Financial Data and Key Metrics Changes - The company reported revenue of £2.9 billion, reflecting a 3% organic revenue growth, with adjusted operating profit of £707 million, up 12.8% on an organic basis [28][29][60] - The operating margin improved to 24.2%, up 110 basis points on a reported basis and up to 120 basis points organically [29][63] - Gross profit increased by 5% organically, contributing to strong growth in advertising and promotion (A&P) spending [28][63] Business Line Data and Key Metrics Changes - VMS revenue grew by 9.9%, with strong performance from Centrum and Emergen-C, while pain relief revenue declined by 4.8% due to tough comparatives [30][31] - Oral Care experienced a significant growth of 10.6%, driven by successful product launches and innovation [13][30] - Health revenues increased by 10.6%, with double-digit growth in key markets like China [60] Market Data and Key Metrics Changes - North America saw an organic revenue decline of 3.3%, with a positive price increase of 4.5% but a volume/mix decline of 7.8% [31][58] - Emerging markets, which account for 36% of revenue, achieved 7.7% organic revenue growth, while developed markets grew only 0.5% organically [61] - Asia-Pacific reported a 3.3% organic revenue increase, with balanced contributions from price and volume/mix [21][61] Company Strategy and Development Direction - The company is focused on becoming more agile and competitive, with ongoing productivity programs expected to deliver significant savings and support growth [17][22] - Plans for the closure of the Maidenhead manufacturing facility were announced, with an expected restructuring cost of around £90 million over the next two years [22][59] - The company aims to balance pricing and volume growth, with expectations for a gradual improvement in volume growth throughout the year [10][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance of 4% to 6% organic revenue growth, despite challenging comparatives [9][101] - The operating environment is stabilizing, with improved inventory management among retailers contributing to better performance [44][72] - Management noted that while pricing has normalized, cost inflation is easing, allowing for continued investment in A&P [28][46] Other Important Information - The company completed a share buyback of £315 million, reducing the number of shares in issue by approximately 1.1% [64] - The impact of foreign exchange was noted, with a 460 basis point adverse effect on organic revenue growth due to currency fluctuations [18][34] Q&A Session All Questions and Answers Question: What is the outlook for volume/mix in Q2? - Management indicated that the majority of the volume decline in North America was due to specific factors that will not repeat, suggesting confidence in volume growth for the year [39][71] Question: What are the expected savings from the Maidenhead facility closure? - The savings from the closure are expected to be significant, with a good payback on the one-time costs associated with the transition [40][76] Question: How is the pricing strategy evolving across regions? - Most pricing adjustments have been completed in Europe, while pricing in the U.S. is taken at different times throughout the year, depending on retailer practices [69][77] Question: What is the expected impact of the erectile dysfunction cream launch in the U.S.? - The launch is on track, with production ramping up as planned, and is expected to contribute positively to revenue [105][107] Question: How is the company managing inventory levels? - Current inventory levels are about one week lower than historical trends, indicating effective inventory management [11][52]

About this content About Oliver Haill Oliver has been writing about companies and markets since the early 2000s, cutting his teeth as a financial journalist at Growth Company Investor with a focusing on AIM companies and small caps, before a few years later becoming a section editor and then head of research. He joined Proactive after a couple of years freelancing, where he worked for the Financial Times Group, ITV, Press Association, Reuters sports desk, the London Olympic News Service, Rugby World Cup ...

Financial Performance - Haleon achieved organic revenue growth of 8.0% in 2023, with reported revenue growth of 4.1%, surpassing medium-term guidance [26]. - Total revenue for 2023 reached £11.3 billion, up from £10.9 billion in 2022, reflecting a growth of 4.1% [15]. - Adjusted operating profit was £2.5 billion, with an operating profit margin of 22.6%, showing a growth of 10.8% compared to the previous year [15]. - In 2023, Haleon achieved organic revenue growth of 8.0% and adjusted operating profit growth of 10.4% at constant currency, with free cash flow of £1.6 billion [39]. - Haleon expects organic revenue growth of 4-6% and organic profit growth to outpace revenue growth in 2024 [47]. - The company targets annual organic revenue growth of 4-6% [77]. Dividends and Shareholder Returns - The Board proposed a total dividend of 6.0p per ordinary share, representing a payout ratio of approximately 35% of adjusted earnings [28]. - The Board has proposed a final dividend of 4.2p, bringing the total 2023 dividend to 6.0p, which represents approximately 35% of 2023 adjusted earnings, up from 30% in 2022 [77]. - The company plans to allocate £500m to share buybacks during 2024 [77]. - Recent divestments, including Lamisil and ChapStick, are aimed at reducing complexity and focusing on higher growth brands, with £500 million allocated for share buybacks in 2024 [45]. Market Position and Growth Strategy - Haleon's brands maintained or grew market share, with 58% of brands showing positive performance, particularly Sensodyne and Panadol [40]. - Haleon holds approximately 11% market share in the Oral Health market and is the number one player in Therapeutic Oral Health with around 50% market share in that sub-category [52]. - The global consumer healthcare market reached £190 billion, with the US representing over 25% of this market [50][51]. - The company aims to increase household penetration of its brands and expand its portfolio through new consumer trends and Rx-to-OTC switches [89][93]. - Haleon expanded its Centrum portfolio in India and entered new markets including Sweden, Libya, and Iraq [110]. Innovation and Product Development - Haleon launched 68 new innovations in 2023, including top products in the US toothpaste market [19]. - Pronamel contributed 22% of all US toothpaste market growth during its launch period [103]. - Launched Tums + Sleep targeting 63% of US adults with occasional heartburn and sleep issues, combining melatonin for sleep assistance [132]. - Introduced ENO Chewy Bites in Tangy Lemon and Zesty Orange flavors, designed for fast relief from acidity with natural ingredients [132]. - Haleon launched Centrum products in the US with bottle packaging utilizing up to 100% post-consumer recycled plastic [106]. Sustainability and Environmental Initiatives - Haleon achieved a 48% reduction in net Scope 1 and 2 carbon emissions compared to a 2020 baseline, up from a 44% reduction in 2022 [180]. - The company aims for net zero carbon emissions from source to sale by 2040, aligned with the IPCC pathway to 1.5°C [176]. - Haleon is committed to ensuring 91% of palm oil derivatives are sustainably sourced, maintaining a similar level from 2022 [180]. - The company successfully produced one billion recycle-ready toothpaste tubes, two years ahead of the 2025 target [181]. - 70% of Haleon's packaging is now recycle-ready, an increase from 65% in 2022 [180]. Employee Engagement and Corporate Culture - Employee engagement survey results showed 78% of employees felt Haleon fulfills its core engagement values [148]. - Opened new offices in London and Bengaluru, enhancing workplace environment with sensory rooms and green spaces [146]. - Established a global leadership development program to build capabilities and leadership behaviors, with expansion planned for 2024 [144]. - Conducted 10 flagship events with approximately 2,000 participants through Employee Resource Groups (ERGs) to promote an inclusive culture [155]. Risk Management and Governance - The Environmental & Social Sustainability Committee reviews progress against key environmental and net zero priorities, meeting at least twice a year [191]. - The Audit & Risk Committee oversees principal risks, including those related to ESG and climate change, meeting at least four times a year [191]. - Governance structures include the Board and various subcommittees responsible for climate strategy and risk management [189]. - The process for managing climate-related risks is integrated into the company's four-step enterprise risk management framework [196].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File ...

Financial Data and Key Metrics - Gross margin increased by 70 basis points in Q4, driven by easing inflationary pressures and pricing strategies [24] - The company ended the year with a strong cash position of £1 billion, allowing it to pay back a $700 million bond due in March and distribute dividends [11] - Operating profit grew nearly three points ahead of the rate of sales growth in 2023, with a 60 basis points margin improvement [45][69] Business Line Performance - Respiratory health division saw strong growth in Q4, with a 7.5% increase in the back half of the year, driven by geographic diversity and product portfolio strength [64][65] - Oral health segment performed well, with strong growth in Sensodyne and other brands, supported by innovation and pricing strategies [104][131] - VMS (Vitamins, Minerals, and Supplements) showed improvement, particularly with Centrum and Caltrate, driven by clinical studies and marketing support [60][61] Market Performance - In China, the OTC business saw significant demand due to COVID-related restrictions being lifted, with strong performance in Q1 and Q2 expected [22][34] - North America experienced a challenging environment in respiratory health, with flat performance in the back half of the year, while other regions like Central Eastern Europe, Japan, and Turkey saw higher growth [64][65] - India saw high single-digit sales growth, with Sensodyne leading with double-digit growth, despite some disruptions from the transition from Hindustan Unilever [88][89] Strategic Direction and Industry Competition - The company is focusing on innovation, with 67 new product launches in 2023, including Sensodyne Clinical White and other oral health products [15][121] - A&P (Advertising and Promotion) spend is being actively managed, with a focus on investing in growth areas and optimizing returns, particularly in oral health and VMS [2][16][48] - The company is targeting a 50-50 split between volume and price growth in the long term, with 2024 being a stepping stone towards this goal [50][137] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the 4% to 6% sales growth guidance for 2024, with organic profit expected to grow ahead of sales growth [21][28] - The company is managing inflationary pressures and expects gross margin to continue growing ahead of sales growth, supported by pricing and productivity programs [24][25] - The respiratory health market is expected to normalize, with fluctuations of plus or minus 0.5% to 1% in extreme seasons [65] Other Important Information - The company is actively managing its portfolio, with divestments and potential bolt-on acquisitions to strengthen its business [75][146] - A £500 million share buyback program is planned for 2024, with flexibility to execute it through open market purchases or placings with GSK and Pfizer [86][145] - The company is targeting a medium-term leverage ratio of around 2.5x, supported by strong cash generation and debt reduction efforts [129][101] Q&A Session Summary Question: Net benefit from savings in 2025 and A&P spend drivers - The company did not provide specific net benefit figures for 2025 but mentioned that productivity programs will provide a tailwind for 2024 [3] - A&P spend in 2023 was 80 basis points of potential sales, driven by rationalization post-GSK and reduced spend in the US respiratory market [1][2] Question: Volume performance in EMEA and LatAm - Volume declines in EMEA and LatAm were noted, particularly in Latin America, linked to hyperinflation in Argentina [128][123] Question: Respiratory health performance in Q4 - Respiratory health saw strong growth in Q4, driven by geographic diversity and product portfolio strength, with no significant one-offs or inventory discrepancies [64][65] Question: Innovation and R&D spend - R&D spend as a percentage of sales declined due to efficiencies and accounting changes, but the company remains committed to innovation, with 67 new product launches in 2023 [7][121] Question: Share buyback and capital allocation - The company plans a £500 million share buyback in 2024, with flexibility to execute it through open market purchases or placings with GSK and Pfizer [86][145] Question: Pricing and volume growth in 2024 - The company expects pricing to contribute more to growth than volume in 2024, with a long-term goal of a 50-50 split between the two [50][137]

2023 Full year results February 2024 These forward-looking statements and views may be based on a number of assumptions and, by their nature, involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future and/or are beyond Haleon's control or precise estimate. Such risks, uncertainties and other factors that could cause Haleon's actual results, performance or achievements to differ materially from those in th ...

Q3 2023 Key Financials - Q3 2023 revenue was £2798 million[14] - Adjusted operating profit was £689 million[14] - Adjusted operating profit margin was 246%[14] - Organic revenue growth was 50% driven by 66% price and (16)% volume/mix[42, 97, 114] 9M 2023 Performance - 9M 2023 revenue was £8536 million[15] - Adjusted operating profit was £1960 million[15] - Adjusted operating profit margin was 230%[15] - Organic revenue growth was 85%[11, 24, 25] Regional Performance (Q3 2023) - North America organic revenue growth was (15)%[22] - EMEA & LatAm organic revenue growth was 108%[22] - Asia Pacific organic revenue growth was 59%[22] Full Year 2023 Outlook - Organic revenue growth is expected to be 7-8%[41, 79, 80] - Adjusted operating profit growth is expected to be 9-11% at constant currency[41, 80, 95] - Net interest expense is estimated to be approximately £350 million[95] - Adjusted effective tax rate is projected to be 23-24%[95] Currency Impact - Estimated unfavorable translational foreign exchange impact of approximately (35)% on revenue[17] - Estimated unfavorable translational foreign exchange impact of approximately (6)-(65)% on adjusted operating profit[17]

2023 Half year results August 2023 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 financial condition and perfo ...

Haleon plc (NYSE:HLN) Q2 2023 Earnings Conference Call August 2, 2023 5:00 AM ET Company Participants Sonya Ghobrial - Head, Investor Relations Brian McNamara - Chief Executive Officer Tobias Hestler - Chief Financial Officer Conference Call Participants Iain Simpson - Barclays Guillaume Delmas - UBS Rashad Kawan - Morgan Stanley Chris Pitcher - Redburn Alicia Forry - Investec Olivier Nicolai - Goldman Sachs Bruno Monteyne - Bernstein Tom Sykes - Deutsche Bank Sonya Ghobrial Good morning, everyone and welco ...

[Financial Highlights and Outlook](index=1&type=section&id=Financial%20Highlights%20and%20Outlook) [H1 2023 Performance Summary](index=1&type=section&id=H1%202023%20Performance%20Summary) Haleon reported strong growth in H1 2023, with a 10.6% increase in reported revenue to £5,738m and 10.4% organic growth, primarily driven by price increases. Operating profit saw a significant rise of 26.8% to £1,141m. The company also made strong progress on its deleveraging commitment, reducing net debt to 3.4x last 12 months adjusted EBITDA H1 2023 Financial Results Summary | Reported results | | | Adjusted results | | | | --- | --- | --- | --- | --- | --- | | 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 | - H1 organic revenue growth of **10.4%** was composed of a **7.5%** increase from price and a **2.9%** increase from volume/mix[3](index=3&type=chunk) - The company is executing on its deleveraging commitment, with net debt at 30 June 2023 representing **3.4x** last 12 months net debt/adjusted EBITDA[3](index=3&type=chunk) - Haleon agreed to dispose of Lamisil for an aggregate consideration of **£235m**, with total expected cash realization of around **£250m**. Completion is expected in Q4[3](index=3&type=chunk) [FY2023 Outlook and Dividend](index=3&type=section&id=FY2023%20Outlook%20and%20Dividend) The company has raised its full-year 2023 guidance, now expecting 7-8% organic revenue growth and 9-11% constant currency adjusted operating profit growth. An interim dividend of 1.8 pence per ordinary share has been declared. A negative impact from foreign exchange is anticipated for the full year based on spot rates at June 30, 2023 Updated FY2023 Guidance | Metric | FY 2023 Expected | Previous Guidance (Q1 2023) | | :--- | :--- | :--- | | Organic revenue growth | 7-8% | Towards the upper end of 4-6% | | Adjusted operating profit growth | 9-11% constant currency | Not specified in this text | | Net interest expense | c.£350m | Not specified in this text | | Adjusted effective tax rate | 23-24% | Not specified in this text | - The Board has declared an H1 2023 interim dividend of **1.8 pence per ordinary share**, expected to be paid on October 5, 2023[5](index=5&type=chunk)[6](index=6&type=chunk) - Based on spot rates at June 30, 2023, translational foreign exchange is expected to have a negative impact of **c.4% on revenue** and **c.6.5% on Adjusted operating profit** for the full year[7](index=7&type=chunk) [Business and Operational Review](index=6&type=section&id=Business%20and%20Operational%20Review) [Guiding Strategy and Strategic Pillars](index=6&type=section&id=Guiding%20Strategy%20and%20Strategic%20Pillars) Haleon's strategy focuses on outperformance through its portfolio of category-leading brands, aiming for 4-6% annual organic sales growth and sustainable moderate adjusted operating margin expansion in the medium term. The strategy delivered strong performance in H1 2023, with 10.4% organic growth and 55% of the business gaining or maintaining market share - The company's medium-term goal is to drive **4-6% annual organic sales growth** and sustainable moderate adjusted operating margin expansion at constant currency[15](index=15&type=chunk) - In H1 2023, Haleon's strategy resulted in **10.6% reported revenue growth** and **10.4% organic growth**[16](index=16&type=chunk) - Year-to-date (May 2023), **55% of Haleon's business gained or maintained market share**, with improved momentum in recent months[17](index=17&type=chunk) [Performance by Product Category (Business Review)](index=6&type=section&id=Performance%20by%20Product%20Category%20(Business%20Review)) Growth was broad-based across most categories, driven by innovation and brand building. Oral Health grew 10.8% organically, led by Sensodyne and parodontax. Pain Relief was up 12.9%, boosted by Fenbid in China. Respiratory Health surged 22.0% due to a strong cold and flu season. VMS was the exception, with a slight organic decline of 0.5% due to tough prior-year comparatives and changing consumer behavior post-COVID - **Oral Health:** Revenue grew **10.8% organically**, driven by strong performance and share gains from Power Brands Sensodyne, parodontax, and Polident. Innovation, such as Sensodyne Pronamel Active Shield, contributed to growth[18](index=18&type=chunk) - **Vitamins, Minerals and Supplements (VMS):** Revenue declined **0.5% organically** due to tough comparatives and reduced consumer concern about COVID-19, particularly impacting the immunity subcategory in the US. Centrum saw low single-digit growth overall[19](index=19&type=chunk) - **Pain Relief:** Revenue increased **12.9% organically**, with standout performance from Fenbid in China following the end of COVID-19 lockdowns. Panadol also delivered high single-digit growth[22](index=22&type=chunk)[23](index=23&type=chunk) - **Respiratory Health:** Revenue grew **22.0% organically**, largely driven by a strong cold and flu season in Q1 and significant growth of Contac in China after lockdowns ended[27](index=27&type=chunk) - **Digestive Health and Other:** Revenue increased **7.7% organically**, with broad-based growth across Digestive Health, Skin Health, and Smoking Cessation subcategories[30](index=30&type=chunk) [Execution and Financial Discipline](index=12&type=section&id=Execution%20and%20Financial%20Discipline) The company managed to largely offset inflationary cost pressures through pricing and other initiatives, though adjusted gross profit margin declined by 70bps at constant currency. A cost-saving program is underway, expected to deliver c.£300 million in gross savings over three years. The disposal of Lamisil for £235 million will support deleveraging efforts, with the company confident of reaching below 3x net debt/Adjusted EBITDA during 2024 - E-commerce represented **9% of Haleon's sales** year to date, with double-digit growth in China[37](index=37&type=chunk) - Adjusted gross profit margin declined **70bps at constant currency**, as pricing and other initiatives were not enough to fully offset cost inflation and transactional foreign exchange losses[39](index=39&type=chunk) - A program to increase agility and productivity is expected to result in annualised gross cost savings of **c. £300 million** over the next three years, with benefits largely expected in FY 2024 and FY 2025[42](index=42&type=chunk) - The disposal of Lamisil is expected to generate around **£250 million in cash**, which will be used to pay down debt, underpinning confidence to de-lever to **below 3x net debt/Adjusted EBITDA during 2024**[43](index=43&type=chunk) [Responsible Business Initiatives](index=14&type=section&id=Responsible%20Business%20Initiatives) Haleon is advancing its responsible business strategy, focusing on environmental sustainability and health inclusivity. Key environmental goals include reducing Scope 3 carbon emissions by 42% by 2030 and making all product packaging recycle-ready by 2025. The company is ahead of schedule on its rollout of recycle-ready toothpaste tubes. Health inclusivity initiatives, such as the Panadol Pain Phone in Indonesia, aim to empower 50 million people a year by 2025 - The company aims to reduce Scope 3 carbon emissions by **42% by 2030** (from a 2020 baseline) and make all product packaging recycle-ready by 2025[48](index=48&type=chunk)[50](index=50&type=chunk) - Haleon expects to have launched around **1 billion recycle-ready toothpaste tubes by the end of 2023**, two years ahead of its 2025 plan[50](index=50&type=chunk) - The company has a goal to empower **50 million people a year** to be more included in opportunities for better everyday health by 2025[51](index=51&type=chunk) [Detailed Operational and Financial Performance](index=16&type=section&id=Detailed%20Operational%20and%20Financial%20Performance) [Operational Review by Product Category](index=16&type=section&id=Operational%20Review%20by%20Product%20Category) This section provides a detailed revenue breakdown by product category for H1 2023. Oral Health revenue reached £1,589m (+10.8% organic), Pain Relief was £1,405m (+12.9% organic), and Respiratory Health was £839m (+22.0% organic). VMS revenue was flat at £816m (-0.5% organic), while Digestive Health and Other grew to £1,089m (+7.7% organic) Revenue by Product Category (H1 2023 vs H1 2022) | | Revenue (£m) | | Revenue change (%) | | | :--- | :--- | :--- | :--- | :--- | | | 2023 | 2022 | Reported | Organic | | 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 %** | - Oral Health's **10.8% organic growth** was driven by double-digit growth in all three Power Brands: Sensodyne, Parodontax, and Denture Care (Polident)[57](index=57&type=chunk) - Pain Relief's **12.9% organic growth** was largely driven by very strong growth from Fenbid in China following the end of lockdowns[59](index=59&type=chunk) - Respiratory Health's **22.0% organic growth** was due to a strong cold and flu season in Q1 and Contac sales in China almost doubling[60](index=60&type=chunk) [Operational Review by Geographical Segment](index=18&type=section&id=Operational%20Review%20by%20Geographical%20Segment) EMEA and LatAm was the fastest-growing region with 14.9% organic growth, driven by strong pricing (13.3%). APAC grew 11.6% organically, fueled by strong volume/mix (9.3%), particularly in China. North America saw more modest organic growth of 4.7%, derived entirely from price increases, with flat volume/mix Revenue by Geographical Segment (H1 2023 vs H1 2022) | | Revenue (£m) | | Revenue change (%) | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | 2023 | 2022 | Reported | Organic | Price | Vol/Mix | | 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 %** | Adjusted Operating Profit by Geographical Segment (H1 2023 vs H1 2022) | | Adjusted operating profit (£m) | | YoY change | YoY constant currency | | :--- | :--- | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2023 | | 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 %** | - North America's adjusted operating profit margin declined by **150bps at constant currency**, driven by cost inflation and costs to meet demand volatility, partially offset by pricing[70](index=70&type=chunk) - APAC performance was particularly strong in China, with double-digit growth reflecting strong demand for Pain Relief and Respiratory Health products following the easing of COVID-19 restrictions[72](index=72&type=chunk) [Summary of Financial Performance](index=24&type=section&id=Summary%20of%20Financial%20Performance) For H1 2023, total revenue grew 10.6% to £5,738m and operating profit increased significantly by 26.8% to £1,141m. However, due to higher net finance costs from annualized interest and a higher adjusted tax rate, adjusted profit after tax declined by 10.4% to £791m. This resulted in an adjusted diluted EPS of 8.5p, down 11.5% from the prior year Income Statement Summary (H1 2023 vs H1 2022) | Six months ended 30 June | 2023 (£m) | 2022 (£m) | % change | | :--- | :--- | :--- | :--- | | Total revenue | 5,738 | 5,188 | 10.6 | | Operating profit | 1,141 | 900 | 26.8 | | Adjusted operating profit | 1,271 | 1,191 | 6.7 | | Profit after tax attributed to shareholders | 687 | 517 | 32.9 | | Adjusted profit after tax attributed to shareholders | 791 | 883 | (10.4) | | Diluted earnings per share (p) | 7.4 | 5.6 | 32.1 | | Adjusted diluted earnings per share (p) | 8.5 | 9.6 | (11.5) | - Adjusted gross margin declined, largely driven by transactional foreign exchange losses, which offset benefits from pricing and manufacturing efficiencies[76](index=76&type=chunk) - Adjusting items within operating profit totaled **£130m**, primarily consisting of Separation and Admission Costs (**£60m**), restructuring costs (**£30m**), and amortization (**£23m**)[78](index=78&type=chunk) - The decline in Adjusted profit after tax was largely driven by the annualisation of interest costs and a higher adjusted effective tax rate (**23% vs 21% in H1 2022**), which more than offset growth in Adjusted operating profit[82](index=82&type=chunk)[83](index=83&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=28&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Condensed Consolidated Income Statement](index=28&type=section&id=Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2023, the Group's revenue was £5,738m, an increase from £5,188m in the prior-year period. Operating profit rose to £1,141m from £900m. After accounting for net finance costs and income tax, the profit after tax for the period was £730m, resulting in a diluted EPS of 7.4p Condensed Consolidated Income Statement | For the six months ended 30 June | 2023 (£m) | 2022 (£m) | | :--- | :--- | :--- | | Revenue | 5,738 | 5,188 | | Gross profit | 3,550 | 3,211 | | Operating profit | 1,141 | 900 | | Profit before tax | 960 | 864 | | Profit after tax for the period | 730 | 544 | | Profit attributable to shareholders of the Group | 687 | 517 | | Diluted earnings per share (pence) | 7.4 | 5.6 | [Condensed Consolidated Statement of Comprehensive Income](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for H1 2023 was £338m, a significant decrease from £1,483m in H1 2022. This was primarily due to a large negative exchange movement on overseas net assets of £(385)m, which contrasted with a positive £690m movement in the prior-year period Condensed Consolidated Statement of Comprehensive Income | For the six months ended 30 June | 2023 (£m) | 2022 (£m) | | :--- | :--- | :--- | | Profit after tax for the period | 730 | 544 | | Other comprehensive (expenses)/income net of tax | (392) | 939 | | **Total comprehensive income net of tax for the period** | **338** | **1,483** | [Condensed Consolidated Balance Sheet](index=30&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of June 30, 2023, total assets were £34,164m, slightly down from £34,815m at year-end 2022. Total liabilities decreased to £17,597m from £18,358m, driven by a reduction in long-term borrowings. Net assets stood at £16,567m Condensed Consolidated Balance Sheet | As at | 30 June 2023 (£m) | 31 December 2022 (£m) | | :--- | :--- | :--- | | Total non-current assets | 29,962 | 30,756 | | Total current assets | 4,202 | 4,059 | | **Total assets** | **34,164** | **34,815** | | Total current liabilities | (4,987) | (4,370) | | Total non-current liabilities | (12,610) | (13,988) | | **Total liabilities** | **(17,597)** | **(18,358)** | | **Net assets** | **16,567** | **16,457** | | **Total equity** | **16,567** | **16,457** | [Condensed Consolidated Statement of Changes in Equity](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Total equity increased slightly to £16,567m at June 30, 2023, from £16,457m at the start of the year. The increase was primarily driven by profit for the period (£730m), which was partially offset by other comprehensive expenses (£392m) and dividends paid to equity shareholders (£222m) Movement in Total Equity (H1 2023) | | £m | | :--- | :--- | | At 1 January 2023 | 16,457 | | Profit after tax | 730 | | Other comprehensive (expenses)/income | (392) | | Dividends to equity shareholders | (222) | | Other movements | (6) | | **At 30 June 2023** | **16,567** | [Condensed Consolidated Cash Flow Statement](index=32&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) Net cash inflow from operating activities was strong at £749m for H1 2023, an increase from £680m in H1 2022. Net cash outflow from investing activities was £188m. Financing activities resulted in a net outflow of £678m, largely due to dividend payments (£222m), interest paid (£220m), and net repayment of borrowings. Overall, cash and cash equivalents decreased by £117m during the period Condensed Consolidated Cash Flow Statement Summary | For the six months ended 30 June | 2023 (£m) | 2022 (£m) | | :--- | :--- | :--- | | Net cash inflow from operating activities | 749 | 680 | | Net cash outflow from investing activities | (188) | (8,587) | | Net cash (outflow)/inflow from financing activities | (678) | 8,546 | | **(Decrease)/increase in cash and cash equivalents** | **(117)** | **639** | [Notes to the Financial Statements](index=33&type=section&id=Notes%20to%20the%20Financial%20Statements) [Basis of Preparation and Significant Policies](index=33&type=section&id=Basis%20of%20Preparation%20and%20Significant%20Policies) The unaudited interim financial statements for the six months to June 30, 2023, were prepared in accordance with IAS 34 Interim Financial Reporting and UK-adopted IFRS. The accounting policies are consistent with the 2022 annual financial statements. The directors have reviewed forecasts and have adopted the going concern basis of accounting - The interim financial statements are prepared in accordance with IAS 34 and UK IFRS, and should be read in conjunction with the 2022 annual financial statements[94](index=94&type=chunk) - The Directors have adopted the going concern basis of accounting, believing the Group will generate sufficient cash for at least 12 months, supported by **£461m in cash** and undrawn credit facilities of **$1.4bn and £1bn**[101](index=101&type=chunk) - The Group is evaluating the future impact of the OECD Pillar Two income tax legislation, which was substantively enacted in the UK in June 2023[104](index=104&type=chunk) [Revenue and Segment Information](index=37&type=section&id=Revenue%20and%20Segment%20Information) The Group is organized into three geographical reportable segments: North America, EMEA and LatAm, and Asia Pacific (APAC). The Chief Operating Decision Maker (CODM) assesses performance using Adjusted Operating Profit. For H1 2023, EMEA and LatAm was the largest segment by revenue (£2,323m) and adjusted operating profit (£542m) H1 2023 Revenue and Adjusted Operating Profit by Segment | Segment | Revenue (£m) | Adjusted Operating Profit (£m) | | :--- | :--- | :--- | | North America | 2,046 | 471 | | EMEA and LatAm | 2,323 | 542 | | APAC | 1,369 | 318 | | Corporate and other unallocated | - | (60) | | **Total** | **5,738** | **1,271** | - The reconciling items between IFRS operating profit (**£1,141m**) and Adjusted operating profit (**£1,271m**) total **£130m**, primarily consisting of separation costs (**£60m**), restructuring costs (**£30m**), and net amortization/impairment (**£23m**)[109](index=109&type=chunk)[110](index=110&type=chunk) [Dividends and Earnings Per Share](index=39&type=section&id=Dividends%20and%20Earnings%20Per%20Share) A final dividend for the year ended Dec 31, 2022, of 2.4 pence per share (totaling £222m) was paid in H1 2023. An interim dividend for H1 2023 of 1.8p per share has been declared for payment in October 2023. Basic and diluted EPS for H1 2023 were both 7.4p, based on a profit of £687m attributable to shareholders - The final 2022 dividend of **2.4p per share** (**£222m**) was paid during the period[119](index=119&type=chunk) - An interim dividend of **1.8 pence per share** has been declared by the Board, to be paid on October 5, 2023[120](index=120&type=chunk) H1 2023 Earnings Per Share Calculation | | Six months ended 30 June 2023 | | :--- | :--- | | Profit after tax attributable to equity shareholders (£m) | 687 | | Basic weighted average number of shares (million) | 9,234 | | Dilutive weighted average number of shares (million) | 9,264 | | **Basic earnings per share (pence)** | **7.4** | | **Diluted earnings per share (pence)** | **7.4** | [Financial Instruments and Borrowings](index=40&type=section&id=Financial%20Instruments%20and%20Borrowings) As of June 30, 2023, the Group's total borrowings stood at £9,865m, a decrease from £10,440m at year-end 2022. This includes £9,191m in bonds. During the period, the Group redeemed $300m of notes. The company maintains undrawn committed credit facilities of £1,000m and $1,400m Composition of Borrowings as at 30 June 2023 | | Current (£m) | Non-current (£m) | Total (£m) | | :--- | :--- | :--- | :--- | | Commercial paper | (463) | — | (463) | | Loan and overdrafts | (40) | — | (40) | | Lease liabilities | (41) | (105) | (146) | | Non-voting preference shares | — | (25) | (25) | | Bonds | (553) | (8,638) | (9,191) | | **Total** | **(1,097)** | **(8,768)** | **(9,865)** | - On March 2, 2023, the Group exercised its option to redeem at par the **$300m of Callable Floating Rate Senior Notes** due 2024[131](index=131&type=chunk) - The Group has undrawn credit facilities of **£1,000m** (maturing Sept 2025) and **$1,400m** (maturing Sept 2023)[133](index=133&type=chunk) [Contingent Liabilities, Acquisitions, and Post Balance Sheet Events](index=46&type=section&id=Contingent%20Liabilities%2C%20Acquisitions%2C%20and%20Post%20Balance%20Sheet%20Events) There were no significant changes in legal proceedings during the period. The Group completed the acquisition of the Jacarepaguá (Brazil) manufacturing site from GSK for £69m. Subsequent to the balance sheet date, on July 13, 2023, the Group agreed to dispose of the rights to Lamisil for cash consideration of £235m, with completion expected in Q4 2023 - There have been no significant changes in respect of legal proceedings for the period ended 30 June 2023[140](index=140&type=chunk) - On April 28, 2023, the Group acquired a manufacturing site in Brazil from GSK for **£69m**[141](index=141&type=chunk) - Post balance sheet event: On July 13, 2023, the Group agreed to dispose of the rights in Lamisil for cash consideration of **£235m**, expected to complete in Q4 2023[143](index=143&type=chunk) [Appendix](index=47&type=section&id=Appendix) [Use of Non-IFRS Measures](index=47&type=section&id=Use%20of%20Non-IFRS%20Measures) This section defines the non-IFRS measures used by management, such as Adjusted Results, Organic Revenue Growth, Adjusted EBITDA, and Free Cash Flow. It provides detailed reconciliations from IFRS-reported figures to these adjusted measures. Management believes these measures provide useful complementary information by excluding items like amortization, restructuring, and separation costs to enhance comparability of the Group's underlying financial performance from period to period Reconciliation of IFRS to Adjusted Results (H1 2023) | 2023 (£m) | IFRS Results | Adjusting Items | Adjusted Results | | :--- | :--- | :--- | :--- | | Gross profit | 3,550 | 27 | 3,577 | | Operating profit | 1,141 | 130 | 1,271 | | Profit before tax | 960 | 130 | 1,090 | | Income tax | (230) | (26) | (256) | | Profit after tax for the period | 730 | 104 | 834 | Reconciliation of Profit After Tax to Adjusted EBITDA (H1 2023) | £m | 2023 | | :--- | :--- | | Profit after tax | 730 | | Add Back: Income tax | 230 | | Less: Finance income | (38) | | Add Back: Finance expense | 219 | | **Operating profit** | **1,141** | | Adjusting items | 130 | | **Adjusted operating profit** | **1,271** | | Add Back: D&A and Impairment | 135 | | **Adjusted EBITDA** | **1,406** | Reconciliation to Free Cash Flow (H1 2023) | £m | 2023 | | :--- | :--- | | Net cash inflow from operating activities | 749 | | Less: Net capital expenditure | (133) | | Less: Distributions to non-controlling interests | (43) | | Less: Interest paid | (220) | | Add: Interest received | 16 | | **Free cash flow** | **369** | Net Debt Calculation | £m | As at 30 June 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Short-term borrowings | (1,097) | (437) | | Long-term borrowings | (8,768) | (10,003) | | Derivative financial liabilities | (214) | (206) | | Cash and cash equivalents | 490 | 684 | | Derivative financial assets | 64 | 94 | | **Net debt** | **(9,525)** | **(9,868)** |