filled lozenge that soothes sore throats and treats coughs.

Digestive Health and Other saw 8.6% revenue growth on a reported basis and organic revenue growth of 7.7% (excluding the effect of a 0.9% increase as a result of foreign exchange movements). Revenue in this category is split across three areas, c.50% Digestive Health, c.25% Skin Health and c.25% Smoking Cessation brands. Broad based growth across all of the subcategories supported performance in the first half.

We strengthened our position in Tums in the US and grew household penetration within the strategic growth segment of young consumers.

We also rolled out a natural proposition of Fenistil across Central Eastern Europe to bring new users into the itch relief category.

Innovation accelerating growth

The focus on innovation to accelerate growth continued and we strengthened the portfolio with new launches. During the year locally relevant propositions were launched across several markets, targeting a younger consumer base for whom relevance is increased with natural based propositions.  We launched Tums + Sleep in the US, a melatonin-containing chewy bite product that addresses heartburn and helps consumers fall asleep. In India, we targeted younger consumers to Eno through Eno Chewy Bites which we launched in June through our online channel.

Marketing effectiveness

Haleon Advertising and Promotion (A&P) spend was up 4.7% at actual exchange rates (AER) and 4.0% at constant currency for the half, with spend equally split between offline and online media channels.  A&P spend benefitted from bringing production in-house and ceasing advertising in Russia.

Marketing to Healthcare professionals strengthened with Haleon’s HealthPartner portal, an online hub for healthcare professionals launched in 2019 in one market and now scaled globally to 50 markets. During the first half, we scaled more engagements with this platform and know from our analytics this helps secure more recommendations. A recent study in the US showed that experts who have engaged on the portal recommend our toothpaste about 30% more than those who haven’t.

Beyond this, we continued to roll out Otrivin “Actions to Breathe Cleaner” campaign where Haleon collects pollution by-products and uses them to make certified non-toxic pencils for underprivileged children in India. This initiative has cleaned over 8 billion cubic feet of air to date and driven over 240m impressions through earned media and won a number of marketing awards including Campaign of the Year and Gold Award (environmental category) at the Campaign PR Awards Asia.

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Interim results announcement

Six months ended 30 June 2023

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Increased channel penetration

Within channels there remains an opportunity for increased e-commerce penetration. e-commerce represented 9% of Haleon’s sales year to date. Improved content, optimised media, increased investment in high traffic events such as China contributed to growth. In China, one of Haleon’s largest e-commerce markets, sales grew double digit with strong Sensodyne performance during the 618 shopping festival.

Maintain strong execution and financial discipline

We fuel our growth agenda through strong execution and disciplined cost management. In combination with sales growth, this approach enables us to free up resources for reinvestment, while creating value for our stakeholders.

Haleon continued to focus on driving value from third-party expenditure and offset headwinds from input prices and commodity inflation through a combination of forward buying, value engineering and new supplier introductions.

Haleon managed to largely offset inflationary cost pressures in the half through a combination of pricing and other initiatives. However, this combined with transactional foreign exchange losses, resulted in gross profit and adjusted gross profit each of £3.6bn, gross profit margin of 61.9% and adjusted gross profit margin across the business being down 50bps at AER and 70bps constant currency to 62.3%.

Additionally, initiatives were put in place to ensure Haleon was able to meet demand from consumers. For example, in China, Fenbid and Contac saw strong growth following the lifting of COVID-19 related restrictions towards the end of 2022 despite tight labour conditions arising from COVID-19 outbreaks. Haleon was able to double its manufacturing output at its Tianjin facility to ensure adequate supplies of these products to Chinese consumers and hospitals. Strong collaboration with partners ensured raw material supply to our facility.

Across the business, Haleon also undertook SKU rationalisation and improved logistics productivity through warehousing and outbound freight consolidation which helped to partially offset freight and distribution cost inflation. Simultaneously, the business continued its insourcing initiatives, improved return on investment on promotional spend and optimised price-pack architecture across the portfolio.

During the half, we made good progress on our programme to increase agility and productivity across the business with implementation now underway. This is expected to result in annualised gross cost savings of c. £300 million over the next three years, with the benefits largely expected in FY 2024 and FY 2025.

Separately, consistent with our strategy to be proactive in managing our portfolio, Haleon reached an agreement with Karo Healthcare AB for the disposal of our rights to Lamisil topical for a total consideration of £235 million. Including working capital to be released, the total cash realised from the disposal is expected to be around £250 million. This disposal will also simplify Haleon’s portfolio and allow us to reallocate resources to other drivers of Haleon’s growth. The transaction is expected to complete in Q4 2023. Proceeds from the disposal will be used to pay down debt, underpinning our confidence to de-lever to net debt/Adjusted EBITDA below 3x during 2024.

In July, it was announced that Haleon had reached a licensing agreement with Futura Medical to exclusively commercialise the first FDA approved topical erectile dysfunction (ED) treatment for OTC use in US.

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Interim results announcement

Six months ended 30 June 2023

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At the demerger in July 2022, Haleon had total borrowings of £11,765m and net debt of £10,707m, representing leverage of around 8x total borrowings/profit after tax and 4x net debt/Adjusted EBITDA. Strong cash generation and Adjusted EBITDA growth since then, resulted in Haleon closing the first half with total borrowings of £9,865m and leverage of 7.6x total borrowings/profit after tax and 3.4x net debt/Adjusted EBITDA. Net debt at 30 June 2023 stood at £9,525m. As debt is largely matched to the regions where profit is earned, there is a natural hedge on foreign exchange movements over time.

Run a responsible business

Running a responsible business is one of our strategic priorities. We deliver our strategy through three interconnected focus areas: our commitment to making everyday health more inclusive, reducing our environmental impact, and operating with ethical, responsible, and transparent behaviours and standards of conduct. In March, the Board established an Environmental & Social Sustainability Committee to focus on this important area for Haleon.

Progressing against existing environmental targets

We aim to reduce our Scope 3 carbon emissions from source to sale by 42% by 2030, based on a 2020 baseline. To achieve this, we are working with our suppliers to accelerate their transition to renewable electricity, since purchased goods and services account for 56% of Haleon’s carbon emission footprint across Scope 1, 2 and 3. We held our first Supplier Sustainability Summit as Haleon with approximately 200 attendees, to share more about our Responsible Business goals and set clear expectations with our suppliers.

We are also working to make our packaging more sustainable, including our aim to reduce our use of virgin petroleum-based plastic by 10% by 2025, and a third by 2030. As part of this effort, we are exploring the use of pulp-based alternatives to plastic. We are now working with the Bottle Collective to explore the feasibility and co-development of cellulose-based technologies as alternatives to virgin petroleum-based plastics for the packaging of consumer health products. The Bottle Collective, led by PA Consulting and PulPac, has a mission to tackle single-use plastic waste by industrialising a recyclable high-speed, low-cost Dry Molded Fiber bottle process.

We are on track for all product packaging to be recycle-ready by 2025 where safety, quality and regulations permit. We continue to roll-out our recycle-ready toothpaste tubes globally and by the end of this year we expect to have launched around 1 billion tubes in market since our roll out began in 2021, two years ahead of our plan to reach this milestone in 2025.

Opportunity to make a difference with health inclusivity

Haleon aims to empower 50 million people a year to be more included in opportunities for better everyday health by 2025. Several examples in H1 2023 demonstrate the work Haleon brands are doing to translate this ambition into action. Through our Panadol brand, we’ve partnered with the Indonesian healthcare app Halodoc to set up a mobile clinic, Panadol Klinik Cekatan. We’ve extended this programme to create the Panadol Pain Phone, a telemedicine unit which connects health professionals to people with limited healthcare access. Designed to bridge the distance between rural communities and medical experts, the Panadol Pain Phone provides a video screen for face-to-face interactions, as well as sensors that measure metrics such as heart rate, blood pressure, temperature, and oxygen levels.

Voltaren in the US launched a campaign aimed at helping caregivers prioritise their own physical health and movement. The brand launched the ‘Acts of Care’ campaign, based on the idea that when caregivers

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Interim results announcement

Six months ended 30 June 2023

Graphic

hear from a loved one, it increases their overall wellbeing. Brain mapping shows a 36% increase in wellbeing in caregivers after they hear from a loved one about their value. This was measured with Emotiv EEG headsets, which measured well-being based on brain wave changes in levels of stress, relaxation, excitement, engagement, and attention. The campaign website also has advice for caregivers, to support their own physical and mental health.

Our work to help improve health inclusivity is being recognised. The Health Inclusivity Index was awarded Best Data Visualisation at this year’s Webby Awards, which honour excellence on the Internet. Haleon supported Economist Impact in the publication of the Health Inclusivity Index in 2022, which was recognised this year for demonstrating best in class use of data visualisation by representing complex datasets in innovative, visually appealing and easily comprehensible ways.

Operational review

Category performance

Revenue by product category for the six months ended 30 June 2022 and 2023:

Revenue (£m)

Revenue change (%)

    

2023

    

2022

    

Reported

    

Organic1

  

Oral Health

1,589

    

1,438

    

10.5

%  

10.8

%

VMS

816

816

(0.5)

%

Pain Relief

1,405

1,248

12.6

%  

12.9

%

Respiratory Health

839

683

22.8

%  

22.0

%

Digestive Health and Other

1,089

1,003

8.6

%  

7.7

%

Group revenue

5,738

5,188

10.6

%  

10.4

%

1.Definitions and calculations of non-IFRS measures can be found on pages 29 to 37

All commentary below refers to organic revenue growth unless otherwise stated.

Key category performance was as follows:

Oral Health

Revenue was £1,589m (H1 2022: £1,438m), a growth of 10.5% on a reported basis (including the effect of exchange rates (0.3)%) and 10.8% on an organic basis, with all 3 Power Brands delivering robust growth and up double digit. Sensodyne was driven by growth in North America, Middle East & Africa, and India. Parodontax benefitted from particularly healthy growth in Middle East and Africa. Denture Care growth was driven by strong performance from innovations such as Polident Max Hold +.

VMS

Revenue was £816m (H1 2022: £816m), flat on a reported basis (including the effect of exchange ranges +0.4% and the impact of acquisitions: +0.1%). Organic revenue slightly declined at (0.5)%. As expected, Emergen-C declined double digit in North America due to a tough comparative as a result of the COVID-19 Omicron wave last year and as consumers changed behaviour in this category following normalisation of conditions post COVID-19. Centrum increased low-single digit due to a difficult comparative from trade sell-in following added capacity coming on stream last year. The brand was particularly strong in EMEA & LatAm, up double digit, and saw good growth in Asia Pacific where it increased mid-single digit, which partly offset a decline in North America. Caltrate increased mid-single digit driven by a similar level of growth in China.

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Interim results announcement

Six months ended 30 June 2023

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Pain Relief

Revenue was £1,405m (H1 2022: £1,248m), a growth of 12.6% on a reported basis (including the effect of exchange rates (0.1)%, the impact of acquisitions +0.3% and disposals of (0.5)%).  Organic revenue growth of 12.9% was largely driven by very strong growth from Fenbid in China following the end of lockdowns in Q4 2022. Advil grew mid-single digit overall. Panadol, up high-single digit, was underpinned by strong performance in Middle East & Africa, Australia and Central & Eastern Europe. Voltaren increased mid-single digit due to strength in the US, Central and Eastern Europe, Italy and India.

Respiratory Health

Revenue was £839m (H1 2022: £683m), a growth of 22.8% on a reported basis (including the effect of exchange rates +0.8%). Organic revenue increased 22.0% given a strong cold and flu season in the first quarter, combined with re-stocking in EMEA and LatAm, and North America given particularly low inventory levels at the end of last year. Allergy sales increased mid-single digit. Theraflu and Otrivin both increased double digit with strength in Central & Eastern Europe and Middle East & Africa. Contac sales almost doubled, driven by growth in China following the end of lockdowns in Q4 2022.

Digestive Health and Other

Revenue was £1,089m (H1 2022: £1,003m), a growth of 8.6% (including the effect of exchange rates: +0.9%). Organic revenue was up 7.7% with Digestive Health up mid-single digit underpinned by mid-teens growth in Tums and Benefiber, and mid-single digit growth in Eno. Smokers Health revenue increased mid-single digit and Skin Health brands increased mid-single digit driven by Fenistil.

Geographical segment performance

Performance by geographical segment for the six months ended 30 June:

Revenue (£m)

Revenue change (%)

    

2023

    

2022

    

Reported

    

Organic1

Price1

    

Vol/Mix1

North America

2,046

1,873

9.2

%  

4.7

%  

4.7

%  

%

EMEA and LatAm

2,323

2,069

12.3

%  

14.9

%  

13.3

%  

1.6

%

APAC

1,369

1,246

9.9

%  

11.6

%  

2.3

%  

9.3

%

Group

5,738

5,188

10.6

%  

10.4

%  

7.5

%  

2.9

%

1.Price and Volume/Mix are components of Organic Revenue Growth. Definitions and calculations of non-IFRS measures can be found on pages 29 to 37.

Adjusted operating profit by geographical segment for the six months ended 30 June:

Adjusted operating
profit (£m)

YoY change

YoY constant
currency1

    

2023

    

2022

    

2023

    

2023

  

Group operating profit

1,141

900

26.8

%  

29.9

%

Reconciling items between adjusted operating profit and operating profit2

130

291

(55.3)

%  

(56.0)

%

Group Adjusted operating profit

1,271

1,191

6.7

%  

8.9

%

North America

471

454

3.7

%  

(2.0)

%

EMEA and LatAm

542

467

16.1

%  

17.6

%

APAC

318

300

6.0

%  

9.7

%

Corporate and other unallocated

(60)

(30)

100.0

%  

(13.3)

%

Group Adjusted operating profit

1,271

1,191

6.7

%  

8.9

%

1.Definitions and calculations of non-IFRS measures can be found on pages 29 to 37.
2.Reconciling items for these purposes are the Adjusting Items, which are defined under Use of Non-IFRS Measures. A reconciliation between Operating profit and Adjusted operating profit is included under Use of Non-IFRS Measures.

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Adjusted operating profit margin by geographical segment for the six months ended 30 June:

Adjusted operating
profit margin (%)

YoY change

YoY constant
currency1

    

2023

    

2022

    

2023

    

2023

  

North America

23.0

%  

24.2

%  

(1.2)

%  

(1.5)

%

EMEA and LatAm

23.3

%  

22.6

%  

0.7

%  

0.5

%

APAC

23.2

%  

24.1

%  

(0.9)

%  

(0.5)

%

Group1

22.2

%  

23.0

%  

(0.8)

%  

(0.4)

%

1.

Definitions and calculations of non-IFRS measures can be found on pages 29 to 37.

2.

Reconciling items for these purposes are the Adjusting Items, which are defined under Use of Non-IFRS Measures. A reconciliation between Operating profit and Adjusted operating profit is included under Use of Non-IFRS Measures.

North America

Revenue was £2,046m (H1 2022: £1,873m), a growth of 9.2% on a reported basis (including exchange rate impact of +4.5%) and +4.7% on an organic basis. Organic growth comprised of 4.7% price and flat volume/mix.
Drivers of revenue at CER (excluding the impact of adverse impact of foreign exchange movements) included Oral Health where revenue up high-single digit largely driven by strong demand for Sensodyne, up double digit underpinned by continued innovation driving market share gains.
VMS – revenue down double digit due to lapping capacity coming on stream in 2022. Emergen-C declined double digit given tough comparative in H1 2022 due to the Omicron wave. Centrum declined high-single digit due to added capacity in the prior year comparative.
Pain Relief – high-single digit revenue growth underpinned by Advil growth benefitting from price increases and market activation. Excedrin up double digit helped by innovation. Voltaren up double digit.
Respiratory Health – revenue grew double digit due to high incidence of cold and flu during Q1 and a shortage of cold/flu products in Canada. Robitussin up double digit helped by cold and flu in the first quarter. Flonase was flat given a softer allergy season.
Digestive Health and Other – revenue up low-single digit with strong demand in Tums following a restock at the start of the year as well as pricing. Nexium declined high-single digit. Smokers Health grew low-single digit. Skin Health revenues declined low-double digit due to a decline in Abreva and Chapstick.
Adjusted operating profit increased 3.7% and declined 2.0% at constant currency. Adjusted operating profit margin declined by 120bps at AER and 150bps at constant currency to 23.0%. Constant currency margin decline was driven by phasing of costs incurred as a standalone company, inflationary cost pressures along with increased costs to meet unexpected volatility in demand.  This was partially offset by pricing, efficiencies and strong cost management.

Europe, Middle East & Africa (EMEA) and Latin America (LatAm)

Revenue was £2,323m (H1 2022: £2,069m), a growth of 12.3% on a reported basis (including the impact of foreign exchange of (2.3)% and disposals of (0.3)%). Organic revenue growth was +14.9%, with 13.3% price and 1.6% volume/mix.
There was a c.3% benefit to both Q2 and H1 2023 revenue, from pricing in Turkey and Argentina which impacted the overall Group by c.1%.
Drivers of revenue at CER (excluding the impact of foreign exchange movements) and organic growth included Oral Health which saw double digit revenue growth with double digit growth in both Sensodyne and parodontax underpinned by the launch of parodontax Active Gum Repair in EMEA. Denture care performed well, also up double digit following the launch of Max Hold + Comfort in Europe.

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VMS – revenue up mid-single digit driven by double digit growth in Centrum with strong growth in Latin America supported by entry into new markets including Egypt towards the end of 2022. This was partly offset by a decline in Calsource.
Pain Relief – high-single digit growth largely reflecting double-digit Panadol growth. Voltaren grew mid-single digit.
Respiratory Health – revenue up double digit due to a prolonged strong cold and flu season significantly ahead of 2019 levels supported by strength in Theraflu and Otrivin.
Digestive Health and Other – revenue up double digit with good results in all categories.
Geographically, Latin America, Central & Eastern Europe, Middle East & Africa, and Southern Europe saw double digit revenue growth. Northern Europe and Germany were up high-single digit and mid-single digit respectively.
Adjusted operating profit increased 16.1% and 17.6% at constant currency. Adjusted operating profit margin increased by 70bps at AER to 23.3% or 50bps at constant currency largely driven by pricing, strong growth and efficiencies across the business. This offset phasing of costs incurred as a standalone company, cost inflation and adverse transactional foreign exchange.

Asia-Pacific

Revenue was £1,369m (H1 2022: £1,246m), a growth of 9.9% on a reported basis (including exchange impact of (2.0)%, the impact of MSAs (0.1)% and acquisitions of +0.4%). Organic revenue growth was +11.6%, with 2.3% price and 9.3% volume/mix.
Drivers of revenue at CER (excluding the impact of adverse foreign exchange) included Oral Health which saw mid-single digit revenue growth with strength across Sensodyne underpinned by penetration and premiumisation particularly in India and Japan. New innovation launches across Poligrip helped drive double digit growth in Denture Care.
VMS – increased mid-single digit with Centrum up mid-single digit helped by new innovation including gender formulations and pricing in China. Caltrate was also up mid-single digit led by demand in China, pricing and new innovations such as Bone 50+ in Taiwan.
Pain Relief – double digit revenue growth largely driven by Fenbid in China due to the easing of restrictions and COVID-19 related demand in the region. Panadol was flat primarily due to the high comparison base from Omicron wave related demand in 2022.
Respiratory Health – revenue grew double digit helped by COVID-19 related demand in China. In particular, Contac sales more than doubled driving growth in the category in the region.
Digestive Health and Other – revenue flat with strength in Skin Health partly offset by a lower than expected sell-out by Eno in India.
Performance in China was particularly strong, up double digit reflecting strong demand following the easing of COVID-19 related restrictions, and subsequent rise in COVID-19 cases, which benefited Pain Relief and Respiratory Health. India and Japan saw high-single digit growth with Australia up mid-single digit. South East Asia saw low-single digit growth as it lapped strong comparatives in the prior year.
Adjusted operating profit increased 6.0% and 9.7% at constant currency. Adjusted operating profit margin decreased by 90bps at AER to 23.2% and 50bps at CER. The margin decline reflected higher cost inflation and phasing of costs incurred to be a standalone company, more than offsetting cost management and positive operating leverage from strong revenue growth.

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Interim results announcement

Six months ended 30 June 2023

Graphic

Summary of financial performance (unaudited)

Income statement summary

Six months ended 30 June

    

2023

    

2022

    

%

£m

£m

change

Total revenue

5,738

5,188

10.6

Gross profit

3,550

3,211

10.6

Adjusted gross profit1

3,577

3,258

9.8

Operating profit

1,141

900

26.8

Adjusted operating profit1

1,271

1,191

6.7

Profit before tax

960

864

11.1

Adjusted profit before tax1

1,090

1,155

(5.6)

Profit after tax attributed to shareholders of the Group

687

517

32.9

Adjusted profit after tax attributed to shareholders of the Group1

791

883

(10.4)

Diluted earnings per share2

Reported (p)

7.4

5.6

32.1

Adjusted1 (p)

8.5

9.6

(11.5)

1.

Definitions and calculations of non-IFRS measures can be found on pages 29 to 37.

2.

Earnings per share calculation for the period ended 30 June 2022 has been adjusted retrospectively as required by IAS 33 ‘Earnings per share’ due to the increase in the number of ordinary shares outstanding as a result of the demerger activities that took place in July 2022. Diluted earnings per share for the period ended 30 June 2023 has been calculated after adjusting the weighted average number of shares used in the basic calculation to assume the conversion of all potential dilutive shares.

Revenue

Revenue increased 10.6% to £5,738m (H1 2022: £5,188m). Favourable foreign exchange added £11m to total revenue for the half year. This included a translational foreign exchange benefit of £99m in the first quarter which largely reversed in the second quarter to £(88)m as Sterling strengthened against a broad set of currencies. Revenue grew 10.4% organically for H1 2023.

Gross profit

Reported gross profit increased by 10.6% to £3,550m (H1 2022: £3,211m) with gross margin flat at 61.9%. Adjusted gross profit increased by 9.8% to £3,577m (H1 2022: £3,258m) with Adjusted gross margin of 62.3% (H1 2022: 62.8%).

Adjusted gross profit margin was driven by pricing and ongoing supply chain, and manufacturing efficiency benefits. This helped offset higher commodity related costs and cost inflation with the decline in margin largely driven by transactional foreign exchange losses.

Operating profit

Operating profit increased by 26.8% to £1,141m (H1 2022: £900m) and operating profit margin increased 260bps to 19.9% (H1 2022: 17.3%). Adjusted operating profit increased by 6.7% to £1,271m (H1 2022: £1,191m) and Adjusted operating profit margin at AER declined 80bps and 40bps at CER to 22.2%.

Adjusting items within operating profit totalled £130m in H1 2023 (H1 2022: £291m) and included Separation and Admission Costs of £60m (H1 2022: £229m) representing the tail end of costs relating to separating the business from GSK and listing in July 2022. Amortisation and impairment of intangible assets was £23m (H1 2022: £40m). We incurred restructuring costs of £30m (H1 2022: £20m) largely relating to restructuring associated with our programme to increase productivity and agility. Disposals and others totalled £10m (H1 2022: £2m). Transaction related costs were £7m (H1 2022: nil).

13

Interim results announcement

Six months ended 30 June 2023

Graphic

Adjusted operating profit growth was driven by strong revenue growth partly offset by higher commodity and raw material costs, cost inflation, and phasing of costs related to operating as a standalone company.

During H1 2023, A&P spend was up 4.7% and 4.0% at CER representing 18.4% of revenue (H1 2022: 19.4%). A&P spend benefitted from bringing production in-house and ceasing advertising in Russia.

R&D expenditure for H1 2023 was £142m (H1 2022: £136m). Adjusted R&D expenditure totalled £141m, up 2.9% and 1.5% at CER (H1 2022: £137m).

Net finance costs

Net finance costs were £181m (H1 2022: £36m). This reflected finance costs of £219m primarily related to the issuance of £9.2bn in notes in March 2022 and finance income of £38m. In H1 2022, Haleon received interest income of £43m mainly related to the on-lend of funds to GSK Group and Pfizer Group before the demerger which did not occur in H1 2023.

Tax charge

The statutory tax charge of £230m (H1 2022: £320m) represented an effective tax rate on IFRS results of 24% (H1 2022: 37%). The H1 2022 tax charge included a £104m non-cash charge due to the revaluation of US deferred tax liabilities given the increase in the blended rate of US state taxes expected to apply as a result of the demerger. The tax charge on an Adjusted basis was £256m (H1 2022: £245m) and the effective tax rate on an Adjusted basis was 23% (H1 2022: 21%).

Profit after tax

Profit after tax attributable to shareholders of the Group was £687m (H1 2022: £517m), and Adjusted profit after tax attributable to shareholders was £791m (H1 2022: 883m), down 10.4% and 7.8% (CER). The decline is largely driven by the annualisation of interest costs and the higher tax rate described above which more than offset growth in Adjusted operating profit.

This resulted in diluted earnings per share of 7.4p (H1 2022: 5.6p) and adjusted diluted earnings per share of 8.5p (H1 2022: 9.6p).

Net capital expenditure

Net capital expenditure of £133m (H1 2022: £88m) included £144m (H1 2022: £92m) related to the purchase of PP&E and intangible assets. Proceeds from disposals of intangible assets was £11m (H1 2022: £3m). There were no proceeds from the sale of PP&E (H1 2022: £1m).

Net debt

At 30 June 2023, the Group’s net debt was £9,525m.  Net debt is calculated as follows:

    

As at 30 June
2023

    

As at 31 December
2022

 

£m

£m

Cash and cash equivalents

490

684

Short-term borrowings

(1,097)

(437)

Long-term borrowings

(8,768)

(10,003)

Derivative financial assets

64

94

Derivative financial liabilities

(214)

(206)

Net Debt

(9,525)

(9,868)

14

Interim results announcement

Six months ended 30 June 2023

Graphic

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE (unaudited)

2023

2022

Notes

£m

£m

                             

                             

Revenue

2

5,738

5,188

Cost of sales

(2,188)

(1,977)

Gross profit

3,550

3,211

Selling, general and administration

(2,262)

(2,179)

Research and development

(142)

(136)

Other operating (expense)/income

(5)

4

Operating profit

2

1,141

900

Finance income

38

43

Finance expense

(219)

(79)

Net finance costs

(181)

(36)

Profit before tax

960

864

Income tax

5

(230)

(320)

Profit after tax for the period

730

544

Profit attributable to shareholders of the Group

687

517

Profit attributable non-controlling interests

43

27

Basic earnings per share (pence)

7

7.4

5.6

Diluted earnings per share (pence)

7

7.4

5.6

15

Interim results announcement

Six months ended 30 June 2023

Graphic

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE (unaudited)

2023

2022

£m

£m

                             

                             

Profit after tax for the period

730

544

Other comprehensive income for the period

Items that may be subsequently reclassified to income statement:

Exchange movements on overseas net assets

(385)

690

Exchange movements on overseas net assets of non-controlling interests

(9)

(1)

Fair value movements on cash flow hedges

(1)

197

Reclassification of cash flow hedges to the income statement

(11)

(6)

Related tax on items that may be subsequently reclassified to the income statement

3

(48)

(403)

832

Items that will not be reclassified to income statement:

Remeasurement gains on defined benefit plans

9

138

Related tax on items that will not be reclassified to the income statement

2

(31)

11

107

Other comprehensive (expenses)/income net of tax for the period

(392)

939

Total comprehensive income net of tax for the period

338

1,483

Total comprehensive income for the period attributable to:

Shareholders of the Group

304

1,457

Non-controlling interests

34

26

Total comprehensive income, net of tax for the period

338

1,483

16

Interim results announcement

Six months ended 30 June 2023

Graphic

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT (unaudited)

30 June
2023

31 December
2022

Notes

£m

£m

                             

                             

Non-current assets

Property, plant and equipment

1,718

1,757

Right of use assets

129

142

Intangible assets

27,674

28,436

Deferred tax assets

241

220

Post-employment benefit assets

39

25

Derivative financial instruments

8

48

44

Other non-current assets

113

132

Total non-current assets

29,962

30,756

Current assets

Inventories

1,501

1,348

Trade and other receivables

2,045

1,881

Cash and cash equivalents

490

684

Derivative financial instruments

8

16

50

Current tax receivables

150

96

Total current assets

4,202

4,059

Total assets

34,164

34,815

Current liabilities

Short-term borrowings

9

(1,097)

(437)

Trade and other payables

(3,510)

(3,621)

Derivative financial instruments

8

(29)

(31)

Current tax payable

(297)

(210)

Short-term provisions

(54)

(71)

Total current liabilities

(4,987)

(4,370)

Non-current liabilities

Long-term borrowings

9

(8,768)

(10,003)

Deferred tax liabilities

(3,439)

(3,601)

Post-employment benefit obligations

(160)

(161)

Derivative financial instruments

8

(185)

(175)

Long-term provisions

(36)

(26)

Other non-current liabilities

(22)

(22)

Total non-current liabilities

(12,610)

(13,988)

Total liabilities

(17,597)

(18,358)

Net assets

16,567

16,457

Equity

Share capital

10

92

92

Other reserves

(11,546)

(11,537)

Translation reserve

661

1,046

Retained earnings

27,243

26,730

Shareholders’ equity

16,450

16,331

Non-controlling interests

117

126

Total equity

16,567

16,457

17

Interim results announcement

Six months ended 30 June 2023

Graphic

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE (unaudited)

Non-

Share

Share

Other

Translation

Retained

Shareholders'

controlling

Total

capital

premium

reserves

reserve

earnings

equity

interests

equity

Notes

£m

£m

£m

£m

£m

£m

£m

£m

At 1 January 2023

92

(11,537)

1,046

26,730

16,331

126

16,457

Profit after tax

687

687

43

730

Other comprehensive (expenses)/income

(9)

(385)

11

(383)

(9)

(392)

Total comprehensive (expenses)/income

(9)

(385)

698

304

34

338

Distributions to non-controlling interests

(43)

(43)

Dividends to equity shareholders

6

(222)

(222)

(222)

Share-based incentive plans

36

36

36

Other

1

1

1

At 30 June 2023

92

(11,546)

661

27,243

16,450

117

16,567

At 1 January 2022

1

(11,632)

448

37,538

26,355

125

26,480

Profit after tax

517

517

27

544

Other comprehensive income/(expenses)

143

690

107

940

(1)

939

Total comprehensive income

143

690

624

1,457

26

1,483

Distributions to non-controlling interests

(47)

(47)

Dividends to equity shareholders

6

(873)

(873)

(873)

Issue of share capital of the former ultimate holding company

21,758

21,758

21,758

Capital reduction of the former ultimate holding company

(21,758)

(21,758)

(21,758)

Transactions between the former ultimate holding company and equity shareholders1

70

(64)

(56)

(50)

(50)

Other

6

6

6

At 30 June 2022

1

70

(11,553)

1,138

37,239

26,895

104

26,999

1.Equity shareholders refer to GSK and Pfizer, which held equity interests of 68% and 32% in the Group respectively prior to the demerger.

18

Interim results announcement

Six months ended 30 June 2023

Graphic

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE (unaudited)

2023

2022

Notes

£m

£m

Cash flows from operating activities

Profit after tax

730

544

Taxation charge

5

230

320

Net finance costs

181

36

Depreciation of property, plant and equipment and right of use assets

98

82

Amortisation of intangible assets

54

50

Impairment and assets written off, net of reversals

6

23

Loss/(gain) on sale of intangible assets, property, plant and equipment and businesses

7

(3)

Other non-cash movements

31

6

Decrease in pension and other provisions

(7)

(44)

Changes in working capital:

Increase in inventories

(194)

(153)

Increase in trade receivables

(159)

(92)

Increase in trade payables

103

144

Net change in other receivables and payables

(97)

(95)

Taxation paid

(234)

(138)

Net cash inflow from operating activities

749

680

Cash flows from investing activities

Purchase of property, plant and equipment

(122)

(78)

Proceeds from sale of property, plant, and equipment

1

Purchase of intangible assets

(22)

(14)

Proceeds from sale of intangible assets

11

3

Purchase of businesses, net of cash acquired

(71)

Loans to related parties

(9,211)

Proceeds from settlement of amounts invested with GSK finance companies

700

Interest received

16

12

Net cash outflow from investing activities

(188)

(8,587)

Cash flows from financing activities

Payment of lease liabilities

(25)

(17)

Interest paid

(220)

(4)

Dividends paid to shareholders

6

(222)

(873)

Distributions to non-controlling interests

(43)

(47)

Contribution from parent

18

Repayment of borrowings

9

(245)

(11)

Proceeds from borrowings

9

156

9,241

Other financing cash flows

(79)

239

Net cash (outflow)/inflow from financing activities

(678)

8,546

(Decrease)/increase in cash and cash equivalents and bank overdrafts

(117)

639

Cash and cash equivalents and bank overdrafts at the beginning of the period

611

406

Exchange adjustments

(33)

22

Decrease in cash and cash equivalents and bank overdrafts

(117)

639

Cash and cash equivalents and bank overdrafts at the end of the period

461

1,067

Cash and cash equivalents and bank overdrafts at the end of the period comprise:

Cash and cash equivalents

490

1,334

Overdrafts

(29)

(267)

Cash and cash equivalents and bank overdrafts at the end of the period

461

1,067

19

Interim results announcement

Six months ended 30 June 2023

Graphic

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023 (unaudited)

1 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Haleon plc (the Company) and its subsidiary undertakings (collectively, the Group) is a global leader in consumer health, with brands trusted by millions of consumers globally. Haleon’s product portfolio spans five major categories – Oral Health, Vitamins, Minerals and Supplements (VMS), Pain Relief, Respiratory Health, Digestive Health and Other. Its long-standing brands – such as Advil, Sensodyne, Panadol, Voltaren, Theraflu, Otrivin, Polident, parodontax and Centrum – are built on trusted science, innovation and deep human understanding.

Haleon is a public company limited by shares, incorporated under the laws of England and Wales with registered number of 13691224. The Company has ordinary shares with a nominal value of £0.01 per share. The Group’s shares are listed and traded on the London Stock Exchange (LSE) with American Depositary Shares (ADSs) listed on the New York Stock Exchange (NYSE) (LSE/NYSE: HLN). The registered address of the Company is Building 5, First Floor, The Heights, Weybridge, Surrey, KT13 0NY, United Kingdom.

The condensed consolidated interim financial statements (interim financial statements) of the Group for the six months to 30 June 2023 have been prepared in accordance with IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Standards as adopted by the United Kingdom (UK IFRS). These condensed consolidated interim financial statements, which are unaudited, do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s consolidated financial statements and related notes as at and for the year ended 31 December 2022, which are available on the Company’s website. The annual financial statements of the Group for the year ended 31 December 2022 have been prepared in accordance with the International Financial Reporting Standards as adopted by the United Kingdom (UK IFRS) and in compliance with the International Financial Reporting Standards as issued by the IASB (IASB IFRS).

The condensed consolidated interim financial statements do not include all of the information required for a complete set of IFRS financial statements. However, selected notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the publication of the Group’s consolidated financial statements.

All accounting policies for recognition, measurement, consolidation and presentation are as outlined in the Group’s consolidated financial statements and these accounting policies are applied consistently in preparation of the condensed consolidated interim financial statements. The condensed consolidated interim financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments, and are presented in Pounds Sterling, the presentation currency of the Group.

The comparative figures for the financial year ended 31 December 2022 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

20

Interim results announcement

Six months ended 30 June 2023

Graphic

Exchange rates

The Group operates in many countries and earns revenues and incurs costs in many currencies. The results of the Group, as reported in Sterling, are affected by movements in exchange rates between Sterling and other currencies. Average exchange rates prevailing during the period, as modified by specific transaction rates for large transactions, are used to translate the results and cash flows of overseas subsidiaries into Sterling. Period-end rates are used to translate the net assets of those entities. The principal currencies and relevant exchange rates in the key markets where the Group operates are shown below.

Average rates

Period-end rates

Six months ended 30 June 2023

Six months ended 30 June 2022

As at
30 June 2023

As at
31 December 2022

USD/£

1.23

1.30

1.26

1.20

Euro/£

1.14

1.19

1.17

1.13

CNY/£

8.59

8.38

9.19

8.31

Going concern

The Directors have reviewed the Group’s cash flow forecasts, financial position and exposure to principal risks and have formed the view that the Group will generate sufficient cash to meet its ongoing requirements for at least 12 months from the date the condensed consolidated interim financial statements have been authorised. At 30 June 2023, the Group had cash and cash equivalents, net of bank overdrafts, of £461m and undrawn credit facilities of $1.4bn and £1bn with initial maturity dates of September 2023 and September 2025, respectively. As a result, the Directors believe that it is appropriate to adopt the going concern basis of accounting in preparing the Group’s condensed consolidated interim financial statements.

Judgements and estimates

In preparing the condensed consolidated interim financial statements, management is required to make judgements about when or how items should be recognised in the condensed consolidated interim financial statements and estimates and assumptions that affect the amounts of assets and liabilities, income and expenses reported in the condensed consolidated interim financial statements. Actual amounts and results could differ from these estimates.

The critical areas of accounting estimates and judgements are the same as those disclosed in the published Group consolidated financial statements and related notes as at and for the year ended 31 December 2022.

Recent accounting developments

On 20 June 2023, the UK Finance Bill was substantively enacted in the UK, including legislation to implement the OECD Pillar Two income taxes for periods beginning on or after 1 January 2024. The Group is currently evaluating the future impact of this legislation. On 19 July 2023 the UK Endorsement Board adopted the temporary, mandatory deferred tax exception to IAS 12, as issued by the IASB in May 2023. The exception has been applied and the Group has neither recognised nor disclosed information about deferred tax assets or liabilities relating to Pillar Two income taxes.

Other than the above, new standards or amendments to standards that have been issued by the IASB and are effective from 1 January 2023 were not material to the Group. All new accounting standards, amendments to accounting standards and interpretations that have been published by the IASB and are not effective for 30 June 2023 reporting periods, have not been early adopted by the Group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods.

21

Interim results announcement

Six months ended 30 June 2023

Graphic

2 REVENUE AND SEGMENT INFORMATION

The Group is organised into business units based on geographical areas and has three reportable segments:

-North America
-Europe, Middle East, Africa and Latin America (EMEA and LatAm)
-Asia Pacific (APAC)

No operating segments have been aggregated to form the above reportable operating segments.

The Group’s Commercial Operations Board, which consists of the Group’s CEO, CFO and other members of the senior leadership, is the Chief Operating Decision Maker (CODM) who monitors the operating results of the Group’s reportable segments separately for the purpose of making decisions about resource allocation and performance assessment. The CODM uses a measure of Adjusted operating profit to assess the performance of the reportable segments. Adjusted operating profit is defined as operating profit less net intangible amortisation and impairment of brands, licences, and patents, restructuring costs, transaction-related costs, separation and admission costs, and disposals and others.  The CODM does not review IFRS operating profit or total assets and liabilities on a segment basis.

The composition of these geographical segments is reviewed on an annual basis. Analysis of revenue and Adjusted operating profit by geographical segment is included below:

Six months ended 30 June

2023

2022

Revenue by segment

£m

£m

                             

North America

2,046

1,873

EMEA and LatAm

2,323

2,069

APAC

1,369

1,246

Group revenue

5,738

5,188

Six months ended 30 June

2023

2022

£m

£m

Group operating profit

1,141

900

Reconciling items between Group operating profit and Group Adjusted operating profit1

130

291

Total

1,271

1,191

Six months ended 30 June

2023

2022

£m

£m

North America

471

454

EMEA and LatAm

542

467

APAC

318

300

Corporate and other unallocated

(60)

(30)

Total

1,271

1,191

1.The reconciling items above include:
a)Net amortisation and impairment of intangible assets of £23m (2022: £40m): Amortisation and impairment of intangible assets, excluding computer software and impairment of goodwill net of reversals of impairment.
b)Restructuring costs of £30m (2022: £20m): Expenses related to business transformation activities where the plans are sufficiently detailed and well advanced, and where a valid expectation to those affected has been created.
c)Transaction-related costs of £7m (2022: £nil): Costs related to acquisition of a manufacturing site.
d)Separation and admission costs of £60m (2022: £229m): Costs incurred in relation to and in connection with separation and listing of the Group as a standalone business.
e)Disposals and others of £10m (2022: £2m): Gains and losses on disposals of assets and businesses, tax indemnities related to business combinations and other items.

22

Interim results announcement

Six months ended 30 June 2023

Graphic

The primary products sold by each of the reportable segments consist of Oral Health, Vitamins, Minerals and Supplements, Pain Relief, Respiratory Health, Digestive Health and Other products and the product portfolio is consistent across the reportable segments. Analysis of revenue by product category is included below:

Six months ended 30 June

2023

2022

Revenue by product category

£m

£m

                             

                             

Oral Health

1,589

1,438

Vitamins, Minerals and Supplements

816

816

Pain Relief

1,405

1,248

Respiratory Health

839

683

Digestive Health and Other

1,089

1,003

Group revenue

5,738

5,188

3 IMPAIRMENT REVIEW

In 2022, the Group recorded an impairment charge of £111m for Preparation H since the carrying value of the brand was higher than the recoverable amount. In June 2023, if the discount rate for Preparation H was 0.25% higher or the revenue growth rate, including long term growth rate, was 0.25% lower than management’s estimates respectively, the Group would have to recognise a further impairment of £49m or £43m respectively. There has been no change in circumstances since the year-end that would cause management to revise their view of this impairment.

In addition, Robitussin, continues to be sensitive to reasonably possible changes in key assumptions. The only reasonably possible change in key assumptions that would cause the recoverable amount of Robitussin to be less than or equal to the carrying value would be to increase the discount rate of 6.75% by 1.00%.

Other than as disclosed above, the Directors do not consider that any reasonably possible changes in the key assumptions would cause the fair value less costs of disposal of the individually significant brands to fall below their carrying values.

4 RESTRUCTURING, SEPARATION AND ADMISSION COSTS

Restructuring costs

Restructuring costs include severance and other personnel costs, professional fees, impairments of assets and other related items. The Group’s restructuring costs for the six months ended 30 June 2023 totalled £30m (2022: £20m). Restructuring costs are reported within cost of sales (2023: £3m, 2022: £8m), selling, general and administration (2023: £26m, 2022: £13m) and research and development (2023: £1m, 2022: £(1)m).

Separation and admission costs

Separation and admission costs include costs incurred in relation to and in connection with the separation and listing of the Group as a standalone business. Separation and admission costs for the six months ended 30 June 2023 totalled £60m (2022: £229m). Separation and admission costs are reported within cost of sales (2023: £1m, 2022: £nil) and the selling, general and administration expense (2023: £59m, 2022: £229m).

23

Interim results announcement

Six months ended 30 June 2023

Graphic

5 TAX

For the six months ended 30 June 2023, the income tax expense has been determined based on management’s best estimate of the effective tax rate applicable for the full year. This is then applied to the pre-tax profit of the interim period, with the tax due on adjusting items considered on an item by item basis.

6 DIVIDENDS

Six months ended 30 June

2023
£m

20221
£m

Final dividend for the year ended 31 December of 2.4 pence per ordinary share (2022: nil)

222

1.During the six months ended 30 June 2022, the Group declared and paid dividends to the GSK Group and the Pfizer Group under the Shareholders’ Agreement valid at that time. This included £421 per share for a total amount of £421m on 30 March 2022 and £452 per share for a total amount of £452m on 29 June 2022. These dividends were paid by the former ultimate holding company of GlaxoSmithKline Consumer Healthcare Holdings (No.2) Limited (CHHL2) and were calculated based on CHHL2’s share structure.

An interim dividend of 1.8 pence per share has been declared by the Board and is expected to be paid on 5 October 2023 to the holders of ordinary shares and US American Depositary Shares (ADS).

7 EARNINGS PER SHARE

Six months ended 30 June

2023

2022

Profit after tax attributable to equity shareholders (£m)

687

517

Basic weighted average number of shares (million)

9,234

9,235

Effect of dilutive potential shares (million)

30

Dilutive weighted average number of shares (million)

9,264

9,235

Basic earnings per share (pence)

7.4

5.6

Diluted earnings per share (pence)

7.4

5.6

Basic earnings per share for the six months ended 30 June 2022 has been adjusted retrospectively, as required by IAS 33 ‘Earnings per share’, to reflect the share structure of the Company resulting from the increase in the number of ordinary shares outstanding as a result of the demerger activities that took place in July 2022. As a result, basic earnings per share for the period ended 30 June 2022 has been calculated by dividing the profit attributable to shareholders by the Company’s weighted average number of shares in issue, with 9,234,573,831 shares outstanding upon the completion of the demerger activities.

Diluted earnings per share has been calculated after adjusting the weighted average number of shares used in the basic calculation to assume the conversion of all potentially dilutive shares.

8 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

Financial instruments held at fair value shown according to the fair value hierarchy is provided below. Financial assets and liabilities held at fair value are categorised by the valuation methodology applied in determining their fair value. Where possible, quoted prices in active markets are used (Level 1). Where such prices are not available, the asset or liability is classified as Level 2, provided all significant inputs to the valuation model used are based on observable market data. If one or more of the significant inputs to the valuation model is not based on observable market data, the instrument is classified as Level 3.

24

Interim results announcement

Six months ended 30 June 2023

Graphic

Level 1

Level 2

Level 3

Total

As at 30 June 2023

£m

£m

£m

£m

                             

                             

                             

                             

Financial assets at fair value through profit or loss:

Held for trading derivatives that are not in a designated and effective hedging relationship

28

28

Cash and cash equivalents (money market funds)

4

4

Derivatives designated and effective as hedging instruments:

- fair value hedge

- cash flow hedge

1

1

- net investment hedge

35

35

Total financial assets

4

64

68

Level 1

Level 2

Level 3

Total

As at 30 June 2023

£m

£m

£m

£m

Financial liabilities at fair value through profit or loss:

Held for trading derivatives that are not in a designated and effective hedging relationship

(38)

(38)

Derivatives designated and effective as hedging instruments:

- fair value hedge

(172)

(172)

- cash flow hedge

(3)

(3)

- net investment hedge

(1)

(1)

Total financial liabilities

(214)

(214)

Level 1

Level 2

Level 3

Total

As at 31 December 2022

£m

£m

£m

£m

                             

                             

                             

                             

Financial assets at fair value through profit or loss:

Held for trading derivatives that are not in a designated and effective hedging relationship

90

90

Cash and cash equivalents (money market funds)

10

10

Derivatives designated and effective as hedging instruments:

- fair value hedge

2

2

- cash flow hedge

- net investment hedge

2

2

Total financial assets

10

94

104

Financial liabilities at fair value through profit or loss:

Held for trading derivatives that are not in a designated and effective hedging relationship

(23)

(23)

Derivatives designated and effective as hedging instruments;

- fair value hedge

(139)

(139)

- cash flow hedge

- net investment hedge

(44)