Annual Report and Form 20-F 2024
Haleon at a glance
We are a global leader in the growing consumer healthcare market:
c.£
200
bn
Market
1
5
Global categories
1
9
Power Brands
£
11.2
bn
Revenue
Our strategy:
Our strategy is designed to leverage our portfolio and capabilities
and has four key pillars:
1
Increase
household
penetration
2
Capitalise on new
and emerging
opportunities
3
Maintain strong
execution and
financial discipline
4
Run a responsible
business
Medium-term
financial guidance:
Annual organic revenue
2
growth of 4-6%
Organic operating profit
2
growth ahead of organic
revenue
2
growth
Net debt/adjusted EBITDA
2
expected to be around
2.5x. Dividend to grow
at least in line with
adjusted earnings
Leadership position across five global categories
1,3
:
Over-the-Counter (OTC)
Oral Health
Vitamins, Minerals
and Supplements
(VMS)
Pain Relief
Respiratory
Health
Digestive Health
and Other
29
%
of 2024 revenue
15
%
of 2024 revenue
23
%
of 2024 revenue
15
%
of 2024 revenue
18
%
of 2024 revenue
1
Source: Nicholas Hall, Euromonitor Passport and Haleon analysis of third-party data (2023), the latest available data for the Consumer Healthcare market as a whole,
beyond our individual categories.
2
Definitions and calculations of non-IFRS measures can be found from page 43.
3
Oral Health market position refers to Therapeutic Oral Health which comprises c.90% of 2024 Oral Health revenues.
What’s inside
Strategic Report
2024 highlights
2
Chair’s statement
4
Chief Executive Officer’s review
5
Our business environment
6
Our business model
8
Our key stakeholders
10
Our strategy
12
Our market categories
13
Our culture and people
18
Our approach to sustainability
22
Our key performance indicators
32
2024 Business review
34
Use of non-IFRS measures
43
Our approach to risk
51
Viability statement
57
Statement of compliance
58
Corporate Governance
Our Board of Directors
59
Our Executive Team
62
Letter from the Chair
64
Governance structure
65
Board activities
66
Audit & Risk Committee Report
72
Environmental & Social Sustainability Committee Report
77
Nominations & Governance Committee Report
79
Directors’ Remuneration Report
82
Compliance with the UK Corporate Governance Code
99
Consolidated Financial Statements
Statement of Directors’ responsibilities
100
Independent auditor’s report
101
Report of independent registered public accounting firm
114
Consolidated income statement
116
Consolidated statement of comprehensive income
117
Consolidated balance sheet
118
Consolidated statement of changes in equity
119
Consolidated cash flow statement
121
Notes to the Consolidated Financial Statements
122
Parent Company Financial Statements
Parent Company balance sheet
179
Parent Company statement of changes in equity
180
Notes to the Parent Company Financial Statements
181
Other Information
Directors’ Report
186
Group information
191
Shareholder information
208
Exhibits
212
Form 20-F cross reference
214
Forward-looking statements
218
Glossary
219
Useful information
220
Our key stakeholders
Photographs
The black and white images on the front cover
and throughout show Haleon consumers
interacting with our brands.
Throughout our Report you will also find a
selection of imagery featuring some of our brand
marketing campaigns, responsible business
initiatives and consumers. We extend our thanks
to all of those featured.
Our approach to reporting
Integrated reporting
In addition to our shares being listed on the
London Stock Exchange (LSE), Haleon is a
foreign private issuer (FPI) with American
Depositary Shares (ADSs) listed on the New York
Stock Exchange (NYSE). We have produced a
combined Annual Report and Form 20-F to
ensure consistency of information for both UK
and US investors. This Report contains disclosures
required to meet both regulatory regimes.
The Report also includes non-IFRS measures,
which we believe provide investors and
other stakeholders with important additional
information about the Company’s performance.
Where used, they are indicated.
External websites and/or reports that are
referred to in this Report are not incorporated
into and do not form part of this Report.
>>
Relevant policies are available on our website
www.haleon.com/who-we-are/Governance/
codes-policies-and-standards
Consumers
Customers
Employees
Governments and
industry regulators
Health
Professionals
Investors
Suppliers
>>
See page 10
Haleon
Annual Report and Form 20-F 2024
1
Strategic Report
Contents
2024 highlights
Revenue by geography
Revenue by market category
Revenue
Revenue growth
Organic revenue growth
1
£
11.2
bn
(0.6)
%
5.0
%
(2023: £11.3bn)
(2023: 4.1%)
(2023: 8.0%)
Operating profit
Operating profit margin
Operating profit growth
£
2.2
bn
19.6
%
10.5
%
(2023: £2.0bn)
(2023: 17.7%)
(2023: 9.4%)
Adjusted operating profit
1
Adjusted operating
profit margin
1
Organic operating
profit growth
1
£
2.5
bn
22.3
%
9.8
%
(2023: £2.5bn)
(2023: 22.6%)
(2023: 10.8%)
Diluted earnings per share
Adjusted diluted earnings
per share
1
Total dividend
per ordinary share
2
15.7
p
17.9
p
6.6
p
(2023: 11.3p)
(2023: 17.3p)
(2023: 6.0p)
Net cash inflow from
operating activities
Free cash flow
1
Net debt/adjusted EBITDA
1
£
2.3
bn
£
1.9
bn
2.8
x
(2023: £2.1bn)
(2023: £1.6bn)
(3.0x as at 31 December 2023)
1
We use certain non-IFRS alternative performance measures to provide additional information about the Company’s performance. Non-IFRS measures may be considered in
addition to, but not as a substitute for or superior to, information presented in accordance with IFRS. Non-IFRS measures are defined and reconciled to the nearest IFRS measure,
see from page 43 for more details.
2
Includes the interim dividend of 2.0p paid on 19 September 2024, and the proposed final dividend of 4.6p per ordinary share. The total dividend represents a payout ratio of c.37%
of adjusted earnings (2023: c.35%).
Oral Health
£3.3bn
29%
VMS
£1.7bn
15
%
Pain Relief
£2.6bn
23
%
Respiratory Health
£1.7bn
15
%
Digestive Health and Other
£1.9bn
18
%
North America
£4.0bn
36%
EMEA & LatAm
£4.6bn
41%
APAC
£2.6bn
23%
Haleon
Annual Report and Form 20-F 2024
2
Strategic Report
Increase household
penetration
During 2024, we continued to generate healthy share gains across
our portfolio, underpinned by a series of successful product
innovations which address unmet consumer needs. We launched
127 new innovations, including Sensodyne Clinical White, with
clinically proven whitening technology specially designed for
sensitive teeth. In Pain Relief, we launched Advil Targeted Relief,
the first topical pain relief product from Advil with four active
ingredients to provide pain relief at the source for up to eight hours.
127
new innovations
Capitalise on new and emerging
opportunities
We leveraged the strength of our brands to reach underserved
consumers in emerging markets with products tailored to their
needs. For example, to drive access among low-income consumer
groups in Brazil, we expanded our Centrum Essencial range –
a multivitamin at a lower price point – with the launch of Centrum
single sachets. By focusing on energy and immunity, which are
two of the biggest need states in Brazil, the sachets are introducing
new consumers to the VMS category.
c.
50
%
of consumers for Centrum Essencial range new to VMS category
Maintain strong execution
and financial discipline
We continued to generate strong cash flow, finishing the year at
2.8x net debt/adjusted EBITDA and returned over £1bn to
shareholders in 2024 through our first ever share buyback
programme and dividend payments. We reinvested some of the
proceeds from our divestments into Tianjin TSKF Pharmaceutical
Co. Ltd (TSKF), our China Joint Venture, an important milestone in
a key strategic market, where we now have an 88% stake, with an
option to acquire full ownership in 2025.
over £
1
bn
returned to shareholders
Run a responsible business
We achieved our
health inclusivity ambition
to empower 50m
people a year to be more included in opportunities for better
everyday health – one year ahead of plan. This was achieved
through brand initiatives which aim to tackle barriers to health
inclusivity. In 2024, this included the expansion of Polident’s
‘Smiles Can’t Wait’ programme to include Indonesia, which aims
to make dentures and denture care more accessible. Theraflu also
launched its third ‘Right to Rest and Recover’ programme in the
US and extended the campaign to working mothers in Poland,
to advocate for more people to have the right to sick pay.
over
50
m
people empowered
Haleon
Annual Report and Form 20-F 2024
3
Strategic Report
2024 Highlights
Chair’s statement
Sir Dave Lewis
Chair
2024: another year of good progress
The evolution of Haleon from a division
of a pharmaceuticals business to a leading
FMCG business continues at pace. The
Executive Team, led by Brian, delivered a
strong performance, with progress made
against each of our key strategic priorities.
There are significant opportunities ahead
and our performance over the last two
years represents an encouraging start.
In the upcoming year, Brian and his
leadership team will share more on our
future ambitions at a Capital Markets Day.
Disciplined capital allocation
Our strong performance, cash generation
and active portfolio management has
allowed us to significantly lower the
leverage in the business and begin a
disciplined share buyback programme.
The disposal of ChapStick and our Nicotine
Replacement Therapy business outside the
US realised c.£0.8bn. We invested £0.5bn
in our OTC joint venture in China, raising
our participation from 55% to 88%.
Our first share buyback programme, which
together with the off-market purchase of
a portion of Pfizer’s shares and dividend
payments, saw us return more than £1bn
to shareholders.
Consistent with this approach and
reflecting our confidence in the strength
of cash generation, we have announced
an allocation of £500m of capital to
share buybacks in 2025.
The Board is proposing a total dividend
increase of 10% to 6.6p per ordinary
share, which represents an increase in
the pay-out ratio to approximately 37%
of 2024 adjusted earnings. This includes
a final dividend of 4.6p per ordinary share.
The Board remains focused on driving
shareholder returns.
Corporate governance
During the year, we continued to focus
on strong corporate governance, our
purpose and the evolution of Haleon’s
culture. In 2024, we conducted our first
external Board performance review, which
noted that the Board had a good breadth
and mix of skills and experience to support
the business and its strategic objectives.
A number of areas were highlighted for
the Board and Committees to consider
going forwards and these will form part
of the action plan for 2025.
The Board has overall responsibility for
Haleon’s Responsible Business strategy.
We made good progress in 2024 against
each of our targets to reduce our
environmental impact, make everyday
health more inclusive, and operate with
ethical, responsible, and transparent
behaviours and standards of conduct.
In line with our commitment to being a
leading employer, we are implementing
initiatives that aim to provide equal
opportunities and create an inclusive
culture. While we are pleased with
progress in this area to date, we also
recognise that there is still more we can
do to develop our culture. This agenda
will remain a key priority for the Board
in 2025 and beyond.
Board developments
The Board recognises the important
role it plays in supporting the Executive
Team to anticipate and navigate external
challenges and change. We regularly
conduct deep dives into our key
categories and functions and visit key
markets. In 2024 we conducted a
full Board visit to China.
We maintain an active review of the
Board skills matrix and in 2024 we
added more global FMCG, financial and
digital technology experience to the
Board. To this end, we were delighted
to welcome Dawn Allen as Chief
Financial Officer. Dawn joined the
Board on 1 November 2024 and brings
extensive global FMCG and finance
experience. We also welcomed Alan
Stewart and Nancy Avila as independent
Non-Executive Directors, adding a wealth
of global consumer and technology
experience to Haleon.
In addition, Bláthnaid Bergin, Chief
Financial Officer of J Sainsbury plc, joined
the Board in February 2025. Bláthnaid has
deep consumer and finance expertise.
Following Pfizer’s reduction in
shareholding over the past six months,
David Denton and Bryan Supran stepped
down from the Board in December 2024
and February 2025 respectively.
Finally, I would like to extend my thanks
to David, Bryan, Deirdre Mahlan and Tobias
Hestler for their significant contributions
to the Board over the last few years and
wish them well for the future.
Looking ahead to 2025
The Board has the following priorities
for the coming year:
—
Continued transformation of Haleon
into an agile, consumer-focused
business, including building bespoke
processes and systems that support
a global FMCG business.
—
Further evolving our strategy and
culture so we are primed to capitalise
on the significant opportunities ahead.
—
Generating value through disciplined
capital allocation that maximises
shareholder returns.
—
Maintaining strong corporate
governance and ethical behaviours.
Thank you
On behalf of the Board, I would like
to thank the Executive Team for their
leadership and dedication throughout
the year. I would also like to recognise the
hard work and commitment of all Haleon
employees globally in delivering against
our strategic objectives and purpose.
While we are still on a journey with more
to achieve, the strong momentum over
2024 gives us confidence that we are on
the right course to realise the full potential
of this business in 2025 and beyond.
Haleon
Annual Report and Form 20-F 2024
4
Strategic Report
Brian McNamara
Chief Executive Officer
Chief Executive Officer’s review
Building momentum
2024 was a year of good progress for
Haleon, with the business continuing to
gather operational momentum. Guided
by our purpose to deliver better everyday
health with humanity, we have continued
to take significant steps to become a
more agile and competitive organisation.
While the work to evolve our business
continues, we have built solid foundations
to capitalise on the significant
opportunities ahead.
Consistently strong financial
performance
In 2024, we delivered organic revenue
growth of 5.0% (reported (0.6)%), and
organic operating profit growth of 9.8%
(reported operating profit growth of
10.5%). As a result, adjusted operating
margin increased 100bps on an organic
basis, though declined 30bps on a
reported basis given the impact
of disposals and adverse translational
foreign exchange movements.
We achieved a good split of price and
volume mix, reflecting both the quality
and resilience of our portfolio of brands.
We also delivered a healthy competitive
performance, demonstrating that consumers
are continuing to choose our brands.
A disciplined approach to our capital
allocation framework allowed us to divest
a number of brands that are no longer
strategic for us and reinvest capital into
higher growth markets. Strong free cash
flow of £1.9bn also allowed us to reduce
debt and deliver strong shareholder
returns in 2024. As a result, we finished the
year at 2.8x net debt/adjusted EBITDA.
Strong progress against our strategy
Our progress in 2024 was driven by
meaningful progress against our
strategic priorities:
—
Increase household penetration: 71%
of our brands gained or maintained
market share, supported by innovation
and investment in A&P. Sensodyne
continued to generate healthy share
gains, through new innovations.
For example, Sensodyne Clinical White
was rolled out to over 10 markets and
was the top innovation in the US Oral
Health category. We also further rolled
out Otrivin Nasal Mist, our innovative new
dispensing technology which delivers
an improved consumer experience.
—
Capitalise on new and emerging
opportunities: We launched targeted
innovations for underserved consumers
in emerging markets, which included
Centrum single sachets focused on
energy and immunity in Brazil, bringing
new consumers to the VMS category.
The recent launch of a smaller 20 rupee
Sensodyne pack in India also helps us
access an underserved part of the
market. In the US, we commercialised
Eroxon, the first FDA-approved topical
erectile dysfunction treatment for OTC
use. While this requires the creation
of a new category, it addresses a
significant unmet consumer need.
—
Maintain strong execution and financial
discipline: We made good progress
against our capital allocation priorities,
balancing both investment in the
business and shareholder returns.
We have driven further efficiencies and
productivity across our supply chain,
where we continue to see significant
opportunities. We also invested for
growth by increasing our stake in our
TSKF joint venture in China, underlining
our confidence in this key market.
Strong cash generation underpinned
our ability to further deleverage, while
we completed our £500m share
buyback allocation for the year.
—
Run a responsible business: We launched
bioplastic toothpaste caps in support
of our aim to reduce virgin plastic from
our packaging. Good progress against
our health inclusivity goals meant we
empowered more than 50m people
globally to be more included in
opportunities for better everyday
health. We also advanced our
inclusion ambitions and expanded
access to our talent programmes and
grew our Employee Resource Groups.
Accelerating our culture journey
We continued to optimise our
processes and structures to enable our
transformation into an agile, consumer-
focused business, with a focus on
accelerating the culture shift needed
to support this change.
We mobilised our employees around a
strong performance-based culture by
defining new behaviours focused on
serving consumers, driving productivity,
greater collaboration and continuous
learning, as well as aligning the organisation
around the opportunity ahead.
During 2024, we also held our first
week-long learning and development
programme for employees, where we
embedded these new behaviours.
While we have made good progress on
our culture journey, with our overall
employee engagement score at 81% in
2024 (up 3% on 2023), there is more to
do in 2025 and beyond.
Evolving our leadership for the future
During the year, we welcomed new
members to my Executive Team, bringing
a complementary set of skills and
significant consumer facing experience
to support the next phase of our growth.
We welcomed Dawn Allen as our new
Chief Financial Officer (CFO) in November,
who brings a strong track record of global
FMCG leadership. In addition, Line De
Decker was appointed our Chief Human
Resources Officer; Adrian Morris our
General Counsel; and Claire Dickson our
Chief Digital and Technology Officer – all
of whom bring both significant functional
and consumer experience to the business.
I would like to thank Tobias Hestler for his
contribution as CFO and wish him all the
very best for the future.
Confidence in our outlook
The opportunity ahead for Haleon is
significant and I remain confident in our
ability to deliver on our medium-term
guidance. In 2025, we expect to deliver
organic revenue growth of 4-6%, with
organic operating profit growth
ahead of that.
Thank you
I would like to thank everyone at Haleon
for their hard work and dedication in
delivering another successful year. I would
also like to extend my thanks to the Chair
and the Board for their ongoing support
and guidance as we continue to
strengthen and evolve our business.
Haleon
Annual Report and Form 20-F 2024
5
Strategic Report
Chief Executive Officer’s review
Our business environment
We operate in five categories: Oral Health;
Vitamins, Minerals and Supplements
(VMS); Pain Relief; Respiratory Health;
and Digestive Health and Other. Pain Relief,
Respiratory Health, and Digestive Health
and Other are all OTC categories.
Our strategic focus is on Oral Health, VMS,
Pain Relief and Respiratory Health globally,
and Digestive Health in select markets.
These are large, growing categories where
we have global and/or local leadership.
In consumer healthcare, the US is the
largest market, making up c.27%
1
of the
global market. Emerging markets, notably
China, Brazil and India, also present
attractive, fast-growing opportunities.
The Oral Health market is relatively
consolidated, with the top five players
making up more than 60%
1
of the market.
Haleon is the third largest player, with
approximately 11%
1
market share. We focus
almost exclusively on Therapeutic Oral
Health, where we are the global leader,
with c.45%
2
market share.
The VMS category is large (£65bn
1
in
2023) and fast growing, but also
highly fragmented, with the top 20
manufacturers accounting for only 22%
1
of sales, and top five only 11%
1
. Haleon is
the largest player, with approximately
3%
1
global market share.
The OTC category is distinct, as it is highly
regulated, which differs by country and
respective regulator. OTC medicines
are available in retail distribution
channels (including pharmacies) without
prescription. Respiratory Health is the
category most impacted by seasonal
demand, including being heightened
from October to January in the Northern
Hemisphere (particularly in North America
and Europe), from flu incidences which are
typical during that period. There is some
global consolidation – for example the top
five players make up about 35%
1
of the
market in Pain Relief, 26%
1
in Respiratory
Health and 23%
1
in Digestive Health.
1
Source: Nicholas Hall, Euromonitor Passport and Haleon analysis of third-party data (2023), the latest available data for the consumer healthcare market as a whole,
beyond our individual categories. This includes categories which have historically been faster growing where Haleon does not have a significant presence including VMS
and specific subcategories within this.
2
Source: Haleon’s analysis of third-party data including IQVIA, Circana et al & NIQ data (2023), the latest available data for the consumer healthcare market as a whole,
beyond our individual categories.
Broader industry dynamics
The broader industry shift of
pharmaceutical companies demerging
their consumer healthcare divisions
continues. In 2023, the former consumer
healthcare division of Johnson & Johnson
separated to form a new listed consumer
healthcare business, Kenvue. Additionally,
Sanofi announced in 2023 its intention to
separate its consumer healthcare division,
via the creation of a standalone company,
Opella. In 2024, Sanofi confirmed its
negotiations with a US private equity
firm to transfer a 50% controlling stake
in Opella. Other businesses in the sector
include Bayer, Church & Dwight, Colgate-
Palmolive, Nestlé, Perrigo, Proctor &
Gamble, Reckitt and Unilever, along with
local players. The overall industry is highly
competitive. Haleon has been able to
differentiate itself through its purpose,
innovation supported by deep human
understanding and trusted science, brand
building and Health Professional advocacy.
Haleon is a world-leading consumer health company,
operating in a fast-growing, c.£200bn
1
market.
Oral Health
VMS
OTC (inc. Pain Relief,
Respiratory Health,
Digestive Health and Other)
Consumer healthcare market 2019-2023 (£bn)
1
0
20
40
60
80
100
120
140
160
180
200
2019
2020
2021
2022
2023
£103bn
OTC market
£65bn
VMS market
10.8
4.6
Peer 4
5.4
Peer 3
17.4
Peer 2
24.2
Peer 1
£29bn
Oral Health market
#1
in
Therapeutic
Oral Health
–
Strong global market share positions (2023)
1
Top 5
62.4%
2.0%
1.6%
Peer 4
1.6%
Peer 3
2.8%
Peer 1
Peer 2
2.8%
Top 5
10.8%
3.7%
3.0%
Peer 4
3.4%
Peer 3
5.8%
Peer 1
Peer 2
6.1%
Top 5
22.0%
Haleon
Annual Report and Form 20-F 2024
6
Strategic Report
Market drivers
Long-term macro trends remain
significant growth drivers for the consumer
healthcare industry. A growing and ageing
population, and an expanding middle
class, are increasing demand for consumer
healthcare. These trends put even more
strain on public healthcare systems, which
often have stretched budgets already.
With demand rising, consumer healthcare
itself is evolving, and consumers are
becoming more educated and aware
about their health needs. They are turning
to self-care – seeking proven, accessible,
affordable, preventative or holistic
solutions – to take more proactive control
of their health. These trends present
valuable growth opportunities within
the consumer healthcare sector. In our
strategy and categories sections, we
outline how Haleon is effectively
responding to these trends and
positioning itself for future success.
Trend
Key statistic
Description and why a growth driver
Global population
shift towards
emerging markets
1.5
bn
global
population
increase
expected by
2050, over 90%
from developing
markets
In the next five years, over 90% of population
growth will come from developing markets,
which are expected to contribute more than half
of the global economic growth, driven by an
expanding middle class, particularly in India
and China. These shifts present a long-term
growth opportunity for Haleon.
Source: UN
Ageing
populations
2.1
bn
people will be
aged 60 years
or over by 2050
Life expectancy continues to rise. The number of
individuals aged 60 and over is projected to nearly
double and reach 2.1bn, from 2015 to 2050, with
80% of this population residing in low- and
middle-income countries. Even in countries that are
still growing rapidly and have relatively youthful
populations, the number of persons aged 65 or
over is expected to rise over the next 30 years.
This ageing demographic is driving demand for
products and services that promote healthy
ageing, preventive care and self care.
Source: WHO
Consumer focus
on health and
wellness
80
%
of consumers
want more
control over
their health
Consumers are increasingly taking a more active
approach to managing their physical health and
mental well-being, seeking effective, science-backed
health solutions they can trust. Research suggests
80% of consumers want more control of their
health, and 69% are taking health into their own
hands, conducting research rather than depending
completely on doctors
1
. This trend towards self
care is driven by greater awareness of health
issues, in the post-COVID-19 landscape, enabled
by digital health advancements. This shift represents
a sizeable opportunity in consumer health.
Source: IPSOS
Increasing
pressure on
public healthcare
systems
1.8
bn
physician hours
are saved each
year through
self-care
practices
Public healthcare systems worldwide are
experiencing heightened pressure from increasing
demand for services, driven by factors such as higher
prevalence of chronic conditions, longer life
expectancies, and a post-COVID-19 backlog. At the
same time, financial constraints are impacting their
ability to meet this growing demand. As a result,
consumers are actively seeking more ready access
to affordable and effective healthcare solutions,
utilising self-care practices such as self-medication
through OTC products. These trends further increase
the need for preventative care and self-care
solutions from the consumer healthcare industry.
Source: Global Self-Care
Federation
Sizeable unmet
consumer needs
>
50
%
of the global
population do
not consume
enough
micronutrients
essential to
health
Consumer healthcare is evolving and growing.
Global demographic shifts, and rapid scientific and
technological advancements, are changing consumer
behaviours. As consumers become more educated
about and aware of their health needs, they are
looking to take more control of their health. They are
increasingly seeking science-backed solutions to
address unmet health needs, in terms of prevention
as well as self care. This is driving significant
innovation opportunities in consumer healthcare
across a wide spectrum of solutions including
premium, affordable and targeted offerings.
Source: The Lancet
Global Health
>>
See our strategy and categories sections on pages 12 to 17.
1
Source: IPSOS Global Trends Report (2024), study conducted across 50 markets.
Haleon
Annual Report and Form 20-F 2024
7
Strategic Report
Our business environment
Our business model
Our deep human understanding, combined with our trusted science,
is our competitive advantage.
Deep human understanding
We invest in a suite of proprietary assets to build deep
human understanding – to generate consumer insights,
create fit for purpose innovation and communication,
and enhance our engagement with health professionals
who help educate consumers. These include dedicated
shopper research centres, and consumer understanding
and social listening data. There is a huge opportunity
to improve people’s quality of life, not just treat their
health needs. That is why deep human understanding
will always be our starting point.
We have a diverse portfolio of global and local brands in five categories:
Oral Health
Vitamins, Minerals
and Supplements
(VMS)
Pain Relief
Respiratory Health
Digestive Health
and Other
Supported by our key resources
Employees
Raw materials
Suppliers
Manufacturing
capabilities
Sales &
distribution
A&P
R&D
Regulatory
expertise
Trusted science
We leverage the technical and scientific expertise
that comes from our scientists, supported by strong
regulatory understanding and underpinned by scientific
evidence generation to support new differentiating
claims. During the year, we delivered 94 publications
supporting our expert engagement and product claims.
We continue to invest in research and development
(R&D) to support our innovation.
Using these competitive strengths and guided by our purpose, we:
Innovate
Innovation plays an important
role in delivering our purpose.
Through innovation, we find new and
better ways to address what people
truly need on their health journeys.
Leveraging consumer understanding
and trusted science, we develop
everyday health solutions for under-
served and unmet needs, address
emerging trends and improve delivery
mechanisms for existing products.
Our focus on innovation also helps
us advance our responsible business
agenda, through trusted ingredients,
sustainable packaging improvements
and inclusive design.
Create meaningful and
distinctive brands
To build our brands, we invest in
advertising and promotion (A&P)
activities, such as paid media,
omnichannel brand activations
and in-store and online consumer
experiences. We also have a
strong focus on building data,
analytics and digital capabilities.
With these investments, we aim
to enhance our equity in brands
that consumers trust, thereby
empowering more people to
self care.
Drive Health Professional
advocacy
We partner with Health
Professionals far beyond our
brands, working towards a shared
ambition to deliver better everyday
health for all. We have direct and
trusted relationships with more
than 3.5m Health Professionals,
and partner with a large network
of pharmacies. They recognise
the strength and efficacy of
our products, which they trust
and recommend to consumers,
bringing new users to our brands
and categories.
Haleon
Annual Report and Form 20-F 2024
8
Strategic Report
Organic operating
profit growth
ahead of organic
revenue growth
1,2
High cash
conversion
Investing
for growth
Shareholder
returns
M&A
I
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c
r
e
a
s
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Driving value
A sustainable growth model
Our competitive strengths, combined with our ability to innovate, build brands and drive expert advocacy, create a sustainable model
for growth and deliver attractive returns.
How we used our cash
Reinvest in the business
In 2024, Haleon focused reinvestment
in our brands, capabilities, supply chain,
processes, systems and people, to drive
sustainable growth and attractive returns.
Capital
expenditure
(2.8% of revenue)
3
£
318
m
Disciplined capital allocation
In 2024, we raised c.£0.8bn divesting
non-core brands. We also acquired an
additional 33% equity interest in TSKF,
our joint venture in China, for c.£0.5bn.
Shareholder returns
Haleon has a dividend policy that looks
to balance its stakeholders’ interests,
while ensuring the long-term success
of the Company. In 2024, Haleon
returned over £1bn to shareholders,
through share buybacks and dividends.
The Board has proposed a 2024 total
dividend of 6.6p per ordinary share,
representing c.37% of 2024 adjusted
earnings (35% in 2023). Over the
medium term, Haleon expects
dividends to grow at least in line
with adjusted earnings.
Delivering value
We deliver value across Haleon’s entire value chain:
Consumers
Customers
Employees
Governments
and industry
regulators
Health
Professionals
Investors
Suppliers
>>
See also our key stakeholders, 2024 Business review and approach to risk sections on pages 10, 34 and 51.
1
Over the medium term, the Company expects annual organic revenue growth of 4–6%.
2
Definitions and calculations of non-IFRS measures can be found from page 43.
3
Includes purchase of Property, Plant and Equipment (PP&E) and intangible assets.
Haleon
Annual Report and Form 20-F 2024
9
Strategic Report
Our business model
What matters to our stakeholders
Why they matter to Haleon
Consumers
Consumers want brands they
trust, that understand their
needs and care about the
environment and society.
Our consumers are at the heart of everything
we do. We aim to provide products that better
meet their needs.
Customers
Our customers want safe,
innovative and accessible
products that enable consumers
to improve their everyday health
and which have sustainability
at their heart.
Customers, such as mass market pharmacies,
drug stores, retailers and e-commerce
platforms, are central to our business as
they provide our products to consumers.
Employees
Employees want to be part of a
purpose led, inclusive company
where they can be themselves,
and are supported to thrive in
their careers.
Our employees ensure our business
operates effectively. It is essential that we
attract and retain the best people, and keep
each other safe, healthy and well.
Governments and
industry regulators
Effective, safe and accessible
products help reduce the burden
of healthcare costs and increase
opportunities for innovation
and business investment.
Governments and industry regulators set the
legal and regulatory environment in which
we operate. We work with them to advance
everyday health and manage risks.
Health Professionals
Health Professionals want
effective and safe products
supported by reliable scientific
information and responsible
sales and marketing practices.
Our engagement with Health Professionals,
such as doctors, dentists and pharmacists,
drives performance through recommendations
and help us understand long-term trends.
Investors
Investors want sustainable
performance for long-term
shareholder value, strong
corporate governance and
commitment to the management
of responsible business issues.
We are committed to creating long-term
sustainable growth and attractive returns for
both our debt and equity investors delivered
through the Group’s strategy.
Suppliers
Suppliers value trust-based
relationships, underpinned by
responsible practices, values
and policies.
Maintaining healthy long-term
relationships with our suppliers helps us
to protect business continuity and achieve
our environmental ambitions.
Our key stakeholders
Understanding and
effectively engaging
with key stakeholders
remains essential to
our long-term success.
Haleon maintains ongoing engagement
with stakeholders across all levels
of the organisation through various
channels. We value these interactions
for the insights they provide and
regularly monitor outcomes to
inform our decisions.
Engagement primarily takes place at
senior leadership and operational
levels, with the Board overseeing
these activities. Directors also
engage directly with stakeholders,
particularly investors and customers.
>>
This section should be read in conjunction
with the ensuing pages, and also our
Board activities disclosure from
page 66, including our Section 172
statement and communication with
shareholders disclosure.
Haleon
Annual Report and Form 20-F 2024
10
Strategic Report
Examples of how we engage
Examples of outcomes
Examples of measurement
Consumers
—
Marketing campaigns, brand
launches and promotions.
—
Regular consumer surveys.
—
Community Investment Programmes.
—
Consumer enquiries handled by our
Global Consumer Relations team.
—
24/7 Online Help Centre.
—
Launched marketing campaigns focused
on addressing health inclusivity such as
‘Polident Smiles Can’t Wait’.
—
Consumer satisfaction with our
consumer relations service (CSAT)
improved 16 points in 2024.
—
Further developed consumer testimonial data
tools, to identify and learn from trends.
—
Customer satisfaction scores.
—
Brand equity scores.
—
Brand incremental share growth statistics.
—
Volume of consumer interactions,
with c.1.3m in 2024.
Customers
—
Partnerships with major customers
focused on self-care and health inclusivity.
—
Sector and customer collaboration
supporting local communities.
—
Interactive visits to our shopper
research centres.
—
Partnered with major UK retailer to donate
essential products to address hygiene poverty.
—
Partnered with prominent retailer in China
to deliver self-care education and products
to rural communities.
—
Worked with large US retailer to provide
mobile dental clinics to improve access.
—
Charitable donations.
—
Customer net sales performance
and retention.
—
Direct feedback from customers
through regular industry surveys
e.g. Advantage Group Survey.
—
Growth in share of shelf and
distribution points.
Employees
—
Annual employee engagement survey.
—
Global broadcasts and Executive Team
site and market visits.
—
Local events and celebrations.
—
Development programmes and resources.
—
Employee Resource Groups (ERGs).
—
Employee lifecycle surveys.
—
Employee engagement score of 81%.
—
Held three global broadcasts where employees
could engage with the Executive Team.
—
10,346 employees attended our first ‘Growing
at Haleon’ learning and development week.
—
Held four workforce engagement discussions.
—
Held 10 global flagship ERG events and
150 local events.
—
Employee engagement survey results.
—
Number of employees joining
global broadcasts.
—
Level of engagement on internal
channels and platforms.
—
Level of participation during our
‘Growing at Haleon’ week.
—
Level of participation in ERG events.
Governments and industry regulators
—
Collaboration with regulators to establish
appropriate product and claims standards.
—
Legislation reform through direct
and indirect liaison with regulators
and policymakers.
—
Meetings and events aimed at engaging
key Government stakeholders.
—
Leadership roles in sector trade
associations e.g. GSCF, CHPA.
—
Participated in inaugural WHO Global Oral
Health meeting.
—
Attended UK Government’s International
Investment Summit.
—
Speaker panels at ‘Self-Care in Healthcare:
A Shared Vision for Asia Pacific’.
—
Participated in B20 Discussion Forum:
‘Health Movement Through Innovation
and Access in Brazil’.
—
Positive progress in legislative and
regulatory developments.
—
Number of Government engagements.
—
Product speed to market.
—
Costs associated with regulatory changes.
Health Professionals
—
Awareness campaigns and
research initiatives.
—
Haleon Health Partner portal.
—
Expanded Centre for Human Sciences.
—
Participated in targeted in-person
and virtual events.
—
Video content from the ‘Every Patient’
campaign won two industry awards.
—
The Haleon Health Partner portal reached
nearly 1m health professional registrations.
—
Centre for Human Sciences launched Community
Pharmacy Pain Consultations Programme
to improve pain management outcomes.
—
Number of Health Professionals
participating in our surveys, tracking
and campaigns.
—
Level of Haleon Health Partner portal users.
—
Level of engagement with Haleon’s Centre
for Human Sciences.
—
Key Performance Indicators (KPIs)
for events.
Investors
—
Roadshows, ‘fireside’ chats, webcasts,
conferences and 1:1 meetings.
—
Investor events and video series
covering areas of interest.
—
AGM, stock exchange announcements
and results briefings.
—
Regular updates to the Board and Executive Team
on investor, shareholder and analyst perceptions.
—
Review of strategy incorporating investor
feedback.
—
Investor and analyst surveys.
—
Feedback from investors and analysts.
—
Level of analyst and investor participation
in events.
Suppliers
—
Online supplier portal.
—
Workshops and sessions with suppliers
focused on responsible business
practices and innovation.
—
Sustainable Supply Chain Programme.
—
Third-party risk management assessments.
—
Digitised onboarding for new
low-spend suppliers.
—
Over 600 suppliers attended innovation events.
—
Introduced carbon pricing programme
to incentivise decarbonisation.
—
Spend on small business suppliers.
—
Number of suppliers attending our events.
—
Feedback from suppliers on
decarbonisation.
—
Number of tenders using carbon
pricing scheme.
—
Continuity of relationships.
Haleon
Annual Report and Form 20-F 2024
11
Strategic Report
Our key stakeholders
Our strategy
We are driven by our purpose – to deliver better everyday health with humanity.
Our strategy is designed to grow our
portfolio of leading brands and market
categories. We target sustainable
above-market growth and attractive
returns, with our purpose and culture
bringing focus and clarity to the strategic
decisions we make. Underpinning the way
we run our business are four strategic pillars.
Drive portfolio growth by
increasing household penetration
We have a clear strategy to drive
penetration-led growth across our
portfolio. We do this by being consumer
focused, innovating to address unmet
consumer needs and building meaningful
and distinctive brands and experiences
that are trusted by consumers,
customers and experts.
Capitalise on new and
emerging opportunities
Our brand portfolio, scale and route-to-
market provide the opportunity to expand
brands into new occasions, segments,
channels and markets, where they have
the reach and scale to succeed.
Maintain strong execution
and financial discipline
We prioritise developing capability
advantage across the value chain – from
innovation, to marketing, commercial,
supply chain, business optimisation and
cost control. We believe this enables us
to deliver sustainable moderate margin
expansion and reinvest for future growth,
while creating value for our stakeholders.
Run a responsible business
Running a responsible business is
integral to delivering on our purpose.
Our environmental, social and governance
(ESG) goals focus on making everyday
health more inclusive, reducing our
environmental impact, and operating
with ethical and responsible standards
of business conduct.
1
Increase household
penetration
2
Capitalise on new
and emerging
opportunities
3
Maintain strong
execution and
financial discipline
4
Run a responsible
business
Maximise significant growth
opportunities across our
categories by applying
our proven approach to
penetration-led growth.
Increase growth of our
brands across channels,
routes to market and
geographies.
Expand our portfolio
through new and
emerging consumer
trends and by pursuing
Rx-to-OTC switches.
Focus on driving
efficiency, effectiveness
and agility to make every
investment count.
Make everyday health
more inclusive.
Protect the environment
and address social
sustainability barriers
to everyday health.
Embed strong
governance and ethical
business behaviours.
The Board and Executive Team review updates on strategy evolution and performance throughout the year, to ensure continued
focus on market drivers, relevance to our business model and that capital is appropriately allocated.
>>
See also our approach to sustainability, key performance indicators, 2024 Business review, our approach to risk and Board activities sections
on pages 22, 32, 34, 51 and 66.
In the our market category pages which follow, we include examples of where our strategic pillars and market drivers came to life
in 2024.
Market drivers
Global economic shift towards
emerging markets
Ageing populations
Consumer focus on health
and wellness
Increasing pressure on public
health systems
Sizeable unmet consumer needs
Strategic pillars
1
Increase household penetration
2
Capitalise on new and
emerging opportunities
3
Maintain strong execution
and financial discipline
4
Run a responsible business
Haleon
Annual Report and Form 20-F 2024
12
Strategic Report
The importance of Oral Health
The World Health Organisation recognises that nearly half of the world’s population
suffer from oral health diseases, with cases increasing by 1bn
1
over the past 30 years.
This suggests that many people do not have access to the prevention and treatment
needed. Tooth sensitivity and gum disease are widespread, with around 45–50%
2
of
consumers experiencing these conditions. Despite this, treatment rates are low, with
only around a third
2
of consumers using a specialist toothpaste for each condition.
Our position
We focus on premium, specialist Therapeutic Oral Health, with broad geographic
presence. Haleon is the global #1
3
player in Sensitivity with Sensodyne, #2
3
in gum
health with parodontax and #1
3
in Denture Care.
Our market categories
Oral Health
1
Source: UN World Health Organisation, Global Oral Health Status Report, 2022.
2
Source: Sensodyne: Haleon Incidence & Usage Study, 2022; Parodontax: Global U&A Refresh 2022 Clear.
3
Source: Euromonitor (2023) and Haleon analysis of third-party market data, the latest available data for the
Consumer Healthcare market as a whole, beyond our individual categories.
4
Vs a non-whitening toothpaste after eight weeks, twice daily brushing.
5
With twice daily brushing.
6
Source: Haleon’s analysis of third-party data including Circana (2024).
7
Means plastic that is wholly or partly derived from materials of biological origin, excluding materials
embedded in geological formations and/or fossilised.
Brands
2024 revenue
£
3,312
m
+
5.6
%
growth
+
9.6
%
organic growth
Global market share (2023)
3
10.8
%
>>
See page 40 for further information on
performance during the year.
Our 2024 focus areas and achievements
Focus
areas
2024
achievements
Strategic
pillars
Market
drivers
Increase household
penetration
Expanded into emerging markets with relevant
and affordable offerings, with our Sensodyne
20 rupee pack in India and the launch of
parodontax in China.
1
2
Innovate to address
unmet needs
Successfully launched Sensodyne Clinical White,
scientifically proven to whiten teeth by two
shades
4
while providing 24/7 sensitivity
protection
5
. Ranked as the #1 innovation in
the Oral Health category in the US, driving
market share growth for the brand
6
.
Expanded our Polident Max Hold Plus range,
now available in over 40 markets, underpinning
growth of our fixatives range.
1
Leverage trusted
science
Continued to drive our trusted science with
dentists and hygienists, participating in key
events including the FDI World Dental
Federation’s World Oral Health Day,
where Haleon was a major partner, to
promote and educate on better oral health.
1
2
Run a responsible
business
Launched toothpaste tube caps made using
bioplastic
7
in several markets across Europe,
progressing our ambition to reduce virgin
petroleum-based plastic in our packaging.
3
4
Haleon
Annual Report and Form 20-F 2024
13
Strategic Report
Our market categories
The importance of VMS
The majority of the global population does not consume enough micronutrients
essential to health
1
, increasing the risk of developing chronic diseases. Consumer trends
such as: the growing interest in science-backed solutions for self care; healthy ageing;
and gut health are also contributing to the growth of this category. Using VMS is seen by
consumers as a way to gain control and have confidence that they are doing what they
can to stay healthy and well.
Our position
The VMS category is a large and fast-growing part of the global consumer healthcare
market. It is a highly fragmented category, with the top 20 players accounting for around
22%
2
of the market. Haleon has the leading position, with 2.8%
2
share. Our key brands
include: Centrum, the world’s leading multivitamin
2
; Caltrate, a leader in bone health
in China
2
; and Emergen-C, a leader in immunity in the US
3.
Our market categories
continued
Vitamins, Minerals and
Supplements (VMS)
2024 revenue
£
1,696
m
+
3.4
%
growth
+
7.6
%
organic growth
Global market share (2023)
2
2.8
%
>>
See page 40 for further information
on performance during the year.
Brands
1
Source: The Lancet Global Health.
2
Source: Nicholas Hall (2023) and Haleon analysis of third-party market data, the latest available data for the Consumer
Healthcare market as a whole, beyond our individual categories.
3
Source: Circana (2024).
Our 2024 focus areas and achievements
Focus
areas
2024
achievements
Strategic
pillars
Market
drivers
Increase household
penetration
Expanded our Centrum Daily Kits range in China
and Korea – daily nutrition packs tailored to life
stages, to address Asian consumers’ needs.
The range contains a blend of vitamins,
minerals and locally relevant ingredients,
such as green tea and ginkgo biloba leaf.
In Brazil, we launched Centrum single dose
immunity and energy powders. These provide
affordable and on-the-go solutions through
a new sachet format.
1
2
3
Innovate to address
unmet needs
Introduced Emergen-C Crystals Immune+, a new
formula with vitamin D, contributing to category
share growth. We also launched Emergen-C zero
sugar formulas in powder and gummies formats.
1
3
Leverage trusted
science
Continued activation of Centrum Silver, supported
by multiple clinical studies, demonstrating
cognitive health benefits for older adults.
Drove performance of Caltrate Capsules,
supported by strong activation in China, with
ingredients clinically proven to improve calcium
absorption (vitamin D3) and bone metabolism
(vitamin K2).
1
2
3
Drive Health
Professional
advocacy
Launched a global expert campaign for
Centrum, ‘Think Again’, highlighting the
potential for multivitamins to deliver health
benefits, such as improving brain health.
The campaign engaged over 20,000 experts.
1
2
Haleon
Annual Report and Form 20-F 2024
14
Strategic Report
Pain Relief
OTC
2024 revenue
£
2,564
m
(3.3)
%
growth
+
0.1
%
organic growth
Global market share (2023)
2
13.0
%
>>
See page 41 for further information
on performance during the year.
Brands
The importance of Pain Relief
Pain is a consistent and universal condition, that affects over 90%
1
of the
adult population. Over the past decade, the social and emotional impact of pain
has grown by nearly 25%
1
, with stigma and social isolation arising from everyday
pain increasing worldwide. Our ambition is to break down the barriers to
achieving better everyday health for everyone.
Our position
At a global level, the top five players account for c.35%
2
of the category, and Haleon
is the market leader with 13%
2
global market share. Our portfolio spans systemic and
topical sub-categories, led by three Power Brands – Voltaren, Panadol and Advil –
complemented by Local Growth Brands, including Excedrin, Fenbid and Grand-Pa.
1
Source: Haleon Global Pain Index 2023, 5th Edition.
2
Source: Nicholas Hall (2023) and Haleon analysis of third-party market data, the latest available data for the
Consumer Healthcare market as a whole, beyond our individual categories.
Our 2024 focus areas and achievements
Focus
areas
2024
achievements
Strategic
pillars
Market
drivers
Increase household
penetration
Continued the successful roll-out of Voltaren
24-hour patch, with launches in Spain, France,
Romania, Poland and Belgium.
1
2
Innovate to address
unmet needs
Launched Panadol Dual Action – a paracetamol
and ibuprofen combination systemic pain reliever,
in Pakistan and Central and Eastern Europe
.
Launched Advil Targeted Relief in the US, the first
topical pain relief product from Advil, with four
active ingredients which provide users with up
to eight hours of relief at the source.
1
2
3
Leverage trusted
science
Haleon participated in the International
Association for the Study of Pain (IASP) 2024
World Congress on Pain, attended by over
6,000 delegates. Our engagement focused
on bringing inclusion in pain management.
4
Drive Health
Professional advocacy
Haleon hosted the 4th Global Pain Awareness
Week, to bring globally renowned pain experts
and first-line Health Professionals together to share
knowledge on important pain topics. About 42,000
Health Professionals attended the event.
1
Strategic Report
Our market categories
Haleon
Annual Report and Form 20-F 2024
15
Respiratory Health
OTC
2024 revenue
£
1,677
m
(3.4)
%
growth
+
0.9
%
organic growth
Global market share (2023)
2
5.6
%
>>
See page 41 for further information
on performance during the year.
Brands
The importance of Respiratory Health
Respiratory conditions are prevalent globally. Conditions such as the common cold, flu,
cough, sore throat or nasal congestion affect most adults at least once per year, with
incidence varying by geography. About 70%–80%
1
of sufferers feel confident in treating
themselves for these conditions, including through the use of OTC medicines.
Our position
The Respiratory Health category is fragmented globally, with the top five players
accounting for 26%
2
of the market. Haleon has a joint leading position, with 5.6%
2
share.
Our portfolio consists of two Power Brands, Otrivin and Theraflu, along with Local
Growth Brands, including Flonase, Robitussin and Contac.
1
Source: Global Self-Care Federation.
2
Source: Nicholas Hall (2023) and Haleon analysis of third-party market data, the latest available data for the
Consumer Healthcare market as a whole, beyond our individual categories.
Our 2024 focus areas and achievements
Focus
areas
2024
achievements
Strategic
pillars
Market
drivers
Increase household
penetration
Continued the roll out of Otrivin Nasal Mist
across Europe, offering an improved consumer
experience through comfort, ergonomics and
efficacy. The product continues to deliver above
expectations, driving Otrivin share growth in launch
markets, and was received well by consumers,
with many claiming an improved user experience.
1
2
Innovate to address
unmet needs
In the US, we launched Theraflu-D Flu Relief Max
Strength Syrups in the US with the powerful oral
nasal decongestant, pseudoephedrine. This was
an accelerated launch, to provide our consumers
with more options and to meet evolving needs.
Responded to increasing consumer demand for
Respiratory treatments post-COVID-19 in China,
by expanding beyond cold and flu. Continued the
roll out of Contac cough, now the second largest
Western medicine cough brand in China.
1
2
3
Meaningful and
distinctive brands
During allergy season in the US, Flonase
pioneered a unique collaboration with the hit
series, Bridgerton. This partnership garnered
an Online Media, Marketing & Advertising Award
in the ‘Pharma/Health/Wellness: Campaign’
category, demonstrating some of our social
marketing capabilities.
1
3
Run a responsible
business
We began rolling out our new, easy-to-open, more
recyclable paper packaging for Flonase. This new
packaging will no longer require consumers to use
scissors to open the package, and aims to avoid
more than 160 tonnes of plastic waste per annum.
1
3
4
Our market categories
continued
Haleon
Annual Report and Form 20-F 2024
16
Strategic Report
The importance of Digestive Health and Other
Digestive health issues affect a large proportion of the population. In the US, over
60%
1
of adults have experienced digestive health issues. Symptoms include acid
reflux/heartburn, abdominal pain, bloating, diarrhoea, constipation, nausea/vomiting,
dysphagia and incontinence. Sufferers frequently experience two or more
symptoms at a time.
Our position
Haleon has a strong presence in the global Digestive Health category, driven by our
leading position in immediate-relief antacids. We have a focused geographic Digestive
Health presence across key markets, in particular the US, India and Brazil, underpinned
by brands such as Tums and ENO.
Our Digestive Health and Other category also includes Skin Health and Smokers’ Health.
Our Skin Health brands include Bactroban, the leading wound-healing brand in China,
Zovirax/Abreva, the global leader in cold sore treatments and Fenistil, the top anti-itch
solution in EMEA & LatAm. In Smokers’ Health, Nicorette has helped consumers
quit smoking for over 40 years. In 2024, we divested our Smokers’ Health business
outside of the US, to focus our resources on higher growth brands and reduce
complexity in our network.
Digestive Health and Other
OTC
2024 revenue
£
1,984
m
(7.2)
%
growth
+
5.5
%
organic growth
Global market share (2023)
2
3.8
%
1
>>
See page 41 for further information
on performance during the year.
Brands
1
Source: The American Journal of Gastroenterology.
2
Source: Nicholas Hall (2023) and Haleon analysis of third-party market data, the latest available data for the
Consumer Healthcare market as a whole, beyond our individual categories.
3
Source: Circana (2024).
Our 2024 focus areas and achievements
Focus
areas
2024
achievements
Strategic
pillars
Market
drivers
Increase household
penetration
Launched a new format, Tums Gummy Bites,
in the US, which was the #1
3
OTC Digestive
Health innovation in the US in 2024, by sales.
We also launched ENO Chewy Bites in India,
a chewable antacid to drive the convenience
of anytime anywhere acidity relief, targeted at
the entire family, including the younger cohort.
Formats included affordable single sachets.
1
2
3
Innovate to address
unmet needs
Launched Eroxon in the US – the first OTC,
FDA-cleared treatment for erectile dysfunction.
In two clinical studies, over 60% of men
with erectile dysfunction saw meaningful
improvement. Eroxon is available online
and at most major US retailers.
2
Meaningful and
distinctive brands
Successfully launched a new campaign and brand
positioning for Benefiber in the US, supported by
strong commercial execution. We raised brand
awareness with a ‘Garden of the Guts’ campaign,
with Benefiber outperforming its category and
achieving market share gains
3
.
1
3
Run a responsible
business
In India, we continued to roll out recycle-ready
sachets for ENO, gradually shifting away from
laminate packaging.
4
Haleon
Annual Report and Form 20-F 2024
17
Strategic Report
Our market categories
Our culture and people
We are focused on our purpose-led, performance-focused
culture underpinned by our core values, key behaviours
and leadership standards. Together, these support the
delivery of our strategy. Our range of responsible business
standards, policies and practices, including our Code of
Conduct, provide a framework to guide our approach
in delivering our strategy and business performance.
Our purpose:
To deliver better everyday health with humanity
Our core value:
Seeking to always
do the right thing
Our key behaviours:
Go beyond
Do what matters most
Keep it human
The Board monitors and is responsible
for our culture, including adherence to our
core value and behaviours to ensure they
are embedded and aligned to our strategy
and purpose. The Board and Executive
Team receive regular reports on all
aspects of culture, including reports from
our Speak Up channel and the results from
our annual employee engagement survey.
The CEO and Executive Team are
responsible for embedding our culture
on a day-to-day basis, as well as for
implementing our strategy, monitoring
the Group’s performance, and providing
updates to the Board on overall
performance, risk management and
our system of internal controls. Our 14
business units, and global category and
brand teams, are responsible for delivering
our strategy, innovation agenda and global
brand campaigns. They are supported by
global functions in key areas including
ethics and compliance, corporate affairs,
sustainability, finance, human resources,
legal, marketing and R&D.
Since becoming Haleon in 2022, we have
evolved our ways of working with a new
operating model that removes complexity
and brings us closer to our consumers.
We are in the second year of a three-year
global productivity programme that
transforms business processes and structure
and helps to reduce complexity and costs so
that we can drive performance and invest in
future growth. We are on target to deliver
our plans. In 2025, we will continue to
drive additional performance and agility.
Additional information and detail on
culture and people can be found in our
Responsible Business Report available
on our website at
www.haleon.com/
our-impact/esg-reporting-hub.
Measuring our culture
Measuring and tracking our culture
is crucial to ensuring we deliver our
purpose and strategy, and remain a
trusted company.
Our range of indicators includes:
—
Annual mandatory Code of Conduct
training including anti-bribery and
corruption and keeping data secure.
—
A framework of internal financial
and operational controls, audit and
assurance programmes that monitor the
Company’s compliance with regulations
and internal procedures and policies.
—
Encouraging anyone, whether working
for Haleon or not, to speak up about
misconduct, breaches of policy or
procedures, and suspected violations
of laws and regulations.
—
Measuring employee engagement
through our annual employee
engagement survey. Haleon received
an 81% overall engagement score.
—
Measuring our environmental, health
and safety performance across the
Company and conducting risk-based
audits, which the Board and Executive
Team monitor.
—
Conducting regular conversations and
year-end reviews with employees.
Haleon
Annual Report and Form 20-F 2024
18
Strategic Report
We will undertake targeted cultural
development work in 2025 to help to
ensure Haleon continues to have a
culture that supports our strategic plans.
>>
See also our business model, key
stakeholders, strategy, approach to risk
and financial statement sections on
pages 8, 10, 12, 51 and from page 100.
>>
See also our key performance indicator
section on page 32.
>>
See also the Audit & Risk Committee
Report from page 72.
>>
See also our statement of compliance on
page 58 with links to our standards and
policies, including our Code of Conduct
and Modern Slavery Statement.
Our people
Our people comprise permanent
and fixed-term direct employees.
Our business is also supported by
third-party temporary workers
and contractors.
We aspire to create an environment where
everyone can reach their full potential and
perform at their best. Our initiatives and
policies reflect relevant employment law,
including the provisions of the Universal
Declaration of Human Rights and
International Labour Organisation (ILO)
Declaration on Fundamental Principles and
Rights at Work. We have people policies
and initiatives that seek to provide equal
opportunities and create an inclusive
culture where everyone can belong.
Attracting, fostering and
developing talent
Throughout 2024, we evolved our
employer brand proposition to continue
to attract diverse talent, including
appointments in key leadership roles.
Development and learning has three
objectives: build the right competencies
to stay safe and compliant within our
regulatory environment; develop strategic
capabilities; and provide employees with
opportunities to grow and reach their
potential. In June, we brought together our
top 270 leaders in London for a three-day
event following which leaders ran sessions
with local teams to cascade the learning
across the business. To build on this, we
ran a five-day Growing at Haleon Week,
available to all employees globally.
More than 38,900 places were taken up
across 16 sessions from 31 speakers.
We enhanced our global leadership
development offer and continued to roll
out our first-line leader programme (Lead)
and launched a new programme for leaders
of leaders (Inspire). More than 30% of our
leadership population participated in one
or more of our global leadership or talent
programmes. We also evolved and simplified
our approach to assessing and rewarding
employee performance. The new approach
helped to drive an increased awareness
of how performance was evaluated and
helped colleagues to be clearer on how
their work supports our strategy.
Creating a more inclusive workplace
Our DEI strategy in 2024 underpinned
our commitment for all our employees
to be treated equally, and harassment
and discrimination to not be tolerated.
The focus was on three strategic priorities:
1.
Employee belonging: workplace
inclusion — create a work environment
that is inclusive and accessible, where
all employees feel like they belong,
are valued and have tools to thrive.
2.
Representation: attract, recruit, promote
and retain the best talent with a variety
of backgrounds and experiences that
reflects the customers and consumers
that our brands serve.
3.
Societal change: community impact —
leverage our expertise to enable
health inclusivity through our business
relationships, brands and research.
A DEI council met quarterly to receive
performance updates and to discuss
priorities, drive accountability, and initiate,
fund and oversee the implementation of
Haleon’s global inclusion activities.
We made progress in 2024 with several
initiatives, including: a new Community
of Practice to share best practice and
learnings; regular Employees Resource
Groups (ERG) to discuss inclusion initiatives;
and the successful launch of our global
self-ID project as part of a broader initiative
to strengthen representation data.
Our people-management development
programmes aim to enhance peoples’
capabilities and competencies through
our learning modules. Our core leadership
programmes, including Lead and Inspire,
develop the skills of all our leaders to help
mitigate bias and lead more inclusively.
Our four global ERGs; Pride (LGBTQ+),
Empower (disability), Illuminate (race &
ethnicity), and Women@Haleon (gender)
are each sponsored by a member of the
Executive Team and have grown their
presence to 34 local chapters within 14
countries. We have developed a Caregivers
Community ERG in the US and are in the
process of creating a UK chapter, as well
as a Family Veterans and Friends ERG in the
US. Global and local events were held for
International Women’s Day, Pride Month,
Black History Month, and many more.
Our strategic focus for 2025 will be on
further embedding initiatives throughout
our organisational processes, culture,
and behaviours, expanding our leadership
development programmes and refining
our guidelines for inclusive hiring and
interview panels.
>>
See also our Nominations & Governance
Committee Report on page 79.
Haleon
Annual Report and Form 20-F 2024
19
Strategic Report
Our culture and people
Our culture and people
continued
Company gender representation
As at 31 December 2024
Men
Women
Other
Non-disclosed
Total
Directors
5
6
—
—
11
Executive Team
7
6
—
—
13
Executive Team direct reports
51
45
—
2
98
Senior managers
1
773
653
—
8
1,434
All employees
12,996
11,431
8
126
24,561
1
Comprised of Leadership roles as defined in our glossary.
Employee health and wellbeing
We want to be a place that betters
employees’ everyday health and
wellbeing and allows them to be at
their best. A place where we celebrate
difference, prioritise mental and physical
wellbeing, and build an inclusive working
environment where everyone can thrive.
In 2024, we focused on: creating a
wellbeing strategy and brand; launching
our refreshed people-manager mental
health training, Leading on Mental
Wellbeing; implementing a Mental Health &
Wellbeing standard; and launching a Health
and Wellbeing Dashboard to help measure
organisational health and wellbeing.
In 2025, we plan to launch our new health
and wellbeing framework including our
new global flagship Employee Assistance
Programme partnership, plus a refreshed,
more structured Health and Wellbeing
Champions network.
Workplace environments
In 2024, we updated our Workplace
Solutions standards to help ensure
each office/site delivers the appropriate
level of service, to meet our business
and employees’ needs more effectively.
Our standards aim to guarantee our
locations provide the right mix of
productivity, community, collaboration
and focus areas, while supporting
our philosophy Hybrid@Haleon.
This philosophy empowers managers
and teams to trust each other and find
the right approach to drive performance.
Health and safety
We continued on our journey to deliver
our zero-harm culture by strengthening
our environment, health and safety (EHS)
performance. Our EHS management system
and strategy focus on strengthening our
health and safety culture and capability,
while aiming to make it easier to prevent
harm. Our strategy is supported by annual
targets and objectives which seek to drive
continuous improvement, while helping us
to reduce the number of reportable injury
and illness cases and serious incidents.
We also provide task-specific and risk-
based health and safety training for our
employees and third-party temporary
workers, focusing on hazard identification
and risk reduction in the workplace.
2024
2023
Reportable Injury and Illness
Rate per 100,000 hours
worked
0.13
*
0.14
Lost time injury and illness rate
per 100,000 hours worked
0.10
*
0.10
*
KPMG LLP has issued independent limited assurance
over the selected data indicated using assurance
standard ISAE (UK) 3000.
There were no fatalities in 2024.
Upholding our standards
We have standards and policies in place
to ensure we uphold high standards of
business ethics. We are committed to
transparency, integrity, consumer
satisfaction, safety and compliance
with all relevant laws and regulations.
Product quality, safety and development
Our products undergo extensive quality
testing and controls as part of our
manufacturing processes. In addition,
we have portals for consumers to obtain
product information and report adverse
reactions. The Haleon Quality System
establishes standards that govern the
entire product lifecycle, ensuring
consistency across all business units and
third-party manufacturers. It emphasises
the role of management at all levels in
upholding these standards, particularly
during product development. Haleon’s
scientists focus on tailoring products to
meet local needs, subjecting them to
rigorous research and testing to comply
with quality and safety standards, thereby
fostering consumer trust. This process
includes various assessments such as
stability testing, consumer feedback,
and clinical studies.
Integral to this system is the Trusted
Ingredients programme, which leverages
cross-functional expertise to guide the
selection of active pharmaceutical
ingredients and excipients or additives
used in our products. Haleon implements
controls to evaluate potential benefits and
risks and consumer concerns associated
with these ingredients, including an
independent evidence-based safety
review for new ingredients added to
the product portfolio.
The purpose of the Haleon Safety Board,
as part of the governance framework that
manages Haleon’s ‘Product User Safety’
principal risk, is to: (1) set the Company’s
product safety strategy; and (2) oversee
the implementation of the product safety
policy in relation to the composition and
core company position of all products.
Additionally, continuous monitoring of
ingredient safety is conducted in
collaboration with industry peers, regulators
and healthcare providers, ensuring that
Haleon remains proactive in assessing
the safety and benefits of its products.
Code of Conduct
Our Code of Conduct helps to promote
ethical business practices and offers
guidance to our Board, Executive Team,
employees, and third-party temporary
workers. Non-compliance with our Code is
considered misconduct and may lead to
disciplinary action, including termination.
Relevant principles of our Code also
extend to our suppliers, distributors,
agents, consultants, and contractors.
The Code: comprises 19 principles; is
available in 17 languages; combines
written standards with a decision-tree
approach to help make the right choices
and know when to seek advice; and
includes annual mandatory training
including anti-bribery and corruption
and keeping data secure.
Anti-bribery and anti-corruption (ABAC)
Our ABAC Policy outlines our global
principles, standards, requirements and
zero-tolerance stance. All employees and
third-party temporary workers are
required to adhere to this policy.
Haleon
Annual Report and Form 20-F 2024
20
Strategic Report
Regular internal checks are conducted as
part of our financial control procedures,
and due diligence checks are performed
on all high-risk third parties.
During 2024, regular updates on the
compliance programme were provided
to the Executive Team and the Audit &
Risk Committee.
Speak up
Haleon encourages anyone, whether
working for the Company or not, to speak
up about misconduct, breaches of policy
or procedures, and suspected violations
of laws and regulations. Concerns can
be raised in multiple languages via an
independently managed web form and
hotlines, or by email, telephone, or post.
All cases are handled in accordance
with Haleon’s investigatory principles:
humanity; confidentiality; proportionality;
and non-retaliation. Regular updates and
investigation reports are reviewed by
senior management and the Audit & Risk
Committee, and learnings are converted
into recommendations and updated
training. During 2024, we upgraded to a new
platform to help to improve our processes.
Human rights
Our Human Rights Policy, which is
reviewed by the Environmental & Social
Sustainability Committee, sets out how we
integrate human rights into our business
operations and our relationships with
suppliers and other business partners.
We seek to align our human rights
procedures with international agreements
and guidelines, such as the UN Guiding
Principles on Business and Human Rights
and the Organisation for Economic
Co-Operation and Development’s (OECD)
Guidelines for Multinational Enterprises.
We are committed to upholding the
Universal Declaration of Human Rights
and the core labour standards set out by
the International Labour Organisation.
Responsible suppliers
Haleon’s supply chain has significant scale
and complexity with a mixture of direct
and indirect supplies and services such
as raw materials and logistics. We are a
member of Manufacture 2030, a platform
to drive consistency and transparency of
supplier sustainability reporting.
—
Our Supplier Code of Conduct
establishes the minimum environmental,
social and ethical standards to be met
by any entity that supplies products or
services to Haleon.
—
We follow set processes for contracting
with new suppliers, and those we
continue to work with, including due
diligence processes and using approved
buying channels.
—
Our third-party risk management
process seeks to assess risks across
our supply chain, and where necessary
Cyber security
We recognise that, in common with
most other organisations, Haleon is at
risk of a cyber-security attack or threat
that could compromise our ability to
manufacture, distribute and sell our
products and services. We continue
to invest to mitigate this risk, including
using advanced technologies and
engagement of third-party experts
to provide additional support and
guidance. We have a dedicated
cyber-security threat intelligence
function focused on the threat
landscape and attack vectors that are
targeting healthcare providers, including
ransomware threats, and a cyber-
defence team in place to monitor and
react to cyber threats. Cyber intelligence
is integrated into our cyber-security
risk management and governance
processes. Haleon’s Chief Information
Security Officer is responsible for the
cyber-security function, and provides
frequent updates on issues including:
current threats; operational key risk
indicators; and cyber-security maturity
improvements, to the Executive Team
and Audit & Risk Committee, who have
oversight of our information security
and cyber-risk strategy. Cyber-security
risk updates are shared with the wider
Board by the Audit & Risk Committee.
—
Our newly appointed Chief
Information Security Officer has
more than 20 years’ information
technology and security experience.
—
External consultants are engaged to
assess our cyber-security maturity
against the US National Institute
of Standards and Technology
Cybersecurity Framework (NIST CSF).
They provide continued assurance
that our plans and processes are
delivered to best protect Haleon
from threats including a framework
for data controls which covers our
digital supply chain.
—
We have a third-party risk management
process in place to help ensure that
inherent risk assessments are
completed for third-party suppliers,
with additional due diligence
assessments completed for higher-
risk suppliers. Processes include:
identification and mitigation of risks;
risk assessments; adherence to
information and control standards;
and incident notification
requirements in contracts.
—
We constantly look to mature our
cyber-security systems and controls
to keep pace with the threat
landscape. Our preparedness
activities include: a cyber-security
week; testing our response
procedures and processes by
performing simulations and crisis
management exercises, including
advanced Red and Black team
exercises; and penetration testing to
develop our response to potential
incidents, such as ransomware
attacks. Vulnerability management,
monitoring and alerting processes
are in place to help protect the
Company against cyber attacks.
—
Our annual awareness campaigns
promote our global cyber-security
policies and procedures, handling of
confidential data, social media and
cyber-security practices, and remind
employees of resources available to
protect themselves, Haleon and
consumers. Internal policies for
protecting Company assets include
protection of information, acceptable
use of technology resources, AI and
related procedures. We are focused
on minimising risks through fostering
secure practices and behaviours, for
example, constant programmes aimed
at recognising and reporting suspicious
online behaviour or phishing.
—
During 2024, Haleon did not identify
any significant cyber-security incidents.
>>
See also: Our approach to risk; the
Audit & Risk Committee Report; and
Risk factors on pages 51, 72 and 193.
we undertake additional due diligence.
In 2023, we joined the ethical supply
chain platform Sedex. In some of the
due diligence processes, we use a
combination of Sedex assessments
and Pharmaceutical Supply Chain
Initiative audits to assess risks to
drive improvements.
Haleon
Annual Report and Form 20-F 2024
21
Strategic Report
Our culture and people
Our approach to sustainability
Our Responsible Business strategy focuses
on three interconnected focus areas: making
everyday health more inclusive; reducing
our environmental impact; and upholding
our standards by operating with ethical,
responsible, and transparent behaviours
and standards of conduct. The following
pages outline Haleon’s progress against
our Environment and Health Inclusivity
focus areas. Progress against Upholding
our Standards is detailed on page 20.
The Board has overall responsibility for
the Group’s Responsible Business strategy,
delegated to the Environmental & Social
Sustainability Committee.
Tackling carbon emissions
In 2024
1
, we achieved a 50%
*
net reduction
in our market-based Scope 1 and 2 carbon
emissions versus 2020. We implemented
several projects to switch to renewable
energy sources such as renewable fuels
and electric steam generators, including
electric steam generator installation at
our sites in Pulo Gadung, Indonesia, and
Nairobi, Kenya. We have increased our
use of carbon offsets this year to offset
hard-to-abate Scope 1 emissions.
However, we have a staged plan to
reduce our use of offsets year-on-year
to a maximum of 5% of baseline year
emissions by 2030, in line with our Science
Based Targets Initiative (SBTi) target.
We are improving the granularity of the
data used for Scope 3 emissions reporting
each year, enabling more accurate
reporting of our baseline and our
performance in the reporting period.
Haleon’s source to sale Scope 3 emissions
decreased by 10% in the reporting period
1
versus 2022 due to the use of emission
factors that better reflect suppliers’
emissions reduction actions, inventory
reduction, initiatives to make our
packaging more sustainable, and switching
to lower emissions-intensity forms of
transport for logistics and distribution.
In January 2024, we launched Haleon’s
Sustainable Supply Chain Pledge, asking
our suppliers to demonstrate their shared
commitment to climate action. Signatories
are requested to move to renewable
electricity and develop a science-based
target in line with SBTi.
Making our packaging more sustainable
To reduce our use of virgin petroleum-
based plastic, we continued to scale up
current, and launch new initiatives in 2024,
focused on formats that account for the
largest share of our plastic packaging:
tubes and bottles. This included a
further roll-out of Centrum and
mouthwash bottles made with recycled
plastic, and the launch of toothpaste
tube caps made using bioplastic.
We also remain on track to develop
solutions for product packaging to be
recycle-ready
2
by 2025 where safety,
quality and regulations permit. We expect
80-85% of our product packaging to be
recycle-ready by the end of 2025 on this
basis. In the 2024 reporting period, 74%
*
of our packaging was recycle ready
1
.
For the remaining 15-20% of our product
packaging, there is not yet a recycle-ready
solution that meets the stringent safety,
quality and regulatory requirements for
healthcare packaging. For example, there is
currently no commercially available solution
to make Otrivin Metered Dose Nasal Spray
from a single packaging material that
enables the precise dosing and fine spray
needed to deliver the product benefit and
meet quality standards.
Sourcing trusted
ingredients sustainably
As part of our aim to source key
agricultural, forestry and marine-derived
ingredients and packaging materials more
sustainably, we increased our percentage
of sustainably sourced key materials to
81%
1,3
, primarily driven by an increase
in sustainably sourced paper materials,
to 80% of all paper materials in the
reporting period
1,3
. We maintained
strong performance on sustainably
sourced palm oil derivatives at 92%
1,3
.
Our Healthy Mint Supply Chain programme
in India has now enrolled over 7,500
farmers, increasing our percentage of
sustainably sourced mint to 91%
1,3
.
The programme is focused on improving
mint farming practices, reducing the
environmental impact while delivering
social benefits to the local community.
In 2024, new techniques, technologies
Running a responsible business is a strategic imperative
for Haleon and hardwired into how we do business.
and training for smallholder mint farmers
led to improved productivity, higher yields
and reduced water usage.
Integrating water stewardship
and waste circularity
With a focus on better water management
and less waste in our operations, we aim to
certify all our manufacturing sites with the
Alliance for Water Stewardship (AWS)
certification by 2025, and the TRUE waste
certification by 2030. We also aim for
water neutrality for sites in water-stressed
basins
4
by 2030. Since 2023, 12 of our
24 manufacturing sites have achieved
the AWS certification, with a further
seven recommended for certification.
Five of our manufacturing sites achieved
TRUE waste certification this year.
Health inclusivity
We aim to empower 50 million people
a year by 2025 to be more included in
opportunities for better everyday health.
In 2024, we empowered over 50 million
people
5
, achieving against our target one
year ahead of plan. We did this through
continuing to expand programmes which
build health knowledge, promote healthy
behaviours and address barriers to better
everyday health such as bias and prejudice.
We track the number of people
empowered by a variety of Haleon health
inclusivity initiatives, which reach people
directly, or through Health Professionals.
We take action to improve health
inclusivity by driving change through our
purposeful brands, empowering self-care,
investing in research and action, and
building healthier communities through
our community investment programmes.
>>
More information on our Responsible
Business strategy and performance is
available in Haleon’s Responsible Business
Report at
www.haleon.com/our-impact/
esg-reporting-hub
Haleon
Annual Report and Form 20-F 2024
22
Strategic Report
During 2024 we focused on:
—
Expanding the educational content
available on, and reach of, the Haleon
Health Partner online portal,
empowering over 35 million people
*
in
2024
5
. Health Professionals engaging
with tools and materials on the portal
increase their own and patients’ health
knowledge and understanding of
conditions and how to treat them.
—
Scaling up Theraflu’s ‘Rest and Recover’
programme, a multi-year initiative in the
US and Poland to champion the right
for workers to take time off when they
fall sick and the importance of doing so.
In 2024, we empowered over seven
million people
*5
in the US through
engagement with the programme.
—
Expanding Polident’s ‘Smiles Can’t Wait’
programme from Thailand and the
Philippines to Indonesia, with an aim to
make dentures and denture care more
accessible by providing treatment,
education on how to care for dentures,
and by tackling stigma associated
with tooth loss.
—
Continuing our work with Remote Area
Medical and Walmart to provide free
dental health education and treatment
through mobile dental vans to
underserved communities in the US
—
Leveraging the latest results of the
Health Inclusivity Index to inform
policies and actions to improve health
inclusion, including at the Global Health
Literacy Summit and Future of Health
Summit. We continue to support
Economist Impact in further research and
will publish Phase 3 findings in 2025.
—
Joining the British Red Cross’ Disaster
Relief Alliance. The Alliance works to
provide vital aid in the immediate
aftermath of an emergency, but also
invests in preparedness programmes,
helping to build more resilient
communities which are better prepared
for, and can recover faster from,
potential future emergencies.
>>
More information on the Health Inclusivity
Index is available at
www.impact.
economist.com/projects/health-
inclusivity-index
Our aims
2024 performance
1
2023 performance
1
2022 performance
1
Empower millions of people a year to be more
included in opportunities for better everyday health,
empowering 50 million people a year by 2025
5
.
50
m+
41
m+
22
m+
Reduce our net Scope 1 and 2 carbon emissions
by 100% by 2030 vs a 2020 baseline
6
.
-
50
%
*
-
48
%
-
44
%
Reduce our Scope 3 carbon emissions from source
to sale by 42% by 2030 vs a 2022 baseline
6
.
-
10
%
-
2
%
7
—
Reduce our use of virgin petroleum-based plastic by
10% by 2025, and a third by 2030 vs a 2022 baseline
8
.
-
1
%
+
3
%
—
Develop solutions for all product packaging to be
recycle-ready by 2025, as part of our goal to make
all packaging recyclable or reusable by 2030,
where safety, quality and regulations permit
2
.
74
%
*
70
%
65
%
All key agricultural, forest and marine-derived
materials used in our ingredients and packaging to be
sustainably sourced and deforestation-free by 2030
3
.
81
%
62
%
—
>>
Further details are in our TCFD and SECR disclosures from pages 24 and 188, our principal risk related to ESG on page 55, and Notes 1 and 12 to the
Consolidated Financial Statements on pages 124 and 136.
>>
For further information on our reporting criteria please see Haleon’s 2024 Responsible Business Basis of Reporting. The Responsible Business
Report, KPMG LLP’s limited assurance conclusion and Haleon’s reporting criteria are available at
www.haleon.com/our-impact/esg-reporting-hub
*
KPMG LLP has issued independent limited assurance over the selected data
indicated using assurance standards ISAE(UK) 3000 and ISAE3410.
1
The 2024 and 2023 reporting periods for Scope 1 and 2 Carbon emissions (market-
based) and health inclusivity is 1 December (in the prior year) — 30 November (in the
year stated). The 2022 reporting period for these metrics is the calendar year. The annual
reporting period for Scope 3 emissions, plastic, packaging and sustainable sourcing is
1 July (in the prior year) — 30 June (in the year stated). 2020 and 2022 baseline reporting
periods are calendar years.
2
Recycle ready refers to product packaging and devices that are made of materials that
are proven to be compatible with existing or emerging recycling infrastructure. In line
with the CDP definition of ‘technical recyclability’ this does not take into account
whether the collection, sorting and recycling of the packaging or device happens in
practice, at scale, and with reasonable economics. The reported result against this KPI
includes all packaging in scope of our reporting, and does not exclude packaging where
there is not a recycle-ready solution that meets stringent safety, quality and regulatory
requirements for healthcare packaging.
3
Scope includes Haleon’s globally managed spend on key materials which are
agricultural, forestry or marine-derived. Globally managed spend covers the majority of
our internal spend and expands across some of our third-party manufacturing network.
This is the first year this KPI is reported as an aggregate measure with all key materials.
4
Determined using publicly available tools to identify water risk, such as the World
Resources Institute Aqueduct Tool, site-specific reviews of local water risk using local
data, and materiality of the risk to the business.
5
Reporting period = 1 December 2023 — 30 November 2024. Multiple initiatives,
measured in several different ways, contribute to this result. In some cases proxies for
empowered have been used, and estimations, extrapolations and assumptions have
been made. Recognising this limitation, the published result is accurate to the best of
our ability and knowledge.
6
Scope 1, 2 and 3 emissions calculated in line with the GHG Protocol. Scope 1 and 2 are
market-based emissions from Haleon’s operational control. Our 2030 Scope 1 & 2 goal is
underpinned by a 95% absolute reduction target. Scope 3 estimated footprint includes
all indirect emissions from Haleon’s value chain, and our source to sale commitments
include GHG Protocol categories except 6, 7 and 10-15. For further information on our
reporting criteria see Haleon 2024 Responsible Business Basis of Reporting.
7
Calculated in accordance with methodology and data improvements and updated
carbon emissions factors, and so the 2023 value differs from the value disclosed in
the 2023 Annual Report and Form 20-F.
8
Scope includes product packaging and some devices, including toothbrushes.
Haleon
Annual Report and Form 20-F 2024
23
Strategic Report
Our approach to sustainability
Audit & Risk Committee
Environmental & Social
Sustainability Committee
Remuneration Committee
Executive and Managerial-Level Governance Committees,
including Environment
Executive Team Risk Forum (formerly ERCC)
Chief Executive Officer and Executive Team
Haleon Board
Sustainability Compliance and Risk Forum
Our approach to sustainability
continued
Task Force on Climate-related Financial Disclosures (TCFD)
Compliance statement
In accordance with the FCA’s UK Listing Rule
6.6.6R, the Companies Act 2006 s414CB(A1)
and (2A) and the SEC’s Guidance Regarding
Disclosure Related to Climate Change
(2010), we present our TCFD compliance
statement and confirm that we have
made climate-related financial disclosures
for the year ended 31 December 2024
which are consistent with the TCFD
Recommendations and Recommended
Disclosures, on pages 24–31.
We also include climate-related
disclosures throughout Haleon’s Annual
Report and Form 20-F 2024, including
information on our principal risk related
to ESG on page 55, key performance
indicators on page 33, Notes 1 and 12
of the Financial Statements on page 124
and from page 136, and reporting for the
UK Government’s guidance on Streamlined
Energy and Carbon Reporting (SECR) on
pages 188 and 189.
Governance
Governance over climate-related risks
and opportunities is consistent with the
governance structures in place across
Haleon, comprising of the Board, Board
committees, executive and management-
level governance committees, and
specialist working groups across the
business (see diagram below, with
arrows indicating flow of information).
The Board takes overall accountability
for risk and opportunity management,
including climate change. The Board
delegates specific matters related to
climate change to subcommittees in
the following ways:
—
The Environmental & Social Sustainability
Committee (ESS) provides oversight and
effective governance over progress
with the environmental and social
sustainability agenda, including climate
change. The ESS Committee meets at
least three times a year and is
comprised of four Non-Executive
Directors. In 2023, the ESS Committee
received an outside-in assessment and
deep dive facilitated by external
experts, to evaluate Haleon’s
Responsible Business strategy and goals,
including those on climate. In 2024,
the ESS Committee had a series of deep
dives complemented by externally
facilitated subject matter experts
which focused on specific topics,
including implications for Haleon’s
net zero priorities.
—
The Audit & Risk Committee meets at
least four times a year and oversees
Haleon’s principal risks, including
Haleon’s principal risk related to ESG,
which covers climate change (page 55).
—
The Remuneration Committee meets
at least four times a year and supports
Haleon’s climate strategy by aligning
Haleon’s Performance Share Plan with
ESG performance via the ESG qualifier.
This includes our Scope 1 and 2
decarbonisation goal (page 85).
The Chief Executive Officer and the
Executive Team are responsible for the
delivery of Haleon’s Responsible Business
strategy, and they are supported by various
governance forums to monitor the climate
strategy, including the management of
climate-related risks and opportunities.
—
The Environment Steering Committee
governs progress against Haleon’s
environment strategy and commitments,
including climate change commitments.
The Committee meets at least quarterly
and makes strategic recommendations on
managing our environmental footprint for
approval by the Executive Team and the
Board. It also monitors climate-related
risks, opportunities and regulations.
It is chaired by the Vice President of
Sustainability and Executive Team
members include the Chief Corporate
Affairs Officer, the Chief Supply Chain
Officer, and the Chief R&D Officer.
—
The Executive Team Risk Forum (Risk
Forum) consists of members of the
Executive Team and Heads of Audit &
Risk and Ethics & Compliance. The Risk
Forum meets at least four times per year
and is responsible for ensuring that the
principal risks are managed effectively.
This includes Haleon’s principal risk
Haleon
Annual Report and Form 20-F 2024
24
Strategic Report
related to ESG, which covers climate-
related risks (page 55). In April 2024,
the Risk Forum reviewed the principal
risk related to ESG. The principal risk is
owned by the Chief Corporate Affairs
Officer and monitored through Haleon’s
risk management framework described
on page 51.
—
Compliance and Risk Forums (CRF) are
conducted by our functional teams,
categories, and business units, to
embed risk management in day-to-day
business operations. The Sustainability
CRF meets at least every other month
and is responsible for monitoring,
assessing, and mitigating potential risks
that may impact Haleon’s responsible
business strategy delivery, including
risks associated with climate change.
Membership includes the Vice President
of Sustainability and members of the
sustainability team.
—
Working groups in our global functions,
global categories and business units
integrate responsible business targets,
principles and initiatives (including
those related to climate change) into
Haleon’s strategic business planning
process, capital planning and
budgeting, evaluation of potential
divestments or acquisitions, day-to-day
responsibilities and metric management.
Responsible business scorecards, at both
enterprise-wide and business unit level,
track in-year targets against our
responsible business commitments,
including targets tracking carbon
emissions reduction. The ESS and the
Executive Team receive progress updates
against these quarterly as a tool to
evaluate performance and inform
decision-making, including on
climate-related issues.
Responsible business targets are
incorporated into employee personal
objectives and performance evaluations
where relevant, including climate-related
objectives for executive management.
Executive remuneration is tied to specific
responsible business-related KPIs. For the
year ended 2024, this included climate-
related objectives (pages 33 and 90).
Strategy and risk management
Identifying, assessing, and managing
climate-related risks
The process for identifying, assessing
and managing climate-related risks is
consistent with Haleon’s four-step
enterprise risk management process
described on page 51. This ensures that
accountability for the identification,
assessment, mitigation and monitoring
of risks is aligned with Haleon’s strategic
objectives. At the corporate level, ESG
and the integration of sustainability and
climate-related risks into our business
and investment decisions was identified
as a principal risk; read more on page 55.
We have developed our Responsible
Business strategy and goals, including
those related to climate, to manage risks
as well as realise opportunities, such as
changing consumer preferences.
The Sustainability CRF leads the
environmental (including climate) and social
risk identification and assessment process,
which is conducted on an ongoing basis.
Risks are assessed by taking into
consideration the likely impact (considering
both financial and reputation impacts),
the probability of the risk, and the controls
that are in place to manage the risk, in line
with Haleon’s risk management framework
outlined on page 51. This helps to
identify those risks and controls where
management should focus its effort.
Continuous evaluation and management
of risk is embedded in our strategy to
enable an appropriate, measured and
timely response. Risk owners are assigned
to the risks (including climate risks) and
continually monitor and assess each risk.
A combination of internal knowledge and
external factors, such as horizon scanning,
legal and regulatory developments, and
emerging climate science, are considered to
determine whether to mitigate, transfer or
accept climate-related risks. In some cases,
it may be deemed appropriate to transfer
the risk, for example by discharging costs
or liability to another party in our value
chain. Part of the risk assessment process
is also acceptance: establishing a level of
comfort with the risk, considering our
existing control strategies, and considering
them currently sufficient.
The most significant climate-related risks
and opportunities are described in detail
on pages 27 to 31 along with our plans to
manage these. These are considered to
have the most significant impact on our
business, strategy and financial planning.
Risk and mitigation plans undergo a formal
review at least once a year. Haleon
performed a climate-related risk and
opportunity assessment using scenario
analysis in 2023 and plans to conduct these
assessments at least every three years.
Our resilience to climate change
As outlined in the risks on pages 27 to 31,
the quantitative scenario analysis indicates
that our business is not at high risk of
facing significant financial impacts from
climate-related risks in the short term.
The analysis was performed in 2023,
however the results are still relevant to
the business. Any climate-related risks
with a medium-risk financial impact are
either projected to occur in the long term
or have already been addressed through
our mitigating actions. As a result, we do
not anticipate the need for major changes
to our strategy to respond to these risks.
In the medium and long term, we need to
consider transition risks. The transition to a
low-carbon economy could have financial
implications for Haleon, as consumer
preferences shift towards sustainable
products, potentially impacting our market
share and brand reputation. Additionally,
increased carbon taxes on emissions
across our operations and supply chain
could also have financial impacts.
However, these risks can be mitigated if
we achieve our carbon reduction targets
for emissions across all scopes. We have
already conducted life-cycle assessments
for 11 key products to better understand
and mitigate the risks associated with their
life-cycle stages. You can read more in our
Climate Action Transition Plan.
In the long-term, we need to be aware
of the impacts of physical risks. Our key
facilities could be affected by flooding
and heatwaves, leading to disruption and
damage. Our Oral Health product line
could also be impacted by disruptions in
the supply of raw materials, particularly
wheat and corn, which are at a higher risk
of yield impact due to long-term climate
change. While we already have a resilient
sourcing strategy for these key crops, we
need to continue monitoring the situation.
The transition to a low-carbon economy
also presents an opportunity for Haleon,
as consumer preferences shift towards
more sustainable products. To capitalise
on this opportunity, we need to improve
the sustainability of our products and
make consumers aware of these
changes through effective claims
and consumer messaging.
Haleon
Annual Report and Form 20-F 2024
25
Strategic Report
Our approach to sustainability
Task Force on Climate-related Financial Disclosures (TCFD) continued
Our approach to sustainability
continued
Climate-related scenario analysis
Climate-related scenario analysis is used
to assess the potential impact of climate-
related risks and opportunities. In 2022,
we performed our first qualitative analysis
which we refreshed in 2023, both
qualitatively and quantitatively, in order to
assess the risks and opportunities in greater
detail and understand the impact of climate
change on our existing business model.
A year has passed since we conducted our
scenario analysis under the TCFD framework.
However, the insights derived from this
analysis remain relevant. The results have
been used to inform our strategy and
financial planning, including updates to
our underlying cash flows for our planned
actions to meet our climate ambitions.
We worked with a sustainability intelligence
company, Risilience, to quantify the
potential financial impact of our
physical and transition climate risks and
opportunities. Risilience used a ‘Digital
Twin’, which is a data-driven digital
representation of our business and value
chain. This used internal data from our
business including current and approved
financial projections, market breakdown,
key facilities, raw materials and our GHG
footprint, to stress-test and quantify the
potential financial impact of climate risks
and opportunities under different scenarios.
The climate scenarios used as part of
the analysis are outlined below. We also
modelled a 2.5°C warming trajectory but
we are not disclosing it here as we are
only disclosing the results with the
highest potential impact.
Warming trajectory
by 2100
Climate scenarios
Rationale behind climate scenario analysis selection
1.5ºC
Paris Ambition: Rapid
transition to a low-carbon
economy with orderly
emissions reductions
and rapid consumer
preference change.
Enables us to test our business strategy against the most optimistic scenario from
a climate-transition perspective.
Aligns with our target to be a net zero business from source to sale by 2040,
aligned to guidance from The Climate Pledge and Race to Zero.
Aligns with TCFD and IPCC
1
recommendations to include a 2°C or lower scenario,
with 1.5°C scenario recommended as the ‘2°C or lower’, aligning with the latest
scientific research from the IPCC.
This scenario represents the worst case’/ highest potential for transition risk
for our business.
>4ºC
No Policy: Reversal of
emissions reductions and
abolishment of climate policy
leading to extreme warming.
Enables us to test business strategy against the worst-case scenario from a
physical risk perspective.
This scenario was used in our qualitative analysis in 2022.
A number of assumptions were made
in carrying out the analysis:
—
Current mitigating actions were not
modelled for any of the scenarios.
—
All scenarios were modelled
independently, i.e., no correlation
was assumed between different risks
and opportunities.
—
Investment costs required to
realise opportunities were not
taken into account.
While many scenario models and techniques
are advanced, we recognise that knowledge
in this area is growing, and we expect
models and pathways to evolve with time.
Models also have limitations, and there
are certain areas which are challenging to
model. Additionally, in certain situations,
different models can project contrasting
results. In these situations, we have
considered how different outcomes
would impact our businesses.
1
We used the IPCC Representative Concentration Pathways (RCPs) to assess physical climate risk. RCPs are commonly used by climate scientists to assess physical climate risk,
with each pathway representing a different GHG concentration trajectory which can then be translated into global warming impacts. We used climate data from the World Climate
Research Programmes Coupled Model Intercomparison Project — Phase 6 (CMIP 6 — adjusted for spatial resolution and bias corrected) to do this translation. RCPs feed into climate,
crop and flood models. There are four RCP pathways with RCP8.5 representing the worst case scenario.
Impact of climate-related risks
and opportunities and resilience of
our strategy
In 2023, we updated the time horizons
used to consider the impact of climate
risks and opportunities. The length of
the time horizons were reduced to allow
greater alignment to modelling capabilities
for quantitative scenario analysis and to
reduce the risk of modelling uncertainties
associated with using time horizons
beyond 2050. This provides more accurate
results compared to using longer time
horizons and aligns with our business risk
cycles, allowing us to use the analysis for
strategic decision making.
We define short, medium and long-term
horizons as follows:
—
Short-term (0-4 years)
: aligns to
our financial planning and risk
management framework.
—
Medium-term (5-9 years)
: aligns to
our interim Scopes 1, 2 and 3 emissions
reduction targets of 2030.
—
Long-term (10+ years)
: aligns to our
net zero target of 2040 and the UK
Government’s net zero target of 2050.
Haleon
Annual Report and Form 20-F 2024
26
Strategic Report
Physical risks
Risk
Impact analysis
Management of risk
Impact of extreme
weather events on
operations and
supply chain
The revenue and cost
impact of damage and
disruption to key
facilities from the
following climate
hazards: riverine, coastal
and flash flooding,
heatwaves, water stress,
and temperate and
tropical windstorms.
Potential impacts included in our Paris Ambition (1.5°C)
and No Policy (4°C) scenario analysis included:
—
Revenue disruption from the interruption of supply of
electricity, gas and water, due to heatwaves and flooding.
—
Inefficiencies in production due to disrupted
employee travel, e.g., caused by flooding.
—
Increased facility and operational down time,
due to damaged transport infrastructure.
—
Direct damage to stock, buildings, and contents
from flood and windstorms.
Under a No Policy (4°C) scenario, the hazards with the
greatest potential to impact our business are riverine and
flash flooding, and heatwaves, over the long-term time
horizon. Three of our sites, Guayama (Puerto Rico), Tianjin
(China) and Dungarvan (Ireland), are at greatest risk of
property damage from riverine flooding owing to their
close proximity to rivers.
Sites in the US, southern Europe and eastern China are
located in regions that could experience a rapid increase
in heatwave probability driven by global average
temperatures and the likelihood of prolonged extreme
temperature events. Heatwaves have the potential to
cause disruption through interrupting our supply chain
(such as from infrastructure damage to the road and rail
network) as well as reducing the productivity of our
workforce through human health impacts.
The risk of water stress is considered to be low with 0.4%
of annual revenue from our owned sites being potentially
impacted in the long-term (by 2050).
Assumptions:
—
2023 financial values are kept constant up to 2050 and
acute physical risk shocks were applied to these values.
—
The revenue share for our sites was assumed to be site
revenue as a proportion of total revenue. The remaining
revenue share was split proportionally across third-
party manufacturers’ sites.
—
Meteorological conditions that could lead to water
stress (i.e., severe drought) were considered. Local
geological conditions were excluded from the analysis.
Actions:
—
In 2024 we conducted refresher training
for regional EHS and engineering leads on
climate risks.
—
Manufacturing sites are included within a
loss-prevention survey programme and are
routinely visited to confirm appropriate
resilience measures are in place, including
flood, wind and storm protection.
—
Our manufacturing sites have emergency plans,
disaster recovery plans (DRPs), and business
continuity plans (BCPs), which we continuously
improve to further enable our sites to withstand
extreme weather events.
—
Our BCPs include options for multiple sourcing
for manufacturing of our products. This is
achieved by using a combination of Haleon or
third-party manufacturing organisations’ sites,
spread across different geographies.
—
We conducted value-chain water footprint
analysis to better understand potential
water-related risks in specific geographies
and prioritise actions.
—
All our manufacturing sites are implementing
the Alliance for Water Stewardship (AWS)
standard to address local water-related risks
and opportunities. Since 2023, 12 of our sites
have been certified with a further seven
recommended for certification. In 2023 our
Cape Town site became water neutral
following water replenishment activities in
2022 with WWF South Africa.
Metrics and targets:
—
All our manufacturing sites in water-stressed
basins
1
to be water neutral by 2030. We consider
water neutrality achieved when the amount of
water replenished in the catchment exceeds
the site’s water withdrawal.
—
We aim for AWS certifications at all our
manufacturing sites by the end of 2025.
—
In 2024 we implemented a new metric to monitor
the percentage of sales generated by our own
sites at high risk of extreme weather events.
Paris Ambition (1.5°C)
S
M
L
No Policy (4°C)
S
M
L
1
Determined using publicly available tools to identify water risk, such as the WRI Aqueduct Tool, site-specific reviews of local water risk using local data, and materiality of the risk to
the business.
Key
Time horizon for impact
S
Short-term
M
Medium-term
L
Long-term
0-4 years
5-9 years
10+ years
Financial impact of risk or opportunity
Low risk
Medium risk
High risk
Opportunity
£10m-£40m
£40m-£80m
>£80m
Haleon
Annual Report and Form 20-F 2024
27
Strategic Report
Our approach to sustainability
Task Force on Climate-related Financial Disclosures (TCFD) continued
Our approach to sustainability
continued
Physical risks
Risk
Impact analysis
Management of risk
Reduced availability of
raw materials due to
chronic weather impact
The financial impacts on
ingredient production
due to chronic climate
change induced by
changing temperature
and precipitation
patterns. The following
raw materials were
considered for the
analysis: corn, wheat,
mint, palm oil and
soybean.
Potential impacts included in our Paris Ambition (1.5°C)
and No Policy (4°C) scenario analysis included:
—
Reduction in crop yields leading to supply and
demand implications and price volatility.
—
Supply shortages which could prevent or limit the
production of key product lines and lead to a
loss in revenue.
—
Increased costs due to long-term chronic drought
affecting crop supply and implementation of
adaptation measures such as irrigation solutions.
Scenario analysis was conducted to assess the financial
impact of crop yield fluctuations caused by long-term
climate change for our key crops. Changes in rainfall and
temperature were assessed using data on crop sourcing
locations and crop vulnerability. The effects of sudden
hazards like heatwaves and droughts on crops were also
assessed, considering the sourcing locations with a high
likelihood or increasing probability of such events.
Changes in long-term precipitation and temperature
patterns under the No Policy (4°C) scenario are likely to
affect wheat and corn sourcing, with wheat experiencing
the largest average percentage yield decline of c.37%
between 2023 and 2050. Our key sourcing regions for
these crops (France, US and UK) could also be impacted
by extreme weather events, such as drought or severe
heatwave events, further reducing crop yields.
In our Oral Health products, corn is a crucial feedstock.
However, the projected impact on corn yields in 2050 is
anticipated to be minimal, accounting for less than 3% of the
total revenue generated by Oral Health products in 2023.
Under the No Policy (4°C) scenario, certain areas of
central US may see corn yields decline as a result of
precipitation variation.
Assumptions:
—
2023 financial values are kept constant up to 2050 and
acute physical risk shocks are applied to these values.
—
The impact of climate conditions on raw material supply is
limited to temperature and precipitation. Other conditions,
such as soil quality, were excluded from the analysis.
—
Revenue impacts were considered in terms of
reduced crop yields leading to production limitations.
Price fluctuations were not considered in the analysis.
Actions:
—
Seek to assess feasibility of substituting
raw materials with lower-risk alternatives,
for example replacing corn-derived ingredients
with alternatives to reduce exposure to yield
and cost fluctuations.
—
We have a robust sustainable sourcing
strategy in place (pages 22 and 23).
—
Our sourcing strategy involves multiple
sourcing options from different geographies
and holding materials’ safety stocks where
feasible. Continuity of supply is a priority for
our procurement team.
—
Haleon has defined and launched its Supplier
ESG Expectations, which outlines the targets
we have set our suppliers, such as requiring
materials to be covered by industry-recognised
certifications where relevant.
—
Sustainability requirements are embedded
into tender processes.
Metrics and targets:
—
We aim for all of our key agricultural, forest,
and marine-derived materials to be sustainably
sourced and deforestation-free by 2030
1
.
For the key material supply chains in scope of
this goal, we use recognised global certification
programmes wherever possible, for example
Roundtable on Sustainable Palm Oil (RSPO)
Mass Balance certification for our palm oil
derivatives, and Forest Stewardship Council
(FSC) and Programme for the Endorsement of
Forest Certification (PEFC) certifications for our
paper packaging materials. Where these are
not available, we are working with independent
experts to define clear standards and processes
for sustainable sourcing based on the specific
issues and opportunities for each material.
Paris Ambition (1.5°C)
S
M
L
No Policy (4°C)
S
M
L
1
Scope includes Haleon’s globally managed spend on key materials that are agricultural, forest, or marine-derived. Globally managed spend covers the majority of our internal spend
and expands across some of our third-party manufacturing network.
Key
Time horizon for impact
S
Short-term
M
Medium-term
L
Long-term
0-4 years
5-9 years
10+ years
Financial impact of risk or opportunity
Low risk
Medium risk
High risk
Opportunity
£10m-£40m
£40m-£80m
>£80m
Haleon
Annual Report and Form 20-F 2024
28
Strategic Report
Transition risks
Risk
Impact analysis
Management of risk
Carbon pricing policy
The financial impacts of
carbon taxes on
emissions across our
operations and supply
chain.
Potential impacts included in our Paris Ambition
(1.5°C) scenario analysis included the following
(the No Policy (4°C) scenario was not relevant):
—
Direct increase to overhead costs from Scope 1
and 2 emissions (e.g., cost of electricity and fuel).
—
Increased cost of raw materials from upstream
suppliers passing through increased costs
from Scope 3 emissions.
—
Reduction in sales from passing the costs
from carbon taxes on to consumers.
Under a Paris Ambition (1.5°C) scenario where global
carbon prices are expected to grow significantly from
2023, the potential impact is a medium risk if we do
not reach our SBTi-aligned target for Scope 1 and 2
emissions. However, if we meet our SBTi target, the
risk is significantly reduced as we aim to achieve
at least 95% absolute Scope 1 and 2 emissions
reduction by 2030 (vs a 2020 baseline).
Indirect Scope 3 emissions account for the majority
of our exposure to carbon costs, particularly
upstream emissions associated with farming and
processing, which could be passed on by our
suppliers. We have limited ability to influence these
costs as they will depend on the extent to which
suppliers reflect carbon tax expenditure within
prices. The risk of indirect Scope 3 costs will be
greatly reduced if we are able to meet our
commitment to reduce Scope 3 emissions from
source to sale by 42% by 2030 (vs a 2022 baseline)
and deliver our net zero source to sale target by
2040, aligned to guidance from Race to Zero and
Amazon Climate Pledge.
Assumptions:
—
Business as usual emissions trajectory where
emissions grow proportionally to revenue growth.
—
Linear trajectories were used between scenario
data points to estimate climate pricing data for
intervening years.
—
All global emissions are subject to carbon
pricing and no border adjustments were
included in the analysis.
—
No risk is assumed under a No Policy (4°C)
scenario. This is due to this scenario representing
a reversal of current policies including currently
implemented carbon prices.
—
Carbon price used in the analysis (2027 weighted
average carbon price (USD/tonne): $83.45.
Carbon prices used in analysis were collated from
sources such as the International Monetary Fund,
International Energy Agency and Network for
Greening the Financial System.
Actions:
—
Delivery of our carbon emissions reduction targets
for Scopes 1, 2 and 3 carbon emissions as outlined
below and in our Climate Action Transition Plan will
mitigate our operations’ exposure to future carbon
pricing and environmental taxation.
—
We work with our suppliers and through industry
groups such as Energize to help suppliers map their
carbon emissions and take actions to reduce their
carbon footprint.
—
We have launched our Supplier Climate Training
Programme with over 350 suppliers. The aim is to
educate and support them on their decarbonisation
journey. This covers topics like: transitioning to
renewable electricity, carbon footprint and
emissions calculations and carbon pricing.
—
In 2024, Haleon implemented an internal carbon
pricing scheme that converts carbon emissions into
a commercial value for supplier selection criteria.
This mechanism encourages suppliers to reduce
their carbon footprint to make themselves more
competitive. Haleon’s carbon price follows the EU
ETS cost of carbon.
Metrics and targets:
—
Reduce net Scope 1 and 2 carbon emissions by 100%
by 2030 vs a 2020 baseline, underpinned by our SBTi
target to reduce absolute Scope 1 and 2 carbon
emissions by 95% by 2030 vs a 2020 baseline.
—
Reduce Scope 3 carbon emissions from source to
sale by 42% by 2030 vs a 2022 baseline.
1
—
Achieve net zero carbon emissions from source to
sale by 2040, aligned to guidance from the Climate
Pledge and Race to Zero.
1
Paris Ambition (1.5°C)
S
M
L
No Policy (4°C)
Not applicable
1
Our net zero and Scope 3 carbon emissions targets span carbon emission categories from source to sale (excluding GHG protocol categories 6, 7 and 10-15).
Key
Time horizon for impact
S
Short-term
M
Medium-term
L
Long-term
0-4 years
5-9 years
10+ years
Financial impact of risk or opportunity
Low risk
Medium risk
High risk
Opportunity
£10m-£40m
£40m-£80m
>£80m
Haleon
Annual Report and Form 20-F 2024
29
Strategic Report
Our approach to sustainability
Task Force on Climate-related Financial Disclosures (TCFD) continued
Our approach to sustainability
continued
Transition risks
Risk
Impact analysis
Management of risk
Changing consumer
preferences: risk
The financial impacts of
taking action towards
the sustainability of our
products, and consumer
purchasing shifting
towards more
sustainable brands
(e.g. products with
less plastic or more
recyclable packaging).
Potential impacts included in our Paris
Ambition (1.5°C) and No Policy (4°C)
scenario analysis included:
—
Reduction in product sales and loss
in market share.
—
Reputational damage and reduction
in brand loyalty.
Under a Paris Ambition (1.5°C) scenario,
it is expected that consumers will rapidly
shift towards more sustainable products.
The unmitigated potential risk to our
business is considered to be medium.
The majority of potential revenue loss is
driven by our Oral Health products which
represent the largest share of total revenue.
Oral Health product consumers in the US
are likely to see a rapid shift towards
more sustainable products.
Assumptions:
—
Buying preferences will vary at
differing rates across global regions.
—
To model demand shifts of our products,
consumer-led demand for sustainable
packaging was used as a proxy.
—
The risk was modelled under a scenario
where we do not act to improve the
sustainability of our products, in order
to analyse the unmitigated impact of
consumer demand shifts.
Actions:
—
To meet or exceed the expectations of Haleon’s key
stakeholders, including consumers, we are committed to deliver
on our Responsible Business strategy and targets (page 23).
—
We conducted an extensive study to explore and understand
the importance of social and environmental issues to people
around the world, to understand their sustainability priorities
in relation to our categories of Oral Health, OTC and VMS.
We conducted quantitative research in 11 markets in 2022
(Australia, Brazil, China, Germany, Indonesia, Italy, Poland,
South Africa, Thailand, UK, US) and qualitative research in four
markets in 2023 (China, Germany, UK, US) that included online
consumer communities, digital listening (US), cultural analysis
and expert interviews. This work has given us an understanding
of consumers’ priorities, identifying opportunities for Haleon to
help address these.
—
Using our sustainability claims tracker, twice a year we monitor
the incidence of environmental and social sustainability claims
across new product launches in our categories.
—
Haleon’s sustainability impact assessment tool (SIAT) enables
our R&D teams to calculate, analyse and compare the impact of
product and packaging design decisions on key environmental-
impact parameters (including carbon footprint and packaging).
—
In 2024 we improved the SIAT scoring process to make it more
quantitative and introduced a weighted sustainability scoring.
—
We are participating in externally verified sustainable choice
ranges such as Amazon’s ‘Climate Pledge Friendly’ programme
as well as making direct sustainability statements in relation to
our products.
—
With a focus on health inclusivity, our brands seek to tackle
specific barriers that stand in the way of better everyday health.
This includes empowering consumers and Health Professionals
to better understand the impact of climate change on health
and equip both with tools and solutions to manage and
mitigate the impact on everyday health.
Metrics and targets:
—
Haleon has set targets with an aim to respond to changing
consumer preferences, for example our aims for 100% of
product packaging to be recycle-ready by 2025 and recyclable
by 2030, where safety, quality and regulations permit, and to
reduce our use of virgin petroleum-based plastic by 10% by
2025 and by a third by 2030 vs a 2022 baseline
1
. See page 23
for our performance. Where relevant, we incorporate
environmental credentials into consumer-facing statements
or listings in retailers’ sustainable choices ranges.
Paris Ambition (1.5°C)
S
M
L
No Policy (4°C)
S
M
L
Key
Time horizon for impact
S
Short-term
M
Medium-term
L
Long-term
0-4 years
5-9 years
10+ years
Financial impact of risk or opportunity
Low risk
Medium risk
High risk
Opportunity
£10m-£40m
£40m-£80m
>£80m
1
Scope includes product packaging and some devices, including toothbrushes.
Haleon
Annual Report and Form 20-F 2024
30
Strategic Report
Transition opportunities
Opportunity
Impact analysis
Management of opportunity
Changing consumer
preferences:
opportunity
The financial impacts
of taking action towards
the sustainability of
our products, and
consumer purchasing
shifting towards
more sustainable
brands (e.g., products
with less plastic or more
recyclable packaging).
Potential impacts included in our Paris Ambition (1.5°C)
and No Policy (4°C) scenario analysis included:
—
Changing consumer demand to low-carbon alternatives
leading to a gain in market share and an increase in
product sales.
—
Positive reputational impacts and increasing
brand loyalty.
The potential market opportunity for more sustainable
products could be significant under a Paris Ambition (1.5°C)
scenario, equating to 2.6% additional revenue in 2032,
compared to baseline projected revenues. Consistent with
the related risk, the greatest potential for upside is driven
by our Oral Health products.
The size of the potential opportunity decreases in the long
term, as more products align with consumer preferences and
take actions to meet future climate targets. Therefore, the
opportunity reduces for product groups which have already
seen a sustainable shift.
Assumptions:
—
Buying preferences will vary at differing rates across
global regions. To model demand shifts for Haleon’s
products, consumer-led demand for sustainable
packaging was used as a proxy.
—
The opportunity was modelled under a future where
we work to improve the sustainability of our products
in order to understand the potential financial gains that
could be realised.
Actions:
—
Management activities as for equivalent risk
on page 30, with a focus on realising
opportunities of responding to changing
consumer preferences.
Metrics and targets:
—
Haleon has set targets with an aim to respond
to changing consumer preferences, for example
our aims for 100% of product packaging to be
recycle-ready by 2025 and recyclable by 2030,
where safety, quality and regulations permit,
and to reduce our use of virgin petroleum-
based plastic by 10% by 2025 and by a third by
2030 vs a 2022 baseline. See page 23 for our
performance. Where relevant, we incorporate
environmental credentials into consumer-facing
statements or listings in retailers’ sustainable
choices ranges.
Paris Ambition (1.5°C)
S
M
L
No Policy (4°C)
S
M
L
Metrics and targets
We have made significant progress in
establishing our standalone Responsible
Business strategy as a separately listed
company (following demerger in July
2022). This has included the development
of targets, associated delivery plans to
meet targets, performance and risk
management forums and processes.
As outlined in this disclosure, we have
developed metrics alongside our scenario
analysis which are used to monitor certain
risks and opportunities. This includes
cross-industry metrics and targets
recommended by TCFD, which can be
found mapped to risks and opportunities
on pages 27–31, in KPIs on page 33, our
Scope 1, 2 and 3 emissions set out in line
with the UK Government’s guidance on
Streamlined Energy and Carbon Reporting
(SECR) on pages 188 and 189, and built into
our ESG Qualifier as described on pages 33
and 85. In January 2025, SBTi validated our
near-term target to reduce absolute
Scope 1 and 2 GHG emissions by 95% by
2030 from a 2020 base year
1
, which is the
absolute target that underpins our target
to reduce net Scope 1 and 2 GHG
emissions by 100% by 2030 from a 2020
base year. SBTi also validated our target to
reduce absolute Scope 3 GHG emissions
from purchased goods and services,
capital goods, fuel and energy-related
activities, upstream transportation
and distribution, waste generated in
operations, upstream leased assets
and downstream transportation and
distribution by 42% versus our 2022
baseline within the same timeframe.
Haleon continues its journey to better
manage climate risks, and in 2024 we
have implemented a new metric to
monitor the percentage of sales
generated by our own sites at high
risk of extreme weather events.
Our 2024 performance and the key
areas which we will focus on in 2025
are described on pages 22 and 23.
Performance against these targets, along
with additional environmental metrics
and reporting methodologies, can be
found on our website.
>>
More information on our Climate Action
Transition Plan, including progress reported
in our 2024 Responsible Business Report, is
available at
www.haleon.com/our-impact/
esg-reporting-hub
1
The target boundary includes biogenic land-related emissions and removals from bioenergy feedstocks.
Key
Time horizon for impact
S
Short-term
M
Medium-term
L
Long-term
0-4 years
5-9 years
10+ years
Financial impact of risk or opportunity
Low risk
Medium risk
High risk
Opportunity
£10m-£40m
£40m-£80m
>£80m
Haleon
Annual Report and Form 20-F 2024
31
Strategic Report
Our approach to sustainability
Our key performance indicators
We have several enterprise metrics monitoring performance across the business, from which we select our key performance indicators
(KPIs). These are the most applicable in tracking our strategic performance, sustainability efforts and commitments to our key
stakeholders. The Board and Executive Team monitor our KPIs to ensure continued alignment to our strategy and, where applicable,
they are linked to Executive Directors’ remuneration.
>>
See also the Directors’ Remuneration Report from page 82, and forward-looking statements on page 218.
Delivery on our 4-6% guidance.
Relevance and calculation
Measures the strength of our existing portfolio.
Data is derived directly from our
Financial Statements.
Future focus
Continue to deliver on our guidance,
prioritising driving growth from increasing
penetration, brand building, innovation,
and developing routes to market.
A key profitability measure, measuring the
Group’s performance against its sustainable
growth model.
Relevance and calculation
Drives value-creating behaviours and captures
excess cash returned to shareholders via
share buybacks, which in turn increase
total shareholder returns.
Data is derived directly from our
Financial Statements.
Future focus
Top-line and bottom-line growth of the
business, reduction of interest charges through
optimal leverage and share buybacks.
Continued profitable growth.
Relevance and calculation
Our organic operating profit growth is an
important indicator of the strength of our
business model.
Data is derived directly from our
Financial Statements.
Future focus
Drive positive operating leverage, whilst at the
same time ensuring healthy investment to drive
top-line growth or return to shareholders.
Targeting medium term leverage of c.2.5x
net debt/adjusted EBITDA.
Relevance and calculation
Reducing our leverage strengthens our
balance sheet and maintains our
Investment-Grade credit rating.
Data is derived directly from our
Financial Statements.
Future focus
Operate a strong Investment-Grade
balance sheet with medium-term leverage
of c.2.5x net debt/adjusted EBITDA.
A key component in measuring the viability
of our business.
Relevance and calculation
Provides us with capacity to invest in the
business, pay down debt and make
shareholder returns.
Data is derived directly from our
Financial Statements.
Future focus
Drive free cash flow through a combination
of working capital management and
efficiencies across the business.
Drive market share gains through brand
building, innovation and increased
investment in A&P and R&D.
Relevance and calculation
The attractiveness of our products is key for all
our stakeholders, giving them confidence in our
ability to increase household penetration and
capitalise on new and emerging opportunities.
Based on Haleon’s analysis of third-party
market value sales data, including IQVIA,
Circana & NIQ data.
Future focus
Ensure healthy investment in A&P and drive
innovation through investment in R&D.
Organic revenue growth
1,2
Adjusted diluted earnings per share
(EPS) growth
1
Organic operating profit growth
1
Net debt/adjusted EBITDA
1
Free cash flow
1
Business gained/maintained share
Changes made to our KPIs
Following the strong strategic progress
made since our demerger, Haleon has
reviewed its KPIs, given a number of
targets are within sight of delivery.
Some key changes are:
—
Given Haleon’s commitment to active
portfolio management and the 2024
disposals of Nicotine Replacement
Therapy (NRT) outside the US, and
ChapStick, organic operating profit
growth is now a KPI (i.e. excluding the
impact of acquisitions and divestments,
and at constant currency), rather than
adjusted operating profit. This gives
a more direct representation of the
Company’s performance.
—
From 2024, we have included adjusted
Diluted EPS growth at constant currency
as a KPI, to ensure value creation across
the business.
—
Net debt/adjusted EBITDA has been
retained as a KPI, both for consistency
in our KPIs and to maintain strategic
oversight of our leverage.
—
Given our commitment on recycle-ready
packaging will be fulfilled in 2025,
we have replaced this metric with
Virgin petroleum-based plastic
reduction, in line with our
responsible business agenda.
2024
2023
2022
71%
58%
66%
2024
2023
2022
3.5%
-6.0%
2.8%
2024
2023
2022
2021
2020
5.0%
8.0%
9.0%
3.8%
2.8%
2024
2023
2022
2021
2020
£1.9bn
£1.6bn
£1.6bn
£1.2bn
£2.0bn
2024
2023
2022
2021
9.8%
10.8%
5.9%
16.4%
2024
2023
2022
2.8x
3.0x
3.6x
Haleon
Annual Report and Form 20-F 2024
32
Strategic Report
Reduce our net Scope 1 and 2 carbon emissions
by 100% by 2030, versus our 2020 baseline.
Relevance and calculation
Decarbonising our operations is a key focus
area and helps protect against climate-related
transition risks.
We track the percentage change in total tonnes
of market-based net Scope 1 and 2 greenhouse
gas (GHG) emissions versus 2020.
Future focus
We are focused on addressing our remaining
Scope 1 emissions by transitioning to
renewable-energy-powered systems for
heating and cooling.
Track gender representation in
leadership roles
6
.
Relevance and calculation
We believe building an inclusive organisation
that represents the consumers and
communities who rely on our brands is a
competitive advantage and is an important
consideration for our stakeholders.
Calculated as a percentage of employees
who self-identify as female, compared to the
number of permanent employees, across a
quarterly average.
5
Future focus
Continue to track representation to understand
the composition of our workforce and how it
reflects our key stakeholders.
Reduce our use of virgin petroleum-based
plastic by 10% by 2025, and a third by 2030,
versus a 2022 baseline.
Relevance and calculation
Packaging and plastic pollution is an
environmental area of high concern to
consumers. We are committed to
addressing this by making our packaging
and devices more sustainable.
We track the percentage change in estimated
tonnes of virgin petroleum-based plastic in
our packaging and devices, versus 2022.
Future focus
Continue to focus on reducing our use of virgin
petroleum-based plastic, and replacing virgin
petroleum-based plastic with recycled plastic
or alternative materials, focusing on our most
significant packaging formats.
Build a company where employees are proud to
work, feel inspired, challenged, supported and
have a sense of personal accomplishment.
Relevance and calculation
Ensuring employees feel that Haleon is
fulfilling its core engagement index measures
is fundamental to our long-term success.
We track responses to our core engagement
index measures in our annual employee survey
and review progress via our pulse survey.
Future focus
Continue to focus on strengthening our work
processes to enhance productivity, allow for
greater agility and deliver better performance.
Initiatives include using our Employee Listening
program to measure and improve our culture.
Carbon reduction
3
Gender representation
5
Virgin petroleum-based plastic
reduction
4
Employee engagement
7
Our KPIs and Executive Director
remuneration in 2024
Elements of our Executive Director
remuneration are linked to the delivery
of specific KPIs that are considered the
most relevant in assessing business
performance and our commitment to
our stakeholders.
>>
See also our Director Remuneration
report from page 82.
ESG Qualifier
The 2024 PSP has an ESG qualifier with
thresholds set for three responsible
business KPIs: Carbon reduction; Virgin
petroleum-based packaging; and Gender
representation. At the end of the
performance period, if any of the thresholds
are missed, a reduction in the level of vesting
of 10% could be applied for each missed
threshold. If the metrics are static or go
backwards compared to the 2023 baseline,
a 25% reduction in the level of vesting could
be applied for each measure (see page 90).
Executive Director Remuneration
Performance Share Plan
Annual Incentive Plan
Performance Share Plan
Annual incentive plan
*
KPMG LLP has issued independent limited assurance
over the selected data indicated using assurance
standards ISAE(UK)3000 and ISAE 3410.
1
Organic revenue growth, organic operating profit growth,
net debt, adjusted diluted earnings per share growth and
Free cash flow are non-IFRS measures. Definitions and
calculations of non-IFRS measures can be found from
page 43.
2
Haleon portfolio revenue growth in 2020 and 2021
was 4.9% and 3.9% respectively, which illustrates the
performance of the brands that made up the portfolio
at the time of the demerger.
3
Successful reductions shown as negative figures.
The 2023 and 2024 reporting periods run from
1 December of the prior year to 30 November of the
reported year. The 2020 baseline and 2022 reporting
periods are calendar years. Carbon offsets account for
14% of our location-based Scope 1 and 2 carbon
emissions in 2024.
4
Successful reductions shown as negative figures.
Reporting periods run to 30 June in each reporting year,
from 1 July in the prior year. The 2022 baseline is the
calendar year. Scope includes product packaging and
some devices, including toothbrushes.
5
In 2024, Haleon moved to a quarterly average
methodology to track our gender representation in
leadership. This measurement is taken at end of each
quarter (March, June, September, December) and
averaged across the four quarters.
6
‘Leadership roles’ is defined in our glossary.
7
Measure shows the engagement index at Haleon
calculated as an average favourability score on three
questions: 1) I am proud to work for Haleon; 2) My work
gives me a feeling of personal accomplishment; and 3)
I would recommend Haleon as a great place to work.
8
Measured on a cumulative basis across the period
2024-2026.
50% linked to Cumulative
free cash flow
8
30% linked to Adjusted
diluted EPS growth
20% linked to Organic
operating margin
improvement
60% linked to Organic
revenue growth
20% linked to Organic
operating profit growth
20% linked to individual
business objectives
2024
2023
2022
45.2%
*
44.9%
43.7%
2024
2023
2022
81%
78%
80%
2024
2023
2022
-50%
*
-48%
-44%
2024
2023
-1%
+3%
Haleon
Annual Report and Form 20-F 2024
33
Strategic Report
Our key performance indicators
2024 Business review
Chief Financial Officer’s review
Dawn Allen
Chief Financial Officer
I was delighted to be appointed as CFO
of Haleon in November 2024. I have had
an intensive onboarding period, visiting
a number of our sites. Haleon’s brands,
world-class science and expert coverage
is second to none. Having spent 25 years
at Mars, and the last two years as CFO
of Tate & Lyle, I am excited to have the
opportunity to join Haleon at such a
pivotal moment. I am confident in our
strategy and delighted to be working
with such talented teams across the world
to unlock the next chapter for Haleon,
as we continue to evolve into a leading
fast moving consumer health company.
Strong financial performance
In 2024, Haleon delivered another year
of strong financial performance continuing
the trajectory that the business set out
following demerger. We have also been
proactively managing the portfolio for
growth, divesting of ChapStick and the
non-US Nicotine Replacement Therapy
business, raising proceeds of £0.8bn.
We have partially re-invested this
cash into a £500m share buyback and
increasing stake in our OTC China Joint
Venture to 88%, with an option to
acquire full ownership in 2025.
For the year, organic revenue increased
5.0% (reported (0.6)%) to £11.2bn.
Headwinds from foreign exchange and net
M&A reduced revenue by 3.7% and 1.9%
respectively. Despite a challenging market
backdrop, we saw broad-based organic
growth across the regions demonstrating
the attractiveness of our brands and
geographic footprint. While growth was
predominately weighted towards price, we
saw a more balanced outcome between
price and volume/mix in the second half of
the year as inflationary pressures receded.
Strong organic operating leverage helped
in part by efficiencies and savings across
COGS, translated into adjusted organic
operating profit up 9.8% (reported
operating profit up 10.5%), representing
100bps of margin growth. This was more
than offset by a drag from net M&A (5.2%)
and FX (6.5)% which resulted in adjusted
operating margin down 30bps on the prior
year. Adjusted EPS was up 3.5% in the year,
to 17.9p (reported EPS up 38.9% to 15.7p),
largely reflecting the benefit of lower
dividend payments for our China JV and
the impact of the £500m share buyback
which we executed during 2024.
Continued investments for growth
During the year we continued to invest,
driving growth and building new
capabilities. Our A&P spend was up
6.5% and 10.2% at constant currency,
focused on key growth areas including
Oral Health and VMS, and key markets.
Adjusted R&D expenditure was flat and
up 2.7% organically, with spend devoted
to new innovations and clinical studies
to support new differentiating claims.
Part of these investments were funded
through productivity savings.
Gross capital expenditure of £318m
(2023: £336m) was largely devoted to
systems, processes and automation which
will be key to unlocking efficiency and
driving sustainable growth.
During the year, we made good progress
with our productivity programme which
will result in annualised gross cost savings
of approximately £300m by the end of
2025. We are on-track to deliver this
through initiatives including restructuring
and improving our processes.
Driving shareholder returns
Haleon delivered £1.9bn in free cash flow.
This was driven by a strong organic trading
performance and a reduction in working
capital from 8.0% to 7.2% of sales, largely
due to improved inventory management.
Working capital is an area where we
continue to be focused and see further
optimisation opportunity.
During the year we also returned £1.1bn to
shareholders through a £500m buyback
with the remainder coming from dividends.
Taken together, this meant we reduced net
debt by £607m, finishing the year at £7.9bn.
During the year, we repaid $700m of our
March 2024 notes. We also raised €750m
and £300m in fixed notes with proceeds
expected to fund our $1.75bn bond due
in March 2025.
Our leverage now stands at 2.8x net
debt to adjusted EBITDA (2023: 3.0x).
We continue to believe c.2.5x net
debt to adjusted EBITDA is the right
leverage for Haleon over the medium-term.
This enables the business to appropriately
balance our capital allocation priorities
of maintaining a strong balance sheet,
to continue to invest for growth and
explore acquisitions, as well as return
surplus capital to shareholders through
dividends and share buybacks.
Given these priorities, the Board has
proposed a final dividend for 2024 of
4.6p per ordinary share and a total
dividend of 6.6p per ordinary share, up
10% year on year. In addition, we have
announced the allocation of £500m to
share buybacks in 2025. This reflects our
expected strong free cash flow generation.
Looking into 2025
There is more to do as we become more
agile and consumer focused. Nevertheless,
I am confident Haleon is well placed to
achieve another year of strong financial
performance. This, combined with our
disciplined capital allocation framework,
will help to ensure we continue to deliver
value for all our stakeholders.
Haleon
Annual Report and Form 20-F 2024
34
Strategic Report
Income statement summary
2024
£m
2023
2
£m
% change
Revenue
11,233
11,302
(0.6)
Revenue growth
(0.6%)
4.1%
Organic revenue growth
1
5.0%
8.0%
Gross profit
6,824
6,747
1.1
Adjusted gross profit
1
7,099
7,001
1.4
Operating profit
2,206
1,996
10.5
Adjusted operating profit
1
2,500
2,549
(1.9)
Net finance costs
(302)
(368)
(17.9)
Profit before tax
1,910
1,628
17.3
Adjusted profit before tax
1
2,198
2,181
0.8
Profit after tax attributable to shareholders of the Group
1,442
1,049
37.5
Adjusted profit after tax attributable to shareholders of the Group
1
1,638
1,607
1.9
Earnings per ordinary share
Diluted (pence)
15.7
11.3
38.9
Adjusted
1
(pence)
17.9
17.3
3.5
1
Definitions and calculations of non-IFRS measures can be found from page 43.
2
For a discussion of the Group’s financial and operating performance for the year ending 31 December 2023, see Haleon’s 2023 Annual Report and Form 20-F, pages 34-42.
Revenue
Reported revenue declined 0.6% to
£11,233m (2023: £11,302m). Adverse
foreign exchange had a £421m impact on
total revenue. This was largely driven by
Sterling strengthening against the US
Dollar, Euro, Chinese Renminbi and key
emerging market currencies. The net
impact of M&A (including MSAs) was
£197m adverse, reflecting the disposals
of ChapStick and Nicotine Replacement
Therapy business outside the US.
Revenue grew 5.0% organically for 2024.
Gross profit
Reported gross profit increased by 1.1%
to £6,824m (2023: £6,747m) with gross
margin up 100bps to 60.7%.
Adjusted gross profit increased by 1.4%
at actual exchange rates and 8.1%
organically to £7,099m (2023: £7,001m).
Adjusted gross profit was driven by
pricing, lower cost inflation, a number
of supply chain initiatives as well
as inventory revaluation in H1 2024.
Adjusted gross profit margin increased
130bps at actual exchange rates and
190bps at constant currency and
excluding the net impact of M&A
to 63.2% (2023: 61.9%).
Operating profit
Reported operating profit increased
by 10.5% to £2,206m (2023: £1,996m)
and reported operating profit margin
increased 190bps to 19.6% (2023: 17.7%).
Adjusted operating profit declined by
1.9% at actual exchange rates to £2,500m
(2023: £2,549m) and increased 9.8% on
an organic basis. Adjusted operating
profit margin declined 30bps to 22.3%
(2023: 22.6%). On an organic basis,
adjusted operating margin increased
100bps, driven by operating leverage
from revenue growth combined with
ongoing efficiencies across the business.
For the year, A&P spend was up 6.5% on a
reported basis, and up 10.2% at constant
currency, representing 19.2% of revenue
(2023: 17.9%). Adjusted R&D expenditure
was £297m (2023: £297m), flat at actual
exchange rates and up 2.7% at constant
currency and excluding the net impact of
M&A, with increased spend on scientific
evidence generation, including clinical
studies to support new differentiating
claims, partly offset by productivity savings.
Adjusting items within operating profit
totalled £294m in 2024 (2023: £553m).
This included the amortisation and
impairment of intangible assets of £147m
(2023: £224m) with £135m related to the
impairment of Nexium from weaker market
conditions in the Proton Pump Inhibitor
(PPI) category. Restructuring costs totalled
£214m (2023: £169m) and included £152m
related to the productivity programme
and £60m to the proposed Maidenhead
site closure. Transaction-related costs
were £(1)m (2023: £2m). Separation and
admission costs were £30m (2023: £120m).
Disposals and other items amounted to
£(96)m (2023: £38m) and included a £121m
gain on disposal from the divestment of
the NRT business outside the US.
Net finance costs
Net finance costs were £302m (2023:
£368m). This reflected finance costs of
£384m (2023: £402m). Finance income
was £82m (2023: £34m) largely related to
interest income from the €750m and £300m
fixed notes raised in September 2024.
Tax charge
The statutory tax charge of £435m
(2023: £517m) represented an effective
tax rate on IFRS results of 22.8%
(2023: 31.8%). The 2023 tax charge
included a £155m non-cash debit
related to intragroup transfers.
The tax charge on an adjusted basis
was £527m (2023: £512m) and the
effective tax rate on an adjusted results
basis was 24.0% (2023: 23.5%).
Haleon
Annual Report and Form 20-F 2024
35
Strategic Report
2024 Business review
2024 Business review
continued
Non-controlling interest
The Group’s non-controlling interest, which
largely relates to its OTC Joint Venture
(JV) in China, fell to £33m (2023: £62m).
This reflected a softer performance from
the China JV in the first half given tough
comparatives from the easing of lockdown
restrictions relating to COVID-19 in 2023.
In addition, the second half of 2024
dividend was included in the purchase
price consideration of the additional
33% equity stake in the OTC China JV, which
closed at the end of 2024 for c.£500m.
Profit after tax and earnings per share
Profit after tax attributable to shareholders
of the Group was £1,442m (2023: £1,049m)
and adjusted profit after tax attributable to
shareholders was £1,638m (2023: £1,607m),
up 1.9% at actual exchange rates.
This resulted in diluted earnings per share
of 15.7p (2023: 11.3p) and adjusted diluted
earnings per share of 17.9p (2023: 17.3p).
Apart from the movements described
above, earnings per share was helped by
a 1% reduction in the weighted average
share count following the Group’s
purchase and subsequent cancellation of
c.150.8m ordinary shares from the £500m
allocated to share buybacks in 2024.
Geographical segment performance
Revenue by geographical segment for the year ended 31 December
Revenue (£m)
Revenue change (%)
2024
2023
Reported
Organic
1
Price
1
Vol/Mix
1
FX impact
Net M&A
impact
North America
4,042
4,195
(3.6)%
1.1%
2.3%
(1.2)%
(2.8)%
(1.9)%
EMEA & LatAm
4,631
4,545
1.9%
7.9%
5.9%
2.0%
(3.8)%
(2.2)%
APAC
2,560
2,562
(0.1)%
6.0%
1.9%
4.1%
(4.9)%
(1.2)%
Group
11,233
11,302
(0.6)%
5.0%
3.7%
1.3%
(3.7)%
(1.9)%
1
Price and volume/mix are components of organic revenue growth. Definitions and calculations of non-IFRS measures can be found from page 43.
Adjusted operating profit by geographical segment for the year ended 31 December
Adjusted operating profit
1
(£m)
YoY
change
YoY Organic
change
1
FX impact
Net M&A
impact
2024
2023
2024
Group operating profit
2,206
1,996
10.5%
26.1%
(7.9)%
(7.7)%
Reconciling items between adjusted
operating profit and operating profit
2
294
553
(46.8)%
—
—
—
Group adjusted operating profit
3
2,500
2,549
(1.9)%
9.8%
(6.5)%
(5.2)%
North America
1,000
1,107
(9.7)%
(2.1)%
(3.4)%
(4.2)%
EMEA & LatAm
1,054
1,010
4.4%
20.2%
(9.0)%
(6.8)%
APAC
539
541
(0.4)%
12.6%
(9.1)%
(3.9)%
Corporate and other unallocated
(93)
(109)
14.7%
2.7%
10.1%
1.9%
Group adjusted operating profit
2,500
2,549
(1.9)%
9.8%
(6.5)%
(5.2)%
1
Definitions and calculations of non-IFRS measures can be found from page 43.
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.
3
On a segment basis, adjusted operating profit is the measure of segment profit or loss reviewed by the Company’s chief operating decision maker. Adjusting items are not allocated
by segment, as these items are managed centrally by the Group, and therefore are not part of the measure of segment profit or loss reviewed by the Company’s chief operating
decision maker.
Adjusted operating profit margin by geographical segment for the year ended 31 December
Adjusted operating
profit margin
1
(%)
YoY change
YoY Organic
change
1
FX impact
Net M&A
impact
2024
2023
2024
North America
24.7%
26.4%
(170)bps
(80)bps
(20)bps
(70)bps
EMEA & LatAm
22.8%
22.2%
60bps
240bps
(100)bps
(80)bps
APAC
21.1%
21.1%
—
130bps
(80)bps
(50)bps
Group
22.3%
22.6%
(30)bps
100bps
(60)bps
(70)bps
Haleon
Annual Report and Form 20-F 2024
36
Strategic Report
2024 Revenue
North America
Change (%)
2024
£m
2023
£m
YoY
Organic
1
Price
2
Vol/Mix
2
Revenue
4,042
4,195
(3.6)%
1.1%
2.3%
(1.2)%
Adjusted operating profit
1
1,000
1,107
(9.7)%
(2.1)%
n/a
n/a
Adjusted operating profit margin
1
24.7%
26.4%
(1.7)%
(0.8)%
n/a
n/a
1
Definitions and calculations of non-IFRS measures can be found from page 43.
2
Price and volume/mix are components of organic revenue growth.
2024 reported revenue was £4,042m
(2023: £4,195m), a decline of 3.6% on
a reported basis, which included the
negative impact of exchange rates of
(2.8)% and a (1.9)% impact from net M&A.
As a result, revenue grew 1.1% on an
organic basis with +2.3% price and
(1.2)% volume/mix.
On an organic basis, excluding the
impact of foreign exchange and net
M&A, key highlights included:
—
Strong Sensodyne growth underpinned
by Sensodyne Clinical White.
—
Mid-single digit VMS growth driven
by strength in Centrum supported by
Centrum Silver following the activation
of cognitive function claims. In addition,
there was a strong performance in
Canada which benefited from a
competitor being out of stock.
—
Slight decline in Pain Relief with
Voltaren up mid-single digit and
Advil down low-single digit.
Revenue growth
(3.6)
%
Organic revenue growth
1
1.1
%
Organic profit growth
1
(2.1)
%
—
Respiratory Health declined high-single
digit reflecting a softer cold and flu
season in second half of the year.
—
Digestive Health and Other grew
low-single digit with strength in
Tums and Benefiber partly offset by
mid-single digit declines in both Skin
Health and Smokers’ Health.
—
Towards the end of the year, we
started to commercialise Eroxon, the
first FDA- approved topical erectile
dysfunction (ED) treatment for OTC
use in the US. While this is a new brand
in a new category, we are continuing to
invest in A&P to educate consumers on
the treatment and drive momentum.
Adjusted operating profit declined
9.7% and 2.1% organically, driven by
increased investment in A&P and R&D,
along with the prior year including the
benefit of a tax credit which did not
repeat. Adjusted operating margin was
24.7% and declined 170bps at AER and
by 80bps at constant currency and
excluding the net impact of M&A.
Geographical segment performance
North America
36%
Rest of world
64%
Haleon
Annual Report and Form 20-F 2024
37
Strategic Report
2024 Business review
2024 Business review
continued
Geographical segment performance
continued
2024 Revenue
Europe, Middle East & Africa (EMEA) and Latin America (LatAm)
Change (%)
2024
£m
2023
£m
YoY
Organic
1
Price
2
Vol/Mix
2
Revenue
4,631
4,545
1.9%
7.9%
5.9%
2.0%
Adjusted operating profit
1
1,054
1,010
4.4%
20.2%
n/a
n/a
Adjusted operating profit margin
1
22.8%
22.2%
0.6%
2.4%
n/a
n/a
1
Definitions and calculations of non-IFRS measures can be found from page 43.
2
Price and volume/mix are components of organic revenue growth.
2024 reported revenue was £4,631m
(2023: £4,545m), an increase of 1.9%
on a reported basis, which included the
negative impact of exchange rates of
(3.8)% and a (2.2)% impact from net M&A.
As a result, organic revenue grew +7.9%
with +5.9% price and +2.0% volume/mix.
Excluding the impact of foreign
exchange rates and net M&A, Latin
America, Middle East & Africa and Central
and Eastern Europe all saw strong double
digit organic revenue growth which was
primarily driven by price. Northern Europe
and Germany were up mid-single digit
while Southern Europe was flat.
Excluding the impact of foreign exchange
and net M&A, key highlights included:
—
Oral Health supported by double
digit growth across all three Power
Brands, Sensodyne, parodontax and
Polident/Poligrip.
Revenue growth
1.9
%
Organic revenue growth
1
7.9
%
Organic profit growth
1
20.2
%
—
Strong growth in VMS led by Centrum.
—
Pain Relief growing mid-single digit
driven by mid-single digit growth in
Voltaren and low-single digit growth
in Panadol where growth was held
back given strong consumption in
Middle East and Africa in 2023.
—
Performance in Respiratory Health
was led by strong sell-in for Theraflu
in Central and Eastern Europe although
consumption was impacted by a soft
cold and flu season.
Adjusted operating profit increased
4.4% and 20.2% organically, driven by
productivity, operating leverage and a
benefit of inventory revaluation in the
first half. These positive drivers more
than offset a strong increase in A&P.
Adjusted operating profit margin was
22.8% and increased by 60bps at AER
and 240bps at constant currency and
excluding the net impact of M&A.
EMEA & LatAm
41%
Rest of world
59%
Haleon
Annual Report and Form 20-F 2024
38
Strategic Report
2024 Revenue
Asia Pacific (APAC)
Change (%)
2024
£m
2023
£m
YoY
Organic
1
Price
2
Vol/Mix
2
Revenue
2,560
2,562
(0.1)%
6.0%
1.9%
4.1%
Adjusted operating profit
1
539
541
(0.4)%
12.6%
n/a
n/a
Adjusted operating profit margin
1
21.1%
21.1%
—
1.3%
n/a
n/a
1
Definitions and calculations of non-IFRS measures can be found from page 43.
2
Price and volume/mix are components of organic revenue growth.
2024 reported revenue was £2,560m
(2023: £2,562m), a decline of 0.1% on
a reported basis, which included the
negative impact of exchange rates
(4.9)% and a (1.2)% impact from net M&A.
As a result, organic revenue growth in
APAC was +6.0% with +1.9% price and
+4.1% volume/mix.
Excluding the impact of foreign
exchange and net M&A, performance was
particularly strong in India, up double digit
driven by successful in-market execution
following the change in distribution in the
prior year. China grew mid-single digit,
with double digit growth in second half of
the year after passing the tough Fenbid/
Contac comparative in first half of the year.
South East Asia and Taiwan, and North
Asia both grew mid-single digit, which
offset a mid-single digit decline in
Australia and New Zealand.
Excluding the impact of foreign exchange
and net M&A, key highlights included:
—
Double digit growth in Oral Health
underpinned by strong growth in
Sensodyne and parodontax.
—
VMS growing high-single digit with
Centrum up mid-single digit and
Caltrate up double digit.
—
Strong Respiratory Health growth with
strong demand for cold and flu products
in the first half of the year, with softer
performance in fourth quarter.
—
Pain Relief down mid-single digit driven
by decline in Fenbid due to tough
comparatives following the easing of
COVID-19-related restrictions in China
in first quarter of 2023 with stronger
growth in the second half of the year.
Panadol declined mid-single digit due
to softer market dynamics in Australia
despite continued share gains.
Adjusted operating profit declined 0.4%
and increased 12.6% organically. This was
driven by positive operating leverage
combined with operational efficiencies
which more than offset a strong increase
in A&P spend. Adjusted operating margin
was 21.1%, flat at actual exchange rates
and increased 130bps at constant currency
and excluding the net impact of M&A.
Revenue growth
(0.1)
%
Organic revenue growth
1
6.0
%
Organic profit growth
1
12.6
%
Asia Pacific
23%
Rest of world
77%
Haleon
Annual Report and Form 20-F 2024
39
Strategic Report
2024 Business review
2024 Business review
continued
Revenue by market category
Revenue by market category for the year ended 31 December
Revenue (£m)
Revenue change (%)
2024
2023
Reported
Organic
1
FX
impact
Net
M&A
impact
Oral Health
3,312
3,136
5.6%
9.6%
(4.0)%
—
VMS
1,696
1,640
3.4%
7.6%
(4.2)%
—
Pain Relief
2,564
2,652
(3.3)%
0.1%
(3.4)%
—
Respiratory Health
1,677
1,736
(3.4)%
0.9%
(4.3)%
—
Digestive Health and Other
1,984
2,138
(7.2)%
5.5%
(2.9)%
(9.8)%
Group revenue
11,233
11,302
(0.6)%
5.0%
(3.7)%
(1.9)%
1
Price and volume/mix are components of organic revenue growth. Definitions and calculations of non-IFRS measures
can be found from page 43.
Oral Health
In 2024, Oral Health reported revenue
increased 5.6% to £3.3bn with organic
revenue growth of 9.6% (excluding a 4.0%
adverse impact of foreign exchange rates).
Over the course of the year, Haleon
continued to see market share gains
supported by innovation and geographic
expansion combined with strong in-market
execution. Across Sensodyne, where
revenue (excluding the impact of foreign
exchange), grew double digit, we benefited
from the continued roll-out of Sensodyne
Clinical White, which is scientifically
proven through clinical studies to whiten
teeth by two shades without worsening
or causing sensitivity. Clinical White
has now been launched in over 10
markets including the US, UK and France.
This innovation has received strong
consumer uptake, attracting a younger
audience to the brand and was the number
one US Oral Health market launch in 2024.
During the year, Haleon continued to see
strong momentum building across its
gum health portfolio with the launch of
parodontax Gum Strengthen & Protect
with hyaluronic acid: this multi-format
range across both toothpaste and
mouthwash has expanded the brand
into the key untapped gum need-state
of proactive gum care. The product has
been rolled out across several markets
in EMEA seeing strong performance.
Denture Care continued to see success
from previous launches such as Polident
Max Hold Plus, which we launched in
2022, and is now available in over 40
markets. This was complemented by the
launch of Poligrip Ultimate ‘All in One’
in Southern Europe and Central Eastern
Europe, delivering across key needs and
features our Ultimate Biting Power
Technology, with new clinical studies
supporting strong consumer feedback.
VMS
In Vitamins, Minerals and Supplements,
2024 reported revenues increased 3.4%
to £1.7bn. On an organic basis, revenues
grew 7.6% (excluding a 4.2% adverse
impact of foreign exchange rates).
2024 organic growth was driven by
strength in Centrum which grew high-
single digit benefiting from strong brand
building and activation of its trusted
science credentials including cognitive
function claims for Centrum Silver. In India,
Centrum continues to hold the number one
multivitamin brand share on Amazon with
the product now being distributed in
bricks and mortar stores. Encouraging
performance has been supported by
strong commercial campaigns showcasing
Health Professional advocacy particularly
for joint pain. We also expanded the
portfolio of Centrum Daily Kits in China -
a range of daily nutrition packs with
benefits tailored to life stages, developed
for the needs of Asian consumers.
To address increased accessibility, we
launched Centrum Essencial in Brazil at
the end of 2023, a multivitamin offering
at a lower price point, and in 2024 we
launched Centrum single sachets focused
on energy and immunity. These initiatives
are driving access among low-income
consumer groups in Brazil, with around
half of consumers of these products in
Brazil being new to the category.
Caltrate grew double digit, ahead of
the market, driven by education and the
successful ‘Bone Up China’ programme.
This centres around the treatment and
prevention of osteoporosis, leveraging
its distinctive go to market model and
securing the brand’s position as the
number one calcium brand globally
and increasing penetration in China.
In addition, performance was aided
by a competitor being out of stock.
Haleon
Annual Report and Form 20-F 2024
40
Strategic Report
Emergen-C sales grew low-single digit,
impacted by the softer cold and flu
season in second half of 2024.
Consumption, however, continues to
outpace the market driven by price and
new format innovation including the
launch of Emergen-C Crystals Immune+,
a new formula with vitamin D which is
contributing to category share growth.
Pain Relief
In Pain Relief, reported revenue declined
3.3% resulting in £2.6bn of revenue.
Organic revenue growth was 0.1%
(excluding a 3.4% adverse impact of
foreign exchange rates). As expected,
2024 performance reflected tough
comparatives from the first half of 2023
due to strong demand for Fenbid in China,
following the lifting of COVID-19-related
restrictions, and Advil in Canada.
In 2024, Panadol declined low-single
digit with performance improving
towards the end of the year, after passing
a difficult comparative in Middle East &
Africa. In November, we launched Panadol
Dual Action, a paracetamol and ibuprofen
combination product, in five markets and
initial feedback has been encouraging.
We expect to further roll out this
product globally over the coming years.
Advil revenue slightly declined impacted
by changes in inventory levels at certain
retail outlets. During the year, we
launched Advil Targeted Relief in the US,
the first topical pain relief product from
Advil. In September 2024, Advil Dual
Action became the first product to earn
the American Dental Association’s Seal
of Acceptance in a new category for
short-term pain relief, which helped to
underpin performance.
Mid-single digit revenue growth in
Voltaren was supported by strong
double-digit performances in China and
Central & Eastern Europe. During the year,
we further expanded our penetration of
24-hour medicated patches with launches
in France, Romania, Poland and Belgium.
Beyond this, we repositioned Voltaren
1% Sport across Central & Eastern Europe,
which is designed to cater to the needs of
a younger demographic with a superiority
claim of ‘50% faster recovery from injury’.
Respiratory Health
Respiratory Health reported revenue
declined 3.4% to £1.7bn with organic
revenue growth of 0.9% (excluding
a 4.3% adverse impact of foreign
exchange rates). 2024 growth was
muted compared to recent years.
This reflected a combination of lapping
strong cold and flu comparatives arising
from significantly elevated Contac demand
in China in the first quarter of 2023 from the
lifting of COVID-19-related restrictions,
and a softer cold and flu season in second
half of 2024, particularly in the US.
Performance was supported by mid-single
digit growth in Otrivin, underpinned by
strong execution from the launch of Otrivin
Nasal Mist, which delivers improved
consumer experience. This was further
rolled out to a number of European
markets including the Nordics
underpinning market share gains.
Theraflu continued to outpace the market,
growing mid-single digit. In the US, we
launched Theraflu-D Flu Relief Max
Strength Syrups with the powerful oral
nasal decongestant, pseudoephedrine.
This was an accelerated launch, in line with
the US FDA Advisory Committee’s proposal
to remove oral phenylephrine (PE) from its
approved list of ingredients for cough and
cold medicines. Allergy revenues were flat
on an organic basis (excluding the impact
of foreign exchange rates) reflecting a
soft season.
Digestive Health and Other
Digestive Health and Other reported
revenue declined 7.2% to £2.0bn and
grew 5.5% organically (excluding a 9.8%
negative impact from organic adjustments
and a 2.9% adverse impact of foreign
exchange movements). Across the
category, the 2024 reported revenue
decline reflected the divestments of
ChapStick and the Nicotine Replacement
Therapy business outside the US. In 2024,
(excluding the impact of net M&A and
foreign exchange movements) Digestive
Health and Other delivered mid-single
digit organic growth which was
underpinned by strength in Tums and
ENO driven by innovation including
Tums Chewy Bites and ENO Chewy Bites.
Elsewhere, Nexium declined as a result
of weak market conditions in the PPI
category. In Skin Health, double-digit
growth in Bactroban in China was a key
growth driver helped by activation
and a new acne-focused innovation.
Towards the end of the year, we
commercialised Eroxon in the US, the
first FDA-approved topical erectile
dysfunction (ED) treatment for OTC use.
This launch is a new brand in a new
category, therefore we expect it will take
time to build consumer awareness and
education. Smoking Cessation grew
low-single digit.
Haleon
Annual Report and Form 20-F 2024
41
Strategic Report
2024 Business review
2024 Business review
continued
Indebtedness, liquidity and financial risk management
Indebtedness
At 31 December 2024, the Group’s
total borrowings were £10,127m
(2023: £9,456m), and the Group’s
net debt was £7,907m (2023: £8,514m).
Long-term financing consists of $6,000m
USD bonds, €3,100m Euro bonds and
£1,000m GBP bonds issued under the
Euro Medium Term Note programme as
well as a CNY2,679m bank loan.
As at 31 December 2024, the Group’s
long-term and short-term credit ratings
were Moody’s: Baa1/P-2 and S&P:
+BBB/A-2.
Total borrowings/profit after tax was 6.9x
and net debt/adjusted EBITDA was 2.8x
as at 31 December 2024. Haleon expects
to operate with leverage of around 2.5x
net debt/adjusted EBITDA over the
medium-term.
Cash generation
Net cash from operating activities totalled
£2,301m in 2024 (2023: £2,100m). Free cash
flow was £1,944m, a £369m increase versus
2023, driven by an increase in operational
cash flows, proceeds from the disposal
of the Nicotine Replacement Therapy
business outside the US.
Liquidity
At 31 December 2024, the Group had total
liquidity of £4,144m comprising £1,937m
of bank facilities and £2,250m of cash
and cash equivalents, less £43m of bank
overdrafts. The Group has undrawn credit
facilities of $1,300m (2023: $1,300m)
with maturity date of September 2025 and
£900m (2023: £900m) with maturity date
of September 2027. As at 31 December 2024,
no amounts were drawn under these
facilities (2023: nil).
The Group uses short-term financing to
manage working capital requirements and
has access to a $10,000m US commercial
paper programme and a £2,000m Euro
commercial paper programme. There was
no commercial paper outstanding as of
31 December 2024 (2023: £nil).
Management believes that the Group
has sufficient working capital for present
requirements and to minimise liquidity risk,
the Group has policies to limit the amount
of debt maturing in any year. In addition,
policies require the Group to always
maintain a minimum available liquidity,
including undrawn revolving credit
facilities and available cash, less
commercial paper issued.
Interest rate risk
The Group’s strategic priorities are to
minimise interest costs and minimise
income statement volatility arising from
interest rates.
The Group has a policy to limit the amount
of floating rate debt it holds to manage
the amount of income statement volatility.
The Group will regularly assess its interest
rate profile in light of changes to market
interest rates.
At 31 December 2024, 59% of debt was
fixed with the balance being exposed to
floating rates.
Foreign exchange translation risk
The Group’s policy is to manage Group
net debt such that the currency mix of
debt broadly aligns with the currency
mix of earnings, considering relative
interest costs and practical implications.
The currency mix of debt includes the
impact of foreign exchange and
cross-currency swaps.
De-leveraging through a combination of
net debt reduction and adjusted EBITDA growth
2023
2024
Net debt
1
(£m)
Adjusted EBITDA
1
(£m)
8,514
7,907
2023
2024
2,831
2,805
Net debt/
adjusted EBITDA
1
2023
2024
3.0x
2.8x
1
Definitions and calculations of non-IFRS measures can be found from page 43.
Currency mix of net debt
(including swaps)
1
USD
56%
EUR
25%
CNH
20%
CAD
3%
Bond debt maturity profile (£m)
2025
2026
2027
2028
2029
2030
2032
2033
2034
2038
2052
0
450
900
1350
1800
USD
EUR
GBP
1,394
1,587
1,558
617
398
776
785
620
298
694
620
299
1
The chart excludes (4)% of net assets in other
currencies (£335m).
Currency mix of total borrowings
(including swaps)
USD
61%
EUR
25%
GBP
10%
CNH
3%
Other
1%
Haleon
Annual Report and Form 20-F 2024
42
Strategic Report
Use of non-IFRS measures
We believe these measures provide
useful information to investors and
where clearly identified, we have
included certain alternative
performance measures in this document
to allow investors to better analyse our
business performance and allow greater
comparability. To do so, we have excluded
items affecting the comparability of
period-over-period financial performance.
Adjusted results and other non-IFRS
measures may be considered in addition
to, but not as a substitute for or superior
to, information presented in accordance
with IFRS.
Adjusted results
Adjusted results comprise: adjusted
gross profit; adjusted gross profit
margin; adjusted selling, general and
administration (SG&A); adjusted research
and development (R&D); adjusted other
operating income/(expense); adjusted
operating profit; adjusted operating
profit margin; adjusted income tax;
adjusted effective tax rate; adjusted
profit attributable to shareholders; and
adjusted diluted earnings per share.
Adjusted results exclude net amortisation
and impairment of intangible assets,
restructuring costs, transaction-related
costs, separation and admission costs, and
disposals and others, in each case net of
the impact of taxes (where applicable)
(collectively, the adjusting items).
Management believes that adjusted
results, when considered together with
the Group’s operating results as reported
under IFRS, provide investors, analysts
and other stakeholders with helpful
complementary information to
understand the financial performance
and position of the Group from period to
period and allow the Group’s performance
to be more easily comparable.
Adjusting items
Adjusted results exclude the following
items (net of the impact of taxes,
where applicable):
Net amortisation and impairment
of intangible assets
Net impairment of intangibles, impairment
of goodwill and amortisation of acquired
intangible assets, excluding computer
software. These adjustments are made to
reflect the performance of the business
excluding the effect of acquisitions.
Restructuring costs
From time to time, the Group may undertake
business restructuring programmes that are
structural in nature and significant in scale.
The cost associated with such programmes
includes severance and other personnel
costs, professional fees, impairments of
assets, and other related items.
Transaction-related costs
Transaction-related accounting or
other adjustments related to significant
acquisitions including deal costs and other
pre-acquisition costs when there is certainty
that an acquisition will complete. It also
includes costs of registering and issuing
debt and equity securities and the effect
of inventory revaluations on acquisitions.
Separation and admission costs
Costs incurred in relation to and in
connection with separation, UK admission
and registration of the Company’s ordinary
shares represented by the Company’s
American Depositary Shares (ADSs)
under the US Exchange Act of 1934 and
listing of ADSs on the NYSE (the US Listing).
These costs are not directly attributable
to the sale of the Group’s products and
specifically relate to the foregoing
activities, affecting comparability of the
Group’s financial results in historical and
future reporting periods.
Disposals and others
Includes gains and losses on disposals
of assets, businesses and tax indemnities
related to business combinations, legal
settlement and judgements, impact of
changes in tax rates and tax laws on
deferred tax assets and liabilities, retained
or uninsured losses related to acts of
terrorism, significant product recalls,
natural disasters and other items.
These gains and losses are not directly
attributable to the sale of the Group’s
products and vary from period to period,
which affects comparability of the Group’s
financial results. In addition, these gains
and losses include net monetary gains and
losses arising from hyperinflationary
economies as this affects comparability of
the Group’s financial results. From period
to period, the Group will also need to
apply judgement if items of a unique
nature arise that are not specifically
listed above.
We use certain alternative performance measures to make financial, operating,
and planning decisions and to evaluate and report performance.
Haleon
Annual Report and Form 20-F 2024
43
Strategic Report
Use of non-IFRS measures
The following tables set out a reconciliation between IFRS and adjusted results for the year ended 31 December 2024:
Gross profit
Operating profit
Income tax
£m
2024
2023
2022
2024
2023
2022
2024
2023
2022
IFRS results
6,824
6,747
6,577
2,206
1,996
1,825
(435)
(517)
(499)
Net amortisation and impairment of
intangible assets
1
147
224
172
147
224
172
(35)
(53)
(37)
Restructuring costs
2
123
26
19
214
169
41
(49)
(35)
(7)
Transaction-related costs
—
—
—
(1)
2
8
1
—
(2)
Separation and admission costs
3
1
4
4
30
120
411
(7)
(29)
(55)
Disposals and others
4
4
—
—
(96)
38
15
(2)
122
94
Adjusted results
7,099
7,001
6,772
2,500
2,549
2,472
(527)
(512)
(506)
Gross profit margin for 2024 was 60.7% (2023: 59.7%, 2022: 60.6%) and adjusted gross profit margin for 2024 was 63.2% (2023: 61.9%, 2022: 62.4%).
Selling, general
and administration
R&D
Other operating
income/(expense)
£m
2024
2023
2022
2024
2023
2022
2024
2023
2022
IFRS results
(4,452)
(4,413)
(4,483)
(298)
(311)
(300)
132
(27)
31
Net amortisation and impairment of
intangible assets
1
—
—
—
—
—
—
—
—
—
Restructuring costs
2
90
129
25
1
14
(3)
—
—
—
Transaction-related costs
—
2
8
—
—
—
(1)
—
—
Separation and admission costs
3
29
116
407
—
—
—
—
—
—
Disposals and others
4
31
6
44
—
—
—
(131)
32
(29)
Adjusted results
(4,302)
(4,160)
(3,999)
(297)
(297)
(303)
—
5
2
Profit attributable
to shareholders
Diluted earnings
per share (pence)
£m
2024
2023
2022
2024
2023
2022
IFRS results
1,442
1,049
1,060
15.7
11.3
11.5
Net amortisation and impairment of intangible assets
1
112
171
135
1.2
1.8
1.4
Restructuring costs
2
165
134
34
1.8
1.4
0.4
Transaction-related costs
—
2
6
—
—
0.1
Separation and admission costs
3
23
91
356
0.3
1.1
3.8
Disposals and others
4
(104)
160
109
(1.1)
1.7
1.2
Adjusted results
1,638
1,607
1,700
17.9
17.3
18.4
1
Net amortisation and impairment of intangible assets:
includes £135m impairment charge of Nexium, impairment reversal of intangible assets of £(15)m (2023: £nil), and amortisation
of intangible assets excluding computer software £24m (2023: £39m). Impairment reversal of intangible assets relates to the divestment of ChapStick on 31 May 2024.
2
Restructuring costs:
includes amounts related to business transformation activities. In 2024, it includes £68m of non-cash costs.
3
Separation and admission costs:
includes amounts incurred in relation to and in connection with the separation and listing of the Group as a standalone business.
4
Disposals and others:
in 2024, it includes £(121)m gain from disposal of the Nicotine Replacement Therapy business outside the US.
Use of non-IFRS measures
continued
Haleon
Annual Report and Form 20-F 2024
44
Strategic Report
Constant currency
The Group’s reporting currency is Pound
Sterling, but the Group’s significant
international operations give rise to
fluctuations in foreign exchange rates.
To neutralise foreign exchange impact
and to better illustrate the change in
results from one year to the next, the
Group discusses its results both on an
‘as reported basis’ or using actual
exchange rates (AER) (local currency
results translated into Pound Sterling at the
prevailing foreign exchange rate) and using
constant currency exchange rates (CER).
To calculate results on a constant currency
basis, prior year exchange rates are used
to restate current year comparatives
except for the local currency of entities
that operate in hyperinflationary
economies. These currencies are
translated into Pound Sterling using
the prior year closing exchange rate.
The principal currencies and relevant
exchange rates in the key markets where
the Group operates are shown below.
Average rates:
2024
2023
2022
USD/£
1.28
1.24
1.24
Euro/£
1.18
1.15
1.17
CNY/£
9.19
8.81
8.31
Organic revenue growth and organic
operating profit growth
Our organic growth measures take our
adjusted results and further exclude the
impact of divestments, acquisitions,
manufacture and supply agreements
(MSAs) relating to divestments and closure
of production sites, and the impact of
foreign currency exchange movements
including changes in currency and price
growth in excess of 26% in hyperinflationary
economies from one period to the next.
Inflation of 26% per year compounded
over three years is one of the key
indicators within IAS 29 to assess
whether an economy is deemed to
be hyperinflationary.
The Group believes discussing organic
revenue growth and organic operating profit
growth contributes to the understanding
of the Group’s performance and trends
because it allows for a year-on-year
comparison of revenue and operating profit
in a meaningful and consistent manner.
Organic measures are calculated period
to period as follows, using prior year
exchange rates to restate current year
comparatives except for the local currency
of entities that operate in hyperinflationary
economies. These currencies are translated
into Pound Sterling using the prior year
closing exchange rate.
Current year organic measures exclude
revenue and operating profit from brands
or businesses acquired in the current
accounting period.
Current year organic measures exclude
revenue and operating profit attributable
to brands or businesses acquired in the
prior year from 1 January to the date of
completion of the acquisition.
Prior year organic measures exclude
revenue and operating profit in respect
of brands or businesses divested or
closed in the current accounting period
from 12 months prior to the completion
of the disposal or closure until the end
of the prior accounting period.
Prior year organic measures exclude
revenue and operating profit in respect
of brands or businesses divested or closed
in the previous accounting period in full.
Prior year and current year organic
measures exclude revenue and operating
profit attributable to MSAs relating to
divestments and closure of production
sites taking place in either the current or
prior year, each an organic adjustment.
These adjustments are made because these
agreements are transitional in nature and,
with respect to production site closures,
include a ramp-down period in which
revenue and operating profit attributable
to MSAs gradually reduces several months
before the production site closes.
To calculate organic growth for the period,
organic measures for the prior year are
subtracted from organic measures in the
current year and divided by organic
measures in the prior year.
Organic revenue growth by individual
geographical segment is further discussed
by price and volume/mix changes, which
are defined as follows:
Price:
defined as the variation in revenue
attributable to changes in prices during the
period. Price excludes the impact to organic
revenue growth due to (i) the volume of
products sold during the period and (ii) the
composition of products sold during the
period. Price is calculated as current year
net price minus prior year net price
multiplied by current year volume. Net price
is the sales price, after deduction of any
trade, cash or volume discounts that can
be reliably estimated at point of sale.
Value added tax and other sales taxes are
excluded from the net price. In determining
changes in price, we exclude the impact
of price growth in excess of 26% per year
in hyperinflationary economies as
explained above.
Volume/mix:
defined as the variation
in revenue attributable to changes in
volumes and composition of products
sold in the period.
The following tables reconcile reported
revenue growth and reported operating
profit growth to organic revenue growth
and organic operating profit growth,
respectively, for the periods presented.
Haleon
Annual Report and Form 20-F 2024
45
Strategic Report
Use of non-IFRS measures
Geographical segments
2024 vs 2023 (%)
North
America
EMEA &
LatAm
APAC
Total
Revenue growth
(3.6)
1.9
(0.1)
(0.6)
Organic adjustments
1.9
2.2
1.2
1.9
Effect of exchange rates
2.8
3.8
4.9
3.7
Organic revenue growth
1.1
7.9
6.0
5.0
Price
2.3
5.9
1.9
3.7
Volume/mix
(1.2)
2.0
4.1
1.3
2024 vs 2023 (%)
North
America
EMEA &
LatAm
APAC
Corporate
and other
unallocated
Total
Operating profit growth
—
—
—
—
10.5
Adjusting items
—
—
—
—
(46.8)
Adjusted operating profit growth
(9.7)
4.4
(0.4)
14.7
(1.9)
Effect of exchange rates
3.4
9.0
9.1
(10.1)
6.5
Adjusted operating profit growth (CER)
(6.3)
13.4
8.7
4.6
4.6
Organic adjustments
4.2
6.8
3.9
(1.9)
5.2
Organic operating profit growth
(2.1)
20.2
12.6
2.7
9.8
2023 vs 2022 (%)
North
America
EMEA &
LatAm
APAC
Total
Revenue growth
1.9
6.4
3.6
4.1
Organic adjustments
—
0.2
—
0.1
Effect of exchange rates
0.8
6.0
5.4
3.8
Organic revenue growth
2.7
12.6
9.0
8.0
Price
3.6
12.8
2.7
7.0
Volume/mix
(0.9)
(0.2)
6.3
1.0
Use of non-IFRS measures
continued
Haleon
Annual Report and Form 20-F 2024
46
Strategic Report
2023 vs 2022 (%)
North
America
EMEA &
LatAm
APAC
Corporate
and other
unallocated
Total
Operating profit growth
—
—
—
—
9.4
Adjusting items
—
—
—
—
(14.5)
Adjusted operating profit growth
3.5
3.4
6.9
34.6
3.1
Effect of exchange rates
1.2
9.2
10.9
(28.5)
7.3
Adjusted operating profit growth (CER)
4.7
12.6
17.8
6.1
10.4
Organic adjustments
0.1
0.8
(0.2)
—
0.4
Organic operating profit growth
4.8
13.4
17.6
6.1
10.8
2022 vs 2021 (%)
North
America
EMEA &
LatAm
APAC
Total
Revenue growth
16.8
10.1
15.4
13.8
Organic adjustments
0.3
0.9
(1.0)
0.2
Effect of exchange rates
(11.2)
(0.1)
(3.8)
(5.0)
Organic revenue growth
5.9
10.9
10.6
9.0
Price
2.9
6.4
2.6
4.3
Volume/mix
3.0
4.5
8.0
4.7
2022 vs 2021 (%)
North
America
EMEA &
LatAm
APAC
Corporate
and other
unallocated
Total
Operating profit growth
—
—
—
—
11.4
Adjusting items
—
—
—
—
21.2
Adjusted operating profit growth
29.2
1.8
9.8
5.2
13.8
Effect of exchange rates
(17.9)
(0.6)
(4.2)
(5.2)
(7.8)
Adjusted operating profit growth (CER)
11.3
1.2
5.6
—
6.0
Organic adjustments
0.2
1.3
(3.4)
—
(0.1)
Organic operating profit growth
11.5
2.5
2.2
—
5.9
Haleon
Annual Report and Form 20-F 2024
47
Strategic Report
Use of non-IFRS measures
Use of non-IFRS measures
continued
Market categories
2024 vs 2023 (%)
Oral Health
VMS
Pain Relief
Respiratory
Health
Digestive
Health and
Other
Total
Revenue growth
5.6
3.4
(3.3)
(3.4)
(7.2)
(0.6)
Organic adjustments
—
—
—
—
9.8
1.9
Effect of exchange rates
4.0
4.2
3.4
4.3
2.9
3.7
Organic revenue growth
9.6
7.6
0.1
0.9
5.5
5.0
2023 vs 2022 (%)
Oral Health
VMS
Pain Relief
Respiratory
Health
Digestive
Health and
Other
Total
Revenue growth
6.1
(2.1)
4.0
9.9
2.0
4.1
Organic adjustments
—
—
0.2
—
0.5
0.1
Effect of exchange rates
4.5
3.0
3.2
3.8
4.0
3.8
Organic revenue growth
10.6
0.9
7.4
13.7
6.5
8.0
2022 vs 2021 (%)
Oral Health
VMS
Pain Relief
Respiratory
Health
Digestive
Health and
Other
Total
Revenue growth
8.6
11.6
14.0
39.5
7.4
13.8
Organic adjustments
(0.3)
(0.2)
(0.4)
—
2.2
0.2
Effect of exchange rates
(2.7)
(6.4)
(4.7)
(6.9)
(6.7)
(5.0)
Organic revenue growth
5.6
5.0
8.9
32.6
2.9
9.0
2024
2023
2022
Gross profit growth
1.1%
2.6%
10.5%
Adjusted gross profit growth
1.4%
3.4%
12.8%
Effect of exchange rates
4.7%
3.9%
(5.6)%
Adjusted gross profit growth (CER)
6.1%
7.3%
7.2%
Organic adjustments
2.0%
0.1%
(0.1)%
Organic gross profit growth
8.1%
7.4%
7.1%
Haleon
Annual Report and Form 20-F 2024
48
Strategic Report
Adjusted EBITDA
Adjusted EBITDA is calculated as profit
after tax excluding income tax, finance
income, finance expense, adjusting items
(as defined on page 43), depreciation of
property, plant and equipment and right
of use assets, amortisation of computer
software, impairment of property, plant
and equipment, right of use assets and
computer software net of impairment
reversals. Adjusted EBITDA does not
reflect cash expenditures, or future
requirements for capital expenditures
or contractual commitments. Further,
adjusted EBITDA does not reflect changes
in, or cash requirements for, working
capital needs, and although depreciation
and amortisation are non-cash charges,
the assets being depreciated and
amortised are likely to be replaced in
the future and adjusted EBITDA does
not reflect cash requirements for
such replacements.
Adjusted EBITDA eliminates differences
in performance caused by variations in
capital structures (affecting net finance
costs), tax positions (such as the
availability of net operating losses against
which to relieve taxable profits), the cost
and age of tangible assets (affecting
relative depreciation expense) and the
extent to which intangible assets are
identifiable (affecting relative amortisation
expense). As a result, we believe that
adjusted EBITDA provides useful
information to understand and evaluate
the Group’s operating results.
The reconciliation between profit after tax for the year and adjusted EBITDA for the years ended 31 December 2024, 31 December 2023
and 31 December 2022 is provided below:
£m
2024
2023
2022
Profit after tax
1,475
1,111
1,119
Add back: Income tax
435
517
499
Less: Finance income
(82)
(34)
(51)
Add back: Finance expense
384
402
258
Less: Net monetary gain arising from hyperinflationary economies
(6)
—
—
Operating profit
2,206
1,996
1,825
Net amortisation and impairment of intangible assets
147
224
172
Restructuring costs
214
169
41
Transaction-related costs
(1)
2
8
Separation and admission costs
30
120
411
Disposals and others
(96)
38
15
Adjusted operating profit
2,500
2,549
2,472
Add back: Depreciation of property, plant and equipment
160
152
142
Add back: Depreciation of right of use assets
53
49
38
Add back: Amortisation of computer software
75
69
64
Add back: Impairment of property, plant and equipment, right of use assets and computer software
net of impairment reversals
17
12
14
Adjusted EBITDA
2,805
2,831
2,730
Haleon
Annual Report and Form 20-F 2024
49
Strategic Report
Use of non-IFRS measures
Free cash flow
Free cash flow is calculated as net cash
inflow from operating activities plus cash
inflows from the sale of intangible assets,
the sale of property, plant and equipment
and interest received, less cash outflows
for the purchase of intangible assets,
the purchase of property, plant and
equipment, distributions to non-
controlling interests and interest paid.
We believe free cash flow is meaningful to
investors because it is the measure of the
funds generated by the Group available
for distribution of dividends, repayment
of debt or to fund the Group’s strategic
initiatives, including acquisitions.
The purpose of presenting free cash
flow is to indicate the ongoing cash
generation within the control of the
Group after taking account of the
necessary cash expenditures for
maintaining the capital and operating
structure of the Group (in the form of
payments of interest, corporate taxation
and capital expenditure).
The reconciliation of net cash inflow from operating activities to free cash flow for the years ended 31 December 2024, 31 December 2023
and 31 December 2022 is provided below:
£m
2024
2023
2022
Net cash inflow from operating activities
2,301
2,100
2,063
Purchase of property, plant and equipment
(250)
(234)
(304)
Purchase of intangible assets
(68)
(102)
(24)
Proceeds from sale of intangible assets
325
246
36
Less: Distributions to non-controlling interests
(79)
(58)
(48)
Less: Interest paid
(360)
(404)
(163)
Add: Interest received
75
27
19
Free cash flow
1,944
1,575
1,579
Net debt
Net debt at a period end is calculated as
short-term borrowings (including bank
overdrafts and short-term lease liabilities),
long-term borrowings (including long-term
lease liabilities), and derivative financial
liabilities less cash and cash equivalents
and derivative financial assets.
We analyse the key cash flow items driving
the movement in net debt to understand
and assess cash performance and utilisation
in order to maximise the efficiency with
which resources are allocated.
The analysis of cash movements in net
debt allows management to more clearly
identify the level of cash generated from
operations that remains available for
distribution after servicing the Group’s
debt. In addition, the ratio of net debt
to adjusted EBITDA is used by investors,
analysts and credit rating agencies to
analyse our operating performance in the
context of targeted financial leverage.
The reconciliation of net debt to the different balance sheet items as at 31 December 2024 and 31 December 2023 is provided below:
£m
2024
2023
Short-term borrowings
(1,487)
(656)
Long-term borrowings
(8,640)
(8,800)
Derivative financial liabilities
(160)
(190)
Derivative financial assets
130
88
Cash and cash equivalents
2,250
1,044
Net debt
(7,907)
(8,514)
Use of non-IFRS measures
continued
Haleon
Annual Report and Form 20-F 2024
50
Strategic Report
Our approach to risk
We understand the challenges and uncertainties we face and take a proactive
approach to risk management to maximise opportunities, drive informed commercial
decision making, and protect our people and assets.
Risk management framework
At Haleon, management of risk is firmly
embedded in our strategy to achieve
our long-term goals. We have a diverse
range of risks and have appropriate
processes and tools to identify risks
before they materialise.
The framework is embedded within the
strategy and planning cycle, which
ensures accountability for the identification,
assessment, mitigation and monitoring of
risks aligned with our strategic objectives.
The framework supports information flow
and open communication between the
Board, the Audit & Risk Committee (ARC),
the Executive Team, our functions,
business units, markets and sites.
Our framework defines the essential
elements of the Group’s approach to risk
management and compliance programmes,
ensuring risks associated with
conducting business activities are
effectively controlled, in line with the
Board’s risk appetite and compliance
with regulatory requirements.
The framework is aligned to the three
lines model which assigns roles and
responsibilities for the management
of risks within Haleon.
Risk management at Haleon
Top down
Internal inputs
—
Board/Board Committees
—
Executive Team Risk Forum
—
Annual enterprise risk assessment
—
Internal data and insights
—
Strategic objectives
—
Internal audit outcomes
Bottom up
External inputs
—
Expert risk and control functions
—
Business unit and function ongoing
risk/control strategy review
—
Business unit and function annual
risk assessment
—
UK Corporate Governance Code,
laws and regulations
—
External partners
—
External audit outcomes
Board
Accountable for risk management and defining Haleon’s risk appetite towards achieving its strategic objectives
Expert risk and control functions
Provides subject matter expertise to the business, defines policy
and control standards and challenges the management of risks
Enterprise Risk Management
Owns, designs and maintains the risk management framework.
Provides expertise, support, challenge and monitors risk-related
matters. Enhances the level of risk awareness of all employees
through education workshops and training
Executive Team Risk Forum
Provides leadership oversight by reviewing top risks. Approves risk mitigation strategies and ensures effective risk management practices.
Sets relevant risk management governance standards and policies
Business units and functions
Establishes and maintains appropriate structures and processes of risk management and related control strategy. Owns business
unit/functional risks, applies the risk management framework and ensures compliance with legal, regulatory and ethical expectations
Bottom-up
Risk management governance
Top-down
Internal Audit
Provides independent
and objective
assurance over the
adequacy and
effectiveness of risk
management, controls
and governance
processes
Remuneration Committee
Sets the structure for the
Company’s Remuneration
Policy, reviews workforce
remuneration and aligns
incentives and rewards
Nominations &
Governance Committee
Leads the process for
appointments to the Board and
ensures corporate governance
standards are maintained
Environmental &
Sustainability Committee
Provides oversight and
governance over progress with
the ESG agenda and external
regulatory requirements
ARC
Provides oversight and
effective governance over
processes and systems for
risk management, controls
and reporting
Leadership – accountability to stakeholders for organisational oversight
First Line – ownership and operation of processes
Second Line – risk management expertise and control framework design
Third Line – independent assurance
Control
strategy
Management
action and
reporting
Risk
identification
Assessment
of residual
risk and
prioritisation
Haleon
Annual Report and Form 20-F 2024
51
Strategic Report
Our approach to risk
Our approach to risk
continued
Risk governance
The Board has ultimate accountability for
managing the Group’s risks and setting
our risk appetite in line with our strategic
objectives. The Board ensures appropriate
oversight through various mechanisms,
including strategy meetings, management
reports and reviews of selected risk areas.
To assist the Board in discharging its
responsibilities, the ARC is responsible for
reviewing and assessing the effectiveness
of the Group’s risk management and
internal control systems, covering the
Group’s enterprise risks, financial and
operational controls and procedures.
The Executive Team is joined by the Head
of Audit & Risk and Head of Enterprise Risk
Management to form the Executive Team
Risk Forum (Risk Forum). The Risk Forum
meets quarterly and ensures that risks
are adequately managed, and the risk
management framework is effectively
deployed throughout the Group. The Risk
Forum discusses enterprise and emerging
risks, reviews industry trends, regulatory
developments, high-profile incidents and
critical audit findings. Each enterprise risk
is owned by a member of the Executive
Team, who is accountable for designing
and implementing risk mitigation
strategies and regularly reporting risk
updates to the ARC and Risk Forum.
At a functional, business unit, market and
site level, regular risk review meetings
ensure a more granular review of risk and
operationalisation of strategic priorities.
These governance forums provide the
Risk Forum with a bottom-up view of
risks and issues along with oversight of
how the key risks are being managed.
Open communication and adequate
reporting remain essential to ensure
Haleon’s leaders maintain a sound risk
culture and are kept informed to allow
for swift decisions and meaningful actions.
An annual management confirmation
review across each business unit and
function ensures key risks are well
managed and that corrective and
preventative actions are in place to
address any significant gaps.
Assessing risk
We continuously assess and evaluate
the risks posed by the changing
environments in which we operate to
ensure an appropriate, measured, and
timely response by considering potential
impacts and most likely scenarios.
The annual enterprise risk assessment
(ERA) for 2024 included a risk survey and
interviews with the Board, Executive Team
and business unit general managers to
identify and evaluate both current and
emerging risks, and to inform the 2025
internal audit plan. The ERA outcome
also reflects on whether we think the
impact and likelihood associated with
each of our enterprise risks are
increasing or decreasing.
The top-down process is complemented
by horizon scanning to identify external
trends, and inputs from risk review
meetings at all levels of the organisation
help us identify opportunities and/or
emerging risks.
The ERA results have been shared with
the ARC and the Board to confirm the
principal risks and agree on the Group’s
risk management priorities for 2025.
Where the level of risk taken is likely to
or has exceeded desired levels in the
period, management action is taken to
further reduce the risk.
Our principal risks
Our principal risks are a subset of our
enterprise risks and are deemed by the
Board to be the most significant risks faced
by the Group, including those that can
materially impact our performance and/or
reputation and could threaten our
long-term business model or liquidity.
Our principal risks remain unchanged
from the previous year, are not listed in any
particular order and do not comprise an
exhaustive list of risks associated with the
business. While a robust assessment of
these risks has been undertaken,
additional risks not known to the Board
or assessed to be less significant may also
materialise and result in an adverse effect
on the business. Haleon also faces other
enterprise risks that we manage as part of
our integrated risk management framework
including health and safety, product
quality, product user safety, financial,
and legal and compliance.
Haleon
Annual Report and Form 20-F 2024
52
Strategic Report
Principal risk and link to strategy
Description and risk development
Mitigation
1
2
3
4
Growth model
Our success depends on our
ability to identify and explore
business opportunities to
deliver organic growth.
Oversight forum
Board
Risk owner
Head of Strategy
Risk category
Strategic
Failure to meet our medium-term organic growth
objectives due to inadequate strategic and/or financial
planning, lack of innovation, and deficient execution
could result in erosion of shareholder value and
damage to our reputation.
The consumer health sector continues to attract new
competitors at global and local levels with significant
growth potential, limited penetration of some
categories and changing social and demographic trends.
Our continued growth relies on our ability to
successfully deliver innovation that is responsive to
new product opportunities, competitor offerings and
reflects changing consumer preferences.
Continued pressure from international buying groups,
changes in sales channel structures, and customer and
market consolidation may negatively impact pricing,
margins and market share.
This risk remains unchanged from 2023.
We are actively implementing our growth strategy,
achieving our organic growth objectives by increasing
household penetration and capitalising on new and
emerging opportunities. Our business unit leaders are
dedicated to expanding our consumer base through our
Power Brands and developing our strategic brands in
local markets.
We continuously review and benchmark our
performance against competitors, analysing internal
and external data when performing our business
planning and budgeting processes.
We ensure sufficient resources are allocated to research
and development initiatives to drive consumer-centric
innovation and stay ahead of market trends.
We maintain an integrated forecast and demand
planning process, ensuring discipline in pricing drivers
and efficient commercial execution. Our global and local
teams are mobilised to drive growth across all product
portfolio categories.
We have a clear value proposition across all sales
channels, while actively pursuing opportunities to
enhance route to market, increase profitability, grow
market share, and expand our digital capabilities.
>>
See also our business model on page 8.
Principal risk and link to strategy
Description and risk development
Mitigation
3
4
People and organisation
Talent attraction and
retention is pivotal to
the success of Haleon as
is the effectiveness of our
operating structures.
Oversight forum
Remuneration Committee
Risk owner
Chief Human Resources
Officer
Risk category
People
Inability to attract, develop and retain a diverse range
of skilled employees as we deliver a fit for the future
organisation in a highly competitive market, which could
impact our ability to achieve our strategic objectives.
Strengthening our core people processes, including
talent management and capability development, is a
key enabler for success as we transform our business,
ways of working, organisational structures and culture.
This risk remains unchanged from 2023.
We continuously work to attract and retain top talent.
Our annual Haleon employee survey consistently shows
high-level participation rates (89%) and provides us with
valuable insights. Improvement areas and corresponding
action plans are closely monitored by senior leadership.
We continue to simplify processes and grow employee
engagement delivering the change required to embed
a purpose-led consumer and performance culture.
We have a clear employer value proposition that reflects
our strong corporate brand and reputation.
Talent identification, mapping and succession planning
exercises are undertaken for critical senior management
positions, helping to optimise both talent management
and leadership continuity.
Learning and development programmes are in place,
with regular uptake, to help ensure our people realise
their full potential. Our talent pipeline is actively
strengthened through leadership development initiatives.
We are committed to building an inclusive workplace.
Our established DEI strategy, overseen by our Global
DEI Council, helps to ensure all our employees have
equal opportunities for growth and development.
>>
See also our culture and people section
from page 18.
Trend key
Increasing risk
Decreasing risk
Unchanged
New risk
Strategy key
Increase household penetration
Capitalise on new and emerging
opportunities
3
Maintain strong execution
and financial discipline
4
Run a responsible business
1
2
Haleon
Annual Report and Form 20-F 2024
53
Strategic Report
Our approach to risk
Our approach to risk
continued
Principal risk and link to strategy
Description and risk development
Mitigation
2
4
Trusted ingredients
Haleon’s brands must
reflect trusted science and
ingredients to consumers.
Oversight forum
ARC
Risk owner
Chief R&D Officer
Risk category
Operational
Loss of customer confidence due to not pursuing
best-in-class science or not monitoring and responding
to emerging ingredient data and changes in consumer
perception of product ingredients could negatively
impact our brands and our reputation.
There continues to be pressure and scrutiny from
governments, regulators, NGOs and consumers over
the safety, efficacy, purity and potential environmental
impact of ingredients within healthcare products.
Monitoring our ingredient-related risks and taking
proactive measures to address emerging ingredient
regulations and industry trends remains a key focus.
This risk remains unchanged from 2023.
Our approach and success as a global consumer health
company is underpinned by our understanding of the
evolving science of ingredients and deep human
understanding of consumer needs and preferences.
We manage ingredient-related risks through an
established Trusted Ingredients Framework, enabling
us to collect intelligence from multiple external sources,
anticipating and detecting early signals to inform our
approach and action plans to tackle ingredient risk.
We have extensive controls in place designed to evaluate
benefits and risks and identify potential concerns about
ingredients. Whenever we introduce a new ingredient into
our portfolio, we conduct an independent evidence-
based review of the ingredient’s safety.
Cross-functional teams across Haleon conduct continuous
monitoring of ingredient and materials data to facilitate
the early detection of and response to emerging
ingredient risks. When new risks are identified, there is
an assessment of actions needed to proactively manage
and mitigate the risk which could include the assignment
of a dedicated specialist taskforce.
We also actively participate in industry associations to
gain insights and to impact the environment we operate
in for the benefit of consumers.
>>
Haleon may incur liabilities or be forced to recall products as a result of real or perceived product quality or other product-related issues, see page 196.
>>
More information is available at
www.haleon.com/our-impact/environment/sourcing-trusted-ingredients-sustainably
Principal risk and link to strategy
Description and risk development
Mitigation
1
2
3
4
Supply chain resilience
Continued challenges to our
supply chain capacity test our
resilience to ensure we meet
increasing customer demand.
Oversight forum
Board
Risk owner
Chief Supply Chain Officer
Risk category
Operational
Disruption or constraints in our global sourcing and
supply network due to external or internal factors or
insufficient capacity leading to the inability to meet
consumer demand and desired service levels.
We operate a complex global supply chain that is
susceptible to a variety of risks including geopolitical
instability, extreme weather events and cyber-security
threats. Building resilience into our supply chain is
critical so we can continue to operate in the event of
these risks materialising.
In addition, indirect factors such as energy and
commodity volatility can significantly disrupt
business operations, impacting our ability to serve
our customers and consumers.
This risk remains unchanged from 2023.
We are investing in capacity across the network
while simplifying the number of stock keeping units,
strengthening our ability to respond to growing
consumer demand for our products, and adhering
to local regulations and safety standards.
We have made good progress de-risking our supply of
critical materials through our dual sourcing roadmap,
increasing upstream supply chain resilience and
allowing us to adapt to evolving portfolio needs
and market conditions.
Supply chain operations are managed through an
extensive control framework, with oversight and
continuous monitoring provided by senior management.
Crisis management and business continuity plans
covering a broad range of disruptive scenarios are in
place, supporting effective incident response and
rapid restoration of supply. Plans are regularly
reviewed and tested.
The above actions and frameworks build resilience,
however we recognise the need for vigilance and
improvement driven by the constant risk of issues
and threats. Supply chain is developing a product
focus approach to business continuity planning in
2025 while re-enforcing this ongoing expectation
of vigilance and response.
Haleon
Annual Report and Form 20-F 2024
54
Strategic Report
Trend key
Increasing risk
Decreasing risk
Unchanged
New risk
Strategy key
Increase household penetration
Capitalise on new and emerging
opportunities
3
Maintain strong execution
and financial discipline
4
Run a responsible business
1
2
Principal risk and link to strategy
Description and risk development
Mitigation
2
4
Environmental, social
and governance
Sustainability and climate-
related risks are integrated
into our business and
investment decisions.
Oversight forum
Environmental & Social
Sustainability Committee
Risk owner
Chief Corporate Affairs
Officer
Risk category
Operational
Failure to address existing and emerging
environmental, social and governance risks could
materially damage our reputation leading to significant
financial losses. Responsible performance is critical to
our investors, customers, consumers and employees.
The ESG regulatory environment continues to evolve
with non-financial reporting requirements growing
globally. This, combined with increasing scrutiny from
our stakeholders, reinforces the importance of our
responsible business objectives and how we measure
our performance against these.
The achievement of our ESG goals is influenced by
the environment in which we operate. Important
dependencies include: the pace at which global energy
supplies switch to renewables; the recycling industry
developing technology to recycle small formats; and
the availability of responsibly and sustainably sourced
or recycled materials.
The uncertain nature of climate change, governmental
response and consumer behaviour continues to bring
additional challenges and opportunities.
This risk remains unchanged from 2023.
Being a responsible business is central to Haleon’s strategy
and purpose, supported by strong Executive Team
sponsorship and governance processes. Our responsible
business objectives cover: carbon emissions; plastics and
packaging; product quality; safety; and health inclusivity.
We establish our sustainability goals through detailed
analyses, benchmarking, and materiality assessments
to ensure they are ambitious, relevant, and attainable.
Our health inclusivity initiatives enable individuals
to have greater access to opportunities for improved
everyday health, thereby enhancing our brand and
corporate reputation among consumers, customers,
and other key stakeholders.
Our governance boards and teams proactively monitor
and oversee ESG matters, external reporting requirements
and regulations. We receive limited assurance over select
ESG KPIs, with a plan to expand this scope in future in line
with new reporting frameworks. Our sustainability team
works closely with business functions to assess the
impacts of and response to regulatory changes.
We update our climate risk modelling and action
plan regularly through our TCFD programme of
work and disclosures.
>>
See also our approach to sustainability from
page 22, including our TCFD disclosure.
Principal risk and link to strategy
Description and risk development
Mitigation
4
Cyber security
Haleon’s operations
depend on robust and
secure IT systems and
information management.
Oversight forum
ARC, Board
Risk owner
Chief Digital and
Technology Officer
Risk category
Operational
Major disruption to our IT systems, including through
cyber attacks, could materially impact our operations,
harm our reputation and lead to significant
financial losses.
The scope, scale and likelihood of cyber threat activity
continues to grow as the cyber landscape evolves and
geopolitical conflicts intensify. Given our increasing
reliance on digital services, such adversity could
significantly disrupt our global business, R&D, supply
chain and sales, results and reputation, and ultimately
impact our consumers.
This risk has increased since 2023 due to a rise in the
number and sophistication of global cyber-security
cases, our exposure via suppliers and other critical
third parties, and new cyber risk through the adoption
of AI tools.
Our focus remains on ensuring our operational technology
is superior and robust to support Haleon’s business needs
and to facilitate targeted intervention as necessary.
We operate and continuously improve the maturity of our
technology control framework, optimising the usage of
tools to simplify workflows and build capability.
Investment in fit-for-purpose products is ongoing,
ensuring our operational technology remains superior
and robust to support business needs and facilitate
targeted interventions as necessary.
Leading external organisations are engaged to optimise
our cyber defences and the maturity of our operating
practices. This includes regular assurance of our cyber
maturity, independent security and penetration testing,
and crisis management exercises.
We continue to mature and expand the scope of key
established cyber-security functions which provide the
foundation to protect against cyber-security threats and
perform operational tasks to secure Haleon’s environment.
Haleon
Annual Report and Form 20-F 2024
55
Strategic Report
Our approach to risk
Our approach to risk
continued
Trend key
Increasing risk
Decreasing risk
Unchanged
New risk
Strategy key
Increase household penetration
Capitalise on new and emerging
opportunities
3
Maintain strong execution
and financial discipline
4
Run a responsible business
1
2
Principal risk and link to strategy
Description and risk development
Mitigation
2
3
4
Geopolitical instability
Changes in the
geopolitical landscape are
continuously monitored.
Oversight forum
Board
Risk owner
Chief Financial Officer
Risk category
Strategic
Failure to monitor and respond to increasing geopolitical
tensions and macroeconomic uncertainty may impair our
ability to deliver our growth and strategic objectives,
leading to commercial, financial and reputational
losses, challenging the exchange of products and
services, and restricting the movement of talent.
Increased sanctions, other supranational guidelines
and the imposition of tariffs in key markets such as the
US, raise our risk profile and could lead to severe trade
disruptions, cash flow constraints, and restricted
opportunities for strategic growth.
International cooperation remains under pressure,
including the increasingly complex political
relationship between China and the US, our two largest
markets, which may hinder the prospects of current
trade deals and increase retaliation.
This risk has increased in 2024 to reflect the continued
and broadening conflicts across the Middle East and
Ukraine, ongoing political and economic tensions
between major economies and the rise in nationalism
and protectionism.
We proactively monitor geopolitical and macroeconomic
trends and consider the potential impact of these
scenarios on our business. Scenario analysis is applied to
our planning processes to evaluate potential impacts on
our business model and operations.
Geopolitical risks are considered and managed within our
continuity planning for both our internal resilience and
the resilience of our extended supply chain.
Our trade compliance and sanctions teams closely
monitor changes in regulation and oversee import and
export activities, and our Treasury function manages our
foreign exchange risk exposure.
We are deeply concerned about the continued and
broadening conflicts in various parts of the world and
remain committed to enhancing everyday health with
humanity, prioritising the safety, security and wellbeing
of our employees. We continue to ensure access to our
essential health products and provide humanitarian
support, especially in areas affected by crisis and conflict.
Emerging risks
Emerging risks are uncertainties or potential disruptors that have not yet crystallised into specific risks and whose potential impact is
difficult to predict. They are reviewed by the Board alongside our enterprise risks. Changes to our emerging risk profile in 2024 include
broadening the scope of the mass generative AI emerging risk and removing macroeconomic uncertainty, as its impact is now
addressed by the geopolitical instability principal risk.
Emerging risk
Description and risk development
Mitigation
Artificial intelligence (AI)
Given the relatively recent development of Generative
AI and its rapidly evolving nature, new risks and
opportunities continue to emerge.
AI and Generative AI present opportunities to improve
performance and productivity and generate business
growth, with a focus on business services, commercial
effectiveness, innovation and supply chain capabilities.
With the adoption of AI, there is a rapidly evolving
landscape for risk, governance and compliance.
Examples include ensuring an understanding, and
implementation, of country specific regulations,
managing data privacy and intellectual property,
securing AI platforms and considering AI enablement of
employee, customer, consumer and partner interactions.
At Haleon we have Responsible AI Principles which
provide employees with guidance as we develop and
adopt AI technologies.
We also have a Haleon Responsible AI Policy which is
deployed company wide. It includes enterprise-wide
governance, controls, technologies and culture
requirements to mitigate risks including reputational
and regulatory.
>>
See also our culture and people, approach to sustainability (including our TCFD disclosure), Audit & Risk Committee Report and risk factors sections
on pages 18, 22, 72 and 193.
Haleon
Annual Report and Form 20-F 2024
56
Strategic Report
Viability statement
In accordance with provision 31 of the
2018 UK Corporate Governance Code, the
Directors have assessed the viability of the
Group by considering the activities and
principal risks together with factors likely
to affect the Group’s future development,
performance, financial position, cash flows,
liquidity position and borrowing facilities
as described in the Annual Report.
The Director’s assessment of viability has
been made over a three-year period, which
corresponds to the Group’s planning cycle.
Additionally, the Directors believe this
presents the readers of the Annual Report
with a reasonable degree of confidence
over the period assessed.
The assessment considered the Group’s
prospects related to revenue, operating
profit and free cash flow. The Directors
considered the maturity dates for the
Group’s debt obligations and its access
to public and private debt markets,
including its committed credit facilities.
The Directors also carried out a robust
review and analysis of the principal risks
facing the Group, including those risks
that could materially and adversely affect
the Group’s business model, future
performance, solvency and liquidity.
Stress testing was performed on a number
of scenarios, including the potential
impact of severe but plausible scenarios
over the viability period for each potential
combination of principal risks identified
below. In total, four individual scenarios
have been created incorporating a
combination of principal risks. None of
the scenarios modelled were found to
have an impact on the long-term viability
of the Group over the assessment period.
In addition, the Group would be able to
withstand the impact of the most severe
combination of these risks with mitigating
actions available. These mitigating
actions could be reasonably
implemented by the Group and include
reducing A&P spend, reducing capital
spend, pausing M&A activity and
cancelling shareholder dividends.
Based on the assessment described above,
and considering the Group’s current
financial position, debt maturity profile,
stable cash generation, access to liquidity,
geographic diversification and lack of
concentration of supply, the Directors have
a reasonable expectation that the Group is
well positioned to manage principal risks
and the potential downside impacts of such
risks materialising. As a result, the Directors
expect that the Company will be able to
continue in operation and meet its liabilities
as they fall due over the assessment period.
Scenario modelled
Key assumptions
Link to principal risks
Scenario 1:
A climate event results in a major
manufacturing site shutdown for 18 months,
causing disruption to the supply chain
increasing commodity, freight and labour
costs and a Group-wide cyber event which
would cause lost sales for two weeks.
—
Decrease in net revenue and gross profit
as a result of a loss of product sales.
—
Increase in commodity, freight and labour
costs of other manufacturing sites.
—
Supply chain resilience.
—
Trusted ingredients.
—
Environmental, social and governance.
—
Cyber security.
Scenario 2:
No sales price increases or
volume growth over the forecast period
across all product categories to reflect slower
economic growth and competitor activity.
—
No price increases and forecasted growth,
with a corresponding impact on cost of
goods sold due to lower volumes.
—
Growth model.
—
Geopolitical instability.
Scenario 3:
Inability to access the capital
market, inflationary pressure, foreign currency
volatility, interest risks and geopolitical risks.
—
Unable to access the commercial paper
market or to refinance existing commercial
paper balances at a reasonable cost.
—
Double interest costs on the portion
of bond debt subject to floating rates
(i.e. including the impact of derivatives).
—
Depreciation of major local currencies
where the Group generates its profits
by 5% against Pound Sterling.
—
No revenue and operating profit
generated from countries involved in
armed conflict across the plan period.
—
Geopolitical instability.
Scenario 4:
A significant incident that leads
to a product recall and reputational damage
for a key brand resulting in the loss of
substantial sale of products from this
brand for six months.
—
75% decrease in sales and operating
profit for a Power Brand for six months.
—
Significant legal fine (5% of Group
turnover).
—
Write off all inventories relating to the
product of the above Power Brand.
—
Additional investment in A&P to
rebuild the brand.
—
Growth model.
—
Supply chain resilience.
—
Trusted ingredients.
Haleon
Annual Report and Form 20-F 2024
57
Strategic Report
Viability statement
The Strategic Report on pages 2 to 58 was approved by the Board on 20 March 2025.
Amanda Mellor
Company Secretary
Environment
www.haleon.com
/our-impact/environment
www.haleon.com
/who-we-are/Governance/codes-policies-and-standards
www.haleon.com
/who-we-are/our-policy-positions
www.haleon.com
/our-impact/esg-reporting-hub
Employees
www.haleon.com
/our-impact/upholding-our-standards
www.haleon.com
/who-we-are/Governance/codes-policies-and-standards
www.haleon.com
/who-we-are/our-policy-positions
www.haleon.com
/our-impact/gender-pay-gap
www.haleon.com
/our-impact/esg-reporting-hub
Social matters and business conduct
www.haleon.com
/our-impact/upholding-our-standards
www.haleon.com
/who-we-are/Governance/codes-policies-and-standards
www.haleon.com
/who-we-are/our-policy-positions
www.haleon.com
/our-impact/esg-reporting-hub
Human rights and modern slavery
statements
www.haleon.com
/our-impact/upholding-our-standards
www.haleon.com
/who-we-are/Governance/codes-policies-and-standards
www.haleon.com
/our-impact/esg-reporting-hub
www.haleon.com
/our-impact/human-rights
Anti-corruption and anti-bribery
www.haleon.com
/who-we-are/Governance/codes-policies-and-standards
A description of the business model
Our business model
8
Environmental matters
Our approach to sustainability
22
Task Force on Climate-related
Financial Disclosures
24
Our key performance indicators
32
Our approach to risk
51
Environmental & Social Sustainability
Committee Report
77
Note 1 General information:
Impact of climate change
124
Note 12 Property, plant and
equipment: Impact of climate change
136
Streamlined Energy and
Carbon Reporting
188
Statement of compliance
Employee matters
Our key stakeholders
10
Our culture and people
18
Our key performance indicators
32
Our approach to risk
51
Section 172 statement
68
Workforce engagement
71
Directors’ Remuneration Report
82
Miscellaneous Reporting
Requirements
187
Social matters
Our approach to sustainability
22
Environmental & Social Sustainability
Committee Report
77
Our key policies and positioning statements, including our Code of Conduct can be found on Haleon’s website:
Section 172 statement
Details relevant to how the Directors have had regard to the matters set out in Section 172(1)(a) to (f) of the Companies Act 2006 can
be found across the Report, including, but not limited to, the Chair’s statement and CEO’s review on pages 4 and 5, culture and people
from page 18, and our approach to sustainability from page 22. The Section 172 statement is provided on page 68.
Non-financial and sustainability information statement
Non-financial and sustainability information, including a description of policies, due diligence processes, outcomes and risks and
opportunities can be found as set out below. Internal verification and disclosure controls apply to all the information covered in
these areas. Our climate-related financial disclosures are contained in the TCFD disclosure from page 24 and, for item (h), also on
pages 33, 188 and 189.
>>
Further information about our responsible business assurance activities can be found at
www.haleon.com
/our-impact/esg-reporting-hub
Human rights
Our culture and people
18
Anti-corruption and anti-bribery
Our culture and people
18
Audit & Risk Committee Report
72
Policy, due diligence and outcomes
Our approach to risk
51
Viability statement
57
Audit & Risk Committee Report
72
Non-financial key performance indicators
Our key performance indicators
33
Haleon
Annual Report and Form 20-F 2024
58
Strategic Report
Committee membership key:
Skills and experience
1
(excluding Executive Directors)
This table shows the number of Directors
with each relevant skill/experience
Skills and experience:
Dave brings more than two decades of leadership
experience across Europe, Asia and the Americas, including roles as CEO
and Global President. His significant business and board-level experience
enables him to provide the Board with valuable leadership.
Other significant appointments:
PepsiCo Inc. (Non-Executive Director),
World Wildlife Fund UK (Chair), CD&R LLP (Operating Advisor)
Previous roles:
Tesco plc (Group Chief Executive), Unilever plc
(President Americas and Global President for Personal Care)
Chair and Executive Directors
Sir Dave Lewis
Chair
Appointed:
23 May 2022
N
N
Skills and experience:
Brian brings extensive experience in consumer
healthcare, product supply and brand marketing gained through senior
leadership roles across major global organisations. This, combined with
his experience in leading growth in large regions, provides him with the
skillset required to inspire and lead the Group.
Other significant appointments:
The Consumer Goods Forum
(Board Member), Mondelēz International, Inc. (Non-Executive Director)
Previous roles:
GSK plc (CEO of the Consumer Healthcare Business),
Novartis AG (OTC Division Head and a member of the Executive
Committee), Procter & Gamble (Product Supply and Marketing)
Skills and experience:
Dawn brings extensive financial leadership
experience in consumer goods. Her wealth of commercial and
international experience is valuable to the Board. She is a member
of the Institute of Chartered Accountants of England and Wales.
Other significant appointments:
ITV plc (Non-Executive Director
and member of the Audit & Risk Committee)
Previous roles:
Tate & Lyle (Chief Financial Officer), Mars Inc. (various
country, region, divisional VP CEO roles, most recent being VP and Global
CFO Mars Transformation), Tasty Bite Eatables (Non-Executive Director),
Ernst & Young (Senior Auditor)
Our Board of Directors
>>
The detailed breakdown of gender and ethnic representation as
required by the UK Listing Rules is shown on page 81.
Committee Chair
A
Audit & Risk
E
Environmental & Social
Sustainability
N
Nominations & Governance
R
Remuneration
Brian McNamara
Chief Executive Officer
Appointed:
23 May 2022
Dawn Allen
Chief Financial Officer
Appointed:
1 November 2024
Board composition
1
Gender
1
Ethnicity
1
Nationality
1
1
Data as at the latest practicable date of 6 March 2025.
7
6
10
4
2
3
2
5
7
5
2
5
Consumer and Retail
Healthcare
International
Supply chain
Technology
Digital/
innovation
Regulatory
Finance
M&A/transformation
Sustainability/
responsible business
Employee engagement
Governance/investor
Men
Women
4
7
Chair
Executive Directors
Independent
Non-Executive Directors
1
2
8
White
Mixed/Multiple
Ethnic Groups
Asian/Asian British
8
1
2
6
2
1
1
British
American
Irish
Indian
French
1
Haleon
Annual Report and Form 20-F 2024
59
Corporate Governance
Our Board of Directors
Dame Vivienne Cox
Independent Non-Executive Director
Appointed:
18 July 2022
Marie-Anne Aymerich
Independent Non-Executive Director
Appointed:
18 July 2022
Tracy Clarke
Independent Non-Executive Director
Appointed:
18 July 2022
Nancy Avila
Independent Non-Executive Director
Appointed:
1 September 2024
Bláthnaid Bergin
Independent Non-Executive Director
Appointed:
24 February 2025
Our Board of Directors
continued
Manvinder Singh (Vindi) Banga
Senior Independent Non-Executive Director
(SID)
Appointed:
18 July 2022
Independent Non-Executive Directors
Skills and experience:
Vindi brings a wealth of experience spanning
more than three decades in leadership roles, primarily within global
consumer goods industries, which is further broadened by his series
of non-executive directorships in other sectors.
Other significant appointments:
CD&R LLP (Partner), UK Government
Investments (Chair), Imperial College London (Chair of the Council),
The Economist Group (Non-Executive Director)
Previous roles:
GSK plc (Senior Independent Director), Marks &
Spencer plc (Senior Independent Director), Unilever plc (various roles,
most recent being President of the Global Foods, Home and Personal
Care business), Confederation of British Industry (CBI) (Non-Executive
Director), Thomson Reuters Corp (Non-Executive Director)
Skills and experience:
Tracy brings a wealth of international banking
and financial services expertise to the Board, underpinned by 35 years’
diverse experience in the sector. Serving as Chair of the Remuneration
Committee for several organisations, she demonstrates a capability to
lead discussions on remuneration strategy and policy.
Other significant appointments:
TP ICAP Group plc (Non-Executive
Director and Remuneration Committee Chair), Starling Bank Limited
(Senior Independent Director and Remuneration Committee Chair)
Previous roles:
Standard Chartered Bank (various roles, most recent
being Private Bank CEO), Sky plc (Non-Executive Director, Chair of
the Remuneration Committee and Big Picture Committee), Eaga plc
(Non-Executive Director), Inmarsat plc (Non-Executive Director)
A
N
R
A
E
N
R
Skills and experience:
Nancy brings significant experience leading
business transformations with technology, developing new digital
channels for growth, modernising operations and addressing
regulatory, technology, cyber and financial risk. Most of her career
has been spent in technology and business operations across
several Fortune 100 companies.
Other significant appointments:
Analog Devices, Inc. (Chief
Information Officer), Comerica Incorporated (Independent Director)
Previous roles:
McKesson Corporation (Executive Vice President, Chief
Information Officer/Chief Technology Officer), Johnson Controls Inc.
(Vice President and Chief Information Officer), Abbot Laboratories Inc.
(Vice President, Business and Technology Services)
Skills and experience:
Marie-Anne brings extensive experience in
leading global brands across multiple categories in the consumer goods
and luxury sectors. She has expertise in developing premium product
portfolios, notably leading innovations in the oral care industry.
Other significant appointments:
Pierre Fabre Group (Non-Executive
Director), Academy of St Martin in the Fields (Trustee and member of
the Nomination Committee)
Previous roles:
Unilever plc (Global Executive Vice President, Oral Care
and Managing Director, Home Care and Personal Care), LVMH Group
(Brand General Director – Parfums Christian Dior)
Skills and experience:
Vivienne brings extensive experience across
multiple industries, particularly in the energy, natural resources and
publishing sectors. Her background includes leadership roles in large
organisations, focusing on gas, power, renewables and alternative
energy. Additionally, she has significant expertise in governance and
regulatory affairs.
Other significant appointments:
Victrex plc (Chair and Nominations
Committee Chair), Venterra Group plc (Non-Executive Director)
Previous roles:
GSK plc (Non-Executive Director and Workforce
Engagement Director), BP plc (Executive Vice President and Chief
Executive), BG Group plc (Non-Executive Director), Rio Tinto plc
(Non-Executive Director), Pearson plc (Senior Independent Director),
Vallourec (Chairman of the Supervisory Board), UK Government’s
Department for International Development (Lead Independent Director)
Skills and experience:
Bláthnaid brings financial leadership and
strategic planning experience from a variety of consumer-facing
businesses gained during previous and current executive and non-
executive positions. She is a qualified chartered accountant and
spent most of her career working across Europe, Asia and Australia.
Other significant appointments:
Sainsburys plc (Chief Financial Officer)
Previous roles:
Artemis Alpha Investment Trust (Non-Executive
Director, Chair of the Audit Committee and Senior Independent
Director), Aviva plc (Chief Finance Operations Officer), RSA (various
roles, most recent being Group Financial Controller), GE (various roles),
Procter & Gamble (Finance Analyst)
E
A
E
R
A
Haleon
Annual Report and Form 20-F 2024
60
Corporate Governance
Committee membership key:
Committee Chair
A
Audit & Risk
E
Environmental & Social
Sustainability
N
Nominations & Governance
R
Remuneration
Alan Stewart
Independent Non-Executive Director
Appointed:
1 September 2024
Asmita Dubey
Independent Non-Executive Director
Appointed:
18 July 2022
Amanda Mellor
Company Secretary
Appointed:
23 May 2022
Deirdre Mahlan (Independent Non-Executive Director) served
as a member of the Board from 18 July 2022 to 1 October 2024.
Tobias Hestler (Chief Financial Officer) served as a member of
the Board from 23 May 2022 to 1 November 2024.
David Denton (Non-Executive Director) served as a member of
the Board from 1 March 2023 to 4 December 2024.
Bryan Supran (Non-Executive Director) served as a member of
the Board from 18 July 2022 to 25 February 2025.
The detailed breakdown of gender and ethnic representation
as required by the UK Listing Rules is shown on page 81.
Company Secretary
>>
Further details can be found at
www.haleon.com/who-we-are/leadership
Skills and experience:
Alan brings significant corporate finance,
accounting and international experience from a wide range of
consumer-related industries. He has extensive board and listed
company experience.
Other significant appointments:
Burberry plc (Non-Executive Director
and Audit Committee Chair)
Previous roles:
Diageo plc (Non-Executive Director and Audit
Committee Chair), Reckitt Benckiser Group PLC (Non-Executive Director
and Remuneration Committee Chair), Games Workshop Group plc
(Non-Executive Director and Audit Committee Chair), Tesco plc
(Chief Financial Officer), Marks & Spencer plc (Chief Financial Officer)
Skills and experience:
Asmita brings over 25 years’ experience working
in consumer businesses. She has extensive experience of working and
building joint business partnerships in China.
Other significant appointments:
L’Oréal (Chief Digital & Marketing
Officer and member of Executive Committee)
Previous roles:
GSK plc (Digital Advisory Board)
Independent Non-Executive Directors
A
E
N
R
Skills and experience:
Amanda brings extensive experience in
company secretarial, corporate governance, investor relations and
investment banking.
Other appointments:
Volution Group plc (Senior Independent
Director), GC100 (Executive Committee Member)
Haleon
Annual Report and Form 20-F 2024
61
Corporate Governance
Our Board of Directors
Keith Choy
President, Asia Pacific
Appointed:
16 December 2021
Line De Decker
Chief Human Resources
Officer
Appointed:
1 August 2024
Claire Dickson
Chief Digital and Technology
Officer
Appointed:
4 September 2024
Filippo Lanzi
President, EMEA & LatAm
Appointed:
16 December 2021
Adrian Morris
General Counsel
Appointed:
12 August 2024
Lisa Paley
President, North America
Appointed:
16 December 2021
Our Executive Team
In addition to Brian McNamara and Dawn Allen, the Executive Team comprises:
Skills and experience:
Keith has almost
30 years’ experience in the consumer-
packaged goods and health industries and
joined GSK’s Consumer Healthcare business
in 2019. He was previously President,
International Markets for Pfizer Consumer
Healthcare. Keith has also held roles at
Wyeth Pharmaceutical and Gillette.
Skills and experience:
Line has extensive
experience navigating complex and regulated
organisations, having served as Chief People
and Sustainability Officer at Aliaxis, Senior
Vice President and Head of Transformation
at GSK and held senior HR management
positions at GSK and DuPont. She began her
career in tax and reward at PwC and UCB.
Skills and experience:
Claire has more than
25 years’ experience working in technology.
She was Chief Information Officer at DS Smith
where she was accountable for developing
and implementing cyber-secure, resilient
global operations, while driving growth by
enhancing digital and data capabilities
across machinery, energy, supply chain
and customer experience.
Skills and experience:
Filippo joined GSK in
2015 holding leadership roles in south and
central eastern Europe prior to becoming
APAC Regional Head. He then became Head
of EMEA in 2019, prior to leading LatAm.
Before this, he worked for Novartis OTC as
General Manager in Italy and Greece. Filippo
also held positions at Johnson & Johnson
and Nestlé S.A.
Skills and experience:
Adrian has a wealth
of expertise across all aspects of legal,
regulatory, compliance and governance.
He was Group General Counsel at Tesco plc
for 11 years and, prior to that, Associate
General Counsel at BP plc and Centrica plc.
Skills and experience:
Prior to joining
GSK’s Consumer Healthcare business in 2019,
Lisa spent a decade at Pfizer Consumer
Healthcare where she was most recently
President, North America. She was previously
Vice President of Sales at Johnson & Johnson
and also held various roles at Pfizer
Consumer Healthcare/Warner-Lambert.
1
Data as at the latest practicable
date of 6 March 2025.
Ethnicity
1
White
Asian/Asian British
11
2
Gender
1
Men
Women
7
6
Nationality
1
British
Italian
Swedish
French
Chinese
American
Dual (Belgian/British)
6
1
1
1
1
2
1
Haleon
Annual Report and Form 20-F 2024
62
Corporate Governance
Namrata Patel
Chief Supply Chain Officer
Appointed:
6 November 2023
Ed Petter
Chief Corporate Affairs
Officer
Appointed:
1 January 2024
Franck Riot
Chief R&D Officer
Appointed:
16 December 2021
Tamara Rogers
Chief Marketing Officer
Appointed:
16 December 2021
Bjorn Timelin
Head of Strategy
Appointed:
2 October 2023
Bjarne Tellmann (General Counsel)
served as a member of the Executive
Team from 16 December 2021 to
29 March 2024.
Mairéad Nayager (Chief Human
Resources Officer) served as a
member of the Executive Team from
1 March 2022 to 26 April 2024.
The detailed breakdown of gender
and ethnic representation as required
by the UK Listing Rules is shown on
page 81.
>>
Further details can be found
at
www.haleon.com/who-we-are/
leadership
Skills and experience:
Namrata has
extensive global experience in manufacturing
and end-to-end supply chain management.
She has held senior leadership positions
at companies including The Coca-Cola
Company, Gillette and Procter & Gamble
and currently sits on the board of Oxford
Biomedica plc as an Independent
Non-Executive Director.
Skills and experience:
Prior to Haleon,
Ed spent seven years at BT Group plc as
Group Corporate Affairs Officer and a
member of the Executive Committee. He has
previously held leadership roles at Lloyds
Banking Group and McDonald’s after
spending four years working in consultancy
at McKinsey & Company and Blue Rubicon.
Skills and experience:
Franck has over 20
years’ experience leading R&D in consumer-led
industries. Prior to joining GSK’s Consumer
Healthcare business in 2019, he was Vice
President of Research and Innovation for
the Essential Dairy and Plant-Based Division,
Danone S.A. Before that, he was Group R&D
Director at Nomad Foods and previously held
a variety of R&D leadership roles at Danone.
Skills and experience:
Tamara has 30 years’
experience in FMCG. Prior to joining GSK’s
Consumer Healthcare business in 2019, Tamara
spent nearly 25 years at Unilever plc, most
recently as Executive Vice President, Personal
Care, North America and prior to that, SVP
Global Deodorants. Tamara is a Non-Executive
Director of Greggs plc and board member of
the Global Self-Care Federation.
Skills and experience:
Bjorn was Senior
Partner at McKinsey & Company specialising
in strategic and commercial topics for
consumer-facing companies, with clients
across the retail, consumer packaged goods,
media, and luxury goods sectors. Prior to that
he spent four years at Procter & Gamble’s
beauty care division in the UK and Switzerland.
On joining the Board in November 2024,
Dawn commenced a robust and varied
induction process aimed at familiarising
her with the business and our key
stakeholders. Over several weeks,
Dawn participated in a series of
meetings and site visits as below:
—
Introductory meetings with
members of the Board, the
Executive Team and other key
members of senior leadership.
—
Participation in employee town
halls with the CEO and other
members of the Executive Team.
—
A market visit to the US including a
visit to a key manufacturing site and
to a selection of consumer stores,
gaining valuable insight into local
market operations.
—
Meetings with key investors
and analysts.
In addition, Dawn was provided with
past Board and Committee papers
and internal policies and procedure
documents, to assist her in broadening
her understanding of our internal
frameworks, values and culture.
Case study: Dawn Allen
induction
Haleon
Annual Report and Form 20-F 2024
63
Corporate Governance
Our Executive Team
Sir Dave Lewis
Chair
As I shared in my Chair’s statement
on page 4, Haleon delivered further
progress this year, demonstrating the
Group’s strong potential. The Board
remains focused on supporting
management in developing the
Company’s strategic ambitions and
building the enablers and capabilities
to drive sustainable, long-term,
profitable growth.
Board focus
Board discussions centred on long-term
strategy, financial performance, capital
allocation, operating capabilities,
governance and our people.
The Board had several strategy-related
discussions throughout the year,
focusing on maximising the brand
portfolio and divesting non-core activities
to enable investment in core activities.
Key divestments included the sale of
ChapStick for approximately $430m and
our Nicotine Replacement Therapy
business outside the US for c.£500m.
We continued to focus significant attention
on our China business. China is a key
growth market for Haleon and investing
into and growing our China business has
been a major consideration for the Board
since the demerger in 2022. To build a
better understanding of the market and
the opportunities for Haleon, the Board
visited China in June 2024 to meet with
our executive and operating teams, review
our operations in Shanghai and visit our
manufacturing site in Suzhou. As a result
of the Board’s discussions, we agreed to
increase our interest in our joint venture in
China from 55% to 88% with an option to
acquire the remaining 12% in the future.
In addition to the Board China market visit,
I had the opportunity to meet our local
teams and visit Haleon’s operations in
Levice, Slovakia and Budapest, Hungary.
In October 2024, the Board held an
offsite meeting with the Executive Team
to review Haleon’s long-term ambitions,
financial plans and targets and key
enablers. Deep dives continue to be a
regular feature on the Board’s agenda:
these provide the opportunity for focused
understanding and discussion on key
strategic areas. This year, we considered
the VMS landscape, supply chain and
cyber-security, as well as governance
case studies and shareholder activism.
The Board has also spent considerable
time on Haleon’s capital allocation
strategy. Having delivered significant
deleveraging of the Group since demerger
in 2022 from c.4x to c.2.8x, we were
pleased this year to be able to commence
a buyback programme. In 2024, we
returned £500m to shareholders through
off-market buybacks of shares from Pfizer
Inc. of £315m and £114.6m in March and
October 2024, respectively, with the
remaining £70m completed through an
on-market buyback programme from
August to October 2024. We also bought
back a further £115.4m of shares to satisfy
future share allocation requirements for
our employee share plans.
The Board recognises that having a
strong culture is key to realising Haleon’s
ambitions and longer-term success.
We discuss this regularly and have a
deeper review at least annually.
Opportunities to meet our employees
across different locations and geographies
also provide valuable insights into our
culture and comprise an important part
of our Board employee engagement
programme. Feedback from these
meetings is regularly discussed by the
Board. Further detail is provided in the
Workforce Engagement Director’s
statement on page 71.
Setting the right standards and behaviours
is an important part of shaping a strong
culture for everyone in the organisation.
The Directors recognise the importance
of this and commit to completing the
Haleon Code of Conduct and anti-bribery
and corruption training during the year,
along with all Haleon employees.
Details on the Board’s activities for
2024, along with some insights into key
discussions and decisions, are set out
on page 66.
Board succession planning
We welcomed a number of new
independent Non-Executive Directors in
the second half of the year. Alan Stewart
and Nancy Avila both joined as Non-
Executive Directors in September 2024.
Alan brings a wealth of board, executive
and leadership insights and Nancy
brings valuable technology, business
transformation, digital and cyber
experience to support the Board’s
discussions in these areas. In October
2024, Deirdre Mahlan stepped down
from the Board and was succeeded
by Alan as Chair of the Audit & Risk
Committee. I would like to thank Deirdre
for her considerable contributions to
the Board and for chairing the Audit
& Risk Committee since Haleon’s listing
in July 2022.
Following the reduction of Pfizer Inc.’s
shareholding, David Denton and Bryan
Supran stepped down from the Board
as Non-Executive Directors and
representative directors of Pfizer on
4 December 2024 and 25 February 2025
respectively. I would like to thank them
both for their insights and contributions
to the Board. We announced the
appointment of Bláthnaid Bergin as an
independent Non-Executive Director
and we welcomed her to the Board in
February 2025. With a strong track record
of financial leadership and transformation
from multiple consumer-facing businesses,
Bláthnaid brings a wealth of relevant skills
and experience to the Board.
During the year, Tobias Hestler stepped
down as Chief Financial Officer of Haleon.
I would like to thank him for his significant
contribution to the Board and his key role
in establishing Haleon as a standalone
business. Dawn Allen joined the Company
as CFO in October 2024 and brings deep
consumer and financial experience to
the Board.
Board performance review
As Haleon entered its third year since
listing, we undertook our first external
Board evaluation, which was conducted by
Chris Saul of Christopher Saul Associates
Limited. The process for the evaluation,
key feedback and action plans for the
year ahead are set out on page 70.
Annual General Meeting (AGM)
We look forward to welcoming
shareholders to our digital format AGM on
28 May 2025. This will again be broadcast
from our offices in London. Details on how
to join the AGM will be provided in our
Notice of Meeting.
Letter from the Chair
Haleon
Annual Report and Form 20-F 2024
64
Corporate Governance
>>
Matters reserved for the Board, Committees’ Terms of Reference, along with the Chair, CEO and SID’s role descriptions are available at
www.haleon.com/who-we-are/Governance/board-and-board-committees
Board and Committee meetings and
attendance during 2024
Board papers are circulated to all
Directors in advance of the meeting
allowing sufficient time for their
consideration. If any Director is unable to
attend a meeting, they can communicate
their opinions and comments on the
matters to be considered via the Chair of
the Board or the relevant Committee Chair.
Following the conclusion of each
scheduled Board meeting, the Chair
holds a separate session with the
Non-Executive Directors.
1
Stepped down from the Board on 1 November 2024.
2
Appointed to the Board on 1 November 2024.
3
Appointed to the Board on 1 September 2024.
4
Apologies in advance of the meeting.
5
Stepped down from the Board on 1 October 2024.
6
Stepped down from the Board on 4 December 2024.
7
Bryan Supran and David Denton could not attend a
Board meeting due to a conflict of interest with the
matters being discussed.
At Haleon, we recognise that a robust
governance framework is fundamental
to realising our purpose of delivering
better everyday health with humanity
and executing our strategy effectively.
Our governance structure is designed to
facilitate clear decision-making, ensure
accountability and provide comprehensive
oversight across the Group. The Board
maintains overall responsibility for the
Governance structure
Director
Board
Audit & Risk
Committee
Nominations
& Governance
Committee
Remuneration
Committee
Environmental &
Social Sustainability
Committee
Chair and Executive Directors
Sir Dave Lewis
6/6
5/5
Brian McNamara
6/6
Tobias Hestler
1
5/5
Dawn Allen
2
2/2
Independent Non-Executive Directors
Vindi Banga
6/6
6/6
5/5
5/5
Nancy Avila
3
2/2
2/2
Marie-Anne Aymerich
6/6
6/6
Tracy Clarke
4
5/6
6/6
5/5
5/5
6/6
Dame Vivienne Cox
6/6
6/6
5/5
6/6
Asmita Dubey
6/6
Deirdre Mahlan
5
4/4
4/4
3/3
3/3
Alan Stewart
3
2/2
2/2
2/2
2/2
2/2
Non-Executive Directors
Bryan Supran
4,7
4/6
David Denton
4,6,7
3/5
direction and control of Haleon, with
specific day-to-day management
delegated to the Chief Executive Officer,
who is supported by the Executive Team.
To enhance its effectiveness, the Board
has established several committees,
each operating under defined terms of
reference available on our website.
These committees work collaboratively
to address key areas of oversight.
For instance, the Audit & Risk Committee
maintains a close relationship with other
committees to ensure a holistic approach
to risk management and internal control.
This interconnected governance
framework enables Haleon to maintain
the agility required in the dynamic consumer
healthcare market while upholding the
highest standards of corporate governance
and stakeholder accountability.
The Board
The Board’s main role
is to promote the
long-term sustainable
success of the
Company, generating
value for shareholders
and contributing to
wider society.
It sets the Company’s
purpose, values,
strategy and long-term
objectives. The Board
is also responsible for
the Group’s system of
corporate governance,
risk management and
financial performance.
Audit & Risk Committee
Role of the Committee is to oversee the integrity of the financial reporting and audit process, and to oversee the
maintenance of sound internal controls and risk management systems. The Committee monitors the effectiveness
of internal and external audit and reviews concerns about financial fraud and whistleblowing.
>>
See page 72
Environmental & Social Sustainability Committee
Role of the Committee is to provide oversight and effective governance over progress with the environmental and
social sustainability agenda and the external governance and regulatory requirements relevant to these areas.
>>
See page 77
Nominations & Governance Committee
Role of the Committee is to lead the process for appointments to the Board and make recommendations to ensure
plans are in place for orderly succession to both the Board and senior management positions, and oversee a
succession pipeline. The Committee also has a role to ensure that the Company is managed to high standards of
corporate governance.
>>
See page 79
Remuneration Committee
Role of the Committee is to set the broad structure for the Company’s Remuneration Policy and to determine the
remuneration of the Chair, the Executive Team and the Company Secretary. The Committee is also responsible for
reviewing workforce remuneration and the alignment of incentives and rewards with the Company’s culture.
>>
See page 82
The Chief Executive Officer (CEO) is responsible for:
—
Developing Haleon’s strategic direction for consideration by the Board;
—
Implementing the strategy and reporting on progress;
—
Day-to-day management of the Company, communicating expectations
in relation to Company culture and ensuring responsible business
conduct across the business; and
—
Providing effective leadership, co-ordination and performance
management of the Executive Team.
The Executive Team is responsible for:
—
Supporting the CEO in the delivery of Haleon’s strategy;
—
Providing input into strategic and operational decisions aligned to
business priorities, and supporting on the delivery of actions; and
—
Supporting the CEO in implementing decisions made by the Board.
Executive Team Forums
Sustainability
& Risk
Finance
Innovation
Digital &
Technology
Supply Chain
Human Resources
R&D
Haleon
Annual Report and Form 20-F 2024
65
Corporate Governance
Governance Structure
Key focus areas during the year
During the year, the Board’s activities focused on key areas of strategic and operational priorities, while ensuring the interests of
stakeholders were considered in decision-making. From shaping the Company’s long-term strategy to overseeing critical portfolio
management decisions and capital allocation, the Board’s engagement was broad while remaining responsive to changing external
economic and political dynamics. The following sections provide information on the Board’s key activities, highlighting its dedication
to fostering sustainable growth, enhancing operational efficiency, creating enduring value for all our stakeholders and the relevant
factors considered within the context of Section 172(1)(a) to (f) of the Companies Act 2006 (Section 172).
Key areas of Board discussion
Item
Activity
Key outcomes/decisions
Group strategy
A
B
C
A B C
—
Reviewed the strategic and operational
performance of the business by brand,
market categories and regions.
—
Reviewed investment and divestment opportunities.
—
Discussed the global economy, geopolitics, and
impact on growth and performance.
—
Considered the global consumer and competitive
landscape and opportunities for innovation.
—
Received deep dive into VMS and supply chain strategy, and considered
further areas of strategic growth at the strategy offsite meeting.
—
Approved the divestment of the Nicotine Replacement Therapy
business outside of the US for up to £500m.
—
Approved the increase in Haleon’s stake in the TSKF joint venture in
China from 55% to 88% with the option for Haleon to acquire the
remaining 12% shareholding in TSKF in future.
—
Launch of Sensodyne Clinical White, and parodontax Gum Strengthen
& Protect in several markets, and the launch of Centrum Menopause
Support and Emergen-C Zero Sugar in the US.
Financials and
performance
A
F
—
Monitored Haleon’s financial performance and
growth against the 2023 financial plan and
external commitments.
—
Considered the approach to capital allocation
and returns.
—
Discussed financial performance against the
2024-2026 plan, future outlook and analyst consensus.
—
Approved the allocation of £500m for share buybacks.
—
Approved the quarterly, half-yearly and full-year results, and the
2023 Annual Report and Accounts.
—
Approved potential future bond issue of between £500m – £1bn.
—
Approved the 2025-27 corporate plan and 2025 financial plan.
Risk management
E
—
Discussed the Company’s system of risk management
and internal controls (alongside regular updates
from the Audit & Risk Committee).
—
Assessed the effectiveness of the Company’s risk
and control processes.
—
Reviewed the Company’s principal risks.
—
Approved the 2024 half year and full year Statement on Principal Risks
for inclusion in the 2024 Interim Results, Preliminary Statements,
and Report and Accounts.
—
Confirmed that the Company’s system of risk and control was
operating effectively.
—
Confirmed the number and scope of principal risks remained accurate.
People, culture
and values
A
B
—
Discussed progress against Haleon’s
productivity programme.
—
Reviewed the results from the 2024
employee engagement survey.
—
Considered Haleon’s cultural ambition
and ongoing progress.
—
Approved the 2024 Gender Pay Gap Report for publication.
—
Approved the proposed closure of the Maidenhead (UK) manufacturing
site and the move to Levice (Slovakia).
—
Endorsed the 2025 employee engagement focus areas.
—
Agreed the areas for further focus on Haleon’s cultural journey,
including enhancing innovation in business processes and
deepening the connection between performance and reward.
Governance
A
E
—
Considered reports from the Chairs of each
Board Committee on key areas of Committee
discussion and focus.
—
Reviewed progress made against the 2024 Board
performance action plans.
—
Engaged in the 2024 external Board
performance review.
—
Received and discussed regular updates on
key governance and disclosure matters.
—
Reviewed external board appointments and
conflicts of interest.
Following recommendation from the Nominations & Governance Committee:
—
Approved the appointment of Dawn Allen as the new CFO.
—
Approved the appointment of Alan Stewart as a Non-Executive Director,
Chair of the Audit & Risk Committee and a member of all Board committees.
—
Approved the appointment of Nancy Avila as a Non-Executive Director
and member of the Audit & Risk Committee.
—
Approved Haleon’s Governance Framework.
—
Approved the 2025 Board and Committee Action Plans following
the Board performance review.
—
Approved changes to various governance policies to simplify and
better align with Haleon’s operating model.
Shareholder and
engagement
A
E
F
—
Reviewed the preparations for the 2024 AGM and
the digital focus.
—
Considered updates from Investor Relations,
including share price and valuation analysis, market
engagement and ownership analysis, and the views
of institutional investors.
—
Received and discussed updates on employee
engagement by the Workforce Engagement Director.
—
Approved the Notice of 2024 AGM.
—
Approved the 2023 final dividend of 4.2p, the 2024 interim dividend
of 2.0p and the proposed 2024 final dividend of 4.6p.
—
Stakeholder considerations factored into key board decisions during
the year including the off-market share buybacks from Pfizer.
—
Members of the Board took part in Growing at Haleon week, focused
on employee growth and development.
Sustainability
C
D
E
—
Considered Haleon’s sustainability agenda
and progress plan against each of our strategic
market categories.
—
Enhanced the Board’s oversight of key sustainability
disclosures as part of the review of Haleon’s
Governance Framework.
—
Reviewed the risks and opportunities, plus areas for further innovation
to support delivery.
—
Approved the 2024 Human Rights Statement.
>>
See also our key stakeholders and culture and people sections on pages 10 and 18.
Relevant Section 172 factors
Board activities
A
Employees
B
Business relationships
C
Community and environment
D
Business conduct
E
Members of the Company
F
Long term
Haleon
Annual Report and Form 20-F 2024
66
Corporate Governance
Our stakeholders
Consumers
Customers
Employees
Governments and
industry regulators
Health Professionals
Investors
Suppliers
Case study: focus on strategic priorities
venture in China from 55% to 88%.
This strategic acquisition was designed
to deliver greater control and increased
operational flexibility in a key growth
market. The Board thoroughly
considered various aspects of this
transaction, including potential
valuation ranges, funding alternatives,
risk mitigations and optimal timing.
This decision underscored Haleon’s
commitment to the Chinese market
and its exceptional growth potential.
These portfolio management
decisions reflect the Board’s
proactive approach to shaping
Haleon’s business profile, balancing
divestments of non-core assets with
strategic investments in high-potential
markets. Throughout these processes,
the Board carefully weighed the
long-term implications for various
stakeholders, including employees,
customers and shareholders, ensuring
alignment with Haleon’s overall
strategic vision and financial objectives.
Strategic oversight
In 2024, the Board conducted
comprehensive strategic reviews
across key business areas. This
supported the evolution of Haleon’s
purpose and strategic drivers to better
reflect our focus on long-term value
creation and total shareholder return.
Vitamins, Minerals and
Supplements (VMS)
The Board reviewed our VMS strategy,
focusing on growth potential and
margin enhancement. The evaluation
centred on the Centrum brand’s
market position and differentiation,
alongside broader considerations of
category profitability, innovation and
cross-category synergies. This
resulted in the strategic focus on
expanding consumer reach and
driving shareholder value through
organic growth and margin
improvement. Key elements included
optimising manufacturing efficiencies,
strengthening scientific differentiation,
and aligning with sustainability goals,
while also exploring potential inorganic
growth opportunities.
Haleon’s supply chain
The Board undertook a detailed
review of Haleon’s supply chain
strategy, evaluating our quality,
service and cost (QSC) performance
against competitors, and assessing
organisational capabilities. The Board
considered the QSC against four
strategic pillars: Operational
Excellence, Transform Core
Capabilities, Build for Tomorrow
and People First. The review
included evaluation of enterprise
programmes aimed at enhancing
data infrastructure and strengthening
cross-functional governance to drive
operational efficiency.
Board strategy offsite
In October, the Board held its
annual strategy offsite in conjunction
with the Executive Team to review
progress against strategic objectives
and to set the future direction.
The Board reviewed Haleon’s
purpose, ambitions, strategic drivers
and behaviours. The Board discussed
the strategy for each category,
considered acceleration plans
and how to make healthcare more
accessible in developing countries,
plus the enterprise enablers that
would support delivery of our goals
and ambitions, including the use of
technology and driving simplification.
In 2024, the Board actively engaged
in strategic portfolio management
to enhance Haleon’s agility and
competitiveness.
A significant divestment was the sale of
Haleon’s Nicotine Replacement Therapy
(NRT) business outside the US to Dr
Reddy’s Laboratories SA for up to
£500m. This transaction, involving
brands such as Nicotinell, Nicabate,
Habitrol and Thrive, allowed Haleon to
exit the NRT category outside the US,
reducing complexity and enabling
increased focus on strategic growth
areas. Similarly, the Board oversaw the
sale of the ChapStick brand to Suave
Brands Company (announced in 2023)
for $430m, along with a passive
minority interest in the acquiring
company. This divestment aligned with
our strategy to simplify the business
and accelerate debt reduction.
In addition, the Board carefully
evaluated and approved an increase
in Haleon’s stake in the TSKF joint
Haleon
Annual Report and Form 20-F 2024
67
Corporate Governance
Board activities
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Board activities
continued
Stakeholder engagement cycle
Stakeholder engagement and Section 172 statement
In accordance with the requirements of Section 172 of the
Companies Act 2006 (the Act), the Directors consider that,
during the financial year ended 31 December 2024, they
have acted in a way that they consider, in good faith,
would most likely promote the success of the Company for
the benefit of its members as a whole, having regard to the
likely consequences of any decision in the long term and
the broader interests of other stakeholders, as required
by the Act. The following pages set out how each of these
factors, and each of our stakeholders, are taken into
consideration when determining Haleon’s strategy.
Effective stakeholder engagement is fundamental to
Haleon’s purpose and strategic delivery. As a global leader
in consumer health, the Board recognises the far-reaching
impact of our operations and the diverse interests of our
stakeholders. Our engagement strategy combines executive-
led initiatives with direct Board involvement, allowing us to
promptly recognise and address stakeholder concerns at all
levels of the organisation. This comprehensive approach
informs both our day-to-day decisions and long-term
strategic planning, reinforcing Haleon’s commitment to
responsible and responsive corporate governance.
Through active stakeholder engagement, we not only
fulfil our legal obligations but also strengthen our position
as an innovative and trusted partner in our industry.
Employees
The Board maintained active engagement
with our workforce through multiple
channels. Board members conducted
site visits and hosted employee events,
enabling direct dialogue. The non-
executive director for employee
engagement undertook focused work
with employees, providing valuable
Board feedback. The Board reviewed
Company culture and employee
engagement survey results, while
individual members met employees during
their induction. Notable engagement
included reviewing the proposed strategic
decision to close the Maidenhead site and
move production to Levice, Slovakia, with
careful consideration of employee impact.
The CEO’s interactive sessions facilitated
two-way communication, enabling
direct feedback from the workforce.
These multifaceted engagement efforts
have provided the Board with invaluable
insights into employee experiences,
concerns and ideas, informing decision-
making and strategy development.
Investors and shareholders
Regular monitoring of investor sentiment
and market trends informed Board
decisions throughout the year.
Comprehensive shareholder feedback
was gathered through half-year and
full-year results roadshows,
supplemented by bi-annual broker
updates. The Remuneration Committee
Chair’s direct engagement with investors
ensured that executive compensation
remained aligned with shareholder
interests. In addition, a comprehensive
programme of director-investor meetings
covering key financial announcements,
long-term priorities and specific issues
raised by investors demonstrated the
Board’s commitment to transparent and
responsive governance. These diverse
engagement activities have enabled the
Board to maintain a pulse on shareholder
sentiment, address concerns proactively
and align strategic decisions with investor
expectations, ultimately contributing to the
creation of long-term shareholder value.
Suppliers
Board visits to manufacturing sites
provided first-hand insights into
operational processes, challenges and
opportunities. A deep dive into the supply
chain strategy allowed the Board to
comprehensively understand key
challenges and opportunities within this
critical business function. Meetings with
joint venture partners and regular Board
updates on joint venture strategies
ensured alignment with these key
suppliers and partners. This multifaceted
engagement approach has equipped the
Board with deep understanding of
Haleon’s supply chain dynamics, enabling
more informed decision-making on
strategic sourcing, risk management and
efficiency improvements. The insights
gained have been valuable in shaping
Haleon’s long-term supply chain strategy,
enhancing resilience, and identifying
opportunities for innovation and
sustainability within the supplier network.
B
F
A
C
D
A
C
E
Relevant Section 172 factors
A
Long term
A
B
Employees
B
C
Business relationships
C
D
Community and environment
D
E
Business conduct
E
F
Members of the Company
F
Our stakeholders
Consumers
Customers
Employees
Governments and
industry regulators
Health Professionals
Investors
Suppliers
Haleon
Annual Report and Form 20-F 2024
68
Corporate Governance
Customers, consumers and health
professionals
Board visits to trade and retail sites in
China provided valuable insights into
local market dynamics and consumer
behaviours. Regular monitoring of
performance across each product
category and in different markets
ensured the Board remained attuned
to shifting consumer preferences and
market trends. The Board actively
reviewed changes in consumer
behaviour, adapting strategies as
appropriate to meet evolving needs.
Consideration of emerging consumer
needs through consumer insight reviews
has been instrumental in shaping
product development and marketing
strategies. This comprehensive
engagement approach has enabled
the Board to make informed decisions
on product portfolios, market entry
strategies and consumer-centric
innovations. The insights gained from
these engagements have been
invaluable in ensuring that Haleon’s
offerings remain relevant, effective and
aligned with the needs of consumers
and health professionals across diverse
global markets.
Culture
The Board recognises that a strong
corporate culture is fundamental to Haleon’s
long-term success. Throughout 2024, we
maintained close oversight of the Group’s
cultural journey and progress against our
cultural ambitions.
The Board monitors culture in several
ways, including via the:
—
Employee engagement survey.
—
Annual Board performance review.
—
Board Inclusion policy.
—
Employee listening sessions with
the Workforce Engagement Director.
—
Board and Executive Team market visits.
—
Executive Team Employee Town Halls.
Our 2024 annual employee engagement
survey provided valuable insights into our
cultural progress. The results showed
improvements across nearly all metrics,
with scores exceeding industry
benchmarks in 39 out of 40 areas.
Particularly encouraging were the strong
employee connection to our purpose,
commitment to responsible business
practices, robust ethical standards and
deep understanding of consumer needs.
While these results are positive, the Board
acknowledges there is more to achieve.
The Board conducted an in-depth
review of Haleon’s culture, examining
both our cultural strengths and areas
to be enhanced. This review focused
on identifying opportunities to deliver
tangible business benefits and strengthen
our reputation. The Board assessed
progress across five key cultural levers:
strategy, operating model, process,
people, and reward, evaluating the
effectiveness of current initiatives and
considering the additional actions
required. As a result, a culture road map
was developed with clear milestones and
success measures, to support the effective
oversight of progress in this area by
the Board.
C
E
A
D
E
Governments and industry regulators
The Board maintained active
engagement with government and
regulatory stakeholders throughout
2024. This included participation in the
International Investment Summit and
meetings with senior government officials
to discuss business and trade matters.
As part of its strategic oversight, the
Board received regular updates on
Haleon’s engagement with policyholders
in key jurisdictions in which we operate,
enabling effective monitoring of market
performance, risks and opportunities.
Through the ESS Committee, the Board also
received updates on Haleon’s involvement
at COP29, ensuring alignment between
our sustainability commitments and
governmental climate action initiatives.
Case study: delivering
shareholder returns
During 2024, the Board considered
the allocation of capital, with a
focus on creating long-term value
for shareholders. After a review of
various options, and in line with its
commitment to balance shareholder
returns with broader stakeholder
interests, the Board approved a
£500m capital allocation for share
buybacks. The Board considered
the programme’s potential to
enhance shareholder value through
increased earnings per share and
share price appreciation.
The buybacks were executed in
three phases. Firstly, in March 2024,
Haleon participated in Pfizer Inc.’s
secondary global offering, completing
an off-market share purchase totalling
£315m. This transaction marked
a significant step in Pfizer’s first
reduction of its stake in Haleon
following our listing in July 2022.
Subsequently, in August 2024, we
initiated an on-market share buyback
programme, purchasing a further
£70m worth of shares and finally,
completing a further off-market
share purchase from Pfizer in
October 2024 totalling £114.6m.
All shares purchased in relation to
the £500m allocation were cancelled.
In addition, a further £115.4m worth
of shares were purchased from Pfizer
to satisfy the Company’s obligations
under its employee share schemes.
These shares are held in Treasury.
This strategic approach to capital
allocation not only fulfilled our
commitment to return value to
shareholders but also aligned with
our broader financial strategy of
maintaining a robust balance sheet.
By carefully managing our capital
structure, we aim to ensure the
Company’s long-term financial
stability, which benefits a wide
range of stakeholders including
employees, suppliers and customers.
Haleon
Annual Report and Form 20-F 2024
69
Corporate Governance
Board activities
Board and Committee
performance review
Observations discussed with
the Chair and the Board
One-to-one
interviews conducted
Appointed CSA
following tender process
Board activities
continued
Board development and performance
Evaluation brief
provided to CSA
Board and Committee
meetings observed by CSA
Reports presented to the
Board and Committees and
actions for 2025 agreed
Board training
The Board actively supports Haleon’s culture
of continuous development, with Directors
demonstrating this through their own
professional growth. During 2024, the
Board maintained a comprehensive
development programme, which was
regularly reviewed and updated to
reflect both Company-specific needs
and broader market developments.
Directors participated in focused training
sessions covering core governance areas
including disclosure obligations and our
Code of Conduct. Strategic briefings
kept the Board informed of key business
developments, while regular governance
updates covered important regulatory
changes, and evolving requirements in
governance and sustainability reporting.
Board performance review
Since listing in 2022, Haleon’s Board and
Committee performance reviews had been
conducted internally, facilitated by the
Company Secretary. In accordance with
the UK Corporate Governance Code, an
external performance review was required
for 2024. The Committee considered a
number of external Board evaluators and
shortlisted two companies to meet with the
Chair and CEO. Following these meetings,
the Committee agreed to appoint Chris
Saul of Christopher Saul Associates (CSA).
CSA is an independent external service
provider with no other connection to the
Group or any individual directors.
A comprehensive brief was provided to
CSA by the Chair and Company Secretary.
The performance review process took the
form of detailed interviews with every
Board member, relevant attendees of
Board/Committee meetings and key
advisers. CSA also observed the Board
and its Committees at the October
2024 meetings.
A report was compiled by CSA based on
the information and views supplied by
those interviewed and CSA’s observations.
Key findings and conclusion
Overall, the Board’s performance and
effectiveness was viewed positively, with
the Board culture having evolved since
Haleon’s delisting in 2022. Board members
were noted to be open, committed and
collegiate in their approach, fostering a
productive environment for Board
discussion and decision-making and with
good engagement and interaction with
the Executive Team. The composition of
the Board was considered to demonstrate
a good breadth and mix of skills and
experience to support the business and
its strategic objectives. Board operations
were noted to function well, with agendas
focused on key matters of strategy,
performance, risk and culture. The Chair
received positive feedback for his
effectiveness in focusing debate and
fostering an inclusive environment.
All Committees were felt to work well
providing good oversight of their remits
and a strong level of debate.
Each of the Directors is considered to be
an effective member of the Board and all
Directors, as at the date of this Report,
intend to seek re-election at the AGM.
Dawn Allen, Nancy Avila, Bláthnaid Bergin
and Alan Stewart will stand for election
for the first time at the AGM.
A number of areas were highlighted for the Board to consider going forwards and these
form part of the action plans set out below:
Strategy
Continue focus on strategic agenda and delivery of key objectives,
driving performance and shareholder returns.
Stakeholders
Broaden discussion around stakeholders as well as external
horizon scanning and discussion on geopolitical and macro issues,
AI and the evolving ESG agenda.
Culture
Advance progress on cultural evolution and interactions with
key talent and business areas.
Markets
Enhance market visits in key locations.
Haleon
Annual Report and Form 20-F 2024
70
Corporate Governance
Workforce engagement
In line with Provision 5 of the UK Corporate
Governance Code, the Board regularly
assesses the appropriateness of the
mechanism for workforce engagement.
The Board believes that the mechanism
of a designated Non-Executive Director
remains the most effective method for
Haleon to enable the employee voice
to be heard, and for key insights to be
brought into the Boardroom.
Employee insight
The Board values the opportunity
to connect with employees.
Understanding the key issues that
matter to our employees across
Haleon’s diverse markets and regions
is essential. By learning about their
experiences working at Haleon and
identifying any challenges they face,
we gain valuable insights into the
Company’s culture. Keeping a close
watch on employee engagement helps us
assess the current and future factors that
drive attraction and retention at Haleon.
Engagement plan
In preparing the workforce engagement
plan for 2024, the key drivers of
engagement originated from the 2023
annual employee survey, which identified
the need to improve and streamline work
processes, and to provide opportunities
for career growth, and the importance of
maintaining communications through
periods of change. During 2024, I met with
employees on five occasions, including
a face-to-face session in China. It was
important to ensure these sessions
included a cross-business group of
culturally diverse employees from across
our key markets and functions. Amongst
other matters, the sessions explored:
—
The employee engagement survey
results with managers from global
functions across EMEA and LatAm;
—
The Haleon brand and our customers
with global marketing and marketing
function colleagues;
—
Accelerating growth, which was a
session that took place during the
Board’s visit to China, and was joined
by cross functional teams in Shanghai;
and
—
Work processes as an enabler of
engagement which was joined by
colleagues from the Research &
Development and Quality Supply
Chain functions.
These sessions offered valuable insight
into drivers of employee engagement
at Haleon. The discussions highlighted
the progress made towards developing
a culture grounded in growth and
development, the opportunities for
Haleon to continue to differentiate itself
in market via ‘humanity’, and employee
connections to Haleon’s purpose and
vision. Key points raised included further
improving communications across all
grades, streamlining systems and
processes for greater agility, continuing
to foster local empowerment and unifying
culture through change. At each meeting I
gave an overview of the role of Haleon’s
Board as well as the remuneration
approach at Haleon, setting out how the
Remuneration Committee operates and
how it considers wider workforce
remuneration arrangements. I provided
regular updates to the Board following
these sessions, which were valuable to
Board discussions during the year.
Continued engagement
In addition to my activities, direct
engagement with employees remains
extremely valuable for the wider Board,
who had the opportunity to meet with
employees during the Board visit to China.
In addition, the Board receives regular
verbal updates from management, which
will continue to form an important part of
the Board’s agenda for 2025, alongside
updates on employee engagement survey
results and detailed summaries at the end
of each financial year.
>>
See also the consideration of workforce pay
and approach to engagement on page 95.
Workforce engagement
Dame Vivienne Cox
Workforce Engagement Director
This year I have enjoyed some
excellent opportunities to engage with
employees across different parts of
the Company and globe. These have
been both insightful and informative.
The sessions have covered: the
employee engagement survey results
and key themes for focus in 2024; a
deep dive into the Haleon brand and
its customers; a face-to-face session
in China which discussed accelerating
the growth of Haleon; and exploring
how work processes act as an
enabler of engagement and how
we can improve this in the future.
Looking ahead to 2025, I will be
seeking to engage on a number of
topics, including: looking at how we
improve engagement across broader
levels of the organisation: considering
how Haleon can keep its consumers
at the heart of its work; and a focus
on how employees can grow
themselves and others at Haleon.
Haleon
Annual Report and Form 20-F 2024
71
Corporate Governance
Board activities
Alan Stewart
Chair
Letter from the Chair
I am pleased to present my first
report as Chair of the Audit & Risk
Committee. I would like to take this
opportunity to thank Deirdre Mahlan
for her key role in establishing the
Committee following demerger and
ensuring a smooth handover process.
My first few months have been
focused on gaining a deep
understanding of Haleon’s risk
landscape and control environment,
working closely with my fellow
Committee members, management,
and our external auditor.
During 2024, the Committee has
maintained rigorous oversight of our
financial reporting processes and
internal control systems, the
effectiveness of the external audit
and the strength of the Company’s
control environment to manage risks.
The Committee continued to closely
monitor Haleon’s compliance with
Section 404 of the US Sarbanes-
Oxley Act (SOX) and maintained a
keen focus on understanding our
principal risks through a series of
deep dives into topics such as ESG
risk, supply chain resilience and cyber
security. Further information on this
and our other activities are set out
later in this report.
The Board and Committee external
performance review concluded that
the Committee operates effectively.
The specific actions for the Committee
are provided later in this report and
will be an additional area of focus
for the Committee in 2025.
Audit & Risk Committee Report
privately with the audit partner and with
the Head of Audit, Risk and Assurance.
The Board has confirmed that it is satisfied:
—
That the Committee members
collectively possess an appropriate
breadth of recent and relevant financial
expertise including competence in
accounting and/or audit and experience
in the consumer healthcare industry.
—
That Alan Stewart possesses the
relevant attributes to be the designated
Audit Committee Financial Expert in
accordance with US federal securities
laws and regulations.
Looking ahead
The Committee will continue to focus on
its key areas of responsibility, including the
Group’s financial reporting and disclosures,
internal control over financial reporting, the
effectiveness of KPMG as external auditor
and the approach to the 2025 external audit.
Controls surrounding the IT environment,
including cyber security, will remain a
key area of focus for the Committee as
well as monitoring our ESG maturity in
preparedness for future CSRD reporting
requirements. In addition, the Committee
will oversee the preparation for new
compliance requirements such as the
recent changes to the UK Corporate
Governance Code which take effect in
2025 and the further development of
the Group’s enterprise risk management
framework and compliance programmes.
Key duties and responsibilities
The Committee’s responsibilities include
monitoring and reviewing:
—
The integrity of financial reporting of the
Company’s Financial Statements including
reviewing significant judgements and
the adequacy of related disclosures.
—
The external and internal audit process
and performance of the Internal Audit
function and the external auditor.
—
The effectiveness of the Company’s
system of internal control.
—
The process for the management
of related-party transactions.
—
The Group’s risk management
system, and the identification and
management of risks.
—
The Company’s process for
monitoring compliance with legal
and regulatory requirements and
ethical codes of practice.
Membership and meetings
The Committee comprises solely of
Independent Non-Executive Directors.
Details are set out on pages 60 and 61,
together with details of their attendance
for the year on page 65.
The Chair, CEO, CFO, General Counsel,
Group Financial Controller, Head of Audit,
Risk and Assurance, and the lead audit
partner from KPMG LLP (KPMG) regularly
attend meetings, with other attendees
invited as appropriate. The Committee also
met without management present and met
Following Alan’s appointment, he received a comprehensive induction, meeting with key
personnel to gain valuable insight into the Group. His induction included:
Case study: Alan Stewart
Areas covered
Sessions by
Group strategy and operational model
Board Chair; CEO; Head of Strategy
Governance, Legal and
regulatory compliance
Company Secretary; General Counsel;
Chief Compliance Officer
Financial performance, capital
management, financial reporting
and controls, and tax
CFO; Group Treasurer; Group Controller;
Head of Tax
Key markets: North America, EMEA
and LatAm, and Asia Pacific
Country President of each market
Risk management and internal audit
Head of Audit, Risk and Assurance
IT strategy and cyber security
Chief Digital and Technology Officer;
Chief Technology Officer; Chief Information
Security Officer
Corporate affairs including ESG
Chief Corporate Affairs Officer;
VP Sustainability
HR including remuneration and
workforce engagement
Chief Human Resources Officer;
Global Head of Reward
External engagement
KPMG, UBS, Citi
Haleon
Annual Report and Form 20-F 2024
72
Corporate Governance
Committee activities
External reporting
— Discussed and recommended to the Board for approval, the quarterly trading statements, half-year and full-year financial statements,
and the 2024 Annual Report and Form 20-F.
— Considered the level of distributable reserves to support the Board approval of the 2023 and 2024 dividends.
— Reviewed and challenged the going concern assumptions for 2024 and the principles underpinning the longer-term viability statement.
— Reviewed and challenged the treatment of key accounting matters and judgements including the estimation of the recoverable amount
of indefinite life brands.
— Reviewed and approved the 2024 tax strategy for publication.
— Reviewed and recommended the 2025 funding requirements to the Board for approval.
— Considered treasury matters and compliance with statutory reporting obligations.
— Assessed whether the Annual Report, as a whole, was fair, balanced and understandable.
External and internal audit
— Reviewed and approved the statutory audit engagement letter for KPMG in respect of Haleon plc and its subsidiaries for the period
ended 31 December 2024 and received regular updates on delivery of the external audit for 2024.
— Reviewed and approved the 2024 base audit fee.
— Held periodic meetings with the external auditor, without management present.
— Reviewed and agreed policies and processes designed to safeguard independence of the external auditor.
— Reviewed and approved the non-audit services to be performed by the external auditor, in line with the Non-Audit Service Policy.
— Assessed the effectiveness of the external auditor.
— Reviewed and approved the appointment of the lead audit partner for the FY25 audit.
— Reviewed and approved the 2025 Internal Audit budget and plan.
— Received and discussed regular updates on the 2024 Internal Audit Plan from the Head of Audit, Risk and Assurance and met him
regularly without management present.
Internal controls
— Received and discussed regular updates on internal controls, including the results of testing, and discussed instances where the
effectiveness of internal controls was considered to be insufficient or required remediation.
— Considered the assessment to determine the Company’s status as a Foreign Private Issuer for US SEC purposes.
— Reviewed the Group’s SOX evaluation and certification of internal controls over financial reporting for the year ended 31 December 2024.
Related-party transactions
— Reviewed related parties as part of the year-end process.
Risk management
— On behalf of the Board, reviewed the processes by which the Group’s principal risks are identified and managed and received periodic
reports of the status of principal risks; reported any issues arising from these reports to the Board.
— Undertook detailed reviews of key risk areas and processes including ESG, trusted ingredients, product user safety, digital and technical
infrastructure and cyber security.
— Considered enhancements to Haleon’s Resilience Framework and simplification of the Crisis Management and Business Continuity Policy
and process.
— Reviewed tax and treasury policies and considered consistency with the risk appetite of the Company.
— Reviewed the effectiveness of the risk management and internal control systems.
Legal and Compliance
— Received and discussed regular updates from the Legal function on legal and litigation matters.
— Monitored fraud reporting and discussed trends with management.
— Considered updates on the implementation of the new Ethics & Compliance model.
— Reviewed and discussed reports from the Compliance function, including updates on Haleon’s Anti-Bribery and Corruption programme,
enhancements to the Code of Conduct training, Speak Up sanctions, concerns management and internal investigation’s framework.
Haleon
Annual Report and Form 20-F 2024
73
Corporate Governance
Audit & Risk Committee Report
Significant reporting matters in relation to the Financial Statements considered by the Committee during 2024
Accounting area
Committee’s conclusion and response
Recoverable amount
of indefinite life
brands
As at 31 December 2024, the Group had approximately £17,623m of intangible assets that are indefinite life brands.
The Group tests at least annually whether indefinite life brands have suffered any impairment. Impairment testing
is inherently judgemental and requires management to make multiple estimates, including those related to the
future revenue growth of each brand, terminal growth rates, profit margins and discount rates. The Committee
reviewed information on the impairment tests performed, focusing on the critical assumptions as well as any
changes from the prior year.
In 2024, the Group recognised non-cash net impairment charges totalling £135m, related to the Nexium brand,
as it was determined the carrying value was less than the estimated recoverable amount. The Committee
noted the decrease in the recoverable amount of the Nexium brand was mainly driven by challenging market
conditions for the category. For the brands with limited levels of headroom, the Committee also reviewed and
challenged sensitivity analyses provided by management to understand the impact of changes in key assumptions.
The Committee was satisfied with the assumptions utilised by management and also considered and reviewed
the Group’s relevant impairment disclosures. Refer to Note 14 of the Consolidated Financial Statements for further
detail.
Audit & Risk Committee Report
continued
Financial and narrative reporting
A key focus for the Committee during
2024 was the integrity of Haleon’s
financial reporting. We reviewed and
recommended approval of the interim
and full-year financial statements, and
associated releases, closely examining
critical judgement areas, going concern
and viability assessments, and
impairment reviews.
The Committee evaluated whether the
Annual Report, taken as a whole, was
fair, balanced and understandable and
contained the necessary information
for shareholders to assess the Group’s
performance, business model and strategy.
To support this assessment, management
established processes to ensure
consistency of disclosures, address
financial reporting risks and coordinate
Company-wide input. In fulfilling its role,
the Committee recommended to the Board
for approval, a near-final version of the
Annual Report at its February 2025 meeting
following the Committee’s assessment that
it was fair, balanced, and understandable.
During the year, the Committee considered
key disclosures and reporting requirements
to ensure clear and accurate communication
of material information to shareholders.
This included assessing assumptions
underlying impairment testing,
calculating gain/loss on disposal of
intangible brand assets, going concern and
viability assessments and climate-related
financial reporting.
The Committee received updates on the
control environment, financial reporting
integrity, the Annual Report verification
process, including management’s checklist
confirming compliance with the relevant
regulatory requirements, and external
audit outcomes. The key audit matters
reviewed by the external auditor and
the related outcomes are set out in the
external auditor’s report on pages 101
to 115.
The Committee monitors engagements with
external stakeholders relevant to its areas
of oversight, including the UK’s Financial
Reporting Council (FRC) and the US
Securities and Exchange Commission (SEC).
Internal audit
The Internal Audit function plays a critical
role in providing independent, objective
assurance to the Board, the Committee, and
senior management. The function evaluates
the adequacy and effectiveness of Haleon’s
risk management, governance and internal
control processes. The appointment of the
Head of Audit, Risk and Assurance is a
matter reserved for the Committee,
including the approval of his annual
objectives. The Head of Audit, Risk and
Assurance maintains regular discussions
with the Committee Chair and provides
updates on the function’s activities at
Committee meetings.
During the year, the Committee closely
monitored the effectiveness of the
Internal Audit function, including its
quality, experience and expertise relative
to the size of the business. The reports
received detailed key internal audit
observations and proposed improvement
measures with related timelines provided
to management. The Committee approved
the Internal Audit annual budget and work
plan, which includes risk-based reviews
of financial, operational, strategic and
governance risks, as well as assurance
over emerging risks and business change
initiatives. The 2025 Internal Audit plan
will be regularly reviewed and updated
as required to reflect evolving assurance
requirements and priorities.
Internal control and risk management
The Board is responsible for establishing
procedures to manage risk and oversee
the Group’s internal control framework,
including setting risk appetite in line with
the Group’s strategic objectives, and
ensuring appropriate oversight through
various mechanisms, including strategy
meetings, management reports and
reviews of selected risk areas.
On behalf of the Board, the Committee is
responsible for reviewing and assessing
the effectiveness of the Group’s risk
management and internal control systems.
A fundamental part of the work carried
out included the review of the Group’s
principal risks and its financial and
operational controls and procedures.
The Committee discussed information
on risk mitigation plans, internal control
maturity and areas for improvement.
The Committee also undertook deep
dives into a number of principal risks,
including ESG and trusted ingredients.
The Group’s approach to risk management
and internal controls has further evolved
and will continue to be refined throughout
2025 in preparation for compliance with
the revised UK Corporate Governance
Code. The risk management framework
is designed to actively manage, rather
than eliminate, the significant risks and
uncertainties the Group may face.
Consequently, the Group’s internal
control system can only provide
reasonable, but not absolute,
assurance over its principal risks.
Haleon
Annual Report and Form 20-F 2024
74
Corporate Governance
In 2024, a top-down enterprise risk
assessment was conducted to review
and prioritise the Group’s principal risks,
assess the magnitude of risk exposure,
and highlight any emerging risks.
In parallel, a bottom-up risk
identification was performed across
business units, markets, sites and
functions. The Committee reviewed the
findings, agreed on the principal risks and
concluded that management’s approach
to risk and risk appetite was satisfactory.
>>
See also our approach to risk section
from page 51.
The Committee reviewed and
endorsed a range of policies and
programmes, including:
—
The Company’s Code of Conduct
and its core value of seeking to always
do the right thing, applicable to the
Board, Executive Team, employees
and third-party temporary workers.
The Code of Conduct supports
and encourages good judgement
while maintaining a culture of
risk accountability.
—
The mandatory anti-bribery
and corruption (ABAC) training.
—
The annual certification process from
business unit and segment general
managers and finance directors
attesting their responsibility over
the integrity of financial information
and the effectiveness of relevant
internal controls over financial
reporting and disclosure.
—
Internal controls, discussing
opportunities to further simplify
and evolve the framework in line with
our strategy and operating model.
—
Haleon’s Speak Up and
investigations process.
—
Enterprise risk areas such as
treasury, tax and trade compliance.
Based on the Committee’s activities
performed throughout the year, and its
annual performance review, the
Committee considered the Group’s system
of internal control and risk management
under the provisions of the UK Corporate
Governance Code for the year ended
31 December 2024 and the period up
to 6 March 2025, the last practicable date.
US Sarbanes-Oxley Act of 2002 (SOX)
The Group is required to comply with the
provisions of SOX, specifically Sections
302 and 404, as it relates to a Foreign
Private Issuer listed on a US exchange.
During 2024, the Group completed a
successful second year of compliance
with Section 404 of SOX.
The Committee maintained close oversight
of Haleon’s internal control over financial
reporting which was deemed to be
designed and operating effectively as at
31 December 2024. During the year, the
Committee received regular updates on
the progress and status of the Group’s
compliance with SOX and closely monitored
the remediation of any deficiencies to
internal controls identified. This included
reviewing the root cause of the deficiencies,
the remediation actions being taken
and the adequacy of mitigation or
alternative controls.
The Committee will continue to monitor
the progress of the Group’s internal control
optimisation efforts, remediation of
internal control deficiencies, and internal
controls related to technology systems
and associated infrastructure.
>>
See also our management’s report on
internal control over financial reporting
on page 192.
ESG principal risk
The Committee reviewed the
management of Haleon’s ESG
principal risk. The Committee
discussed Haleon’s progress in
driving delivery against externally
committed ESG goals, preparing to
meet rising reporting requirements
such as the Corporate Sustainability
Reporting Directive (CSRD), and
reviewed the competitiveness of
Haleon’s ESG strategy and targets.
Key areas of focus included the
impact of third-party manufacturers
on Haleon’s ability to meet its ESG
commitments and the launch of the
supplier pledge to support supplier
commitments to data disclosure,
setting science-based emissions-
reduction targets, and developing
decarbonisation roadmaps.
The quality and backing of Haleon’s
ESG performance data was also
reviewed, with a focus on internal
controls, external audit and an ESG
Steering Committee to oversee the
underlying evidence.
Cyber security principal risk
During 2024, the Committee continued
its deep dives into key cyber-security
risks, including third-party risk
and AI. The Committee reviewed
Haleon’s process for assessing and
remediating risks from IT suppliers.
This included examining the risk-
assessment approach, onboarding
procedures, mitigation plans,
escalation protocols, and
circumstances leading to third-party
contract termination. The Committee
noted the close collaboration
between the cyber-security team and
business owners to support timely
risk remediation, as well as the
contractual provisions in place
and consequences of a breach
of contract.
The Committee considered both the
risks and opportunities presented by
AI usage at Haleon. While recognising
AI’s potential to enhance efficiency,
sales, and competitiveness, the
Committee also reviewed Haleon’s
adoption of AI initiatives, the
regulatory landscape, and the
Company’s Responsible AI Policy
and employee education
programmes, notably the Global
AI Accelerate Day attended by
more than 7,300 employees.
External audit
KPMG entered its second year as our
external auditor in 2024. During the year,
the Committee reviewed and discussed
the plans for the external audit, the
proposed audit fees, and terms of
engagement. It reviewed the external
audit process which had evolved in
certain key areas, including increased
use of digital tools.
The Committee regularly receives reports
from the external auditor on the progress
of its audit activities. The Committee
reviews the contents of these reports,
the level of professional judgement and
challenge of management assumptions
demonstrated by the external auditor
and, where appropriate, requests that
management respond to the challenge and
tracks management response to ensure a
satisfactory outcome to the challenges
raised.
Haleon
Annual Report and Form 20-F 2024
75
Corporate Governance
Audit & Risk Committee Report
Audit & Risk Committee Report
continued
In considering the independence of KPMG,
the Committee received a statement of
independence from the external auditor,
a report describing the arrangements to
identify, report and manage any conflicts
of interest, and reviewed the extent of
non-audit services provided to the
Group. The Committee confirmed its
satisfaction with the effectiveness and
independence of KPMG with respect
to their engagements in their
respective jurisdictions.
The Committee assessed the effectiveness
of the external audit process including the
quality of the audit team and involvement
by the lead audit partner, the adequacy
of audit planning, the timely and robust
execution of the audit, the quality of
communications to the Committee, and
auditor independence and objectivity.
The Committee concluded that the 2024
external audit was effective and that the
external auditor continued to perform
effectively. Following the lead audit
partner’s decision to step down, the
Committee considered and approved
the appointment of a new lead audit
partner for the 2025 audit. Following
the Committee’s recommendation, the
Board recommends to shareholders the
reappointment of KPMG as the external
auditor for 2025.
The total fees paid to KPMG for the year
ended 31 December 2024 were £19m,
of which £2m related to non-audit work.
Details of the fees paid to the external
auditor are in Note 6 to the Consolidated
Financial Statements on page 129.
Non-audit services
The Committee has adopted a policy
designed to safeguard the independence
and objectivity of the external auditor.
This policy, which complies with the FRC’s
2019 Revised Ethical Standard and SOX,
sets out a framework for determining
whether it is appropriate to retain the
external auditor to provide non-audit
services and outlines the process for
pre-approving non-audit fees.
The policy includes a list of permitted
non-audit services in line with the
relevant regulations. Any service not
on this list is prohibited.
The Committee has pre-approved the
use of the external auditor for non-audit
services where:
—
They are included in the policy’s list
of permitted non-audit services.
—
They are approved by the Group
Financial Controller, or their designate
in certain defined circumstances,
when not exceeding £100,000.
—
They are approved by the CFO and
the Chair of the Committee when they
exceed £100,000.
The total fee for non-audit services
provided by the external auditor is
reported to the Committee on a quarterly
basis. Management’s approval based on
monetary limits is not a delegation of
authority for approval by the Committee,
but rather a confirmation of adherence
to the policy for permissible non-audit
services. The Committee reviews the
nature and level of non-audit services
undertaken by the external auditor during
the year to satisfy itself that there is no
impact on its independence.
During the period ended 31 December 2024,
the external auditor undertook non-audit
work in relation to other assurance
services, corporate finance and other
services and was paid a total of £2m.
The Committee considers that for the year
ended 31 December 2024, the Company
has complied with the Competition and
Markets Authority’s Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of
Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014
and the FRC’s Audit Committees and the
External Audit: Minimum Standard.
Committee performance review
As part of the external Board and Committee performance review, the Committee was assessed to be operating effectively,
with positive feedback on the way the Committee had been chaired during the year.
The Committee progressed all the key areas of focus from the 2024 performance review. A number of areas were highlighted
for the Committee to consider going forwards and these form part of the 2025 action plan below:
Action plan 2025
Focus area
Actions
Core responsibilities
Continue oversight and focus on key areas of the Committee’s remit.
Principal risks
Maintain focus on risk management with further deep dives on key areas of risk, including IT and
cyber security.
Culture and accountability
Continue to focus on culture and accountability in relation to controls and Internal Audit reviews.
Haleon
Annual Report and Form 20-F 2024
76
Corporate Governance
Committee activities
External ESG targets
—
Regularly reviewed Haleon’s performance against
the responsible business scorecard measures.
Deep dives
—
Received a deep dive on key topics including health
inclusivity, sustainable packaging, carbon, Science
Based Targets initiative (SBTi) and the Taskforce
on Nature-related Financial Disclosures (TNFD).
—
Reviewed and approved the virgin petroleum-based
plastic reduction target of 10%.
External reporting
—
Considered external disclosures in relation to TCFD
reporting, Haleon’s Responsible Business Report and
human rights, external ratings, and Haleon’s Climate
Action Transition Plan.
—
Regularly reviewed Haleon’s readiness for future
disclosure requirements, including CSRD.
Stakeholder engagement
—
Discussed regular updates on stakeholder engagement.
Looking ahead
The Committee will continue to focus on
oversight in relation to packaging, carbon
net zero, health inclusivity and progress
against the Company’s sustainability
ambitions, and oversee Haleon’s
preparedness to comply with current and
upcoming external reporting obligations.
>>
See also our approach to sustainability
from page 22.
Committee focus areas in 2024
The Committee undertook a series of deep
dives during the year, to review Haleon’s
progress against key sustainability targets,
and its preparedness for upcoming legal/
regulatory external disclosures. In some
cases, the deep dives were preceded by an
education session from an industry expert
on the particular subject, to provide a
broader overview and an external
perspective. The Committee found these
sessions invaluable in deepening their
understanding of current and upcoming
sustainability reporting requirements,
Haleon’s readiness to comply, and the
impact of global external factors on
delivery against sustainability targets.
Sustainable packaging
The Committee had a deep dive into
Haleon’s sustainable packaging strategy
and plastics-reduction and recycle-ready
target. Following the decision in 2023, to
rebase the virgin petroleum-based plastic
baseline year from 2020 to 2022, the
Committee considered Haleon’s plastics-
reduction target, the accuracy and
robustness of the data, plans and progress
within key product categories, and the
enablers and external dependencies to
deliver against our goals. The Committee
discussed key challenges in supply of
alternatives to plastic that meet the
rigorous quality, safety and regulatory
requirements for Haleon’s product
packaging, plus the role of technology
to aid progress in this area. Following the
deep dive, the Committee agreed that
Haleon’s current plastic-reduction target
of 10% and goal for all product packaging
to be recycle-ready by 2025 (where
possible) remained ambitious and
aligned with our sustainability strategy.
Letter from the Chair
I am pleased to report on a
year of significant progress in
supporting the delivery of
Haleon’s sustainability ambitions.
During 2024, the Committee maintained
comprehensive oversight of our
ESS initiatives, regularly reviewing
performance against our responsible
business scorecard. We conducted
detailed assessments of our key
focus areas, including health
inclusivity, sustainable packaging,
carbon-reduction initiatives, and our
nature-related impacts, risks and
opportunities. Following the decision in
2023 to update our baseline year from
2020 to 2022 for virgin plastic reduction
and Scope 3 carbon emissions,
we maintained our respective
commitments to a 10% reduction in
virgin petroleum-based plastic by
2025 and a 42% reduction in Scope 3
carbon emissions from source to sale.
Our commitment to transparency and
robust reporting has been evidenced
through our oversight of various
disclosure frameworks, including
TCFD and CSRD requirements, as well
as Haleon’s Responsible Business
Report and Climate Action Transition
Plan. Through regular stakeholder
engagement, we continue to ensure
our sustainability strategy remains
responsive to evolving stakeholder
expectations and emerging
environmental and social challenges.
The Board and Committee external
performance review showed that
the Committee operates efficiently.
The specific actions for the Committee
are provided later in this report, and
will be an additional area of focus
for the Committee in 2025.
Environmental & Social Sustainability
Committee Report
Marie-Anne Aymerich
Chair
Key duties and responsibilities
The Committee’s responsibilities for
environmental and social sustainability
(ESS) include monitoring and reviewing:
—
Haleon’s progress against its ESS agenda
and associated external governance
and regulatory requirements.
—
Emerging ESS issues that could impact
the Group’s operations, ESS initiatives,
or reputation.
—
Haleon’s ESS engagement with
relevant external stakeholders,
NGOs and other interested parties.
—
The ESS disclosures within the
Annual Report and external ESS
reporting, including the Climate
Action Transition Plan.
Membership and meetings
The Committee comprises solely
Independent Non-Executive Directors.
Details are set out on pages 60 and 61,
together with details of attendance for
the year on page 65.
The Chair, CEO, Chief Corporate Affairs
Officer, VP Sustainability, and the
Sustainability Programme Director
regularly attended meetings in 2024.
Other attendees were invited to
meetings as appropriate.
Haleon
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77
Corporate Governance
Environmental & Social Sustainability Committee Report
Environmental & Social Sustainability
Committee Report
continued
Carbon
This deep dive session focused on
Haleon’s carbon-reduction strategy and
carbon disclosure plan. The Committee
discussed Haleon’s carbon footprint,
the progress against the reduction in
our carbon Scope 1 and 2 emissions,
in particular the plan to deliver a 100%
net reduction by 2030, the delivery of
our decarbonisation programme by
replacing fossil fuel heat and cooling
systems with renewable energy
alternatives, and the role of suppliers and
third-party manufacturers in the delivery
of Haleon’s Scope 3 reduction targets.
The Committee also considered how
Haleon’s goals relating to water reduction
and water neutrality in water-stressed
basins by 2030 help to mitigate the
physical risks posed by a changing climate.
This session provided the Committee with
the insight and understanding needed to
support their review and approval of
Haleon’s first Climate Action Transition Plan.
Health inclusivity
The Committee conducted a detailed
review of Haleon’s health inclusivity
strategy and its alignment with the Group’s
overall ambition and purpose. The review
considered the health inclusivity initiatives
underway and in the pipeline to deliver
against the current target to empower 50
million people a year to be more included
in opportunities for better everyday health
by 2025. The Committee considered the
challenge in measuring social impact and
the upcoming implications of the tangible
measures required in compliance with
CSRD reporting and assurance. The deep
dive equipped the Committee with an
overview of the key opportunities and
challenges to support its oversight of
Haleon’s current and future ambitions
in this area.
Nature
The Committee received an externally
facilitated session on nature and
biodiversity loss, examining the key drivers
and their implications for the planet,
society and business. The session provided
a strong foundation for the Committee’s
discussion on the ways Haleon is impacted
by, and impacts, nature, and expectations
from our key stakeholders. This included
an overview of the process used by Haleon
to assess our dependencies, impacts, risks
and opportunities related to nature over
our value chain and in preparation for
compliance with TNFD. The session
enhanced the Committee’s understanding
of how businesses can effectively respond
to nature-related challenges and how
Haleon can prepare for future reporting
in this area.
ESG performance and reporting
The Committee maintained oversight of
Haleon’s ESG performance through regular
reviews of our responsible business
scorecard. We monitored progress against
key commitments across environmental
targets (including packaging); health
inclusivity goals; and core standards in
diversity and inclusion, product quality,
health and safety, and supplier
requirements. We are pleased to report
to shareholders that Haleon successfully
delivered against its Responsible Business
strategy and KPI targets in 2024.
The Committee also focused on
enhancing our ESG reporting framework
to meet evolving regulatory requirements.
Key developments included conducting
Haleon’s first CSRD double materiality
assessment and strengthening our external
disclosure through the publication of our
first Responsible Business Report and
Climate Action Transition Plan.
Stakeholder engagement
Engagement with stakeholders on ESG
matters remained a priority in 2024.
The Committee received regular updates
on interactions with consumers, customers,
employees, the government, industry
regulators, investors and suppliers.
This included two supplier sustainability
summits held in 2024, with more than 350
suppliers attending across both summits;
announcing our partnership with Johnson
Controls to further accelerate supply chain
decarbonisation; Haleon’s presence at
Climate Week; a consumer insights study
in India which engaged 500 consumers,
focusing on people’s health and wellbeing
and their experience of health inclusivity;
and maintaining ongoing engagement
with ESG investors on a 1:1 basis, sharing
our Responsible Business Report with
over 30 of them.
Committee performance review
As part of the external Board and Committee performance review, the Committee was assessed to be operating effectively with good
oversight of Haleon’s sustainability agenda. The Committee progressed all the key areas of focus from the 2024 performance review.
A number of areas were highlighted for the Committee to consider going forwards and these form part of the 2025 action plan below:
Action plan 2025
Focus area
Actions
External reporting
Continue focus on Haleon’s preparedness for current and future external sustainability disclosures, including CSRD.
KPIs/targets
Maintain oversight of the delivery of sustainability KPIs and targets.
Training
Continue deep dive sessions on areas of ESG evolution.
Haleon
Annual Report and Form 20-F 2024
78
Corporate Governance
Sir Dave Lewis
Chair
Letter from the Chair
I am pleased to present our Report for
2024, which was a year of significant
activity in Board composition and
succession planning.
The Committee has undertaken
comprehensive succession planning
in relation to the Board and the
Executive Team. This year, we
successfully appointed Dawn Allen,
as our new CFO, and three new
Independent Non-Executive
Directors, Alan Stewart, Nancy Avila
and Bláthnaid Bergin. These
appointments followed rigorous
selection processes guided by our
Board skills and experience matrix,
strengthening our collective expertise
while advancing our objectives.
In addition, the Committee maintained
close oversight of governance matters
during the year, including the review
of Haleon’s governance framework
and leading Haleon’s first external
performance review. We have
continued to monitor progress
against our Board Inclusion Policy
objectives, while regularly reviewing
the composition and effectiveness of
both the Board and its Committees.
The effectiveness of the Committee
was assessed as part of the first
external Board and Committee
performance review and was
considered to be operating effectively.
The specific actions for the Committee
are provided later in this report, and
will be an additional area of focus for
the Committee in 2025.
Committee activities
Succession planning
—
Considered Non-Executive Directors’ tenure and
succession planning arrangements for the Board
including the CEO and CFO.
—
Reviewed the composition of the Executive Team and
discussed key experiences, strengths, development areas,
performance and succession coverage.
—
Reviewed and discussed the Board skills and experience
matrix for Non-Executive Directors.
—
Considered the criteria for the appointment of new
Non-Executive Directors and recommended the
appointment of Alan Stewart, Nancy Avila and Bláthnaid
Bergin to the Board for approval.
—
Reviewed the candidates for the appointment to the Audit &
Risk Committee Chair (and Audit Committee Financial Expert)
and recommended Alan Stewart to the Board for approval.
Board composition
—
Reviewed the composition of the Board and its Committees.
—
Discussed progress against objectives and reviewed the
Board Inclusion Policy.
Evaluation and annual
assessment of
performance
—
Assessed the independence of the Non-Executive Directors.
—
Recommended to the Board that each Director stand for
re-election by shareholders at the Company’s 2024 AGM.
—
Reviewed and made recommendations to the Board in
respect of each Director’s actual, potential or perceived
conflicts of interest.
—
Reviewed the independence and time commitments of
the Non-Executive Directors.
Governance
—
Considered the potential external Board performance
reviewers and agreed to appoint Christopher Saul
Associates to conduct the 2024 Board performance review.
—
Discussed the feedback from the 2024 Board and
Committee effectiveness review and the action plans.
—
Considered the Director induction plan for Alan Stewart,
Nancy Avila and Bláthnaid Bergin.
—
Reviewed and approved changes to the Haleon
Governance Framework.
—
Reviewed the governance of Haleon’s subsidiary companies.
Key duties and responsibilities
The Committee’s responsibilities include:
—
Leading the process for appointments
to the Board.
—
Ensuring plans are in place for orderly
succession to both the Board and senior
leadership positions.
—
Overseeing the development of a
pipeline for succession at Board and
senior management level.
—
Monitoring and, where appropriate,
recommending changes to the Company’s
corporate governance framework.
Membership and meetings
Excluding the Chair, who was considered
independent on appointment, the
Committee comprises solely Independent
Non-Executive Directors.
Details are set out on pages 59-61,
together with details of attendance for
the year on page 65. The CEO and the
Chief Human Resources Officer regularly
attended meetings, with other attendees
invited as appropriate.
Succession planning
The Committee maintained oversight of
succession planning to ensure Haleon has
the right leadership capabilities for both
immediate and future needs. Throughout
2024, we continued to review and develop
our succession plans at Board and senior
management level, focusing on building
a robust talent pipeline. This structured
approach to succession planning was
demonstrated through four key Board
appointments during the year: Alan
Stewart succeeded Deirdre Mahlan as
Audit & Risk Committee Chair; Nancy
Avila’s appointment addressed our
identified need for enhanced digital
expertise; Bláthnaid Bergin enriches the
financial experience on the Board; and the
appointment of Dawn Allen as CFO, further
Nominations & Governance
Committee Report
Haleon
Annual Report and Form 20-F 2024
79
Corporate Governance
Nominations & Governance Committee Report
Nominations & Governance
Committee Report
continued
1.
We reviewed our Board skills matrix to
identify specific areas where additional
expertise would enhance Board
effectiveness. This review identified the
need for: a director with experience in
technology, digital, data, cyber-security
and AI; a director with the financial
leadership experience to succeed
Deirdre Mahlan as Chair of the Audit
& Risk Committee; and a director
with recent executive experience.
2.
We engaged the Lygon Group to
support the search process and worked
closely with them to develop a detailed
role specification, which outlined the
required experience, skills, and personal
qualities needed for the role. The Lygon
Group is a signatory to the Voluntary
Code of Conduct for Executive Search
Firms and there are no connections
between Lygon Group and the
Company or its individual directors.
Inductions of the new Non-Executive
Directors included: strategic discussions
with the Chair and CEO; detailed
governance briefings with the Company
Secretary; and sessions with the CFO
on financial performance, reporting
and controls. They also met with senior
management on legal matters, risk
management and internal audit, and
technology and cyber security.
CFO appointment
The Committee led the appointment of
Dawn Allen as CFO in line with the Board
appointment process. Following an
extensive search considering both internal
and external candidates, led by the
Lygon Group, we appointed Dawn Allen
as CFO with effect from 1 November 2024.
Dawn brings exceptional financial leadership
experience in the global consumer goods
sector. Her track record in driving
business performance, combined with
her extensive international experience
and deep understanding of consumer-
focused businesses, made her the
standout candidate for this crucial role.
The Committee was particularly impressed
with her strategic mindset and proven
ability to deliver business transformation,
skills that align closely with Haleon’s
growth ambitions.
Following her appointment, Dawn
received a comprehensive induction
to Haleon as set out on page 63.
Executive Committee changes
The Committee also discussed the
Company’s leadership requirements
including assessing the Executive Team’s
capabilities and development plans
against the current and future succession
needs. In addition, it reviewed the people
strategy and talent agenda more broadly
to help in developing a pipeline of
potential future leaders.
Ed Petter joined the Executive Team in
January 2024 as Chief Corporate Affairs
Officer. In August, Adrian Morris and
Line de Decker joined the Executive Team
as General Counsel and Chief Human
Resources Officer, respectively. Claire
Dickson joined the Executive Team in
September as Chief Digital and
Technology Officer. Tobias Hestler
stepped down as CFO from the Board
and Executive Team following Dawn’s
appointment on 1 November 2024.
strengthened our executive leadership.
These appointments reflect our
commitment to maintaining a well-
balanced Board with the right mix of
skills and experience to drive Haleon’s
strategic agenda.
Board appointment process:
The Nominations & Governance Committee
follows a structured and rigorous process
for Board appointments to ensure we
identify and select the most suitable
candidates. Our appointment process
comprised five key stages:
Step 1
Confirm objective of the process
and role specification
Step 2
Engage external executive recruitment
agency and agree the process
Step 3
Assess the long list against the
role specification
Step 4
Agree a shortlist and arrange interviews
Step 5
Identify the preferred candidate
to recommend to the Board
Step 6
Director induction
3.
The Committee reviewed an extensive
long list of potential candidates,
evaluating each against our
predetermined criteria. This assessment
considered not only technical capabilities
but also the potential contribution to
Board dynamics and overall composition.
4.
Following the initial assessment, we
conducted in-depth interviews with
shortlisted candidates. These interviews
involved Committee members and other
Board Directors to ensure a thorough
evaluation of each candidate’s suitability.
5.
The Committee identified Alan Stewart,
Nancy Avila and Bláthnaid Bergin as
its preferred candidates and made a
recommendation to appoint them to
the Board. This followed confirmation
of independence and capacity to take
on the role.
6.
Both Alan and Nancy received a
comprehensive induction, tailored
to suit their individual needs, which
comprised a balance of knowledge-
based sessions with both internal
functions and external advisors.
Bláthnaid’s induction commenced
following the announcement of her
appointment to the Board.
Board appointments
Alan Stewart was appointed to the Board,
Audit & Risk, Nominations & Governance,
Remuneration, and Environmental & Social
Sustainability Committees on 1 September
2024. He succeeded Deirdre Mahlan as
Chair of the Audit & Risk Committee on 1
October 2024. Alan brings extensive FTSE
100 financial leadership experience and
deep retail sector knowledge to the Board.
His proven track record in financial
stewardship and corporate governance
made him the ideal candidate to chair our
Audit & Risk Committee.
Nancy Avila was appointed to the
Board and the Audit & Risk Committee
on 1 September 2024. Her appointment
addressed our identified need for enhanced
digital and technical expertise at Board
level and has strengthened our oversight
of digital transformation initiatives and
technological innovation, areas crucial
to Haleon’s future growth strategy.
Bláthnaid Bergin joined the Board on
24 February 2025. Bláthnaid brings strong
financial leadership and strategic planning
to the Board, with a wealth of experience
in transformation across multiple
consumer-facing industries that will
be valuable to Board discussions.
>>
Biographical details of Executive Team members can be found on pages 62 and 63.
Haleon
Annual Report and Form 20-F 2024
80
Corporate Governance
Committee performance review
As part of the external Board and Committee performance review, the Committee was assessed to be operating effectively, with
Director induction and management of conflicts of interest positively highlighted. The Committee progressed all the key areas of focus
from the 2024 performance review. A number of key areas were highlighted for the Committee to consider going forward and form part
of the 2025 action plan below. Succession planning and talent development will remain areas of key focus for the Committee in 2025.
Action plan 2025
Focus area
Actions
Succession planning
Sustain progress on succession planning for the Board and the Executive Team.
Development
Support development and talent management for the Executive Team and senior management.
Governance
structure
Review Board and Committee structures with the changes in Non-Executive Director membership.
Composition, time commitment
and independence
The Committee regularly evaluates Board
composition to ensure it remains effective
and well balanced. During 2024, we
reviewed the collective skills, experience,
and composition of the Board and its
Committees. As part of this assessment,
we examined the time commitment of
each Non-Executive Director, confirming
their capacity to fulfil their roles
effectively alongside external
commitments. In addition, the Board
considered the appointment of Brian
McNamara as a Non-Executive Director
of Mondelēz International, Inc. effective
from 1 February 2024, and found that
he continued to have sufficient time to
commit to his role as CEO of Haleon.
The Committee supports the Board in
its consideration of potential conflicts
of interests.
The Board maintains a strong independent
element, with more than half of its members
being Independent Non-Executive Directors,
in compliance with the UK Corporate
Governance Code.
The Committee actively oversees Board
representation, ensuring a balanced range of
experiences and skill sets while maintaining
our focus on merit-based appointments.
As at 6 March 2025, the Company met the
recommendations of the FTSE Women
Leaders Review on gender representation,
and the Parker Review objective on board
ethnic minority representation. The Board
met and exceeded the UK Listing Rules
requirements in respect of gender
representation and ethnic diversity.
The tables below provide the information,
required under the UK Listing Rules in
the mandatory format.
Governance framework
During 2024, the Committee reviewed
enhancements to our governance framework
to consolidate our Board and Committee
Terms of Reference into a single, cohesive
structure to strengthen our governance
oversight and reduce duplication and
complexity. Key updates included:
—
Enhanced oversight of ESG matters
across our governance framework.
—
Strengthened risk management
processes and reporting.
—
Updated delegated authorities to
support efficient decision-making.
—
Enhanced alignment with current and
upcoming regulatory requirements.
Gender representation as at 6 March 2025
1
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, SID, CEO and CFO)
Number in
executive
management
2
Percentage
of executive
management
Men
4
36%
3
7
54%
Women
7
64%
1
6
46%
Not specified/prefer not to say
—
—
—
—
—
Ethnicity representation as at 6 March 2025
1
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, SID, CEO and CFO)
Number in
executive
management
2
Percentage
of executive
management
White British or other White
(including minority-white groups)
8
73%
3
11
85%
Mixed/Multiple Ethnic Groups
1
9%
—
—
—
Asian/Asian British
2
18%
1
2
15%
Black/African/Caribbean/Black British
—
—
—
—
—
Other ethnic group, including Arab
—
—
—
—
—
Not specified/prefer not to say
—
—
—
—
—
For the purposes of UKLR 6.6.6 (11), the data disclosed in these tables was compiled using information acquired through the ‘Self-ID’ tool
accessible to employees via the Company’s HR information system. Information relating to the Board was provided on a voluntary basis.
>>
Information on the gender representation of the Executive Team and their direct reports is available on pages 20 and 62.
>>
See our Board Inclusion Policy at
www.haleon.com/who-we-are/Governance/board-and-board-committees
1
Data as at the latest practicable date of 6 March 2025.
2
Executive management is defined as members of the Executive Team (including the CEO and CFO).
Haleon
Annual Report and Form 20-F 2024
81
Corporate Governance
Nominations & Governance Committee Report
EBITDA targets. This outcome includes
an adjustment to exclude the impact of
acquiring an additional stake in the
TSKF joint venture which was not
anticipated when the targets were set.
When reviewing the final outcome, the
Committee carefully considered the impact
of inflation experienced in several markets
over the performance period in the context
of wider business performance. As a result
of this review, the Committee considered
it appropriate to apply downward
discretion to the final outcome which
resulted in a reduction of c. 9ppts
compared to the formulaic result.
This means these awards will vest at 76%
of maximum. The Committee is satisfied
that the vesting outcome is reflective of
broader underlying business performance,
and that plans to meet Haleon’s
responsible business commitments are
on track.
>>
Full details of the 2024 remuneration
paid to the Directors and the basis for its
determination are set out on pages 86–90.
Rewarding 2024 performance
During 2024, Haleon made meaningful
improvements across all aspects of our
strategy. Organic revenue growth was
achieved at 5% and organic operating
profit growth was achieved at 9.8%.
The overall outcome under the financial
measures of the 2024 Annual Incentive
Plan (AIP) was therefore 54% of the
maximum opportunity. This outcome is
aligned with the wider workforce on
the same global financial measures.
Individual AIP outcomes for Executive
Directors, including performance against
the Individual Business Objectives (IBOs),
are 58.2% of maximum for the CEO, 57.3%
of maximum for the outgoing CFO and
57.8% of maximum for the incoming CFO.
The Haleon Performance Share Plan (PSP)
awards granted in 2022 will vest in March
2025, by reference to the performance
period ended on 31 December 2024.
The formulaic outcome for these awards
was 85% of maximum based on
performance against the cumulative free
cash flow and net debt/adjusted
Directors’ Remuneration Report
Letter from the Chair
I am pleased to present the Directors’
Remuneration Report for Haleon for
the year ended 31 December 2024.
The Committee remains confident that
Haleon’s Directors’ Remuneration
Policy and its implementation
continues to drive progress against
our strategic goals and commitments,
while creating a sustainable, values
and purpose-led company. I would
like to thank the shareholders that
engaged with me and provided
helpful feedback throughout the year.
This Report sets out an overview of
the business performance in the
year and the corresponding incentive
payouts, how we intend to apply
our remuneration policy in 2025
and an overview of the remuneration
arrangements in relation to the
CFO transition.
Tracy Clarke
Chair
The 2025 PSP performance measures remain
cumulative free cash flow (50% weighting),
adjusted diluted earnings per share (EPS)
growth (30% weighting), organic operating
margin improvement (20% weighting) with
the ESG qualifier thresholds remaining in
relation to carbon reduction and reducing
virgin petroleum-based packaging. Haleon is
committed to an inclusive organisation that
represents the consumers and communities
who rely on our brands. This commitment
has not changed, however to ensure
continued compliance with requirements
in countries in which we operate we have
modified the ESG qualifier to remove the
gender representation threshold from 2025
PSP awards (see page 91). The Committee
will keep this decision under review,
particularly in relation to inflight PSP
awards granted in 2023 and 2024.
In combination across the AIP and PSP, the
financial measures have been chosen to
align our Executive Directors’ remuneration
with our strategy to deliver sustainable
above-market growth and attractive returns,
while running a responsible business,
which is integral to all that we do.
>>
Further information about the measures
and targets linked to incentive awards is
provided on pages 87–91.
2025 remuneration arrangements
There have been no changes to the
Directors’ Remuneration Policy approved
by shareholders at the 2023 AGM.
For 2025, the Committee reviewed the
incentive performance measures to ensure
they continue to align with the delivery of
the strategic goals and commitments made
to investors. The Committee concluded
that while the 2025 AIP should retain the
same measures, the weighting of the two
financial measures of the AIP should be
re-balanced to increase the focus on
organic operating profit growth, which
will now have a 40% weighting (from 20%
previously). As a result, there will be a
40% weighting for organic revenue growth
(from 60% previously), and no change to
the weighting of IBOs.
This change reflects the evolution of
Haleon to be a more agile fast moving
consumer health company. The focus on
profit will help drive improvements across
the business particularly across supply
chain, systems and processes, and
reflects our move into the third year of our
productivity programme. At the same time,
we will keep sight of the importance of
driving revenue growth which is also a
key determinant of shareholder returns.
Overall, the 2025 AIP performance
measures will be:
—
organic revenue growth (40% weighting)
—
organic operating profit growth (40%
weighting); and
—
IBOs (20% weighting).
Having considered all relevant factors,
including workforce remuneration
arrangements, inflation rates and market
practice, the Committee approved a 3.5%
salary increase for the Executive Directors,
which is in line with the average 3.5%
increase awarded to UK employees. In
respect of the CFO, as Dawn Allen’s
appointment salary was set in line with that
of her predecessor, which was agreed at
the start of 2024, the Committee concluded
that it was appropriate for her to receive
an increase in line with the UK workforce
for 2025. The Committee also approved a
3.5% fee increase for the Chair. The base
fees for Non-Executive Directors will
increase by 3.5% and the fees for the Chair
of the Environmental & Social Sustainability
Committee will increase by £5,000 bringing
the 2025 fees to £35,000 per annum.
CFO transition
In April 2024, Haleon announced that
Tobias Hestler would step down from
the role of CFO to better balance work
demands with the management of a
long-term health condition, and that
Dawn Allen would become the new
CFO with effect from 1 November 2024.
The remuneration arrangements of the
incoming and the outgoing CFO are in line
with Haleon’s Directors’ Remuneration
Policy approved by shareholders and were
disclosed at the time of the announcement.
Haleon
Annual Report and Form 20-F 2024
82
Corporate Governance
Committee activities
Executive
remuneration and
incentive plans
— Approving the 2024 AIP and PSP targets, including the IBOs.
— Approving the 2023 AIP outcome and the 2023 PSP Refill awards vesting outcome.
— Approving the 2025 AIP and PSP measures and targets.
— Approving 2024 and 2025 remuneration arrangements for the members of the Executive Team, including the
Executive Directors, and the Company Secretary.
— Reviewing the 2025 AIP design for the Executive Team.
Stakeholder
engagement
— Considering shareholder feedback on the 2023 Directors’ Remuneration Report and the outcomes of the 2024 AGM.
— Considering and approving the 2024 shareholder engagement timeline and materials.
— Discussing the workforce remuneration arrangements.
Governance
— Approving the final 2023 and draft 2024 Directors’ Remuneration Reports.
— Approving the remuneration arrangements for the incoming and outgoing members of the Executive Team,
including the CFO.
— Approving the 2024 schedule of business.
As part of the external Board and Committee performance review, the Committee was assessed to be operating effectively.
The Committee progressed all the key areas of focus from the 2024 performance review. The 2025 action plan is below:
Action plan 2025
Focus area
Actions
Remuneration
— Continue focus on key areas of the Committee’s remit.
— Review framework and targets ahead of Remuneration Policy review and submission for shareholder approval in 2026.
— Build on progress in delivering effective and transparent disclosures.
of employment. Tobias stepped down
from the Board on 1 November 2024, but
remained with the business until the end
of 2024, to ensure an orderly transition.
He remained eligible for the 2024 AIP
which will be paid in March 2025, with
50% deferred for three years, in line with
the Directors’ Remuneration Policy.
>>
Full details related to the incoming and
outgoing CFO’s remuneration arrangements
are described further in this Report on
pages 92 and 93.
On appointment, Dawn Allen’s base
salary was set at £730,000. The Committee
believes that this salary level is
representative of Dawn’s skills, experience
and the scope of the role. Dawn receives a
pension contribution at 7% of annual base
salary as a cash allowance. The incentive
opportunities remain unchanged from
the levels awarded to the outgoing CFO:
a maximum AIP opportunity of 200% of
base salary and a maximum PSP award
of 350% of base salary, in line with the
Directors’ Remuneration Policy.
The Committee has approved good leaver
status for Tobias’ incentive awards with
unvested PSP awards subject to proration.
The PSP award granted to him in 2024
lapsed following the notice of termination
I wrote to our largest shareholders
to inform them of the planned salary
increases and the 2025 AIP and PSP
performance measures. I am very grateful
for the support and valuable comments
that we have received. Our current
Directors’ Remuneration Policy was well
received by shareholders (2023 AGM
approval vote: 98.19%). The Committee
will be reviewing the Policy during 2025
to ensure it continues to align with our
long-term ambitions and corporate
governance requirements. I look forward
to consulting with shareholders on the
outcomes of the review and the new
Policy, which will be submitted for
approval at the 2026 AGM.
Key duties and responsibilities
The Remuneration Committee’s principal
responsibilities are:
—
Making recommendations to the Board
on remuneration principles and policy
applied to the Executive Directors.
—
Setting, reviewing and approving
individual remuneration arrangements
for the Chair, Executive Directors, senior
leadership and the Company Secretary.
—
Designing remuneration policies and
practices that support the Company’s
strategy and promote its long-term
sustainable success.
—
Ensuring that performance conditions
are transparent, stretching and
rigorously applied.
—
Enabling the use of discretion over
outcomes and recovery and withholding
of awards where the Committee deems
this to be appropriate.
—
Making recommendations to the Board
concerning the introduction of new
share incentive plans which require
Board or shareholder approval.
—
Reviewing employee remuneration and
key related policies, and the alignment
of incentives and rewards with the
Company’s culture, and taking these
into account when determining the
policy for executive remuneration.
Membership and meetings
The Committee comprises solely
Independent Non-Executive Directors.
Details are set out on page 59–61, together
with attendance for the year on page 65.
The Chair, CEO, Chief Human Resources
Officer, Global Head of Reward and a
representative from the independent
remuneration adviser (PwC) attend
meetings on a regular basis. Other
attendees are invited to meetings
as appropriate. The Committee also
meets without management present.
No Directors or executives are present
when their own remuneration is
discussed nor involved in determining
their own remuneration.
AGM and shareholder engagement
The Committee was pleased with the
strong support received for our 2023
Directors’ Remuneration Report (95.74%
votes in favour). In December 2024,
Haleon
Annual Report and Form 20-F 2024
83
Corporate Governance
Directors’ Remuneration Report
Remuneration at a glance
Directors’ Remuneration Report
continued
The current Directors’ Remuneration Policy (approved at the 2023 AGM) will apply until the 2026 AGM. The Committee is comfortable
that the Policy operated as intended during 2024 and that the 2024 remuneration paid to Directors as set out below and within the
Annual Report on Remuneration, was appropriate.
>>
The complete Policy is available on the Company’s website:
www.haleon.com/who-we-are/Governance/codes-policies-and-standards
Summary of the application of the Directors’ Remuneration Policy in 2024 and 2025
Element
2024
2025
2026
2027
2028
2029
Application for 2024
Application for 2025
Base Salary
2024 base salaries:
— CEO: £1,306,250
— CFO (outgoing): £731,500
— CFO (incoming): £730,000
2025 base salaries:
— CEO: £1,351,969 (+3.5%)
— CFO: £755,550 (+3.5%)
Benefits
Benefits operated in line
with the Policy
Benefits will operate in line
with the Policy
Pension
arrangements
Employer contributions:
— CEO: 7% of salary
— CFO: 7% of salary
No change
Annual
Incentive Plan
(AIP)
Deferral period
Maximum AIP opportunities:
— CEO: 200% of salary
— CFO: 200% of salary
2024 performance measures:
— 60% Organic
revenue growth
— 20% Organic operating
profit growth
— 20% IBOs
50% of any AIP earned is
deferred for three years
No change to AIP
opportunities.
2025 performance measures:
— 40% Organic
revenue growth
— 40% Organic operating
profit growth
— 20% IBOs
50% of any AIP earned is
deferred for three years
Performance
Share Plan
(PSP)
Vesting period
Holding period
PSP award levels:
— CEO: 450% of salary
— CFO: 350% of salary
2024 performance measures:
— 50% Cumulative free
cash flow
—
30% Adjusted diluted
EPS growth
— 20% Organic operating
margin improvement
— ESG qualifier
No change to PSP award levels
No change to 2025
Performance Measures
Modification to ESG Qualifier
as described in page 91
Share ownership
requirements
Share ownership
requirements:
— CEO: 450% of salary
— CFO: 350% of salary
No change
Malus and clawback
The Committee may apply malus and clawback any time prior to the second anniversary of the date the cash element of an annual
bonus is paid, or a share award vests. The Committee may only invoke the malus and clawback policy provisions in circumstances such
as a material misstatement of results; a failure of risk management resulting in material financial loss; an error or material misstatement
which results in an overpayment (such as in the assessment of performance); a corporate failure of the Company; employee misconduct;
or material reputational damage to the Company. The Company also operates a mandatory clawback policy that complies with the
US Securities and Exchange Commission (SEC) requirements.
What performance means for Executive Directors’ pay in 2024
At Haleon, remuneration packages are designed to ensure strong alignment between pay and performance. The Committee considers
performance has been appropriately reflected in the incentive outcomes, as set out in the Annual Report on Remuneration from page 86.
Haleon
Annual Report and Form 20-F 2024
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Corporate Governance
2024 remuneration scenarios and actual remuneration received
The charts below show the potential levels of remuneration which could be received by the CEO and the outgoing CFO under different
performance scenarios based on the levels of regular AIP and PSP awards granted in the year, as well as actual remuneration received
in respect of 2024 including the vesting of the 2022-24 PSP awards. This illustration shows the outgoing CFO’s remuneration until
31 December 2024 and does not show the remuneration of the incoming CFO as she joined the Board on 1 November 2024.
2024 AIP outcome
The AIP outcomes were 58.2% of maximum for the CEO and
57.3% of maximum for the outgoing CFO. The incoming CFO
was awarded a pro-rated AIP based on 57.8% of maximum.
(Note: For the maximum payment scenario a 50% increase to share price is assumed.)
Link between incentive measures and strategy
A combination of financial and non-financial measures has been chosen to ensure that executive remuneration is aligned with the
key performance indicators (KPIs) used by the business to monitor performance against our strategic priorities. The table below sets
out the incentive measures and weightings used in AIP 2024 and each of the PSP cycles which were in-flight during 2024:
Strategic KPI (as shown on
pages 32-33 of this report)
AIP measures (2024)
PSP measures (cycles which were in-flight during 2024)
1
2022-2024 cycle
2023-2025 cycle
2024-2026 cycle
Organic revenue growth
Organic revenue growth (60% weighting)
Organic
Operating margin
improvement
(20% weighting)
Organic operating
profit growth
Organic operating profit growth
(20% weighting)
Adjusted diluted
EPS growth
Adjusted diluted
EPS growth
(30% weighting)
Net debt/adjusted EBIDTA
Net debt/adjusted EBITDA
(50% weighting)
Free cash flow
Cumulative free cash flow (50% weighting)
Carbon reduction
Carbon reduction (ESG qualifier)
Reduction in virgin
petroleum-based
packaging
2
Reduction in virgin
petroleum-based
packaging (ESG
qualifier)
2
Gender Representation
Gender Representation (ESG qualifier)
1
In determining the vesting levels and any adjustment which should apply, the Committee will also consider wider factors, including whether broader plans to meet Haleon’s
responsible business commitments are on track. The Committee will consider all applicable legal and regulatory requirements when making its decision.
2
The 2022-24 and 2023-25 PSP ESG qualifier included a measure based on recycle-ready packaging. For the 2024-26 PSP this was replaced by the measure based on reduction in
virgin petroleum-based packaging as the external commitment on recycle-ready packaging runs to 2025.
>>
Further details of the performance measures for the 2024 AIP and PSP awards, and how they are aligned with the Company’s strategy and the
creation of shareholder value, are set out on pages 87-91 of the Directors’ Remuneration Report. 2025 AIP and PSP performance measures aligned
with the 2025 strategic KPIs are set out on pages 89 and 91 of this Directors’ Remuneration Report.
2022-2024 PSP awards
The first cycle of regular Haleon PSP awards will vest in
March 2025 at 76% of maximum, in line with performance
against the cumulative free cash flow, net debt/adjusted
EBITDA targets and ESG qualifier.
Minimum
£1,504,000
100%
23%
12%
16%
20%
20%
17%
57%
68%
67%
£6,430,000
£12,809,000
£9,062,000
Target
Maximum
Actual 2024
CEO
Fixed pay
PSP
AIP
Minimum
£815,000
100%
26%
13%
19%
23%
24%
20%
61%
51%
63%
£3,122,000
£6,064,000
£4,284,000
Target
Maximum
Actual 2024
Outgoing CFO
CEO
76%
76%
Outgoing CFO
CEO
57.8%
Outgoing CFO
Incoming CFO
57.3%
58.2%
Haleon
Annual Report and Form 20-F 2024
85
Corporate Governance
Directors’ Remuneration Report
Planned implementation for 2025
Content within a box indicates that all the information in the panel is planned for implementation in 2025.
‘Single figure’ of remuneration — Executive Directors (audited)
The following table shows a single total figure of remuneration for each Executive Director in respect of qualifying services for the
2024 and 2023 financial years.
£000
Brian McNamara
2024
Brian McNamara
2023
Tobias Hestler
2024
5
Tobias Hestler
2023
Dawn Allen
2024
6
Salary
1,292
1,250
604
700
133
Benefits
122
171
34
45
15
Pension
90
88
42
49
9
Total fixed remuneration
1,504
1,509
680
794
157
AIP
1
1,520
1,880
701
1,088
150
PSP
2,3
6,038
2,434
—
165
—
Other
4
—
—
—
—
2,127
Total variable remuneration
7,558
4,314
701
1,253
2,277
Total remuneration
7
9,062
5,823
1,381
2,047
2,434
1
The value of the 2024 AIP includes both the cash (50% of the AIP) and deferred portion (50% of the AIP). The deferred part of the bonus is subject to malus and clawback in
accordance with the malus and clawback policy, but no further performance conditions. Tobias Hestler stepped down from the Board on 1 November 2024 but remained
employed until 31 December 2024. The value of the AIP attributable to the period between 2 November and 31 December is disclosed under “payments for loss of office”
on pages 92-93 of this Report.
2
2023 column shows the PSP Refill awards which vested in March 2024. The value of awards has been restated to show the actual share price and ADS price at vesting of
£3.3015/$8.4500 and includes the accumulated dividends delivered in the form of shares. Due to the share price appreciation over the vesting period, the value of the 2023 PSP
Refill awards is higher than the value at grant by $123,537 (£99,627) for Brian McNamara and by £3,533 for Tobias Hestler. The value of the 2023 PSP Refill award for Brian McNamara
has been converted from USD to GBP using the average 2023 exchange rate of 1.24.
3
2024 column shows the value of the 2022-2024 PSP awards which will vest in March 2025 calculated based on the average share price over the last three months of 2024 of £3.7630.
The actual value of vesting PSP awards, based on the share price on the vesting date will be shown in the 2025 Directors’ Remuneration Report. Due to the share price appreciation
over the vesting period, the estimated value of the 2022 PSP awards is higher than the value at grant by £1,585,746 for Brian McNamara. The value of Tobias’s 2022 PSP award, as
well as the amount attributable to share price appreciation, are disclosed under “payments for loss of office” on pages 92-93 of this Report. No discretion has been exercised as a
result of the share price change.
4
Other remuneration for Dawn Allen includes cash awards as well as share awards without performance conditions made on appointment. These awards were made to compensate
the value foregone on termination of her employment with Tate & Lyle. The full details of appointment awards are set out on page 92 of this Report. Value of vested share awards is
calculated using share price on vest date (£3.718) and value of unvested share awards is calculated based on the average share price over the last three months of 2024 (£3.7630).
5
2024 remuneration for Tobias Hestler has been pro-rated until the date on which he stepped down from the Board on 1 November 2024.
6
2024 remuneration for Dawn Allen shows amounts paid in respect of the period of her employment (28 October–31 December 2024).
7
Each remuneration element is rounded to the nearest £1,000, and totals reflect the sum of these rounded values.
Salary (audited)
Executive Directors received a 4.5% salary increase in 2024 in line with the average increases awarded to the wider UK workforce.
Executive Director
Annual base salary
as of 1 January 2024
Annual base salary
as of 1 April 2024
Brian McNamara
£1,250,000
£1,306,250
Tobias Hestler
£700,000
£731,500
2025 salaries
In determining whether salary increases should be awarded to Executive Directors, the Committee carefully considered investors’
expectations, external environment, company performance, salary increases for the wider workforce, personal performance and
competitive market positioning against the FTSE 30 (excluding financial services) and large international FMCG companies peer
groups
1
. The Committee approved a 2025 salary increase of 3.5% for the Executive Directors, in line with the wider UK workforce.
Executive Director
Annual base salary
from 1 April 2025
% increase
Brian McNamara
£1,351,969
3.5%
Dawn Allen
£755,550
3.5%
1
In 2024 this group included Diageo, AstraZeneca, GSK, British American Tobacco, Vodafone Group, Imperial Brands, Danone S.A., Heineken N.V., Burberry Group, Associated British
Foods, L’Oréal S.A., Pernod Ricard SA, Sanofi and Siemens Healthineers AG.
Benefits (audited)
2024 benefits for Executive Directors included family private healthcare, death in service, income protection, financial planning, car
travel, reimbursement of business expenses deemed to be taxable benefits, and (for the CEO only) home security services. Executive
Directors are eligible to participate in the HMRC approved Haleon Share Save Plan and Share Reward Plan. Details of Executive Directors’
rights under the Share Save Plan are set out in the ‘Statement of Directors’ shareholding and share interests’ table on page 97.
Directors’ Remuneration Report
continued
Annual Report on Remuneration
Haleon
Annual Report and Form 20-F 2024
86
Corporate Governance
2025 benefits
Benefits for 2025 remain in line with the Policy.
Pension
Executive Directors receive pension contributions at the rate of 7% of annual base salary which includes contributions to the pension
plan as well as cash allowances. Executive Directors do not participate in defined benefit pension plans.
Executive Director
Pension plan
contributions
Pension
allowance
Total 2024 pension
contributions
Brian McNamara
£0
£90,453
£90,453
Tobias Hestler
£5,556
£36,564
£42,120
Dawn Allen
£0
£9,303
£9,303
2025 Pension
Pension for 2025 remains in line with the Policy and with the broader workforce.
2024 Annual Incentive Plan (AIP) awards (audited)
80% of the bonus opportunity is determined by financial performance and 20% is based upon the achievement of IBOs.
The figures below represent the total 2024 AIP awards to be paid, including the portion payable in cash in 2025, and the 50% portion
deferred into Haleon shares for a further three years to 2028, subject to continued employment and malus and clawback provisions.
The award made to Tobias Hestler will be deferred under the same conditions.
2024 AIP targets
2024 AIP outcome
AIP outcome
(% of max per element)
Performance measures
Weighting
Threshold
(25% of max)
Target
(50% of max)
Maximum
(100% of max)
Actual
Outcome
(% of max)
Brian
McNamara
Tobias
Hestler
Dawn
Allen
Organic revenue growth
60%
2.3%
5.3%
8.3%
5.0%
47%
28.2%
28.2%
28.2%
Organic operating
profit growth
20%
3.5%
7.5%
11.5%
9.8%
78.8%
15.8%
15.8%
15.8%
IBOs — Brian McNamara
20%
Details of performance
are set out on page 88.
14.2%
—
—
IBOs — Tobias Hestler
1
—
13.3%
—
IBOs — Dawn Allen
2
—
—
13.8%
AIP award (% of maximum)
58.2%
57.3%
57.8%
AIP award (value)
£1,519,691
£701,240
£149,740
The colour bars represent the actual outcome.
1
Tobias Hestler stepped down from the Board on 1 November 2024, but remained employed until 31 December 2024. The value of the AIP disclosed above relates to the period
between 1 January and 1 November 2024. The value of the AIP attributable to the period between 2 November and 31 December is disclosed under “payments for loss of office”
of pages 92 and 93 of this Report.
2
Dawn Allen joined Haleon on 28 October 2024 and her 2024 AIP has been pro-rated for the period between 28 October and 31 December 2024.
In the prior year Directors’ Remuneration Report, the Committee confirmed that it reviewed the impact of inflation experienced in
several markets and considered it appropriate to apply downward discretion to the formulaic result for the 2023 AIP outcome, details
of which are available in the 2023 Report. For 2024 Haleon’s accounting approach follows hyper-inflation standards, whereby inflation
impacts above a threshold for specific countries are removed from both targets and actual outcomes. Given this change in approach
and having considered wider business performance, there is no discretion applied to the formulaic result for the 2024 AIP outcome.
Haleon
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Corporate Governance
Directors’ Remuneration Report
Achievement of 2024 individual business objectives (IBOs) (audited)
20% of the Executive Directors’ 2024 AIP is linked to the achievement of IBOs which were focused on key strategic objectives.
In addition to the objectives outlined, there is an expectation that the Executive Directors will each demonstrate the required
high leadership standards and behaviours of the Company.
The table below summarises performance against the key 2024 IBOs for the CEO, the outgoing CFO and new CFO:
Brian McNamara
Objective
Description of performance
Growth strategy
Define breakthrough growth strategy for India
to deliver accelerated growth per annum.
— Strategy developed to deliver the accelerated growth plan.
— 2024 performance was particularly strong in India, up double digits driven by successful
in market execution. Further details on page 39.
Culture
Further develop the blueprint for Haleon
cultural development and deliver on
key organisational objectives.
— Significant progress across all key culture measures, evidenced by 2024 global all-employee
engagement survey results (89% response rate).
— Overall engagement score improved from 78% to 81% in 2024 (+3 points vs 2023,
and +3 points compared to external peer benchmark).
Portfolio Review
Finalise strategy and execution for
acquisition of additional equity
interest in TSKF.
— Successful £500m acquisition of an additional 33% equity interest in TSKF, the joint venture
which operates Haleon’s OTC business in China.
— This increases Haleon’s participation in TSKF to 88%, delivering greater control and increased
strategic and operational flexibility across the business, and is accretive to EPS for Haleon’s
shareholders. Haleon also has an option to acquire the remaining 12% shareholding.
Recognising Brian’s performance during 2024, the Committee judged that 14.2% of a maximum of 20% attributable to IBOs was appropriate.
Tobias Hestler
Objective
Description of performance
Productivity
Deliver agreed Haleon productivity
program benefits and Procurement savings.
— Overall Haleon productivity benefits ahead of initial expectation with approximately half
of £300m gross savings delivered in 2024. See page 34 for further details.
Business Services
Establish blueprint and plan for
Global Business Services.
— Blueprint presented to the Board, plan developed which will deliver further cost savings
over 2025-27.
Portfolio Review
Progress divestments and complete
acquisition of additional equity
interest in TSKF.
— Successful completion of divestments including ChapStick and NRT business outside US
in 2024 for approximately £0.8bn.
— Successful £500m acquisition of an additional 33% equity interest in TSKF, the joint venture
which operates Haleon’s OTC business in China.
— This increases Haleon’s participation in TSKF to 88%, delivering greater control and increased
strategic and operational flexibility across the business, and is accretive to EPS for Haleon’s
shareholders. Haleon also has an option to acquire the remaining 12% shareholding.
Recognising Tobias’s performance during 2024, the Committee judged that 13.3% of a maximum of 20% attributable to IBOs was appropriate.
Dawn Allen
Objective
Description of performance
Portfolio Review
Complete acquisition of additional
equity interest in TSKF.
— Successful £500m acquisition of an additional 33% equity interest in TSKF, the joint venture
which operates Haleon’s OTC business in China.
— This increases Haleon’s participation in TSKF to 88%, delivering greater control and increased
strategic and operational flexibility across the business, and is accretive to EPS for Haleon’s
shareholders. Haleon also has an option to acquire the remaining 12% shareholding.
Capital Market Day
Develop approach for Capital Markets Day
— Plan developed and approval secured for the 2025 Capital Markets Day.
Recognising Dawn’s performance during 2024, the Committee judged that 13.8% of a maximum of 20% attributable to IBOs was appropriate.
Since Dawn joined on 28 October 2024 it was agreed with the Committee that she will have only two IBOs weighted equally at 10% each.
Directors’ Remuneration Report
continued
Annual Report on Remuneration
continued
Haleon
Annual Report and Form 20-F 2024
88
Corporate Governance
Deferral policy for the 2024 AIP
In line with the Policy, 50% of the 2024 AIP awards (to be paid in March 2025) will be deferred for three years into conditional awards
over Haleon shares, subject to continued employment and malus and clawback provisions. The award made to Tobias Hestler will be
deferred under the same conditions. These deferred bonus awards are expected to be granted in March 2025 and will be disclosed in
the 2025 Directors’ Remuneration Report.
Deferred Annual Bonus Plan (DABP) awards in respect of the 2023 AIP made in 2024 (audited)
The following table sets out details of mandatory deferral into the DABP of the 2023 AIP awards made on 13 March 2024:
Executive Director
Type of award
Nature of award
Number of shares subject to award
Grant price
1
Face value at grant
Brian McNamara
DABP
Conditional shares
285,715
£3.29
£940,000
Tobias Hestler
DABP
Conditional shares
165,320
£3.29
£543,900
1
Grant price is calculated as the average closing share price over the three business days immediately preceding the grant date.
2025 AIP awards
In line with the Policy, for 2025 the target and maximum AIP opportunities for our Executive Directors will be:
Executive Director
Target opportunity
(% of salary)
Maximum opportunity
(% of salary)
Brian McNamara
100%
200%
Dawn Allen
100%
200%
Performance will be based on Group financial performance targets aligned to the Group’s KPIs, as well as IBOs. The 2025 AIP measures
will remain unchanged from 2024, however (as described on page 82) the weighting of the two financial measures will be re-balanced
to reflect the ongoing focus of driving both revenue and operating profit growth. The 2025 AIP performance measures will be:
—
Organic revenue growth (40%) measured at a constant exchange rate.
—
Organic operating profit growth (40%); and measured at a constant exchange rate.
—
Individual Business Objectives (20%).
2025 AIP targets are considered commercially sensitive and will be disclosed in the 2025 Annual Report.
In line with the Policy, 50% of all 2025 AIP awards will be deferred for three years into conditional awards over Haleon shares,
subject to continued employment, malus and clawback provisions.
2022-2024 Performance Share Plan awards vesting (audited)
The first cycle of three-year Haleon Performance Share Plan awards is due to vest in March 2025, by reference to the performance
period ended on 31 December 2024. As disclosed in the 2022 Annual Report, performance measures for the awards were cumulative
free cash flow (50%), net debt/adjusted EBITDA (50%) and the ESG qualifier.
Target ranges
Outcome
Performance measures
Weighting
Minimum
(25% vesting)
1
Maximum
(100% vesting)
1
Actual
outcome
2
Level
of vesting
Cumulative free cash flow
(Measured on a cumulative basis over
the performance period 2022-24)
50%
£5.318bn
82%
£4.557bn
£5.557bn
Net debt/adjusted EBITDA
(Measured as a ratio at year end 2024)
50%
2.6x
69%
3.0x
2.4x
Overall vesting level (% of maximum)
3
76%
The colour bars represent the actual outcome.
1
Straight-line interpolation is applied for performance between minimum and maximum.
2
The net debt/adjusted EBITDA actual outcome has been adjusted to exclude the impact of Haleon’s acquisition of an additional 33% stake in the TSKF joint venture, which completed
on 30 December 2024. This adjustment to actual outcome was necessary as this acquisition was not anticipated at the time the targets were set at the beginning of the performance
period and therefore not factored into the original targets. This adjustment ensures that the targets retain the originally intended level of stretch.
3
When reviewing the final outcome, the Committee carefully considered the impact of inflation experienced in several markets over the performance period in the context of wider
business performance (in line with the adjustment approach used in respect of 2023 AIP as disclosed in the 2023 Report). As a result of this, the Committee considered it appropriate
to apply downward discretion to the 2022-24 PSP outcome which resulted in a reduction of c. 9 percentage points compared to the formulaic result, which was 85% of maximum.
Haleon
Annual Report and Form 20-F 2024
89
Corporate Governance
Directors’ Remuneration Report
The Committee also considered progress made during the performance period on carbon reduction, recycle-ready packaging and
gender representation for the 2022-2024 performance period when determining the vesting outcome.
Measure
Threshold
Actual outcome
Threshold met?
Carbon reduction
(Measured for 12 months to November 2024)
At least 30% reduction in Scope 1 and 2
carbon emissions from the 2020 level.
50% reduction in Scope 1 and 2
carbon emissions from the 2020 level
*
.
Yes
Recycle-ready packaging
(Measured for 12 months to June 2024)
At least 68% of packaging should
be recycle-ready.
74% of packaging recycle-ready
*
.
Yes
Gender representation
(Quarterly average in 2024)
At least 44.5% of leadership roles
held by women.
45.2% of leadership roles
held by women
*
.
Yes
*
KPMG LLP has issued independent limited assurance over the selected data indicated using assurance standards ISAE(UK) 3000 and ISAE3410.
As all thresholds have been met and the Committee was satisfied that broader plans to meet Haleon’s responsible business
commitments were on track (see page 23), no reduction was applied to the level of vesting shown below.
Executive Director
Number of
shares awarded
Dividend equivalents
accrued over the
performance period
Type of
award
Percentage of the
PSP award vesting
Number of
shares vesting
Value of
shares vesting
1
Brian McNamara
2,049,305
61,908
Ordinary shares
76%
1,604,522
£6,037,743
1
The value of shares vesting is based on the average share price during last three months of 2024 at £3.7630.
Due to the share price appreciation over the vesting period, the estimated value of the 2022-2024 PSP awards is higher than the value
at grant by £1,585,746 for Brian McNamara. The value of the PSP award that vested for Tobias Hestler is disclosed under “payments for
loss of office” on pages 92 and 93 of this Report.
Performance Share Plan awards made in 2024 (audited)
Brian McNamara was made an award with a face value of 450% of salary. Dawn Allen was made an award with a face value of 350%
of salary pro-rated to reflect her employment start date in October 2024. The award made to Tobias Hestler has lapsed following
the notice of termination of his employment. The following table sets out details of awards made in 2024:
Executive Director
Date of grant
End of the
performance period
Type of
award
Nature of
award
Number of shares
subject to award
Grant price
1
Face value
at grant
Brian McNamara
13 March 2024
31 December 2026
PSP
Conditional shares
1,709,727
£3.29
£5,625,000
Dawn Allen
31 October 2024
31 December 2026
PSP
Conditional shares
170,334
2
£3.75
£638,750
1
Grant price is calculated as the average closing share price over the three business days immediately preceding the grant date.
2
Dawn received additional PSP awards as a part of buyout disclosed on page 92.
Performance measures for the PSP awards granted in 2024
As disclosed in the 2023 Annual Report, performance measures for the 2024-2026 PSP awards included cumulative free cash flow
(50%), adjusted diluted EPS growth (30%) and organic operating margin improvement (20%).
Target ranges
Measure
Weighting
Minimum
(25% vesting)
1
Maximum
(100% vesting)
1
Cumulative free cash flow
(Measured on a cumulative basis over the performance period 2024-26)
50%
£5.310bn
£6.490bn
Adjusted diluted EPS growth
(Measured as % growth on a cumulative basis over three years)
30%
6% p.a.
10% p.a.
Organic operating margin improvement
(Measured as bps improvement on a cumulative basis over three years)
20%
+100 bps
+270 bps
1
Straight-line interpolation is applied for performance between minimum and maximum.
An ESG qualifier is also included within the 2024 PSP design, to reflect commitments that the Company has made on carbon reduction,
the use of plastic and gender representation. At the end of the performance period, if any of the thresholds are missed, a reduction in
the level of vesting of 10% could be applied for each missed threshold. In addition, if the metrics are static or go backwards compared
to the 2023 baseline, a 25% reduction in the level of vesting could be applied for each measure (i.e., a potential overall reduction of up
to 75%).
Directors’ Remuneration Report
continued
Annual Report on Remuneration
continued
Haleon
Annual Report and Form 20-F 2024
90
Corporate Governance
The carbon reduction and gender representation ESG thresholds were retained in the 2024-2026 measures. The external commitment
on recycle-ready packaging runs to 2025, and therefore this metric was replaced by a metric assessing the reduction in virgin
petroleum-based packaging as part of the ESG qualifier for the 2024-2026 cycle, in line with Haleon’s responsible business commitment.
The ESG qualifier thresholds for the 2024 PSP are as follows:
Measure
Threshold
Carbon reduction
(Measured for 12 months to November 2026)
At least 55% reduction in Scope 1 and 2 carbon emissions from the 2020 level.
Reduction in virgin petroleum-based packaging
(Measured for 12 months to June 2026)
At least 12% reduction from the 2022 level.
Gender Representation
(Quarterly average in 2026)
At least 46% of leadership roles held by women.
In determining the vesting levels and any adjustment which should apply, the Committee will also consider wider factors, including
whether broader plans to meet Haleon’s responsible business commitments are on track. The Committee will consider all applicable
legal and regulatory requirements when making its decision.
Performance Share Plan awards to be made in 2025
Brian McNamara and Dawn Allen will be granted awards with a face value of 450% of salary and 350% of salary respectively.
Performance measures for the 2025 PSP awards
Target ranges
Measure
Weighting
Minimum
(25% vesting)
1
Maximum
(100% vesting)
1
Cumulative free cash flow
(Measured on a cumulative basis over the performance period 2025-27)
50%
£5.345bn
£6.545bn
Adjusted diluted EPS growth
(Measured as % growth on a cumulative basis over three years)
30%
8% p.a.
14% p.a.
Organic operating margin improvement
(Measured as bps improvement on a cumulative basis over three years)
20%
+185 bps
+355 bps
1
Straight-line interpolation is applied for performance between minimum and maximum.
The Committee reviews the mix of measures in incentives on an annual basis and will continue to consider whether the performance
measures remain aligned with our strategic priorities.
An ESG qualifier is also included within the 2025 PSP design, to reflect commitments that the Company has made on carbon reduction
and the use of plastic. Haleon is committed to an inclusive organisation that represents the consumers and communities who rely on
our brands. This commitment has not changed, however to ensure continued compliance with requirements in countries in which we
operate we have modified the ESG qualifier to remove the gender representation threshold from 2025 PSP awards. The Committee
will keep this decision under review.
At the end of the performance period, if either of the thresholds are missed, a reduction in the level of vesting of 10% could be
applied for each missed threshold. In addition, if the metrics are static or go backwards compared to the 2024 baseline, a 25%
reduction in the level of vesting could be applied for each measure (i.e., a potential overall reduction of up to 50%).
The ESG qualifier thresholds for the 2025 PSP are as follows:
Measure
Threshold
Carbon reduction
(Measured for 12 months to November 2027)
At least 59% reduction in Scope 1 and 2 carbon emissions from the 2020 level.
Reduction in virgin petroleum-based packaging
(
Measured for 12 months to June 2027)
At least 15% reduction from the 2022 level.
In determining the vesting levels and any adjustment which should apply, the Committee will also consider wider factors,
including whether broader plans to meet Haleon’s responsible business commitments are on track.
Haleon
Annual Report and Form 20-F 2024
91
Corporate Governance
Directors’ Remuneration Report
Appointment awards made to Dawn Allen
To compensate the value of the awards that were forfeited on her resignation from Tate & Lyle, Dawn Allen was granted a number
of cash and share awards, as set out in the schedule below. In line with the Directors’ Remuneration Policy, appointment awards are
made on the terms that replicate, as closely as possible, the terms and conditions of the original awards and are paid or vest on a
timeline that mirrors the original payment and vesting dates.
Cash award
Value
Payment date
Basis of determination
Year of disclosure
Cash award in respect of 2023 bonus
£350,023
November 2024
Matches the value of actual
Tate & Lyle bonus forfeited
2024
Cash award
1
in respect of a Tate & Lyle appointment
award that vested in June 2023 and was clawed back
by Tate & Lyle
£823,260
November 2024
Matches the gross value
of the award that was clawed
back by Tate & Lyle
2024
Cash award in respect of 2024 bonus
£208,040
June 2025
Pro-rated target
Tate & Lyle bonus forfeited
2024
1
Tate & Lyle confirmed recovery of the whole award as a cash repayment. Therefore, the Haleon replacement award has been paid in cash based on the Policy of like for
like replacement.
All appointment share awards were made as conditional shares on 31 October 2024 with the grant price of £3.75.
Type of award
Face value
on grant
End of the
performance period
Number of shares
subject to award
Vesting date
Basis of determination
2
Year of disclosure
Share award
1
in
respect of a Tate & Lyle
appointment award that
lapsed on resignation
£592,175
n/a
158,653
November 2024
Matches the value of the
Tate & Lyle award at vesting
2024
Share award
1
replacing
the 2023 deferred
annual bonus shares
£154,837
n/a
41,484
June 2025
Matches the value
of shares forfeited
2024
PSP award replacing
the 2022 performance
share award
£1,325,763
31 March 2025
355,191
June 2025
Matches the value of the original
award; performance will be based
on the performance outcome of
the original Tate & Lyle award
2025
PSP award replacing
the 2023 performance
share award
£1,247,681
31 December 2025
334,272
June 2026
Matches the value of the
original award and is aligned
with the Haleon 2023 PSP
performance conditions
2025
PSP award
replacing 6/12ths of
the 2024 performance
share award
3
£723,188
31 December 2026
190,369
June 2027
Matches the value of the
Tate & Lyle policy award
pro-rated for time and aligned
with the Haleon 2024
PSP performance conditions
2026
1
Under the plan rules the share value award was made on 31 October 2024 following the release of the Company’s Q3 Trading Statement and ahead of the individual being appointed
to the Board on 1 November 2024.
2
The value of share awards was determined by reference to the average share price of Tate & Lyle and Haleon during the three months preceding the employment start date.
3
Dawn Allen joined Haleon during October 2024. In line with Haleon’s internal policy she was granted a Haleon PSP award in respect of 2024 which reflects 3/12th of her 2024
Haleon opportunity (October–December), as disclosed on page 90 of this report. As described in the table above, Dawn was also granted a Haleon PSP award replacing 6/12ths of her
2024 opportunity from her previous employer (reflecting the period from April–September).
These awards are subject to the following terms and conditions:
—
Standard malus and clawback provisions which apply to all incentive awards made to the Executive Directors, in line with the
Directors’ Remuneration Policy; and
—
All cash awards and the share award in respect of a Tate & Lyle appointment award that lapsed on resignation will be forfeited
if Dawn Allen gives notice to terminate her employment or if her employment is terminated for cause within 12 months following
the payment or vesting of these awards.
Principles addressed when determining the remuneration outcomes for Executive Directors
When determining the remuneration outcomes, the Committee had regard to a number of key principles: clarity and simplicity of the
incentive structure (remuneration aligned with market practice, consisting of a single short-term incentive and long-term incentive); avoiding
payment for failure (a range of design features take into account risk, including malus and clawback provisions); proportionality (rewarding
performance against stretching targets); and acting in line with our purpose and culture when setting remuneration. The full description of
how our Policy aligns with these principles is set out on page 86 of the 2022 Annual Report, available on the website at
www.haleon.com
.
Payments for loss of office (audited)
On 1 November 2024, Tobias Hestler stepped down from his position as the CFO. His remuneration arrangements are in line with our
Directors’ Remuneration Policy approved by shareholders.
Directors’ Remuneration Report
continued
Annual Report on Remuneration
continued
Haleon
Annual Report and Form 20-F 2024
92
Corporate Governance
Tobias continued to receive his salary, pension and benefits from 2 November 2024 until he left the business on 31 December 2024.
In addition, legal fees of £8,400 were paid by the Company in relation to the termination of his employment. He will be paid in lieu of
notice for the remainder of his 12-month notice period until 23 April 2025. He will continue to receive medical benefit for six months
after termination and EY tax support in respect of his Haleon income. The Committee determined that he is a good leaver and, in
accordance with the Directors’ Remuneration Policy, is eligible for a 2024 AIP award, with the performance outcome determined as
set out on page 87 of this Report, with 50% deferred for three years. Outstanding deferred bonus awards will be released on the
original timetable, subject to malus and clawback provisions.
Outstanding long-term incentive awards will be pro-rated to the end of Tobias’s employment and will vest in line with the original
vesting dates, subject to satisfaction of the performance conditions. All outstanding awards will remain subject to malus and
clawback provisions. His 2024 PSP award which was granted in March 2024 has lapsed. In line with the rules of the Share Save Plan,
Tobias will be able to exercise his option during six months following his termination date.
Tobias’s shareholding will be subject to the Haleon share ownership policy for a period of two years after the termination of his
employment. In line with the Directors’ Remuneration Policy, he is required to hold 154,861 shares (equivalent to 80% of salary)
which is the lower of his shareholding requirement immediately prior to departure and his actual shareholding on departure.
The table below details all payments made to Tobias Hestler after he stepped down from the Board. Performance targets and
assessment are presented on pages 87-89 of this Report.
£000
Tobias Hestler (attributable to 2 November–31 December 2024)
Salary
£120
Benefits
£6
Pension
£8
AIP
£137
PSP
£2,630
Legal fees
£8
The table below sets out the calculation of the 2022 PSP award value for Tobias Hestler. The performance assessment is set out on
page 89 of this Report.
Executive Director
Number of
shares awarded
Dividend equivalents accrued over
the performance period
Type of award
Percentage of the PSP
award vesting
Number of
shares vesting
Value of
shares vesting
1
Tobias Hestler
1
892,587
26,965
Ordinary shares
76%
698,859
£2,629,775
1
2022-2024 PSP awards were pro-rated by reference to the performance period for all eligible early leavers. As Tobias Hestler remained employed for the full performance period,
no time pro-ration was applied to his 2022 award. The value of shares vesting is based on the average share price during the last three months of 2024 of £3.7630.
Due to the share price appreciation over the vesting period, the estimated value per share of the 2022-2024 PSP awards is higher
than the value per share at grant by £690,681 for Tobias Hestler.
Payments to past Directors (audited)
There were no payments to past Directors during 2024 other than described in the payments for loss of office section from page 92.
Total shareholder return (TSR)
The chart shows the monthly value, from the time of demerger to 31 December 2024, of a notional sum of £100 invested in Haleon
shares on 18 July 2022, compared to £100 invested in the FTSE 100 on the same date. The FTSE 100 Index was chosen as the
comparator because the Company is a constituent of this index.
Jul
2022
Jul
2023
Jun
2023
May
2023
Apr
2023
Mar
2023
Feb
2023
Jan
2023
Aug
2022
Aug
2023
Sep
2022
Sep
2023
Oct
2022
Oct
2023
Nov
2022
Nov
2023
Dec
2024
Dec
2023
Jan
2024
Feb
2024
Mar
2024
Apr
2024
May
2024
Jun
2024
Jul
2024
Aug
2024
Sep
2024
Oct
2024
Nov
2024
Dec
2022
40
60
80
100
120
140
Total shareholder return
Haleon
FTSE 100
Haleon
Annual Report and Form 20-F 2024
93
Corporate Governance
Directors’ Remuneration Report
Directors’ Remuneration Report
continued
Chief Executive Officer — historical remuneration information
The table below shows the remuneration of the Chief Executive Officer in place at the time over the same period.
Year
2022
2023
2024
Chief Executive Officer
Brian McNamara
Brian McNamara
Brian McNamara
Single figure of total remuneration (£’000)
1
2,294
5,823
9,062
AIP outcome (% of maximum)
2
72%
75%
58%
PSP vesting (% of maximum)
3
n/a
81%
76%
1
Pre-demerger remuneration for Brian McNamara was set in US Dollars and has been converted to GBP in the table above, using the average 2022 exchange rate of 1.24.
2
2022 AIP value has been pro-rated for the period between Director’s appointment (23 May 2022) and the end of the financial year (31 December 2022).
3
There were no PSP awards vesting in 2022.
Relative importance of spend on pay
The table below sets out the amounts payable in respect of 2023 and 2024 on all-employee pay and dividends:
Year
2023
2024
Total staff costs
1
£2,149m
£2,170m
Dividends
2
£388m
£570m
1
Total staff costs are presented in line with Note 7 to the Financial Statements.
2
Dividends are presented in line with Note 10 to the Financial Statements.
Chief Executive Officer’s pay compared with employee pay
The table below compares the CEO’s ‘single figure’ of total remuneration to that received by three representative UK employees in 2024,
2023 and 2022. The total remuneration for each quartile employee, and the salary component within this, are also outlined below.
Year
Method
3
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2024
Option B
141:1
82:1
62:1
2023
1
Option B
94:1
51:1
38:1
2022
2
Option B
64:1
32:1
24:1
1
2023 CEO single figure includes the value of the PSP Refill award which was made to compensate the value foregone on early vesting of the GSK award. This award vested in March 2024.
2023 CEO pay ratio has been restated to reflect the restated value of the PSP Refill award on the vesting date.
2
2022 CEO single figure does not include any long-term incentive component as the first Haleon PSP award was made to the CEO in 2022. The total 2022 remuneration for employees
is based on earnings between 23 May 2022 and 31 December 2022 and the 2022 bonus pro-rated for that period.
3
See Methodology below.
Year
25th percentile
£000
Median
£000
75th percentile
£000
2024 salary
50
68
95
2024 total remuneration
64
110
147
Methodology
In line with the approach taken in previous years, we have chosen to use Option B as our preferred methodology to calculate the CEO
pay ratio. Given the complexity of the pay arrangements for different categories of UK employees at Haleon, this approach allows us
to leverage the existing gender pay gap calculations and thus presents a practical and efficient approach, using robust and meaningful
data that is representative of the remuneration levels for UK employees.
The Company used data from the 2024 gender pay gap calculation to determine employees positioned at each pay quartile and excluded
those employees who left the Company before 31 December 2024. Remuneration was calculated in line with the methodology used to
determine the single total figure of remuneration for the CEO, as presented in this Report. Remuneration figures are determined with
reference to the financial year ending on 31 December 2024. The remuneration covers salary, benefits and pension contributions,
bonus in respect of 2024 which will be paid in March 2025 and share awards without performance conditions granted in 2024. No
components were omitted from the calculation and no adjustments were made to any of the pay elements. Where required, actual
remuneration was converted into a full-time equivalent by pro-rating earnings to reflect full-time contractual working hours.
The Committee determined that the identified employees are reasonably representative of the pay quartiles, since the structure of
their remuneration arrangements is in line with that of the majority of employees in the UK. The Committee believes that the median
pay ratio for the 2024 financial year is consistent with the pay, reward and progression policies for the Company’s UK employees.
The change in the CEO pay ratio between 2022 and 2023 is primarily attributed to the vesting of the Haleon PSP Refill award that was
made to compensate the proportion of GSK awards that lapsed on demerger awards for the CEO whereas the 2022 single figure of
remuneration did not include any long-term incentive awards. The change between 2023 and 2024 reflects the vesting of the first
full cycle of the Haleon PSP for the CEO.
Annual Report on Remuneration
continued
Haleon
Annual Report and Form 20-F 2024
94
Corporate Governance
Percentage change in remuneration
The table below sets out the change in remuneration for each Director between 2022 and 2024 compared to a wider UK employee
comparator group:
Change in 2023 against 2022
Change in 2024 against 2023
Salary/fees
1
(% change)
Benefits
2
(% change)
Bonus
3
(% change)
Salary/fees
1
(% change)
Benefits
2
(% change)
Bonus
3
(% change)
Executive Directors
Brian McNamara
0%
-52%
4%
4.5%
-29%
-19%
Tobias Hestler
0%
5%
8%
4.5%
-11%
-23%
Dawn Allen
4
n/a
n/a
n/a
n/a
n/a
n/a
Chair and Non-Executive Directors
Sir Dave Lewis
0%
19%
n/a
4.5%
208%
n/a
Manvinder Singh (Vindi) Banga
0%
-52%
n/a
2.9%
116%
n/a
Nancy Avila
5
n/a
n/a
n/a
n/a
n/a
n/a
Marie-Anne Aymerich
0%
191%
n/a
3.4%
-47%
n/a
Tracy Clarke
0%
-89%
n/a
3.2%
306%
n/a
Dame Vivienne Cox
0%
-87%
n/a
3.4%
490%
n/a
David Denton
6
n/a
n/a
n/a
n/a
n/a
n/a
Asmita Dubey
0%
-35%
n/a
4.5%
-73%
n/a
Deirdre Mahlan
7
0%
146%
n/a
3.2%
-84%
n/a
Alan Stewart
5
n/a
n/a
n/a
n/a
n/a
n/a
Bryan Supran
6
n/a
-43%
n/a
n/a
-96%
n/a
John Young
7
0%
-11%
n/a
n/a
n/a
n/a
Average for all UK employees
8,9
6%
35%
25%
4.5%
53%
-29%
1
Change in salary/fees for Directors in 2022/23 is shown as the change from the post-demerger annual rate of salary applicable for 2022 to the rate applicable for 2023.
2
Change in benefits for Directors in 2022/23 is shown as annualised value of post-demerger benefits for 2022 compared with the full value of benefits in 2023.
3
Change in bonus for the Executive Directors in 2022/23 is shown as the annualised value of the post-demerger 2022 AIP compared with the full value of the 2023 AIP. In 2023/24
change in bonus for Tobias Hestler is shown based on his full 2024 AIP, whereas the amount in the single figure table has been pro-rated to reflect him stepping down from the
Board on 1 November.
4
Dawn Allen joined the Board on 1 November 2024.
5
Nancy Avila and Alan Stewart joined the Board on 1 September 2024.
6
Non-Executive Director fees for David Denton and Bryan Supran are waived. David Denton joined the Board with effect from 1 March 2023.
7
John Young stepped down from the Board with effect from 28 February 2023 and Deirdre Mahlan stepped down from the Board on 1 October 2024.
8
Only a very small number of individuals are employed by the same entity as Directors. As the number of employees is fewer than five, data for this entity is not presented.
Therefore, the table above shows a comparison to the average remuneration for all UK employees of Haleon.
9
Average change in salary for the UK employees is the average increase awarded to the UK workforce. Average change in benefits for the UK employees for 2022/23 represents a
change in the medical benefit offering in the UK between 2022 and 2023 which resulted in an increase in the average monthly premium. Average change in benefits for the UK
employees for 2023/24 represents an introduction of London travel allowance from August 2024 due to change in the office location. Average change in bonus for the UK
employees for 2022/23 was restated based on the actual bonus data. Average change in bonus for the UK employees for 2023/24 is calculated as the change in the business
multiplier between 2023 and 2024 and will be restated in the 2025 Report when actual bonus data is available.
Consideration of workforce pay and approach to engagement
The Board receives regular updates on employee engagement, including employee engagement survey results, with a detailed update
presented annually. Workforce engagement is covered on page 71, which includes commentary on how the views of employees were
considered by the Board.
To ensure that the remuneration-related decisions are fair and appropriate, the Committee considered employees’ pay increases when
determining the appropriate salary levels for the Executive Directors and fees for the Chair. In addition, the Committee was provided
with an update on bonus outcomes for the wider employee population, which were taken into account to ensure that the bonus
outcomes appropriately reflect business performance at all levels in the organisation. In 2024, the Workforce Engagement Director,
Dame Vivienne Cox, conducted a series of meetings with various groups of employees. She covered the role of the Board and the
Committee in one of her sessions, setting out how the Remuneration Committee operates and how it considers wider workforce
remuneration arrangements.
In addition, employees have been informed about the alignment between the executive remuneration structure and the wider
workforce remuneration arrangements as part of the wider reward communications. The Directors’ Remuneration Policy, which is
available on Haleon’s website, has been shared with employees, providing an opportunity to view and assess the remuneration
structure which applies to the Board. The Company always welcomes employee feedback, and views on executive remuneration
will be shared with the Committee.
Haleon
Annual Report and Form 20-F 2024
95
Corporate Governance
Directors’ Remuneration Report
Directors’ Remuneration Report
continued
Remuneration Committee advisers
During 2024, PwC was the independent remuneration adviser to the Committee, having been appointed by the Committee in
August 2022. PwC is a member of the Remuneration Consultants’ Group and voluntarily operates under their code of conduct when
providing advice on executive remuneration in the UK. PwC regularly meets with the Chair of the Committee without management
present. The Committee is comfortable that the PwC engagement partner and team providing remuneration advice to the Committee
do not have connections with Haleon or its individual Directors that may impair their independence and objectivity. The total fees paid
to PwC for the provision of independent advice to the Committee in 2024 were £72,800 excluding VAT charged on a fixed fee as well
as time and materials basis. During 2024, PwC also provided other services to Haleon entities, relating to tax advice, internal audit and
assurance, controls, general management consultancy, cyber security, deals and transactions work. Remuneration advice is provided
by an entirely separate team within PwC.
Statement of voting at the Annual General Meeting (AGM)
The Directors’ Remuneration Policy was approved by shareholders at the 2023 AGM and the 2023 Directors’ Remuneration Report
was approved by shareholders at the 2024 AGM. Each of these resolutions received a significant vote in favour by shareholders and
the Committee is grateful for this support and endorsement by our shareholders. The votes received were:
Resolution
For
%
Against
%
Withheld
1
To approve the 2023 Directors’
Remuneration Report
7,586,720,188
95.74%
337,969,514
4.26%
24,649,536
To approve the Directors’
Remuneration Policy
7,728,166,817
98.19%
142,531,194
1.81%
35,150,085
1
“Vote withheld” is not a vote in law and is not counted in the calculation of the votes “For” or “Against” a resolution.
Directors’ service contracts and letters of appointment
Brian McNamara’s, Tobias Hestler’s and Dawn Allen’s service contracts, dated 9 May 2022, 10 May 2022 and 23 April 2024 respectively,
are subject to a 12-month notice period and any payments for loss of office will be in line with the Directors’ Remuneration Policy
disclosed in the 2022 Annual Report. Executive Directors’ service contracts are available for inspection at the Company’s registered office
and included as exhibits to this Annual Report and Form 20-F. The Non-Executive Directors and the Chair were each appointed by a
letter of appointment for an initial term of three years, and either party may terminate the appointment on three months’ notice, or,
if earlier, with the consent of the Board. All Non-Executive Directors are subject to annual re-election by shareholders at the AGM
and there is no provision in their letters of appointment giving them a right to compensation upon early termination.
2024 Non-Executive Directors’ remuneration
The Chair received an annual fee which was set at £731,500 per annum for 2024. The 2024 base fee for each other Non-Executive
Director was £99,275 per annum. Bryan Supran and David Denton are Pfizer employees and their fees are waived for acting as
Non-Executive Directors of Haleon plc. Additional fees payable in 2024 were as follows:
—
£50,000 per annum for the Senior Independent Director;
—
£30,000 per annum for the Workforce Engagement Director;
—
£40,000 per annum for chairing the Audit & Risk Committee;
—
£40,000 per annum for chairing the Remuneration Committee; and
—
£30,000 per annum for chairing the Environmental & Social Sustainability Committee.
2025 Non-Executive Directors’ remuneration
The Board reviewed the Non-Executive Directors’ fees and, at the recommendation of the Chair and the CEO, approved a 3.5% increase
to the base fee for the Non-Executive Directors, bringing the 2025 base fee to £102,750 per annum. The fees for the chair of the
Environmental & Social Sustainability Committee will be increased by £5,000 bringing the 2025 fees to £35,000 per annum. In addition,
a 3.5% increase was applied to the Chair’s annual fee, bringing the 2025 Chair’s fee to £757,103 per annum. No other changes were
made to the remuneration of the Non-Executive Directors.
Annual Report on Remuneration
continued
Haleon
Annual Report and Form 20-F 2024
96
Corporate Governance
‘Single figure’ of remuneration — Non-Executive Directors (audited)
The table below shows the actual fees paid to our Non-Executive Directors in 2024 and 2023.
Non-Executive Director
1
2024 fees
(£000)
2024 benefits
(£000)
2024 total
remuneration
(£000)
2023 fees
(£000)
2023 benefits
(£000)
2023 total
remuneration
(£000)
Sir Dave Lewis
724
17.4
741
700
5.6
706
Manvinder Singh (Vindi) Banga
148
1.3
149
145
0.6
146
Nancy Avila
33
0.0
33
0
0
0
Marie-Anne Aymerich
128
1.6
130
120
3.0
123
Tracy Clarke
138
0.6
139
135
0.2
135
Dame Vivienne Cox
128
2.3
130
125
0.4
125
David Denton
2
0
1.3
1
0
0.2
0
Asmita Dubey
98
0.5
99
95
1.8
97
Deirdre Mahlan
104
2.3
106
135
14.2
149
Alan Stewart
43
0.3
43
0
0
0
Bryan Supran
0
0.3
0.3
0
6.1
6
John Young
2
0
0
0
16
0.8
17
1
Fees and total remuneration have been rounded to the nearest £1,000 for presentation purposes, and totals reflect the sum of these rounded values.
2
John Young stepped down from the Board with effect from 28 February 2023. John was succeeded as Non-Executive Director and representative of Pfizer by David Denton with
effect from 1 March 2023.
Statement of Directors’ shareholding and share interests (audited)
Total shareholding of Directors on 31 December 2024 is shown below.
Director
Shares
beneficially
owned
1
Shares
not subject to
performance
Options not subject
to performance
Shares
subject to
performance
Total interest
Share
ownership
as % of 2024
salary/fee
2
Share
ownership
requirement
met
Chair
Sir Dave Lewis
94,627
—
—
—
94,627
49%
n/a
Executive
Directors
Brian McNamara
635,485
422,160
0
5,645,438
6,703,083
248%
No
Tobias Hestler
3
38,759
241,399
7,919
1,700,980
1,989,057
86%
No
Dawn Allen
83,974
41,484
0
1,050,176
1,175,634
55%
No
Non-Executive
Directors
Manvinder Singh
(Vindi) Banga
329,800
—
—
—
329,800
1,250%
n/a
Nancy Avila
0
—
—
—
0
0%
n/a
Marie-Anne Aymerich
27,884
—
—
—
27,884
106%
n/a
Tracy Clarke
12,504
—
—
—
12,504
47%
n/a
Dame Vivienne Cox
0
—
—
—
0
0%
n/a
David Denton
0
—
—
—
0
n/a
n/a
Asmita Dubey
0
—
—
—
0
0%
n/a
Deirdre Mahlan
80,000
—
—
—
80,000
303%
n/a
Alan Stewart
33,923
—
—
—
33,923
129%
n/a
Bryan Supran
50,000
—
—
—
50,000
n/a
n/a
1
Beneficial interest also includes shares held indirectly through Haleon ADSs and shares/ADSs held by connected persons.
2
Share ownership as % of 2024 salary/fee is based on the average share price over the last three months of 2024 of £3.7630. Shares that count towards the requirement include
beneficial holdings and unvested DABP shares on an after-tax basis.
3
The total shareholding for Tobias is shown at 1 November 2024. The 2023-25 PSP awards are presented in full however 320,385 shares will be forfeited due to time pro-ration as set
out in the loss of office section.
No changes to Directors’ interests in ordinary shares or ADSs occurred between 31 December 2024 and 6 March 2025 (being the last
practicable date). Non-Executive Directors, including the Chair, are encouraged to build up a personal holding in the shares of the
Company equal to the value of one year of their annual base fee. Executive Directors are required to build up significant holdings of
shares in Haleon (450% and 350% of salary for the CEO and CFO respectively). Until these requirements have been met, Executive
Directors are required to hold all Haleon shares acquired under the Company’s share plans (net of income tax and National Insurance
contributions). Executive Directors must comply with shareholding requirements for two years after leaving the Company, at a level
equal to the lower of their shareholding requirement immediately prior to departure or their actual shareholding on departure. During
this period, former Executive Directors will be required to seek permission to deal from the Company Secretary.
Haleon
Annual Report and Form 20-F 2024
97
Corporate Governance
Directors’ Remuneration Report
Annual Report on Remuneration
continued
Additional disclosures
Further information is provided on compensation and interests of Directors and senior management. For the purpose of this disclosure,
this group includes the Executive and Non-Executive Directors and the Executive Team.
The following table sets out aggregate remuneration for this group for 2024.
2024 remuneration
£000
Total compensation paid
46,859
Aggregate increase in accrued pension benefits (net of inflation)
—
Aggregate payments to defined contribution schemes
1,173
During 2024, members of this group were awarded shares and ADSs under the Company’s share plans, as set out in the table below.
To align the interests of senior management with those of shareholders, Executive Directors and Executive Team members are required
to build and maintain significant holdings of shares in Haleon over time. Executive Team members are required to hold shares to an
equivalent multiple of three times their base salary.
Awards
Dividend equivalents
Shares
ADSs
Shares
ADSs
Performance Share Plan
8,900,988
267,982
298,905
16,371
Share Value Plan
1
806,245
0
0
0
Share Reward
2
400
0
0
0
1
Executive Directors are not eligible to participate in the Share Value Plan.
2
See Note 26 to the Financial Statements for further details on the Share Reward Plan.
At 6 March 2025 (being the latest practicable date), this group and persons closely associated with them had the following interests
in shares and ADSs of the Company. Interests awarded under the various share plans are described in Note 26 to the Financial
Statements, ‘Employee share schemes’ on page 169.
Interests as at 6 March 2025
Shares
ADSs
Owned
759,929
344,747
Unexercised options
14,069
0
Deferred Annual Bonus Plan
663,559
0
Performance Share Plan
19,361,428
947,794
Share Value Plan
1
1,199,425
0
1
Executive Directors are not eligible to be granted awards under the Share Value Plan.
Directors’ Remuneration Report
continued
Haleon
Annual Report and Form 20-F 2024
98
Corporate Governance
Compliance with the
UK Corporate Governance Code
Code principle
Page(s)
Board leadership and company purpose
A
The Board performance review showed that the Board continues to operate effectively. This is attributed to the
diverse and complementary expertise of the Directors, which promotes balanced decision-making focused on
long-term sustainable success. Careful procedures manage conflicts of interest should they arise with Directors
linked to the controlling shareholder, including recusal from certain Board discussions where required.
59, 60, 61, 65,
70
B
The Board has agreed the strategic direction of the Group and monitored the strategy, medium-term plans and
evolution of the culture and values at its meetings during 2024. The Haleon Code of Conduct training is annually
completed by all Board Directors and employees.
66, 69
C
The Board monitors performance and KPIs through regular updates, presentations and deep dives into key areas.
It also oversees the effectiveness of the Group’s risk management framework. Regular reviews of the Company’s
controls and risk management processes are performed by the Audit & Risk Committee.
66, 73
D
Stakeholder engagement activities during the period included meetings with major institutional shareholders, shareholder
representative bodies and employees (through the Workforce Engagement Director and employee engagement during
local market visits). The AGM also provides the opportunity for the Board to engage directly with shareholders.
68, 69, 71
E
The Board received updates on policies and practices throughout the period. Any employee can raise matters of
concern confidentially through the Speak Up programme which is overseen by the Audit & Risk Committee.
66, 73
Division of responsibilities
F
The Board performance review highlighted that the Chair led the Board effectively during 2024, demonstrating
objective judgement and promoting a culture of openness and debate.
70
G
There is an appropriate balance of Executive and Independent Non-Executive Directors. There is a clear division of
responsibilities between the Chair and the Chief Executive Officer.
59, 60, 61, 65
H
The Non-Executive Directors have diverse backgrounds and skill sets. The Board performance review affirmed that
all Non-Executive Directors are effective and devote appropriate time to their duties. The Chair meets regularly with
Non-Executive Directors without Executive Directors present.
59, 60, 61, 70,
81
I
The Chair and Company Secretary ensure the Board and its Committees receive timely, accurate and clear information
to support their decision-making.
65, 70
Composition, success and evaluation
J
Appointments to the Board are led by the Nominations & Governance Committee. Directors are subject to annual
re-election at the AGM.
79, 80
K
The Board skills matrix is maintained and reviewed by the Nominations & Governance Committee, which also
reviews membership of Board Committees on a regular basis.
79, 80
L
The Board performance review was conducted externally, and concluded that the Board operates effectively.
70
Audit, risk and internal control
M
The Audit & Risk Committee is responsible for assessing the independence and effectiveness of the external auditor
and the internal audit function. It has reviewed all of the Group’s published Financial Statements.
73
N
The Board is satisfied that the Annual Report, taken as a whole, is fair, balanced and understandable. The viability and
going concern statements specifically cover the Board’s assessment of the current and future prospects of the Group.
57, 74, 100,
190
O
The Board and, as appropriate, the Audit & Risk Committee (in line with its Terms of Reference) has reviewed the
principal risks, monitors risk appetite and oversees the internal control framework.
66, 74
Remuneration
P
The Remuneration Committee has developed a policy on Executive Director remuneration which was approved by
shareholders at the 2023 AGM.
84
Q
No Directors are involved in deciding their own remuneration outcomes. The Remuneration Committee followed
a clear process while developing the Directors’ Remuneration Policy.
83
R
The Remuneration Committee exercises independent judgement and considers the application of discretion
permitted when determining the outcome of performance-related Executive remuneration.
82, 85, 87, 88,
94
In January 2024, the Financial Reporting
Council (FRC) published a new version of
the UK Corporate Governance Code,
which will apply to companies with a
premium listing on the London Stock
Exchange, including Haleon, for financial
periods starting on or after 1 January 2025.
Haleon will report against compliance
with the new Code in its 2025 Annual
Report & Accounts.
The Board considers that the Company has
applied the principles and complied fully
with the provisions set out in the 2018 UK
Corporate Governance Code (the Code)
for the period from 1 January 2024 to
31 December 2024.
The table below summarises how the
principles of the Code have been applied
throughout this period. It should be read in
conjunction with the Strategic Report and
Corporate Governance section, including
the Directors’ Remuneration Report.
>>
See also our summary statement outlining
differences between the Group’s UK
corporate governance practices from
those of US companies on page 208.
>>
The Code is published on the FRC
website:
www.frc.org.uk
Haleon
Annual Report and Form 20-F 2024
99
Corporate Governance
Compliance with the
UK Corporate Governance Code
Disclosure Guidance and Transparency Rules
The Directors confirm to the best of their knowledge:
—
The Consolidated Financial Statements, prepared in
accordance with a relevant financial reporting framework,
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Parent Company and the
undertakings included in the consolidation taken as a whole.
—
The Annual Report, including the Strategic Report, includes
a fair review of the development and performance of the
business and the position of the Parent Company and the
Group taken as a whole, together with a description of the
principal risks and uncertainties that it faces.
—
In accordance with Disclosure Guidance and Transparency
Rule (DTR) 4.1.16R, the financial statements will form part of
the annual financial report prepared under DTR 4.1.17R and
4.1.18R. The auditor’s report on these financial statements
provides no assurance over whether the annual financial report
has been prepared in accordance with those requirements.
UK Corporate Governance Code
The Directors consider that this Annual Report and Form 20-F
taken as a whole, is fair, balanced and understandable and that
it provides the information necessary for shareholders to assess
the Parent Company’s and the Group’s position and performance,
business model and strategy.
Disclosure of information to auditors
Each of the Directors who held office as at the date of approval
of this Report confirm that:
—
They have taken steps to make themselves aware of
relevant audit information (as defined by Section 418(3)
of the Companies Act 2006).
—
None of the Directors are aware of any relevant audit
information which has not been disclosed to the Company’s
and Group’s auditor.
For and on behalf of the Board
Brian McNamara
Dawn Allen
Chief Executive Officer
Chief Financial Officer
20 March 2025
20 March 2025
Financial Statements and accounting records
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. The Directors have prepared
the Consolidated Financial Statements in accordance with
United Kingdom (UK) adopted international accounting standards
in conformity with the requirements of the Companies Act 2006,
and the Parent Company Financial Statements in accordance with
UK accounting standards. The Consolidated Financial Statements,
also comply with International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards
Board (IASB), including interpretations issued by the IFRS
Interpretations Committee (IFRIC), and International Financial
Reporting Standards. Under company law directors must not
approve the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Parent
Company and the Group, and the profit or loss for that period.
In preparing these Financial Statements, the Directors are
required to:
—
Select suitable accounting policies and apply them consistently.
—
Make judgements and accounting estimates that are reasonable.
—
Provide additional disclosures when compliance with the
specific requirements of the financial reporting framework
are insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
entity’s financial position and financial performance.
—
State whether the Consolidated Financial Statements have
been prepared in accordance with UK-adopted international
accounting standards.
—
State for the Parent Company Financial Statements whether
applicable UK accounting standards, comprising FRS 102,
have been followed.
—
Prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the Parent
Company and the Group will continue in business.
The Directors are responsible for ensuring that the Parent
Company and the Group keep adequate accounting records
that are sufficient to show and explain the Parent Company’s
and the Group’s transactions and disclose with reasonable
accuracy the financial position of the Parent Company and the
Group to enable them to ensure that the Financial Statements
comply with the Companies Act 2006. The Directors also have
responsibility for the system of internal control, safeguarding
the assets of the Parent Company and the Group, and taking
reasonable steps to prevent and detect fraud and other
irregularities. Under applicable law and regulations, they
also have responsibility for preparing a Directors’ Report,
Strategic Report, Directors’ Remuneration Report, and Corporate
Governance Statement. The Directors are responsible for the
maintenance and integrity of the Annual Report including on
Haleon’s website. Legislation in the UK governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Statement of Directors’ responsibilities
Haleon
Annual Report and Form 20-F 2024
100
Financial Statements
Financial Statements
KPMG LLP’s Independent auditor’s report
to the members of Haleon plc
1. Our opinion is unmodified
Additional opinion in relation to IFRS as issued by IASB
As explained in Note 1 to the Group Financial Statements, the Group, in addition to complying with its legal obligation to apply
UK-adopted International Financial Reporting Standards, has also applied International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).
In our opinion, the Group Financial Statements have been properly prepared in accordance with IFRS as issued by the IASB.
What our opinion covers
We have audited the Group and Parent Company Financial Statements of Haleon plc (“the Company”) for the year ended
31 December 2024 (FY24) included in the Annual Report, which comprise:
Group (Haleon plc and its subsidiaries)
Parent Company (Haleon plc)
Consolidated income statement
Balance sheet
Consolidated statement of comprehensive income
Statement of changes in equity
Consolidated balance sheet
Notes to the Parent Company Financial Statements,
including the accounting policies in Notes 1 and 2.
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the Consolidated Financial Statements,
including the accounting policies in Notes 1 to 3.
In our opinion:
—
The Financial Statements of Haleon plc give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as
at 31 December 2024, and of the Group’s profit for the year then ended;
—
The Group Financial Statements have been properly prepared in accordance with UK-adopted international accounting standards;
—
The Parent Company Financial Statements have been properly prepared in accordance with UK accounting standards, including
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and
—
The Group and Parent Company Financial Statements have been prepared in accordance with the requirements of
the Companies Act 2006.
Haleon
Annual Report and Form 20-F 2024
101
Independent auditor’s report to the members of Haleon plc
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit
opinion and matters included in this report are consistent with those discussed and included in our reporting to the Audit & Risk Committee.
We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to listed public interest entities.
2. Overview of our audit
Factors driving
our view of risks
The macro-economic environment has been a driving
factor in our risk assessment, as general economic
uncertainty has led to high commodity and other
input cost inflation, affecting many countries the
Group operates and sells in, whilst inflation rates
have trended downwards in 2024. Price increases
and the impact on volumes sold, together with the
broader impact on margin and operating profit across
markets and brands are areas considered during our
risk assessment.
The Group holds brands with indefinite lives where
a high degree of estimation uncertainty exists with
regards to assumptions and estimates used in the
Group’s assessment of the recoverable amount.
The key assumptions are terminal growth rate and
discount rate. There is significant auditor judgement
involved in evaluating these assumptions. We identified
that the indefinite life brand most sensitive to possible
change in key assumptions used in the valuation
models is Preparation H. The effect of these matters
could result in a potential range of reasonable
outcomes greater than our materiality for the
Financial Statements as whole.
The investment in subsidiaries in the Parent Company
Financial Statements is deemed to be material. As a
result this is considered to be the area that has the
greatest effect on our overall Parent Company audit.
Key Audit Matters
Vs FY23
Item
Recoverability of
indefinite life brands
4.1
Recoverability of Parent
Company’s investment in
subsidiaries
4.2
Audit & Risk
Committee
Interaction
During the year, the Audit & Risk Committee met 6 times. KPMG are invited to attend all Audit & Risk
Committee meetings and are provided with an opportunity to meet with the Audit & Risk Committee in
private sessions without the Executive Directors being present. For each Key Audit Matter, we have set out
communications with the Audit & Risk Committee in section 4, including matters that required particular
judgement for each.
The matters included in the Audit & Risk Committee Report on page 72 are materially consistent with our
observations of those meetings.
Our independence
We have fulfilled our ethical responsibilities under, and
we remain independent of the Group in accordance
with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities.
We have not performed any non-audit services during
FY24 or subsequently which are prohibited by the FRC
Ethical Standard.
We were first appointed as auditor by the shareholders
for the year ended 31st December 2023. The period of
total uninterrupted engagement is for two financial
years ended 31st December 2024.
The Group engagement partner is required to rotate
every 5 years. As these are the second set of the
Group’s Financial Statements signed by Nicholas Frost,
he will be required to rotate after the FY27 audit.
The average tenure of partners responsible for
component audits as set out in section 7 below is
3 years, with the shortest being 1 year and the
longest being 3 years.
Total audit fee
£16.5m
Audit related fees (including
interim review)
£1.4m
Other services
£0.0m
Non-audit fee as a % of total audit
and audit related fee %
7.9%
Date first appointed
20th April
2023
Uninterrupted audit tenure
2 years
Next financial period which
requires a tender
FY33
Tenure of Group
engagement partner
2 years
Average tenure of component
signing partners
3 years
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
102
Financial Statements
Financial Statements
Materiality
(Item 6 below)
The scope of our work is influenced by our view of
materiality and our assessed risk of material misstatement.
We have determined overall materiality for the Group
Financial Statements as a whole at £110m (FY23: £100m)
and for the Parent Company Financial Statements as a
whole at £100m (FY23: £97m).
Consistent with FY23, we determined that Group
normalised profit before tax from continuing operations
(“PBTCO”) remains the benchmark for the Group. This is
normalised to exclude certain restructuring costs of
£202m (FY23: £147m), Nexium brand impairment of
£135m and gain on disposal of Haleon’s Non-US Smokers
Health business (£122m). We adjusted for these items
because they do not represent the normal, continuing
operations of the Group. Our Group materiality represents
5.2% (FY23: 4.8%) of the benchmark.
Materiality for the Parent Company Financial Statements
was determined with reference to a benchmark of
Parent Company total assets of which it represents
0.4% (FY23: 0.4%).
Materiality levels used in our audit
FY24 £m
FY23 £m
Group
Group Materiality
GPM
Group Performance Materiality
HCM
Highest Component Materiality
PLC
Parent Company Materiality
LCM
Lowest Component Materiality
AMPT
Audit Misstatement Posting Threshold
Group Scope
(Item 7 below)
We have performed risk assessment and planning
procedures to determine which of the Group’s components
are likely to include risks of material misstatement to the
Group Financial Statements, the type of procedures to
be performed at these components and the extent of
involvement required from our component auditors
around the world.
We performed audit procedures on 18 components,
having considered our evaluation of the Group’s
operational structure and our ability to perform audit
procedures centrally.
The Group also operates shared service centres in Poland,
Malaysia, Costa Rica and India, that perform accounting
and reporting activities and are relevant to our audit.
Together, these shared service centres process a
substantial portion of the Group’s transactions over
purchases, revenue, payroll and journal entries.
We also performed testing of centrally managed controls
(manual and automated), testing of general IT controls
over centrally managed IT systems and performance of
specific risk focused audit procedures over purchases,
revenue, payroll and journal entries at the group level.
In addition, for the remaining components for which we
performed no audit procedures, we performed analysis at
an aggregated Group level to re-examine our assessment
that there is not a reasonable possibility of a material
misstatement in these components. In particular, we
matched individual sales orders to goods delivery
documents and invoices to inform our assessment of
whether there was a reasonable possibility of a material
misstatement in the remaining revenue.
We consider the scope of our audit, as communicated to
the Audit & Risk Committee, to be an appropriate basis
for our audit opinion.
Coverage of Group
Financial Statements
Our audit procedures covered
the following percentages:
110
100
Group
80
88
HCM
75
82.5
GPM
97
100
PLC
10
12
LCM
5
5.5
AMPT
Revenue
63%
Total
assets
85%
Haleon
Annual Report and Form 20-F 2024
103
Independent auditor’s report to the members of Haleon plc
The impact of
climate change
on our audit
In planning our audit, we considered the impacts of climate change on the Group’s business and its
Financial Statements.
The Group set targets to achieve net zero carbon emissions from source to sale by 2040, aligned to guidance
from the Climate Pledge and Race to Zero. Further information has been provided in the Group’s Strategic
Report on page 26. The Group continues to align its climate-related disclosures with the recommendations
of the Task Force on Climate Related Financial Disclosure (“TCFD”) and the Companies Act. These disclosures
are included in the Strategic Report on pages 24 to 31.
Climate change risk could have a significant impact on the Group’s business as it adapts its strategy and
operations to address the potential financial risks which could arise from both the physical and transition
risks associated with climate change. To evaluate and assess the resilience of its business to climate change,
the Group assessed the impact of damage and disruption caused by extreme weather events, reduced
availability and increased price volatility of raw materials due to climate change, carbon pricing regulations
and loss of attractiveness due to consumers’ increasing expectations. These are the areas in which the
Group foresees the greatest potential for disruption. Further information can be found on pages 24 to 31.
As part of our audit, we have made inquiries of the Group to understand the extent of the potential impact
of climate change risk on the Group’s Financial Statements. We have performed a risk assessment of how
climate risks facing the Group, particularly those relating to the impact of damage and disruption caused by
extreme weather events, reduced availability and increased price volatility of raw materials due to climate
change, carbon pricing regulations and loss of attractiveness due to consumers’ increasing expectations,
and the Group’s strategy to mitigate these risks, may affect the Financial Statements and our audit. Our risk
assessment focused on the risk climate change may pose to the determination of future cash flows within
the Group’s going concern assessment and assessment over the recoverability of indefinite life brands,
as well as the impact on the carrying amount and useful lives of property, plant, and equipment. We also
held discussions with our own climate change professionals to challenge our risk assessment.
On the basis of our risk assessment, we determined that while climate change poses a risk to the
determination of future cash flows, the risk to the audit from climate change alone is not significant,
as such there was no impact on our Key Audit Matters.
We have read the climate-related information in the front half of the Annual Report, and considered
consistency with the statements and our audit knowledge.
3. Going concern, viability and principal risks and uncertainties
The Directors have prepared the Financial Statements on the going concern basis as they do not intend to liquidate the Group or the
Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s financial position
means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt
over their ability to continue as a going concern for at least twelve months from the date of approval of the Financial Statements
(“the going concern period”).
Going concern
We used our knowledge of the Group, its industry, and the general economic
environment to identify the inherent risks to its business model and analysed
how those risks might affect the Group’s and Company’s financial resources
or ability to continue operations over the going concern period. The risks that
were considered most likely to adversely affect the Group’s and Company’s
available financial resources over this period were:
—
Commodity inflation and pricing; and
—
Selling price and volume sensitivity
We also considered realistic second order impacts, such as business
transformation and portfolio management failure.
We considered whether these risks could plausibly affect the liquidity in the
going concern period by assessing the degree of downside assumptions that,
individually and collectively, could result in a liquidity issue, considering the
Group’s current projected cash and facilities and the outcome of their reverse
stress testing.
We considered whether the going concern disclosure in Note 1 to the
Financial Statements gives a full and accurate description of the Directors’
assessment of going concern.
Accordingly, based on those procedures, we found the Directors’ use of the
going concern basis of accounting without any material uncertainty for the
Group and Parent Company to be acceptable. However, as we cannot predict
all future events or conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the above conclusions are not a guarantee that the
Group or the Parent Company will continue in operation.
Our conclusions
—
We consider that the Directors’ use of the going
concern basis of accounting in the preparation of the
Financial Statements is appropriate;
—
We have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty
related to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s
or Parent Company’s ability to continue as a going
concern for the going concern period;
—
We have nothing material to add or draw attention to
in relation to the Directors’ Statement in Note 1 to the
Financial Statements on the use of the going concern
basis of accounting with no material uncertainties that
may cast significant doubt over the Group and Parent
Company’s use of that basis for the going concern
period, and we found the going concern disclosure
in Note 1 to be acceptable; and
—
The related statement under the Listing Rules set out
on page 57 is materially consistent with the Financial
Statements and our audit knowledge.
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
104
Financial Statements
Financial Statements
Disclosures of emerging and principal risks and longer-term viability
Our responsibility
We are required to perform procedures to identify whether there
is a material inconsistency between the Directors’ disclosures in
respect of emerging and principal risks and the viability statement,
and the Financial Statements and our audit knowledge.
Based on those procedures, we have nothing material to add
or draw attention to in relation to:
—
The Directors’ confirmation within the viability statement on
page 57 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
—
The Principal Risks disclosures describing these risks and how
emerging risks are identified and explaining how they are being
managed and mitigated; and
—
The Directors’ explanation in the viability statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that period
to be appropriate, and their statement as to whether they have
a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or
assumptions.
We are also required to review the viability statement set out
on page 57 under the Listing Rules.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our Financial Statements
audit. As we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were
made, the absence of anything to report on these statements
is not a guarantee as to the Group’s and Parent Company’s
longer-term viability.
Our reporting
We have nothing material to add or draw attention to in
relation to these disclosures.
We have concluded that these disclosures are
materially consistent with the Financial Statements and
our audit knowledge.
Haleon
Annual Report and Form 20-F 2024
105
Independent auditor’s report to the members of Haleon plc
4. Key Audit Matters
What we mean
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the Financial Statements
and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which
had the greatest effect on:
—
The overall audit strategy;
—
The allocation of resources in the audit; and
—
Directing the efforts of the engagement team.
We include below the Key Audit Matters in decreasing order of audit significance together with our key audit procedures to address
those matters and our results from those procedures (unchanged from FY23). These matters were addressed, and our results are
based on procedures undertaken, for the purpose of our audit of the Financial Statements as a whole. We do not provide a separate
opinion on these matters.
4.1 Recoverability of indefinite life brands (Group)
Financial Statement Elements
Our assessment of risk vs FY23
Our results
FY24
FY23
Intangible assets –
Indefinite life brands
£17,623m
£18,073m
Intangible assets – Impairment
£135m
£184m
Our assessment is that the risk is similar to FY23.
Preparation-H remains as the brand most sensitive
to possible change in the key assumptions.
Our assessment is that the risk is similar to FY23.
Preparation-H remains as the brand most sensitive
to possible change in the key assumptions.
FY24:
Acceptable
FY23:
Acceptable
Description of the Key Audit Matter
Forecast-based assessment
Indefinite life brands are impaired when their carrying amount
exceeds their recoverable amount. There is inherent uncertainty
with regard to assumptions and estimates involved in the Group’s
forecast-based assessment of the recoverable amount of indefinite
life brands. In particular, there is significant auditor judgement
involved in evaluating the terminal growth rate and discount rate used
in the analysis of the recoverable amount of the indefinite life brands.
The indefinite life brands most at risk of material misstatement
were identified using sensitivity analysis on key assumptions and
a critical assessment of potential triggering events that could be
indicative of an impairment in the carrying value of the brands.
An impairment charge of £184m was recognised during the prior
year, largely in relation to the impairment of the ChapStick brand
upon transfer to held-for-sale of £170m, with an impairment
charge of £135m recognised during the current year in relation
to the impairment of the Nexium brand. We identified that the
indefinite life brand most sensitive to possible change in key
assumptions used in the valuation models is Preparation H, for
which the carrying value is £1,108m as at 31 December 2024.
The effect of these matters is that, as part of our risk assessment,
we determined that the evaluation of the recoverability of the
carrying value of Preparation-H has a high degree of estimation
uncertainty with a potential range of reasonable outcomes
greater than our materiality for the Financial Statements as a
whole. The Financial Statements (Note 14) disclose the
sensitivity estimated by the Group for this brand.
Our response to the risk
Our procedures to address the risk included:
—
Control design and operation:
Evaluating the design and testing the
operating effectiveness of certain internal controls within the indefinite
life brands impairment testing process, including controls related to the
development of the terminal growth rate and discount rate;
—
Sensitivity analysis:
Performing sensitivity analysis on the terminal
growth rate and discount rate to assess their impact on the Group’s
determination that the fair value less cost to sell (“FVLCTS”) exceeds
the carrying value;
—
Valuation expertise:
Involving our own valuation professional with
specialised skills and knowledge, who assisted in independently
developing a range of terminal growth rate and discount rate using
publicly available market data for comparable companies and
comparing these rates to those utilised by the Group to assess their
reasonableness;
—
Historical comparison:
Challenging projected revenue by comparing
historical projections to actual results to assess the Group’s ability to
accurately forecast;
—
Benchmarking and assessing assumptions:
Assessing and challenging
revenue growth rate against externally derived publicly available data,
including broker and analyst reports, industry reports, media reports,
macro-economic assumptions, academic and scientific studies, and
regulatory changes; and
—
Assessing transparency:
Assessing whether the Group’s disclosures
detail the critical estimates and sensitivities including any impact of
reasonably possible changes regarding the impairment testing of
indefinite life brands.
Communications with Haleon plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
—
Our approach to the audit of indefinite life brands, including details of our planned substantive procedures and extent of our controls reliance;
—
Our conclusions on the appropriateness of the Group’s impairment assessment, including assumptions used by the Group in their
FVLCTS based assessment to calculate the recoverable amount of indefinite life brands and whether the terminal growth rate and
discount rate used by the Group were reasonable; and
—
The adequacy of disclosures, particularly as it relates to the critical estimates and sensitivities with regard to the impairment testing.
Areas of particular auditor judgement
The evaluation of the assumptions used by the Group in the analysis of the recoverable amount of indefinite life brands is an area requiring
significant auditor judgement. The assumptions are the terminal growth rate and discount rate.
Our results
We found the indefinite life brands balance, and the related impairment charge, to be acceptable.
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
106
Financial Statements
Financial Statements
Further information in the Annual Report and Accounts:
See the Audit & Risk Committee Report on page 72 for details on how the
Audit & Risk Committee considered recoverable amount of indefinite life brands as an area of significant attention, Note 3 for the
accounting policy on indefinite life brands, and Note 14 for the financial disclosures.
4.2 Recoverability of the Company’s investment in subsidiaries (Parent Company only)
Financial Statement Elements
Our assessment of risk vs FY23
Our results
FY24
FY23
Investment in Subsidiaries
£22,336m
£22,266m
Our assessment is that the risk is similar to FY23.
There have been no material changes to the
Company’s investment in subsidiaries
during the year.
FY24:
Acceptable
FY23:
Acceptable
Description of the Key Audit Matter
Low risk, high value
The carrying amount of the Company’s investment in subsidiaries
represents 93.7% (FY23: 99.9%) of the Company’s total assets.
We do not consider the carrying amounts of these investments to
be at a high risk of significant misstatement, or to be subject to a
significant level of judgement. However, due to their materiality in
context of the Parent Company accounts, this is considered to be
the area with the greatest effect on our overall audit strategy and
allocation of resources in planning and completing our audit of
the Parent Company.
Our response to the risk
We performed a substantive approach rather than seeking to rely on
any of the company’s controls because the nature of the balance is
such that we would expect to obtain audit evidence primarily through
the detailed procedures described below.
Our procedures to address the risk included:
—
Tests of detail:
Comparing the carrying amount of 100% of investments
with the relevant subsidiary’s draft balance sheet to identify whether
their net assets, being an approximation of the minimum recoverable
amount, were in excess of their carrying amount and assessing whether
those subsidiaries have historically been profit making;
—
Comparing valuations:
Comparing the carrying amount of the
Company’s investment in subsidiaries with the expected value of the
business based on the net assets of the Group, as well as to the market
capitalisation; and
—
Indicators:
Evaluating the considerations of indicators of impairment
of the Parent Company’s direct investments.
Communications with Haleon plc’s Audit & Risk Committee
Our discussions with and reporting to the Audit & Risk Committee included:
—
Our approach to the audit of the recoverability of the parent company’s investments in subsidiaries, including the planned substantive
procedures; and
—
An assessment of indicators of impairment from the conclusion reached in the Group impairment workings.
Our results
We found the conclusion that there is no impairment of the investment in subsidiaries to be acceptable.
Further information in the Annual Report and Accounts:
See Note 2 of the Parent Company Financial Statements for the accounting
policy on investments in subsidiaries and Note 5 of the Parent Company Financial Statements for the financial disclosures.
5. Our ability to detect irregularities, and our response
Fraud – identifying and responding to risks of material misstatement due to fraud
Fraud risk assessment
To identify risks of material misstatement due to fraud (fraud risks) we assessed events or
conditions that could indicate an incentive or pressure to commit fraud, or provide an opportunity
to commit fraud. Our risk assessment procedures included:
—
Inquiring of Directors, the Audit & Risk Committee, internal audit and inspection of policy
documentation as to the Group’s high-level policies and procedures to prevent and detect
fraud, including the internal audit function, and the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any actual, suspected or alleged fraud;
—
Reading Board and Audit & Risk Committee minutes;
—
Considering remuneration and incentive schemes and performance targets for senior
management;
—
Using analytical procedures to identify unusual or unexpected relationships; and
—
Using our own forensic professionals with specialised skills and knowledge to assist us
in identifying the fraud risks based on discussions of the circumstances of the Group.
Risk communications
We communicated identified fraud risks throughout the audit team and remained alert to any
indications of fraud throughout the audit. This included communication from the Group to
component audit teams of relevant fraud risks identified at the Group level and requests to
component audit teams to report to the Group auditor any instances of fraud that could give
rise to a material misstatement at the Group level.
Haleon
Annual Report and Form 20-F 2024
107
Independent auditor’s report to the members of Haleon plc
Fraud risks
As required by auditing standards, and taking into account possible pressures to meet profit
targets, we performed procedures to address the risk of management override of controls,
in particular the risk that Group and component management may be in a position to make
inappropriate accounting entries and the risk of bias in accounting estimates. On this audit
we do not believe there is a fraud risk related to revenue recognition as the revenue model is
non-complex with limited estimation or manual intervention. Revenue is disaggregated
between a significant number of components and remuneration targets are based on Group
performance rather than component performance.
We did not identify any additional fraud risks.
Procedures to address
fraud risks
In determining the audit procedures, we have taken into account the results of our evaluation
and testing of the operating effectiveness of the Group-wide fraud risk management controls.
We also performed the following:
—
Identifying journal entries to test for all in-scope components based on risk criteria and
comparing the identified entries to supporting documentation. These included journal entries
posted to seldom used accounts, journal entries posted by a user who only posted few entries
for the fiscal year, journal entries containing a pre-defined list of keywords and those posted
with an unusual account combination; and
—
Assessing whether the judgements made in making accounting estimates are indicative of a
potential bias.
Laws and regulations – identifying and responding to risks of material misstatement relating to compliance
with laws and regulations
Laws and regulations
risk assessment
We identified areas of laws and regulations that could reasonably be expected to have a
material effect on the Financial Statements from our general commercial and sector experience,
through discussion with the Directors and other management (as required by the auditing
standards), from inspection of the Group’s regulatory and legal correspondence and discussion
with the Directors and other management the policies and procedures regarding compliance
with laws and regulations.
Risk communications
We communicated identified laws and regulations throughout our team and remained alert to any
indications of non-compliance throughout the audit. This included communication from the Group
to in-scope component audit teams of relevant laws and regulations identified at a Group level,
and requested for in-scope component auditors to report any instances of non-compliance with
laws and regulations that could give rise to a material misstatement at a Group level.
Direct laws context
and link to audit
The potential effect of these laws and regulations on the Financial Statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly affect the Financial Statements
including financial reporting legislation (including related companies’ legislation), distributable
profits legislation and taxation legislation. We assessed the extent of compliance with these laws
and regulations as part of our procedures on the related Financial Statement items.
Most significant indirect
law/regulation areas
Secondly, the Group is subject to many other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the Financial
Statements, for instance through the imposition of fines or litigation. We identified the following
areas as those most likely to have such an effect:
—
Competition legislation (reflecting the Group’s involvement in a number of ongoing
investigations by national competition authorities);
—
Employment legislation (reflecting the Group’s significant and geographically diverse work force);
—
Health and safety regulation (reflecting the nature of the Group’s production and
distribution processes);
—
Consumer product law such as product safety and product claims (reflecting the nature of
the Group’s diverse product base);
—
Fraud, corruption and bribery legislation, including the Foreign Corrupt Practices Act and UK
Bribery act (reflecting the Group’s global operations, including higher risk jurisdictions);
—
Sanctions (reflecting the Group’s global operations, including higher risk jurisdictions);
—
Contract legislation (reflecting the Group’s extensive use of trademarks, copyright and patents);
—
Data privacy (requirements from existing data privacy laws); and
—
Environmental regulation (reflecting nature of the Group’s production and distribution processes).
Auditing standards limit the required audit procedures to identify non-compliance with these
laws and regulations to enquiry of the Directors and other senior management, and inspection of
regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is
not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
108
Financial Statements
Financial Statements
Context
Context of the ability of
the audit to detect fraud or
breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have
detected some material misstatements in the Financial Statements, even though we have properly
planned and performed our audit in accordance with auditing standards. For example, the further
removed non-compliance with laws and regulations is from the events and transactions reflected
in the Financial Statements, the less likely the inherently limited procedures required by auditing
standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
6. Our determination of materiality
The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative
considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in evaluating
th1ffect of misstatements, both individually and in the aggregate, on the Financial Statements as a whole.
£110m
(FY23: £100m)
Materiality for the
Group Financial Statements
as a whole
What we mean
A quantitative reference for the purpose of planning and performing our audit.
Basis for determining materiality and judgements applied
Materiality for the Group Financial Statements as a whole was set at £110m (FY23: £100m).
Consistent with FY23, materiality was determined with reference to a benchmark of normalised
Group profit before taxation from continuing operations (“PBTCO”). We adjusted for these items
because they do not represent the normal, continuing operations of the Group. The items we
adjusted for were certain restructuring costs of £202m (FY23: £147m), Nexium brand impairment
of £135m and gain on disposal of the Haleon’s Non-US Smokers Health business (£122m).
In setting Group materiality at planning we determined materiality using the forecast normalised
PBTCO of £2,125m (FY23: £2,067m). This represents 5.2% (2023: 4.8%) of the final Group
normalised PBTCO value. We considered the materiality amount for the Financial Statements as a
whole and concluded that it remained appropriate.
We have inspected analyst consensus data and other investor commentary to identify what are
considered to be key indicators of performance, and concluded normalised PBTCO to be the basis
for earnings, and therefore the primary focus of a reasonable investor. We have inspected analyst
consensus data and other investor commentary for indicators of alternate significant drivers of
economic decisions. No revisions to our calculation methodology resulted therefrom.
Materiality for the Parent Company Financial Statements as a whole was set at £100m
(FY23: £97m), determined with reference to a benchmark of Parent Company total assets,
of which it represents 0.4% (FY23: 0.4%).
£82.5m
(FY23: £75m)
Performance materiality
What we mean
Our procedures on individual account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances add up to a material
amount across the Financial Statements as a whole.
Basis for determining performance materiality and judgements applied
We have considered performance materiality at a level of 75% (FY23: 75%) of materiality for
Haleon plc’s Group Financial Statements as a whole to be appropriate.
The Parent Company performance materiality was set at £75m (FY23: £74m), which equates to
75% (FY23: 75%) of materiality for the Parent Company Financial Statements as a whole.
We applied this percentage in our determination of performance materiality because although
we did identify specific IT findings during the FY23 audit, the majority of factors did not indicate
an elevated level of risk.
Haleon
Annual Report and Form 20-F 2024
109
Independent auditor’s report to the members of Haleon plc
£5.5m
(FY23: £5m)
Audit misstatement
posting threshold
What we mean
This is the amount below which identified misstatements are considered to be clearly trivial from a
quantitative point of view. We may become aware of misstatements below this threshold which could
alter the nature, timing and scope of our audit procedures, for example if we identify smaller
misstatements which are indicators of fraud.
This is also the amount above which all misstatements identified are communicated to Haleon plc’s
Audit & Risk Committee.
Basis for determining the audit misstatement posting threshold and
judgements applied
We set our audit misstatement posting threshold at 5% (FY23: 5%) of our materiality for the Group
Financial Statements. We also report to the Audit & Risk Committee any other identified misstatements
that warrant reporting on qualitative grounds.
The overall materiality for the Group Financial Statements of £110m (FY23: £100m) compares as follows to the main Financial
Statement caption amounts:
Total Group revenue
Group profit before tax
Total Group assets
FY24
FY23
FY24
FY23
FY24
FY23
Financial Statement caption
£11,233m
£11,302m
£1,910m
£1,628m
£34,315m
£34,055m
Group Materiality as % of caption
1.0%
0.9%
5.8%
6.1
0.3%
0.3%
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
110
Financial Statements
Financial Statements
7. The scope of our audit
Group scope
What we mean
How the Group auditor determined the procedures to be performed across the Group.
This year, we applied the revised group auditing standard in our audit of the Consolidated Financial
Statements. The revised standard changes how an auditor approaches the identification of components,
and how the audit procedures are planned and executed across components.
In particular, the definition of a component has changed, shifting the focus from how the entity prepares
financial information to how we, as the group auditor, plan to perform audit procedures to address
group risks of material misstatement. Similarly, the group auditor has an increased role in designing the
audit procedures as well as making decisions on where these procedures are performed (centrally and/
or at component level) and how these procedures are executed and supervised. As a result, we assess
scoping and coverage in a different way and comparisons to prior period coverage figures are not
meaningful. In this report we provide an indication of scope coverage on the new basis.
We performed risk assessment procedures to determine which of the Group’s components are likely
to include risks of material misstatement to the Group Financial Statements and which procedures to
perform at these components to address those risks.
In total, we identified 208 components, having considered the Group’s geographical locations and
operational structure.
Of those, we identified 1 quantitatively significant component which contained the largest percentages
of both total revenue and total assets of the Group, for which we performed audit procedures.
Additionally, having considered qualitative and quantitative factors, we selected 17 components with
accounts contributing to the specific risks of material misstatement of the Group Financial Statements.
The below summarises where we performed audit procedures:
Component type
Number of components where
audit procedures were performed
Range of
materiality applied
Quantitatively significant components
1
£88m
Other components
17
£12m – £56m
Total
18
We involved component auditors in performing the audit work on 18 components. We performed audit
procedures on the items excluded from the normalised Group profit before tax used as the benchmark for
our materiality. We approved the component materialities having regard to the mix of size and risk profile
of the Group across the components. The Group auditor performed the audit of the Parent Company.
The Group also operates shared service centres in Poland, Malaysia, Costa Rica and India, which are
relevant to our audit and perform accounting and reporting activities. Together, these shared service
centres process a substantial portion of the Group’s transactions over purchases, revenue, payroll and
journal entries. The outputs relate to financial information of the reporting components they service, and
therefore they are not separate reporting components. Each service centre was subject to specified
risk-focused audit procedures, predominantly the testing of transaction processing operated from
the Group’s shared service centres.
Our audit procedures covered 63% of Group revenue, 85% of Group total assets and 68% of total
profits and losses that make up Group profit before taxation. For the remaining components for which
we performed no audit procedures, no component represented more than 2% of Group total revenue,
Group profit before tax or Group total assets. We performed analysis at an aggregated Group level to
re-examine our assessment that there is not a reasonable possibility of a material misstatement in these
components. In particular, we matched individual sales orders, to goods delivery documents and
invoices to inform our assessment of whether there was a reasonable possibility of a material
misstatement in the remaining revenue.
Impact of controls on our group audit
We identified 10 key finance IT systems as being relevant to our Group audit, which included the
Enterprise Resource Planning (“ERP”) system used across the majority of components of the Group to
record underlying transactions, and the Group’s consolidation system. These IT systems are primarily
managed from the centralised IT function in Haleon’s shared service centres. We centrally assessed the
design and operating effectiveness of the general IT controls and key automated controls related to
financial reporting of IT systems, this contributed to our risk assessment.
Taking into account our assessment of the most effective audit approach, our knowledge of the general
IT control environment, and the timing of remediation activities during the year under audit, we planned
and performed a substantive audit when determining the extent, timing, and nature of our procedures,
except for reliance on controls to support certain key reports, including in relation to journals and inventory.
Haleon
Annual Report and Form 20-F 2024
111
Independent auditor’s report to the members of Haleon plc
Group auditor
oversight
What we mean
The extent of the Group auditor’s involvement in work performed by component auditors.
As part of establishing the overall Group audit strategy and plan, we conducted the risk assessment and
planning discussion meetings with component auditors to discuss Group audit risks relevant to the components.
Instructions
We instructed component auditors as to the areas to be covered, including the relevant risks detailed
above and the information to be reported back.
Virtual meetings and calls
We held regular virtual meetings with the component auditors in-scope for Group reporting.
These meetings were held to understand the business, any updates to the risk assessment and any
issues and findings. The findings reported to us were discussed in more detail with component
auditors and any further work required by us was then performed by the component auditors.
Site visits
We visited 5 (FY23: 5) component auditors and 4 (FY23: 4) shared service centre auditors in the below
locations to assess the audit risks and strategy:
—
Component Auditors: United States, Puerto Rico, Canada, China and Germany
(FY23: United States, China Switzerland, Italy and Japan); and
—
Shared Service Centres (in line with FY23): Poland, Malaysia, Costa Rica and India.
At these site visits and meetings, the results of the planning procedures and further audit procedures
communicated to us were discussed in more detail, and any further work required by us was then
performed by the component auditors.
Global conference
We hosted a virtual conference in June 2024. This conference emphasised key areas of the Group audit
instructions and allowed for the sharing of risk assessment considerations and Group updates. It helped
us to enhance our understanding of the component auditors’ perspective on the overall audit approach
and improve two-way communication. The conference covered key Group developments, the origins
of risk and IT audit planning.
Inspection of work papers
We inspected the work performed by the component auditors for the purpose of the Group audit and
evaluated the appropriateness of conclusions drawn from the audit evidence obtained and consistencies
between communicated findings and work performed, with a particular focus on journal entries and
revenue testing procedures performed.
8. Other information in the Annual Report
The Directors are responsible for the other information presented in the Annual Report together with the Financial Statements.
Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance conclusion thereon.
All Other Information
Our responsibility
Our responsibility is to read the other information and, in doing so, consider whether, based on our
Financial Statements audit work, the information therein is materially misstated or inconsistent with
the Financial Statements or our audit knowledge.
Our reporting
Based solely on that work we
have not identified material
misstatements or inconsistencies
in the other information.
Strategic Report and Directors’ Report
Our responsibility and reporting
Based solely on our work on the other information described above we report to you as follows:
—
We have not identified material misstatements in the Strategic Report and the Directors’ Report;
—
In our opinion the information given in those reports for the financial year is consistent with the Financial Statements; and
—
In our opinion those Reports have been prepared in accordance with the Companies Act 2006.
Directors’ Remuneration Report
Our responsibility
We are required to form an opinion as to whether the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the Companies Act 2006.
Our reporting
In our opinion the part of the
Directors’ Remuneration Report
to be audited has been properly
prepared in accordance with the
Companies Act 2006.
Independent auditor’s report
to the members of Haleon plc
continued
Haleon
Annual Report and Form 20-F 2024
112
Financial Statements
Financial Statements
Corporate governance disclosures
Our responsibility
We are required to perform procedures to identify whether there is a material inconsistency
between the Financial Statements and our audit knowledge, and:
—
The Directors’ statement that they consider that the Annual Report and Financial Statements
taken as a whole is fair, balanced and understandable, and provides the information necessary
for shareholders to assess the Group’s position and performance, business model and strategy;
—
The section of the Annual Report describing the work of the Audit & Risk Committee, including
the significant issues that the Audit & Risk Committee considered in relation to the Financial
Statements, and how these issues were addressed; and
—
The section of the Annual Report that describes the review of the effectiveness of the Group’s
risk management and internal control systems.
Our reporting
Based on those procedures, we
have concluded that each of these
disclosures is materially consistent
with the Financial Statements and
our audit knowledge.
We are also required to review the part of the Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report
in this respect.
Other matters on which we are required to report by exception
Our responsibility
Under the Companies Act 2006, we are required to report to you if, in our opinion:
—
Adequate accounting records have not been kept by the Parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
—
The Parent Company Financial Statements and the part of the Directors’ Remuneration Report
to be audited are not in agreement with the accounting records and returns; or
—
Certain disclosures of Directors’ remuneration specified by law are not made; or
—
We have not received all the information and explanations we require for our audit.
Our reporting
We have nothing to report
in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 100, the Directors are responsible for: the preparation of the Financial
Statements including being satisfied that they give a true and fair view. The Directors are also responsible for such internal control
as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group
or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an Auditor’s Report. Reasonable assurance is a high level of
assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Statements.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities
.
The Company is required to include these Financial Statements in an annual financial report prepared under Disclosure Guidance and
Transparency Rule 4.1.17R and 4.1.18R. This auditor’s Report provides no assurance over whether the annual financial report has been
prepared in accordance with those requirements.
10. The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to
them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for
the opinions we have formed.
Nicholas Frost (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountant
15 Canada Square
London, E14 5GL
20 March 2025
Haleon
Annual Report and Form 20-F 2024
113
Independent auditor’s report to the members of Haleon plc
Report of independent registered
public accounting firm
To the Shareholders and Board of Directors
Haleon plc:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Haleon plc and subsidiaries (“the Company”) as of 31 December 2024
and 2023, the related Consolidated Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity, and
Cash Flow Statement for each of the years in the two-year period ended 31 December 2024 and the related notes (collectively,
“the Consolidated Financial Statements”). We also have audited the Company’s internal control over financial reporting as of
31 December 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the financial position
of the Company as of 31 December 2024 and 2023, and the results of its operations and its cash flows for each of the years in the
two-year period ended 31 December 2024, in conformity with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of 31 December 2024 based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these Consolidated Financial Statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying management’s report on internal control over financial reporting. Our responsibility is to express an opinion on the
Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the Consolidated Financial Statements included performing procedures to assess the risks of material misstatement
of the Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial
Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the Consolidated Financial Statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits
also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of Financial Statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Financial
Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the Financial Statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Haleon
Annual Report and Form 20-F 2024
114
Financial Statements
Financial Statements
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the Consolidated Financial
Statements that was communicated or required to be communicated to the Audit & Risk Committee and that: (1) relates to accounts
or disclosures that are material to the Consolidated Financial Statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the Consolidated Financial
Statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the recoverable amount for the Preparation H intangible asset
As discussed in Note 14 to the Consolidated Financial Statements, as of 31 December 2024, the Company has a £1,108m intangible
asset related to its Preparation-H indefinite life brand. As discussed in Note 3, the Company performs impairment testing on an
annual basis and whenever events or changes in circumstances indicate that a brand’s carrying value may exceed its recoverable
amount. The recoverable amount utilised in the impairment test is estimated using a fair value less costs to sell model, which relies
on certain assumptions and estimates. Key assumptions and estimates used by management in determining the recoverable
amounts include the terminal growth rate and discount rate.
We identified the assessment of the recoverable amount for the Preparation-H intangible asset as a critical audit matter. It required
a high degree of auditor judgment, including the involvement of valuation specialists with specialised skills and knowledge, to
evaluate the significant assumptions, specifically terminal growth rate and discount rate, used to estimate the recoverable amount
of the brand. We performed a sensitivity analysis to identify these significant assumptions. Minor changes to the assumptions used
could have had a significant effect on the Company’s determination of the recoverable amount.
The following are the primary procedures we performed to address this critical audit matter:
—
Evaluated the design and tested operating effectiveness of certain internal controls related to the indefinite life brands
impairment process. This included controls over the development of the terminal growth rate and discount rate;
—
Challenged the Company’s terminal growth rate by comparing to publicly available data, including long-term inflation
forecasts, analyst reports and other third-party sources;
—
Performed sensitivity analysis on the terminal growth rate and discount rate to assess their impact on the Company’s
determination of the fair value relative to the carrying value; and
—
Involved a valuation professional with specialised skills and knowledge who assisted in independently developing a range
of discount rates and terminal growth rates using publicly available market data for comparable companies and comparing
these rates with the rates used by the Company.
/s/ KPMG LLP
We have served as the Company’s auditor since 2023.
London, United Kingdom
20 March 2025
Haleon
Annual Report and Form 20-F 2024
115
Report of independent registered public accounting firm
Consolidated income statement
for the year ended
Notes
31 December
2024
£m
31 December
2023
£m
31 December
2022
£m
Revenue
4
Cost of sales
(4,409 )
(4,555 )
(4,281 )
Gross profit
Selling, general and administration
(4,452 )
(4,413 )
(4,483 )
Research and development
(298 )
(311 )
(300 )
Other operating income/(expense)
5
(27 )
Operating profit
6
Finance income
8
Finance expense
8
(384 )
(402 )
(258 )
Net finance costs
(302 )
(368 )
(207 )
Net monetary gain arising from hyperinflationary economies
1
Profit before tax
Income tax
9
(435 )
(517 )
(499 )
Profit after tax for the year
Profit attributable to shareholders of the Group
Profit attributable to non-controlling interests
Basic earnings per share (pence)
11
Diluted earnings per share (pence)
11
1
IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ has been applied effective 1 January 2024.
Haleon
Annual Report and Form 20-F 2024
116
Financial Statements
Consolidated statement of comprehensive income
for the year ended
Notes
31 December
2024
£m
31 December
2023
£m
31 December
2022
£m
Profit after tax for the year
Other comprehensive (expenses)/income for the year
Items that may be subsequently reclassified to the income statement:
Exchange movements on overseas net assets
23
(132 )
(420 )
Exchange movements on overseas net assets of non-controlling interests
23
(2 )
(7 )
(10 )
Fair value movements on cash flow hedges
25
(1 )
Reclassification of cash flow hedges to the income statement
25
(33 )
(23 )
(18 )
Related tax on items that may be subsequently reclassified to the income statement
1
9
(44 )
Total
(160 )
(438 )
Items that will not be reclassified to the income statement:
Remeasurement gains on defined benefit plan
20
Related tax on items that will not be reclassified to the income statement
9
(7 )
(29 )
Total
Other comprehensive (expenses)/income, net of tax for the year
(148 )
(432 )
Total comprehensive income, net of tax for the year
Total comprehensive income for the year attributable to:
Shareholders of the Group
Non-controlling interests
1
Includes tax on fair value movements on cash flow hedges of £nil (2023: £(2 )m), netted off by tax on reclassification of cash flow hedges to the income statement of £8 m (2023: £6 m).
Haleon
Annual Report and Form 20-F 2024
117
Financial Statements
Consolidated statement of comprehensive income
Consolidated balance sheet
as at
Notes
31 December
2024
£m
31 December
2023
£m
Non-current assets
Property, plant and equipment
12
Right of use assets
13
Intangible assets
14
Other investments
27
Deferred tax assets
9
Post-employment benefit assets
20
Derivative financial instruments
25
Other non-current assets
16
Total non-current assets
Current assets
Inventories
15
Trade and other receivables
16
Cash and cash equivalents
17
Derivative financial instruments
25
Current tax receivables
Assets held for sale
28
Total current assets
Total assets
Current liabilities
Short-term borrowings
19
(1,487 )
(656 )
Trade and other payables
18
(3,705 )
(3,526 )
Other financial liability
27
(177 )
Derivative financial instruments
25
(90 )
(40 )
Current tax payables
(235 )
(288 )
Short-term provisions
21
(118 )
(130 )
Total current liabilities
(5,812 )
(4,640 )
Non-current liabilities
Long-term borrowings
19
(8,640 )
(8,800 )
Deferred tax liabilities
9
(3,353 )
(3,487 )
Post-employment benefit obligations
20
(131 )
(157 )
Derivative financial instruments
25
(70 )
(150 )
Long-term provisions
21
(57 )
(39 )
Other non-current liabilities
(28 )
(53 )
Total non-current liabilities
(12,279 )
(12,686 )
Total liabilities
(18,091 )
(17,326 )
Net assets
Equity
Share capital
23
Other reserves
23
(11,197 )
(10,960 )
Retained earnings
Shareholders’ equity
Non-controlling interests
Total equity
Board of Directors and signed on its behalf by:
Dawn Allen
Chief Financial Officer
Haleon
Annual Report and Form 20-F 2024
118
Financial Statements
Consolidated statement of changes in equity
for the year ended
Notes
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Shareholders’
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 January 2024
(10,960 )
Implementation of IAS 29 – Hyperinflation
At 1 January 2024 Restated
(10,960 )
Profit after tax
Other comprehensive (expenses)/income
(158 )
(146 )
(2 )
(148 )
Total comprehensive (expenses)/income
(158 )
Distributions to non-controlling interests
(79 )
(79 )
Dividends to equity shareholders
10
(570 )
(570 )
(570 )
Share-based incentive plans
26
Tax on share-based incentive plans
Shares transferred to employees
(40 )
Purchase of shares by employee benefit
trusts
(5 )
(5 )
(5 )
Purchase of treasury shares
(116 )
(116 )
(116 )
Repurchase of ordinary shares and capital
reduction
(1 )
(503 )
(503 )
(503 )
Purchase of non-controlling interests
(479 )
(479 )
(17 )
(496 )
Non-controlling interests purchase option
27
(177 )
(177 )
(177 )
At 31 December 2024
(11,197 )
Notes
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Shareholders’
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 January 2023
(10,491 )
Profit after tax
Other comprehensive (expenses)/income
(431 )
(425 )
(7 )
(432 )
Total comprehensive (expenses)/income
(431 )
Distributions to non-controlling interests
(58 )
(58 )
Dividends to equity shareholders
10
(388 )
(388 )
(388 )
Share-based incentive plans
26
Tax on share-based incentive plans
Purchase of shares by employee
benefit trusts
(38 )
(38 )
(38 )
At 31 December 2023
(10,960 )
Haleon
Annual Report and Form 20-F 2024
119
Financial Statements
Consolidated statement of changes in equity
Notes
Share
capital
£m
Share
premium
£m
Other
reserves
£m
Retained
earnings
£m
Shareholders’
equity
£m
Non-
controlling
interests
£m
Total
equity
£m
At 1 January 2022
(11,184 )
Profit after tax
Other comprehensive income/(expenses)
(10 )
Total comprehensive income
Issue of share capital of the former
ultimate holding company
Capital reduction of the former ultimate
holding company
(21,758 )
(21,758 )
(21,758 )
Transactions between the former ultimate
holding company and equity shareholders
1
Effect of change of ultimate
holding company
(1 )
(70 )
(47 )
(118 )
(118 )
Transactions with equity shareholders
1
(47 )
(47 )
(47 )
Distributions to non-controlling interests
(48 )
(48 )
Dividends to equity shareholders
1
10
(11,930 )
(11,930 )
(11,930 )
Issue of share capital
Capital reduction
(11,451 )
(10,607 )
(22,058 )
(22,058 )
Share-based incentive plans
26
At 31 December 2022
(10,491 )
1
In 2022, equity shareholders refers to GSK and Pfizer, which held equity interests of 68 % and 32 % in the Group respectively prior to the demerger as described in Note 1.
Consolidated statement of changes in equity
for the year ended
continued
Haleon
Annual Report and Form 20-F 2024
120
Financial Statements
Notes
31 December
2024
£m
31 December
2023
£m
31 December
2022
£m
Cash flows from operating activities
Profit after tax
Taxation charge
9
Net finance costs
8
Depreciation of property, plant and equipment and right of use assets
12, 13
Amortisation of intangible assets
14
Impairment and assets written off, net of reversals
4
(Gain)/Loss on sale of intangible assets, property, plant and equipment
(7 )
(30 )
Gain on sale of business
27
(121 )
Share-based incentive plan expense
26
Other non-cash movements
(15 )
(11 )
Increase/(decrease) in pension and other provisions
(43 )
Changes in working capital:
Decrease/(increase) in inventories
(131 )
(292 )
(Increase)/decrease in trade receivables
(312 )
(85 )
Increase in trade payables
Net change in other receivables and payables
(126 )
Taxation paid
(593 )
(445 )
(324 )
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
(250 )
(234 )
(304 )
Purchase of intangible assets
(68 )
(102 )
(24 )
Proceeds from sale of intangible assets
27
Purchase of business, net of cash acquired
27
(71 )
Proceeds from sale of businesses
27
Loans to related parties
24
(9,211 )
Proceeds from settlement of amounts invested with GSK finance companies
24
Interest received
Net cash inflow/(outflow) from investing activities
(134 )
(8,784 )
Cash flows from financing activities
Payment of lease liabilities
19
(60 )
(55 )
(45 )
Interest paid
(360 )
(404 )
(163 )
Dividends paid to shareholders
10
(570 )
(388 )
(2,682 )
Purchase of non-controlling interests
27
(488 )
Distributions to non-controlling interests
(79 )
(58 )
(48 )
Contribution from parent
Repayment of borrowings
19
(562 )
(553 )
(1,518 )
Proceeds from borrowings
19
Purchase of shares by employee benefit trust
(5 )
(38 )
Purchase of treasury shares
(116 )
Share capital purchased for cancellation
23
(503 )
Other financing cash flows
(8 )
(72 )
Net cash (outflow)/inflow from financing activities
(1,537 )
(1,568 )
Increase in cash and cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts at the beginning of the year
Exchange adjustments
(79 )
(15 )
Increase in cash and cash equivalents and bank overdrafts
Cash and cash equivalents and bank overdrafts at the end of the year
Cash and cash equivalents and bank overdrafts at the end of the year comprise:
Cash and cash equivalents
17
Overdrafts
(43 )
(50 )
(73 )
Cash and cash equivalents and bank overdrafts at the end of the year
Consolidated cash flow statement
for the year ended
Haleon
Annual Report and Form 20-F 2024
121
Financial Statements
Consolidated cash flow statement
Notes to the Consolidated Financial Statements
122
Haleon
Annual Report and Form 20-F 2024
Financial Statements
General information
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 and traded 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, England, KT13 0NY.
by the International Accounting Standards Board (IASB IFRS), including interpretations issued by the IFRS Interpretations Committee
(IFRIC) and International Financial Reporting Standards as adopted by the United Kingdom (UK IFRS) (together IFRS) and the Companies
Act 2006. IFRS as adopted by the UK differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the
Until July 2022, Haleon UK Holdings (No.2) Limited (HHL2) (previously, GlaxoSmithKline Consumer Healthcare Holdings (No.2) Limited
(CHHL2)), the former ultimate holding company of the Group and the accounting predecessor, was jointly owned by GSK plc and its
subsidiaries which held the majority controlling equity interest of 68%, and Pfizer Inc. and its subsidiaries which held a non-controlling
equity interest of 32%. In July 2022, following the execution of a series of legal acts and contractual arrangements, including the spin-off
to the shareholders of GSK, the Company was established to succeed HHL2 as the new ultimate holding company of the Group, with
55% of its equity interest held by the shareholders of GSK, 32% of its equity interest held by Pfizer and approximately 13% of its equity
interest held by GSK. This corporate restructuring was contemplated and executed as one single economic event yet sequenced via
multiple legal proceedings and activities. Management concluded that the predecessor (carryover) basis of accounting is appropriate
because the corporate restructuring was instigated by GSK and its shareholders without the involvement of outside third parties or
new investors.
This set of Consolidated Financial Statements have been prepared as if the Group had been in existence throughout all the periods
presented by applying the principles of predecessor accounting in accordance with SEC Regulation C Rule 405 and IFRS although the
actual legal transaction and corporate reorganisation occurred in July 2022. There was no economic change or event impacting the
reporting entity because the business activities of the predecessor and successor remained identical and only the legal form and
Accounting convention
Statements are presented in Pound Sterling (GBP, £), the functional currency of the Company and presentation currency of the Group,
Financial period
These Consolidated Financial Statements cover the financial year from 1 January 2024 to 31 December 2024, with comparative figures
for the financial years from 1 January 2023 to 31 December 2023 and, where appropriate, from 1 January 2022 to 31 December 2022.
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 Financial
Statements have been authorised.
The Directors have performed an additional ‘reverse stress test’ to ensure the going concern assumption remains appropriate. This
incorporates the downside conditions that would cause the Group’s financial resources to be insufficient to meet its liabilities as they
fall due. The ‘reverse stress test’ shows that forecast Group revenue and profit would have to reduce significantly in order to cause this
worst-case scenario. Given the current financial strength of the Group, the combination of events required to achieve this scenario is
considered highly unlikely to occur.
At 31 December 2024, the Group had cash and cash equivalents, net of bank overdrafts of £2,207m and undrawn credit facilities of
$1.3bn and £0.9bn with initial maturity dates of September 2025 and September 2027, respectively. As a result, the Group’s
Entities over which the Group has the power to direct the relevant activities so as to affect the returns to the Group, generally through
control over the financial and operating policies from either voting or contractual rights, are accounted for as subsidiaries. Interests
acquired in entities are consolidated from the date the Group acquires control and interests sold are deconsolidated from the date
control ceases.
Where, as part of a business combination, the Group is not able to exercise control over a particular operation due to the existence of
legal or other restrictions, the associated assets and liabilities are not consolidated, and a financial asset or liability is recognised for
the economic benefit or obligation to be received under the contribution agreement. The assets and liabilities are consolidated, and the
associated financial asset or liability derecognised, on the date at which the Group is able to exercise control over these operations.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
123
Transactions and balances between subsidiaries are eliminated and no profit before tax is recognised on sales between subsidiaries
until the products are sold to customers outside the Group. Transactions with non-controlling interests are recorded directly in equity.
Deferred tax relief on unrealised intra-group profit is accounted for only to the extent that it is considered recoverable. Refer to Note
The Consolidated Financial Statements are presented in GBP, which is also the Company’s functional currency. Each entity in the Group
determines its own functional currency and items included in the financial statements of each entity are measured using that
functional currency.
Foreign currency transactions in individual Group companies are translated into functional currency using exchange rates at the date
of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets
and liabilities at the rates prevailing on the reporting period date, are recognised in the income statement except when deferred in
equity as qualifying hedges. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was measured. Non-monetary items measured in terms of historical cost in a foreign
currency are not retranslated.
In preparing the Consolidated Financial Statements, the balances in individual Group companies are translated from their functional
currency into GBP. The income statement, the cash flow statement and all other movements in assets and liabilities are translated at
average rates of exchange as a proxy for the transaction rate, or at the transaction rate itself if more appropriate. Assets and liabilities
are translated at the closing rates at the end of the reporting period.
The effect of exchange rate differences during the year on net assets of foreign operations is recorded in equity.
The Group applies hedge accounting to certain exchange differences arising between the functional currencies of a foreign operation
and the functional currency of the parent entity, regardless of whether the net investment is held directly or through an intermediate
parent. Differences arising on retranslation of a financial liability designated as a foreign currency net investment hedge are recorded in
other comprehensive income/(expenses) and accumulated in equity to the extent that the hedge is effective, which may be subsequently
reclassified to the consolidated income statement. These differences are reported within profit or loss to the extent that the hedge is
ineffective. Gains and losses on the hedging instrument accumulated in equity are reclassified to profit or loss on the disposal or partial
disposal of the foreign operation.
The principal currencies and relevant exchange rates in the key markets where the Group operates are shown below:
Average rates | Year end rates | |||||
2024 | 2023 | 2022 | 2024 | 2023 | 2022 | |
USD/£ | 1.28 | 1.24 | 1.24 | 1.25 | 1.27 | 1.20 |
Euro/£ | 1.18 | 1.15 | 1.17 | 1.20 | 1.15 | 1.13 |
CNY/£ | 9.19 | 8.81 | 8.31 | 9.15 | 9.06 | 8.31 |
Accounting for Argentina and Turkey as hyperinflationary economies
The Argentinian and Turkish economies are designated as hyperinflationary for accounting purposes. The Group has monitored the
impact of inflation on its subsidiaries in these countries and does not believe that inflation had a material impact on the Group over
the past years. As a result, application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ has been applied to the entities
whose functional currency is the Argentinian Peso or Turkish Lira effective 1 January 2024.
The application of IAS 29 includes:
—
Adjusting historical cost non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date
of initial recognition to the balance sheet date.
—
Adjusting the income statement for inflation during the reporting period.
—
Translating the income statement at the period end foreign exchange rate instead of an average rate.
—
Adjusting the income statement to reflect the impact of inflation and exchange rate movement on holding monetary assets and
liabilities in local currency.
The main effects of applying IAS 29 on the Group Consolidated Financial Statements are:
—
Opening retained earnings increased by £9m reflecting the impact of adjusting the historical cost of non-monetary assets and
liabilities for the effect of inflation from the date of their initial recognition to 1 January 2024.
—
Revenue and operating profit for the year ended 31 December 2024 increased by £37m and £10m respectively.
—
A net monetary gain arising from hyperinflationary economies of £6m was recorded in the income statement reflecting the impact
Notes to the Consolidated Financial Statements
continued
124
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Impact of climate change
In preparing these Consolidated Financial Statements we have considered the impact of climate change. The Group does not believe
that there is a material impact on the financial reporting judgements and estimates arising from climate change in the short term and
as a result the valuation of our assets and liabilities has not been significantly impacted by these risks as at 31 December 2024.
In concluding, we specifically considered the impact of climate change on the following areas:
Financial statement area | Relevant climate-related risks | Relevant ESG targets | Relevant Note for further information |
Property, plant and equipment | — Impact of extreme weather events | — Carbon reduction. | Note 12 ‘Property, plant |
| on operations and supply chain. | — Water neutrality at our | and equipment’ | |
— Carbon pricing regulations. | manufacturing sites. | ||
Goodwill and intangible brands | — Impact of extreme weather events | — Carbon reduction. | Note 14 ‘Intangible assets’ |
| on operations and supply chain. | — Recycle-ready packaging. | ||
— Reduced availability and | — Sustainably sourced and | ||
| increased price volatility of raw | deforestation-free ingredients | ||
| materials due to chronic climate | and packaging. | ||
| change. | — Reduced use of virgin | ||
— Carbon pricing regulations. | petroleum-based plastic. | ||
— Changing consumer preferences. | |||
Inventory | — Reduced availability and | — Recycle-ready packaging. | Note 15 ‘Inventories’ |
| increased price volatility of raw | — Sustainably sourced and | ||
| materials due to chronic climate | deforestation-free ingredients | ||
| change. | and packaging. | ||
— Carbon pricing regulations. | — Reduced use of virgin | ||
| petroleum-based plastic. | |||
Going concern and viability | — Damage and disruption caused | Viability assessment | |
| by extreme weather events. |
Whilst there is currently no short-term impact anticipated from climate change, the judgements and estimates of the Group will be regularly
The accounting policies adopted are the same as those which were applied for the previous financial year except as explained below
and hyperinflation accounting outlined in Note 1.
Where an accounting policy is generally applicable to a specific note to the Consolidated Financial Statements, the policy is described
within that note.
The accounting policies below have been applied throughout the Consolidated Financial Statements and apply to the Financial
Statements as a whole.
Revenue
enters into relate to sales orders containing single performance obligations for the delivery of our products.
Product revenue is recognised when control of the goods is passed to the customer. The point at which control passes is determined by
each customer arrangement, but generally occurs on delivery to the customer.
rebates and coupons). Revenue includes fixed and variable consideration.
Variable consideration arises on the sale of goods as a result of discounts and allowances given and accruals for estimated future returns
and rebates. Discounts can either be on-invoice or off-invoice whilst allowances and rebates are generally off-invoice. The discounts,
allowances and promotional rebates are recognised as a deduction from revenue at the time that the related revenue is recognised or
when the Group has committed to pay the consideration, whichever is later. Variable consideration is not included in the transaction
price until it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The methodology and assumptions used to estimate returns and rebates are monitored and adjusted regularly in light of contractual
and legal obligations, historical trends, past experience and projected market conditions. Once the uncertainty associated with the
returns and rebates is resolved, revenue is adjusted accordingly. The differences between actual amounts settled and the estimated
accrued amounts are recognised as a change in management estimate in the subsequent reporting period. The assumptions used in
estimation are based on known facts with a high level of accuracy. In addition, the Group’s promotional programmes are typically
short-term in nature resulting in lower inherent estimation uncertainty.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
125
Some contracts for the sale of consumer health products provide customers with a right to return the goods within a specified period.
A refund liability is recognised for the goods that are expected to be returned (i.e., the amount not included in the transaction price).
A right of return asset (and the corresponding adjustment to cost of sales) is also recognised for the right to recover the goods from
the customer. The Group uses the most likely amount method to estimate the variable consideration in contracts with a right to return.
The Group also provides retrospective volume rebates to certain customers once the products purchased during the period exceed the
threshold specified in the contract. A refund liability is recognised for the expected future rebates (i.e., the amount not included in the
transaction price). The Group applies the most likely amount method to estimate the variable consideration in the contract related to
The Group has elected to apply the practical expedient not to disclose the aggregate amount of transaction price allocated to performance
Research expenditure is charged to the income statement in the period in which it is incurred. Development expenditure is charged to
the income statement in the period in which it is incurred, unless it meets the requirements of IAS 38 to be capitalised as an intangible
asset and then amortised over the useful life of the developed product.
R&D expenditure comprises expenditure that is directly attributable to the research and development of new products or variants,
including the costs attributable to the generation or improvement of intellectual property and product registrations, depreciation and
In May 2023, the International Accounting Standards Board issued amendments to IAS 7 ‘Statement of Cash Flows’ and IFRS 7
‘Financial Instruments’ to clarify the characteristics of supplier finance arrangements and require additional disclosure of such
arrangements. As a result of implementing the amendments, the Group has provided additional disclosures about its supplier finance
arrangement. Please refer to Note 18.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’ will replace IAS 1 ‘Presentation of Financial Statements’ and applies for
annual reporting periods beginning on or after 1 January 2027. The new standard introduces the following key new requirements:
—
Entities are required to classify all income and expenses into five categories in the statement of profit or loss, namely the operating,
investing, financing, discontinued operations, and income tax categories. Entities are also required to present a newly defined
operating profit subtotal. Entities’ net profit will not change.
—
Management-defined performance measures (MPMs) are disclosed in a single note in the financial statements.
—
Enhanced guidance is provided on how to group information in the financial statements.
In addition, all entities are required to use operating profit subtotal as the starting point for the statement of cash flows when
presenting operating cash flows under the indirect method.
Other than noted above, the Group is still in the process of assessing the impact of the new standard, particularly with respect to the
structure of the Group’s statement of profit or loss, the statement of cash flows and the additional disclosures required for MPMs. The
Group is also assessing the impact on how information is grouped in the financial statements, including for items currently labelled as
‘other’.
All new accounting standards, amendments to accounting standards and interpretations that have been published by the IASB, and
are not effective for 31 December 2024 reporting periods, have not been early adopted by the Group. These standards, amendments
Critical accounting judgements and key sources of estimation uncertainty
In preparing the Consolidated Financial Statements, management is required to make judgements about when or how items should be
recognised in the Consolidated Financial Statements and estimates and assumptions that affect the amounts of assets, liabilities, income
and expenses reported in the Consolidated Financial Statements. Actual amounts and results could differ from those estimates.
There are no critical accounting judgements. The following is the key source of estimation uncertainty.
Indefinite life brands
Estimation of the recoverable amount of indefinite life brands requires significant estimates of the value of each brand. The Group
reviews indefinite life brands for impairment at least annually or when there is an indication that the assets may be impaired. The
recoverable amounts of indefinite life brands are estimated using the fair value less costs to sell methodology. These calculations
use management’s estimates consistent with current budgets and plans that have been formally approved, assumptions of market
participants and are based on discounted cash flow forecasts using estimated long-term growth rates. Refer to Note 14 ‘Intangible
Notes to the Consolidated Financial Statements
continued
126
Haleon
Annual Report and Form 20-F 2024
Financial Statements
—
North America.
—
Europe, Middle East, Africa and Latin America (EMEA & 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 CEO, CFO and other members of 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 on a segment basis.
geographical segment is included below:
2024 | 2023 | 2022 | |
£m | £m | £m | |
North America | 4,042 | 4,195 | 4,116 |
EMEA & LatAm | 4,631 | 4,545 | 4,270 |
APAC | 2,560 | 2,562 | 2,472 |
Group revenue | 11,233 | 11,302 | 10,858 |
Transactions between Haleon’s geographical regions are carried out at arm’s length terms in accordance with appropriate transfer
pricing rules and Organisation for Economic Cooperation and Development (OECD) principles.
Adjusted operating profit by segment
2024 | 2023 | 2022 | |
£m | £m | £m | |
Group operating profit | 2,206 | 1,996 | 1,825 |
Reconciling items between Group operating profit and Group adjusted operating profit 1 | 294 | 553 | 647 |
Total | 2,500 | 2,549 | 2,472 |
North America | 1,000 | 1,107 | 1,070 |
EMEA & LatAm | 1,054 | 1,010 | 977 |
APAC | 539 | 541 | 506 |
Corporate and other unallocated | (93) | (109) | (81) |
Total | 2,500 | 2,549 | 2,472 |
1
The reconciling items above include:
a
Net amortisation and impairment of intangible assets of £147m (2023: £224m, 2022: £172m): amortisation and impairment of intangible assets, excluding computer software and
impairment of goodwill net of reversals of impairment.
b
Restructuring costs of £214m (2023: £169m, 2022: £41m): 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 £(1)m (2023: £2m, 2022: £8m).
d
Separation and admission costs of £30m (2023: £120m, 2022: £411m): costs incurred in relation to and in connection with separation and listing of the Group as a standalone business.
e
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
127
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 market category is included below:
2024 | 2023 | 2022 | |
£m | £m | £m | |
Oral Health | 3,312 | 3,136 | 2,957 |
Vitamins, Minerals and Supplements | 1,696 | 1,640 | 1,675 |
Pain Relief | 2,564 | 2,652 | 2,551 |
Respiratory Health | 1,677 | 1,736 | 1,579 |
Digestive Health and Other | 1,984 | 2,138 | 2,096 |
Group revenue | 11,233 | 11,302 | 10,858 |
Revenue attributable to the country of domicile and foreign countries with the most significant contribution to the Group’s revenue are
included below:
2024 | 2023 | 2022 | |
£m | £m | £m | |
UK | 384 | 381 | 348 |
US & Puerto Rico | 3,616 | 3,755 | 3,692 |
China | 987 | 966 | 907 |
Rest of the World | 6,246 | 6,200 | 5,911 |
Group revenue | 11,233 | 11,302 | 10,858 |
Other segmental information
Other | |||||
EMEA & | reconciling | ||||
North America | LatAm | APAC | items | Total | |
£m | £m | £m | £m | £m | |
Year ended 31 December 2024 | |||||
Impairment charges | 8 | 5 | 1 | 193 | 207 |
Impairment reversal | — | — | — | (15) | (15) |
Year ended 31 December 2023 | |||||
Impairment charges | 3 | 5 | 2 | 190 | 200 |
Impairment reversal | — | — | — | — | — |
Year ended 31 December 2022 | |||||
Impairment charges | 2 | 7 | 1 | 133 | 143 |
Impairment reversal | — | — | — | — | — |
2024 | 2023 | 2022 | |
£m | £m | £m | |
UK | 334 | 405 | 440 |
US & Puerto Rico | 7,523 | 7,622 | 8,519 |
Rest of the World | 20,346 | 20,844 | 21,508 |
Non-current assets | 28,203 | 28,871 | 30,467 |
Notes to the Consolidated Financial Statements
continued
128
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Other operating income/(expense)
Other operating income/expense includes income and expense from all other operating activities which are not related to the ordinary
course of business of the Group, such as gains/losses from disposals and transaction-related costs.
In 2024, the Group recognised £121m gain on disposal of the Nicotine Replacement Therapy (NRT) business outside the US. Refer to
Note 27 ‘Acquisitions and disposals’ for further details about the business disposal.
In 2023, the Group recognised £10m loss on disposal of the Lamisil brand.
made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably
estimated. Advertising and promotion (A&P) expenditure is charged to the income statement as incurred. Shipment costs on
intercompany transfers are charged to cost of sales; distribution costs on sales to customers are included in selling, general and
Key expenses included in operating profit
2024 | 2023 | 2022 | |
£m | £m | £m | |
Advertising and promotion 1 | 2,157 | 2,023 | 2,026 |
Distribution costs 1 | 239 | 237 | 237 |
Separation and admission costs | 30 | 120 | 411 |
Restructuring costs | 214 | 169 | 41 |
1
Reported within selling, general and administration expense.
Separation and admission costs represent costs incurred in relation to and in connection with the separation and listing of the Group
as a standalone business in 2022. Separation and admission costs are reported within cost of sales (2024: £1m, 2023: £4m, 2022: £4m)
and the selling, general and administration expense (2024: £29m, 2023: £116m, 2022: £407m).
Restructuring costs
Restructuring costs are recognised and provided for, where appropriate, in respect of the direct expenditure of a business reorganisation
where the plans are sufficiently detailed and well advanced, and where a valid expectation to those affected has been created by either
starting to implement the restructuring plans or announcing its main features. Restructuring costs are those mainly related to specific
Board-approved restructuring programmes, including integration costs following material acquisitions, which are structural in nature
and significant in scale.
Restructuring costs include severance and other personnel costs, professional fees, impairments of assets and other related items.
Haleon may undertake restructuring programmes in response to changes in the Group’s trading environment and overall strategy or
following significant acquisitions. Costs, both cash and non-cash, of these programmes are provided for as individual elements are
approved and meet the accounting recognition criteria. As a result, charges may be incurred over a number of years following the
initiation of a major restructuring programme.
Restructuring costs in 2024 and 2023 mainly relate to business transformation activities associated with our programme to increase
productivity and agility. In 2022, restructuring costs mainly related to activities aiming to generate synergies from the integration of the
Pfizer Group’s Consumer Healthcare business into the Group’s business, following the Pfizer Transaction completed on 31 July 2019.
Refer to Note 21 ‘Provisions’ for further details about the Group’s restructuring provisions.
A breakdown of the restructuring costs is included below:
2024 | 2023 | 2022 | |
£m | £m | £m | |
Cost of sales | 123 | 26 | 19 |
Selling, general and administration, and other operating expenses | 90 | 129 | 25 |
Research and development | 1 | 14 | (3) |
Total | 214 | 169 | 41 |
2024 | 2023 | 2022 | |
£m | £m | £m | |
Cash | 146 | 168 | 39 |
Non-cash | 68 | 1 | 2 |
Total | 214 | 169 | 41 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
129
In April 2023 KPMG LLP (UK) was appointed as external auditor for the Group. In 2022, in light of UK and US rules on independence,
the Group had two external auditors KPMG LLP (US) and Deloitte LLP. KPMG LLP (US) was appointed to conduct an audit of the
Group’s financial statements under the rules and standards of the US Securities and Exchange Commission (SEC) and the US Public
Company Accounting Oversight Board (PCAOB) standards. Deloitte LLP was engaged in respect of the statutory audit of the financial
statements of the Group’s parent company and its subsidiaries in accordance with International Standards of Auditing (UK ISAs). A fee
breakdown for each firm is shown in the table below.
2024 | 2023 | 2022 | ||
£m | £m | £m | ||
KPMG LLP (UK) | Audit of Group Consolidated Financial Statements | 12 | 11 | — |
Audit of the Company’s subsidiaries | 5 | 5 | — | |
Audit services | 17 | 16 | — | |
Other services 1 | 2 | 1 | — | |
Total | 19 | 17 | — | |
KPMG LLP (US) | Audit of Group Consolidated Financial Statements | — | — | 14 |
Audit services | — | — | 14 | |
Other services 1 | — | — | 3 | |
Total | — | — | 17 | |
Deloitte LLP | Audit of Parent Company and Consolidated Financial Statements | — | — | 10 |
Audit of the Company’s subsidiaries | — | — | 5 | |
Audit services | — | — | 15 | |
Other assurance services 2 | — | — | 6 | |
Total | — | — | 21 |
1
Other services provided by KPMG relate to permissible tax compliance and advisory services £0.4m (2023: £nil), other audit-related services £1.5m (2023: £1.2m) and other services
£0.2m (2023: £nil).
2
Employees and remuneration of key management personnel
Employees
The average number of employees by individual geographical segment and the Group’s total employment costs are included below.
Average number of employees
2024 | 2023 | 2022 | |
’000 | ’000 | ’000 | |
North America | 4 | 5 | 5 |
EMEA & LatAm | 13 | 12 | 10 |
APAC | 7 | 7 | 6 |
Total | 24 | 24 | 21 |
2024 | 2023 | 2022 | |
£m | £m | £m | |
Wages and salaries 1 | 1,772 | 1,751 | 1,559 |
Social security costs | 173 | 176 | 163 |
Pensions and other post-employment costs (Note 20) | 29 | 26 | 27 |
Share-based incentive plans (Note 26) | 117 | 88 | 78 |
Severance costs from integration and restructuring activities | 79 | 108 | 8 |
Total | 2,170 | 2,149 | 1,835 |
1
Included in wages and salaries are costs in relation to defined contribution pension schemes, principally in the US and UK, of £60m (2023: £70m, 2022: £59m).
Notes to the Consolidated Financial Statements
continued
130
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Remuneration of key management personnel
Key management personnel comprises the Executive Directors and the Executive Team. The compensation of key management
personnel in respect of their services to the Group in aggregate was as follows:
Remuneration of key management personnel
2024 | 2023 | 2022 | |
£m | £m | £m | |
Wages and salaries | 22 | 19 | 18 |
Social security costs | 3 | 2 | 1 |
Defined benefit schemes | 1 | 1 | 1 |
Share-based incentive plans | 20 | 15 | 9 |
Non-executive directors fees | 2 | 2 | — |
Total | 48 | 39 | 29 |
The gain on the share awards exercised by directors in 2024 amounted to £0.1m (2023: nil, 2022: nil). This gain reflects the increase in
Net finance costs
income on other financial assets. Finance expense includes interest costs in relation to financial liabilities including interest on bonds
and lease liabilities, which represents the unwind of the discount rate applied to lease liabilities. Borrowing costs are recognised based
Net finance costs
2024 | 2023 | 2022 | |
£m | £m | £m | |
Interest income on financial assets at amortised cost: | |||
Other receivables | — | — | 38 |
Cash and cash equivalents | 65 | 25 | 18 |
Financial assets measured at fair value through profit or loss | 17 | 7 | (5) |
Net gains and losses arising from: | |||
Financial instruments mandatorily measured at fair value through profit or loss | — | (109) | 208 |
Retranslation of loans and bonds | — | 111 | (208) |
Total finance income | 82 | 34 | 51 |
Interest expense arising on: | |||
Financial liabilities at amortised cost | (389) | (409) | (274) |
Derivatives at fair value through profit or loss | — | — | 6 |
Reclassification of hedges from other comprehensive income | 22 | 23 | 18 |
Net gains and losses arising from: | |||
Financial instruments mandatorily measured at fair value through profit or loss | 11 | — | — |
Retranslation of loans and bonds | (13) | — | — |
Finance expense arising on lease liabilities | (5) | (5) | (4) |
Other finance expense | (10) | (11) | (4) |
Total finance expense | (384) | (402) | (258) |
Net finance costs | (302) | (368) | (207) |
Taxation
Income tax
Current tax payable or recoverable is based on taxable profit for the year, and any adjustments in respect of prior periods.
Taxable profit differs from profit as reported in the income statement because some items of income or expense are taxable or
deductible in different years or may never be taxable or deductible. The amount of current tax payable or receivable is the best
estimate of the amount expected to be paid to, or received from, tax authorities. It is calculated using tax rates and laws that have
been substantively enacted at the reporting date. In addition to ordinary income tax expense, total current tax includes any global
minimum top-up taxes that might be due under Pillar Two legislation.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different
taxable entities which intend to settle the current tax assets and liabilities on a net basis.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
131
Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive
income/(expense) or directly to equity, in which case the tax is recognised in other comprehensive income/(expense) or in equity.
The Group recognises provisions for uncertain tax positions when it is probable that a tax authority would not accept an uncertain
tax treatment. This is done by assuming the tax authority will examine all the amounts and would have full knowledge of all related
information when making those examinations. Uncertain tax positions are assessed and measured on an issue-by-issue basis within
the jurisdictions that we operate either using management’s estimate of the most likely outcome where the issues are binary, or the
expected value approach where the issues have a range of possible outcomes.
Where open tax matters exist, the ultimate liability for such matters may vary from the amounts provided and is dependent upon the
outcome of negotiations with the relevant tax authorities or, if necessary, litigation proceedings. At 31 December 2024, the Group had
recognised provisions of £124m in respect of such uncertain tax positions (2023: £148m, 2022: £159m). Due to the number of uncertain
tax positions held and the number of jurisdictions to which these relate, it is not practicable to give meaningful sensitivity estimates.
The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income
Tax charged to the income statement
The major components of income tax expense are:
Taxation charge/(credit) based on profits for the period
2024 | 2023 | 2022 | |
£m | £m | £m | |
Current year charge | 608 | 570 | 412 |
Charge in respect of prior periods | (62) | (31) | 25 |
Pillar Two income tax | 3 | — | — |
Total current taxation | 549 | 539 | 437 |
Total deferred taxation | (114) | (22) | 62 |
Total | 435 | 517 | 499 |
The tax charge on the Group’s profit for the year can be reconciled from the standard rate of corporation tax in the UK of 25%
(2023: 23.5%, 2022: 19%) as follows:
Reconciliation of the taxation rate on the Group’s profit
2024 | 2023 | 2022 | |
£m | £m | £m | |
Profit before tax | 1,910 | 1,628 | 1,618 |
UK statutory rate of taxation of 25% (2023: 23.5%, 2022: 19%) | 478 | 383 | 307 |
Differences in overseas taxation rates | (18) | (2) | 72 |
Benefit of substance-based tax rulings | (5) | (21) | (15) |
R&D tax credits | (6) | (6) | (3) |
Tax losses not recognised | — | — | 1 |
Permanent differences on disposals, acquisitions and transfers | (35) | 155 | — |
Items non-deductible/taxable for tax purposes | 64 | 55 | 56 |
Reassessment of prior year estimates | (50) | (65) | 5 |
Changes in tax rates | 7 | 18 | 76 |
Total tax charge | 435 | 517 | 499 |
The Group has a substantial business presence in many countries around the world. The effect of overseas tax rates represents the
tax impact on profits arising outside the UK that are then taxed at rates different to the statutory rate in the UK. In 2024, this results
in a reduction to the tax charge due to the further increase in the statutory rate of tax in the UK. This also resulted in a reduction to
the tax charge in 2023 due to the increase in the statutory rate of the UK, whereas in 2022 this impact was to increase the tax charge.
In all years, beneficial incentives offered in certain countries have reduced the overall tax charge.
The tax effect of disposals, acquisitions and transfers can vary from the accounting profit or loss that arises. The credit recorded in
2024 relates to a business divestment, whilst the 2023 charge related to the deferred tax impact of intra-group transfers.
Items non-deductible/taxable for tax purposes include irrecoverable withholding taxes, charges on controlled foreign companies,
as well as legal and transactional fees that are not deductible for tax purposes.
Notes to the Consolidated Financial Statements
continued
132
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The reassessment of prior year estimates includes settlements reached following conclusion of tax authority reviews, differences
between final tax return submissions and liabilities accrued in the financial statements and the release of prior year uncertain tax
positions. In 2023, this also included a one-off deferred tax credit of £37m.
The impact of changes in tax rates results from the revaluation of temporary differences due to a difference in applicable tax rates.
In 2024, this primarily relates to a change in the blended rate of tax that is applicable across multiple states in the United States.
In 2023, this primarily related to new Cantonal legislation substantively enacted in Switzerland that increases the applicable tax rate
from 2025, whilst in 2022 a more significant change in the blend of state tax rates impacted the Group in the US.
Future tax charges, and therefore the effective tax rate, may be affected by factors such as acquisitions, disposals, restructurings,
the location of research and development activity, tax regime reforms, agreements with tax authorities and resolution of open matters
as the Group continues to bring its tax affairs up to date around the world.
On 20 June 2023, the UK Finance (No.2) Bill 2022-23 was substantively enacted in the UK, including legislation to implement in the UK
certain parts of the OECD’s Pillar Two regime which applied to the Group for the first time for the period commencing 1 January 2024.
The primary purpose of this legislation is to introduce a global minimum tax rate of 15%, to address concerns about the tax
contributions of large multinationals.
Tax authorities around the world are responding to the new rules in a variety of ways, with examples being the introduction of
corporate income tax, amendments to statutory rates of tax, and the introduction of ‘Domestic Minimum Top Up Taxes’. The £3m Pillar
Two income tax charge recorded by the Group in 2024 (2023: £nil, 2022: £nil) primarily relates to Ireland, and is included within
differences in overseas tax rates to reflect that the applicable rate due on operations in certain jurisdictions has increased.
In addition to the amounts charged to the income statement, tax of £3m has been credited directly to equity or through
comprehensive income/(expense) (2023: £6m credit, 2022: £73m debit) of which a £1m credit (2023: £5m credit, 2022: £5m debit),
is included in current tax and a £2m credit (2023: £1m credit, 2022: £68m debit) is included in deferred tax and principally relates to
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
It is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that temporary differences or
taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax
liabilities are not recognised to the extent they arise from the initial recognition of non-tax deductible goodwill. In addition, the Group
has neither recognised nor disclosed information about deferred tax assets or liabilities relating to Pillar Two income taxes as required
by the temporary, mandatory deferred tax exception to IAS 12.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in the Group’s
assessment that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated
at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have
Deferred tax assets and liabilities comprise of:
2024 | 2023 | |
£m | £m | |
Deferred tax assets | 276 | 265 |
Deferred tax liabilities | (3,353) | (3,487) |
Total | (3,077) | (3,222) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
133
Movement in deferred tax assets and liabilities
Pensions & | |||||||
Accelerated | other post- | Other net | |||||
capital | employment | Intra-group | temporary | ||||
allowances | Intangibles | benefits | Tax losses | profit | differences | Total | |
£m | £m | £m | £m | £m | £m | £m | |
As at 1 January 2024 | (94) | (3,613) | 32 | 11 | 175 | 267 | (3,222) |
Hyperinflation adjustment | (3) | (2) | — | — | — | (1) | (6) |
Exchange adjustments | — | 19 | (1) | — | (11) | (7) | — |
Credit/(charge) to income statement | 4 | 87 | (1) | 2 | (54) | 76 | 114 |
(Charge)/credit to statement of | |||||||
comprehensive income | — | — | (7) | — | — | 9 | 2 |
Credit directly to equity | — | — | — | — | — | — | — |
Arising on business acquisitions/disposals | — | 35 | — | — | — | — | 35 |
At 31 December 2024 | (93) | (3,474) | 23 | 13 | 110 | 344 | (3,077) |
Pensions & | |||||||
Accelerated | other post- | Other net | |||||
capital | employment | Intra-group | temporary | ||||
allowances | Intangibles | benefits | Tax losses | profit | differences | Total | |
£m | £m | £m | £m | £m | £m | £m | |
As at 1 January 2023 | (90) | (3,641) | 30 | 14 | 135 | 171 | (3,381) |
Exchange adjustments | 6 | 153 | (1) | (1) | (12) | (9) | 136 |
(Charge)/credit to income statement | (10) | (125) | 6 | (2) | 52 | 101 | 22 |
(Charge)/credit to statement of | |||||||
comprehensive income | — | — | (3) | — | — | 3 | — |
Credit directly to equity | — | — | — | — | — | 1 | 1 |
At 31 December 2023 | (94) | (3,613) | 32 | 11 | 175 | 267 | (3,222) |
Provision for deferred tax liabilities of £34m (2023: £37m) has been made in respect of the taxation that would arise on the future
distribution of retained profits by certain overseas subsidiaries. Deferred tax is not provided on temporary differences of £218m
(2023: £206m) arising on unremitted profits as management can control any future reversal and does not consider such a reversal
to be probable.
The Group has recognised a deferred tax asset for trading losses of £12m (2023: £11m) on the basis of management forecasts which
demonstrate these losses should be recovered in the foreseeable future. No deferred tax asset has been recognised in respect of
gross trading losses of £195m (2023: £260m) due to the unpredictability of future profits. Included in this unrecognised amount are
US state tax losses of £127m (2023: £175m) which can only be carried forward for between 15 and 20 years. These losses expire at
various dates over the next 12 years (2023: 17 years). Other unrecognised trading losses may be carried forward indefinitely.
In addition, a deferred tax asset of £1m (2023: £nil) has been recognised for capital tax losses available for offset against future capital
receipts. The Group has not recognised a deferred tax asset for such losses with gross value of £26m (2023: £17m). Included in this
unrecognised amount are losses of £11m (2023: £17m) which expire at the end of 2025. Other unrecognised capital losses may be
when they become payable to Company’s shareholders. Final dividends are recognised when they are approved by shareholders.
The Board are proposing a final dividend for the year ended 31 December 2024 of 4.6p per ordinary share. Subject to shareholder
Notes to the Consolidated Financial Statements
continued
134
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Dividends declared and paid during the year
| 2024 | 2023 | 2022 | |||||||
Total | Total | Total | |||||||
Dividend per | dividend | Dividend per | dividend | Dividend per | dividend | ||||
Paid/payable | share (pence) | (£m) | Paid/payable | share (pence) | (£m) | Paid/payable | share (£) | (£m) | |
2024 interim dividend | 19 Sep 2024 | 2.0 | 182 | — | — | — | — | — | — |
2023 final dividend | 16 May 2024 | 4.2 | 388 | — | — | — | — | — | — |
2023 interim dividend | — | — | — | 5 Oct 2023 | 1.8 | 166 | — | — | — |
2022 final dividend | — | — | — | 27 Apr 2023 | 2.4 | 222 | — | — | — |
Pre-demerger dividends 1 | — | — | — | — | — | — | — | 11,930 | 11,930 |
1
During 2022, the Group declared and paid a series of dividends to GSK and Pfizer under the Shareholders’ Agreement valid at that time. The dividends per share for the dividends
declared and paid before the demerger activities that took place in July 2022 were paid from the former ultimate holding company of CHHL2 and were calculated based on CHHL2’s
share structure. In 2022, the Group utilised a £9,211m loan plus £37m of interest receivable from its former equity shareholders, prior to the demerger, to partially fund the
of share units in issue during the year after deducting treasury shares or shares held by employee benefit trusts (EBTs) if any.
Diluted earnings per share has been calculated after adjusting the weighted average number of shares used in the basic calculation
Earnings per share
2024 | 2023 | 2022 | |
Profit after tax attributable to equity shareholders (£m) | 1,442 | 1,049 | 1,060 |
Weighted average number of shares (million) | 9,142 | 9,235 | 9,235 |
Less: weighted average number of treasury shares and shares held by EBTs (million) 1 | (10) | (2) | — |
Basic weighted average number of shares (million) | 9,132 | 9,233 | 9,235 |
Effect of dilutive potential shares (million) | 43 | 30 | 4 |
Diluted weighted average number of shares (million) | 9,175 | 9,263 | 9,239 |
Basic earnings per share (pence) | 15.8 | 11.4 | 11.5 |
Diluted earnings per share (pence) | 15.7 | 11.3 | 11.5 |
1
The total number of shares held as at 31 December 2024 was 31.0m. The impact of these shares on the basic weighted average number of shares was only 10m because these shares
impairment losses.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in acquisition and installation of
the assets.
reviewed, and where appropriate adjusted annually. Estimated useful lives of the major categories of assets are shown below:
Freehold buildings | 20 to 50 years |
Leasehold land and buildings | Lease term or 20 to 50 years |
Plant and machinery | 10 to 20 years |
Equipment and vehicles | 3 to 10 years |
exist. If an indication of impairment exists, the recoverable amount of the asset or cash generating unit is estimated and any
impairment loss is charged to the income statement as it arises.
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset in prior years and an impairment loss reversal is
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
135
On disposal of property, plant and equipment, the cost and related accumulated depreciation and impairments are derecognised from
the Consolidated Financial Statements and the net amount, less any proceeds, is taken to the income statement.
Plant, | ||||
Land and | equipment | Assets under | ||
buildings | and vehicles | construction | Total | |
£m | £m | £m | £m | |
Cost at 1 January 2023 | 930 | 1,652 | 389 | 2,971 |
Exchange adjustments | (44) | (69) | (19) | (132) |
Additions | 1 | 1 | 230 | 232 |
Additions from business acquisitions | 24 | 14 | 22 | 60 |
Disposals and write-offs | (4) | (54) | — | (58) |
Reclassifications | 63 | 164 | (249) | (22) |
Cost at 31 December 2023 | 970 | 1,708 | 373 | 3,051 |
Hyperinflation adjustment | 3 | 6 | 4 | 13 |
Exchange adjustments | (11) | (25) | (10) | (46) |
Additions | — | — | 250 | 250 |
Additions from business acquisitions | (2) | 1 | — | (1) |
Disposals and write-offs | (2) | (32) | (3) | (37) |
Reclassifications | 54 | 231 | (276) | 9 |
Cost at 31 December 2024 | 1,012 | 1,889 | 338 | 3,239 |
Depreciation at 1 January 2023 | (313) | (888) | — | (1,201) |
Exchange adjustments | 12 | 40 | — | 52 |
Charge for the year | (33) | (119) | — | (152) |
Disposals and write-offs | 2 | 44 | — | 46 |
Reclassifications | 2 | (2) | — | — |
Depreciation at 31 December 2023 | (330) | (925) | — | (1,255) |
Hyperinflation adjustment | — | (3) | — | (3) |
Exchange adjustments | 1 | 12 | — | 13 |
Charge for the year | (34) | (138) | — | (172) |
Disposals and write-offs | 1 | 29 | — | 30 |
Reclassifications | — | (4) | — | (4) |
Depreciation at 31 December 2024 | (362) | (1,029) | — | (1,391) |
Impairment at 1 January 2023 | (3) | (6) | (4) | (13) |
Exchange adjustments | — | 1 | — | 1 |
Impairment losses | — | (4) | (3) | (7) |
Disposals and write-offs | — | 3 | — | 3 |
Reclassifications | — | — | — | — |
Impairment at 31 December 2023 | (3) | (6) | (7) | (16) |
Exchange adjustments | — | 1 | 1 | 2 |
Impairment losses | (1) | (17) | (15) | (33) |
Disposals and write-offs | 1 | 3 | 3 | 7 |
Reclassifications | — | 1 | — | 1 |
Impairment at 31 December 2024 | (3) | (18) | (18) | (39) |
Depreciation and impairment at 31 December 2023 | (333) | (931) | (7) | (1,271) |
Depreciation and impairment at 31 December 2024 | (365) | (1,047) | (18) | (1,430) |
Net book value at 31 December 2023 | 637 | 777 | 366 | 1,780 |
Net book value at 31 December 2024 | 647 | 842 | 320 | 1,809 |
Notes to the Consolidated Financial Statements
continued
136
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Reversals of impairment arise from subsequent reviews of the impaired assets where the conditions which gave rise to the original
Reclassifications include £6m for 2024 (2023: £22m, 2022: £54m) related to assets under construction that have been reclassified to
computer software in intangible assets during the year.
Impact of climate change
The impact of damage and disruption caused by extreme weather events on the useful lives of property, plant and equipment were
considered. Management undertook a modelling exercise to estimate the potential impact that extreme weather events could have on
the Group’s manufacturing sites. Management considered that the hazards with the greatest potential impact over the long-term time
horizon are riverine and flash flooding, and heatwaves. Given the geographical spread of the Group’s manufacturing sites, the prospect
of every site being impacted in any given year, or for every year, is considered remote and as a result, the level of loss potentially
arising would not be considered significant for the Group. In addition, the majority of the Group’s assets have useful lives that end
ahead of the medium- to long-term timescales expected for extreme climate events to occur. Therefore, we consider that there is no
payments to be paid over the lease term at the lease commencement date except for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low-value assets (defined as assets with an initial fair value less than approximately £10,000).
The right of use asset is initially measured at cost, being the present value of the lease payments paid or payable, plus any initial direct
costs incurred in entering into the lease and less any lease incentives received. Non-lease components are accounted for separately
from the lease components in plant and equipment leases but are not separately accounted for in land and buildings or vehicle leases.
owned property, plant and equipment. In other cases, right of use assets are depreciated over the shorter of the useful life of the asset
or the lease term. The lease term is the non-cancellable period of the lease plus any periods for which the Group is reasonably certain
Lease liabilities are initially measured at the value of the lease payments over the lease term that are not paid at the commencement
date and are usually discounted using the incremental borrowing rates of the applicable Group entity (the rate implicit in the lease is
used if it is readily determinable). Lease payments included in the lease liability include both fixed payments and in-substance fixed
payments during the term of the lease.
After initial recognition, the lease liability is recorded at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments or if the Group’s assessment of the lease term changes; any changes in the lease liability
Right of use assets
Land and | Plant and | |||
buildings | equipment | Vehicles | Total | |
£m | £m | £m | £m | |
Net book value at 1 January 2023 | 128 | — | 14 | 142 |
Exchange adjustments | (6) | — | (1) | (7) |
Additions | 39 | 1 | 13 | 53 |
Depreciation | (39) | — | (10) | (49) |
Disposals and write-offs | (17) | — | — | (17) |
Net book value at 31 December 2023 | 105 | 1 | 16 | 122 |
Hyperinflation adjustment | — | — | — | — |
Exchange adjustments | (3) | — | (1) | (4) |
Additions | 29 | — | 19 | 48 |
Depreciation | (39) | (1) | (13) | (53) |
Disposals and write-offs | (1) | — | — | (1) |
Net book value at 31 December 2024 | 91 | — | 21 | 112 |
The total cash outflow for leases amounted to £60m in 2024 (2023: £55m, 2022: £45m). The Group has lease commitments relating to
leases that have not commenced at year end of £2m (2023: £1m, 2022: £30m). Refer to Note 19 ‘Borrowings’ for further details on the
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
137
Goodwill arising on consolidation represents the excess of the fair value of the consideration transferred over the fair value of the
Group’s share of the identifiable assets and liabilities of the acquired subsidiaries at the date of acquisition. Goodwill is not subject to
amortisation but is tested annually for impairment, or more frequently where indicators of impairment exist, and is carried at cost less
any accumulated impairment losses.
For the purpose of impairment testing, assets are grouped in cash generating units (CGUs). A CGU is identified as the lowest aggregation
of assets that generate largely independent cash inflows, and which is looked at by management for monitoring and managing the business.
If the recoverable amount of the CGU is less than the carrying amount, an impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the CGU and then to the other assets of the CGU pro rata on the basis of the carrying amount of each asset
in the CGU. Any impairment loss is immediately recognised in the consolidated income statement and an impairment loss recognised for
goodwill is not subsequently reversed.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Management uses the approved three-year strategic plan and the projected cash flows for a further two-year period as the basis for
the Group CGUs’ value in use calculations.
Intangible assets are recognised when they are identifiable, the Group controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Group and the cost of the asset can be reliably measured.
Separately purchased brands are initially measured at cost, being the purchase price as at the date of acquisition. Acquired brands are
valued independently and recognised at fair value when the Group completes a business combination from third parties, where brands
have a value which is substantial and long term and where the brands either are contractual or legal in nature or can be sold separately
from the rest of the businesses acquired. The determination of the fair values of the separately identified intangibles is based, to a
considerable extent, on management’s judgement. Brands are amortised over their estimated useful lives of up to 20 years, except where
it is considered that the useful economic life is indefinite.
Indefinite life brands mainly comprise trademarks and brands for which there is no foreseeable limit to the period over which they are
expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of the brands
and the level of advertising and promotion support. These brands are in relatively similar, stable and profitable market sectors, with
similar risk profiles, and their size, diversification and market shares mean that the risk of market-related factors causing a reduction in
the lives of the brands is considered to be relatively low. The Group is not aware of any material legal, regulatory, contractual, competitive,
economic or other factors which could limit their useful lives. Accordingly, they are not amortised.
Intangible assets are stated at cost less provisions for amortisation and impairments. Licences, patents, know-how and marketing rights
separately acquired or acquired as part of a business combination are amortised over their estimated useful lives, generally not exceeding
20 years, using the straight-line basis from the time they are available for use. The estimated useful lives for determining the amortisation
charge consider patent lives, where applicable, as well as the value obtained from periods of non-exclusivity. Asset lives are reviewed
and, where appropriate, adjusted annually.
Any development costs incurred by the Group and associated with acquired licences, patents, know-how or marketing rights are written
off to the income statement when incurred.
The costs of acquiring and developing computer software for internal use and internet sites for external use are capitalised as intangible
fixed assets where the software or site supports a significant business system and the expenditure leads to the creation of an asset.
Enterprise Resource Planning (ERP) systems software is amortised over 7-10 years and other computer software over 3-5 years.
The carrying values of all non-current assets are reviewed for impairment, either on a standalone basis or as part of a larger CGU, when
there is an indication that the assets might be impaired. Additionally, intangible assets with indefinite useful lives and intangible assets
which are not yet available for use are tested for impairment annually. Any provision for impairment is charged to the income statement.
If the recoverable amount of an intangible asset is less than the carrying amount, an impairment loss is recognised in the income
statement. The recoverable amount is the higher of fair value less costs of disposal and value in use. Impairment losses are only reversed
if there has been a change in estimates used to determine recoverable amounts and only to the extent that the revised recoverable
Notes to the Consolidated Financial Statements
continued
138
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Intangible assets
Amortised | ||||||
brands, | ||||||
Indefinite life | licences | Computer | Assets under | |||
Goodwill | brands | and patents | software | construction | Total | |
£m | £m | £m | £m | £m | £m | |
Cost at 1 January 2023 | 8,396 | 19,465 | 674 | 555 | — | 29,090 |
Exchange adjustments | (82) | (689) | (11) | (10) | (1) | (793) |
Additions | 3 | — | 7 | 4 | 76 | 90 |
Disposals and write-offs | — | — | (28) | (24) | — | (52) |
Reclassifications | — | (7) | 44 | 17 | 8 | 62 |
Transfer to assets held for sale | — | (556) | (295) | — | — | (851) |
Cost at 31 December 2023 | 8,317 | 18,213 | 391 | 542 | 83 | 27,546 |
Hyperinflation adjustments | 1 | 7 | — | 3 | — | 11 |
Exchange adjustments | 17 | (80) | (2) | (3) | 1 | (67) |
Additions | — | 8 | 4 | 4 | 58 | 74 |
Disposals and write-offs | — | — | (1) | (8) | (32) | (41) |
Reclassifications | — | — | (2) | 45 | (49) | (6) |
Transfer to assets held for sale | (133) | (247) | — | — | — | (380) |
Cost at 31 December 2024 | 8,202 | 17,901 | 390 | 583 | 61 | 27,137 |
Amortisation at 1 January 2023 | — | — | (229) | (281) | — | (510) |
Exchange adjustments | — | — | 8 | 8 | — | 16 |
Charge for the period | — | — | (39) | (69) | — | (108) |
Disposals and write-offs | — | — | 28 | 21 | — | 49 |
Reclassifications | — | — | (32) | — | — | (32) |
Transfer to assets held for sale | — | — | 53 | — | — | 53 |
Amortisation at 31 December 2023 | — | — | (211) | (321) | — | (532) |
Hyperinflation adjustments | — | — | — | (2) | — | (2) |
Exchange adjustments | — | — | — | 2 | — | 2 |
Charge for the period | — | — | (24) | (75) | — | (99) |
Disposals and write-offs | — | — | — | 4 | — | 4 |
Amortisation at 31 December 2024 | — | — | (235) | (392) | — | (627) |
Impairment at 1 January 2023 | — | (132) | — | (12) | — | (144) |
Exchange adjustments | — | 6 | — | — | — | 6 |
Impairment losses | — | (184) | (1) | (1) | — | (186) |
Reversal of impairment losses | — | — | — | — | — | — |
Reclassifications | — | — | (8) | — | — | (8) |
Disposals and write-offs | — | — | — | 3 | — | 3 |
Transfer to assets held for sale | — | 170 | — | — | — | 170 |
Impairment at 31 December 2023 | — | (140) | (9) | (10) | — | (159) |
Exchange adjustments | — | (3) | — | — | — | (3) |
Impairment losses | — | (135) | (3) | (4) | (32) | (174) |
Disposals and write-offs | — | — | 1 | 4 | 32 | 37 |
Impairment at 31 December 2024 | — | (278) | (11) | (10) | — | (299) |
Amortisation and impairment at 31 December 2023 | — | (140) | (220) | (331) | — | (691) |
Amortisation and impairment at 31 December 2024 | — | (278) | (246) | (402) | — | (926) |
Net book value at 31 December 2023 | 8,317 | 18,073 | 171 | 211 | 83 | 26,855 |
Net book value at 31 December 2024 | 8,202 | 17,623 | 144 | 181 | 61 | 26,211 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
139
The net book value of computer software included £84m (2023: £122m, 2022: £133m) of internally generated costs. During the year
ended 31 December 2022, additions to indefinite life brands included £174m of non-cash purchases which were settled by offsetting
a liability owed to the Group by GSK.
Goodwill mainly arose from the Novartis Transaction in 2015 (£2.6bn) and the Pfizer Transaction in 2019 (£5.6bn).
Goodwill is allocated to the Group’s CGUs as follows:
2024 | 2023 | |
£m | £m | |
North America | 3,230 | 3,247 |
EMEA & LatAm | 2,827 | 2,926 |
APAC | 2,145 | 2,144 |
Net book value at 31 December | 8,202 | 8,317 |
The recoverable amounts of the CGUs are assessed using a value in use model (2023: value in use). Value in use is calculated using a
discounted cash flow approach, with a pre-tax discount rate applied to the projected risk-adjusted pre-tax cash flows and terminal value.
The discount rate used is based on the pre-tax weighted average cost of capital (WACC) of the CGUs. The discount rates are specific to
each CGU and are determined based on the cost of capital, including a market premium and country-specific political risk premiums.
Details relating to the discounted cash flow model used in the impairment tests of the APAC, EMEA & LatAm, and North America CGUs
are as follows:
Valuation basis | Value in use | ||
Key assumptions | Sales growth rates | ||
Profit margins | |||
Terminal growth rates | |||
Discount rates | |||
Taxation rates | |||
Determination of assumptions | Growth rates are internal forecasts based on both internal and external market information | ||
Margins reflect past experience, adjusted for expected changes | |||
Terminal growth rates are based on internal projections and external forecasts of the relevant markets | |||
Discount rates are based on the Group WACC, adjusted where appropriate | |||
Taxation rates are based on appropriate rates for each CGU | |||
Period of specific projected cash flows | Five years | ||
Terminal growth rates | 2024 | 2023 | |
North America | 2.1% p.a. | 2.0% p.a. | |
EMEA & LatAm | 2.7% p.a. | 2.6% p.a. | |
APAC | 2.3% p.a. | 2.4% p.a. | |
Discount rates (pre-tax) | 2024 | 2023 | |
North America | 7.4% | 7.9% | |
EMEA & LatAm | 11.2% | 13.2% | |
APAC | 9.4% | 10.2% | |
The terminal growth rate does not exceed the long-term projected growth rate for the Group. Goodwill is monitored for impairment
at individual CGU level. In each case, the valuation indicated substantial headroom such that it is remote that a reasonably possible
Notes to the Consolidated Financial Statements
continued
140
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Indefinite life brands and amortised brands impairment
Indefinite life brands comprise a portfolio of consumer health products. The net book value of the major brands is as follows:
2024 | 2023 | |
£m | £m | |
Advil | 3,527 | 3,521 |
Voltaren | 2,725 | 2,725 |
Centrum | 1,798 | 1,850 |
Caltrate | 1,662 | 1,680 |
Otrivin | 1,385 | 1,385 |
Robitussin | 1,173 | 1,174 |
Preparation H | 1,108 | 1,103 |
Fenistil | 598 | 598 |
Nexium | 574 | 706 |
Emergen-C | 470 | 464 |
Theraflu | 446 | 444 |
Panadol | 395 | 396 |
Sensodyne | 276 | 281 |
Excedrin | 189 | 186 |
Biotene | 127 | 130 |
Polident | 126 | 126 |
Vitasprint | 113 | 118 |
Corega | 110 | 116 |
Nicotinell | — | 246 |
Other brands | 821 | 824 |
Total | 17,623 | 18,073 |
The Group tests all its indefinite life brands for impairment by applying a fair value less costs to sell model using a three-year
strategic plan approved by management and cash flows beyond the three-year period are extrapolated using the terminal growth
rates. All brands were tested for impairment using brand-specific assumptions which included a discount rate equal to the Group’s
post-tax WACC of 7.0% (2023: 7.5%; 2022: 7.0%) adjusted where appropriate for country and currency risks, and applied to the post-tax
cash flows. This valuation methodology uses significant inputs which are not based on observable market data, and therefore this
valuation technique is classified as level 3 of the fair value hierarchy. In addition to the discount rate, the main assumptions include
future sales price and volume growth, product contribution and the future expenditure required to maintain the product’s
marketability and registration in the relevant jurisdictions. These assumptions are based on past experience and are reviewed as
part of management’s budgeting and strategic planning cycle. Except Nexium (see below), the terminal growth rates for all other
brands are between 0% and 2.5% (2023: 0% and 3%; 2022: 0% and 3%) and are management’s estimates which align with those of
market participants’ estimate of future long-term average growth rates for the relevant markets.
In 2024, the Group recorded a non-cash impairment charge of £135m for Nexium since the carrying value of the brand was higher than
the recoverable amount. The decrease in recoverable amount was mainly driven by challenging market conditions for the category.
The post-tax discount rate used for the brand is 6.5% (2023: 7.5%) primarily driven by a decline in the cost of debt and a negative
terminal growth rate of 2% (2023: 0%) driven by the factors affecting brand performance noted above. The revenue growth rate
assumed for the next three years is -8%. If the revenue growth rate for Nexium had been 2.5% lower or the terminal growth rate
had been 0.5% lower than management’s estimates, the Group would have had to recognise a further impairment of £13m or
£6m, respectively.
Additionally, in 2024, the carrying value of Preparation H continues to be sensitive to reasonably possible changes in key assumptions.
The post-tax discount rate used for the brand is 6.5% (2023: 6.8%) primarily driven by a decline in the cost of debt and terminal growth
rate is 2.1% (2023: 2.5%) in line with external forecasts for the category. If the discount rate for Preparation H had been 0.5% higher or
the terminal growth rate had been 0.5% lower than management’s estimates respectively, the Group would have had to recognise an
impairment of £97m (2023: £115m) or £60m (2023: £75m), respectively.
Other than as disclosed above, management does not consider that any reasonably possible changes in the key assumptions would
cause the fair value less costs to sell of the individually significant brands disclosed above to fall below their carrying values.
In 2023, the Group recorded a non-cash impairment charge of £170m upon signing a definitive agreement to dispose ChapStick, an
indefinite life brand, which had been classified as an asset held for sale as at 31 December 2023. In addition, the Group also recorded
an impairment of £15m relating to a collection of smaller brands as these brands are experiencing sales volume decline year on year.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
141
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. The decrease in recoverable amount was mainly driven by an increase in the discount rate applied to the
forecasted future cash flows from 6% to 6.75%. If the discount rate for Preparation H had been 0.25% higher or the revenue growth
rate, including terminal growth rate, had been 0.25% lower than management’s estimates respectively, the Group would have had to
Certain assets were transferred from intangible assets to assets held for sale and subsequently disposed of during the year.
A breakdown of the amortisation, impairment losses and reversals is included below:
Net impairment | ||||||
Amortisation | losses/(reversals) | |||||
2024 | 2023 | 2022 | 2024 | 2023 | 2022 | |
£m | £m | £m | £m | £m | £m | |
Cost of sales | 38 | 55 | 61 | 155 | 185 | 129 |
Selling, general and administration | 61 | 53 | 46 | 4 | 1 | 6 |
Total | 99 | 108 | 107 | 159 | 186 | 135 |
Impact of climate change
The Group has stress tested the future cash flows for the potential impact of climate change and concluded that there is sufficient
headroom for goodwill. Preparation H’s recoverable amount is sensitive to reasonably possible changes in key assumptions that would
lead to an immaterial additional impairment charge due to either physical damage in our manufacturing sites or the associated costs of
future transition risk. Carbon pricing policy is the highest potential transition risk that could have a medium risk in the medium- to long-term
time frame. With continued decarbonisation efforts and Haleon’s focus on meeting the targets to minimise carbon pricing impacts,
direct costs and related production overheads) and net realisable value. Cost is determined on a first in, first out basis. Net realisable
Composition of inventory balances
2024 | 2023 | |
£m | £m | |
Raw materials and consumables | 236 | 298 |
Work in progress | 26 | 20 |
Finished goods | 928 | 1,090 |
Total | 1,190 | 1,408 |
The total cost of inventories recognised as an expense and included in cost of sales amounted to £4,074m in 2024 (2023: £4,196m,
2022: £3,970m). This includes inventory write-down of £177m (2023: £178m, 2022: £118m). The Group reverses and reassesses its
inventory provisions in full every reporting period.
The reversals of prior year write-downs of inventories in 2024 is £90m (2023: £74m, 2022: £40m) and these reversals principally arise
from the reassessment of usage or demand expectations prior to inventory expiration.
Impact of climate change
The Group’s inventory turnover cycle is much shorter than the longer-term time horizons associated with the climate-related risks and
Notes to the Consolidated Financial Statements
continued
142
Haleon
Annual Report and Form 20-F 2024
Financial Statements
for expected credit losses which are measured at an amount equal to lifetime expected credit losses. In determining credit risk, the Group
considers reasonable and supportable information that is relevant and available without undue costs or effort. This includes both
quantitative and qualitative information and analysis based on the Group’s ageing of the receivables, customers’ payment history and
forward-looking information including wider macroeconomic factors. Trade receivables sold under a non-recourse factoring agreement
are derecognised at the point of sale as risks and rewards are substantially transferred.
When a trade receivable is determined to have no reasonable expectation of recovery, it is written off, firstly against any expected
credit loss allowance available and then to the income statement.
Subsequent recoveries of amounts previously provided for or written off are credited to the income statement. Long-term receivables
Trade and other receivables
| 2024 | 2023 | |||||
Current | Non-current | Total | Current | Non-current | Total | |
£m | £m | £m | £m | £m | £m | |
Trade receivables, net of expected credit loss allowance | 1,588 | — | 1,588 | 1,352 | — | 1,352 |
Other prepayments and accrued income | 114 | — | 114 | 107 | — | 107 |
Employee loans and advances | 6 | — | 6 | 5 | — | 5 |
VAT receivable | 151 | — | 151 | 173 | — | 173 |
Other third-party receivables | 196 | 71 | 267 | 219 | 114 | 333 |
Total | 2,055 | 71 | 2,126 | 1,856 | 114 | 1,970 |
2024 | 2023 | |
£m | £m | |
At 1 January | 29 | 41 |
Exchange adjustments | (1) | (2) |
Charge for the year | 38 | 2 |
Subsequent recoveries of amounts provided for | (25) | (7) |
Utilised | (5) | (5) |
At 31 December | 36 | 29 |
Set out below is the information about the credit risk exposure of the Group’s trade receivables using a provision matrix:
Year ended 31 December 2024
| Trade receivables | |||||||
| Days past due | |||||||
Greater | |||||||
181 days- | than | ||||||
Current | 0-30 days | 31-90 days | 91-180 days | 1 year | 1 year | Total | |
£m | £m | £m | £m | £m | £m | £m | |
Estimated total gross carrying amount at default | 1,406 | 113 | 36 | 26 | 18 | 25 | 1,624 |
Expected credit loss | 4 | 1 | 3 | 2 | 4 | 22 | 36 |
Year ended 31 December 2023
| Trade receivables | |||||||
| Days past due | |||||||
Greater | |||||||
181 days- | than | ||||||
Current | 0-30 days | 31-90 days | 91-180 days | 1 year | 1 year | Total | |
£m | £m | £m | £m | £m | £m | £m | |
Estimated total gross carrying amount at default | 1,210 | 102 | 25 | 12 | 15 | 17 | 1,381 |
Expected credit loss | 5 | 1 | 1 | 2 | 4 | 16 | 29 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
143
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being large and diverse.
No single customer represents more than 10% of the Group’s sales.
Within other third-party receivables, £189m (2023: £230m) was classified as financial assets. The expected credit loss in other
receivables is not deemed significant, hence no credit loss allowance is recognised. Refer to Note 25 ‘Capital and financial risk
purposes and normally with an original maturity of three months or less, that are readily convertible to a known amount of cash and
subsidiaries where it is held. Restrictions include exchange controls and taxes on repatriation. In 2024, £1,226m (2023: £161m) of the
cash and cash equivalents are held in short term deposits with financial institutions.
Cash and cash equivalents held in the following currencies, that mostly influence the Group, are presented below:
2024 | 2023 | |
£m | £m | |
Pound Sterling (GBP) | 1,790 | 634 |
Indian Rupee (INR) | 73 | 36 |
Taiwan Dollar (TWD) | 40 | 46 |
Euro (EUR) | 30 | 29 |
United States Dollar (USD) | 27 | 39 |
Others | 290 | 260 |
Total | 2,250 | 1,044 |
effect is material. Trade payables are derecognised when the original liability is either discharged, usually through payment, or
2024 | 2023 | |
£m | £m | |
Trade payables | 1,973 | 1,855 |
Customer return and rebate accruals | 738 | 717 |
Other payables and accruals | 477 | 374 |
Wages and salaries | 290 | 365 |
Accrued interest on financial liabilities | 104 | 100 |
Social security | 54 | 45 |
VAT payables | 51 | 49 |
Deferred income | 18 | 21 |
Total | 3,705 | 3,526 |
Customer return and rebate accruals are provided for by the Group at the point of sale in respect of the estimated rebates, discounts or
allowances payable to customers. Accruals are made at the time of sale but the actual amounts paid are based on claims made some
time after the initial recognition of the sale. The level of accrual is reviewed and adjusted quarterly in light of historical experience of
actual rebates, discounts or allowances given and returns made and any changes in arrangements. The assumptions used in estimation
are based on known facts with a high level of accuracy. In addition, the Group’s promotional programmes are typically short term in
nature resulting in lower inherent estimation uncertainty. As a result, management considered no likelihood of material change in the
next financial year.
Customer return and rebate accruals are not presented net against any trade receivables that may be owing from the same customer
as the offsetting criteria in IAS 32 have not been met.
Refer to Note 24, ‘Related party transactions’ for further details on amounts payable to GSK and Pfizer.
Notes to the Consolidated Financial Statements
continued
144
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Supply chain financing arrangements
The Group has supply chain financing (SCF) arrangements in place. The principal purpose of these arrangements is to enable the
supplier, if it so wishes, to sell its receivables due from the Group to a third-party bank prior to their due date, thus providing earlier
access to liquidity. From the Group’s perspective, the invoice payment due date remains unaltered and the payment terms of suppliers
participating in the SCF programmes are similar to those suppliers that are not participating, and to the wider industry more generally.
If a receivable is purchased by a third-party financial institution, that financial institution does not benefit from additional security
when compared to the security originally enjoyed by the supplier.
These amounts are included within trade payables and all cash flows associated with the programmes are included within cash flow
from operating activities as they continue to be part of the normal operating cycle of the Group.
Carrying amount of liabilities (£m) | 2024 | 2023 |
Presented within trade and other payables | 15 | 4 |
of which suppliers have received payments | 8 | 2 |
Range of payment due dates | ||
Liabilities that are part of the arrangements | 60-125 | 60-125 |
Comparable trade payables that are not part of the arrangement | 30-125 | 30-125 |
the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the
The corresponding liability to the lessor is recognised as a lease obligation within short term and long-term borrowings. The carrying
amount is subsequently increased to reflect interest on the lease liability and reduced by lease payments made.
For calculating the discounted lease liability on leases, the implicit rate in the lease is used. If this is not available, the incremental
borrowing rate with a lease-specific adjustment is used. Finance costs are charged to the income statement to produce a constant
periodic rate of charge on the remaining balance of the obligations for each accounting period.
Variable rents are not part of the lease liability and the right of use asset. These payments are charged to the income statement as
| 2024 | 2023 | |||||
Current | Non-current | Total | Current | Non-current | Total | |
£m | £m | £m | £m | £m | £m | |
Loan and overdrafts | (43) | (290) | (333) | (60) | — | (60) |
Lease liabilities | (50) | (73) | (123) | (48) | (89) | (137) |
Non-voting preference shares | — | (25) | (25) | — | (25) | (25) |
Bonds | (1,394) | (8,252) | (9,646) | (548) | (8,686) | (9,234) |
Total | (1,487) | (8,640) | (10,127) | (656) | (8,800) | (9,456) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
145
Carrying value | ||
2024 | 2023 | |
Bonds 1 | £m | £m |
USD 700m 3.024% Mar 2024 | — | 548 |
USD 1,750m 3.125% Mar 2025 | 1,394 | 1,336 |
EUR 850m 1.250% Mar 2026 | 694 | 707 |
USD 2,000m 3.375% Mar 2027 | 1,587 | 1,561 |
EUR 750m 2.875% Sep 2028 | 620 | — |
GBP 300m 2.875% Oct 2028 | 299 | 299 |
USD 1,000m 3.375% Mar 2029 | 785 | 775 |
EURO 750m 1.750% Mar 2030 | 620 | 650 |
USD 2,000m 3.625% Mar 2032 | 1,558 | 1,551 |
GBP 300m 4.625% Sep 2033 | 298 | — |
EUR 750m 2.125% Mar 2034 | 617 | 646 |
GBP 400m 3.375% Mar 2038 | 398 | 398 |
USD 1,000m 4.000% Mar 2052 | 776 | 763 |
Total | 9,646 | 9,234 |
1
These instruments contain a variety of different features including early redemption options, call options, put options and mandatory early redemption options, which depend on
different triggering events such as change in control, change in laws, regulations and tax law. These features are considered embedded derivatives. These features have not been
Short-term borrowings
As at 31 December 2024, the Group had within short-term borrowings, USD Notes of $1,750m (£1,394m) (31 December 2023: $700m
(£548m)). The average effective pre-swap and post-swap interest rate of all short-term notes in issue as at 31 December 2024 was 3.1%
and 4.6% (31 December 2023: 3.0% and 3.0%). The Group repaid the $700m Fixed Rate Senior Note on its maturity on 25 March 2024.
The Group has commercial paper programmes (with maximum aggregate amounts of £2bn and $10bn) pursuant to which members of
the Group may issue commercial paper from time to time. At 31 December 2024 and 2023 the Group did not have any commercial
paper in issue.
As at 31 December 2024, the Group had no short-term bank loans (31 December 2023: £10m). The weighted average interest rate on
short-term bank loans as at 31 December 2024 was 0% (31 December 2023: 7.8%).
Long-term borrowings
As at 31 December 2024, the Group had within long-term borrowings, Notes of £8,252m (31 December 2023: £8,686m), of which
£4,267m (31 December 2023: £4,783m) fell due in more than five years. The average effective pre-swap and post-swap interest rate of
all long-term notes in issue as at 31 December 2024 was 3.1% and 3.2% (31 December 2023: 3.0% and 3.6%).
Under the Euro Medium Term Note (EMTN), the Group issued two new Notes on 18 September 2024 amounting to €750m (£623m) with
a coupon rate of 2.9% and £300m with a coupon rate of 4.6% maturing on 18 September 2028 and 18 September 2033 respectively.
On 26 December 2024, the Group secured a long-term bank loan of CNY2,679m (£290m) maturing on 25 December 2029. The weighted
average interest rate on the long-term bank loan as at 31 December 2024 was 3.0%.
Notes to the Consolidated Financial Statements
continued
146
Haleon
Annual Report and Form 20-F 2024
Financial Statements
On 17 July 2022, as part of the demerger activities, the Company issued 25,000,000 non-voting preference shares of £1.00 each to
Pfizer Inc. with a coupon rate of 9.5% per annum. The non-voting preference shares (NVPS) command a mandatory quarterly coupon
and can only be redeemed after a period of five years. The Group has, therefore, classified the non-voting preference shares as a
Committed credit facilities
The Group has undrawn credit facilities of £900m and $1,300m with initial maturity dates of September 2027 and September 2025
respectively. As at 31 December 2024, no amounts were drawn under these facilities (31 December 2023: £nil).
The maturity analysis of lease liabilities recognised on the Group balance sheet is as follows:
2024 | 2023 | |
£m | £m | |
Due within one year | (50) | (48) |
Due between one and two years | (36) | (36) |
Due between two and three years | (19) | (25) |
Due between three and four years | (9) | (14) |
Due between four and five years | (6) | (7) |
Due after five years | (3) | (7) |
Total | (123) | (137) |
Refer to Note 8 ‘Net finance costs’ for further details on finance expense arising on lease liabilities.
Fair value | |||||
adjustments, | |||||
interest on | |||||
At | derivatives | At | |||
1 January | Foreign | and | 31 December | ||
2024 | Cash flows | exchange | reclassification | 2024 | |
£m | £m | £m | £m | £m | |
Reconciliation of movement in liabilities to cash flow statement | |||||
Long-term borrowings | (8,711) | (1,214) | 16 | 1,342 | (8,567) |
Short-term borrowings | (558) | 562 | (27) | (1,371) | (1,394) |
Lease liabilities | (137) | 60 | 3 | (49) | (123) |
Derivative financial instruments | (102) | 8 | (1) | 65 | (30) |
Total financial liabilities arising from financing activities | (9,508) | (584) | (9) | (13) | (10,114) |
Cash and cash equivalents net of bank overdrafts | 994 | 1,292 | (79) | — | 2,207 |
Total | (8,514) | 708 | (88) | (13) | (7,907) |
Fair value | |||||
adjustments, | |||||
interest | At | ||||
At 1 January | Foreign | and other | 31 December | ||
2023 | Cash flows | exchange | movements | 2023 | |
£m | £m | £m | £m | £m | |
Reconciliation of movement in liabilities to cash flow statement | |||||
Long-term borrowings | (9,886) | 243 | 412 | 520 | (8,711) |
Short-term borrowings | (320) | 310 | 15 | (563) | (558) |
Lease liabilities | (161) | 55 | 8 | (39) | (137) |
Derivative financial instruments | (112) | 72 | — | (62) | (102) |
Total financial liabilities arising from financing activities | (10,479) | 680 | 435 | (144) | (9,508) |
Cash and cash equivalents net of bank overdrafts | 611 | 398 | (15) | — | 994 |
Total | (9,868) | 1,078 | 420 | (144) | (8,514) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
147
These arrangements have been developed in accordance with local practices in the countries concerned. Pension benefits can be
provided by state schemes, by defined contribution schemes, whereby retirement benefits are determined by the value of funds arising
from contributions paid in respect of each employee, or by defined benefit schemes, whereby retirement benefits are based on employee
pensionable remuneration and length of service. In certain countries, pension benefits are provided on an unfunded basis, some are
administered by trustee companies. The Group also provides other post-employment benefits, mainly post-employment healthcare
plans in the US. These plans are predominantly unfunded. Formal, independent, actuarial valuations of the Group’s main plans are
undertaken regularly, normally at least every three years.
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities
is recognised as an asset or a liability on the consolidated balance sheet. Defined benefit plan liabilities are assessed using the projected
unit funding method and applying the principal actuarial assumptions at the reporting period date consistent with the advice of qualified
actuaries. Pension scheme assets are measured at fair value at the balance sheet date. The amount of any pension fund asset recognised
on the balance sheet is limited to any future refunds from the plan or the present value of reductions in future contributions to the plan.
The amount charged to operating costs in the income statement is the cost of accruing pension benefits promised to employees over
the year, plus the costs of individual events such as past service benefit changes, settlements, curtailments plus the finance charge for
interest on net liability (such events are recognised immediately in the income statement).
Remeasurements of the net defined benefit liability (or asset) comprise actuarial gains and losses and the return on plan assets
excluding amounts included in net interest. Actuarial gains and losses are taken to the consolidated statement of comprehensive
income. Actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising
from differences between the previous actuarial assumptions and what has actually occurred. The return on plan assets, in excess of
interest income, and costs incurred for the management of plan assets are also taken to other comprehensive income.
The costs of other post-employment liabilities are calculated in a similar way to defined benefit pension schemes and spread over the
period during which benefit is expected to be derived from the employees’ services. Future cash flows are discounted at rates reflecting
the yields of high-quality corporate bonds.
Discount rates are derived from AA-rated corporate bond yields, except in countries where there is no deep market in corporate
bonds, government bond yields are used instead. Discount rates are selected to reflect the term of the expected benefit payments.
Projected inflation rate and pension increases are long-term predictions based on the yield gap between long-term index-linked and
fixed-interest government bonds, where available, or on long-term inflation forecasts.
Assumptions
The Group has applied the following financial assumptions in assessing the defined benefit liabilities:
2024 | 2023 | |
%pa | %pa | |
Germany | ||
Rate of increase of future earnings | 3.0 | 3.0 |
Discount rate | 3.4 | 3.3 |
Expected pension increases | 2.0 | 2.1 |
Inflation rate | 2.0 | 2.1 |
Switzerland | ||
Rate of increase of future earnings | 1.8 | 2.0 |
Discount rate | 1.0 | 1.4 |
Expected pension increases | N/A | N/A |
Inflation rate | 1.0 | 1.3 |
Ireland | ||
Rate of increase of future earnings | 2.0 | 2.0 |
Discount rate | 3.4 | 3.3 |
Expected pension increases | 3.0 | 3.0 |
Inflation rate | 2.0 | 2.1 |
Rest of World | ||
Rate of increase of future earnings | N/A | N/A |
Discount rate | 5.7 | 5.1 |
Expected pension increases | N/A | N/A |
Inflation rate | 2.5 | 2.5 |
Notes to the Consolidated Financial Statements
continued
148
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The average life expectancy assumed now for an individual at the age of 60 and projected to apply in the years stated below for an
individual then at the age of 60 is as follows:
As at 31 December 2024
Germany | Switzerland | Ireland | Rest of World | |||||
Years | Male | Female | Male | Female | Male | Female | Male | Female |
Current | 25.5 | 29.2 | 26.7 | 28.6 | 27.3 | 30.3 | 27.4 | 28.8 |
Projected for 2044 | 28.5 | 31.5 | 28.6 | 30.3 | 30.1 | 32.4 | 28.9 | 30.2 |
As at 31 December 2023
Germany | Switzerland | Ireland | Rest of World | |||||
Years | Male | Female | Male | Female | Male | Female | Male | Female |
Current | 25.3 | 29.0 | 26.6 | 28.5 | 26.9 | 29.7 | 27.3 | 28.7 |
Projected for 2043 | 28.1 | 31.3 | 28.5 | 30.2 | 29.7 | 31.9 | 28.9 | 30.2 |
The mortality rates are based on standard tables in each country (Heubeck 2018 in Germany, BVG 2020 in Switzerland and ILT15 in
Ireland) with allowances for future improvements.
Income statement
2024 | 2023 | 2022 | |
£m | £m | £m | |
German pension schemes | 3 | 5 | 5 |
Swiss pension schemes | 10 | 9 | 9 |
Irish pension schemes | 5 | 2 | 5 |
Other overseas pension schemes | 2 | — | (1) |
Unfunded post-employment healthcare schemes | 9 | 10 | 9 |
Total | 29 | 26 | 27 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
149
The costs of the defined benefit pension and post-employment healthcare schemes are charged in the income statement as follows:
Other post | |||
Net | retirement | Total post | |
pensions | obligations | retirement | |
total | total | obligations | |
£m | £m | £m | |
2024 | |||
Cost of sales | 10 | 9 | 19 |
Research and development | 2 | — | 2 |
Selling, general and administration | 8 | — | 8 |
31 December 2024 | 20 | 9 | 29 |
2023 | |||
Cost of sales | 10 | 8 | 18 |
Research and development | 1 | — | 1 |
Selling, general and administration | 7 | — | 7 |
31 December 2023 | 18 | 8 | 26 |
2022 | |||
Cost of sales | 12 | 9 | 21 |
Research and development | 1 | — | 1 |
Selling, general and administration | 5 | — | 5 |
31 December 2022 | 18 | 9 | 27 |
The amounts recorded in the income statement and statement of comprehensive income in relation to the defined benefit pension and
post-employment healthcare schemes were as follows:
| 2024 | 2023 | 2022 | |||||||
Other | Other | Other | |||||||
post- | post- | post- | |||||||
employment | employment | employment | |||||||
Pensions | benefits | Total | Pensions | benefits | Total | Pensions | benefits | Total | |
£m | £m | £m | £m | £m | £m | £m | £m | £m | |
31 December | |||||||||
Amounts charged to operating profit: | |||||||||
Current service cost | 17 | 5 | 22 | 16 | 6 | 22 | 16 | 7 | 23 |
Past service cost/(credit) | 4 | — | 4 | 1 | — | 1 | 1 | — | 1 |
Gain from settlement | (1) | — | (1) | — | — | — | — | — | — |
Net interest cost | — | 4 | 4 | 1 | 2 | 3 | 1 | 2 | 3 |
Total | 20 | 9 | 29 | 18 | 8 | 26 | 18 | 9 | 27 |
Remeasurements recorded in the | |||||||||
statement of comprehensive income | (6) | (13) | (19) | (6) | 1 | (5) | (91) | (32) | (123) |
Balance sheet
The assets of funded schemes are generally held in separately administered trusts, either as specific assets or as a proportion of a
general fund or are insurance contracts. Assets are invested in different classes in order to maintain a balance between risk and return.
Investments are diversified to limit the financial effect of the failure of any individual investment.
The pension plans are exposed to risk that arises because the estimated market value of the plans’ assets might decline, the investment
returns might reduce, or the estimated value of the plans’ liabilities might increase.
Long-term investment strategies for the plans, with investments across a broad range of assets, have been agreed with the trustees
to include return-seeking assets to generate future returns and liability-matching assets to better match future pension obligations.
The main market risks within the asset portfolio are credit risk, interest rates, long-term inflation, equities and property risk.
The plan liabilities are a series of future cash flows with relatively long duration. On an IAS 19 basis, these cash flows are sensitive to
changes in the expected long-term inflation rate and the discount rate (AA corporate bond yield curve) where an increase in long-term
inflation corresponds with an increase in the liabilities, and an increase in the discount rate corresponds with a decrease in the liabilities.
Notes to the Consolidated Financial Statements
continued
150
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The fair values of the assets and liabilities of the German, Swiss and Irish defined benefit pension schemes, together with aggregated
data for other defined benefit pension schemes in the Group are as follows:
31 December 2024
Germany | Switzerland | Ireland | Rest of World | Total | |
£m | £m | £m | £m | £m | |
Listed equities | 56 | 74 | 32 | 4 | 166 |
Property | — | 68 | — | — | 68 |
Listed bonds | 57 | 88 | 162 | 19 | 326 |
Insurance contracts | 24 | 45 | — | — | 69 |
Other assets | — | 34 | 2 | 13 | 49 |
Fair value of assets | 137 | 309 | 196 | 36 | 678 |
Asset ceiling restriction | — | (18) | — | — | (18) |
Fair value of assets after asset ceiling | 137 | 291 | 196 | 36 | 660 |
Present value of scheme obligations | (170) | (291) | (169) | (45) | (675) |
Recognised on the balance sheet | (33) | — | 27 | (9) | (15) |
Included in post-employment benefit assets | — | — | 27 | 9 | 36 |
Included in post-employment benefit obligations | (33) | — | — | (18) | (51) |
Total | (33) | — | 27 | (9) | (15) |
Actual return on plan assets | 11 | 13 | 1 | 3 | 28 |
31 December 2023
Germany | Switzerland | Ireland | Rest of World | Total | |
£m | £m | £m | £m | £m | |
Listed equities | 53 | 76 | 47 | 5 | 181 |
Property | — | 71 | — | — | 71 |
Listed bonds | 56 | 91 | 154 | 19 | 320 |
Insurance contracts | 23 | 49 | — | — | 72 |
Other assets | 1 | 31 | 2 | 12 | 46 |
Fair value of assets | 133 | 318 | 203 | 36 | 690 |
Asset ceiling restriction | — | (29) | — | — | (29) |
Fair value of assets after asset ceiling | 133 | 289 | 203 | 36 | 661 |
Present value of scheme obligations | (184) | (289) | (174) | (50) | (697) |
Recognised on the balance sheet | (51) | — | 29 | (14) | (36) |
Included in post-employment benefit assets | — | — | 29 | 7 | 36 |
Included in post-employment benefit obligations | (51) | — | — | (21) | (72) |
Total | (51) | — | 29 | (14) | (36) |
Actual return on plan assets | 11 | 16 | 20 | 2 | 49 |
The values of pension plan assets are based on conditions in active markets as at 31st December 2024. In the case of the main defined
benefit plans, this statement covers investment in equities, property funds and government bonds as well as corporate bonds. The fair
value of insurance contracts is deemed to be equal to the present value of the obligations it covers while other assets is primarily cash.
The defined benefit pension obligation is analysed as follows:
2024 | 2023 | |
£m | £m | |
Funded | (662) | (684) |
Unfunded | (13) | (13) |
Total | (675) | (697) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
151
The movement in the net defined benefit liability is as follows:
Present | Net | Net post- | ||
Fair value | value of | pensions | employment | |
of assets | obligation | total | obligations | |
£m | £m | £m | £m | |
At 1 January 2023 | 594 | (646) | (52) | (84) |
Exchange adjustments | 6 | (8) | (2) | 6 |
Service cost | — | (16) | (16) | (6) |
Past service cost | — | (1) | (1) | — |
Interest income/(cost) | 18 | (19) | (1) | (2) |
Remeasurements: | ||||
Return on plan assets, excluding amounts included in interest | 31 | — | 31 | — |
Loss from change in financial assumptions | — | (24) | (24) | (1) |
Experience (losses)/gains | — | (3) | (3) | 2 |
Employers’ contributions | 32 | — | 32 | — |
Scheme participants’ contributions | 7 | (7) | — | — |
Benefits paid | (27) | 27 | — | 1 |
At 31 December 2023 | 661 | (697) | (36) | (85) |
Exchange adjustments | (28) | 34 | 6 | (2) |
Service cost | — | (17) | (17) | (5) |
Past service cost | — | (4) | (4) | — |
Interest income/(cost) | 17 | (17) | — | (4) |
Settlements and curtailments | — | 1 | 1 | — |
Remeasurements: | ||||
Return on plan assets, excluding amounts included in interest | 12 | — | 12 | — |
Loss arising from changes in demographic assumptions | — | (3) | (3) | — |
(Loss)/Gain from change in financial assumptions | — | (1) | (1) | 11 |
Experience (losses)/gains | — | (2) | (2) | 2 |
Employers’ contributions | 29 | — | 29 | — |
Scheme participants’ contributions | 7 | (7) | — | — |
Benefits paid | (38) | 38 | — | 3 |
At 31 December 2024 | 660 | (675) | (15) | (80) |
A reconciliation of the net post-employment benefit to the balances recognised on the consolidated balance sheet is as follows:
2024 | 2023 | |
£m | £m | |
Net pension obligations | (15) | (36) |
Net post-employment obligations | (80) | (85) |
Net post-employment benefit | (95) | (121) |
Post-employment benefit assets recognised on the consolidated balance sheet | 36 | 36 |
Post-employment benefit obligations recognised on the consolidated balance sheet | (131) | (157) |
Net post-employment benefit | (95) | (121) |
The Group’s investment strategy in respect of its funded plans is implemented within the framework of the various statutory
requirements of the territories where the plans are based. For the plans based in Switzerland, the Group’s annual contribution is at
least equal to the total annual contributions of the employees. In Ireland, funding is determined based on the triennial funding
valuation performed by actuaries carried out using prudent assumptions and the most recent review in 2024 has shown that the
plan is overfunded. The US post-employment medical benefit plan remains unfunded.
Employer contributions for 2025 are estimated to be approximately £20m in respect of defined benefit pension schemes and £3m
in respect of post-employment medical benefits.
Notes to the Consolidated Financial Statements
continued
152
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The defined benefit pension and post-employment obligations analysed by membership category is as follows:
Pension | Post-employment obligations | |||
2024 | 2023 | 2024 | 2023 | |
£m | £m | £m | £m | |
Active | (347) | (354) | (70) | (76) |
Retired | (224) | (229) | (10) | (5) |
Deferred | (104) | (115) | — | (4) |
Total | (675) | (697) | (80) | (85) |
The approximate effect of changes in assumptions used on the benefit obligations and on the annual defined benefit and post-employment
costs are detailed below. This information has been determined by taking into account the duration of the liabilities and the overall
profile of the plan membership.
Sensitivity analysis
2024 | 2023 | |
£m | £m | |
0.50% decrease in discount rate: | ||
Increase in annual pension cost | 2.3 | 2.2 |
Increase in annual post-employment benefits cost | 0.2 | 0.2 |
Increase in pension obligation | 45.7 | 47.4 |
Increase in post-employment benefits obligation | 3.1 | 3.8 |
0.50% increase in discount rate: | ||
Decrease in annual pension cost | (2.4) | (2.1) |
Decrease in annual post-employment benefits cost | (0.1) | (0.2) |
Decrease in pension obligation | (41.2) | (42.7) |
Decrease in post-employment benefits obligation | (2.8) | (3.5) |
1% increase in the rate of future healthcare inflation: | ||
Increase in annual post-employment cost | 0.2 | 0.3 |
Increase in post-employment obligation | 1.6 | 2.4 |
1% decrease in the rate of future healthcare inflation: | ||
Decrease in annual post-employment cost | (0.2) | (0.3) |
Decrease in post-employment obligation | (1.8) | (2.4) |
A one year increase in life expectancy: | ||
Increase in annual pension cost | 0.7 | 0.7 |
Increase in annual post-employment benefits cost | 0.1 | 0.1 |
Increase in pension obligation | 17.6 | 18.0 |
Increase in post-employment benefits obligation | 0.7 | 0.9 |
The weighted average duration of the defined benefit obligation is as follows:
Years | 2024 | 2023 |
Pension benefits | 14 | 14 |
Post-employment benefits | 12 | 14 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
153
the amount of the obligation can be reliably estimated and where the outflow of economic benefit is probable.
Provisions are measured at management’s best estimate of the most likely outcome of the expenditure required to settle the obligation
at the reporting date and are discounted to present value where the effect is material. Provisions are classified as non-current where
Provisions
Restructuring | Other | ||
programmes | provisions | Total | |
£m | £m | £m | |
As at 1 January 2023 | (36) | (61) | (97) |
Exchange adjustments | 1 | 2 | 3 |
Charge for the period | (87) | (30) | (117) |
Reversed unused | 4 | 3 | 7 |
Utilised | 25 | 10 | 35 |
Other movements | (1) | 1 | — |
As at 31 December 2023 | (94) | (75) | (169) |
Exchange adjustments | 2 | 1 | 3 |
Charge for the period | (95) | (38) | (133) |
Reversed unused | 7 | 8 | 15 |
Utilised | 76 | 33 | 109 |
As at 31 December 2024 | (104) | (71) | (175) |
2024 | 2023 | |
£m | £m | |
To be settled within one year | (118) | (130) |
To be settled after one year | (57) | (39) |
Total provisions | (175) | (169) |
Other provisions include employee-related, legal, environmental, and other provisions. Refer to Note 6, ‘Operating profit’ for further
considered probable or cannot be measured reliably. No provision is made for contingent liabilities, but there is a chance that they
At 31 December 2024, contingent liabilities, comprising guarantees and other items arising in the normal course of business, amounted
to £16m (2023: £29m).
The Group is involved in significant legal and administrative proceedings, principally relating to product liabilities. The most significant
of these matters, other than tax matters, are described herein. Provision is made for the outcome of tax, legal and other disputes
where it is both probable that the Group will suffer an outflow of funds and it is possible to make a reliable estimate of that outflow.
Legal proceedings
The Group may become involved in legal proceedings, in respect of which it is not possible to determine whether a potential outflow
is probable, or to make a reliable estimate of the expected financial effect, if any, that could result from the proceedings. In these
cases, appropriate disclosure about such cases would be included but no provision would be made. Costs associated with claims
made by the Group against third parties are charged to the income statement as they are incurred.
The Group makes provision for these proceedings on a regular basis as summarised in the accounting policy above.
Notes to the Consolidated Financial Statements
continued
154
Haleon
Annual Report and Form 20-F 2024
Financial Statements
With respect to each of the legal proceedings described below, other than those for which a provision has been made, the Group is
unable to make a reliable estimate of the expected financial effect at this stage. The Group does not believe that information about
the amount sought by the plaintiffs, if that is known, would be meaningful with respect to those legal proceedings. This is due to a
number of factors, including, but not limited to, the stage of proceedings, the entitlement of parties to appeal a decision and clarity
as to theories of liability, damages and governing law.
The Group’s position could change over time and therefore, there can be no assurance that any losses that result from the outcome
of any legal proceedings will not exceed by a material amount the value of the provisions reported in the Group’s financial statements.
If this were to happen, it could have a material adverse impact on the results of operations of the Group in the reporting period in
which the judgements are incurred or the settlements entered into.
Zantac litigation
GSK and/or Pfizer have been named as defendants (alongside other manufacturers of ranitidine, as well as retailers and distributors)
in personal injury lawsuits, as well as economic injury and medical monitoring class actions, filed in the US involving Zantac. The Group
understands that outside the US, there are class actions and individual actions pending against GSK and Pfizer in Canada, along with
a class action against GSK in Israel. GSK announced a settlement of 93% of the US state court Zantac cases in October 2024 and
announced resolution of the vast majority of remaining state court cases in February 2025. Pfizer has announced that it has entered
into settlement arrangements in respect of a substantial majority of relevant US state court cases.
The Group is not a party to any Zantac claims and the Group has never marketed Zantac in any form in the US or Canada. The Group is
not primarily liable for any OTC or prescription Zantac claims.
The Group has received notices of potential claims for indemnification relating to OTC Zantac arising out of the Stock and Asset
Purchase Agreement (SAPA), which the Group has rejected on the basis that the scope of the indemnities set out in the SAPA only
covers the Consumer Healthcare businesses of GSK and Pfizer as conducted when their Consumer Healthcare joint venture was
formed in 2018. At that time, neither GSK nor Pfizer marketed OTC Zantac in the US or Canada.
German competition litigation
In 2013, GlaxoSmithKline Consumer Healthcare GmbH & Co. KG and other members of a working group of a German trademark
association were fined by the Federal Cartel Office of Germany as a result of the exchange of certain information related to retailers
during meetings from 2004 to 2006.
Following the fine imposed by the Federal Cartel Office in 2013, the Group is party to civil proceedings in Germany brought by or on
behalf of retailers against the Group and other manufacturers of branded drugstore products, alleging that the exchange of information
within the working group led to higher purchase prices being paid by the retailers, and claiming that the Group and other working
group members are jointly and severally liable for potential damages. The proceedings are taking place in different courts across
2024 | 2023 | |
£m | £m | |
Contracted for but not provided in the Consolidated Financial Statements: | ||
Intangible assets | 105 | 134 |
Property, plant and equipment | 51 | 58 |
Total | 156 | 192 |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
155
Share premium includes any premiums received on the issue of share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax benefits.
Other reserves include the following:
—
EBT shares reserve comprise shares held by an employee benefit trust in connection with the Group’s share-based incentive plans.
—
Cash flow hedge reserve comprises gains and losses relating to these types of financial instruments.
—
Merger reserve arises as a result of business combinations of entities under common control.
—
Other reserves comprises mainly differences between the fair value of the consideration paid for an investment, and the carrying
value of assets and liabilities acquired from business combinations under common control.
Translation reserve arises from the foreign currency translation of the Group’s foreign operations into the Group’s presentation currency.
Retained earnings includes all current and prior years’ retained profits, remeasurement gains/(losses), including any tax impacts on
As at 31 December 2024, the Group had share capital of £91m pertaining to 9,083,725,919 of ordinary shares at £0.01 each
(31 December 2023: £92m pertaining to 9,234,573,831 of ordinary shares at £0.01 each). The decrease in the number of shares
outstanding was due to a number of transactions during the year including a cancellation of 102,272,727 ordinary shares repurchased
from Pfizer pursuant to an off-market share buyback which completed on 21 March 2024 for £315m. On 1 August 2024, the Group
announced the commencement of an on-market share buyback programme; during this programme which ended on 1 October 2024,
the Company repurchased 18,413,907 ordinary shares for an aggregate price of approximately £70m which were subsequently
cancelled.
On 3 October 2024 the Company completed an off-market purchase from Pfizer Inc for an aggregate purchase price of £230m.
£114m of the purchase represented the remainder of the £500m allocated for share buybacks during 2024; 30,161,278 ordinary shares
were cancelled. The further £116m, including transaction costs, purchased 30,365,037 ordinary shares which were held as treasury
shares. As at 31 December 2024 the Company held 30,365,037 ordinary shares as treasury shares (2023: nil ordinary shares).
Share capital and share premium
At | At | ||
31 December | 31 December | ||
2024 | 2023 | ||
Ordinary shares at £0.01 each | Number | 9,083,725,919 | 9,234,573,831 |
Share capital | £’000 | 90,837 | 92,346 |
The table above presents the movement of share capital and share premium of the Company for the year ended 31 December 2024.
All ordinary shares are issued and fully paid. All ordinary shares rank equally with regard to the Company’s residual assets. Holders of
these shares are entitled to dividends declared from time to time and are entitled to one vote per share at general meetings of the
Company. All rights attached to the treasury shares held by the Group are suspended until those shares are reissued. The redeemable
preference shares carry limited class voting rights and no dividend rights.
Notes to the Consolidated Financial Statements
continued
156
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Other reserves
The analysis of other reserves is as follows:
Cumulative | Treasury | Capital | |||||
translation | EBT shares | shares | redemption | Cash flow | Merger | ||
reserve | reserve 1 | reserve | reserve | hedge reserve | reserve | Total | |
£m | £m | £m | £m | £m | £m | £m | |
As at 1 January 2023 | 1,046 | — | — | — | 150 | (11,687) | (10,491) |
Other comprehensive income | — | — | — | — | 12 | — | 12 |
Amount reclassified to income statement | — | — | — | — | (23) | — | (23) |
Purchase of shares by employee benefit trust | — | (38) | — | — | — | — | (38) |
Exchange movements on overseas net assets | (420) | — | — | — | — | — | (420) |
As at 31 December 2023 | 626 | (38) | — | — | 139 | (11,687) | (10,960) |
Other comprehensive income | — | — | — | — | (26) | — | (26) |
Shares transferred to employees | — | 41 | — | — | — | — | 41 |
Repurchase of ordinary shares and capital | |||||||
reduction | — | — | — | 1 | — | — | 1 |
Purchase of shares by employee benefit trust | — | (5) | — | — | — | — | (5) |
Purchase of treasury shares | — | — | (116) | — | — | — | (116) |
Exchange movements on overseas net assets | (132) | — | — | — | — | — | (132) |
As at 31 December 2024 | 494 | (2) | (116) | 1 | 113 | (11,687) | (11,197) |
1
Shares owned through an EBT. The total number of shares held in connection with employee share schemes as at 31 December 2024 was 0.6m.
The cumulative translation exchange in equity is attributable to:
Total | |||
Non- | cumulative | ||
Retained | controlling | translation | |
earnings | interests | exchange | |
£m | £m | £m | |
As at 1 January 2023 | 1,046 | 6 | 1,052 |
Exchange movements on overseas net assets | (420) | (7) | (427) |
As at 31 December 2023 | 626 | (1) | 625 |
Exchange movements on overseas net assets | (132) | (2) | (134) |
As at 31 December 2024 | 494 | (3) | 491 |
Related parties
Upon the completion of the demerger on 18 July 2022, GSK ceased to be a related party of the Group under IAS 24, ‘Related
Party Disclosures’.
On 21 March 2024, the Company purchased 102m Haleon ordinary shares from Pfizer with an aggregate purchase price of £315m. The
purchase was made pursuant to the terms of the share purchase deed between Haleon and Pfizer which was approved by Haleon’s
shareholders at its Annual General Meeting in 2023.
On 3 October 2024, the Company purchased 60.5m Haleon ordinary shares from Pfizer with an aggregate purchase price of £230m.
The purchase was made pursuant to the terms of the share purchase deed between Haleon and Pfizer which was approved by
Haleon’s shareholders at its Annual General Meeting in 2024.
Pfizer Inc. undertook a number of transactions during the year which reduced Pfizer’s voting rights. Following completion of Pfizer’s
sell-down on 3 October 2024 their voting rights reduced to 15%. Following this, Pfizer ceased to be a related party of the Group under
IAS 24, ‘Related Party Disclosures’ and therefore only balances that occurred before 3 October 2024 will be disclosed below.
The Group undertook significant transactions with entities from within GSK during the period ended 18 July 2022, and with entities
from within Pfizer for the year ended 31 December 2022.
The Group had transactions with related parties under manufacture and supply agreements, distribution agreements, support service
agreements, provision of research and development, toll-manufacturing services and transitional services agreements. In addition,
the Group earned net interest income resulting from funds lent to GSK. All related party transactions are undertaken at arm’s length
in accordance with the Group transfer pricing policy.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
157
Where the legal completion of local transfer of assets and liabilities has been delayed, but the Group is able to exercise control over
the relevant activities, the relevant net assets and profits have been recognised in the results.
Transaction values for the year ended 31 December (unless otherwise indicated):
Pfizer companies | GSK companies | |||
Period ended | ||||
2024 | 2023 | 2022 | 18 July 2022 | |
£m | £m | £m | £m | |
Sales of goods | — | — | — | 91 |
Purchases of goods | — | — | — | (41) |
Services, royalties, and other income | — | — | — | 74 |
Services, royalties, and other expense | — | — | (5) | (135) |
Interest income | — | — | 12 | 30 |
Interest expense | — | — | — | (2) |
Dividend paid | 165 | 124 | 3,801 | 8,129 |
Balance outstanding as at 31 December:
Pfizer companies | GSK companies | |||
2024 | 2023 | 2024 | 2023 | |
£m | £m | £m | £m | |
Other amounts owing from related parties | — | — | 34 | 32 |
As at 31 December 2024, other amounts owing from GSK of £34m (2023: £32m) comprise balances arising from arrangements set up
with GSK before the demerger activities. Since these balances occurred when GSK was still a related party of the Group, they are
or loss (FVTPL). The measurement basis is determined by reference to both the business model for managing the financial asset and
the contractual cash flow characteristics of the financial asset. For financial assets other than trade receivables, a 12-month expected
credit loss allowance is recorded on initial recognition. If there is subsequent evidence of a significant increase in the credit risk of an
asset, the allowance is increased to reflect the lifetime expected credit loss. If there is no realistic prospect of recovery, the asset is
Derivative financial instruments are used to manage exposure to market risks. The derivative instruments used by the Group are
forward foreign exchange contracts and swaps, interest rate swaps and cross currency interest rate swaps.
Derivative financial instruments are classified as held-for-trading and are measured at fair value. Derivatives designated as hedging
instruments are classified on inception as fair value hedges, cash flow hedges or net investment hedges. The treatment of changes in
the value of derivatives depends on their use as explained below.
Fair value hedges
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Group designates
the liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair
value of the risk being hedged, with changes going to the income statement. Gains and losses on the corresponding derivative are also
recognised in the income statement. The amounts recognised are offset in the income statement to the extent that the hedge is effective.
Ineffectiveness may occur if the critical terms do not exactly match, or if there is a value adjustment resulting from a change in credit
risk (in either the Group or the counterparty to the derivative) that is not matched by the hedged item. When the relationship no longer
meets the criteria for hedge accounting, the fair value hedge adjustment made to the bond is amortised to the income statement using
the effective interest method.
Cash flow hedges
Derivatives are also held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives are designated as
being part of cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair value of derivatives are
recognised in equity. Any ineffective elements of the hedge are recognised in the income statement. Ineffectiveness may occur if there
are changes to the expected timing of the hedged transaction. If the hedged cash flow relates to a non-financial asset, the amount
accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred
in equity are taken to the income statement at the same time as the related cash flow. When a derivative no longer qualifies for hedge
accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, the cumulative
gain or loss is taken to the income statement. If the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken
to the income statement immediately.
Notes to the Consolidated Financial Statements
continued
158
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Net investment hedges
Certain derivatives and financial liabilities are designated as hedges of the currency risk on the Group’s investment in foreign subsidiaries.
Differences arising on retranslation of a financial liability designated as hedging instrument in a net investment hedge and the fair value
of derivatives are recorded in equity to the extent that the hedge is effective. These differences on retranslation of financial liability
and the fair value of derivatives are reported within the income statement to the extent that the hedge is ineffective. Gains and losses
accumulated in equity are included in the income statement when the foreign operation is disposed of.
Derivatives for which hedge accounting is not applied
Derivatives not designated as hedges are held in order to economically hedge certain balance sheet items and commodity exposures.
No hedge accounting is applied to these derivatives, which are carried at fair value with changes being recognised in the income
The key objectives of the Group’s treasury activities are to minimise the net cost of financial operations and reduce volatility arising
from financial risks.
Treasury activities are governed by the Board. The Group has a Treasury Risk Committee (TRC), chaired by the CFO, that meets on a
regular basis to review treasury activities. The TRC’s members receive management information relating to treasury activities.
The Group may use a variety of financial instruments to finance its operations and derivative financial instruments to manage market
risks from these operations. Derivatives comprise of foreign exchange forward contracts and swaps, interest rate swaps and cross
currency interest swaps which are used to manage foreign exchange and interest rate risk on borrowings.
Derivatives are used exclusively for hedging purposes in relation to underlying business activities and not as trading or
speculative instruments.
The Group manages its capital to ensure that entities in the Group are able to operate as going concerns whilst availing themselves of
intercompany funding where appropriate.
2024 | 2023 | |
£m | £m | |
Cash and cash equivalents | 2,250 | 1,044 |
Short-term borrowings | (1,487) | (656) |
Long-term borrowings | (8,640) | (8,800) |
Derivative financial assets associated with long-term borrowings | — | 69 |
Derivative financial liabilities associated with long-term borrowings | (68) | (169) |
Total equity | 16,224 | 16,729 |
Total capital | 8,279 | 8,217 |
In May 2024 the Group’s long-term credit rating with S&P Global Ratings (S&P) was upgraded from BBB to BBB+. As at 31 December
2024, the Group’s long-term credit rating with S&P is BBB+ (stable outlook) (2023: BBB) and with Moody’s Investors Service (Moody’s)
it is Baa1 (positive outlook) (2023: Baa1). The Group’s short-term credit ratings are A-2 and P-2 with S&P and Moody’s, respectively
The Group’s policy is to borrow centrally in order to meet anticipated funding requirements. The strategy is to diversify liquidity sources
and to maintain broad access to financial markets. Each day, the Group sweeps cash to or from a number of global subsidiaries and
central treasury accounts for liquidity management purposes.
The Group uses both notional and physical cash pool arrangements as appropriate by location and currency. For notional cash pools,
liquidity is drawn against foreign currency balances to provide both local funding and central liquidity as required and with balances
actively managed and maintained to appropriate levels. As balances in notional pooling arrangements are not settled across currencies,
gross cash and overdraft balances are reported. At 31 December 2024, the Group had £1,487m (2023: £656m) of borrowings repayable
within one year and held £2,250m (2023: £1,044m) of cash and cash equivalents.
The Group uses short-term financing to manage working capital requirements and has access to a $10,000m US commercial paper
programme and a £2,000m Euro commercial paper programme, both of which were established in August 2022. At 31 December 2024
and 2023 the Group did not have any commercial paper in issue.
The Group has access to two revolving credit facilities: a $1,300m facility maturing in September 2025; and a £900m facility maturing
in September 2027. These committed facilities were undrawn at 31 December 2024.
Long-term financing consists of $6,000m in USD bonds, as well as €3,100m Euro bonds and £1,000m GBP bonds as well as a
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
159
Foreign exchange risk management
Foreign currency transaction exposures arising on internal and external trade flows are selectively hedged. The Group’s objective is
to minimise the exposure of overseas operating subsidiaries to transaction risk by matching local currency income with local currency
costs where possible. Foreign currency cash flows may be hedged selectively as approved by the TRC. Cash surpluses or borrowing
requirements of subsidiary companies are usually managed centrally using foreign exchange forward contracts and swaps to hedge
future repayments back into the originating currency.
Borrowings denominated in, or swapped into, foreign currencies that match investments in overseas Group assets may be treated as a
hedge against the relevant assets. Forward contracts in major currencies are also used to reduce exposure to the Group’s investment in
overseas assets. Refer to ‘Net investment hedges’ section of this Note for further details.
Credit risk is the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group, and arises
on cash and cash equivalents and favourable derivative financial instruments held with banks and financial institutions as well as
credit exposures to wholesale and retail customers, including outstanding receivables.
The Group considers its maximum credit risk to be £2,380m (2023: £2,777m) which is the total of the Group’s financial assets, excluding
other investments which bear equity risk rather than credit risk.
The Group’s greatest concentration of credit risk at 31 December 2024 is £316m with BNP Paribas (A/A1), and £273m with HSBC (A+/
A3). The Group’s greatest concentration of credit risk at 31 December 2023 was £342m with HSBC (A-/A3), and £158m with Citigroup
Inc. (BBB+/A3).
There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing
the loss allowance for financial assets at amortised cost since the adoption of IFRS 9.
Treasury-related credit risk
The Group has continued to maintain a consistent approach to counterparty risk throughout the year. The aggregate credit risk in
respect of financial instruments that the Group may have with one counterparty is limited by reference to the long-term credit ratings
assigned for that counterparty by a recognised credit rating agency (e.g., S&P or Moody’s.) The Group measures expected credit losses
over cash and cash equivalents as a function of individual counterparty credit ratings and associated 12-month default rates. Based on
the available credit ratings, the credit risk of outstanding financial instruments has not increased significantly since their initial
recognition. Expected credit losses over cash and cash equivalents and third-party financial derivatives are deemed to be immaterial
and so have not been recognised. No such loss has been experienced during 2024 and 2023. The credit ratings of counterparties are
set out in the below table.
BB+/Ba1 | ||||||
and below | ||||||
AAA/Aaa | AA/Aa | A/A | BBB/Baa | or unrated | Total | |
£m | £m | £m | £m | £m | £m | |
2024 | ||||||
Bank balances and deposits | — | 1 | 1,658 | 10 | 27 | 1,696 |
Money market funds | 554 | — | — | — | — | 554 |
Government securities | — | — | — | — | — | — |
Cash and cash equivalents | 554 | 1 | 1,658 | 10 | 27 | 2,250 |
Derivative financial instruments | — | 14 | 116 | — | — | 130 |
Total | 554 | 15 | 1,774 | 10 | 27 | 2,380 |
2023 | ||||||
Bank balances and deposits | 22 | 2 | 229 | 248 | 84 | 585 |
Money market funds | 93 | 363 | — | — | — | 456 |
Cash and cash equivalents | 115 | 365 | 229 | 248 | 84 | 1,041 |
Government securities | — | — | — | — | 3 | 3 |
Derivative financial instruments | — | 2 | 87 | — | — | 89 |
Total | 115 | 367 | 316 | 248 | 87 | 1,133 |
The credit ratings in the above tables are as assigned by S&P and Moody’s. Where the opinion of the two rating agencies differs,
the lower rating of the two is assigned to the counterparty. Where local rating or Fitch data is the only source available, the ratings
are converted to global ratings equivalent to those of S&P or Moody’s using published conversion tables.
Notes to the Consolidated Financial Statements
continued
160
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Wholesale and retail credit risk
The Group does not have a substantial wholesale and retail credit risk as a result of its diversified geographical presence, product
offering, consumer profile and historical credit loss information. Where appropriate, the Group utilises credit insurance and receivables
factoring to minimise the credit risk of the trade receivables in the Group (refer to Note 16 ‘Trade and other receivables’ for further
details about the Group’s expected credit losses). Factoring arrangements are based on a portfolio approach and are used to mitigate
The Group manages the interest rate risk on its net debt portfolio, with the objectives of minimising the effective net interest cost and
income statement volatility.
The Group’s main interest rate risk arises from borrowings and investments with floating rates and from the refinancing of maturing
fixed-rate debt where any changes in interest rates will affect future cash flows. The policy on interest rate risk management limits the
net amount of floating-rate debt to a specific cap.
Of the Group’s debt, 59% was held at fixed rates as at 31 December 2024 (2023: 77%), including the impact of swaps. Any bond debt
with less than three months to maturity is considered floating rate.
The forward starting interest rate contracts, exchanging floating interest for fixed interest, were designated as cash flow hedges to
pre-hedge the interest variability of the interest cash flows associated with the fixed-rate debt issued in 2022.
The interest rate swap contracts, exchanging fixed interest rate for floating interest, have been designated as fair value hedges to
hedge the variability in fair value associated with the Group’s fixed-rate debt. The interest rate swaps and the interest payments on
the loan occur simultaneously and the fair value of interest rate swaps and the fair value of related debt affect the income statement
Derivative financial instruments and hedging
Derivative financial instruments are used to mitigate exposure to foreign exchange transactional risks of the Group. The fair value of
a derivative financial instrument is classified as a non-current asset or liability if the remaining maturity is more than 12 months and
as a current asset or liability if the maturity is less than 12 months.
The Group has the following derivative financial instruments:
2024 | 2023 | |||||
Notional | Fair value | Fair value | Notional | Fair value | Fair value | |
amount | of assets | of liabilities | amount | of assets | of liabilities | |
£m | £m | £m | £m | £m | £m | |
Non-current | ||||||
Fair value hedges — interest rate swap contracts | 2,445 | — | (63) | 3,210 | — | (109) |
Net investment hedges — cross currency interest rate swaps | — | — | — | 910 | 44 | — |
Cash flow hedges — foreign exchange contracts | 175 | — | (2) | — | — | — |
Current | ||||||
Fair value hedges — interest rate swap contracts | 1,396 | — | (18) | — | — | — |
Net investment hedges — cross currency interest rate swaps | 910 | 61 | — | — | — | — |
Net investment hedges — foreign exchange contracts | 1,149 | 39 | (20) | 1,140 | 5 | (3) |
Cash flow hedges — foreign exchange contracts | 538 | 13 | (17) | 437 | 14 | (5) |
Derivatives designated and effective as hedging instruments | 6,613 | 113 | (120) | 5,697 | 63 | (117) |
Non-current | ||||||
Cross currency interest rate swap contracts | 499 | — | (5) | 1,409 | 20 | (40) |
Current | ||||||
Cross currency interest rate swap contracts | 910 | — | (31) | — | — | — |
Foreign exchange contracts | 2,032 | 17 | (4) | 2,116 | 5 | (33) |
Derivatives classified as held for trading | 3,441 | 17 | (40) | 3,525 | 25 | (73) |
Total derivative instruments | 10,054 | 130 | (160) | 9,222 | 88 | (190) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
161
Fair value hedges
At issuance in March 2022, $1,750m and €850m bonds were converted from fixed rate to floating rate using interest rate swaps.
Further, in April and May 2023 additional $1,400m of bonds issued in March 2022 were converted from fixed to floating rate using
interest rate swaps.
Cash flow hedges
In 2022, the Group entered into forward starting interest rate swaps (derivatives) to pre-hedge interest rate risk on the fixed rate
bonds issued in March 2022. These derivatives were designated in a cash flow hedge relationship. The derivatives were settled in
March 2022 and as a result cash flow hedges were terminated with a net cash inflow of £206m. The element of gains/losses of these
cash flow hedges relating to other comprehensive income is being amortised to the income statement as per the maturity profile of
the loan notes.
In 2024, the Group entered into forward starting interest rate swaps (derivatives) to pre-hedge interest rate risk on the fixed rate
bonds issued in September 2024. These derivatives were designated in a cash flow hedge relationship. The derivatives were settled in
September 2024 and as a result cash flow hedges were terminated with a net cash outflow of £3m. The element of gains/losses of
these cash flow hedges relating to other comprehensive income is being amortised to the income statement as per the maturity profile
of the loan notes.
In 2023, the Group established a programme of hedging highly probable forecast transactional foreign exchange exposure using
foreign exchange contracts (FX forwards and FX swaps). The key exposure designated under cash flow hedge accounting are forecast
receipts from customers and payments to suppliers, capital expenditure and other administration expenses payable in foreign currency.
Net investment hedges
At 31 December 2024 and 31 December 2023, certain foreign exchange contracts and cross currency interest rate swaps were
designated as net investment hedges in respect of the foreign currency translation risk arising on consolidation of the Group’s net
investment in its foreign operations as shown in the table above.
The carrying value of the EUR bonds in Note 19 ‘Borrowings’ included £2,062m (2023: £1,503m) that were also designated as hedging
instruments in net investment hedges in respect of the foreign currency translation risk arising on consolidation of the Group’s net
investment in its European (Euro) foreign operations. For net investment hedges, the balance in the foreign currency translation reserve
in relation to continuing hedges is £(155)m (2023: £(77)m).
Notes to the Consolidated Financial Statements
continued
162
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Hedging instruments
Change in | ||||
fair value for | ||||
Notional | recognising | Carrying value | ||
principal | hedge | assets/ | ||
Average | value | ineffectiveness | (liabilities) | |
strike price | £m | £m | £m | |
2024 | ||||
Cash flow hedges | ||||
Below 10 years | ||||
FX forward contracts/FX swaps | N/A | 538 | (4) | (4) |
Fair value hedges | ||||
Below 10 years | ||||
EUR IRS | 2.0% | 1,328 | (20) | (20) |
USD IRS | 3.4% | 2,512 | (61) | (61) |
Net investment hedges | ||||
Below 10 years | ||||
EUR FX Swaps/forwards | 1.2 | 384 | 8 | 8 |
CNH FX Swaps/forwards | 9.0 | 716 | (6) | (6) |
AUD FX Swaps/forwards | 2.0 | 81 | 3 | 3 |
CAD FX Swaps/forwards | 1.6 | 96 | 11 | 11 |
TWD FX Swaps/forwards | 40.1 | 47 | 1 | 1 |
CNH CCIRS | 8.6 | 910 | 61 | 61 |
EUR Bonds | N/A | 2,076 | 77 | (2,062) |
2023 | ||||
Cash flow hedges | ||||
Below 10 years | ||||
FX forward contracts/FX swaps | N/A | 437 | 8 | 8 |
Fair value hedges | ||||
Below 10 years | ||||
EUR IRS | 1.3% | 739 | (35) | (35) |
USD IRS | 3.4% | 2,471 | (74) | (74) |
Net investment hedges | ||||
Below 10 years | ||||
EUR FX swaps | 1.1 | 631 | 1 | 1 |
CNH CCIRS | 8.6 | 910 | 44 | 44 |
CNH FX swaps/forward | 9.0 | 510 | 1 | 1 |
EUR bonds | N/A | 869 | 18 | (858) |
10-30 years | ||||
EUR bonds | N/A | 652 | 13 | (646) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
163
Hedged items
2024 | 2023 | |||||||
Change in | Change in | |||||||
value for | Balance in | value for | Balance in | |||||
Accumulated | calculating | cash flow | Accumulated | calculating | cash flow | |||
Carrying | fair value | hedge | hedge | Carrying | fair value | hedge | hedge | |
amount | adjustments 1 | ineffectiveness | reserve 2 | amount | adjustments 1 | ineffectiveness | reserve 2 | |
£m | £m | £m | £m | £m | £m | £m | £m | |
Cash flow hedges | ||||||||
Pre-hedging of long-term interest rate | — | — | — | (114) | — | — | — | (133) |
Transactional FX forecast exposure 3 | 538 | — | — | 1 | 437 | — | — | (7) |
Fair value hedges | ||||||||
Bonds 4 | (3,188) | 81 | 81 | — | (3,131) | 109 | 109 | — |
Net investment hedges | ||||||||
Net assets in foreign currency 5 | 4,310 | (155) | (155) | — | 3,571 | (77) | (77) | — |
1
Accumulated fair value adjustments on the hedged items included in the carrying amount of the hedged item.
2
Balance in cash flow hedge reserve for continued transactional FX forecast hedges and discontinued hedges net of tax.
3
In 2023 the Group established a programme to hedge forecast transactional foreign exchange exposure.
4
The difference in change in value for calculating hedge ineffectiveness between derivatives and bonds is due to upfront cash receipt on derivatives and hedge ineffectiveness.
5
Relates to net investment hedges which is part of the translation reserve in equity.
The following table details the effectiveness of the hedging relationships and the amounts reclassified from the hedging reserve to
the income statement for cash flow hedges, recognised under finance income or expense. There was no ineffectiveness on fair value
on net investment hedges.
Hedging gains/(losses) | Hedge | Hedged future cash | ||
in other comprehensive | ineffectiveness | flows no longer | As hedged item | |
income | in profit or loss | expected to occur | affects profit or loss | |
£m | £m | £m | £m | |
2024 | ||||
Cash flow hedges | ||||
Transactional FX hedge | 9 | — | — | 11 |
Pre-hedging of long-term interest rates | ||||
Below 10 years | 138 | — | — | 20 |
10-30 years | 23 | — | — | 2 |
2023 | ||||
Cash flow hedges | ||||
Transactional FX hedge | 9 | — | — | 2 |
Pre-hedging of long-term interest rates | ||||
Below 10 years | 158 | — | — | 19 |
10-30 years | 29 | — | — | 3 |
Notes to the Consolidated Financial Statements
continued
164
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The table below presents the carrying amounts and the fair values of the Group’s financial assets and liabilities. The fair values of
the financial assets and liabilities are included at the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
The following methods and assumptions were used to estimate the fair values:
—
Cash and cash equivalents carried at amortised cost, trade and other receivables and certain other non-current assets, loan amounts
owing from/(to) related parties, trade and other payables and certain other non-current liabilities: approximates to the carrying amount.
—
Cash and cash equivalents (money market funds) carried at fair value: based on net asset value of the funds.
—
Short-term loans, overdrafts and commercial paper: approximates to the carrying amount because of the short maturity of
these instruments.
—
Interest rate swaps and foreign exchange contracts: based on present value of contractual cash flows using market-sourced data
(exchange rates and interest rates) at the balance sheet date.
—
Long-term loans: based on executable quotes or thinly traded prices (a level 2 fair value measurement) for European and US Medium
Term Notes; based on present value of contractual cash flows for non-voting preference shares and based on the approximation of
2024 | 2023 | |||
Carrying | Carrying | |||
value | Fair value | value | Fair value | |
£m | £m | £m | £m | |
Financial assets at fair value through other comprehensive income: | ||||
Unlisted equity investments | 82 | 82 | — | — |
Financial assets measured at amortised cost: | ||||
Cash and cash equivalents | 1,696 | 1,696 | 588 | 588 |
Trade and other receivables and certain other non-current assets | 1,796 | 1,796 | 1,595 | 1,595 |
Financial assets mandatorily measured at fair value through profit or loss: | ||||
Held for trading derivatives that are not in a designated and effective | ||||
hedging relationship | 17 | 17 | 25 | 25 |
Cash and cash equivalents (money market funds) | 554 | 554 | 456 | 456 |
Derivatives designated and effective as hedging instruments | ||||
Cash flow hedge | 13 | 13 | 14 | 14 |
Net investment hedge | 100 | 100 | 49 | 49 |
Total financial assets | 4,258 | 4,258 | 2,727 | 2,727 |
Financial liabilities measured at amortised cost: | ||||
Short-term loans and overdrafts | (43) | (43) | (60) | (60) |
Other bonds | (4,397) | (4,006) | (4,601) | (4,301) |
Long-term loans | (290) | (290) | — | — |
Non-voting preference shares | (25) | (25) | (25) | (25) |
Trade and other payables and certain other non-current liabilities in scope of IFRS 9 | (3,470) | (3,470) | (3,123) | (3,123) |
Bonds in a designated hedge relationship | (5,249) | (5,108) | (4,634) | (4,474) |
Financial liabilities mandatorily measured at fair value through profit or loss: | ||||
Held for trading derivatives that are not in a designated and effective | ||||
hedging relationship | (40) | (40) | (73) | (73) |
Derivatives designated and effective as hedging instruments | ||||
Fair value hedge | (81) | (81) | (109) | (109) |
Cash flow hedge | (17) | (17) | (5) | (5) |
Net investment hedge | (22) | (22) | (3) | (3) |
Total financial liabilities | (13,634) | (13,102) | (12,633) | (12,173) |
Net financial assets and financial liabilities | (9,376) | (8,844) | (9,906) | (9,446) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
165
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. The methods and assumptions used to
estimate the fair values of significant financial instruments on the balance sheet are consistent with those applied for the year ended
31 December 2023.
The equity investment that is valued at Level 3 is a passive investment in a private entity acquired as part of the consideration received
for the divestment of ChapStick. In the absence of specific and active market data, the investment is held at fair value based on a
multiple of the latest available rolling 12-month earnings before interest depreciation and amortisation (EBITDA) and adjusted for net
debt, which approximates to fair value.
Level 1 | Level 2 | Level 3 | Total | |
At 31 December 2024 | £m | £m | £m | £m |
Financial assets at fair value through other comprehensive income: | ||||
Unlisted equity investments | — | — | 82 | 82 |
Financial assets at fair value through profit or loss: | ||||
Held for trading derivatives that are not in a designated and effective hedging | ||||
relationship | — | 17 | — | 17 |
Cash and cash equivalents (money market funds) | 554 | — | — | 554 |
Derivatives designated and effective as hedging instruments: | ||||
Cash flow hedge | — | 13 | — | 13 |
Net investment hedge | — | 100 | — | 100 |
Total financial assets | 554 | 130 | 82 | 766 |
Financial liabilities at fair value through profit or loss: | ||||
Held for trading derivatives that are not in a designated and effective hedging relationship | — | (40) | — | (40) |
Derivatives designated and effective as hedging instruments | ||||
Fair value hedge | — | (81) | — | (81) |
Cash flow hedge | — | (17) | — | (17) |
Net investment hedge | — | (22) | — | (22) |
Total financial liabilities | — | (160) | — | (160) |
Level 1 | Level 2 | Level 3 | Total | |
At 31 December 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 | — | 25 | — | 25 |
Cash and cash equivalents (money market funds) | 456 | — | — | 456 |
Derivatives designated and effective as hedging instruments: | ||||
Cash flow hedge | — | 14 | — | 14 |
Net investment hedge | — | 49 | — | 49 |
Total financial assets | 456 | 88 | — | 544 |
Financial liabilities at fair value through profit or loss: | ||||
Held for trading derivatives that are not in a designated and effective | ||||
hedging relationship | — | (73) | — | (73) |
Derivatives designated and effective as hedging instruments | ||||
Fair value hedge | — | (109) | — | (109) |
Cash flow hedge | — | (5) | — | (5) |
Net investment hedge | — | (3) | — | (3) |
Total financial liabilities | — | (190) | — | (190) |
Notes to the Consolidated Financial Statements
continued
166
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Other assets and liabilities in scope of IFRS 9
The following table reconciles financial instruments within trade and other receivables and other non-current assets which fall within
the scope of IFRS 9 to the relevant balance sheet amounts.
The financial assets are predominantly non-interest earning. Non-financial instruments include tax receivables and prepayments,
which are outside the scope of IFRS 9.
| At 31 December 2024 | At 31 December 2023 | |||||
Financial | Non-financial | Financial | Non-financial | |||
instruments | instruments | Total | instruments | instruments | Total | |
£m | £m | £m | £m | £m | £m | |
Trade and other receivables (Note 16) | 1,780 | 275 | 2,055 | 1,567 | 289 | 1,856 |
Other non-current assets (Note 16) | 16 | 55 | 71 | 28 | 86 | 114 |
Total | 1,796 | 330 | 2,126 | 1,595 | 375 | 1,970 |
The following table reconciles financial liabilities within trade and other payables, other provisions and other non-current liabilities
which fall within the scope of IFRS 9 to the relevant balance sheet amounts. Accrued wages and salaries are included within financial
liabilities. Non-financial instruments include payments on account, tax and social security payables and provisions which do not arise
from contractual obligations to deliver cash or another financial asset, which are outside the scope of IFRS 9.
| At 31 December 2024 | At 31 December 2023 | |||||
Financial | Non-financial | Financial | Non-financial | |||
instruments | instruments | Total | instruments | instruments | Total | |
£m | £m | £m | £m | £m | £m | |
Trade and other payables (Note 18) | (3,268) | (437) | (3,705) | (3,064) | (462) | (3,526) |
Other financial liability (Note 27) | (177) | — | (177) | — | — | — |
Provisions (Note 21) | (5) | (170) | (175) | (11) | (158) | (169) |
Other non-current liabilities | (20) | (8) | (28) | (48) | (5) | (53) |
Total | (3,470) | (615) | (4,085) | (3,123) | (625) | (3,748) |
Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
There are also arrangements that do not meet the criteria for offsetting but still allow for the related amounts to be offset in certain
circumstances, such as bankruptcy or the termination of a contract.
The following tables set out the financial assets and liabilities that are offset, or subject to enforceable master netting arrangements and
other similar agreements but not offset, as at 31 December 2024 and 31 December 2023. The column ‘Net amount’ shows the impact on
the Group’s balance sheet if all offset rights were exercised.
Net financial | |||||
Gross financial | assets/ | ||||
Gross financial | assets/ | (liabilities) | Related | ||
assets/ | (liabilities) | per balance | amounts | ||
(liabilities) | set off | sheet | not offset | Net amount | |
At 31 December 2024 | £m | £m | £m | £m | £m |
Financial assets | |||||
Derivative financial assets | 130 | — | 130 | (90) | 40 |
Financial liabilities | |||||
Derivative financial liabilities | (160) | — | (160) | 90 | (70) |
At 31 December 2023 | |||||
Financial assets | |||||
Derivative financial assets | 88 | — | 88 | (68) | 20 |
Financial liabilities | |||||
Derivative financial liabilities | (190) | — | (190) | 68 | (122) |
Amounts which do not meet the criteria for offsetting on the balance sheet but could be settled net in certain circumstances principally
relate to derivative transactions under International Swaps and Derivatives Association (ISDA) agreements where each party has the
option to settle amounts on a net basis in the event of default of the other party. As there is presently not a legally enforceable right
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
167
Sensitivity analysis
The two major foreign currencies in which the Group’s financial instruments are denominated are US Dollars and Euros. Financial
instruments are only considered sensitive to foreign exchange rates where they are not in the functional currency of the entity that
holds them. Intercompany loans which are fully hedged to maturity with a currency swap have been excluded from this analysis.
2024 | 2023 | |
(Decrease)/ | (Decrease)/ | |
increase | increase | |
in income | in income | |
£m | £m | |
10 cent appreciation of the US Dollar | 2 | — |
10 cent depreciation of the US Dollar | (2) | — |
10 cent appreciation of the Euro | 1 | 3 |
10 cent depreciation of the Euro | — | (2) |
The equity impact, shown below, for foreign exchange sensitivity relates to derivative and non-derivative financial instruments hedging
the Group’s net investments in its European (Euro) and Chinese (CNY) foreign operations.
2024 | 2023 | |
(Decrease)/ | (Decrease)/ | |
increase | increase | |
in equity | in equity | |
£m | £m | |
10 cent appreciation of the CNY | (17) | (17) |
10 cent depreciation of the CNY | 17 | 16 |
10 cent appreciation of the Euro | (189) | (210) |
10 cent depreciation of the Euro | 160 | 177 |
10 cent appreciation of the US Dollar | (6) | (5) |
10 cent depreciation of the US Dollar | 5 | 4 |
The Group is exposed to interest rate risk on its outstanding borrowings and investments where any changes in interest rates will affect
future cash flows or the fair values of financial instruments. The table below shows the Group’s hypothetical sensitivity to changes in
interest rates in relation to Pound Sterling, US Dollar and Euro variable rate financial assets and liabilities, including derivatives. If the
interest rates applicable to floating-rate financial assets and liabilities were to have increased by 1% (100 basis points), and assuming
other variables had remained constant, it is estimated that the Group’s finance income for 2024 would have decreased by approximately
£12m (2023: decreased by approximately £47m). A 1% (100 basis points) movement in US Dollar interest rates would not have any
impact to equity (2023: no impact to equity). A 1% (100 basis points) movement in interest rates in relation to Pound Sterling or Euro
is not deemed to have a material effect on equity (2023: not deemed to have a material effect on equity).
2024 | 2023 | |
Increase/ | Increase/ | |
(decrease) | (decrease) | |
in income | in income | |
£m | £m | |
1% (100 basis points) increase in Pound Sterling interest rates | 13 | 17 |
1% (100 basis points) increase in US Dollar interest rates | (17) | (43) |
1% (100 basis points) increase in Euro interest rates | (8) | (19) |
Notes to the Consolidated Financial Statements
continued
168
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The following table provides an analysis of the anticipated contractual cash flows including interest payable for the Group’s borrowings
on an undiscounted basis. Interest is calculated based on debt held at the balance sheet date without taking account of future issuance.
Floating-rate interest is estimated using the prevailing interest rate at the balance sheet date. Cash flows in foreign currencies are
Trade | ||||||
payables | ||||||
and other | ||||||
Interest | liabilities | |||||
Interest on | Lease | on lease | not in | |||
Borrowings | borrowings | liabilities | liabilities | net debt | Total | |
At 31 December 2024 | £m | £m | £m | £m | £m | £m |
Due in less than one year | 1,437 | 270 | 50 | 3 | 3,485 | 5,245 |
Between one and two years | 694 | 253 | 36 | 2 | 8 | 993 |
Between two and three years | 1,587 | 209 | 19 | 1 | 1 | 1,817 |
Between three and four years | 919 | 190 | 9 | — | — | 1,118 |
Between four and five years | 1,075 | 149 | 6 | — | — | 1,230 |
After five years | 4,267 | 1,072 | 3 | — | — | 5,342 |
Gross contractual cash flows | 9,979 | 2,143 | 123 | 6 | 3,494 | 15,745 |
At 31 December 2023 | ||||||
Due in less than one year | 608 | 275 | 48 | 22 | 3,110 | 4,063 |
Between one and two years | 1,336 | 236 | 36 | 5 | 13 | 1,626 |
Between two and three years | 707 | 220 | 25 | 2 | — | 954 |
Between three and four years | 1,561 | 176 | 14 | 1 | — | 1,752 |
Between four and five years | 299 | 163 | 7 | — | — | 469 |
After five years | 4,783 | 1,143 | 7 | — | — | 5,933 |
Gross contractual cash flows | 9,294 | 2,213 | 137 | 30 | 3,123 | 14,797 |
cash flows. Cash flows in foreign currencies are translated using spot rates at 31 December. The gross cash flows of foreign exchange
contracts are presented for the purposes of this table although, in practice, the Group uses standard settlement arrangements to
reduce its liquidity requirements on these instruments.
2024 | 2023 | |||
Receivables | Payables | Receivables | Payables | |
£m | £m | £m | £m | |
Foreign exchange contracts | ||||
Due in less than one year | 8,912 | (8,873) | 6,171 | (6,180) |
Between one and two years | 103 | (100) | — | — |
Between two and three years | 110 | (104) | — | — |
Interest rate swap contracts | ||||
Due in less than one year | 3,302 | (3,330) | 216 | (289) |
Between one and two years | 1,242 | (1,242) | 3,274 | (3,326) |
Between two and three years | 341 | (347) | 1,332 | (1,294) |
Between three and four years | 620 | (625) | 349 | (347) |
Between four and five years | 223 | (227) | 30 | (29) |
After five years | 458 | (468) | 862 | (864) |
Gross contractual cash flows | 15,311 | (15,316) | 12,234 | (12,329) |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
169
schemes is calculated at the grant date using a fair value model and is charged to the income statement over the vesting period with
a corresponding adjustment to the equity share-based payment reserve. At the end of each reporting period, the Group reviews its
charge and revises it accordingly based on the number of shares expected to vest. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate.
For cash-settled share-based payments, the fair value of service rendered is based on the fair value of the liability related to the
Description of the Group’s plans
The Group operates a number of share-based payment schemes for Executive Directors and other employees which are
predominantly equity-settled, however may be cash-settled in certain locations.
Performance Share Plan
Under the Performance Share Plan, awards are granted to Executive Directors and other employees over ordinary shares or ADSs in
Haleon plc at no cost. The percentage of each award that vests is based upon the performance of the Group over a defined measurement
period with dividends reinvested during the same period. The performance conditions attached to each award are based on three
measures over a three-year performance period. These are cumulative free cash flow (50%), adjusted diluted EPS (30%) and organic
operating margin improvement (20%). In addition, an environmental, social and governance (ESG) qualifier applies which can reduce
the level of the overall vesting by up to 75%.
Share Value Plan
Under the Share Value Plan, awards are granted to qualifying employees over ordinary shares or ADSs in Haleon plc at no cost.
These awards generally vest after three years and there are normally no performance conditions attached. The fair value of these
awards is determined based on the closing share price on the day of grant and adjusted for the expected dividend yield of 2.22%
(2023: 1.54%, 2022: 1.59%) during the vesting period.
Share Save and Share Reward Plans
The Share Save and Share Reward Plans are HMRC-approved savings-related plans. These plans are made available to all UK employees.
The Share Save Plan enables participants to save up to £500 per month, over a fixed three-year period. At the end of the fixed period
the savings can be used to purchase ordinary shares in the Company at a predetermined discount of up to 20%, which is set at the time
of each Share Save launch.
Participants of the Share Reward Plan contribute up to £125 per month to purchase Haleon plc ordinary shares. The Company
then matches these purchases on a one-for-one basis. Participants are eligible to receive dividends during the holding period either
as cash or reinvested to buy further shares. The shares are placed in a UK resident trust and are available to the individual with tax
advantages after a five-year period.
Deferred Annual Bonus Plan (DABP)
Executive Directors are required to defer 50% of any bonus earned into an award over ordinary shares or ADSs under the DABP,
which will normally vest on the third anniversary of grant, subject to continued employment. DABP awards are eligible for dividend
equivalent payments in respect of dividends that would have been paid on the ordinary shares or ADSs up to the date the awards vest.
Charge (£m) | 2024 | 2023 |
Equity-settled | ||
Performance Share Plan | 29 | 17 |
Share Value Plan | 72 | 58 |
Share Save Plan | 1 | 1 |
Cash-settled | ||
Performance Share Plan | 1 | — |
Share Value Plan | 14 | 11 |
Total | 117 | 87 |
The Group has £25m of outstanding liabilities as at 31 December 2024 in relation to cash-settled awards (2023: £13m). There were
£3m worth of releases from Group cash-settled provision in 2024 (2023: £nil). There were no cancellations or modifications to awards
in 2024 or 2023.
Notes to the Consolidated Financial Statements
continued
170
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The movements in ordinary shares, ADS awards and share options during the year, split between each of the relevant schemes,
are shown below:
Performance Share Plan | Share Value Plan | Share Save Plan 1 | |||
Number of share awards (‘000) | Ordinary shares | ADS | Ordinary shares | ADS | Share options |
At 1 January 2023 | 9,479 | 1,620 | 23,664 | 7,590 | 4,623 |
Awards granted | 9,785 | 2,093 | 18,881 | 6,370 | 1,163 |
Dividends reinvested | 230 | 44 | 7 | — | n/a |
Awards released/exercised | — | — | (653) | (319) | (9) |
Awards forfeited | (453) | (206) | (2,958) | (786) | (287) |
At 31 December 2023 | 19,041 | 3,551 | 38,941 | 12,855 | 5,490 |
Awards granted | 11,830 | 945 | 18,442 | 5,329 | 757 |
Dividends reinvested | 475 | 54 | 14 | — | n/a |
Awards released/exercised | (537) | (573) | (6,495) | (2,080) | (206) |
Awards forfeited | (3,130) | (1,060) | (6,032) | (2,199) | (670) |
At 31 December 2024 | 27,679 | 2,917 | 44,870 | 13,905 | 5,371 |
1
Number of share options exercisable as at 31 December 2024 was 156,008 (2023: 168,350).
Fair value of awards
The weighted average fair values of share awards and share options granted during the year were as below:
Weighted fair value | 2024 | 2023 |
Performance Share Plan | ||
Ordinary shares | £3.46 | £3.33 |
ADSs | $8.62 | $8.37 |
Share Value Plan | ||
Ordinary shares | £3.20 | £3.21 |
ADSs | $8.14 | $8.00 |
Share Save Plan 1 | ||
Share options | £1.04 | £0.93 |
1
Weighted average exercise prices (£) for options exercised during the year was £2.28.
For the purposes of valuing options in relation to the Share Save Plan to arrive at the share-based payment charge, a Black-Scholes
option pricing model has been used. The assumptions used in the model are as follows:
2024 Grant | 2023 Grant | |
Weighted average fair value at the measurement date (£) | 1.04 | 0.93 |
Risk-free interest rate (%) | 4.22 | 3.53 |
Expected dividend yield (%) | 2.02 | 1.88 |
Volatility (%) | 20.94 | 23.63 |
Expected life (years) | 3.5 | 3.5 |
Share Save Plan-related options grant price (including 20% discount) (£) | 3.00 | 2.66 |
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the share options is
indicative of future trends, which may not necessarily be the actual outcome.
At 31 December 2024, the range of exercise prices on options outstanding were between £2.27 to £3.00 (2023: £2.27 to £2.66) with
remaining weighted average contractual life of 1.5 years (2023: 2.3 years). The weighted average market price on exercise during the
year was £3.50 (2023: £3.28).
There has been no change in the effective exercise price of any outstanding options during the year.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
171
Employee benefit trusts
The Group sponsors employee benefit trusts (EBTs) to acquire and hold shares in Haleon plc to satisfy awards made under employee
share plans. The trustees of the EBTs purchase shares with finance provided by the Group by way of gifts or loans. The costs of running
the EBTs are charged to the income statement. Shares held by the EBTs are deducted from other reserves and amortised down to the
value of proceeds, if any, receivable from other subsidiaries on exercise by a transfer to retained earnings. The trustees have waived
their rights to dividends on the shares held by the EBTs. At 31 December 2024, the EBTs held 0.6m shares (2023: 10.4m shares, 2022:
predecessor accounting. All assets and liabilities acquired are recognised at their previous carrying values with effect from the
beginning of the earliest period reported in the financial statements. No new goodwill arises from such transactions and the
differences between the fair value of the consideration paid and the carrying value of assets and liabilities acquired is recorded
within equity in the merger reserve.
Business combinations where common control does not exist before the transaction are accounted for using the acquisition accounting
method. Identifiable assets, liabilities and contingent liabilities acquired are measured at fair value at acquisition date. The consideration
transferred is measured at fair value and includes the fair value of any contingent consideration. Where the consideration transferred,
together with the non-controlling interest, exceeds the fair value of the net assets, liabilities and contingent liabilities acquired, the excess
is recorded as goodwill, denominated in the currency of the operation acquired.
The costs related to business combinations are charged to the income statement in the period in which they are incurred. Where not all
the equity of a subsidiary is acquired, the non-controlling interest is recognised either at fair value or at the non-controlling interest’s
Transactions with non-controlling interests are accounted for within equity. Where the Group has issued a put option over shares held
by a non-controlling interest, the Group derecognises the non-controlling interests and instead recognises a financial liability for the
amount likely to be paid to the non-controlling interest on the exercise of those options. Movements in the estimated liability in
Acquisitions
In China, the Group’s OTC business (which represents c.40% of Haleon’s total China business) is conducted through a subsidiary.
The subsidiary Tianjin TSKF Pharmaceutical Co., Ltd. (TSKF) is a joint venture between Haleon, the Tianjin Pharmaceutical Group (TPG)
and Tianjin Pharmaceutical Da Ren Tang Group Corporation Limited (DRTG).
On 27 December 2024, Haleon completed the purchase of 33% of the equity interest in TSKF from the partners, TPG and DRTG for a
total consideration of RMB 4,465 million (£486 million). TSKF was already controlled and therefore consolidated prior to this
transaction. The transactions were recognised in retained earnings.
Haleon also signed an amended Joint Venture Agreement with DRTG which gives the Group an option to buy the remaining 12% of
TSKF. The Group recognised a financial liability of £177m as the option value. The option value was determined based on the same
equity value used for the 33% equity interest purchase. As a result, because the Haleon option over the shares to be purchased gives
Haleon present access to returns over these shares held by DRTG, the non-controlling interest presented in equity for the 12% was
derecognised.
On 28 April 2023, the Group completed the acquisition of the Jacarepaguá (Brazil) manufacturing site from GSK for a final
consideration of £70m (BRL 434m) as a part of the demerger which has been accounted for as business combination. The fair value
of the assets and liabilities recorded has been finalised in the year ending 31 December 2023 which resulted in the recognition of a
bargain purchase gain of £7m. The gain from bargain purchase is a result of an increase in the fair value of identified assets during
the period prior to the closing date.
Disposals
On 30 September 2024, the Group completed the sale of the Nicotine Replacement Therapy (NRT) business outside the US to Dr Reddy’s
Laboratories SA for a total consideration of £485m (with additional proceeds from the transfer of inventory). This comprises an upfront
payment of £458m and a deferred, performance-based consideration with an estimated fair value of £27m as of 30 September 2024.
The Group recognised a £121m gain on disposal in the current year, net of deal costs. In addition, the Group previously incurred £10m
of deal costs in 2023.
On 31 May 2024, the Group completed the disposal of the rights in the ChapStick brand to Suave Brands Company, a portfolio
company of Yellow Wood Partners, for a cash consideration of £324m ($410m), as well as a passive minority interest valued at £80m
in the Suave Brands Company. No pre-tax loss or gain was recognised on the disposal.
In 2023, the Group completed the disposal of the rights in Lamisil, an amortised brand, for cash consideration of £235m. This resulted in a
Notes to the Consolidated Financial Statements
continued
172
Haleon
Annual Report and Form 20-F 2024
Financial Statements
2024 | 2023 | |
Assets held for sale | £m | £m |
Goodwill | — | — |
Intangibles | — | 380 |
Property, plant and equipment | — | — |
Inventories | — | 16 |
Assets held for sale | — | 396 |
In 2023, the Group reclassified £377m of intangible asset after impairment of £170m and £16m of inventory relating to the ChapStick
brand as an asset held for sale. In 2024, the Group reversed £15m of impairment related to the Chapstick brand. The divestment is
shareholder approval at the Company’s AGM, this dividend will be paid on 5 June 2025 to holders of ordinary shares and ADSs on
A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Company has existing rights
that give it the current ability to direct the activities that affect the Company’s returns and exposure or rights to variable returns from
the entity.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective
date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with those used by the Group. All intra-group transactions, balances,
income and expenses are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the
original acquisition and the non-controlling shareholder’s share of changes in equity since the date of the acquisition. Total comprehensive
income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
173
List of subsidiaries
A full list of the Company’s subsidiaries (as defined in the Large and Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008) as at 31 December 2024 is detailed below:
Effective % | |||
Company name | ownership | Security | Registered address |
Wholly owned subsidiaries | |||
Altogether Services, Inc. | 100% | Common | c/o United Corporate Services Inc., 10 Bank Street, |
Suite 560, White Plains NY 10606, United States | |||
Consumer Healthcare Holdings Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, |
Surrey, KT13 0NY, England | |||
Consumer Healthcare Intermediate Holdings Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, |
Surrey, KT13 0NY, England | |||
Duncan Consumer Healthcare Philippines Inc. | 100% | Common | 23rd Floor, The Finance Centre, 26th Street Corner 9th Avenue, |
Bonifacio Global City, Taguig City, 1634, Philippines | |||
Ferrosan (No.2) AB 3 | 100% | Ordinary | Gävlegatan 16, 113 30, Stockholm, Sweden |
Ferrosan ApS | 100% | A Shares, | Delta Park 37, 2665, Vallensbæk Strand, Denmark |
B shares | |||
GlaxoSmithKline Asia Private Limited | 100% | Equity | Patiala Road, Nabha 147201, Dist Patiala, Punjab, India |
GlaxoSmithKline Consumer Healthcare (UK) (No.1) | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, |
Limited | Surrey, KT13 0NY, England | ||
GlaxoSmithKline Consumer Healthcare Investments | 100% | Ordinary | Knockbrack, Dungarvan, Co. Waterford, X35 RY76, Ireland |
(Ireland) (No.3) Limited 4 | |||
GlaxoSmithKline Consumer Healthcare Vietnam | 100% | Charter | Floor 16, Metropolitan, 235 Dong Khoi, Ben Nghe Ward, |
Company Limited | Capital | District 1, Ho Chi Minh City, Vietnam | |
GlaxoSmithKline Consumer Private Limited | 100% | Equity | Patiala Road, Nabha 147201, Dist Patiala, Punjab, India |
GlaxoSmithKline Limited | 100% | Ordinary | Likoni Road, PO Box 78392, Nairobi, Kenya |
GlaxoSmithKline Paraguay S.A. | 100% | Ordinary | Oficial Gilberto Aranda 333, Planta Alta casi Salvador del |
Mundo, Asuncion, Paraguay | |||
GSK Consumer Healthcare Holdings (No.5) Limited 3 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
GSK Consumer Healthcare Holdings (No.6) Limited 3 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
GSK Consumer Healthcare Trinidad and Tobago Limited | 100% | Ordinary | Level 2, Invader’s Bay Tower, Invader’s Bay, Port-of-Spain, |
Trinidad | |||
Haleon Alcala, S.A. | 100% | Ordinary | Ctra de Ajalvir Km 2.500, Alcala de Henares, 28806, |
Madrid, Spain | |||
Haleon Arabia Limited | 100% | Ordinary | 603 Salamah Tower, 6th Floor, Madinah Road, |
Al-Salamah District, Jeddah 21425, Saudi Arabia | |||
Haleon Argentina S.A. | 100% | Ordinary | Tucuman 1, 4th Floor, City of Buenos Aires, C1049AAA, |
Argentina | |||
Haleon Australia Pty Ltd | 100% | Ordinary | Level 48, 8 Parramatta Square, 10 Darcy Street, Parramatta, |
Sydney NSW 2150, Australia | |||
Haleon Austria GmbH | 100% | Ordinary | Schottenring 25, Wien, 1010 |
Haleon Bangladesh Limited | 100% | Ordinary | K-248/1 Dewalibari, Konabari, Gazipur-1700, Bangladesh |
Haleon Belgium N.V. | 100% | Ordinary | Da Vincilaan 5, 1930 Zaventem, Belgium |
Haleon Brasil Distribuidora Ltda | 100% | Quotas | Av das Americas, 3500, 4th floor, rooms 407-420, |
Rio de Janeiro, RJ, 22621-000, Brazil | |||
Haleon Canada ULC / Haleon Canada SRI | 100% | A Class | 1133 Melville Street, Suite 3500, The Stack, Vancouver BC |
Preference, | V6E 4E5, Canada | ||
Common | |||
Haleon CH Holding SARL | 100% | Ordinary | Route de l’Etraz, 1197 Prangins, Switzerland |
Haleon (China) Co., Ltd | 100% | Registered | Room 506, No.1 Shen’gang Boulevard, Lin-gang Special |
Capital | Area of China Pilot Free Trade Zone, Shanghai, 200000, | ||
China | |||
Haleon CH Israel Ltd | 100% | Ordinary | 25 Basel Street, Petech Tikva 49510, Israel |
Haleon CH SARL 2 | 100% | Ordinary | Route de L’Etraz, 1197 Prangins, Switzerland |
Haleon Chile SpA | 100% | Interests Share Av. Andrés Bello N°2687, 25th floor, Las Condes, Chile | |
Haleon Colombia S.A.S. | 100% | Ordinary | Carrera 7 No. 113-43 Piso 4, Colombia |
Notes to the Consolidated Financial Statements
continued
174
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Effective % | |||
Company name | ownership | Security | Registered address |
Haleon Consumer Health (Thailand) Limited | 100% | Ordinary | 13th Floor, Unit 13.06, Wave Place Building, 55 Wireless |
Road, Lumpini Sub-district, Pathumwan District, Bangkok, | |||
10330, Thailand | |||
Haleon Consumer Healthcare Mexico, | 100% | Ordinary, | Boulevard Adolfo Ruiz Cortines No. 3720, Torre 3 Piso 11, |
Sociedad de Responsabilidad Limitada de | Ordinary | Colonia Jardines del Pedregal, Alcaldía Alvaro Obregón, | |
Capital Variable | Variable | Ciudad de México, C.P. 01900, Mexico | |
Haleon Costa Rica S.A. | 100% | Ordinary | Oficentro Terracampus, Edificio, Uno, Quinto Piso, |
Autopista Florencio del Castillo, kilometro siete, Cartago, | |||
La Unión San Diego, Costa Rica | |||
Haleon Czech Republic s.r.o. | 100% | Ordinary | Hvezdova 1734/2c, Prague, 4 140 00, Czech Republic |
Haleon Denmark Aps | 100% | Ordinary | Delta Park 37, 2665, Vallensbæk Strand, Denmark |
Haleon EG General Trading LLC | 100% | Quotas | North 90th street, Boomerang Building, 5th District, |
Cairo, Egypt | |||
Haleon EG Limited | 100% | Ordinary | North 90th street, Boomerang Building, 5th District, |
Cairo, Egypt | |||
Haleon Finland Oy | 100% | Ordinary | Energiakuja 3, Helsinki, 00180, Finland |
Haleon France | 100% | Ordinary | 23 rue François Jacob, 92500, Rueil-Malmaison, France |
Haleon Germany GmbH | 100% | Ordinary | Barthstr. 4, 80339, München, Germany |
Haleon Hellas Single Member Societe Anonyme | 100% | Ordinary | 11 Kifisias Avenue, Athens, Attica, 151 23, Greece |
Haleon Holdings (No.2) LLC 2 | 100% | LLC Interests | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon Hong Kong Limited | 100% | Ordinary | Unit 2810-2812, 28/F, Airside, 2 Concorde Road, Kai Tak |
Hong Kong, China | |||
Haleon Hungary Korlátolt Felelosségu Társaság | 100% | Membership | H-1124, Csorsz utca 43, Budapest, Hungary |
Interests | |||
Haleon Insurance Limited | 100% | Ordinary | Dorey Court, Admiral Park, St Peter Port, GY1 4AT, Guernsey |
Haleon Intermediate Holdings Limited 1,2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon Ireland Dungarvan Limited | 100% | Ordinary | Knockbrack, Dungarvan, Co Waterford, X35 RY76, Ireland |
Haleon Ireland Limited | 100% | Ordinary | 12 Riverwalk, Citywest Business Campus, Dublin 24, Ireland |
Haleon Italy Manufacturing S.r.l. | 100% | Quotas | 90, Via Nettunese, 04011, Aprilia (Prov. di Latina), Italy |
Haleon Italy S.r.l. | 100% | Ordinary | Via Monte Rosa 91, Milano, Italy, 20149 |
Haleon Japan K.K. | 100% | Ordinary | 1-8-1 Akasaka Minato-ku, Tokyo, Japan |
Haleon Kazakhstan Limited Liability Partnership | 100% | Charter | 32 A Manasa Str., Bostandyk District, Almaty, 050008, |
Capital | Kazakhstan | ||
Haleon Korea Co., Ltd. | 100% | Ordinary | 9F LS Yongsan Tower, 92 Hangang-daero, Yongsan-gu, |
Seoul, 04386, Republic of Korea | |||
Haleon Lanka Enterprises Limited | 100% | Ordinary, | 121 Galle Road, Kaldemulla, Moratuwa, Sri Lanka |
Ordinary B | |||
Haleon Lanka (Private) Limited | 100% | Ordinary | World Trade Center, Level 34, West Tower, Echelon Square, |
Colombo 1, Sri Lanka | |||
Haleon Levice, s.r.o. | 100% | Ordinary | Priemyselny Park Gena, Ul. E. Sachsa 4-6, 934 01, |
Levice, Slovakia | |||
Haleon Malaysia Sdn. Bhd. | 100% | Ordinary | Lot 89, Jalan Enggang, Ampang/Hulu Kelang Industrial |
Estate, Selangor Darul Ehsan, 68000 Ampang, Malaysia | |||
Haleon Netherlands B.V. | 100% | Ordinary | Van Asch van Wijckstraat 55G, 3811 LP, Amersfoort, |
Netherlands | |||
Haleon Netherlands Capital B.V. | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, | |||
Haleon New Zealand ULC | 100% | Ordinary | Level 1, 1.04, 12 Madden Street, Auckland, 1010, |
New Zealand | |||
Haleon Norway AS | 100% | Ordinary | Lysaker Torg 5, 3rd floor, Lysaker, 1366, Norway |
Haleon Panama S.A. | 100% | Ordinary | Urbanizacion Industrial Juan D, Calles A Y B, |
Republic of Panama, Panama | |||
Haleon Panama Sociedad de Responsabilidad Limitada | 100% | Participation | Urbanizacion Industrial Juan D, Calles A Y B, |
Interests | Republic of Panama, Panama |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
175
Effective % | |||
Company name | ownership | Security | Registered address |
Haleon Peru S.R.L | 100% | Ordinary | Av Jorge Basadre 349, piso 5, San Isidro, Lima, 05W-109, |
Peru | |||
Haleon Philippines, Inc. | 100% | Common | 23rd Floor, The Finance Centre, 26th Street Corner 9th Avenue, |
Bonifacio Global City, Taguig City, 1634, Philippines | |||
Haleon Poland sp. z.o.o. | 100% | Ordinary | Rzymowskiego 53, 02-697, Warszawa, Poland |
Haleon Portugal, Lda. | 100% | Ordinary | Rua Dr Antonio Loureiro Borges No 3, Arquiparque, |
Quota | Miraflores, 1495-131, Alges, Portugal | ||
Haleon Romania SRL | 100% | Ordinary | 1-5 Costache Negri Street, Opera Center One, 6th floor |
(Zone 2), District 5, Bucharest, Romania | |||
Haleon (Shanghai) Health Management Consulting | 100% | Registered | Unit 03, 25th floor, No. 90 Qirong Road, Pilot Free Trade |
Co., Ltd. | Capital | Zone, Shanghai, China | |
Haleon (Suzhou) Pharmaceutical Co., Ltd. | 100% | Registered | 4 Baodai West Road, Suzhou, Jiangsu Province, |
Capital | 215128, China | ||
Haleon (Suzhou) Technology Co., Ltd. | 100% | Registered | Second floor of the Administrative Building, No. 669, |
Capital | Gangpu, Guoxiang Street, Wuzhong Economic Development | ||
Zone, Suzhou, China | |||
Haleon Schweiz AG | 100% | Ordinary | Suurstoffi 14, 6343, Rotkreuz, Switzerland |
Haleon Singapore Pte. Ltd. | 100% | Ordinary | 23, Rochester Park #03-02, Singapore, 139234, Singapore |
Haleon Slovakia s. r. o. | 100% | Ownership | Galvaniho 7/A, Bratislava, 821 04, Slovakia |
Interests | |||
Haleon South Africa (Pty) Ltd | 100% | Ordinary | 17 Muswell Road South, Block D - Wedgefield Phase 2, |
Bryanston, Gauteng, 2191, South Africa | |||
Haleon Spain, S.A. | 100% | Ordinary | Severo Ochoa, 2, Parque Tecnologico de Madrid, Tres Cantos, |
28760, Madrid, Spain | |||
Haleon Sweden AB | 100% | Ordinary | Gävlegatan 16, 113 30, Stockholm, Sweden |
Haleon (Taizhou) Technology Co., Ltd | 100% | Registered | Room 708 in Building D, Phase II of New Drug Innovation |
Capital | Base, Taizhou, Jiangsu Province, 225300, China | ||
Haleon Tuketici Sagligi Anonim Sirketi | 100% | Nominative | Esentepe Mah. Bahar Sk. Özdilek River Plaza, Vyndham |
Grand No: 13 İç Kapı No: 80 Şişli, Istanbul, Turkey | |||
Haleon UK Capital plc | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Corporate Director Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Corporate Secretary Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Enterprises Limited 2 | 100% | Voting shares | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Export Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, United Kingdom | |||
Haleon UK Finance (USD) Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Finance Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Holding Canada Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Holding New Zealand Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Holding Sri Lanka Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Holdings (No.1) Limited 2 | 100% | Non-voting | Building 5, First Floor, The Heights, Weybridge, Surrey, |
Preference | KT13 0NY, England | ||
Shares, | |||
Ordinary | |||
Haleon UK Holdings (No.2) Limited 2 | 100% | A Shares, | Building 5, First Floor, The Heights, Weybridge, Surrey, |
B Shares, | KT13 0NY, England | ||
Preference | |||
Shares, | |||
Deferred | |||
Shares |
Notes to the Consolidated Financial Statements
continued
176
Haleon
Annual Report and Form 20-F 2024
Financial Statements
Effective % | |||
Company name | ownership | Security | Registered address |
Haleon UK Holdings (No.3) Limited | 100% | Non-voting | Building 5, First Floor, The Heights, Weybridge, Surrey, |
Preference | KT13 0NY, England | ||
Shares, | |||
Ordinary | |||
Haleon UK Holdings (No.7) Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Holdings Limited 2 | 100% | A Shares, | Building 5, First Floor, The Heights, Weybridge, Surrey, |
B Shares, | KT13 0NY, England | ||
C Shares | |||
Haleon UK IP (No.2) Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK IP Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Research Limited | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Services Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Trading Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, England | |||
Haleon UK Trading Services Limited 2 | 100% | Ordinary | Building 5, First Floor, The Heights, Weybridge, Surrey, |
KT13 0NY, United Kingdom | |||
Haleon US Capital LLC 2 | 100% | LLC Interests | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon US Holdings Inc. | 100% | Preferred, | Corporation Service Company, 251 Little Falls Drive, |
Common | Wilmington DE 19808, United States | ||
Haleon US Holdings LLC 2 | 100% | LLC Interests | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon US Inc. | 100% | Common | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon US IP LLC | 100% | LLC Interests | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon US LLC | 100% | LLC Interests | Corporation Service Company, 2595 Interstate Drive Suite 103, |
Harrisburg PA 17110, United States | |||
Haleon US Services Inc. | 100% | Common | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Iodosan S.p.A. | 100% | Ordinary | Via Monte Rosa 91, Milano, Italy, 20149 |
JSC Haleon Rus | 100% | Ordinary | Premises III, Room 9, floor 6, Presnenskaya nab. 10, 123112, |
Moscow, Russian Federation | |||
Limited Liability Company “Haleon Ukraine” | 100% | Ownership | Pavla Tychyny avenue, 1-V, Kiev, 02152, Ukraine |
Interests | |||
N.C.H. — Nutrition Consumer Health Ltd | 100% | Ordinary | 14 Hamephalsim St, Petach Tikva, Israel |
Panadol GmbH | 100% | Ordinary | Barthstr. 4, 80339, München, Germany |
PF Consumer Healthcare B.V. | 100% | Class A, | Van Asch van Wijckstraat 55G, 3811 LP Amersfoort, |
Class B | Netherlands | ||
PF Consumer Healthcare Brazil Importadora e | 100% | Quota | Barueri, at Avenida Ceci, No.1900, Block III, Part 67, |
Distribuidora de Medicamentos Ltda | Tambore District, Sao Paulo, 06460, Brazil | ||
PF Consumer Healthcare Canada ULC/ | 100% | Common | 1133 Melville Street, Suite, 3500, The Stack, Vancouver BC |
PF Soins De Sante SRI | V6E 4E5, Canada | ||
PF Consumer Healthcare Holding B.V. | 100% | Ordinary | Van Asch van Wijckstraat 55G, 3811 LP Amersfoort, |
Netherlands | |||
PF Consumer Taiwan LLC | 100% | Interests | The Corporation Trust Company, Corporation Trust Center, |
1209 Orange Street, Wilmington DE 19801, United States | |||
Pfizer Laboratories PFE (Pty) Ltd. | 100% | Common | Flushing Meadows Building, The Campus, 57 Sloane Street, |
Bryanston 2021, South Africa | |||
Pfizer PFE Colombia S.A.S | 100% | Common | Carrera 7 No. 113 - 43 Piso 4, Colombia |
Financial Statements
Notes to the Consolidated Financial Statements
Haleon
Annual Report and Form 20-F 2024
177
Effective % | |||
Company name | ownership | Security | Registered address |
PT Haleon Indonesia Trading | 100% | Ordinary | Pondok Indah Office Tower 5 Level 12, Suite 1201, Jalan |
Sultan Iskandar Muda Kav. V-TA, Pondok Pinang, Jakarta | |||
Selatan 12310, Indonesia | |||
PT Sterling Products Indonesia | 100% | A Shares, | Pondok Indah Office Tower 5 Level 12, Suite 1201, Jalan |
B Shares | Sultan Iskandar Muda Kav. V-TA, Pondok Pinang, Jakarta | ||
Selatan 12310, Indonesia | |||
PT. Bina Dentalindo 3 | 100% | Ordinary | Gedung Graha Ganesha Lantai 3, Jl Raya Bekasi Km 17, No5, |
Jakarta Timur 13930, Indonesia | |||
Stafford-Miller (Ireland) Limited 2 | 100% | Ordinary | Clocherane, Youghal Road, Dungarvan, Co. Waterford, Ireland |
Sterling Drug (Malaya) Sdn Berhad | 100% | Ordinary | Lot 89, Jalan Enggang, Ampang/Hulu Kelang Industrial |
Estate, Selangor Darul Ehsan, 68000 Ampang, Malaysia | |||
Sterling Products International, Incorporated | 100% | Common | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Treerly Health Co., Ltd | 100% | Registered | Unit 01A, Room 3901, No 16. East Zhujiang Road, Tianhe |
Capital | District, Guangzhou City, China | ||
Wyeth Pharmaceuticals Company | 100% | Partnership | State Road No. 3, Kilometer 142.1, Guayama, 00784, |
Interests | Puerto Rico |
Subsidiaries where the effective interest is less than 100%
Effective % | |||
Company name | ownership | Security | Registered address |
Haleon-Gebro Consumer Healthcare GmbH | 50.0% | Ordinary | Bahnhofbichl 13, 6391 Fieberbrunn, Kitzbühel, Austria |
Haleon Pakistan Limited | 85.8% | Ordinary | 11-A, 11th Floor, Sky Tower (East Wing), Dolmen City, HC-3, |
Block 4, Scheme-5, Clifton, Karachi, Sindh 75600, Pakistan | |||
Haleon US Enterprises Inc. | 88.0% | Common | Corporation Service Company, 251 Little Falls Drive, |
Wilmington DE 19808, United States | |||
Haleon US LP | 88.0% | Partnership | Corporation Service Company, 251 Little Falls Drive, |
Interests | Wilmington DE 19808, United States | ||
Haleon Taiwan Consumer Health Corporation | 55.0% | Ordinary | 24F, No. 66, Sec 1, Zhong Xiao W. Rd, Taipei 100, Taiwan |
Tianjin TSKF Pharmaceutical Co., Ltd 2 | 88.0% | Ordinary | Cheng Lin Zhuang Industrial Zone, Dong Li District, |
Tianjin, 300163, China |
1
Directly held by Haleon plc.
2
Principal subsidiary of the Group as at 31 December 2024.
3
The company is in liquidation.
4
The company was liquidated in the period between 1 January 2025 and 6 March 2025.
Notes to the Consolidated Financial Statements
continued
178
Haleon
Annual Report and Form 20-F 2024
Financial Statements
The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006,
supported by guarantees issued by Haleon plc (under section 479C of the Companies Act 2006) over their liabilities for the year ended
31 December 2024. Unless otherwise stated, the undertakings listed below are owned, either directly or indirectly, by the Company.
Company | |
Name | number |
Consumer Healthcare Holdings Limited | 11986432 |
Consumer Healthcare Intermediate Holdings Limited | 11986416 |
GlaxoSmithKline Consumer Healthcare (UK) (No.1) Limited | 00753340 |
Haleon UK Holding Canada Limited | 12342809 |
Haleon UK Holding New Zealand Limited | 12342879 |
Haleon UK Holding Sri Lanka Limited | 09400298 |
Haleon UK Holdings (No.1) Limited | 13355627 |
Haleon UK Holdings (No.3) Limited | 13401293 |
Haleon UK Holdings (No.7) Limited | 13414769 |
The following UK subsidiaries, having not traded during the year, will take advantage of the audit exemption set out within Section 480
of the Companies Act 2006 for the year ended 31 December 2024. Unless otherwise stated, the undertakings listed below are owned,
either directly or indirectly, by the Company.
Company | |
Name | number |
Haleon UK Corporate Director Limited | 13401336 |
Haleon UK Corporate Secretary Limited | 13434151 |
Financial Statements
Parent Company balance sheet
Haleon
Annual Report and Form 20-F 2024
179
as at 31 December
2024 |
2023 |
||
Notes |
£m |
£m |
|
Fixed assets |
|||
Investments |
5 |
22,336 |
22,266 |
Current assets |
|||
Debtors: amounts falling due within one year |
6 |
1,504 |
308 |
Total current assets |
1,504 |
308 |
|
Creditors: amounts falling due within one year |
7 |
(2) |
(2) |
Net current assets |
1,502 |
306 |
|
Total assets less current liabilities |
23,838 |
22,572 |
|
Creditors: amounts falling due after one year |
8 |
(25) |
(25) |
Net assets |
23,813 |
22,547 |
|
Capital and reserves |
|||
Share capital |
9 |
91 |
92 |
Other reserves |
10 |
46 |
72 |
Retained earnings 1 |
11 |
23,676 |
22,383 |
Shareholders’ equity |
23,813 |
22,547 |
1
The profit for the year was £2,374m (2023: £879m).
The notes on pages 181 to 185 form part of these Parent Company Financial Statements.
The Parent Company Financial Statements on pages 179 to 185 were approved by the Board of Directors and signed on its behalf by:
Dawn Allen
Chief Financial Officer
20 March 2025
Parent Company statement of changes in equity
for the year ended
Share |
Other |
Retained |
|||
capital |
reserves |
earnings |
Total |
||
Notes |
£m |
£m |
£m |
£m |
|
At 1 January 2024 |
92 |
72 |
22,383 |
22,547 |
|
Profit after tax |
11 |
— |
— |
2,374 |
2,374 |
Dividends to equity shareholders |
— |
— |
(570) |
(570) |
|
Share-based incentive plans |
— |
102 |
— |
102 |
|
Shares transferred to employees and employees of subsidiaries |
— |
6 |
(23) |
(17) |
|
Purchase of shares by employee benefit trusts |
— |
(5) |
— |
(5) |
|
Charge from parent for employee vested shares |
— |
(15) |
15 |
— |
|
Repurchase of ordinary shares and capital reduction |
(1) |
(114) |
(503) |
(618) |
|
At 31 December 2024 |
91 |
46 |
23,676 |
23,813 |
Share |
Other |
Retained |
|||
capital |
reserves |
earnings |
Total |
||
Notes |
£m |
£m |
£m |
£m |
|
At 1 January 2023 |
92 |
15 |
21,892 |
21,999 |
|
Profit after tax |
11 |
— |
— |
879 |
879 |
Dividends to equity shareholders |
— |
— |
(388) |
(388) |
|
Share-based incentive plans |
— |
76 |
— |
76 |
|
Purchase of shares by employee benefit trust |
— |
(19) |
— |
(19) |
|
At 31 December 2023 |
92 |
72 |
22,383 |
22,547 |
180
Haleon
Annual Report and Form 20-F 2024
Financial Statements
1. Presentation of the Financial Statements
Description of business
range of Oral Health, Vitamins, Minerals and Supplements (VMS), Pain Relief, Respiratory Health, Digestive Health and Other products
in more than 100 countries.
The principal activity of the Company is to act as the parent holding company of the Group.
The Company is a public company limited by shares and is incorporated and domiciled in England with registered number 13691224.
The address of the Company’s registered office is Building 5, First Floor, The Heights, Weybridge, Surrey, England, KT13 0NY.
Basis of preparation
The Parent Company Financial Statements, which are prepared using the historical cost convention and on a going concern basis, are
prepared in accordance with Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of
Ireland’ and the Companies Act 2006.
The Parent Company Financial Statements are presented in Pound Sterling (GBP, £), the functional currency of the Company, and all
values are denominated in millions of GBP (£m or £ million) unless stated otherwise.
As permitted by Section 408 of the Companies Act 2006, the income statement of the Company is not presented in this Annual Report.
In these Parent Company Financial Statements, the Company is considered to be a qualifying entity (for the purposes of this FRS) and
has applied the exemptions available under FRS 102 in respect of the following disclosures:
—
The requirements of Section 7 Statement of Cash Flows.
—
The requirements of Section 3 Financial Statement Presentation paragraph 3.17(d).
—
The requirements of Section 33 Related Party Disclosures.
—
The requirements of Section 11 Financial Instruments.
—
The requirements of Section 12 Other Financial Instruments.
—
The requirements of Section 28 to disclose information about Key Management Personnel compensation.
—
The requirements of Section 26 Share Based Payments.
Where required, equivalent disclosures are given in the Consolidated Financial Statements of the Group.
Going concern basis
The Company operates as the investment holding company for the Group, holding investments in subsidiaries financed by Group
companies and occasionally acting as financial guarantor of certain subsidiaries of the Group. As the Company is an intrinsic part of the
Group’s structure and considering the likelihood of the guarantees being called upon, the Directors have a reasonable expectation that
Group companies will continue to support the Company through trading and cash generated from trading for the foreseeable future.
Accounting principles and policies
The preparation of the balance sheet in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the balance sheet. Actual amounts could differ from those estimates.
The balance sheet has been prepared in accordance with the Company’s accounting policies approved by the Board and described
in Note 2.
Key accounting judgements and estimates
There are no key judgements or significant estimates.
Notes to the Parent Company
Financial Statements
Financial Statements
Haleon
Annual Report and Form 20-F 2024
181
Notes to the Parent Company Financial Statements
2. Accounting policies
The accounting policies below have been applied throughout the Parent Company Financial Statements and apply to the Parent Company
Financial Statements as a whole.
Foreign currency transactions
Foreign currency transactions are recorded at the exchange rate ruling on the date of transaction. Foreign currency assets and liabilities
are translated at rates of exchange ruling at the balance sheet date.
Operating income and expenditure
Income and expenditure are recognised in respect of services provided or received when supplied in accordance with contractual terms.
An accrual is made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can
be reliably estimated.
Interest receivable and interest payable
Interest receivable and similar income includes interest receivable on intercompany loans. Interest payable and similar charges includes
interest payable on intercompany loans. Interest receivable and interest payable are recognised in profit or loss as they accrue, using
the effective interest rate method.
Dividends
Dividends received are included in the profit and loss account in the year in which the right to receive the payment is established.
Final dividends are recorded in the reserves upon shareholder approval. Interim dividends are deducted from reserves when
they are paid. Dividends in the statement of changes in equity are recognised at their fair value at the date of receipt.
Taxation
Current tax is provided at the amounts expected to be paid or refunded applying tax rates that have been enacted or substantively
enacted by the balance sheet date. This takes into account taxation deferred due to timing differences between the treatment of
certain items for taxation and accounting purposes.
Deferred tax is provided in full, using the liability method, in respect of all timing differences that have originated but not reversed at
the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax
in the future have occurred at the balance sheet date. Deferred tax assets are only recognised to the extent that they are considered
recoverable against future taxable profits and from which the future reversal of underlying timing differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse. Deferred tax liabilities and assets are not discounted.
The Company has applied the exception under the FRS 102 amendment for recognising and disclosing information about deferred tax
assets and liabilities related to Pillar Two income taxes.
Investments in subsidiaries
Investments in subsidiaries are held at cost less accumulated impairment losses.
The carrying values of investments are reviewed for impairment at least once a year or more frequently when there is an indication that
the investment might be impaired. The primary method used to assess if the investment is impaired is to evaluate against the Group’s
valuation on the basis of overall market capitalisation. Another assessment method used is to compare the carrying value of each
investment against its share of the net assets value of the investment or against its share of the valuation of the subsidiary based on
expected discounted cash flows. Any impairment charge is recognised in the income statement in the year concerned.
Share-based payments
Incentives in the form of equity-settled share-based payments are provided to certain employees which are measured at fair value
(excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate
of the shares that will eventually vest, adjusted for the effect of non-market based vesting conditions.
Incentives in the form of shares provided by the Company to employees of its subsidiaries represents additional capital contributions.
An addition to the Company’s investment in subsidiary undertakings is reported with a corresponding increase in shareholders’ equity.
Refer to Note 26 to the Consolidated Financial Statements for details of the charge.
The Company sponsors employee benefit trusts (EBTs) to acquire and hold shares in Haleon plc to satisfy awards made under
employee share plans. Shares in the Company acquired by the trusts are deducted from equity until shares are vested, cancelled,
reissued or disposed.
Notes to the Parent Company
Financial Statements
continued
Haleon
Annual Report and Form 20-F 2024
182
Financial Statements
Financial assets and liabilities
Financial assets and liabilities are recognised on the Company’s balance sheet when the Company becomes a party to the contractual
provisions of the instrument and derecognised when it ceases to be party to such provisions. Financial liabilities are classified as
current if they are legally due to be paid within 12 months of the balance sheet date.
Financial assets and liabilities are initially measured at fair value and are subsequently reported at amortised cost.
Receivables are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate method, less any
expected credit losses.
Amounts owed to Group undertakings and other payables are recognised initially at the transaction price and subsequently measured
at amortised cost using the effective interest method. Non-interest bearing payables are stated at their nominal value as they are due
on demand.
Non-current liabilities are classified as financial liabilities in accordance with IFRS 9. They are recognised initially at the transaction price
and subsequently measured at amortised cost using the effective interest method.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or
receivable, net of the direct costs of issuing the equity instruments.
Repurchase and cancellation of ordinary shares
When the Company repurchases its ordinary shares as part of a share buyback programme, the amount of the consideration paid,
including directly attributable costs, is deducted from equity. Repurchased shares are either cancelled immediately or held in Treasury
in order to satisfy employee incentives. In order to maintain capital, an equivalent amount to the nominal value of the shares cancelled
is transferred to the capital redemption reserve.
3. Auditor’s remuneration
Fees payable to the Company’s auditor for the audit of the Company and Consolidated Financial Statements are disclosed in Note 6 to
the Consolidated Financial Statements.
4. Employees
The Company has employees to provide management services to subsidiary undertakings. Below is the summary of the employee costs:
Employee costs
2024
£m
2023
£m
Wages and salaries
2.3
2.1
Social security costs
0.3
0.3
Pension and other post-employment costs
0.6
0.5
Share-based payments
0.7
0.5
Total
3.9
3.4
The average monthly number of persons employed by the Company during the year
2024
2023
Finance
4
4
Total
4
4
Financial Statements
Haleon
Annual Report and Form 20-F 2024
183
Notes to the Parent Company Financial Statements
5. Investments
Subsidiary
undertakings
£m
Cost
At 1 January 2023
22,190
Share-based payments to employees of subsidiaries
76
At 31 December 2023
22,266
Share-based payments to employees of subsidiaries
101
Recharged to subsidiaries during the year
(15)
Shares transferred to employees of subsidiaries
(16)
At 31 December 2024
22,336
Impairment
At 1 January 2023
—
At 31 December 2023
—
Impairment
—
At 31 December 2024
—
Net book value
At 1 January 2023
22,190
At 31 December 2023
22,266
At 31 December 2024
22,336
Details of the subsidiary undertakings of the Company as at 31 December 2024 are given in Note 30 to the Consolidated
Financial Statements.
6. Debtors: amounts falling due within one year
2024
£m
2023
£m
Amounts owed by Group undertakings
1,483
282
Other prepayments and accrued income
7
6
Corporation tax
14
20
Total
1,504
308
Amounts owed by Group undertakings are unsecured, interest free and repayable on demand except for a call account balance of
£1,481m (2023: £275m) which is unsecured and repayable on demand with interest received at SONIA rate less 0.05%.
7. Creditors: amounts falling due within one year
2024
£m
2023
£m
Amounts owed to Group undertakings
(1)
(1)
Other payables and accruals
(1)
(1)
Total
(2)
(2)
Amounts owed to Group undertakings are unsecured, interest free and repayable on demand.
8. Creditors: amounts falling due after more than one year
2024
£m
2023
£m
Other payables
(25)
(25)
Other payables relate to the 25,000,000 issued Non-Voting Preference Shares with a coupon rate of 9.5% per annum. The non-voting
preference shares are entitled to receive a quarterly dividend and can only be redeemed after five consecutive calendar years
commencing on the date of issue, 17 July 2022, and hence the Company has an unavoidable obligation to deliver cash. The Company
has, therefore, classified the non-voting preference shares as a financial liability.
Notes to the Parent Company
Financial Statements
continued
Haleon
Annual Report and Form 20-F 2024
184
Financial Statements
9. Share capital
2024 Number
of shares
2024
£m
2023 Number
of shares
2023
£m
Issued and fully paid
Ordinary shares of £0.01 each
9,083,725,919
91
9,234,573,831
92
Total ordinary shares of £0.01 each
9,083,725,919
91
9,234,573,831
92
Movements in share capital and share premium are set out in Note 23 to the Consolidated Financial Statements.
10. Other reserves
The analysis of other reserves is as follows:
EBT shares
reserve
1
£m
Share-based
payment
reserve
£m
Treasury
shares
reserve
£m
Capital
redemption
reserve
£m
Total
£m
As at 1 January 2023
—
15
—
—
15
Share-based incentive plans
—
76
—
—
76
Purchase of shares by employee benefit trust
(19)
—
—
—
(19)
As at 31 December 2023
(19)
91
—
—
72
Share-based incentive plans
—
102
—
—
102
Purchase of shares by employee benefit trust
(5)
—
—
—
(5)
Charge from parent for employee vested shares
—
(15)
—
—
(15)
Shares transferred to employees and employees of subsidiaries
22
(16)
—
—
6
Repurchase of ordinary shares and capital reduction
—
—
(116)
2
(114)
As at 31 December 2024
(2)
162
(116)
2
46
1
Shares owned through an employee benefit trust (EBT). The total number of shares held in connection with employee share schemes as at 31 December 2024 was 0.5m (2023: 5.3m).
Another 0.1m shares were held through a trust by a Group company as at 31 December 2024 (2023: 5.1m).
11. Retained earnings
The profit of the Company for the year was £2,374m (2023: £879m).
The Company has £23,560m (2023: £22,383m) of reserves available for distribution.
12. Other guarantees and contingent liabilities
The total amount of guarantees is £9,466m (2023: £9,476m). This consists of guarantees relating to:
—
The bond issuances by Group companies Haleon US Capital LLC, Haleon UK Capital plc, and Haleon Netherlands Capital B.V.
—
Loan facility agreement for other Group companies.
—
Renewable Energy Purchase Agreement for other Group companies.
—
International Swaps and Derivatives Association agreements for other Group companies.
—
Surety bonds for other Group companies.
Details are included in Note 19 to the Consolidated Financial Statements.
The Company has also provided a guarantee to certain UK subsidiaries to exempt them from audit under Section 479A of the
Companies Act 2006. The subsidiaries to which a guarantee has been issued for this purpose are outlined in Note 30 to the
Consolidated Financial Statements.
Details regarding certain legal actions which involve the Company are set out in Note 22 to the Consolidated Financial Statements.
Financial Statements
Haleon
Annual Report and Form 20-F 2024
185
Notes to the Parent Company Financial Statements
Shares
As at 31 December 2024, the Company had 9,083,725,919 ordinary
shares of £0.01 each and 25,000,000 non-voting preference
shares of £1.00 each in issue. As at 31 December 2024, the
Company had 30,365,037 ordinary shares held as treasury shares.
There are no special control rights or restrictions on share
transfers or limitations on the holding of any class of shares.
Further information about the Company’s ordinary shares and
non-voting preference shares can be found under Articles of
Association on page 203.
Authority to purchase shares
At its AGM held in May 2024, Haleon received shareholder
approval to make purchases of its own ordinary shares (i)
on-market up to a maximum number representing 10% of its
issued share capital and (ii) off-market up to a maximum number
representing 4.99% of its issued share capital from Pfizer, subject
to limitations on the maximum price applicable to each purchase,
and noting that no more than 10% of its issued share capital
would be purchased in aggregate pursuant to these authorities.
During the year, the Company purchased a total of 181,212,949
ordinary shares of £0.01 each. The shares repurchased in 2024
comprised 1.99% of Haleon’s total issued share capital as at
31 December 2024. Further information on each purchase is set
out below. Resolutions seeking shareholder authority for the
purchase of the Company’s shares will be put to shareholders
at the AGM to be held on 28 May 2025.
The Company utilised the authority obtained at its 2024 AGM to
undertake an on-market share buyback programme which was
announced to the market on 1 August 2024. The purpose of the
buyback programme was to reduce share capital. At the end of
the share buyback programme on 1 October 2024, 18,413,907
ordinary shares of £0.01 each had been purchased by the
Company for an average price of £3.82 per ordinary share,
for a total aggregate consideration of approximately £70 million.
All of the purchased ordinary shares were cancelled.
The Company also (i) used the authority obtained at its 2023 AGM
on 21 March 2024 to make an off-market purchase of 102,272,727
shares from Pfizer, at a price per share of £3.08 and a total
consideration of approximately £315 million; and (ii) used the
authority obtained at its 2024 AGM on 1 October 2024 to make
a further off-market purchase of 60,526,315 shares from Pfizer,
at a price per share of £3.80 and a total consideration of
approximately £230 million. For further details of the terms of
the off-market buyback contract with Pfizer, please see Haleon’s
Notice of 2024 AGM available on Haleon’s website.
Dividends and dividend policy
On 27 February 2025, the Board proposed a final dividend
of 4.6p per ordinary share which will be paid, subject to
shareholder approval, following the Company’s 2025 AGM.
The Company paid an interim dividend of 2.0p per ordinary share
on 19 September 2024 in respect of its 2024 half-year results.
Group subsidiaries
As a Group that operates globally, Haleon’s operations and
activities are carried out by subsidiaries, branches and scientific/
representative offices established under the laws of many
jurisdictions. A full list of subsidiaries is provided at Note 30
of the Consolidated Financial Statements from page 172.
Directors’ powers
The Directors may exercise all the powers of the Company,
subject to the Articles of Association (Articles), legislation and
regulation. This includes the ability, subject to shareholder
approval at Haleon’s AGM each year, to exercise the authority
to allot or purchase the Company’s shares. Further details of
the powers of the Directors can be found in the Articles of
Association section on page 203.
Conflicts of interest
Under the Articles and as permitted by the Companies Act, the
Board may authorise any matter which would otherwise involve
a Director breaching their duty to avoid conflicts of interest and
may attach to any such authorisation such conditions and/or
restrictions as the Board deems appropriate (including in respect
of the receipt of information or restrictions on participation at
Board meetings). The Board has a formal system for Directors
to declare such situations to be considered for authorisation
by those Directors who have no interest in the matter being
considered. Situations considered by the Board and
authorisations given are recorded in the Board minutes and in
a register of conflicts maintained by the Company Secretary
and are reviewed annually by the Board. The Board believes
that this system operates effectively.
Insurance and indemnities
The Company maintained directors’ and officers’ liability
insurance cover during the period of this Annual Report.
Each Director also benefits from an indemnity provided by
the Company in respect of any proceedings brought by third
parties against them personally in their capacity as Director.
Code of Conduct
Our Code of Conduct (Code) applies to the Board and Executive
Team, employees and third-party temporary workers and
complies with the NYSE rules as set out in Section 406 of SOX.
Our Code includes a prohibition on engaging in insider trading
or use of non-public information that could manipulate the price
of Haleon’s shares, either to our own advantage or for another
person and also applies to any other company with which we do
business. Further details on our Code are set out in the Strategic
Report on pages 18 and 20, and the Board’s oversight of the
Code is set out on pages 70 and 75.
Haleon has also adopted an insider trading policy governing the
purchase, sale and/or other disposition of our securities by our
Directors, officers and covered employees, which we believe is
reasonably designed to promote compliance with applicable insider
trading laws, rules and regulations and exchange listing standards.
This Directors’ Report contains information to be given in
accordance with the Companies Act 2006. Relevant information
below, which is contained elsewhere in this Annual Report,
is incorporated by cross reference.
Directors’ Report
Haleon
Annual Report and Form 20-F 2024
186
Other information
Shares or ADSs that have not been allocated to share plan
participants are held by the EBTs and although the trustee has
the right to vote or abstain from exercising their voting rights in
relation to those shares, it has a policy of not voting, which is in
line with guidelines. The trustee also has the right to accept or
reject any offer relating to the shares or ADSs in any way it sees
fit. Dividend waivers are in place in respect of unallocated shares
and ADSs held in the EBTs.
The Companies (Miscellaneous Reporting) Regulations 2018
Employee engagement
The below statement relates to our employees as defined in the
glossary and should be read in conjunction with our stakeholder
and people disclosures in the Strategic Report on pages 10
and 18, respectively, Section 172 statement and workforce
engagement disclosures from page 71, and other engagement
disclosures in the Directors’ Remuneration Report from page 82.
During 2024, the key forms of engagement to provide information
to our employees included a fortnightly global email ‘Connecting
Haleon’, intranet global news page, CEO-led global broadcasts,
fireside chats on priority topics, internal social media channels,
dedicated senior manager calls, as well as regional leadership
calls and direct emails, videos and business function team
meetings. Employees have been consulted and given
opportunities to express their views and concerns through
Share plan details
2024 share awards and grants to employees
Our current policy is to settle the majority of awards or grants
under the Company’s share plans with shares purchased in the
market, however, the Company continues to review this policy.
The Company’s share plans incorporate the Investment
Association’s current guidelines on dilution. During the year,
the Company satisfied its obligations under its share plans solely
by the purchase of shares in the market, accordingly there has
been no dilution from the awards made. As at 31 December 2024,
there were 5,371,296 options outstanding, solely in respect of
the Company’s HMRC-approved all-employee Share Save Plan.
Employee benefit trusts (EBTs)
The Group operates EBTs for the benefit of employees and
former employees. The EBTs purchase ordinary shares or ADSs
in the market and release them to current and former employees
in satisfaction of share awards. During 2024, the EBTs released
5,894,148 ordinary shares and 2,614,852 ADSs. At 31 December
2024, the EBTs held 549,453 ordinary shares and 38,569 ADSs in
the Company. The EBTs adopt a prudent approach to purchasing
shares, using funds provided by the Group, based on
expectations of future requirements.
Number of ordinary shares disclosed as a percentage
of the Company’s issued share capital at:
Shareholder
Date of latest disclosure
to the Company
Number of ordinary
shares disclosed
Date of latest disclosure
to the Company
31 December 2024
Blackrock, Inc.
15 January 2025
484,900,413
5.22%
5.22%
Pfizer, Inc.
26 February 2025
661,709,764
7.31%
15.04%
1
Wellington Management Group LLP
31 January 2025
462,282,724
5.10%
N/A
GSK and certain controlled undertakings of GSK
17 May 2024
2
0
0%
0%
1
Prior to its disclosure to the Company on 26 February 2025, Pfizer held its interest in ordinary shares and ADSs.
2
GSK and certain controlled undertakings of GSK reduced their stake to nil during the reporting period.
Financial risk management
The Group’s financial risk management objectives and policies,
including its use of financial instruments, are set out in Note 25
to the Consolidated Financial Statements from page 157.
Future business developments of the Group
Details are set out in the Strategic Report from page 2.
>>
Our Code is available at
www.haleon.com/who-we-are/
Governance/codes-policies-and-standards
Significant shareholders
The following persons have disclosed an interest in the issued
ordinary share capital of the Company in accordance with the
requirements of rules 5.1.2 or 5.1.5 of the FCA’s Disclosure
Guidance and Transparency Rules. The Company’s major
shareholders have the same voting rights as other shareholders.
The Company does not know of any arrangements the operation
of which may result in a change in its control. Other than as set
out below, no changes to major shareholdings were disclosed to
the Company between 31 December 2024 and 6 March 2025.
Pfizer, Inc. was a controlling shareholder of the Company until
21 March 2024. From 1 January 2024 to 21 March 2024, in
compliance with UK Listing Rule 6.2.3R, the Company carried
on the business it carries on as its main activity independently
from Pfizer at all times.
Haleon has a dividend policy that looks to balance all its
stakeholders’ interests while ensuring the long-term success of
the Company. Subject to market conditions and Board approval,
Haleon expects to grow its ordinary dividend at least in line with
adjusted earnings. Future ordinary dividends are expected to be
paid half-yearly with approximately one third of the dividend paid
as an interim dividend, following the Company’s half-year results,
and the balance paid as a final dividend, subject to shareholder
approval, following the Company’s AGM. Dividends are
announced in Pound Sterling, with an equivalent US Dollar
amount paid in respect of the Company’s ADSs.
The Trustees of the Haleon employee benefit trusts, which are
independent of the Company, waived the right to dividends paid
during the year.
Under the Company’s ADS programme, the right to dividends in
relation to the ordinary shares underlying the ADSs was waived
during the year, under an arrangement whereby the Company pays
the monies to satisfy any dividends separately to the Depositary
for distribution to ADS holders entitled to the dividend.
This arrangement is expected to continue for future dividends.
See Note 10 to the Consolidated Financial Statements on
page 133 for information on dividends paid on non-voting
preference shares.
Other Information
Haleon
Annual Report and Form 20-F 2024
187
Directors’ Report
organisations used in the legislation are, however, quite broad.
As a result, the definitions may cover legitimate business
activities not in the ordinary sense considered to be political
donations or political expenditure, nor are they designed to
support any political party or independent election candidate.
Therefore, notwithstanding our policy, and while we do not
intend to make donations to any political parties or organisations,
nor to incur any political expenditure, we will annually seek
shareholder authorisation for any inadvertent expenditure as
a precautionary measure to ensure that the Company and its
subsidiaries do not inadvertently breach the legislation.
Significant agreements and change of control provisions
The Group is a party to certain arrangements which could be
terminated upon a change of control of the Company (and/or the
Group’s UK, Dutch and US debt-issuing entities) and which are
considered significant in terms of their potential impact on the
business of the Group as a whole. These arrangements include
each series of notes issued under the Company’s EMTN
programme and the USD note programme.
The notes contain a redemption or purchase upon change of
control provision which, if triggered, allows note holders to
exercise their option to require the UK and US debt-issuing
entities to redeem, or at such issuers’ options, to purchase,
the notes and pay any accrued and unpaid interest due.
Further information on the notes issued and outstanding under
the programmes as at 31 December 2024 is available in Note 19 to
the Consolidated Financial Statements from page 144.
In addition, during the reporting period the Company was a party
to the Pfizer Relationship Agreement, the principal purpose of
which was to regulate the continuing relationship between the
Company and Pfizer, Inc., which was a controlling shareholder of the
Company following demerger until 21 March 2024. The Relationship
Agreement terminated automatically in accordance with its terms
on 17 January 2025, when Pfizer ceased to hold at least 10% of
Haleon’s ordinary shares. Throughout the period under review,
the Company has complied with provisions and obligations in
the Pfizer Relationship Agreement and, as far as the Company is
aware, Pfizer has also complied. Further information on the Pfizer
Relationship Agreement can be found on page 206.
Streamlined Energy and Carbon Reporting (SECR)
In line with the requirements set out in the UK Government’s
guidance on SECR, the table on page 189 represents Haleon’s
energy use and associated carbon emissions from electricity
and fuel in the UK and the rest of the world (ROW), calculated
with reference to the Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard. In our 2024 reporting
period, the UK accounted for 4% of our global total energy use
as well as 3% of our Scope 1 and 2 emissions (location-based).
Energy efficiency action taken
We achieved 100%
*
renewable electricity at sites within our
operational control in 2022 and have maintained this
performance in 2024 by utilising a combination of on-site solar,
Power Purchase Agreements (PPAs), and renewable electricity
certificates (RECs).
In 2024, we continued to focus our efforts on Scope 1 and 2 carbon
emissions reduction in line with our 2030 goal. Progress includes
installing electric steam generators at our sites in Pulo Gadung,
Indonesia and Nairobi, Kenya to significantly reduce carbon
emissions from energy generation for heating and cooling at
these manufacturing sites.
participation in the twice-yearly employee engagement surveys,
team meetings, townhalls, ERGs, and Q&As at global broadcasts
and fireside chats. They have been made aware of the financial
and economic factors affecting the performance of the Company
through quarterly, global broadcasts and emails from the CEO,
internal social media updates, as well as functional and regional
team meetings. The Chair and Directors have engaged with
employees through direct interactions, ‘employee listening
sessions’ with our Workforce Engagement Director and other
opportunities held during the year to meet Executive Directors
via video meetings or in person.
Engagement with suppliers, customers and others in a
business relationship with Haleon
Our business relationships with our suppliers, customers and
others are fundamental to our success. During the year, the Board
considered matters related to them and had regard to the impact
of decisions on them as detailed in the Section 172 statement on
page 68. The Board monitors relationships through a mixture of
presentations, reports and direct engagement. Details of how
relationships have been maintained throughout the year are
set out in the Our key stakeholders section on page 10.
Employment of disabled persons
Our commitment is to ensure our workforce has the backgrounds,
experiences and skills to serve our consumers and the
communities in which we operate. We are striving to create an
inclusive environment in which everyone can contribute and feel
a sense of belonging, feel understood and valued, treated fairly
and equally, and supported to progress and thrive. We want our
employees to be able to be their authentic selves and, as a result,
perform at their best. All employees must ensure an equitable
and inclusive culture free of discrimination and encourage
respectful and inclusive behaviour. Every effort is made to ensure
that applications for employment from disabled people are fully
and fairly considered and that disabled employees have equal
opportunities for training, career development and promotion.
Political donations
The Group does not make political contributions or sponsor
political meetings, conferences, conventions or events, as set
out in our Anti-Bribery and Corruption (ABAC) Policy. In the year
to 31 December 2024, the Group did not make any political
contributions or provide any sponsorship.
In accordance with the Federal Election Campaign Act in the US,
Haleon employees are able to make personal contributions to
our US Political Action Committee (PAC). A PAC is a corporate or
labour-based political committee that collects voluntary
contributions from eligible US employees into a separate fund.
In donating to the PAC, participating eligible employees are
exercising their legal right to pool their resources and make
political contributions, which are subject to strict limitations
under US law. The fund is managed by a board of directors of
participating employees from Haleon’s US operating company
and makes contributions or expenditures in connection with
Federal and State elections. The PAC is not controlled by Haleon.
The operations of the Haleon PAC are reviewed regularly to
ensure compliance with applicable US laws. Disclosure reports
for the Haleon PAC can be viewed at www.fec.gov. In 2024, a
total of $41,150 was donated to political organisations by the
Haleon PAC.
English law requires prior shareholder approval for political
contributions to political parties and independent election
candidates as well as for any political expenditure. The definitions
of political donations, political expenditure and political
Directors’ Report
continued
Haleon
Annual Report and Form 20-F 2024
188
Other information
Streamlined Energy and Carbon Reporting
continued
In 2024, we spent more than £8m on energy and carbon-reduction projects including upgrading to more energy-efficient equipment,
improving metering at multiple sites and launching several innovative electrification projects as listed on the prior page to increase our
use of renewable energy for heating and cooling.
>>
See also our approach to sustainability section from page 22.
>>
See our ABAC Policy at
www.haleon.com/who-we-are/Governance/codes-policies-and-standards
>>
See our position on political advocacy at
www.haleon.com/who-we-are/our-policy-positions
2024
1
2024
Total
1
2023
1
2023
Total
1
2022
1,6
2022
Total
1,6
Carbon emissions from our operations
2
UK
ROW
Global
UK
ROW
Global
UK
ROW
Global
Total Scope 1 GHG emissions
(thousands
of tonnes CO
2
e, including on-site fuel use,
fleet mileage and refrigerant losses)
2
66
68
*
2
58
60
3
53
56
Total Scope 2 GHG emissions
(location-based) (thousands of tonnes CO
2
e)
3
121
124
*
3
139
142
3
137
140
Total Scope 2 GHG emissions
(market-based) (thousands of tonnes CO
2
e)
—
7
7
*
—
7
7
—
7
7
Total Scope 1 & 2 GHG emissions
(location-based) (thousands of tonnes CO
2
e)
5
187
192
*
5
197
202
6
190
196
Total Scope 1 & 2 GHG emissions
(market-based) (thousands of tonnes CO
2
e)
2
73
75
*
2
65
67
3
61
64
Total GHG emissions offset
(thousands of tonnes CO
2
e)
—
27
27
*
—
17
17
—
9
9
Total net Scope 1 & 2 carbon emissions
(market-based)
3
(thousands of tonnes CO
2
e)
2
46
48
*
2
48
50
3
51
54
Total energy consumed
(GWh)
26
693
719
*
27
670
697
29
652
681
Total renewable energy consumed
(GWh)
15
344
359
*
15
356
371
15
344
359
Total renewable electricity consumed
(GWh)
15
310
325
*
15
326
341
15
312
328
Renewable electricity
(%)
100%
100%
100%
*
100%
100%
100%
100%
100%
100%
Renewable energy
(%)
58%
50%
50%
*
56%
53%
53%
52%
53%
53%
Intensity Ratio
GHG emissions intensity
(location-based)
(tonnes of CO
2
e per £m revenue)
4
13
17
17
*
14
18
18
17
18
18
Carbon emissions from our value chain
Total Scope 3 carbon emissions
(thousands of tonnes CO
2
e)
2,529
2,697
5
2,712
5
>>
For further information on our reporting criteria please see Haleon’s 2024 Responsible Business Basis of Reporting. The Responsible Business
Report, KPMG LLP’s limited assurance conclusion and Haleon’s reporting criteria are available at
www.haleon.com/our-impact/esg-reporting-hub
*
KPMG LLP has issued independent limited assurance over the selected data indicated using assurance standards ISAE (UK) 3000 and ISAE 3410.
1
For the 2024 and 2023 reporting periods we have used data from 1 December (in the prior year) to 30 November (in the year stated). The 2022 reporting period is the calendar year.
The exception to this is for total Scope 3 emissions; the 2024 and 2023 reporting periods cover the period 1 July (in the prior year) to 30 June (in the year stated). The 2022 reporting
period is the calendar year.
2
GHG emissions are expressed in carbon dioxide equivalents (CO
2
e) reflecting the effective amount of CO
2
generated by all gas emissions which add to the greenhouse effect and
global warming. Carbon emissions have been calculated according to the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (updated with Scope 2 guidance).
For further information on the methodologies used to calculate our emissions and energy metrics, please see our basis of reporting criteria available at the web address outlined
above. Scope of reporting is sites over which Haleon has full operational control.
3
This calculation takes the total emissions offset in the reporting period into account.
4
Carbon emissions intensity is derived from the ratio of the total Scope 1 and 2 GHG emissions (location-based) (tCO
2
e) from all sites where we have full operational control to the
total revenue in the same reporting period.
5
Calculated in accordance with methodology and data improvements and updated carbon emission factors, and so the 2022 result (previously 2,333 thousands of tonnes CO
2
e)
and the 2023 result (previously 2,336 thousands of tonnes CO
2
e) reported in the 2023 Annual Report and Form 20-F have been restated.
6
Certain 2022 values in the table may not add up precisely due to the rounding of individual results.
Other Information
Haleon
Annual Report and Form 20-F 2024
189
Directors’ Report
Going concern
The Directors believe that it is appropriate to adopt the going concern basis of accounting in preparing the Group’s Consolidated
Financial Statements. Further detail as to the Directors’ assessment is set out in Note 1 to the Consolidated Financial Statements
on page 122.
An overview of the business activities of Haleon, including a review of the principal business risks that the Group faces, is given in
the Strategic Report on pages 51 to 56 and in Group information from page 191. The scenarios considered and assessment made by
the Directors with respect to the Company’s risk factors and viability are set out on page 57.
Directors’ Report
In addition to the information set out herein, this Directors’ Report incorporates by reference the following sections of this Annual Report:
—
Strategic Report from page 2, including R&D from page 8.
—
Corporate Governance from page 59.
—
Statement of Directors’ responsibilities, including Disclosure of information to auditors on page 100.
—
Group information from page 191, including Articles of Association and Material contracts on pages 203 and 205.
—
Note 24 to the Consolidated Financial Statements (Related-party transactions) from page 156.
—
Note 29 to the Consolidated Financial Statements (Post balance sheet events) from page 172.
—
Shareholder information from page 208.
The only matters to report in respect of UK Listing Rule 6.6.1 are in relation to dividends (set out on page 186), material contracts
(set out from page 205), waiver of fees by the Pfizer nominated Non-Executive Directors (set out on page 96) and agreements with
controlling shareholders (set out on pages 186, 187 and from page 205).
By order of the Board
Amanda Mellor
Company Secretary
Haleon plc
Registered in England and Wales, Company number 13691224
20 March 2025
Directors’ Report
continued
Haleon
Annual Report and Form 20-F 2024
190
Other information
brands. Geographically, the GSK consumer healthcare business
had a strong presence in higher-growth emerging markets in the
Middle East, Africa and Asia, which complemented its businesses
in Europe and North America.
On 2 March 2015, GSK and Novartis formed a consumer healthcare
joint venture to combine the majority of GSK’s consumer healthcare
business and all of Novartis’ OTC business. Novartis’ business
provided GSK with a meaningful incremental presence in OTC.
The combination added a leading portfolio of globally recognised
consumer-preferred and expert-recommended brands in the Pain
Relief, Respiratory Health, Smokers’ Health and Skin Health
categories to the Group’s business.
In June 2018, GSK acquired Novartis’ shareholding in the GSK/
Novartis JV for $13bn, enabling GSK to take full operational and
strategic control of the business.
On 31 July 2019, GSK completed a transaction with Pfizer to
combine substantially all of GSK and Pfizer’s respective consumer
healthcare businesses into a new world-leading consumer
healthcare joint venture (the Pfizer Transaction). The transaction,
which was transformational to the scale of the Group’s business,
brought together two businesses with highly complementary
geographic footprints and brand portfolios.
While the Group retained its strong European footprint,
completion of the transaction also provided the Group with
incremental geographical scale in the US, where it became the
leader in OTC/VMS, and in China, where it became the leading
OTC/VMS multinational. From a portfolio perspective, the
transaction provided the Group with global leadership in the
higher-growth VMS market as well as a leading presence in the US
Pain Relief market complementing the Group’s existing Pain Relief
portfolio. Since completion of the Pfizer Transaction and prior to
demerger, GSK owned 68% of the ordinary shares in the entity
through which both GSK and Pfizer held their equity interests in
the joint venture, with Pfizer holding the remaining 32%.
Alongside integration of the Pfizer consumer healthcare business,
the Group exited approximately 50 non-strategic and growth-
dilutive OTC and skincare assets from 2019 to 2021 to raise
£1.1bn of net proceeds. These disposals have further focused
the business on higher-growth categories, markets and channels
and thereby enhanced the growth profile of Haleon.
History and development of the Group
Haleon is the result of the combination of three consumer health
businesses over the last decade. The focus of the business has
been sharpened through divestment of growth-dilutive brands
and those outside of our core categories. In addition, the
scientific and consumer products’ experience of its legacy
businesses has been enhanced by investment in commercial
and scientific capabilities, technologies and facilities, most
notably in the digital sphere.
On 18 July 2022, Haleon demerged from GSK creating a company
with management, infrastructure, capital allocation and incentives
focused specifically on consumer health.
The Group has a strong and established presence in all key channels
relevant for consumer healthcare and a scale which allows it to
effectively engage with retail partners of all sizes, buying groups,
distributors, pharmacy chains and individual pharmacies.
Prior to demerger, the Group had transformed since 2012 through
progressive strategic M&A and divestments to create a world
leader in consumer health.
The Group’s scale greatly expanded through the successful
combination of the legacy GSK consumer healthcare business
with the Novartis consumer healthcare business in 2015, and the
subsequent combination of this business with the Pfizer consumer
healthcare business in 2019. In addition, the Group’s focus has
been sharpened since 2012 through the progressive divestment
of GSK’s nutritionals businesses and the divestment by the Group
of non-strategic OTC brands, including its programme of
divestments of non-strategic and growth-dilutive brands (with
aggregate net proceeds from divested brands of £1.1bn) during
the period from 2019 to 2021. This deliberate strategy has
resulted in a portfolio more focused on higher-growth categories,
markets and channels. These transactions also provided a
catalyst for a broader transformation of the Group.
Prior to its combination with the Novartis consumer healthcare
business in 2015, GSK’s consumer healthcare business was already
one of the world’s leading OTC and Oral Health companies with a
long heritage in consumer health products dating back to the 18th
century. The Group sold a range of leading OTC brands across
Respiratory Health, Pain Relief, Digestive Health, Skin Health and
Smokers’ Health, together with a strong portfolio of Oral Health
GSK ownership
Demerger from GSK and
independent listing
2022
2020
Exit of non-
strategic
categories
to Unilever
2021
Significant divestment programme
Disposal of 50 non-strategic
growth-dilutive assets
2019
Joint Venture
Formation:
Pfizer Consumer
Healthcare
2018
Full buyout
of Novartis
from JV
2015
Joint Venture
Formation:
Novartis
Consumer
Healthcare
2013
Divest
Exit of beverages
2012
Exit of non-strategic
OTC
Group information
Other Information
Haleon
Annual Report and Form 20-F 2024
191
Group information
Disclosure controls and procedures
The Group carried out an evaluation under the supervision and
with the participation of members of the Group’s management,
including the CEO and CFO, of the effectiveness of the design and
operation of the Group’s disclosure controls and procedures as
required by Item 15(a) of Form 20-F as at 31 December 2024.
Based on their evaluation, the CEO and the CFO concluded that,
as at that date, the Company maintained an effective system of
disclosure controls and procedures.
Management’s report on internal control over
financial reporting
In accordance with the requirements of Section 404 of SOX,
the following report is provided by management in respect of the
Company’s internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the US Securities Exchange
Act of 1934, as amended (the Exchange Act)).
—
Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Group.
Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of Financial Statements for
external purposes in accordance with IFRS.
—
Management conducted an evaluation of the effectiveness
of internal control over financial reporting based on the
framework, Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
—
There have been no changes in the Group’s internal control
over financial reporting during 2024 that have materially
affected, or are reasonably likely to materially affect,
the Group’s internal control over financial reporting.
—
Management has assessed the effectiveness of internal
control over financial reporting as at 31 December 2024
and concluded it is effective.
—
KPMG LLP, which has audited the Consolidated Financial
Statements of the Group for the year ended 31 December 2024,
has also assessed the effectiveness of the Group’s internal
control over financial reporting under Auditing Standard
2201 of the Public Company Accounting Oversight Board (US).
Their audit report is set out from page 114.
Director and Executive Team shareholdings
As at 6 March 2025, being the latest practicable date prior
to publication of this Annual Report, the Directors and the
Executive Team members had beneficial interests in 1,436,999
Haleon ordinary shares (including ordinary shares held
indirectly through Haleon ADSs), representing 0.02% of that class.
These shareholdings indicate all Directors’ or Executive Team
members’ beneficial interests and those held by their spouses
and other connected persons. As at 6 March 2025, no Director
or Executive Team member held more than 1% of the total
issued share capital or has a beneficial interest in the shares
of any subsidiary.
Executive Director benefits upon termination of office
Further information can be found in the Directors’ Remuneration
Report from page 82.
Property, plant and equipment
The Group has interests in properties in numerous countries.
None of these interests is individually material in the context of
the Group as a whole. Such properties are used by the Group
predominantly for manufacturing, distribution and R&D activities.
In particular, the Group owns a supply chain of 24 in-house
dedicated manufacturing sites, with key sites located in Levice
(Slovakia), Dungarvan (Ireland), Nyon (Switzerland) and Guayama
(Puerto Rico). In addition, the Group owns four R&D centres in
Richmond, Virginia (USA), Weybridge (UK), Maidenhead (UK)
and Suzhou (China) providing it with a broad range of in-house
scientific capabilities.
The Group announced a number of developments relating to its
key sites during 2024, including the latest plans for its £130m
investment in a new Global Oral Health Innovation Centre in
Weybridge (UK), which is scheduled to open in 2027. The Group
also announced plans to invest $54m in upgrading its laboratories
and workspaces in its R&D centre in Richmond, Virginia (USA).
Additionally, the Group confirmed plans to begin a phased
closure of its Oral Health manufacturing site in Maidenhead (UK).
This will take place over a two-year period with manufacturing
capabilities transferred to its Oral Health centre of excellence in
Levice (Slovakia). The Group believes its existing facilities are
satisfactory for its current business and, other than these
developments, it currently has no further plans to construct
new facilities or expand or improve its current facilities in a
manner that is material to the Group.
The Group is not aware of any environmental issues affecting its
properties which would have a material impact upon the Group,
and there are no material encumbrances on its properties.
Group information
continued
Haleon
Annual Report and Form 20-F 2024
192
Other information
The Group’s ability to execute its marketing and sales
strategy is subject to challenges
As a consumer products business, the Group relies on a strategy
of leveraging its existing brands and products to drive increased
sales and profits. The successful implementation of this strategy
depends on, among other things, the Group’s ability to: identify
and offer competitively priced products that appeal to evolving
consumer preferences; formulate its strategy in response to these
changing consumer preferences; innovate successfully on its
existing products; and effectively utilise a range of distribution
channels in its key markets.
Failure to execute this strategy successfully for any reason,
including any reduction in consumer demand for the types of
products which the Group offers due to changes in consumer
lifestyle, environmental concerns, economic downturns or other
considerations could have a material adverse effect on the Group’s
business, prospects, financial condition and results of operations.
The Group’s business results are impacted by the Group’s
ability to manage disruptions in the Group’s global supply chain
The Group is engaged in the manufacturing and sourcing of products
and materials on a global scale. The Group’s operations and those
of its suppliers, contract manufacturers and logistics providers
have been and may continue to be disrupted by a number of
factors, including, but not limited to: increased and/or changing
regulation, as well as regulatory compliance issues;
environmental events, including natural disasters (such as fires,
floods and earthquakes) and any potential effect of climate
change; global shipping, logistics, transport and warehousing
constraints, for example due to regional or local conflicts (such
as the conflict in the Middle East and ongoing shipping disruption
in the Red Sea) or widespread health emergencies, such as
pandemics or epidemics any of which may lead to delays in
deliveries and constraints on shipping and logistics as a result of
local lockdowns; global supply chain disruption impacting their
suppliers; strikes and other labour disputes; cyber security
failures or incidents; loss, impairment, closure or disruption of key
manufacturing sites; loss of, or capacity constraints relating to key
suppliers or contract manufacturers; raw material and product
quality or safety issues (see The Group may incur liabilities or be
forced to recall products as a result of real or perceived product
quality or other product-related issues on page 196); industrial
accidents or other occupational health and safety issues; the
impact on the Group’s suppliers of tighter credit or capital
markets; the lack of availability, or retention, of qualified
personnel; governmental incentives and controls (including
exchange controls, import and export restrictions, such as new
or increased tariffs, sanctions, quotas or trade barriers); acts of
war (see The Group’s business may be impacted by the effects
of regional and local conflicts on page 200) or terrorism, political
unrest or uncertainty, fires or explosions, and other external
factors over which the Group has no control; and increases in
ingredient, commodity, utilities and oil prices.
Following 2024 elections in the US and Europe, there is
heightened global uncertainty regarding the potential imposition
of tariffs and other trade barriers or protectionist industrial
policies by the US, China and the European Union. If there is an
escalation in tariff or duty activity, or other protectionist
industrial policies, between the US and its major trading partners,
or other major economies, it could negatively impact global
economic activity, our global supply chain and/or demand for our
products, each of which could materially and adversely affect the
Group’s business, results of operations and financial condition.
The Group has identified a broad range of risks relating to its
business and the industry in which it operates. These risks are
described below and, together with all other information
contained in this Annual Report, should be carefully considered
in evaluating the Group. The risks and uncertainties described
below represent those we consider to be material as at the date
of this Annual Report, with material risks being those to which
senior management pay particular attention and which could
cause the delivery of the Group’s strategy, financial condition,
results of operations and/or prospects to differ materially from
expectations. However, these risks and uncertainties are not the
only ones facing the Group.
If any of the following risks occur, our business, financial
condition, results of operations and prospects could be materially
and adversely affected. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial also
may impair our business operations.
Risks relating to the Group’s business and industry
The Group operates in a highly competitive market
The Group faces substantial and increasing competition in all
of its product categories and geographic markets. There are
relatively low barriers to entry in certain product categories in
many of the markets in which the Group operates (particularly
in the VMS category) and accordingly the Group’s businesses
compete with companies of all sizes on many different fronts,
including cost-effectiveness, product effectiveness and quality,
brand recognition and loyalty, technological innovations,
consumer convenience, promotional activities, new product
introductions and expansion into new markets and channels.
The Group expects to continue to see heightened activity from its
competitors worldwide, including: (i) increasing and aggressive
competition from smaller, high-growth companies which often
operate on a regional basis, and may disrupt existing route-to-
market models; (ii) increasing competition from multinational
corporations moving for the first time into, or expanding or
focusing their presence (whether through acquisitions, disposals,
demergers or other means) in the global consumer healthcare
market; (iii) continuing competition from private label products,
which are brands sold exclusively by a particular retailer; and (iv)
an increase in the introduction and aggressive marketing of new
products in high-demand healthcare areas.
Some of the Group’s competitors may conduct more effective
advertising and promotion activities than the Group does,
introduce competing products more quickly and/or respond more
effectively to business and economic conditions and changing
consumer preferences, including by launching innovative new
products. These risks could also be enhanced by the relatively
recent development of generative AI and its rapidly evolving
nature, which could enable new or existing competitors who are
better able to capitalise on these developments to achieve
additional competitive advantages, such as enhanced product
targeting or cost-savings on advertising and promotion. If the
Group is unable to anticipate the timing and scale of these threats
across its markets or to successfully respond to them, then its
brand loyalty may be harmed, it may lose market share and its
business, prospects, results of operations and financial condition
may be materially adversely affected.
Risk factors
Other Information
Haleon
Annual Report and Form 20-F 2024
193
Group information
Private label products sold by the Group’s retail customers,
which are typically sold at lower prices than branded products,
are a source of competition for certain of the Group’s products.
In addition, the retail landscape in many of the Group’s markets
continues to evolve as a result of the rapid growth of ecommerce
retailers (who are able to generate private label products and
capitalise on access to data) and price comparison sites, changing
consumer preferences (as consumers increasingly shop online),
and, in certain categories (particularly VMS), the increased
presence of alternative retail channels, such as subscription
services, sales through social media platforms and direct-to-
consumer businesses (especially those which specialise in rapid
distribution). The strong growth in ecommerce and the emergence
of alternative retail channels may create pricing and margin
pressures and/or adversely affect the Group’s relationships with
key retailers. If the Group is not able to successfully manage and
adapt to these changes in the retail landscape, the Group’s
business, prospects, results of operations and financial
condition could be materially and adversely affected.
The Group may not be able to develop and commercialise
new products effectively
The future growth of the Group is to a significant extent
dependent on its ability to develop new products or new
formulations of existing products. The Group’s ability to launch
new products and to expand into adjacent categories, channels
of distribution or markets is affected by whether the Group can
successfully: identify, develop and fund technological
innovations; obtain and maintain necessary intellectual property
protection and avoid infringing intellectual property rights of
others; obtain and maintain approvals and registrations of
regulated products in the countries in which the Group has
business operations; anticipate the needs and preferences of
consumers and customers by, among other things, effectively
utilising digital technology and marketing and data analytics to
gain new commercial insights and develop or identify relevant
products aligned to those preferences; and successfully
compete to in-license products.
The identification, development and introduction of innovative
new products that drive incremental sales involves considerable
time, costs and effort, as well as significant risk that any new
product may not generate sufficient customer and consumer
interest and sales to become a profitable product or to cover
the costs of its development and promotion. New products
must be developed to meet the Group’s own rigorous internal
specifications, as well as the relevant regulatory and safety
requirements imposed in our various markets. Each of these
restrictions means that a new product can fail to make it to market
at any stage or do so in a cost-effective manner. In addition, new
products that make it to market may not be accepted quickly or
significantly in the marketplace.
Any failure to develop and commercialise new products in a
timely fashion may lead to decreased market share, decreased
revenue and/or increased R&D costs and, consequently, may
materially and adversely affect the results of the Group’s
operations and financial condition.
Failure to retain key talent or attract new talent
The Group relies upon a number of key executives and employees
who have an in-depth understanding of the consumer healthcare
industry and the Group’s technologies, products, programmes,
collaborative relationships and strategic goals. While the Group
follows a disciplined, ongoing succession planning process and
While the product ranges of the Group’s leading brands are
manufactured by multiple sources, some of the Group’s products
are currently primarily manufactured at a single location and the
loss of the use of all or a portion of any of these manufacturing
facilities or the loss of the use of, or capacity constraints at, key
suppliers in relation to the Group’s other products could impact
the Group’s ability to provide these products.
In addition, the Group purchases certain raw and packaging
materials from single-source suppliers or a limited number of
suppliers and new suppliers may have to be qualified under
industry, governmental and its own standards, which can require
additional investment and take a significant period of time.
Although the Group has contingency plans in place, such as dual
sourcing programmes and alternative supply arrangements, those
plans may not be sufficient to mitigate manufacturing or supplier
interruptions, and the Group may also be limited in its ability to
pass on any increases in the prices it charges for its products as a
result of fixed-price supply agreements or hedging arrangements.
A significant disruption to the manufacturing or sourcing of
products or materials for any reason, including those mentioned
above, could interrupt product supply and, if not remedied,
could lead to litigation or regulatory action, product delistings
by retailers, financial penalties, and reputational damage that
could materially and adversely affect the Group’s business,
results of operations and financial condition.
Increasing dependence on key retail customers, changes in
the policies of the Group’s retail customers, the emergence
of alternative retail channels and the rapidly changing
retail landscape
The Group’s products are sold in a highly competitive global
marketplace which has experienced increased trade concentration
and the growing presence, in both traditional and digital
operations, of large-scale retailers, including pharmacies,
discounters and ecommerce retailers. The Group is increasingly
dependent on certain retailers, and some of these retailers have
and may continue to have greater bargaining strength than the
Group does. For example, similar to its competitors, while the
Group maintains relationships with a variety of significant
retailers across its key markets, sales attributable to its top
five largest retailers account for over half of the Group’s
revenue in the US market.
The Group’s large-scale retail customers, including pharmacies,
may use their leverage to demand higher trade discounts,
allowances, display fees or increased investment, which could
lead to reduced sales or profitability. The loss of a key retailer or
a significant reduction in sales to a key retailer could materially
and adversely affect the Group’s business, prospects, results of
operations and financial condition. The Group’s business might
also be negatively affected by the growing presence and
bargaining strength of customers who operate internationally and
retail buying alliances (horizontal alliances of retailers, retail chains
or entire retailer groups that cooperate in pooling their resources)
and the enhanced leverage that such alliances possess.
The Group has also been and may continue to be negatively
affected by changes in the policies or practices of the Group’s
retail trade and pharmacy customers, such as inventory
de-stocking, limitations on access to shelf space, delisting of
the Group’s products or environmental, sustainability, supply
chain or packaging initiatives and other conditions.
Group information
continued
Risk factors
continued
Haleon
Annual Report and Form 20-F 2024
194
Other information
Failure to respond effectively to the challenges raised by
climate change and other sustainability and ESG matters
Concern over climate change and social impacts has increased the
focus on the sustainability of practices and products in the
market and may result in new or additional legal and regulatory
requirements to reduce or mitigate the effects of climate change
on the environment and social impacts. Areas of focus relevant to
the Group’s business include, among others, responsible sourcing
and deforestation, the use of plastic, energy and water, the
recyclability or recoverability of packaging, including single-use
and other plastic packaging, and the use of certain materials,
such as palm oil where the environmental or social impact of the
material can attract scrutiny, as well as an increased focus on
human rights due diligence.
New or additional legal and regulatory requirements more
stringent than the Group’s current legal and regulatory
obligations and/or the Group’s existing practices and procedures,
may require the Group to revise its operations and supply chain
management. In addition, failure to appropriately prevent,
mitigate or remediate negative human rights or environmental
impacts across the Group’s sites and supply chain may result in
supply chain disruption, regulatory breaches, and reputational
consequences. New regulatory requirements may also require
upgrades to our systems and processes for capturing ESG data,
and compliant ESG reporting may therefore be dependent on
those upgrades being in place and fully embedded. However,
attitudes among governments toward ESG policies continue to
evolve, with certain governments reducing or eliminating ESG
targets and requirements, which may negatively impact the
return on investments we have made and may make it more
difficult to plan future investments, particularly if such policy
changes result in a policy divergence among governments.
There may also be financial impacts as governments implement
taxation initiatives, such as extended producer responsibility
taxes or carbon taxes, to help recover the cost of managing
plastic waste and the impacts of climate change. There may also
be reputational impacts, including related impacts such as
product delistings with customers or loss of preference with
consumers, investors, employees or other stakeholders, should
the Group fail, or be perceived to fail, to meet either its publicly
stated sustainability goals or community expectations in relation
to sustainability initiatives.
In addition, our approach to diversity, inclusion and equal
opportunity in the workplace and ESG policies, may lead
to scrutiny or reactions from stakeholders who may have
differing or contradictory expectations related to the Company’s
approach, which could impact our reputation and result in an
adverse effect on the Group’s business, results of operations,
cash flows and financial condition.
For further information on the specific climate-related risks facing
the Group, see Task Force on Climate-related Financial Disclosures,
from page 24.
All these developments may result in increased costs and
disruption to the Group’s operations, and to loss of revenue,
which could materially and adversely affect the Group’s business,
results of operations, cash flows and financial condition.
has succession plans in place for those individuals comprising our
Board of Directors and our Executive Team (as set out on pages 59
to 63) (Senior Management) and other key executives, these do
not guarantee that the services of qualified senior executives will
continue to be available to the Group at all times. In addition, the
Group’s business, prospects, results of operations and financial
condition will depend on the Company’s ability to successfully
manage any changes in Senior Management.
Competition for such talent is intense, and there can be no
assurance that the Group will be able to continue to attract
and retain such talent. If the Group is unable to recruit, attract,
integrate and retain talented, highly qualified Senior Management
and other key people for any reason, the Group’s business,
prospects, results of operations and financial condition could
be materially and adversely affected.
Damage to the Group’s reputation
Maintaining the Group’s strong reputation and trust with consumers
and customers globally is critical to selling the Group’s branded
products. Negative publicity, posts or comments on social
media about the Group, its products, the ways it does business,
threatened or pending litigation or regulatory proceedings, its
public policy engagement, environmental, social and governance
practices, including as they relate to diversity, equality and
inclusion, the health, safety and welfare of employees or other
stakeholders, or relations with its employees, or regulatory
infractions, violations of sanctions or anti-bribery rules, whether
or not deserved, could jeopardise the Group’s reputation and/or
expose it to adverse press and social media attention. Whether
true or untrue, such negative publicity, posts or comments on
social media could damage the Group’s brands and its reputation
and/or lead to boycotts of its products. Moreover, the Group’s
reputation could be harmed as a result of inappropriate use of
its branded products being promoted on social media and any
associated negative publicity.
The Group’s reputation may also be adversely affected if third
parties with whom the Group contracts (or an owner, acquirer or
other related party of such), including its suppliers, manufacturers
and customers, fail to maintain high ethical, social and
environmental standards, comply with local laws and regulations or
become subject to other negative events or adverse publicity. While
the Group has policies and procedures for managing third-party
relationships, it may not be possible to fully ensure that third parties
adhere to the same standards and values as the Group or to replace
third-party relationships in a timely and/or cost-effective manner.
Counterfeiting is a common issue for successful brands and has
been amplified by the growth of ecommerce. Although the Group
has an anti-counterfeiting programme in place, third parties
continue to sell counterfeit versions of the Group’s products.
These counterfeits are inferior in quality to the genuine Group
products and may pose safety risks to consumers. Consumers of
the Group’s brands could confuse the Group’s products with or
purchase these counterfeit products. The consumption of inferior
quality products, which consumers believe to be genuine (and,
in some instances, may cause consumer safety issues) could also
damage the reputation of the Group and its brands and lead to
a reduction in market share.
Damage to the Group’s reputation or loss of consumer confidence
in the Group’s products for these or any other reasons could
materially and adversely affect the Group’s business, results of
operations, cash flows and financial condition, as well as require
resources to rebuild the Group’s reputation.
Other Information
Haleon
Annual Report and Form 20-F 2024
195
Group information
The Group may incur liabilities or be forced to recall products
as a result of real or perceived product quality or other
product-related issues
Failure to comply with good manufacturing or good distribution
practices and regulations, as well as other regulations in relation
to product quality, throughout the Group’s in-house and contract
manufacturing supply and distribution chains, could lead to
product supply interruptions, product recalls or withdrawals,
litigation and/or regulatory enforcement action and fines from
regulators, despite employee training, promotion of a health and
safety culture, and control measures and systems being in place
that are designed to ensure that the safety and quality of the
Group’s products is maintained. Additionally, products may be
contaminated or tampered with during distribution or at stores.
The Group is increasingly using new technology to enhance the
manufacture and testing of its products, such as the deployment
of new electronic documentation systems and advanced
laboratory information management tools. Such technology is
inherently susceptible to the threat of cyber-attacks which pose
an ongoing risk to the integrity of product quality data and its
audit trail. The Group also continues to be reliant on third parties
and is continuing to undertake a global network rationalisation
programme to reduce the number of manufacturing sites it uses,
both of which are factors that may increase the risks to safe and
timely supply of products.
Product recalls or withdrawals arising as a result of real or
perceived product quality, efficacy, safety, environmental or other
product-related issues, whether initiated on a voluntary basis or
otherwise, can result in a range of adverse consequences to the
Group, including lost sales, the requirement to hold increased
inventories of substitute products, the cost of re-formulations,
damaged relationships with regulators, loss of market share to
competitors, adverse publicity and reputational harm, in addition
to the direct costs of implementing any recall.
Furthermore, such product quality or other product-related
issues also expose the Group to a significant risk of litigation,
particularly product liability claims, and regulatory action (see
Risks related to litigation, disputes and regulatory investigations,
from page 199).
Failure by the Group to manufacture its products in accordance
with good manufacturing practices could have the potential to
do significant damage to the Group’s reputation and materially
and adversely affect the results of its operations and financial
condition. In addition, if any of the Group’s competitors or
customers supply faulty or contaminated products to the market,
the Group’s industry could be negatively impacted, which in turn
could have material adverse effects on the Group’s business.
A cyber-security incident, data breach or a failure of a key
information technology system
The Group relies extensively on information technology systems
(IT systems), including some which are managed, hosted, provided
and/or used by third parties, including cloud-based service
providers, and their vendors, in order to conduct its business.
Although the Group has a broad array of information security
measures in place, the Group’s IT systems, including those of
third-party service providers with whom it has contracted, have
been, and will likely continue to be, subject to computer viruses
or other malicious codes, unauthorised access attempts, phishing
and other cyber-attacks.
The Group may not be able to sufficiently protect its
intellectual property rights or avoid claims of infringement
on the intellectual property rights of others
The Group relies on various types of intellectual property rights
such as trade marks, patents, copyrights and designs, whether
registered or unregistered, as well as unpatented proprietary
knowledge and trade secrets, to protect its business. However,
these rights do not afford complete protection against third
parties’ claims and infringements, for example, due to territorial
limitations on intellectual property protections in certain markets
in which the Group operates. Additionally, there can be no
assurance that third parties will not independently develop
knowledge and trade secrets that are similar to the Group’s, or
develop products or brands that compete effectively with the
Group’s products and brands without infringing, misusing or
otherwise violating any of the Group’s intellectual property rights.
The Group’s intellectual property rights may also be challenged in
the future. In the event of such a challenge, the Group could incur
significant costs to defend its intellectual property rights, even if
it is ultimately successful. Additionally, there is a risk that the
Group will not be able to obtain licences for the intellectual
property rights necessary to support new product introductions
and product innovations.
The Group also uses intellectual property rights in-licensed from
licensors. The Group’s licences to such intellectual property rights
may not provide exclusive or unrestricted rights in all fields of use
and in all territories in which the Group may wish to develop or
commercialise its products in the future, may restrict its rights to
offer certain products in certain markets, and may not grant the
Group full control over the maintenance, protection, enforcement
or use of such intellectual property rights, leaving the Group
reliant on the licensors to conduct such activities.
Further, the agreements under which the Group licenses
intellectual property rights from others are complex, and the
provisions of such agreements may be susceptible to multiple
interpretations. As such, resolution of any dispute relating to such
contracts may be costly, time-consuming and ultimately narrow
the scope of the Group’s rights to the intellectual property being
licensed, or increase what the Group believes to be its financial or
other obligations under the relevant agreement.
Infringement, misuse or other violation of any of the Group’s
intellectual property rights, including by current or former
employees, contractors or third parties, may dilute or diminish
the value and goodwill of the Group’s brands and products in
the marketplace, which could materially and adversely affect
the Group’s results of operations and make it more difficult for
the Group to maintain a strong market position, leading to a
material and adverse effect on the Group’s business and
results of operations.
Group information
continued
Risk factors
continued
Haleon
Annual Report and Form 20-F 2024
196
Other information
The Group faces various risks related to pandemics,
epidemics or similar widespread public health concerns
A pandemic, epidemic or similar widespread health concern could
have a variety of impacts on the Group’s business, results of
operations, cash flows and financial condition, including: effects
on the health, safety and wellbeing of the Group’s employees,
including key employees; volatility in the demand and sales for
and availability of the Group’s products (including, for example,
a decrease in demand for Theraflu due to a particularly weaker
cold and flu season); changes in regulatory policy, including
restrictions on sales of certain products; disruptions to the
Group’s global supply chain, operations and efficiency due to,
among other things, the availability of raw materials or
manufacturing components, logistics challenges, travel
restrictions, absenteeism or ‘stay-at-home’ orders or similar
mandates resulting in many individuals substantially restricting
daily activities and businesses curtailing or ceasing normal
operations; failure of third parties on which the Group relies to
meet their obligations to the Group, or significant disruptions in
their ability to do so; disruptions and volatility in the global
capital markets, which may increase the cost of capital and/or
adversely impact the Group’s access to capital; and/or volatility
in foreign exchange rates.
Despite the Group’s efforts to manage these impacts, their
ultimate impact also depends on factors beyond the Group’s
knowledge or control, including the duration, severity and
geographic scope of an outbreak, the availability, widespread
distribution and use of safe and effective vaccines and the
actions taken to contain its spread and mitigate its public
health and economic effects.
The Group may not successfully acquire and integrate other
businesses, license rights to technologies or products, form
and manage alliances, or divest businesses
The Group may decide in the future to pursue acquisitions,
technology licensing arrangements, strategic alliances or
divestitures as part of its business strategy. The Group may not
complete these transactions in a timely manner, on a cost-effective
basis or at all. In addition, the Group may be subject to regulatory
constraints or limitations or other unforeseen factors that prevent
it from realising the expected benefits of such transactions.
Even if the Group is successful in completing an acquisition,
the products, intellectual property and technologies that are
acquired or in-licensed may not be successful or may require
significantly greater resources and investments than originally
anticipated. The Group may be unable to integrate acquisitions
successfully into its existing business, and the Group may be
unable to achieve expected operating margin improvements,
synergies or efficiencies. The Group could also incur or assume
significant debt and unknown or contingent liabilities in
connection with acquisitions. For disposals where an earn out
arrangement is part of the consideration, the criteria for payment
may not be reached (in whole or in part) and the Group may
realise less than anticipated. Where support is offered to a
purchaser under a transitional services agreement or similar, the
costs of providing that support may be higher than anticipated.
The Group’s reported operating results could be negatively
affected by acquisition or disposition-related charges,
amortisation of expenses related to intangibles and charges
for impairment of long-term assets. The Group may be subject
to litigation in connection with, or as a result of, acquisitions,
dispositions, licences or other alliances and the Group may be
liable for future or existing litigation and claims related to the
Cyber-attacks and other cyber incidents are occurring more
frequently, are constantly evolving in nature, are becoming more
sophisticated and are being made by groups, individuals and nation
states with a wide range of expertise and motives. While the Group
has implemented systems, monitoring and training to prevent
cyber-attacks and other cyber incidents from being successful,
the Group cannot guarantee that its security efforts will protect
against incidents, breaches or breakdowns of its, or its third-party
service providers’, IT systems since the techniques used in these
attacks change frequently and may be difficult to detect for periods
of time, and so such cyber-attacks may from time to time succeed.
In addition, the Group cannot guarantee that it or its third-party
service providers’ response to any such incidents will fully remedy the
extent of the damage caused by these incidents. Although the Group
has policies and procedures in place to ensure that all personal
information collected by it or its third-party service providers is
securely maintained, data incidents or breaches due to human error
or intentional or unintentional conduct may still occur in future.
Furthermore, the Group periodically upgrades its IT systems or
adopts new technologies. If such an upgrade or new technology
does not function as designed, does not go as planned or increases
the Group’s exposure to a cyber-attack or cyber incident, it may
adversely impact the Group’s business, including its ability to
ship products to customers, issue invoices and process payments
or order raw and packaging materials. If the Group were to suffer
a significant loss or disclosure of confidential business or
stakeholder information as a result of a breach of its IT systems,
including those of third-party service providers with whom it
has contracted, or otherwise, the Group may suffer reputational,
competitive and/or business harm, incur significant costs and be
subject to government investigations, litigation, fines and/or
damages, which may materially and adversely impact the Group’s
business, prospects, results of operations and financial condition.
While the Group has disaster recovery and business continuity
plans in place, if its IT systems were damaged, breached or were
to cease to function properly for any reason or if it does not
effectively resolve such issues on a timely basis, the Group may
suffer interruptions in its ability to manage or conduct business
as well as reputational harm, and may be subject to governmental
investigations and litigation, any of which may materially and
adversely impact the Group’s business, prospects, results of
operations and financial condition.
The Group relies on third parties in many aspects of its business
Due to the scale and scope of the Group’s business, the Group
relies on relationships with third parties, including its suppliers,
contract manufacturers, distributors, contractors, commercial
banks, joint venture partners and external business partners,
for route to market and for certain administrative and other
functions. If the Group is unable to effectively manage and
maintain its third-party relationships, including its contractual
arrangements, if such third parties fail to meet their obligations
to the Group or if there are substantial disruptions in the
relationships between the Group and third parties, the Group’s
results of operations could be adversely impacted.
Third-party relationships inherently involve the Group holding a
lesser degree of control over business operations, and compliance
with laws, regulations and Group policies and practices than is
available for the Group’s own operations and compliance. As such,
the Group’s financial, reputational, operational and legal risk is
potentially increased, including in respect of health and safety,
environmental, social and governance issues, modern slavery,
and anti-bribery and corruption.
Other Information
Haleon
Annual Report and Form 20-F 2024
197
Group information
Risks relating to changes in law and the political and
economic environment, regulation and legislation
The Group’s business is subject to legal and regulatory risks
in all the markets in which it operates
The risks apply to most aspects of the Group’s products,
including their development, ingredients, formulation, manufacture,
packaging content, labelling, storage, transportation, distribution,
export, import, advertising, promotion beyond therapeutic
indications, sale and environmental impact. Many different
governmental and regulatory authorities in the Group’s markets
regulate and have jurisdiction over different aspects of the Group’s
business activities including licensing of the Group’s activities.
Those regulations or their interpretation may change. In addition,
the Group’s selling practices are regulated by competition law
authorities in the UK, as well as in the EU, the US and other markets.
In China, where the Group has significant sales and operations,
OTC, medical devices, and registered health products face
stringent regulatory scrutiny. Government authorities are
increasingly enforcing medicines’ quality, safety standards and
ensuring compliance with fair competition rules in marketing and
distribution. These affect both new and existing products and our
business operations in China. There is a risk that commercialisation
of certain products of the Group may be restricted in China if the
Group is unable to comply with these regulatory requirements.
Because of the Group’s extensive international operations, the
Group could be materially and adversely affected by violations
of worldwide anti-bribery laws, including those that prohibit
companies and their intermediaries from making improper
payments to government officials or other third parties for the
purpose of obtaining or retaining business, such as the US Foreign
Corrupt Practices Act, the UK Bribery Act 2010, UK Economic
Crime and Corporate Transparency Act and other laws that
prohibit commercial bribery. Additionally, in certain jurisdictions,
the Group’s engagement with Health Professionals and other
external leaders is subject to applicable restrictions. While the
Group’s policies mandate compliance with such laws, the Group
cannot provide assurance that the Group’s internal control
policies and procedures will always protect the Group from
reckless or criminal acts committed by its employees, joint
venture partners or agents. Similarly, due to the Group’s
international operations, the Group could also be materially
and adversely affected by any violations of international
sanctions laws, which continue to evolve in response to geopolitical
events (see also The Group’s business may be impacted by the
effects of regional and local conflicts, on page 200).
While it is the Group’s policy to comply with all legal and
regulatory requirements applicable to the Group’s business,
there can be no guarantee that the Group will always achieve full
compliance and a finding that the Group is in violation of, or out
of compliance with, applicable laws or regulations could subject
the Group to additional costs of compliance or to civil remedies,
including fines, damages, injunctions or product recalls, or
criminal sanctions. Even if a claim is unsuccessful, is without merit
or is not fully pursued, the Group may incur costs in responding to
such a claim and negative publicity surrounding such assertions
regarding the Group’s products, processes or practices.
acquired business, disposition, licence or other alliance because
either the Group is not indemnified for such claims or the scope
or availability of indemnification is limited. These effects could
cause the Group to incur significant expenses and could
materially and adversely affect the Group’s business, results
of operations and financial condition.
Risks relating to the Group’s leverage and debt
service obligations
The Group has leverage that is broadly consistent with its
longer-term strategy and has significant debt service obligations.
The Group’s longer-term strategy to operate at a leverage of
around 2.5x net debt/adjusted EBITDA may not be successful.
The Group’s outstanding financial indebtedness as at
31 December 2024 is set out in Note 19 to the Consolidated
Financial Statements.
The degree to which the Group is leveraged could have important
consequences for the Group’s business, including, but not limited
to: increasing the Group’s vulnerability to, and reducing its
flexibility to respond to, a downturn in the Group’s business or
general adverse economic and industry conditions; limiting the
Group’s ability to obtain additional financing in the longer term;
requiring the dedication of a substantial portion of the Group’s
cash flow from operations to the payment of interest on the
Group’s indebtedness and the repayment of principal, thereby
reducing the availability of such cash flow to fund capital
expenditures, dividends, joint ventures, acquisitions or other
general corporate purposes; increasing the cost of future
borrowings for the Group; a downgrade in the Group’s credit
rating, which may, in turn, increase the cost of the Group’s
financing arrangements and make it difficult for the Group to
access financing on commercially acceptable terms or at all;
limiting the Group’s flexibility in planning for, or reacting to,
changes in the Group’s business and the competitive environment
and the industry in which it operates; and placing the Group at
a competitive disadvantage as compared to some of its
competitors, to the extent that they are not as highly leveraged.
Any of these or other consequences or events could have a
material adverse effect on the Group’s business, financial condition
and results of operations. In addition, the Group may incur
substantial additional indebtedness in the future. The covenants
in existing financing instruments do not fully prohibit the Company
or its subsidiaries from incurring more indebtedness. If new debt
is added to the Group’s debt levels, the risks that it faces could
intensify. The incurrence of additional indebtedness would
increase the leverage-related risks described herein and would
increase the risk of a downgrade in the Group’s credit rating.
Goodwill and indefinite life intangible assets are a material
component of the Group’s balance sheet and may be subject
to impairments
The Group has recorded a significant amount of goodwill and
indefinite-life intangible assets on its balance sheet as set out in
Note 14 to the Consolidated Financial Statements. The Group
tests the carrying values of goodwill and indefinite life intangible
assets for impairment at least annually and whenever events or
circumstances indicate the carrying value may not be recoverable.
The estimates and assumptions about future results of operations
and cash flows made in connection with impairment testing
could differ from future actual results of operations and cash
flows. Any resulting impairment charge, although non-cash,
could have a material adverse effect on the Group’s results of
operations and financial condition.
Group information
continued
Risk factors
continued
Haleon
Annual Report and Form 20-F 2024
198
Other information
Relatedly, the Group is also subject to risks arising from increases
of interest rates in many markets around the world. In particular,
the Group has obligations under financial instruments that bear
interest at floating rates, and borrowings under the Group’s bank
financing facilities (see Note 25 to the Consolidated Financial
Statements, from page 157). Sustained elevated interest rates may
in future increase the Group’s interest expenses associated with
these and future debt obligations and thereby reduce cash flow
available for other purposes. Any hedging arrangements entered
into by the Group to offset this risk may prove not to be fully
effective or available on terms that are acceptable to the Group.
Risks related to litigation, disputes and
regulatory investigations
The Group is, and may in the future be, subject to legal proceedings,
disputes and regulatory and governmental investigations in various
contexts, including consumer fraud actions, competitor and
regulatory challenges to product and marketing claims, competition
law investigations, product liability and quality claims, human
resources claims, contractual disputes and other disputes or
claims arising in the ordinary course of its business operations.
These legal actions, disputes and investigations may relate to
aspects of the Group’s businesses and operations that are specific
to the Group, or that are common to companies that operate in the
Group’s markets, and this risk may be enhanced in circumstances
where the Group is operating in new markets. Legal actions and
disputes may arise under contracts, regulations or from a course
of conduct taken by the Group, and may be class actions. Further
information on legal proceedings impacting the Group are detailed
in Note 22 to the Consolidated Financial Statements, on page 153.
In connection with acquisitions, disposals or other transactions, the
Group may enter into contractual arrangements pursuant to which
the Group may become exposed to litigation risk despite not
being a party to proceedings in relation to which the indemnities
may be implicated. In connection with the separation as further
set out below under ‘The Group has indemnification obligations
in favour of the GSK Group and the Pfizer Group, which could be
significant’, in 2022, GSK and Pfizer have each served the Group with
notice of potential claims for indemnification relating to OTC Zantac,
the outcome of which claims is currently uncertain. The Group has
rejected both GSK’s and Pfizer’s requests for indemnification on the
basis that the scope of the indemnities set out in the joint venture
agreement only covers the consumer healthcare businesses of GSK
and Pfizer when the Consumer Healthcare JV was formed in 2018.
Given the large or indeterminate amounts of damages sometimes
sought by claimants, other sanctions that might be imposed
(including the Group no longer being able to use key claims)
and the inherent unpredictability of litigation and disputes, it is
possible that an adverse outcome to any litigation, dispute,
government or regulatory investigation could have a material
adverse effect on the Group’s business, financial condition,
results of operations and prospects. The Group has made
provisions for legal disputes and matters, including amounts
relating to legal and administrative proceedings, which we
believe are reasonably possible (but not probable) to be realised.
Given the inherent uncertainty of litigation, it is possible that
we might incur additional liabilities as a consequence of the
proceedings and claims brought against us, including those that
are not currently believed by us to be reasonably possible.
Details of these contingencies are included within Other
provisions as set out in Note 21 to the Consolidated Financial
Statements, on page 153.
The Group faces risks relating to the regulation and perception
of the ingredients it uses in its products
Regulatory bodies and consumer groups may, from time to time,
request or conduct reviews of the use of certain ingredients that
are used in manufacturing the Group’s products. If the result of
such reviews is an inability to use, or restrictions on the use of,
certain ingredients and/or any requirement for remedial action,
the Group may incur significant additional costs and/or need to
invest substantial resources to make formulation adjustments to its
products. Additionally, the Group may be adversely affected by the
findings and any remedial actions resulting from the EU’s ongoing
investigations into the impact of pharmaceuticals in the environment.
While the Group monitors and seeks to respond to and address the
impact of any emerging regulatory and legislative developments,
new or more stringent ingredient legislation could have a negative
impact on the Group’s business, undermine the Group’s reputation
and goodwill and affect consumer demand or trade customer
demand for products containing such ingredients. If the Group
voluntarily removes, or is required to remove, certain ingredients
from its products, it may not be able to develop an alternative
formulation, successfully modify its existing products or obtain
necessary regulatory approvals on a timely basis, or at all, which
could materially and adversely impact the Group’s business,
prospects, financial condition and results of operations.
The Group’s business is subject to market fluctuations and
general economic conditions, including inflationary pressures
and increased interest rates
Uncertainty, fluctuations or negative trends in the international
economic climate have had and could continue to have a material
adverse effect on the Group’s business and profitability. There will
be market fluctuations and economic factors that will be beyond
the Group’s control, but that will have the potential to materially
and adversely affect its business, revenue, financial condition
and operating results.
Such factors include: (i) inflation (including hyperinflation) or
deflation; (ii) changes in government, fiscal and monetary
policies; (iii) changes in the financial standing of the Group’s
customers, suppliers and consumers, including levels of
employment, real disposable income, salaries and wage rates; (iv)
consumer confidence and consumer perception of economic
conditions; (v) retailers’ perception of consumer spending habits;
(vi) technological change; (vii) exposure to possibly adverse
governmental or regulatory actions in countries where the Group
operates or conducts business; (viii) levels of volatility in global
markets; (ix) exposure to the effects of economic sanctions or
other restrictive economic measures as a result of the Group’s
global presence; and (x) any change or development in global,
national or regional economic and political conditions.
For example, the Group is exposed to inflationary pressures and
commodity prices, which generally affect the Group through their
impact on payroll and supply costs (including freight). Whilst the
Group may increase product prices in order to mitigate the impact
of inflation, competitive pressures may constrain the Group’s ability
to fully recover any increased costs in this way, and so the Group
may remain subject to market risk with respect to inflationary
pressures and increases in commodity prices. In addition, the
Group’s initiatives to offset headwinds from inflation (including
hyperinflation in a limited number of markets) in input prices and
commodities, including forward buying, value engineering and
alternative supply arrangements, may not be sufficient to mitigate
these risks.
Other Information
Haleon
Annual Report and Form 20-F 2024
199
Group information
The Group faces risks including but not limited to:
—
Disruption to the Group’s business operations, including
adverse impacts on its employees and on its revenue derived in
regions involved in conflict.
—
Foreign exchange risk relating to its revenues denominated in
relevant currencies. For example, the Group generates revenue
from sales of its products in Russia in Russian Rubles, and
denominates its significant costs in other currencies, such as
Pound Sterling, Euro and USD. Sanctions against Russia have
increased volatility in the value of the Russian Ruble, which
may affect the results of the Group’s operations in Russia as
the relative value between its derived revenues and incurred
costs fluctuates. The Group may not be able to offset any
devaluation of such currencies through increased prices of its
products. In addition, the imposition of exchange controls may
limit the Group’s ability to repatriate profits from its operations
in relevant countries.
—
Reduced demand for the Group’s products which exposes the
Group to increased counterparty risk in relation to customers
and receivables from customers.
—
Compliance with global sanctions regimes, and possible counter
measures imposed in response, many of which are evolving
rapidly and are increasingly complex to operate within.
—
Potential litigation risk from the Group’s counterparties seeking
to assert their rights for payments that are unable to be made
by the Group because of sanctions imposed on counterparties
or financial institutions.
—
Reputational risks associated with the Group’s continued
presence in certain markets. Negative publicity surrounding the
Group’s continued presence and/or supply of products in
countries involved in conflict could damage the Group’s brands
and its reputation, lead to boycotts of its products outside the
conflict region and/or have consequences on the continuation
of operations and/or sales, including a determination by the
Group to discontinue all sales in such countries.
—
As part of the Russian Government’s indicated plans to seize the
assets of western companies leaving Russia, in the event that the
Group discontinues its Russian operations, the potential (i)
nationalisation of the Group’s Russian assets, (ii) devaluing of the
Group’s Russian patents and trademarks and (iii) introduction
of restrictions on, or imposition of unfavourable terms in respect
of, payments made from Russia or relating to assets in Russia.
The impact of conflict remains highly uncertain and there may be
additional risks to the Group arising out of or relating to the
current conflicts and escalating military conflicts globally, which
could also have a material adverse effect on the Group’s business.
Failure to comply with regulation regarding the use of
personal data
The Group is subject to regulations in the jurisdictions in which it
operates regarding the use of personal data. The Group collects
and processes personal data from its consumers, customers,
business contacts and employees as part of the operation of its
business, and therefore it must comply with data protection and
privacy laws. Those laws generally impose certain requirements
on the Group in respect of the collection, retention, use and
processing of such personal information. Notwithstanding its
efforts, the Group is exposed to the risk that this data could be
wrongfully appropriated, lost, disclosed, retained, stolen or
processed in breach of data protection laws.
EU GDPR and the UK GDPR as well as the increased data
protection regulation in other jurisdictions, such as China, Russia
and the US, introduced the potential for significant new levels of
fines for non-compliance based on turnover. As part of its
The Group faces risks associated with significant
international operations
The Group operates on a global basis. While geographic diversity
helps to reduce the Group’s exposure to risks in any one country
or part of the world, it also means that the Group faces risks
associated with significant international operations, including,
but not limited to: exchange rate risks; regulatory limits on the
import and export of products, or repatriation of earnings
(including exchange and export/import controls); political or
economic instability, geopolitical events and rising geopolitical
trade tensions as well as social or labour unrest; foreign
ownership and investment restrictions and the potential for
nationalisation or expropriation of property or other resources;
changes to trade policies and agreements and other foreign or
domestic legal and regulatory requirements, including those
resulting in potentially adverse tax consequences or the
imposition of and/or the increase in onerous trade restrictions,
tariffs and/or price controls (including requirements to exclusively
utilise local manufacturing); and changes to labour laws, travel
or immigration restrictions.
Any or all of the foregoing risks could adversely impact consumer
confidence, affect the Group’s product mix and/or have a
significant impact on the Group’s ability to sell its products on
a competitive basis in international markets and may materially
and adversely affect its business, prospects, results of operations
and financial condition.
Volatility in material and other costs could materially
and adversely impact the Group’s profitability
Increases in the costs of and/or a reduction in the availability
of materials, including active pharmaceutical ingredients and
excipients and raw and packaging material commodities, as well
as labour, energy, logistics and other necessary services, such as
those seen during the COVID-19 pandemic and in relation to
inflationary pressures, may adversely affect the Group’s profit
margins. If material and other cost increases continue in the
future, the Group may be unable to pass along such higher costs
in the form of price increases, achieve cost efficiencies, or
otherwise manage the exposure through sourcing strategies,
ongoing productivity initiatives and the potential use of
commodity hedging contracts. Sustained price increases may
lead to declines in sales volumes as competitors may not adjust
their prices or consumers may decide not to pay higher prices,
which could lead to sales declines and loss of market share and
could materially and adversely affect the Group’s business,
results of operations and financial condition.
The Group’s business may be impacted by the effects of
regional and local conflicts
The Group monitors the effects of regional and local conflicts.
However, the broader economic consequences of Russia’s
invasion of Ukraine and other recent regional conflicts, including
in the Middle East, continue to be difficult to predict, and the
ongoing global geopolitical and economic instability related to
the actions of governments relating thereto (including sanctions
measures), the effects of which include (but are not limited to)
changes in commodity, freight, logistics and input costs, could
continue to adversely impact the Group’s business and/or the
trading prices of its securities.
Group information
continued
Risk factors
continued
Haleon
Annual Report and Form 20-F 2024
200
Other information
Changes in the tax systems of the countries in which the Group
operates could adversely affect the Group’s financial condition
and results of operations
Many countries, including the ones in which the Group operates,
change their tax laws from time to time, including by legislation,
regulation, administrative practice, judicial action or entering into
or amending tax treaties. The Group’s financial condition and
results of operations may be adversely affected by such changes.
For example, the Organisation for Economic Co-operation and
Development’s base erosion and profit shifting project and Pillar
Two regime, which is focused on establishing a global minimum
corporate taxation rate, has caused or is anticipated to cause
changes in the tax laws of many countries in which the Group
operates. Similarly, the US Government routinely proposes
changes to US tax laws, and such changes, including any
expansion of the scope of the US anti-inversion rules, could also
adversely affect the Group’s tax profile.
Risks relating to separation of its business from GSK
The Group has indemnification obligations in favour of the GSK
Group and the Pfizer Group, which could be significant
The Group, GSK, and Pfizer, entered into the Pfizer Stock and Asset
Purchase Agreement (Pfizer SAPA) on 19 December 2018 pursuant
to which the Group, GSK, and Pfizer agreed to form a new global
consumer healthcare joint venture. The Pfizer SAPA, as amended
from time to time, including by the Pfizer SAPA Amendment
Agreement, contains certain cross indemnities among the Group,
the GSK Group and the Pfizer Group. Among other provisions,
the Group is required to indemnify the GSK Group and Pfizer
Group in respect of ‘Purchaser Liabilities’ and ‘Assumed
Liabilities.’ GSK and Pfizer have each served the Group with notice
of potential claims under the relevant indemnification provisions
in the Pfizer SAPA in relation to possible liabilities connected with
OTC Zantac which the Group has rejected (see Legal proceedings
in Note 22 to the Consolidated Financial Statements, on page
153). It is not possible, at this stage, to meaningfully assess
whether the outcome will result in a probable outflow, or to
quantify or reliably estimate what liability (if any) the Group may
have to GSK and/or Pfizer under the relevant indemnities.
In addition, the Company, GSK and Pfizer, among others, entered
into a tax covenant on 1 June 2022, which has been effective from
the time of the Demerger (the Tax Covenant). Subject to certain
financial and other customary limitations, the Tax Covenant contains
certain indemnities in respect of taxation given from GSK and
Pfizer to the Company (and vice versa) where it has been agreed
that such taxes are properly allocable to the indemnifying party.
If any amounts payable by the Group under these indemnities
(or additional taxes imposed on the Group that are not
indemnified by GSK and/or Pfizer under the Tax Covenant) are
substantial, this could have a material adverse effect on the financial
condition, results of operations and/or prospects of the Group.
The Tax Covenant will restrict the Company’s ability to engage
in certain transactions
The Tax Covenant imposes certain restrictions on the Company
which largely fell away from July 2024. However, certain
restrictions remain in place. Although the Company does not
currently anticipate that these restrictions would have a material
adverse impact on the Company, these restrictions may reduce the
Company’s ability to engage in certain business transactions that
otherwise might be advantageous, until such restrictions fall away.
ongoing compliance with applicable requirements, the Group may
be required to expend significant capital or other resources and/
or modify its operations to meet such requirements, any or a
combination of which could have a material adverse effect on
the Group’s business, financial condition and financial results,
or otherwise harm its reputation.
The Group is exposed to risks relating to fluctuations in
currency exchange rates and related hedging activities
The Group operates internationally and holds assets, incurs
liabilities, generates sales and pays expenses in a variety of
currencies other than Pound Sterling (the currency in which it
reports its financial results). The most significant foreign currency
exposures are to the USD, Euro, Swiss Franc and Chinese
Renminbi, including $7,651m of USD-denominated bonds,
€3,073m of Euro-denominated bonds as well as a long-term loan
of CNY2,679m incurred by the Group as at 31 December 2024.
Fluctuations in exchange rates for foreign currencies have
reduced and could continue to reduce the Pound Sterling value
of sales, earnings and cash flows the Group receives from markets
outside the UK, increase its supply costs (as measured in Pound
Sterling) in those markets, negatively impact its competitiveness
in those markets or otherwise materially and adversely impact its
business or financial condition. The Group aims to manage this
risk through hedging where possible and practical; however, such
hedging activities may be ineffective or may not offset more than
a portion of the adverse financial effect resulting from variations
to such rates. The Group is also exposed to counterparty credit
(or repayment) risk under hedging contracts. To the extent any
hedging activities of the Group are wholly or partially ineffective,
or to the extent a hedging counterparty fails to meet its
obligations under any hedging agreement, this could result in
losses which could have a material adverse effect on the Group’s
business, results of operations and financial condition.
Determinations made by the Group with respect to the
application of tax law may result in challenges from or disputes
with tax authorities which result in the payment of additional
amounts for tax
The worldwide nature of the Group’s operations means that the
Group is subject to the tax laws in each country in which it
operates. Given tax laws are complex and are subject to
interpretation by Haleon and the relevant fiscal authorities, there
may be occasions where Haleon’s tax filing position is subject to
challenge and/or there is a risk of double taxation.
Additionally, the Group is subject to many different forms of
taxation within any given jurisdiction in which it operates
(including, but not limited to, corporate income taxes, capital
gains taxes on direct or indirect transfers of ownership, stamp
duty and similar transfer taxes, value added taxes, property taxes
and social security and other payroll taxes). The global tax
environment across all taxes continues to change rapidly creating
further complexity and uncertainty. This means that the Group
may be subject to domestic and cross-border tax authority
disputes in the future, which could result in the payment of
additional amounts of tax. Such potential disputes and the
resulting payment obligations could have a material adverse
effect on the Group’s business, results of operations and financial
condition. At 31 December 2024, the Group had recognised
provisions of £124 million in respect of uncertain tax positions.
Other Information
Haleon
Annual Report and Form 20-F 2024
201
Group information
Group information
continued
Fees and charges payable by ADR holders
The Company’s American Depositary Receipt (ADR) programme is administered by J.P. Morgan Chase Bank, N.A. (the Depositary),
as the Depositary. The holder of an ADR may have to pay the following fees and charges to the Depositary in connection with
ownership of the ADR:
Category
Depositary actions
Associated fee or charge
Depositing or substituting the
underlying shares
Each person to whom ADRs are issued against deposits
of shares, including deposits and issuances in respect of:
(i) share distributions, stock splits, rights, mergers or (ii)
exchange of securities or any other transactions or
event or other distribution affecting the ADSs or the
deposited securities.
Up to $5.00 for each 100 ADSs
(or portion thereof) issued or delivered
(as the case may be).
Receiving or distributing dividends
Distribution of cash/stock dividends.
$0.05 or less per ADS.
Selling or exercising rights
Distribution or sale of securities, the fee being in an
amount equal to the fee for the execution and delivery
of ADSs which would have been charged as a result of
the deposit of such securities.
Up to $5.00 for each 100 ADSs
(or portion thereof).
Withdrawing, cancelling or reducing
an underlying security
Surrendering ADSs for cancellation and withdrawal
of deposited property.
Up to $5.00 for each 100 ADSs (or portion
thereof) surrendered or cancelled (as
the case may be).
Transferring, combination or split-up
of receipts
Not applicable.
Not applicable.
General depositary services,
particularly those charged on an
annual basis
1
Other services performed by the Depositary in
administering the ADRs.
A fee of $0.05 or less per ADS per calendar
year held on the applicable record date(s)
established by the Depositary.
Fees and expenses of the Depositary
Fees and expenses incurred by the Depositary or the
Depositary’s agents on behalf of holders, including in
connection with: (i) stock transfer or other taxes and
other governmental charges, (ii) cancellation transaction
fees and delivery expenses, (iii), transfer or registration
expenses in connection with the deposit and withdrawal
of deposited securities, (iv) expenses in connection with
the conversion of foreign currency into US Dollars (which
are paid out of such foreign currency); (v) cable, telex,
facsimile transmission/delivery and (vi) any other
charge payable by the ADR Depositary or its agents.
As incurred by the Depositary.
1
With effect from 6 December 2022, Haleon agreed that the Depositary could charge an administration fee of $0.03 per ADR annually.
Direct and indirect payments by the Depositary
The Depositary anticipates reimbursing Haleon for certain expenses incurred by it that are related to the establishment and
maintenance of the ADR programme upon such terms and conditions as Haleon and the Depositary may agree from time to time.
The Depositary may make available to Haleon a set amount or a portion of the Depositary fees charged in respect of the ADR
programme or otherwise upon such terms and conditions as Haleon and the Depositary may agree from time to time. In respect of
the year ended 31 December 2024, the Depositary made payments of approximately $14.1m.
Under certain circumstances, including removal of the Depositary or termination of the ADR programme by Haleon, Haleon is required
to repay certain amounts paid to it and to compensate the Depositary for payments made or services provided on behalf of Haleon.
Description of securities other than equity securities
Haleon
Annual Report and Form 20-F 2024
202
Other information
The non-voting preference shares rank pari passu with all other
non-voting preference shares and have preferential dividend
rights ahead of the ordinary shares, entitling holders to quarterly
cumulative dividends at a fixed rate of 9.5% per annum for five
years from the date of the issue, following which the rate shall
be reset for each subsequent period of five consecutive years at
the rate equal to the Bank of England base rate prevailing at the
time of reset plus 7.5%. Dividends on the non-voting preference
shares which have become payable are required to be paid in
full before any repurchases or distributions can be made with
respect to the ordinary shares.
Any dividend unclaimed after a period of six years from the date
it was declared or became due for payment is forfeited and
reverts to the Company unless the Board decides otherwise.
The Board may decide how dividends or other money payable in
cash relating to a share are paid. If shareholders fail to provide
the necessary details to enable payment, or if payment cannot be
made using the details provided by the shareholder, the dividend
or other amount payable will be treated as unclaimed.
Rights on a winding up
The non-voting preference shares carry preferential rights to
participate in a distribution of capital in the event of insolvency
(including on a winding-up) up to an amount equal to their
nominal value plus accrued dividend and any arrears or deficiency
in amount of the cumulative dividend. The ordinary shares do not
carry any rights to participate in a capital distribution (including
on a liquidation) other than those that exist as a matter of law.
Under the Companies Act, upon a liquidation, after the claims of
creditors have been satisfied and subject to any special rights
attaching to any other class of shares in the Company (including
the non-voting preference shares), surplus assets (if any) are
distributed among the shareholders in proportion to the number
and nominal amounts of their ordinary shares.
Redemption of non-voting preference shares
Each non-voting preference share is redeemable in whole at the
option of the Company or each relevant shareholder in respect of
its entire holding on any date falling not less than five years after
the date on which that share was issued or, if earlier, on the
Company undergoing a change of control.
General meetings
The Company is required to give at least 21 days’ notice of a
general meeting unless a special resolution reducing the period
to not less than 14 days has been passed at the immediately
preceding AGM.
The Board may decide to allow persons entitled to attend and
participate in a general meeting to do so by simultaneous
attendance and participation by means of an electronic facility
with no member necessarily in physical attendance at the
electronic meeting, and to permit Directors or others to attend
and speak, and the chair of the meeting to preside, by electronic
means. Shareholders present in person or by proxy by means of
such electronic facility will be counted in the quorum for, and be
entitled to participate in, the relevant general meeting.
The Articles of Association, adopted on 31 May 2022, contain
(amongst others) provisions to the following effect. Any amendment
requires the approval of shareholders by a special resolution at
a general meeting. The Company’s objects are unrestricted.
Directors
The Board has the authority to manage the business of the
Company, for example, through powers to issue and repurchase
its shares, subject where required to shareholder resolutions.
Subject to certain exceptions, the Directors do not have power
to vote at Board meetings on matters in which they have a
material interest.
The Company by ordinary resolution, or the Board, may appoint
any person permitted by law to do so and willing to act to be a
Director. In addition to any power of removal under legislation,
the Company may by special resolution remove a Director before
the expiration of their period of office and may (subject to the
Articles) by ordinary resolution appoint another person as a
Director in their place. All Directors must retire from office at
the AGM each year and may offer themselves for re-election.
Rights and restrictions
The liability of shareholders is limited to the amount, if any,
unpaid on the ordinary shares held by them.
Subject to any rights attached to existing shares, the Company
may issue (i) shares with such rights and restrictions as the
Company may by ordinary resolution decide, or (if there is no such
resolution or so far as it does not make specific provision) as the
Board may decide and (ii) redeemable shares, and the Board may
determine the terms and conditions applied to shares so issued.
Such rights, restrictions, terms and conditions apply to the
relevant shares as if they were set out in the Articles.
Shareholders are entitled to vote at a general meeting or
class meeting on a poll. Any resolution put to a vote at a
general meeting of the Company shall be decided on a poll.
The Companies Act and the Articles provide that on a poll
every shareholder has one vote per ordinary share held and
a shareholder may vote in person or by one or more proxies.
The proxies appointed by them taken together have the same
voting rights as the shareholder could exercise in person. In the
case of joint holders, the vote of the senior who tenders a vote is
accepted to the exclusion of the votes of the other joint holders
and seniority is determined by the order in which the names
stand in the register. Non-voting preference shares do not confer
any right to vote at a general meeting. Non-voting preference
shareholders are, however, entitled to vote at any class meeting
of non-voting preference shareholders.
A shareholder is not entitled to vote any share held by them at
any general or class meeting if any call or other sum then payable
remains unpaid or if that shareholder has been served with a
restriction notice (as defined in the Articles) after failure to
provide the Company with information concerning interests in
those shares required to be provided under the Companies Act.
Dividends
The Company may by ordinary resolution declare dividends not
exceeding the amount recommended by the Board. Subject to the
Companies Act, the Board may pay dividends whenever the
financial position of the Company, in the opinion of the Board,
justifies its payment.
Articles of Association
Other Information
Haleon
Annual Report and Form 20-F 2024
203
Group information
Restrictions in respect of designated persons
The Company can apply restrictions and take certain actions in
relation to its shares where the Company believes the holder
is or may be designated as a sanctioned person by certain
authorities (including the UK, US, EU or any respective
governmental institutions) or where it would be unlawful
by virtue of any applicable sanctions laws.
Impact of regulation
The Group’s activities are subject to regulations on a local and
international level that impact the Group’s activities. The majority
of the Group’s products can be categorised according to four
principal regulatory classifications: OTC medicines; medical
devices; foods; and cosmetics. Each is subject to regulatory
regimes that restrict research, development, manufacturing,
testing, marketing and sale of the Group’s products, and the
process of obtaining regulatory approvals and ongoing
compliance with applicable laws, regulations and other
requirements necessitates the expenditure of substantial time
and financial resources, which can increase the cost and
complexity of the Group’s business (see, for example, The Group
may not be able to develop and commercialise new products
effectively in the Risk Factors section on page 194).
In the US, the FDA is our principal regulator and we must also
comply with regulations promulgated by other federal and state
authorities. In the EU, the regulatory system is based on a
network of national competent authorities in the European
Economic Area, working together with the European Medicines
Agency and the European Commission. In China, the National
Medical Products Administration (and affiliated institutions) is
the primary regulator supervising and regulating drugs, medical
devices and cosmetics.
—
OTC medicines.
OTC medicines are regulated according to
guidelines and standards published by the International
Council for Harmonisation of Technical Requirements for
Pharmaceuticals for Human Use. The requirements govern,
among other things, pre-clinical and clinical testing, pre- and
post-marketing approval, production, distribution, import,
export, and advertising. Failure to comply can result in recalls,
seizures, injunctions, refusal or withdrawal of approval of
products, fines or criminal prosecution.
—
Medical devices.
All medical devices must satisfy safety and
performance, quality system (some low-risk devices may be
exempt) and labelling requirements, with the degree of
regulatory scrutiny increasing with the potential risks of the
medical device. Regulatory controls on medical devices,
including pre-market authorisation requirements, may require
the provision of stringent supporting material, including
(among other things) independent external audits of the
manufacturer’s quality systems, independent external review
of the technical data and documentation of relevant clinical
evidence to support the manufacturer’s claims.
—
Food.
Most food products do not require pre-market
authorisation, although specific categories (such as food
supplements, foods for special medical purposes or dietary
supplements) may require notification of sale to regulators.
In some countries, such as China, products classified as
functional health foods require a formal pre-market review
and registration. Products in this category are subject to
strict quality and safety standards, including for packaging
and product composition.
Group information
continued
Articles of Association
continued
—
Cosmetics.
Cosmetics can be classified differently by territory:
a cosmetic in one country may be classified as a medicine,
or even a medical device, in another country (e.g., fluoride
toothpaste is a cosmetic in the EU and a drug in the US).
Some countries require pre-market approval involving the
provision of safety assessments, manufacturing data and
raw material functionality, while other countries require
no registration.
Additional laws, regulations and other requirements materially
relevant to the Group’s business include:
—
Claims and labelling.
The labelling and advertising for all
product classifications which the Group markets is subject to
applicable laws in markets in which the Group operates, which
may specify text format and the order of information, require
specific information and statements, and restrict misleading,
unfair or unsubstantiated claims in advertisements and on
labels. Regulatory authorities may take enforcement action
against businesses which fail to comply with relevant rules.
—
Pricing.
The Group’s activities are also subject to price
control laws and regulations in some of the markets in which
it operates. For example, in China, in respect of medicines
(both Rx and OTC) in the hospital channel, the government
regulates prices through a centralised procurement mechanism,
medical insurance reimbursement standards and strengthened
regulation of medical and pricing practices.
—
Consumer safety and quality.
The Group is subject to vigilance
regulations designed to ensure the safety of its products,
whether in the development pipeline, already approved, or
post-launch. These regulations require the collection, detection,
assessment, monitoring and prevention of adverse events/
undesirable effects, through (among other things) inspection
by health authorities, reporting of serious safety events, and
preparation of periodic safety reports. The Group is also subject
to quality regulations that apply to innovation, manufacturing
practices, testing, marketing, post-marketing studies and
reporting by product classification. These regulations can
require pre- and post-approval inspections of facilities to ensure
good manufacturing practice compliance, and the imposition
of quality systems regulations on medical devices.
Exchange controls and restrictions on payment of dividends
Other than certain economic sanctions in force from time to time,
there are no governmental laws, decrees or regulations in the
UK restricting the import or export of capital or affecting the
remittance of dividends, interest or other payments to non-
resident holders of ordinary shares or ADRs. There are no
limitations under English law or the Articles on the right of
non-resident or foreign owners to be the registered holders of,
or to exercise voting rights in, ordinary shares or ADRs.
Haleon
Annual Report and Form 20-F 2024
204
Other information
(GSK’s listed subsidiary in India); (iii) GlaxoSmithKline Bangladesh;
(iv) GlaxoSmithKline Consumer Nigeria plc; (v) Imitrex and
Ventolin; and (vi) certain manufacturing sites in Argentina, Brazil,
Indonesia, India and Nigeria.
The parties subsequently agreed to transfer manufacturing sites
in Indonesia, Argentina and Brazil into the Group.
Asset Perimeter: Pfizer Contributed CH Business
The ‘Pfizer Contributed CH Business’ has the meaning given
to ‘Business’ in the Pfizer SAPA, which was defined as the
worldwide business of researching, developing, manufacturing,
marketing, commercialising, distributing and selling: the products
sold under the brand names listed for Pfizer in an annex to the
Pfizer SAPA, as conducted by Pfizer (directly and indirectly) as of
the date of the Pfizer SAPA and as of immediately prior to Pfizer
Completion; and any over-the-counter consumer healthcare or
medicine products, wellness products and other personal care,
oral care, nutrition, skin health, cosmetic and related products,
as conducted by Pfizer (directly and indirectly) through its Pfizer
consumer healthcare business unit (directly or indirectly pursuant
to a contractual arrangement with any other Pfizer business unit,
to the extent of the Pfizer consumer healthcare business unit’s
rights pursuant to such contractual arrangement) as of the date of
the Pfizer SAPA and as of immediately prior to Pfizer Completion,
but excluded: (i) any product marketed, commercialised,
distributed or sold under the brands Diflucan One, Feldene Gel
or Ponstan (or any other products containing the same or similar
compounds as such products) in any jurisdiction; (ii) any
pharmaceutical products or pharmaceutical products that have
become or may in the future become, in whole or in part, over-
the-counter products (other than the products included in the
definition of ‘Business’); and (iii) any product containing any of
the following compounds (or marketed, commercialised,
distributed or sold under any of the following brands) in any
jurisdiction: (a) Sildenafil citrate (Viagra); (b) Celecoxib (Celebrex);
(c) Varenicline (Chantix/Champix); (d) Atorvastatin (Lipitor);
(e) Gabapentin (Neutontin); and (f) Fesoterodine (Toviaz).
Indemnities
Under the Pfizer SAPA, GSK and Pfizer each agreed to indemnify
each other and the Group in respect of losses (other than losses
relating to tax, which were subject to a separate regime — see
below) relating to certain liabilities that the parties agreed would
be retained by GSK or Pfizer, respectively, relating to, among
other things: (i) the assets that were excluded from the GSK
Contributed CH Business or the Pfizer Contributed CH Business
respectively (as described above); (ii) liabilities under any pension
or other employee benefit plans not sponsored by GSKCHH or
another member of the Group, subject to certain exceptions; and
(iii) any liabilities arising from any third-party claim in respect of
products containing talc or asbestos distributed or sold by GSK
or Pfizer at any time before Pfizer Completion.
The Group is required to indemnify GSK and Pfizer in respect of
‘Purchaser Liabilities’ and ‘Assumed Liabilities’, which were
defined as follows: ‘Purchaser Liabilities’ means any and all
liabilities (other than certain specified exceptions — including
those liabilities GSK agreed to indemnify the Group in respect of,
as summarised above) of GSK or any of its affiliates, whether
arising prior to, on or after Pfizer Completion, to the extent
resulting from or arising out of the past, present or future
ownership, operation, use or conduct of the Purchaser Business,
where ‘Purchaser Business’ has the meaning described above
under the section entitled ‘Pfizer Stock and Asset Purchase
Agreement–Asset Perimeter: GSK Contributed CH Business’; and
‘Assumed Liabilities’ means any and all liabilities (other than
The contracts listed below have been entered into by the
Company or a member of the Group within the two years
immediately preceding the date of this Annual Report and are
material to the Company or any member of the Group (other than
contracts entered into in the ordinary course of business) or
were subsisting during this period of review and are contracts
of significance with a controlling shareholder in accordance with
UK Listing Rule 6.6.1R(9). Pfizer, Inc. was a controlling shareholder
of the Company until 21 March 2024.
Pfizer Stock and Asset Purchase Agreement
Pursuant to a stock and asset purchase agreement dated
19 December 2018 and amended and restated on 31 July 2019
(the Pfizer SAPA), GSK, Pfizer and GlaxoSmithKline Consumer
Healthcare Holdings (No.2) Limited (now known as Haleon UK
Holdings (No.2) Limited) (CH JVCo, as the holding company for
the Group prior to separation) agreed to form a new global
consumer healthcare joint venture (the GSK/Pfizer JV), through:
(i) the acquisition by CH JVCo of the Pfizer Contributed CH
Business (as defined below) from Pfizer and (ii) the transfer
by GSK to CH JVCo of those parts of the GSK Contributed
CH Business (as defined below) not already owned by
GlaxoSmithKline Consumer Healthcare Holdings Limited (now
known as Haleon UK Holdings Limited) (GSKCHH, the former
holding company of the Group). Completion of the transaction
(Pfizer Completion) took place on 31 July 2019. Following the
Demerger, the Group has assumed the obligations of CH JVCo
under each of the contracts disclosed in this section.
Asset Perimeter: GSK Contributed CH Business
The ‘GSK Contributed CH Business’ has the meaning given to
‘Purchaser Business’ in the Pfizer SAPA, which was defined as
follows: (i) the worldwide business of researching, developing,
manufacturing, marketing, commercialising, distributing and
selling the products sold under the brand names listed for GSK
in an annex to the Pfizer SAPA as conducted by GSK (directly and
indirectly) as of the date of the Pfizer SAPA and as of immediately
prior to Pfizer Completion; (ii) the business reflected in certain
specified financial statements of the GSK Contributed CH
Business, including the assets, rights, properties, activities,
operations and liabilities that comprised such business; (iii) the
business of marketing, commercialising, distributing and selling
any over-the-counter healthcare or medicine products, wellness
products and other personal care, oral care, nutrition, skin health,
cosmetic and related products (the Consumer Healthcare
Products) as conducted by GlaxoSmithKline Asia Private Limited
(including pursuant to the Consignment Selling Agreement) as of
the date of the Pfizer SAPA and as of immediately prior to Pfizer
Completion; and (iv) to the extent not otherwise reflected in the
financial statements referred to in (ii) above, the research and
development of any Consumer Healthcare Products, as
conducted by GSK (directly and indirectly) through its consumer
healthcare business (directly or indirectly pursuant to a
contractual arrangement with any other GSK business, to the
extent of the GSK consumer healthcare business’ right pursuant to
such contractual arrangement), as of the date of the Pfizer SAPA
and as of immediately prior to Pfizer Completion, but excluded:
the worldwide business of researching, developing,
manufacturing, marketing, commercialising, distributing and
selling pharmaceutical products to the extent such business and
the economic benefit attached to such business was not reflected
in the financial statements referred to in (ii) above; and the
excluded assets listed for GSK in an annex to the Pfizer SAPA,
namely: (i) the assets within the scope of (and proceeds of) GSK’s
divestment of the Horlicks brand and other consumer healthcare
nutrition products in India to Unilever N.V. (which completed on
1 April 2020); (ii) GlaxoSmithKline Consumer Healthcare Limited
Material contracts
Other Information
Haleon
Annual Report and Form 20-F 2024
205
Group information
Separation Co-operation and Implementation Agreement
The Separation Co-operation and Implementation Agreement
(the SCIA) was entered into on 1 June 2022 among GSK, Pfizer,
CH JVCo and the Company, among others, and details certain
actions that were to be taken and arrangements that were to be
implemented to effect completion of, or which otherwise relate
to, the Separation. The SCIA records the obligations of the parties
relating to such matters and contains certain terms on which
relations between the parties are governed following completion
of the Separation.
The SCIA also sets out certain other rights and obligations of the
parties relating to, among other things, information rights and
confidentiality. During the period under review, Pfizer had certain
rights to certain information regarding the Company and the
Group. Subject to certain exceptions, these rights ceased to apply
from 17 January 2025 when Pfizer and members of Pfizer’s group
ceased to hold, in aggregate, Haleon ordinary shares or Haleon
ADSs in respect of such Haleon shares representing at least 10%
of the Haleon shares in issue (or the ordinary shares of any
ultimate holding company thereof from time to time).
Tax Covenant
In accordance with the SCIA, the Company, GSK and Pfizer,
among others, entered into a tax covenant on 1 June 2022,
which has been effective from the time of the Demerger
(the Tax Covenant). Subject to certain financial and other
customary limitations, the Tax Covenant contains certain
indemnities in respect of taxation given from GSK and Pfizer to
the Company (and vice versa) where it has been agreed that
such taxes are properly allocable to the indemnifying party.
Amongst other things, GSK and Pfizer have provided the
Company with indemnities for tax arising (if any) pursuant to
certain pre-demerger reorganisation steps within the Group
and the steps which comprised the Separation. As is customary
for demerger transactions, the Company has provided a more
limited set of tax indemnities to GSK and Pfizer.
The Tax Covenant also imposes certain restrictions on the
Company, which largely fell away from July 2024. However, certain
restrictions remain in place. Although the Company does not
currently anticipate that these restrictions would have a material
adverse impact on the Company, these restrictions may reduce the
Company’s ability to engage in certain business transactions that
otherwise might be advantageous, until such restrictions fall away.
Pfizer Exchange Agreement
On 1 June 2022, Pfizer and the Company, among others, entered
into an exchange agreement pursuant to which Pfizer transferred
all of its interests in the company that held 32% of the ordinary
shares in the Group prior to separation to the Company in
exchange for the issuance by the Company of Haleon ordinary
shares to Pfizer and J.P. Morgan Chase Bank N.A. (as depositary
on behalf of Pfizer), representing in aggregate 32% of the issued
and outstanding Haleon ordinary shares immediately following
separation (to the nearest whole Haleon ordinary share), and
25 million non-voting preference shares.
Pfizer Relationship Agreement
The relationship agreement between the Company and Pfizer was
entered into as a deed on 1 June 2022 (the Pfizer Relationship
Agreement) and terminated automatically on 17 January 2025
when Pfizer ceased to hold at least 10% of Haleon’s ordinary
shares. The principal purpose of the Pfizer Relationship
Agreement was to regulate the continuing relationship between
the Company and Pfizer after Admission. References to aggregate
interests in Haleon ordinary shares in the Pfizer Relationship
certain specified exceptions — including those liabilities Pfizer
agreed to indemnify the Group in respect of, as summarised
above) of Pfizer or any of its affiliates, whether arising prior to, on
or after Pfizer Completion, to the extent resulting from or arising
out of the past, present or future ownership, operation, use or
conduct of the Business, where ‘Business’ has the meaning
described above under ‘Pfizer Stock and Asset Purchase
Agreement–Asset Perimeter: Pfizer Contributed CH Business’.
The Pfizer SAPA Amendment Agreement also extends the
Group’s indemnification obligations in favour of GSK and Pfizer to
include, among other things, all losses (other than losses relating
to tax, which were subject to a separate regime (see below))
relating to liabilities to the extent resulting from or arising out of
the past, present or future ownership, operation, use or conduct
of the consumer healthcare business since Pfizer Completion,
subject to certain exceptions (see “Pfizer SAPA Amendment
Agreement” below).
In respect of tax, each of GSK and Pfizer provided an indemnity,
subject to customary exclusions and limitations, to the Group
in respect of, among other things, tax liabilities of the companies
contributed to the GSK/Pfizer JV arising up to the point of
Pfizer Completion.
The indemnities provided by each of GSK, Pfizer and the Group
under the Pfizer SAPA survived completion of the Demerger
and Separation.
Pfizer SAPA Amendment Agreement
On 1 June 2022, GSK, Pfizer, CH JVCo and the Company entered
into the second amendment agreement to the Pfizer SAPA (the
Pfizer SAPA Amendment Agreement) to implement certain
amendments, including: (i) amendments to the Pfizer SAPA that
were deemed appropriate as a result of the Group being an
independent, separate business from GSK and Pfizer from
Separation; (ii) amendments that were deemed appropriate as a
result of an overlap with certain other ancillary agreements that
are currently being entered into as part of the Separation; and (iii)
to include the Company in the Pfizer SAPA indemnity framework
by way of a guarantee given by the Company of CH JVCo’s
indemnification obligations under the Pfizer SAPA.
Pursuant to the Pfizer SAPA Amendment Agreement: (i) the
Group’s indemnification obligations under the Pfizer SAPA (as
described under Pfizer Stock and Asset Purchase Agreement–
Indemnities on the previous page), were extended to include,
among other things, all losses (other than losses relating to tax,
which were subject to a separate regime) relating to liabilities to
the extent resulting from or arising out of the past, present or
future ownership, operation, use or conduct of the consumer
healthcare business since Pfizer Completion, subject to certain
exceptions primarily related to liabilities retained by each of
Pfizer and GSK, respectively, under the Pfizer SAPA; and (ii) the
Company, which is deemed a ‘Purchaser Indemnified Party’
under the Pfizer SAPA and has the benefit of the indemnities
given to CH JVCo under the Pfizer SAPA, has provided a guarantee
of CH JVCo’s indemnity obligations under the Pfizer SAPA
(as described under “Pfizer Stock and Asset Purchase Agreement–
Indemnities” on the previous page), as amended by the Pfizer
SAPA Amendment Agreement.
The Pfizer SAPA Amendment Agreement also includes provisions
related to the release of guarantees given by Pfizer for the benefit
of companies in the Group (or vice versa).
Group information
continued
Material contracts
continued
Haleon
Annual Report and Form 20-F 2024
206
Other information
The Company shall give notice of such request to the Holders of
other registrable securities registered on the Shelf Registration
Statement, and, subject to certain limitations, include in the Shelf
Underwriting the registrable securities of the other requesting
Holders; (ii) if the Shelf Registration Statement is not available for
use by the Holders, each Holder may require the Company to file
one or more registration statements covering all or any part of its
registrable securities, subject to certain limitations. The Company
shall use its reasonable best efforts to file or confidentially
submit with the SEC such registration statement no later than
60 days from receipt of request from the Holder if the registration
is on Form F-1 or Form S-1 (or 30 days if the registration is on
Form F-3 or Form S-3); and (iii) the Registration Rights Agreement
includes customary provisions that permit the Company to
postpone filing or confidentially submitting a registration
statement, or if a registration statement has been filed or
confidentially submitted, suspend use of, or withdraw, such
registration statement for a limited duration to avoid disclosing
material non-public information in certain circumstances.
The Holders also have certain ‘piggyback’ registration rights,
pursuant to which they will be entitled to register the resale of
their registrable securities alongside certain offerings of securities
that the Company may undertake, subject to ‘cutback’ in certain
such cases.
The Registration Rights Agreement contains customary
indemnification obligations on the part of the Company and,
in certain circumstances, the Holders. The Company is obligated
to pay all expenses associated with the registration of the
registrable securities under the Registration Rights Agreement,
except for transfer taxes and commissions payable in an
underwritten offering (payable by the Holders).
The Registration Rights Agreement terminates with regards to the
Holders affiliated with GSK and the Holders affiliated with Pfizer
when they, respectively, cease to hold registrable securities
representing more than 1% of Haleon’s outstanding ordinary shares.
Off-market buyback contracts
2023 Off-Market Buyback Contract
On 11 September 2023, the Company and Pfizer entered into an
Off-Market Buyback Contract to provide maximum flexibility in the
management of the Company’s capital resources. The Off-Market
Buyback Contract was approved by the Company’s shareholders
at its 2023 AGM. On 21 March 2024, Haleon made an off-market
purchase of 102,272,727 shares from Pfizer pursuant to the terms
of the off-market buyback contract, for a total consideration of
approximately £315 million. For further details of the terms of the
2023 off-market buyback contract with Pfizer, please see Haleon’s
Notice of 2023 AGM available on Haleon’s website.
2024 Off-Market Buyback Contract
On 29 July 2024, the Company and Pfizer entered into an
updated Off-Market Buyback Contract, this was approved by
the Company’s shareholders at its 2024 AGM. On 3 October 2024,
Haleon made an off-market purchase of 60,526,315 shares
from Pfizer pursuant to the terms of the off-market buyback
contract, for a total consideration of approximately £230 million.
For further details of the terms of the 2024 off-market buyback
contract with Pfizer, please see Haleon’s Notice of 2024 AGM
available on Haleon’s website.
Further details of Haleon’s off-market purchases from Pfizer
during 2024 are set out on page 186.
Agreement include both direct holdings of Haleon ordinary
shares and interests in Haleon ordinary shares held indirectly
through holdings of Haleon ADSs.
Pursuant to the Pfizer Relationship Agreement, Pfizer undertook,
that, for so long that Pfizer was a controlling shareholder (as
defined in the Glossary to the UK Listing Rules), it would (and
would procure that its associates (as defined in the Glossary to
the UK Listing Rules) would): (i) conduct all transactions and
arrangements with the Company and the Group at arm’s length
and on normal commercial terms; (ii) not take any action that
would have the effect of preventing the Company from
complying with its obligations under the UK Listing Rules; and
(iii) not propose or procure the proposal of a shareholder
resolution of the Company which is intended or appears to be
intended to circumvent the proper application of the UK Listing
Rules. For so long as Pfizer is a controlling shareholder, it would
(and would, so far as it is legally able to do so, procure that its
associates would) not take any action which precludes the
Company or any other member of the Group from carrying on an
independent business as its main activity.
Under the Pfizer Relationship Agreement, Pfizer was granted the
right to nominate two persons to be appointed to the Board as
representative directors for so long as it and its affiliates together
held 20% or more of the Haleon ordinary shares in issue and a
right to nominate one person to be appointed to the Board as a
representative director for so long as it and its affiliates together
continued to hold less than 20% but at least 10% of the Haleon
ordinary shares in issue. Pfizer was subject to customary standstill
provisions, subject to certain exceptions, and the Pfizer Relationship
Agreement imposed certain obligations on the Company in
connection with seeking shareholder authority to carry out share
repurchases to ensure that no such repurchases result in a
requirement for Pfizer to make a general offer for Haleon ordinary
shares in accordance with Rule 9 of the City Code (provided that
Pfizer had not itself entered into any disqualifying transactions).
Under the Pfizer Relationship Agreement, Pfizer agreed to
procure that any member of its group that held an interest in
Haleon ordinary shares on Admission would, for such time as
that member of Pfizer’s group held an interest in Haleon ordinary
shares, comply with the provisions of the Pfizer Relationship
Agreement as if that member of Pfizer’s group were a party to the
Pfizer Relationship Agreement with the same obligations as Pfizer.
Registration Rights Agreement
The Registration Rights Agreement was entered into on 1 June
2022 among the Company, Pfizer, GSK and the SLPs. GSK, Pfizer
and the SLPs, together with their respective affiliates, successors
or permitted assigns, to the extent they are holders or beneficial
owners of the Company’s registrable securities, are referred to in
the Registration Rights Agreement as ‘Holders’. The Company’s
registrable securities include all shares and ADSs held by the
Holders in the Company after Separation and equity securities
issued in exchange or replacement thereof.
The Registration Rights Agreement provides for certain demand
and piggyback registration rights to the Holders. The Company
filed a shelf registration statement on Form F-1 (the Shelf
Registration Agreement) on 28 July 2022 in partial satisfaction
of the demand registration rights. Additionally, pursuant to the
demand registration rights: (i) following the expiration of the
lock-up restrictions in the Lock-up Deed, each Holder now has the
right to sell any part of its registrable securities in an underwritten
offering pursuant to the Shelf Registration Statement (the Shelf
Underwriting) by delivering a written request to the Company.
Other Information
Haleon
Annual Report and Form 20-F 2024
207
Group information
Committees
The Company has a number of Board Committees which are
similar in purpose and constitution to those required for domestic
companies under NYSE rules. The NYSE requires US companies to
have audit, remuneration and nominating/corporate governance
committees composed entirely of independent directors, as
defined under the NYSE rules. The Company’s Nominations &
Governance, Audit & Risk, and Remuneration Committees consist
entirely of Non-Executive Directors who are independent under
the standards of the Code, which may not necessarily be the
same as the NYSE independence standards. The nominating/
governance committee is responsible for identifying individuals
qualified to become members of the Board and to recommend
to the Board a set of corporate governance principles. As the
Company is subject to the Code, the Company’s Nominations
& Governance Committee is responsible for nominating, for
approval by the Board, candidates for appointment to the Board
and its Committees. The Company’s Nominations & Governance
Committee consists of the Chair and Independent Non-Executive
Directors. The Chair of the Company is not a member of either the
Remuneration or Audit & Risk Committees. As set out on page 72,
the Audit & Risk Committee is chaired by Alan Stewart, an
Independent Non-Executive Director, who, in the Board’s view,
has the experience and qualifications to satisfy the criterion
under US rules for an ‘audit committee financial expert’.
Shareholder approval of equity compensation plans
The NYSE rules for US companies require that shareholders must
be given the opportunity to vote on all equity-compensation
plans and material revisions to those plans. Haleon complies with
UK requirements that are similar to the NYSE rules. The Board,
however, does not explicitly take into consideration the NYSE’s
detailed definition of what are considered ‘material revisions’.
Summary of significant corporate governance differences
from NYSE listing standards
The Group’s statement of compliance with the UK Corporate
Governance Code issued in July 2018 by the Financial Reporting
Council (the Code) is set out on page 99.
The Company’s ADSs are listed on the NYSE and we are subject
to the reporting and other requirements of the SEC applicable
to US foreign private issuers. We are required to disclose any
significant ways in which our corporate governance practices
differ from those followed by US companies under the Listing
Standards of the NYSE.
The significant differences between Haleon’s corporate
governance practices as a UK company and those required
by NYSE standards for US companies are as follows.
Independence
The Code’s principles recommend that at least half the Board,
excluding the Chair, should consist of independent non-executive
directors. As at 6 March 2025, the Board consisted of the Chair,
independent at the time of his appointment, two Executive
Directors and eight Independent Non-Executive Directors. NYSE
listing rules applicable to US companies state that companies
must have a majority of independent directors. The NYSE has set
out six bright line tests for director independence. The Board’s
judgement is that the Non-Executive Directors are independent
and, as such, Independent Non-Executive Directors make up a
majority of the Board. However, it did not explicitly take into
consideration the NYSE’s tests in reaching this determination.
Shareholder information
Purchases of equity securities by the Company and affiliated purchasers
During the financial year ended 31 December 2024, the following ordinary shares (including ordinary shares held indirectly through
Haleon ADSs) were purchased by the Company and the Company’s employee benefit trusts. Haleon completed off-market share
buybacks from Pfizer, Inc. on 21 March 2024 and 3 October 2024 respectively. Haleon undertook an on-market share buyback that
commenced on 1 August 2024 and ended on 1 October 2024.
Period
Total number of shares
purchased
Average price paid per
share (£)
Total number of shares
purchased as part of
publicly announced plans
or programmes
Maximum number of
shares that may yet be
purchased under the
plans or programmes
1 January–31 January
Nil
Nil
Nil
N/A
1 February–29 February
Nil
Nil
Nil
N/A
1 March–31 March
102,272,727
1
3.08
102,272,727
N/A
1 April–30 April
Nil
Nil
Nil
N/A
1 May–31 May
Nil
Nil
Nil
N/A
1 June–30 June
Nil
Nil
Nil
N/A
1 July–31 July
Nil
Nil
Nil
N/A
1 August–31 August
9,730,687
2
3.71
8,662,160
N/A
1 September–30 September
9,817,588
2
3.90
9,543,395
N/A
1 October–31 October
60,526,315
1
3.80
60,526,315
N/A
1 November–30 November
Nil
Nil
Nil
N/A
1 December–31 December
Nil
Nil
Nil
N/A
1
Shares purchased directly from Pfizer Inc.
2
Shares purchased on the open market in the UK and US.
Haleon
Annual Report and Form 20-F 2024
208
Other information
Dividend history
The table below sets out the dividends declared following demerger and for each subsequent financial year in respect of the
Company’s ordinary shares and ADSs.
>>
Information about dividends paid prior to demerger can be found in Note 10 to the Consolidated Financial Statements on page 133.
Pence
US$
2024
6.6
1
—
2
2023
6.0
0.1491385
2022
2.4
0.0597319
1
Includes the proposed 2024 final dividend of 4.6p per ordinary share, which is subject to shareholder approval at the 2025 AGM.
2
The US Dollar equivalent of the final dividend will be set based on the actual foreign exchange rate achieved by the Company prior to payment. Two ordinary shares represent
one ADS and the US Dollar equivalent of the 2024 interim dividend paid to ADS holders on 19 September 2024 was $0.0527217 per ADS.
Shareholder profiles
Analysis of shareholdings as at 31 December 2024
Holding of shares
Number of accounts
% of total accounts
% of total shares
Number of shares
Up to 1,000
40,789
72.45
0.14
12,885,386
1,001–5,000
11,716
20.81
0.28
25,593,595
5,001–100,000
2,873
5.10
0.50
45,168,398
100,001 to 1,000,000
517
0.92
2.23
202,972,454
Over 1,000,000
403
0.72
96.85
8,797,106,086
Totals
56,298
100
100
9,083,725,919
Held by
Institutional and corporate holders
1,481
2.63
69.62
6,324,308,512
Individuals and other corporate bodies
54,815
97.37
12.15
1,103,636,890
Guaranty Nominees Limited
1
0.00
17.90
1,625,415,480
Treasury Shares (Haleon plc)
1
0.00
0.33
30,365,037
J.P. Morgan Chase Bank, N.A. is the Depositary for the Company’s ADR programme. The Company’s ADSs are listed on the NYSE.
Ordinary shares representing the Company’s ADR programme, which is managed by the Depositary, are registered in the name of
Guaranty Nominees Limited.
As at 6 March 2025, (being the latest practicable date prior to publication of this Annual Report) Guaranty Nominees Limited held
1,231,842,896 ordinary shares representing approximately 13.60% of the Company’s issued share capital, excluding treasury shares.
As at the latest practicable date, the number of holders of ordinary shares in the US was 835 with holdings of 921,144 ordinary shares,
and the number of registered holders of ADSs was 14,666 with holdings of 615,921,448 ADSs. Certain of these ordinary shares and
ADSs were held by brokers or other nominees. As a result, the number of holders of record or registered holders in the US is not
representative of the number of beneficial holders or of the residence of beneficial holders.
Other Information
Haleon
Annual Report and Form 20-F 2024
209
Shareholder information
If such a gift or other disposal were subject to both UK
inheritance tax and US estate or gift tax, the Estate and Gift Tax
Convention would generally provide for tax paid in the US to
be credited against tax payable in the UK.
Stamp duty and stamp duty reserve tax
UK stamp duty and/or stamp duty reserve tax (SDRT) will, subject
to certain exemptions, be payable on the transfer of shares at a
rate of 0.5% (rounded up to the nearest £5 in the case of stamp
duty) of the consideration for the transfer. Notwithstanding this,
provided that an instrument is executed in pursuance of the
agreement that gave rise to the charge to SDRT and that instrument
is stamped within six years of the agreement (including being
stamped as exempt) any SDRT charge should be cancelled and
any SDRT which has already been paid will be repaid.
UK stamp duty and/or SDRT will, subject to certain exemptions,
be payable on any transfer of shares to the ADS custodian or
depositary at a rate of 1.5% of the amount of any consideration
provided (if transferred on sale), or their value (if transferred for
no consideration). However, no stamp duty or SDRT should be
payable on the transfer of, or agreement to transfer, an ADS
provided, in the case of stamp duty, that no instrument of
transfer is entered into.
US shareholders
This section describes the material US federal income tax
consequences to a US holder (as defined below) of owning shares
or ADSs. It applies to you only if you hold your shares or ADSs as
capital assets for tax purposes. This discussion addresses only
US federal income taxation and does not discuss all of the tax
consequences that may be relevant to you in light of your
individual circumstances, including foreign, state or local tax
consequences, estate and gift tax consequences, and tax
consequences arising under the Medicare contribution tax on net
investment income or the alternative minimum tax. This section
does not apply to you if you are a member of a special class of
holders subject to special rules, including: a dealer in securities,
a trader in securities that elects to use a mark-to-market method
of accounting for securities holdings, a tax-exempt organisation,
a life insurance company, a person that actually or constructively
owns 10% or more of the combined voting power of our voting
stock or of the total value of our stock, a person that holds
shares or ADSs as part of a straddle or a hedging or conversion
transaction, a person that purchases or sells shares or ADSs
as part of a wash sale for tax purposes, or a person whose
functional currency is not the US Dollar. This section is based
on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations, published
rulings and court decisions, all as currently in effect, as well as
on the Convention Between the US and the UK (the Treaty).
These authorities are subject to change, possibly on a retroactive
basis. In addition, this section is based in part upon the
representations of the Depositary and the assumption that
each obligation in the Deposit Agreement and any related
agreement will be performed in accordance with its terms.
You are a US holder if you are a beneficial owner of shares or
ADSs and you are, for US federal income tax purposes: a citizen
or resident of the US, a domestic corporation, an estate whose
income is subject to US federal income tax regardless of its
source, or a trust if a US court can exercise primary supervision
over the trust’s administration and one or more US persons are
authorised to control all substantial decisions of the trust.
A summary of certain UK tax and US federal income tax
consequences for holders of shares and ADSs who are citizens
of the UK or the US is set out below. It is not a complete analysis
of all the possible tax consequences of the purchase, ownership
or sale of these securities. It is intended only as a general guide.
Holders are advised to consult their advisers with respect to the
tax consequences of the purchase, ownership or sale of their
shares or ADSs and the consequences under state and local
tax laws in the US and the implications of the current UK/US
tax conventions.
US holders of ADSs generally will be treated as the owners of
the underlying shares for the purposes of the current UK/US
double taxation conventions relating to income and gains
(Income Tax Convention), estate and gift taxes (Estate and Gift
Tax Convention), and for the purposes of the Internal Revenue
Code of 1986, as amended.
UK shareholders
This summary only applies to a UK resident shareholder that
holds shares as capital assets.
Taxation of dividends
For the 2024/2025 UK tax year, UK resident individuals are
entitled to a dividend tax allowance of up to £500, so that the
first £500 of dividends received in a tax year will be free of tax.
Dividends in excess of this allowance will be taxed at 8.75% for
basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35%
for additional rate taxpayers.
UK resident shareholders that are corporation taxpayers should
note that dividends payable on ordinary shares are generally
entitled to exemption from corporation tax provided certain
conditions are met.
Taxation of capital gains
UK resident shareholders may be liable for UK tax on gains on
the disposal of shares or ADSs.
For disposals by individuals in the 2024/2025 UK tax year made
before 30 October 2024, a taxable capital gain accruing on a
disposal of shares or ADSs will be taxed at 10% for basic rate
taxpayers, or 20% if, after all allowable deductions, the
individual’s taxable income for the year exceeds the basic rate
income tax banding. For disposals by individuals in the
2024/2025 UK tax year made on or after 30 October 2024, a
taxable capital gain accruing on a disposal of shares or ADSs
will be taxed at 18% for basic rate taxpayers, or 24% if, after all
allowable deductions, the individual’s taxable income for the year
exceeds the basic rate income tax banding. Note, in each case,
this is following the use of any exemptions available to the
individual taxpayer such as the annual exempt amount.
A disposal by corporation tax payers may give rise to a chargeable
gain for the purposes of UK corporation tax, depending on the
circumstances and subject to any available exemption or relief.
Corporation tax is charged on gains at the rate of corporation
tax applicable to that company.
Inheritance tax
Individual (UK-domiciled or otherwise) shareholders may be
liable to UK inheritance tax on the transfer of shares or ADSs.
Tax may be charged on the amount by which the value of the
shareholder’s estate is reduced as a result of any transfer by way
of lifetime gift or other disposal at less than full market value.
In the case of a bequest on death, tax may be charged on the
value of the shares at the date of the shareholder’s death.
Tax information for shareholders
Shareholder information
continued
Haleon
Annual Report and Form 20-F 2024
210
Other information
If an entity or arrangement that is treated as a partnership for US
federal income tax purposes holds the shares or ADSs, the US
federal income tax treatment of a partner will generally depend on
the status of the partner and the tax treatment of the partnership.
You should consult your own tax adviser regarding the US federal,
state and local tax consequences of owning and disposing of
shares and ADSs in your particular circumstances.
In general, and taking into account the earlier assumptions, for US
federal income tax purposes, if you hold ADRs evidencing ADSs,
you will be treated as the owner of the shares represented by
those ADRs. Exchanges of shares for ADRs, and ADRs for shares,
generally will not be subject to US federal income tax.
Distributions
Under the US federal income tax laws, the gross amount of any
distribution we pay out of our current or accumulated earnings
and profits (as determined for US federal income tax purposes),
other than certain pro-rata distributions of our shares that are
generally not taxable, will be treated as a dividend that is subject
to US federal income taxation. If you are a non-corporate US
holder, dividends that constitute qualified dividend income will
be taxable to you at the preferential rates applicable to long-term
capital gains provided that you hold the shares or ADSs for
more than 60 days during the 121-day period beginning 60 days
before the ex-dividend date and meet other holding period
requirements. Dividends we pay with respect to the shares or
ADSs generally will be qualified dividend income provided that,
in the year that you receive the dividend, the shares or ADSs are
readily tradable on an established securities market in the US or
we are eligible for the benefits of the Treaty. Our ADSs are listed
on the NYSE and we therefore expect that dividends on the ADSs
will be qualified dividend income. In addition, we believe that
we are currently eligible for the benefits of the Treaty and that
dividends on the shares and ADS will be qualified dividend
income on that basis, but there can be no assurance that we will
continue to be eligible for the benefits of the Treaty. Dividends
will generally be income from sources outside the US and will
generally be ‘passive’ income for the purposes of computing the
foreign tax credit allowable to you.
The dividend is taxable to you when you, in the case of shares,
or the Depositary, in the case of ADSs, receive the dividend,
actually or constructively. The dividend will not be eligible for
the dividends-received deduction generally allowed to US
corporations in respect of dividends received from other US
corporations. The amount of the dividend distribution that you
must include in your income will be the US Dollar value of the
Pound Sterling payments made, determined at the spot Pound
Sterling/US Dollar rate on the date the dividend is distributed,
regardless of whether the payment is in fact converted into US
Dollars. Generally, any gain or loss resulting from currency
exchange fluctuations during the period from the date the
dividend is distributed to the date you convert the payment into
US Dollars will be treated as ordinary income or loss and will
not be eligible for the special tax rate applicable to qualified
dividend income. The gain or loss generally will be income or
loss from sources within the US for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated
earnings and profits, as determined for US federal income tax
purposes, will be treated as a non-taxable return of capital to
the extent of your basis in the shares or ADSs and thereafter as
capital gain. However, we do not expect to calculate earnings
and profits in accordance with US federal income tax principles.
Accordingly, you should expect to generally treat distributions
we make as dividends.
Sales or dispositions
If you sell or otherwise dispose of your shares or ADSs, you will
recognise a capital gain or loss for US federal income tax
purposes equal to the difference between the US Dollar value of
the amount that you realise and your tax basis, determined in US
Dollars, in your shares or ADSs. A capital gain of a non-corporate
US holder is generally taxed at preferential rates where the
property is held for more than one year. The gain or loss will
generally be income or loss from sources within the US for
foreign tax credit limitation purposes.
Passive foreign investment company (PFIC) classification
We believe that we should not be currently classified as a PFIC
for US federal income tax purposes and we do not expect to
become a PFIC in the foreseeable future. However, this
conclusion is a factual determination that is made annually and
thus may be subject to change. It is therefore possible that we
could become a PFIC in a future taxable year. The discussion
above in this section assumes that we are not classified as a
PFIC for US federal income tax purposes.
If we were to be treated as a PFIC, any gain realised on the sale
or other disposition of your shares or ADSs would in general
not be treated as capital gain. Instead, you would generally be
treated as if you had realised any gain and certain ‘excess
distributions’ ratably over your holding period for the shares or
ADSs. Amounts allocated to the current year and any year before
we were a PFIC would be taxed as ordinary income and amounts
allocated to other years would be taxed at the highest tax rate
in effect for each such year, and would be subject to an interest
charge in respect of the tax attributable to each such year.
In addition, dividends that you receive from us would not be
eligible for the preferential tax rate if we were a PFIC (or treated
as a PFIC with respect to you) either in the taxable year of the
distribution or the preceding taxable year, but instead would be
taxable at rates applicable to ordinary income. If you own our
shares or ADSs during any year that we are a PFIC with respect
to you, you may be required to file IRS Form 8621.
Other Information
Haleon
Annual Report and Form 20-F 2024
211
Shareholder information
Exhibits
The following exhibits are filed as part of this Annual Report on Form 20-F with the SEC and are publicly available through
the SEC’s website.
>>
www.sec.gov
and search Haleon plc under Company Filings.
Exhibit 1
1
Articles of Association of the Company dated 31 May 2022.
Exhibit 2.1
1
Form of Deposit Agreement, among the Registrant, J.P. Morgan Chase Bank, N.A. as Depositary, and all Holders
and Beneficial Owners from time to time of American Depositary Shares issued thereunder.
Exhibit 2.2
1
Form of American Depositary Receipt representing American Depositary Shares representing ordinary shares
of the Registrant (included in Exhibit 2.1).
Exhibit 2.3
1
Indenture dated as of 24 March 2022 among Haleon US Capital LLC (formerly known as GSK Consumer
Healthcare Capital US LLC), Haleon UK Capital plc (formerly known as GSK Consumer Healthcare Capital UK plc),
GSK plc (formerly known as GlaxoSmithKline plc) and the Registrant as guarantors and Deutsche Bank Trust
Company Americas, as trustee, registrar, paying agent, transfer agent and calculation agent.
Exhibit 2.4
Description of Securities Registered Under Section 12 of the Exchange Act.
Exhibit 4.1
1
Service Agreement between Haleon UK Services Limited (formerly known as GlaxoSmithKline Consumer
Healthcare (Overseas) Limited) and Brian McNamara dated 9 May 2022.
Exhibit 4.2
Service Agreement between Haleon UK Services Limited and Dawn Allen dated 23 April 2024.
Exhibit 4.3
1
Stock and Asset Purchase Agreement between Pfizer Inc., GSK plc (formerly known as GlaxoSmithKline plc)
and Haleon UK Holdings Limited (formerly known as GlaxoSmithKline Consumer Healthcare Holdings Limited)
dated as of 19 December 2018. Certain confidential information contained in this exhibit has been omitted
from this exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the
Registrant if publicly disclosed.
Exhibit 4.4
1
Amendment Agreement dated as of 31 July 2019 to the Stock and Asset Purchase Agreement by and among
Pfizer Inc., GSK plc (formerly known as GlaxoSmithKline plc), Haleon UK Holdings Limited (formerly known as
GlaxoSmithKline Consumer Healthcare Holdings Limited) and Haleon UK Holdings (No.2) Limited (formerly
known as GlaxoSmithKline Consumer Healthcare Holdings (No. 2) Limited) dated as of 19 December 2018.
Exhibit 4.5
1
Second Amendment Agreement dated as of 1 June 2022 to the Stock and Asset Purchase Agreement by and
among Pfizer Inc., GSK plc (formerly known as GlaxoSmithKline plc), Haleon UK Holdings Limited (formerly known
as GlaxoSmithKline Consumer Healthcare Holdings Limited) and Haleon UK Holdings (No.2) Limited (formerly
known as GlaxoSmithKline Consumer Healthcare Holdings (No. 2) Limited) dated as of 19 December 2018.
Certain confidential information contained in this exhibit has been omitted from this exhibit because it is
both (i) not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed.
Exhibit 4.6
1
Asset Transfer Framework Agreement dated as of 1 June 2022 between GSK plc, Haleon UK Holdings Limited
(formerly known as GlaxoSmithKline Consumer Healthcare Holdings Limited) and Haleon UK Holdings (No.2)
Limited (formerly known as GlaxoSmithKline Consumer Healthcare Holdings (No. 2) Limited). Certain confidential
information contained in this exhibit has been omitted from this exhibit because it is both (i) not material and
(ii) would likely cause competitive harm to the Registrant if publicly disclosed.
Exhibit 4.7
1
Demerger Agreement dated as of 1 June 2022 between the Registrant and GSK plc.
Exhibit 4.8
1
Tax Covenant dated as of 1 June 2022 between GSK plc, Pfizer, Inc., Haleon UK Holdings Limited (formerly known
as GlaxoSmithKline Consumer Healthcare Holdings Limited), Haleon UK Holdings (No.2) Limited (formerly known
as GlaxoSmithKline Consumer Healthcare Holdings (No.2) Limited) and the Registrant. Certain confidential
information contained in this exhibit has been omitted from this exhibit because it is both (i) not material and
(ii) would likely cause competitive harm to the Registrant if publicly disclosed.
Exhibit 4.9
1
Separation Co-operation and Implementation Agreement dated as of 1 June 2022 between GSK plc, Pfizer Inc.,
the Registrant, Haleon UK Holdings (No.2) Limited (formerly known as GlaxoSmithKline Consumer Healthcare
Holdings (No. 2) Limited), Haleon UK Holdings Limited (formerly known as GlaxoSmithKline Consumer Healthcare
Holdings Limited), Anacor Pharmaceuticals, Inc. and PF Consumer Healthcare Holdings LLC
2
. Certain confidential
information contained in this exhibit has been omitted from this exhibit because it is both (i) not material and
(ii) would likely cause competitive harm to the Registrant if publicly disclosed.
Exhibit 4.10
1
Exchange Agreement dated as of 1 June 2022 between Pfizer Inc., Anacor Pharmaceuticals, Inc. and
the Registrant.
Haleon
Annual Report and Form 20-F 2024
212
Other information
Exhibit 4.11
1
Transition Services Agreement dated as of 1 June 2022 between GlaxoSmithKline Services Unlimited,
GlaxoSmithKline LLC, Haleon UK Services Limited (formerly known as GlaxoSmithKline Consumer Healthcare
(Overseas) Limited) and Haleon US Holdings LLC (formerly known as GlaxoSmithKline Consumer Healthcare
Holdings (US) LLC). Certain confidential information contained in this exhibit has been omitted from this
exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Registrant if
publicly disclosed.
Exhibit 4.12
1
Registration Rights Agreement dated as of 1 June 2022 between the Registrant, Pfizer Inc., GSK plc, GSK (No.1)
Scottish Limited Partnership, GSK (No.2) Scottish Limited Partnership and GSK (No.3) Scottish Limited Partnership.
Exhibit 4.13
1
Rules of the Haleon plc Share Value Plan 2023.
Exhibit 4.14
1
Rules of the Haleon plc Performance Share Plan 2023.
Exhibit 4.15
1
Rules of the Deferred Annual Bonus Plan 2023.
Exhibit 8
List of subsidiaries of Haleon plc as at 31 December 2024 (can be found on pages 173-178).
Exhibit 11
Insider Trading Policy, the Haleon plc Share Dealing Code.
Exhibit 12.1
Certification of Brian McNamara filed pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Exhibit 12.2
Certification of Dawn Allen filed pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Exhibit 13.1
Certification of Brian McNamara and Dawn Allen furnished pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 15.1
Consent of KPMG LLP (UK).
Exhibit 15.2
Consent of KPMG LLP (US).
Exhibit 17
List of Subsidiary Issuers of Guaranteed Securities.
Exhibit 97
1
Compensation recovery policy.
Exhibit 101.INS
Inline XBRL Instance Document.
Exhibit 101.SCH
XBRL Taxonomy Extension Schema.
Exhibit 101.CAL
XBRL Taxonomy Extension Schema Calculation Linkbase.
Exhibit 101.DEF
XBRL Taxonomy Extension Schema Definition Linkbase.
Exhibit 101.LAB
XBRL Taxonomy Extension Schema Label Linkbase.
Exhibit 101.PRE
XBRL Taxonomy Extension Schema Presentation Linkbase.
Exhibit 104
Cover Page Interactive Data File – (formatted as Inline XBRL and contained in Exhibit 101).
1
Incorporated by reference.
2
This entity was dissolved on 28 December 2022.
Other Information
Haleon
Annual Report and Form 20-F 2024
213
Exhibits
Item
Form 20-F caption
Location
Page
1
Identity of Directors, senior
management and advisers
Not applicable
2
Offer statistics and expected timetable
Not applicable
3
Key information
3A (Reserved)
Not applicable
3B Capitalisation and indebtedness
Not applicable
3C Reason for the offer and use
of proceeds
Not applicable
3D Risk factors
Group information: Risk factors
193
4
Information on the company
4A History and development of
the company
Consolidated Financial Statements: Note 1 General information
122
Group information: History and development of the Group
191
Useful information: Investor information – Website and
electronic communication
220
4B Business overview
Haleon at a glance
Inside
front cover
Consolidated Financial Statements: Note 1 General information
122
Consolidated Financial Statements: Note 4 Segment information
126
Group information: Risk factors
193
Group information: Impact of regulation
204
4C Organisational structure
Consolidated Financial Statements: Note 30 Subsidiaries
172
Group information: History and development of the Group
191
4D Property, plant and equipment
Strategic Report: Our business model
8
Consolidated Financial Statements: Note 12 Property, plant
and equipment
134
Directors’ Report: Streamlined energy and carbon reporting
188
Group information: Property, plant and equipment
192
4A
Unresolved staff comments
Not applicable
5
Operating and financial review and prospects
5A Operating results
Strategic Report: Our market categories
13
Strategic Report: Our key performance indicators
32
Strategic Report: 2024 Business review
34
Strategic Report: Viability statement
57
Consolidated Financial Statements: Note 1 General information
– ‘Foreign Currencies’
123
Consolidated Financial Statements: Note 2 Accounting policies
124
Consolidated Financial Statements: Note 25 Capital and financial
risk management – ‘Net investment hedges’, ‘Foreign exchange
risk management’ and ‘Foreign exchange sensitivity’
158
Group information: Risk factors – Risks relating to changes in law
and the political and economic environment, regulation and
legislation
198
5B Liquidity and capital resources
Strategic Report: 2024 Business review – ‘indebtedness, liquidity
and financial risk management’
42
Strategic Report: Use of non-IFRS measures
43
Strategic Report: Viability statement
57
Consolidated Financial Statements: Note 8 Net finance costs
130
Consolidated Financial Statements: Note 16 Trade and
other receivables
142
Form 20-F cross reference
Haleon
Annual Report and Form 20-F 2024
214
Other information
Consolidated Financial Statements: Note 17 Cash and
cash equivalents
143
Consolidated Financial Statements: Note 19 Borrowings
144
Consolidated Financial Statements: Note 22 Contingent liabilities
and commitments
153
Consolidated Financial Statements: Note 25 Capital and financial
risk management
157
5C Research and development,
patents and licenses, etc.
Strategic Report: Our business model
8
Strategic Report: Our market categories
13
Consolidated Financial Statements: Consolidated income statement
116
Consolidated Financial Statements: Note 14 Intangible assets
137
5D Trend information
Strategic Report: 2024 Business review
34
5E Critical accounting estimates
Not applicable
Non-GAAP financial measures
Strategic Report: 2024 Business review
34
Strategic Report: Use of non-IFRS measures
43
6
Directors, senior management and employees
6A Directors and senior management
Corporate Governance: Our Board of Directors
59
Corporate Governance: Our Executive Team
62
Directors’ Report: Significant shareholders
187
6B Compensation
Corporate Governance: Directors’ Remuneration Report
82
Consolidated Financial Statements: Note 7 Employees and
remuneration of key management personnel
129
Consolidated Financial Statements: Note 20 Pensions and other
post-employment benefits
147
6C Board practices
Corporate Governance: Our Board of Directors
59
Corporate Governance: Our Executive Team
62
Corporate Governance: Governance structure
65
Corporate Governance: Audit & Risk Committee Report
72
Corporate Governance: Environmental & Social Sustainability
Committee Report
77
Corporate Governance: Nominations & Governance
Committee Report
79
6D Employees
Consolidated Financial Statements: Note 7 Employees and
remuneration of key management personnel
129
6E Share ownership
Corporate Governance: Directors’ Remuneration Report –
Annual Report on Remuneration
86
Consolidated Financial Statements: Note 26 Employee
share schemes
169
Group information: Directors’ and Executive Team shareholdings
192
6F Disclosure of a registrant’s action
to recover erroneously awarded
compensation
Not applicable
7
Major shareholders and related party transactions
7A Major shareholders
Directors’ Report: Significant shareholders
187
Shareholder information: Shareholder profiles
209
7B Related party transactions
Consolidated Financial Statements: Note 24 Related
party transactions
156
Group information: Material contracts
205
7C Interests of experts and counsel
Not applicable
Item
Form 20-F caption
Location
Page
Other Information
Haleon
Annual Report and Form 20-F 2024
215
Form 20-F cross reference
Form 20-F cross reference
continued
8
Financial information
8A Consolidated statements and
other financial information
Strategic Report: Use of non-IFRS measures
43
Consolidated Financial Statements
116
Report of independent registered public accounting firm
114
Directors’ Report: Dividends and dividend policy
186
8B Significant changes
Consolidated Financial Statements: Post balance sheet events
172
9
The offer and listing
9A Offer and listing details
Useful information: Trading markets
220
9B Plan of distribution
Not applicable
9C Markets
Useful information: Trading markets
220
9D Selling shareholders
Not applicable
9E Dilution
Not applicable
9F Expenses of the issue
Not applicable
10
Additional information
10A Share capital
Not applicable
10B Memorandum and articles
of association
Group information: Articles of Association
203
Other information: Exhibit 1
212
10C Material contracts
Group information: Material contracts
205
10D Exchange controls
Group information: Exchange controls and restrictions on
payment of dividends
204
10E Taxation
Shareholder information: Tax information for shareholders
210
10F Dividends and paying agents
Not applicable
10G Statement by experts
Not applicable
10H Documents on display
Useful information: Investor information – AGM and documents
on display
220
10I Subsidiary information
Not applicable
10J Annual Report to security holders
Not applicable
11
Quantitative and qualitative disclosures
about market risk
Consolidated Financial Statements: Note 25 Capital and financial
risk management
157
12
Description of securities other than equity securities
12A Debt securities
Not applicable
12B Warrants and rights
Not applicable
12C Other securities
Not applicable
12D American depositary shares
Group information: Fees and charges payable by ADR holders
202
13
Defaults, dividend arrearages
and delinquencies
Not applicable
14
Material modifications to the rights of
security holders and use of proceeds
Not applicable
15
Controls and procedures
15A Disclosure controls and procedures
Group information: Disclosure controls and procedures
192
15B Management’s annual report on
internal control over financial reporting
Group information: Management’s report on internal control
over financial reporting
192
15C Attestation report of the
registered public accounting firm
Reports of independent registered public accounting firms
114
15D Changes in internal control
over financial reporting
Not applicable
Item
Form 20-F caption
Location
Page
Haleon
Annual Report and Form 20-F 2024
216
Other information
16
(Reserved)
16A
Audit committee financial expert
Governance: Audit & Risk Committee Report
72
Shareholder information: Summary of significant corporate
governance differences from NYSE listing standards – Committees
208
16B
Code of ethics
Directors’ Report: Code of Conduct
186
16C
Principal accountant fees and services
Corporate Governance: Audit & Risk Committee Report –
External audit
75
Corporate Governance: Audit & Risk Committee Report –
Non-audit services
76
Group Financial Statements: Note 6 Operating profit
128
16D
Exemptions from the listing standards
for audit committees
Not applicable
16E
Purchase of equity securities by the
issuer and affiliated purchasers
Shareholder information: Purchases of equity securities by
the Company and affiliated purchasers
208
16F
Change in registrant’s certifying
accountant
Not applicable
16G
Corporate governance
Shareholder information: Summary of significant corporate
governance differences from NYSE listing standards
208
16H
Mine safety disclosure
Not applicable
16I
Disclosure regarding foreign jurisdictions
that prevent inspections
Not applicable
16J
Insider trading policies
Directors’ Report: Code of Conduct
186
Other information: Exhibit 11
213
16K
Cybersecurity
Strategic Report: Our culture and people
21
Strategic Report: Our approach to risk
51
Governance Report: Audit & Risk Committee Report
72
Group information: Risk factors
193
17
Financial statements
Not applicable
18
Financial statements
Consolidated Financial Statements
116
19
Exhibits
Other information: Exhibits
212
Item
Form 20-F caption
Location
Page
Other Information
Haleon
Annual Report and Form 20-F 2024
217
Form 20-F cross reference
Forward-looking statements
This Annual Report and Form 20-F 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 US Securities Act
and Section 21E of the Exchange Act). Forward-looking statements give Haleon’s current expectations and projections about future
events, including strategic initiatives and future financial condition and performance, and so Haleon’s actual results may differ
materially from what is expressed or implied by such forward-looking statements. Forward-looking statements sometimes use words
such as ‘expects’, ‘anticipates’, ‘believes’, ‘targets’, ‘plans’, ‘intends’, ‘aims’, ‘projects’, ‘indicates’, ‘may’, ‘might’, ‘will’, ‘should’, ‘potential’,
‘could’ and words of similar meaning (or the negative thereof). All statements, other than statements of historical facts, included in this
Report are forward-looking statements. Such forward-looking statements include, but are not limited to, statements relating to future
actions, prospective products or product approvals, delivery on strategic initiatives (including but not limited to acquisitions,
realisations of efficiencies and responsible business goals), future performance or results of current and anticipated products,
sales efforts, expenses, expectations with respect to the markets in which we operate, the outcome of contingencies
such as legal proceedings, dividend payments and financial results.
Any forward-looking statements made by or on behalf of Haleon speak only as of the date they are made and are based upon the
knowledge and information available to Haleon on the date of this Annual Report and Form 20-F. 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 the forward-looking statements include, but are not limited to, those discussed
under Risk Factors on pages 193 to 201 of this Annual Report & Form 20-F. Forward-looking statements should, therefore, be
construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. Subject to our
obligations under English and US law in relation to disclosure and ongoing information (including under the Market Abuse Regulations,
the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), we undertake no obligation
to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
You should, however, consult any additional disclosures that Haleon may make in any documents which it publishes and/or files
with the SEC and take note of these disclosures, wherever you are located.
No statement in this document is or is intended to be a profit forecast or profit estimate.
Haleon
Annual Report and Form 20-F 2024
218
Other information
ADR
American Depositary Receipt
ADR depositary
J.P. Morgan Chase Bank, N.A.
ADS
American Depositary Share, listed on the New York Stock Exchange
AER
Actual exchange rates
Annual Report or Report
The Annual Report and Form 20-F
APAC
Asia Pacific region
CER
Constant currency exchange rates
CMO
Third-party contract manufacturing organisations
Companies Act
The UK Companies Act 2006, as amended
Company, Group or Haleon
Haleon plc and its subsidiaries
Consumer Staples sector
Companies that produce and sell items considered essential for everyday use
DEI
Diversity, equity and inclusion
Employee
Persons on permanent or fixed-term contracts, who are directly employed by Haleon plc
or its subsidiaries (does not include third-party temporary workers or contractors)
EMEA
Europe, Middle East and Africa region
EMTN
Euro Medium Term Note
ERG
Employee resource group
FCA
UK Financial Conduct Authority
FDA
The US Food and Drug Administration
FMCG
Fast-moving consumer goods
FRC
UK Financial Reporting Council
GHG
Greenhouse gas
Health Professional(s)
Pharmacy, dental, respiratory and dermatology wellness professionals and related teams
IASB
International Accounting Standards Board
ISSB
International Sustainability Standards Board
LatAm
Latin America region
Leadership roles
Employees within our compensation grades 0-5. These roles include members of the Executive Team,
their direct reports (excluding administration support), heads of department and other upper
management
Local Growth brands
Local strategic brands that have scale and leadership positions
LSE
London Stock Exchange
MSA
Manufacture and Supply Agreement
NYSE
New York Stock Exchange
Ordinary share
£0.01 pence each in the Company
OTC
Over-the-Counter. Three market categories are collectively known as OTC: Pain Relief, Respiratory
Health and Digestive Health and Other. Purchases of products in these categories are controlled
but do not require a prescription
Parent Company
Haleon plc
Power Brands
Haleon’s nine large-scale multinational brands: Advil, Centrum, Otrivin, Panadol, parodontax,
Polident, Sensodyne, Theraflu and Voltaren
Rx-to-OTC switches
Switches of products requiring a prescription to products with OTC status
SEC
US Securities and Exchange Commission
VMS
Vitamins, Minerals and Supplements
Workforce
Haleon’s employees
>>
For definitions of our non-IFRS measures see from page 43.
Glossary
Other Information
Haleon
Annual Report and Form 20-F 2024
219
Glossary
Trading markets
The principal trading market for the Company’s ordinary shares is
the LSE. The ordinary shares are also listed on the NYSE, trading
in the form of ADSs evidenced by ADRs and traded under the
ticker symbol ‘HLN’. Each ADS represents two ordinary shares.
American Depositary Receipts
The Company has a sponsored ADR facility with J.P. Morgan
Chase Bank, N.A. as Depositary. Each ADR represents two
ordinary shares. All enquiries regarding ADR holder accounts
and payment of dividends should be directed to:
J.P. Morgan Chase Bank, N.A.
Shareowner Services,
PO Box 64504, St. Paul,
MN 55164-0504, USA
+1 800 990 1135 (US calls) (toll-free)
+1 651 453 2128 (non-US calls)
www.shareowneronline.com
under ‘contact us’
www.adr.com
AGM and documents on display
The Company’s AGM will be held on 28 May 2025. Terms and
conditions of all Directors’ appointments will be available for
inspection at the Company’s registered office during normal
business hours and during the AGM. Shareholders may
electronically appoint a proxy to vote on their behalf at
the 2025 AGM.
Shareholders who hold their shares through CREST may appoint
proxies through the CREST electronic proxy appointment service,
by using the procedures described in the CREST Manual.
Financial calendar
Event
Proposed date
2024 Final dividend
—
Ex-dividend date (Ordinary shares)
—
Ex-dividend date (ADS)
—
Record date
—
Payment date
1
24 April 2025
25 April 2025
25 April 2025
5 June 2025
2025 first quarter trading statement
30 April 2025
Capital Markets Day (London)
1 May 2025
2025 Annual General Meeting
28 May 2025
2025 half-year results
31 July 2025
2025 third quarter trading statement
30 October 2025
Financial year end
31 December
1
Payment is subject to shareholder approval at the 2025 AGM.
Useful information
Website and electronic communication
Haleon is committed to reducing the cost and environmental
impact of producing and distributing printed documents in
large quantities and this Annual Report and Form 20-F 2024
has been made available to shareholders through our website
at
www.haleon.com
. The Company is subject to the information
requirements of the Securities Exchange Act of 1934 applicable to
US foreign private issuers. In accordance with these requirements,
the Company files its Annual Report and Form 20-F and other
related documents with the SEC. The SEC maintains an internet
site at
www.sec.gov
that contains reports and other information
regarding issuers, including Haleon, that file electronically
with the SEC.
Ordinary share registrar
For information on a range of shareholder services, including
enquiries concerning individual shareholdings, notification
of a shareholder’s change of address and amalgamation of
shareholder accounts (in order to avoid duplicate mailing of
shareholder communications), shareholders should contact the
Company’s Registrar, Equiniti, using the contact details below.
Equiniti Limited,
Aspect House, Spencer Road, Lancing, West Sussex
BN99 6DA, UK
+44 (0) 371 384 2227
www.shareview.co.uk
Dividend services and bank mandate
The Company only makes dividend and other distribution
payments into a nominated bank account. Shareholders must
complete and return a direct payment instruction to the
Company’s Registrar, Equiniti, in order to ensure your payments
are received quickly and securely into your UK bank account.
Dividend reinvestment plan (DRIP)
As an alternative to receiving cash dividends, shareholders may
choose to reinvest your dividends to buy more Haleon ordinary
shares through the dividend reinvestment plan (DRIP). A DRIP
election form can be downloaded from
www.shareview.co.uk
or
requested by contacting Equiniti using the contact details above.
Ordinary shareholders can alternatively sign up to Equiniti’s
service, EQ Boost. Through this service, ordinary shareholders
can boost cash dividends and convert them into eVouchers for a
range of retailers. You can access further information or sign up
for EQ Boost at
www.shareview.co.uk/Clients/EQBoost
Overseas payment service
It is also possible for overseas shareholders to have their
dividends paid directly to their bank accounts in a local currency.
Charges are payable for this service.
Shareholder security
Many companies have become aware that their shareholders
have received unsolicited telephone calls or correspondence
concerning investment matters. These are typically from ‘brokers’
who target UK shareholders, offering to sell them what often turn
out to be worthless or high-risk shares in US or UK investments.
These operations are commonly known as ‘boiler rooms’.
More detailed information on this or similar activity can be
found on the FCA website at
www.fca.org.uk/consumers
.
Details of any share dealing facilities that the Company
endorses will be included in Company mailings.
Haleon
Annual Report and Form 20-F 2024
220
Other information
CBP017718
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Design Bridge and Partners
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Park works to the EMAS standard and its Environmental
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This publication has been manufactured using 100% offshore
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100% of the inks used are vegetable oil based, 95% of press
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Haleon plc
Registered office address:
Building 5, First Floor,
The Heights
Weybridge
Surrey KT13 0NY
England
www.haleon.com
Packs shown are representative portfolio examples. Packaging
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