[FY2022 Financial & Operational Highlights](index=1&type=section&id=Haleon%20Full%20Year%20Results%202022) Haleon's first full year as a standalone company demonstrated strong financial performance, strategic outlook, and capital allocation, alongside updates on key legal matters [FY 2022 Key Performance Summary](index=1&type=section&id=FY%202022%20Key%20Performance%20Summary) Haleon reported strong first-year results with significant revenue and profit growth, balanced organic expansion, and robust free cash flow FY 2022 Key Financial Metrics | Financial Metric | 2022 (£m) | Change vs 2021 | | :--- | :--- | :--- | | **Revenue** | 10,858 | +13.8% | | Organic Revenue Growth | 9.0% | - | | - Price Component | 4.3% | - | | - Volume/Mix Component | 4.7% | - | | **Adjusted Operating Profit** | 2,472 | +13.8% (+5.9% at CER) | | Adjusted Operating Profit Margin | 22.8% | Flat YoY | | **Reported Operating Profit** | 1,825 | +11.4% | | **Adjusted Diluted EPS** | 18.4p | +2.8% | | **Free Cash Flow** | 1,579 | +£406m | | **Net Debt** | 9,868 | - | - **Two-thirds** of the business gained or maintained market share in 2022, reflecting strong brand performance and execution[5](index=5&type=chunk)[6](index=6&type=chunk) - Power Brands demonstrated strong performance with **10.1% organic growth**, outpacing overall company growth[5](index=5&type=chunk)[23](index=23&type=chunk) [2023 Outlook & Strategic Initiatives](index=2&type=section&id=Outlook) For FY2023, Haleon anticipates 4-6% organic revenue growth and broadly flat adjusted operating profit margin, alongside plans for c.£300m gross cost savings FY2023 Guidance | Metric | FY2023 Guidance | | :--- | :--- | | Organic Revenue Growth | 4-6% | | Adjusted Operating Profit Margin | Broadly flat (after c.40 bps adverse FX impact) | | Net Interest Expense | c. £350m | | Adjusted Effective Tax Rate | 23-24% | - The company plans to achieve **c.£300 million** in annualised gross cost savings over the **next 3 years**, with benefits primarily realized in **FY2024 and FY2025**[18](index=18&type=chunk) - Haleon will be proactive in managing its portfolio, remaining open to bolt-on acquisitions and divestments[18](index=18&type=chunk) [Shareholder Returns & Capital Allocation](index=2&type=section&id=Dividend) Haleon proposed an inaugural final dividend of 2.4p per share, reflecting a 30% payout ratio, and rapidly reduced net debt, expecting to reach under 3x leverage by 2024 - An inaugural final dividend of **2.4p per share** has been proposed for the trading period since the demerger on July 18, 2022[5](index=5&type=chunk)[13](index=13&type=chunk) - The dividend represents a payout ratio of approximately **30%** of adjusted earnings for the post-listing period, a level the company intends to maintain[13](index=13&type=chunk)[15](index=15&type=chunk) - Net debt was reduced from **£10,707m** at demerger to **£9,868m** by year-end, with confidence in reaching a net debt/Adjusted EBITDA ratio of **under 3x** during **2024**[40](index=40&type=chunk) [Litigation Update](index=2&type=section&id=Update%20on%20litigation) Haleon reached a settlement for the majority of PPI cases, with the financial impact not considered material to the Group's financial position - A settlement was reached to resolve the vast majority of PPI cases (Nexium24HR and Prevacid24HR)[5](index=5&type=chunk)[12](index=12&type=chunk) - The financial impact is not material to the Group's financial position, results of operations, or cash flows[12](index=12&type=chunk) [Business and Operational Review](index=3&type=section&id=Business%20and%20Operational%20Review) Haleon's business review highlights strong performance across product categories and geographies, driven by innovation, marketing, and operational efficiencies post-demerger [Performance by Product Category](index=3&type=section&id=Performance%20by%20Product%20Category) Haleon's portfolio delivered strong results, led by Respiratory Health's exceptional growth, with Pain Relief and Oral Health also showing robust performance Revenue and Growth by Product Category | Product Category | Revenue 2022 (£m) | Reported Growth (%) | Organic Growth (%) | | :--- | :--- | :--- | :--- | | Oral Health | 2,957 | 8.6% | 5.6% | | VMS | 1,675 | 11.6% | 5.0% | | Pain Relief | 2,551 | 14.0% | 8.9% | | Respiratory Health | 1,579 | 39.5% | 32.6% | | Digestive Health and Other | 2,096 | 7.4% | 2.9% | | **Group Total** | **10,858** | **13.8%** | **9.0%** | [Oral Health](index=3&type=section&id=Oral%20Health) Oral Health achieved 5.6% organic growth, driven by market share gains from Sensodyne, parodontax, and Polident/Poligrip, supported by innovation and expansion - Sensodyne delivered **mid-single digit growth**, with strong performance in India and the Middle East & Africa, though sales in China declined due to lockdowns[55](index=55&type=chunk) - parodontax grew **high-single digits**, with low-teens growth in North America, supported by strong consumption and innovation[55](index=55&type=chunk) - Denture care revenue was up **high-single digits**, driven by strong growth in EMEA and LatAm[55](index=55&type=chunk) [Vitamins, Minerals and Supplements (VMS)](index=3&type=section&id=Vitamins,%20Minerals%20and%20Supplements%20(VMS)) VMS grew 5.0% organically, gaining market share, with Centrum showing mid-single digit growth and Emergen-C attracting younger households - Centrum revenue increased **mid-single digits**, with good growth in APAC and EMEA & LatAm[55](index=55&type=chunk) - Emergen-C revenue was up **low-single digits**, benefiting from innovations like Emergen-C Kidz[55](index=55&type=chunk) - A clinical study on Centrum Silver demonstrated positive results on cognitive capabilities in adults 65+, providing a new claim for the product[25](index=25&type=chunk) [Pain Relief](index=3&type=section&id=Pain%20Relief) Pain Relief delivered 8.9% organic growth, with Panadol and Advil as standout performers, benefiting from increased demand during the cold and flu season - Panadol revenue grew **high-teens percent**, with double-digit growth across all three regions[55](index=55&type=chunk) - Advil revenue grew **low-double digits**, benefiting from increased incidences of Flu, Covid, and RSV[55](index=55&type=chunk) - Voltaren revenue grew by a **low-single digit**, with high single-digit growth in the US and mid-single-digit growth in China[55](index=55&type=chunk) [Respiratory Health](index=3&type=section&id=Respiratory%20Health) Respiratory Health saw exceptional 32.6% organic growth due to a severe cold and flu season, significantly contributing to overall Group sales - The strong cold and flu season added **3%** to Group organic sales growth in 2022, with sales up **c.30%** compared to 2019[28](index=28&type=chunk)[55](index=55&type=chunk) - Theraflu and Robitussin revenues grew by **over 50%**, while Otrivin was up **over 30%**[55](index=55&type=chunk) [Performance by Geography](index=5&type=section&id=Performance%20by%20Geography) All geographic segments contributed to growth, with EMEA and LatAm leading, while North America saw significant margin expansion despite overall margin declines in other regions due to standalone costs Revenue, Growth, and Margin by Region | Region | Revenue 2022 (£m) | Organic Growth (%) | Price / Vol-Mix (%) | Adj. Op. Profit Margin (%) | Margin Change (CER) (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | North America | 4,116 | 5.9% | 2.9% / 3.0% | 26.0% | +1.3% | | EMEA and LatAm | 4,270 | 10.9% | 6.4% / 4.5% | 22.9% | -2.0% | | APAC | 2,472 | 10.6% | 2.6% / 8.0% | 20.5% | -1.2% | [North America](index=6&type=section&id=North%20America) North America delivered 5.9% organic revenue growth, driven by Respiratory and Pain Relief, with adjusted operating margin expanding significantly to 26.0% - Respiratory Health grew **mid-thirties percent**, with Cold and Flu sales significantly ahead of 2019 levels[63](index=63&type=chunk) - Pain Relief grew **high-single digits**, led by Advil[63](index=63&type=chunk) - Adjusted operating margin increased to **26.0%** (**+250bps AER**, **+130bps CER**), driven by pricing and productivity[63](index=63&type=chunk) [EMEA and LatAm](index=6&type=section&id=EMEA%20and%20LatAm) EMEA and LatAm achieved strong 10.9% organic revenue growth, broad-based across categories, though adjusted operating margin declined to 22.9% due to standalone costs and FX - LatAm and the Middle East & Africa saw strong **double-digit** revenue growth[63](index=63&type=chunk) - Respiratory Health grew **low-thirties percent** due to a strong cold and flu season[63](index=63&type=chunk) - Adjusted operating margin decreased to **22.9%** (**-190bps AER**, **-200bps CER**), impacted by standalone costs and transactional FX[63](index=63&type=chunk) [Asia-Pacific](index=6&type=section&id=Asia-Pacific) APAC reported 10.6% organic revenue growth, driven by volume/mix and strong performance in South-East Asia, Taiwan, and India, despite a margin decline to 20.5% - Performance in South-East Asia, Taiwan, and India was exceptionally strong, with growth **over 20%**[63](index=63&type=chunk) - Pain Relief revenue grew in the **twenties percent**, led by Panadol[63](index=63&type=chunk) - Adjusted operating margin decreased to **20.5%** (**-100bps AER**, **-120bps CER**) due to increased A&P investment and standalone costs[63](index=63&type=chunk) [Key Growth Drivers and Operational Efficiency](index=3&type=section&id=Key%20Growth%20Drivers%20and%20Operational%20Efficiency) Growth was driven by innovation, marketing, and e-commerce expansion, while operational efficiency was achieved through successful GSK separation and Pfizer transaction synergies - E-commerce grew **16%** to **9%** of total sales, with strong growth in the US (**+7%**) and China (**+40%**)[34](index=34&type=chunk) - Consumer-facing A&P spend (excluding Russia) was up **6% (CER)**, with increased investment in streaming, retail media, and e-commerce search[32](index=32&type=chunk)[33](index=33&type=chunk) - The company successfully separated from GSK, incurring **c.£0.2bn** in standalone costs for the year[36](index=36&type=chunk) - Aggregate annual synergies from the Pfizer transaction reached **over £600m**, an increase from the **£500m** guided at Capital Markets Day[37](index=37&type=chunk) [Corporate Responsibility](index=4&type=section&id=Running%20a%20responsible%20business) Haleon is committed to responsible business practices, making significant progress on environmental sustainability and promoting health inclusivity through strategic initiatives [Environmental Initiatives](index=4&type=section&id=Environmental%20Initiatives) Haleon is on track with environmental goals, achieving 100% renewable electricity and progressing towards 100% recycle-ready packaging by 2025 - On track to reduce Scope 1 and 2 carbon emissions by **100%** by **2030** (vs 2020 baseline)[43](index=43&type=chunk) - Achieved **100%** renewable electricity across all directly controlled Haleon sites in **2022**[43](index=43&type=chunk) - Progressing towards making all product packaging recycle-ready by **2025**, with over **350 million** recycle-ready toothpaste tubes launched in **2022**[44](index=44&type=chunk) [Health Inclusivity](index=4&type=section&id=Health%20Inclusivity) Haleon aims to empower 50 million people annually by 2025 through initiatives like the Health Inclusivity Index and the Microsoft Seeing AI app - The company aims to empower **50 million** people a year by **2025** to be more included in opportunities for better everyday health[45](index=45&type=chunk) - Collaborated with Microsoft on the Seeing AI app to help blind or visually impaired consumers access product label information by scanning barcodes[46](index=46&type=chunk) [Consolidated Financial Statements (unaudited)](index=6&type=section&id=Consolidated%20Financial%20Statements%20(unaudited)) Haleon's consolidated financial statements for FY2022 reflect strong operating cash flow, significant debt assumption post-demerger, and a decline in reported profit after tax [Income Statement](index=6&type=section&id=Income%20statement%20summary) Haleon's FY2022 income statement shows increased revenue and operating profit, but profit after tax and diluted EPS declined due to higher finance costs and tax Consolidated Income Statement Summary | Account | 2022 (£m) | 2021 (£m) | % Change | | :--- | :--- | :--- | :--- | | Revenue | 10,858 | 9,545 | 13.8% | | Gross profit | 6,577 | 5,950 | 10.5% | | Operating profit | 1,825 | 1,638 | 11.4% | | Profit before tax | 1,618 | 1,636 | (1.1)% | | Profit after tax for the year | 1,119 | 1,439 | (22.2)% | | Profit attributable to shareholders | 1,060 | 1,390 | (23.7)% | | Diluted earnings per share (pence) | 11.5p | 15.1p | (23.8)% | [Balance Sheet](index=8&type=section&id=CONSOLIDATED%20BALANCE%20SHEET%20(unaudited)) Haleon's FY2022 balance sheet shows a slight increase in total assets, a substantial rise in liabilities due to new borrowings, and a corresponding decrease in total equity Consolidated Balance Sheet Summary | Account | As at 31 Dec 2022 (£m) | As at 31 Dec 2021 (£m) | | :--- | :--- | :--- | | **Total Assets** | **34,815** | **34,451** | | Intangible assets | 28,436 | 27,195 | | Total current assets | 4,059 | 5,251 | | **Total Liabilities** | **18,358** | **7,971** | | Long-term borrowings | 10,003 | 87 | | Total current liabilities | 4,370 | 4,238 | | **Net Assets** | **16,457** | **26,480** | | **Total Equity** | **16,457** | **26,480** | [Cash Flow Statement](index=10&type=section&id=CONSOLIDATED%20CASH%20FLOW%20STATEMENT%20(unaudited)) Haleon's FY2022 cash flow statement indicates strong operating cash inflow, significant investing outflow due to related party loans, and financing inflow from new borrowings Consolidated Cash Flow Statement Summary | Activity | 2022 (£m) | 2021 (£m) | | :--- | :--- | :--- | | Net cash inflow from operating activities | 2,063 | 1,356 | | Net cash outflow from investing activities | (8,784) | (33) | | Net cash inflow/(outflow) from financing activities | 6,911 | (1,236) | | **Increase in cash and cash equivalents** | **190** | **87** | [Net Debt](index=7&type=section&id=Net%20debt) Haleon's net debt stood at £9,868m at year-end 2022, a significant shift from a net cash position in 2021, primarily due to demerger-related borrowings Net Debt Position | Component | As at 31 Dec 2022 (£m) | As at 31 Dec 2021 (£m) | | :--- | :--- | :--- | | Cash and cash equivalents | 684 | 414 | | Short-term borrowings | (437) | (79) | | Long-term borrowings | (10,003) | (87) | | Derivative financial instruments (Net) | (112) | (2) | | **Net Debt / (Cash)** | **(9,868)** | **246** | [Non-IFRS Measures & Reconciliations](index=11&type=section&id=Use%20of%20non-IFRS%20measures%20(unaudited)) Haleon provides reconciliations for non-IFRS measures like Adjusted Results, Organic Revenue Growth, Adjusted EBITDA, and Free Cash Flow to offer clearer insights into underlying performance [Reconciliation of IFRS to Adjusted Results](index=12&type=section&id=Adjusted%20results) Haleon reconciles IFRS to Adjusted Results by excluding items like separation and restructuring costs to provide a clearer view of underlying operating profit Reconciliation to Adjusted Operating Profit | Reconciliation to Adjusted Operating Profit (£m) | 2022 | 2021 | | :--- | :--- | :--- | | **IFRS Operating Profit** | **1,825** | **1,638** | | Net amortisation and impairment of intangible assets | 172 | 16 | | Restructuring costs | 41 | 195 | | Transaction-related costs | 8 | - | | Separation and Admission costs | 411 | 278 | | Disposals and others | 15 | 45 | | **Adjusted Operating Profit** | **2,472** | **2,172** | - Adjusting items are excluded to enhance comparability and include costs related to restructuring, separation from GSK, transaction costs, and disposals[94](index=94&type=chunk)[96](index=96&type=chunk) [Organic Revenue Growth](index=14&type=section&id=Organic%20revenue%20growth) Organic revenue growth, a non-IFRS measure, excludes currency and M&A impacts, showing Haleon's underlying 9.0% growth for FY2022 Organic Revenue Growth Components | Component (%) | 2022 vs 2021 | | :--- | :--- | | Reported Revenue Growth | 13.8% | | Effect of Exchange Rates | (5.0)% | | Effect of Acquisitions/Disposals/MSAs | (0.2)% | | **Organic Revenue Growth** | **9.0%** | [Adjusted EBITDA](index=15&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA, a key non-IFRS metric, increased to £2,730m in FY2022, providing a measure of operational profitability before non-cash and adjusting items Reconciliation to Adjusted EBITDA | Reconciliation to Adjusted EBITDA (£m) | 2022 | 2021 | | :--- | :--- | :--- | | Profit After Tax | 1,119 | 1,439 | | Add: Tax, Net Interest | 706 | 214 | | **Operating Profit** | **1,825** | **1,638** | | Add: Adjusting Items | 647 | 534 | | **Adjusted Operating Profit** | **2,472** | **2,172** | | Add: D&A and Impairment | 258 | 241 | | **Adjusted EBITDA** | **2,730** | **2,413** | [Free Cash Flow](index=15&type=section&id=Free%20cash%20flow) Free cash flow, a measure of cash available for distribution or debt, was £1,579m in 2022, with a strong 141% conversion rate of reported profit after tax Free Cash Flow Components | Component (£m) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash inflow from operating activities | 2,063 | 1,356 | | Less: Net capital expenditure | (292) | (149) | | Less: Distributions to non-controlling interests | (48) | (35) | | Less: Interest paid | (163) | (15) | | Add: Interest received | 19 | 16 | | **Free cash flow** | **1,579** | **1,173** | - The free cash flow conversion rate for 2022 was **141%**, compared to **82%** in 2021[130](index=130&type=chunk)

HALEON 2022 Half year results September 2022 Disclaimer This presentation contains certain statements that are, or may be deemed to be, "forward-looking statements" (including for purposes of the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements give Haleon's current expectations and projections about future events, including strategic initiatives and future financia ...

Financial Performance - H1 2022 revenue increased by 13.4% to £5,188 million, with organic revenue growth of 11.6% driven by 3.7% price and 7.9% volume/mix [3]. - Adjusted operating profit for H1 2022 rose by 21.2% to £1,191 million, with an adjusted operating margin of 23.0%, up 90 basis points at constant currency [3][6]. - Free cash flow for H1 2022 was £553 million, achieving a free cash flow conversion rate of 102% [3]. - Group revenue for the six months ended June 30, 2022, was £5,188m, a 13.4% increase from £4,575m in 2021 [56]. - Adjusted operating profit for the same period was £1,191m, reflecting a 21.2% increase year-over-year [56]. - Profit after tax for the six months ended 30 June 2022 was £544 million, compared to £520 million for the same period in 2021, reflecting a growth of 5% [95]. - Adjusted operating profit grew by 21.2% to £1,191m, with an adjusted operating profit margin of 23.0% [60]. - The company reported a profit after taxation of £544 million for H1 2022, up from £520 million in H1 2021, indicating a positive trend in profitability [187]. Revenue Growth by Region - North America saw organic revenue growth of 10.4%, with a 24.2% adjusted operating margin, up 440bps from the previous year [55][50]. - EMEA and LatAm achieved organic revenue growth of 12.1%, with a 22.6% adjusted operating margin, down 150bps year-over-year [55][50]. - Asia-Pacific reported organic revenue growth of 12.3%, with an adjusted operating margin of 24.1%, up 140bps [55][50]. - North America revenue increased to £1,873 million in 2022, a 17.4% rise from £1,595 million in 2021 [110]. - EMEA and LatAm revenue grew to £2,069 million, reflecting an 8.7% increase from £1,903 million in 2021 [110]. - APAC revenue rose to £1,246 million, a 15.7% increase compared to £1,077 million in 2021 [110]. Product Performance - In Pain Relief, Panadol saw organic growth in the mid-twenties percent, significantly outperforming the category [25]. - Revenue growth by product category showed significant increases, with Respiratory at 50.1% and VMS at 16.2% for the six months ended June 30, 2022 [184]. - The company launched several new products targeting younger consumers, including Emergen-C Kidz, which achieved 10% market share in its first year [24][28]. Cost Management and Efficiency - The company offset approximately 40% of cost inflation through initiatives like forward buying and hedging, locking in about 90% of H2 2022 materials [34]. - The company incurred separation and admission costs of £229 million in H1 2022, compared to £105 million in H1 2021, reflecting ongoing restructuring efforts [187]. - Restructuring costs decreased significantly to £20 million in H1 2022 from £77 million in H1 2021 [126]. Cash Flow and Debt Management - Net cash from operating activities totaled £680m, significantly up from £234m in H1 2021 [66]. - Haleon had net debt of £10,707m post-demerger and aims to reduce net debt/Adjusted EBITDA to less than 3x by the end of 2024 [32]. - Net debt as of June 30, 2022, was £(8,836) million, a substantial increase from £246 million at the end of 2021, indicating a significant cash position [195]. - Cash generated from operations in H1 2022 was £818 million, significantly higher than £386 million in H1 2021 [121]. Strategic Goals and Future Outlook - FY2022 organic revenue growth is expected to be between 6-8%, with adjusted operating margin guidance slightly down from the previous year [8][9]. - The company aims for annual organic revenue growth of 4-6% and to maintain a net debt/adjusted EBITDA ratio below 3x by the end of 2024 [12][21]. - Haleon expects separation and admission costs to be approximately £0.5 billion between FY2022 and FY2024, with 80% incurred in FY2022 [11]. Sustainability Initiatives - The company is on track to achieve 100% reduction in net Scope 1 and 2 carbon emissions by 2030, and a 42% reduction in Scope 3 emissions [38]. - Haleon continues to develop all product packaging to be recyclable or reusable by 2030, with initiatives already implemented in the first half [39]. Shareholder Returns - Dividends paid to shareholders rose to £873 million, compared to £621 million in the previous year, representing an increase of 41% [96]. - The Group declared a dividend of £56 million to GSKCHHL on June 29, 2022, related to the acquisition of the India consumer healthcare business [141].