As filed with the Securities and Exchange Commission on 1 June 2022.

File No.             

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 20-F

 

 

 

☒	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

☐	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:

 

 

Haleon plc^*

(Exact name of Registrant as specified in its charter)

 

 

N/A

(Translation of Registrant’s name into English)

England and Wales

(Jurisdiction of incorporation or organization)

c/o 980 Great West Road

Brentford, Middlesex TW8 9GS

(Address of principal executive offices)

+44 20 8047 5000

company.secretary@gsk.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Ordinary Shares, nominal value £1.25 per share		—		New York Stock Exchange1
American Depositary Shares, each representing two ordinary shares		HLN		New York Stock Exchange

 

1	Not for trading, but only in connection with the listing of the American Depositary Shares on the New York Stock Exchange.

 

 

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☐    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐		Accelerated filer  ☐		Non-accelerated filer  ☒
				Emerging growth company☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. ☐

 

†	The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15. U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ☐		International Financial Reporting Standards as issued by the International Accounting Standards Board  ☒		Other  ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☐

 

*

Haleon plc is the registrant filing this Registration Statement with the Securities and Exchange Commission. Following Separation, Haleon plc will be the new holding company of the consolidated consumer healthcare business of which GlaxoSmithKline Consumer Healthcare Holdings (No.2) Limited is currently the holding company. The securities issued to investors in connection with Separation will be ordinary shares and American Depositary Shares of securities registered or to be registered pursuant to Section 12(b) of the Act.

 

 

 

 

TABLE OF CONTENTS

 

INTRODUCTION AND USE OF CERTAIN TERMS			1
PRESENTATION OF FINANCIAL AND OTHER INFORMATION			4
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS			11
SEPARATION			13
PART I			21
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS			21
1.A. DIRECTORS AND SENIOR MANAGEMENT			21
1.B. ADVISERS			21
1.C. AUDITORS			21
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE			21
ITEM 3. KEY INFORMATION			21
3.A. SELECTED FINANCIAL DATA			21
3.B. CAPITALISATION AND INDEBTEDNESS			35
3.C. REASONS FOR THE OFFER AND USE OF PROCEEDS			37
3.D. RISK FACTORS			37
ITEM 4. INFORMATION ON THE COMPANY			70
4.A. HISTORY AND DEVELOPMENT OF THE COMPANY			70
4.B. BUSINESS OVERVIEW			81
4.C. ORGANISATIONAL STRUCTURE			146
4.D. PROPERTY, PLANT AND EQUIPMENT			146
ITEM 4A. UNRESOLVED STAFF COMMENTS			146
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS			146
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES			199
6.A. DIRECTORS AND SENIOR MANAGEMENT			199
6.B. COMPENSATION			210
6.C. BOARD PRACTICES			214
6.D. EMPLOYEES			217
6.E. SHARE OWNERSHIP			228
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS			231
7.A. MAJOR SHAREHOLDERS			231
7.B. RELATED PARTY TRANSACTIONS			235
7.C. INTERESTS OF EXPERTS AND COUNSEL			237
ITEM 8. FINANCIAL INFORMATION			237
8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION			237
8.B. SIGNIFICANT CHANGES			240
ITEM 9. THE OFFER AND LISTING			240
9.A. OFFER AND LISTING DETAILS			240
9.B. PLAN OF DISTRIBUTION			240
9.C. MARKETS			240
9.D. SELLING SHAREHOLDERS			240
9.E. DILUTION			240
9.F. EXPENSES OF THE ISSUE			241
ITEM 10. ADDITIONAL INFORMATION			241
10.A. SHARE CAPITAL			241
10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION			249
10.C. MATERIAL CONTRACTS			254
10.D. EXCHANGE CONTROLS			268
10.E. TAXATION			268

 

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10.F. DIVIDENDS AND PAYING AGENTS			276
10.G. STATEMENTS BY EXPERTS			276
10.H. DOCUMENTS ON DISPLAY			277
10.I. SUBSIDIARY INFORMATION			277
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			277
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES			277
12.A. DEBT SECURITIES			277
12.B. WARRANTS AND RIGHTS			277
12.C. OTHER SECURITIES			277
12.D. AMERICAN DEPOSITARY SHARES			277
PART II			288
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES			288
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS			288
ITEM 15. CONTROLS AND PROCEDURES			288
ITEM 16. [RESERVED]			288
16A. AUDIT COMMITTEE FINANCIAL EXPERT			288
16B. CODE OF ETHICS			288
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES			288
16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES			288
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS			288
16.F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT			288
16.G. CORPORATE GOVERNANCE			288
16.H. MINE SAFETY DISCLOSURE			288
16.I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS			288
PART III			289
ITEM 17. FINANCIAL STATEMENTS			289
ITEM 18. FINANCIAL STATEMENTS			289
ITEM 19. EXHIBITS			289
INDEX TO FINANCIAL STATEMENTS			F-1

 

 

ii

INTRODUCTION AND USE OF CERTAIN TERMS

In this registration statement, “the Company” refers to Haleon plc, the company that following Separation (as defined below) will be the new holding company of the Consumer Healthcare Business (as defined below) of which GlaxoSmithKline Consumer Healthcare Holdings (No.2) Limited is currently the holding company, “CH JVCo” refers to GlaxoSmithKline Consumer Healthcare Holdings (No. 2) Limited, “the Group,” and “we,” “our,” “us” or like terms, prior to Separation, refer to CH JVCo together with its consolidated subsidiaries and subsidiary undertakings from time to time, and following Separation, refer to the Company together with its consolidated subsidiaries and subsidiary undertakings from time to time.

References to “Pounds Sterling,” “pence,” “£” or “p” are to the lawful currency of the United Kingdom, references to “€” are to the common currency of the European Monetary Union, and references to “USD,” “$” or “cents” are to the lawful currency of the United States.

We have prepared this registration statement to register the ordinary shares of the Company (the “Haleon Shares”), with two Haleon Shares represented by one American depositary share (“Haleon ADSs”), under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the listing and trading of the Haleon ADSs on the New York Stock Exchange (“NYSE”) as a result of Separation. The Separation is conditional on, amongst other things, the approval by holders of ordinary shares of GSK plc (“GSK” and “GSK Shares,” respectively) at the general meeting of GSK proposed to be held at 2.30 p.m. London time on 6 July 2022 (“GSK General Meeting”).

We are furnishing this registration statement solely to provide information to holders of GSK Shares and holders of American depositary shares of GSK, each representing two GSK Shares (“GSK ADSs”), who will receive Haleon Shares and Haleon ADSs, respectively, in Separation. You should not construe this registration statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of GSK. We believe that the information contained in this registration statement is accurate as of the date set forth on the cover. Changes to the information contained in this registration statement may occur after that date, and neither we nor GSK undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations and practices.

In addition, unless otherwise indicated or the context otherwise requires, the following definitions apply throughout this registration statement:

 

“Consumer Healthcare Business”

•

prior to Separation, the business of researching and developing, manufacturing, distributing, marketing, selling, promoting and/or otherwise commercialising Consumer Healthcare Products (as defined in “Item 10. Additional Information—10.C. Material Contracts”), in each case as conducted by CH JVCo and its consolidated subsidiaries and subsidiary undertakings as at the date of this registration statement; and

 

•

following Separation, the business of researching and developing, manufacturing, distributing, marketing, selling, promoting and/or otherwise commercialising Consumer Healthcare Products, in each case as conducted by the Company and its consolidated subsidiaries and subsidiary undertakings, together with any assets and/or entities that will form part of the Group pursuant to the Asset Transfer Framework Agreement (as defined below) and other ancillary and implementing agreements;

 

1

“Demerger”

the proposed demerger of at least 80 per cent. of GSK’s interest in CH JVCo and its consolidated subsidiaries, to be effected by way of an interim dividend (the “Demerger Dividend”), in specie, proposed to be declared by the board of directors of GSK to be satisfied by the transfer by GSK of the GSKCHH A Ordinary Shares (as defined below) to the Company in consideration for the issuance by the Company of Haleon Shares to the holders of GSK Shares as of the Record Time (as defined below) in accordance with the Demerger Agreement (as defined below);

 

“Deposit Agreement”

the deposit agreement to be entered into between the Company, JPMorgan Chase Bank N.A., as depositary, and all holders and beneficial owners from time to time of Haleon ADSs issued thereunder;

 

“Directors”

the directors of the Company as at the date of this registration statement and those persons who will become directors of the Company on UK Admission, as set out in “Item 6. Directors, Senior Management and Employees—6.A. Directors and Senior Management—Directors,” as the context requires;

 

“EU”	the European Union;

 

“EU Member State” or “Member State”

a member state of the EU;

 

“FDA”

the US Food and Drug Administration;

 

“FMCG”

fast-moving consumer goods;

 

“GSK ADS Custodian”

JPMorgan Chase Bank N.A., custodian of the GSK Shares underlying the GSK ADSs;

 

“GSK Depositary”

JPMorgan Chase Bank N.A., as depositary for the GSK ADSs;

 

“GSK Group”

in respect of any time prior to Separation, GSK and its consolidated subsidiaries and subsidiary undertakings from time to time; and in respect of any period following Separation, GSK and its consolidated subsidiaries and subsidiary undertakings from time to time, excluding those companies which form part of the Group;

 

“Haleon ADS Custodian”

JPMorgan Chase Bank N.A., custodian of the Haleon Shares underlying the Haleon ADSs;

 

“Haleon Depositary”

JPMorgan Chase Bank N.A., as depositary for the Haleon ADSs;

 

“Haleon Shareholder”

a holder of Haleon Shares from time to time;

 

“IFRS”

the International Financial Reporting Standards as issued by the International Accounting Standards Board and International Financial Reporting Standards as adopted by the United Kingdom;

 

2

“LSE”

London Stock Exchange plc or the market conducted by it, as the context requires;

 

“Pfizer”

Pfizer Inc.;

 

“Pfizer Group”

Pfizer together with its subsidiaries and subsidiary undertakings from time to time;

 

“SEC”

the US Securities and Exchange Commission;

 

“SLPs”

(i) GSK (No. 1) Scottish Limited Partnership, a private fund limited partnership registered in Scotland with registration number SL035527 and whose principal place of business is at 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ (“SLP1”); (ii) GSK (No. 2) Scottish Limited Partnership, a private fund limited partnership registered in Scotland with registration number SL035526 and whose principal place of business is at 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ (“SLP2”); and (iii) GSK (No. 3) Scottish Limited Partnership, a private fund limited partnership registered in Scotland with registration number SL035525 and whose principal place of business is at 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ (“SLP3”), being the Scottish limited partnerships that will each receive shares in the Company pursuant to the SLP Exchange Agreement, and “SLP” shall be construed accordingly.

 

“Separation”

the Demerger, Share Exchanges (as defined below), UK Admission (as defined below) and other steps pursuant to which, among other things, the Company will become a listed company holding the Consumer Healthcare Business;

 

“subsidiary”

a subsidiary as that term is defined in section 1159 of the Companies Act 2006 of the UK, as amended (the “Companies Act”);

 

“subsidiary undertaking”

a subsidiary undertaking as that term is defined in section 1162 of the Companies Act;

 

“UK Admission”

admission of the Haleon Shares to the premium listing segment of the Official List of the Financial Conduct Authority of the UK (the “Official List” and the “FCA,” respectively) and to trading on the LSE’s main market for listed securities;

 

“United Kingdom” or “UK”

the United Kingdom of Great Britain and Northern Ireland; and

 

“United States,” “USA” or “US”

the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction.

 

3

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Overview

The audited consolidated financial statements for the years ended 31 December 2021, 2020 and 2019 (the “Financial Statements”) included in this registration statement and the related financial information presented herein have been prepared in accordance with IFRS and reflect the financial results of CH JVCo prior to Separation and the Consumer Healthcare Business that will be consolidated under the Company as the new holding company of the Group after Separation.

Reporting Framework

The financial information presented in this registration statement reflects the operating and financial performance of the Group, its cash flows and financial position and resources. The Group’s results as reported in accordance with IFRS represent the Group’s overall performance. The Group also uses a number of adjusted, non-IFRS, measures to report the performance of its business, as described below.

The consolidated financial statements for the year ended 31 December 2020 included in the Financial Statements have been restated for adjustments related to receivables and cost of sales arising from transitional service agreements. See Note 1 to the Financial Statements.

Description of Key Line Items in the Group’s Financial Statements

The following descriptions of key line items in the Financial Statements are relevant to the discussion of the Group’s results of operations in “Item 5. Operating and Financial Review and Prospects.”

 

Item		Represents
Revenue		Revenue from sales of goods to external customers against received orders. Revenue represents net invoice value including 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. Revenue is not recognised in full 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 rebates and returns 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. Value added tax and other sales taxes are excluded from revenue.
Cost of sales		Cost of sales includes all costs directly related to bringing products to their final selling destination. This includes purchasing and receiving costs and direct and indirect costs to manufacture products, including materials, labour and overhead expenses necessary to acquire and convert purchased materials and supplies into finished goods. Cost of sales also includes royalties on certain licenced products, inspection costs, freight charges, costs to operate equipment and depreciation and amortisation.
Selling, general and administration (“SG&A”)		SG&A expenses comprise advertising and promotion costs, selling costs, warehouse and distribution costs, corporate overheads, other administrative expenses and depreciation and amortisation.
Research and development (“R&D”)		R&D expenditure comprises expenditure that is directly attributable to the research and development of new products, including the costs attributable to the generation of intellectual property and product registrations, and depreciation and amortisation of equipment, real estate and IT assets used by the R&D function.

 

4

Item		Represents
Other operating (expense)/income		Other operating (expense)/income includes income and expense from all other operating activities which are not related to the ordinary course business of the Group, such as gains/losses from disposals and transaction costs.
Net finance costs		Net finance costs comprise finance costs and finance income, including net finance costs in relation to pensions and similar obligations. Finance income includes income on cash and cash equivalents and income on other financial assets. Finance costs include interest costs in relation to financial liabilities. This includes interest on lease liabilities, which represents the unwind of the discount rate applied to lease liabilities.
Income tax		Income tax is the expense resulting from the corporate income tax payable in the different countries in which the Group operates.

Adjusted Results and other non-IFRS financial measures

This registration statement contains a number of non-IFRS measures to report the performance of the Group’s business. Non-IFRS measures exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial measures that are not calculated in accordance with IFRS. 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.

Management considers these metrics to be the non-IFRS financial measures used by the Group to help evaluate growth trends, establish budgets and assess operational performance and efficiencies. We believe that these non-IFRS financial measures, in addition to IFRS measures, provide an enhanced understanding of the Group’s results and related trends, therefore increasing transparency and clarity of the Group’s results and business.

There are no generally accepted accounting principles governing the calculation of these measures and the criteria upon which these measures are based can vary from company to company. The non-IFRS financial measures presented in this registration statement may not be comparable to other similarly titled measures used by other companies, have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Group’s operating results as reported under IFRS. We encourage investors and analysts not to rely on any single financial measure but to review the Group’s financial and non-financial information in its entirety.

The following non-IFRS measures are presented in this registration statement:

Measure

 

Adjusted EBITDA

Adjusted EBITDA is one of the measures used by management to assess the financial performance of the Group’s business. It is defined as profit after tax excluding income tax, finance income, finance expense, Adjusting Items (as defined in “Item 3. Key Information—3.A. Selected Financial Data—Adjusting Items”), depreciation of property plant and equipment, impairment of property plant and equipment, right-of-use assets and computer software net of reversals, depreciation of right-of-use assets, and amortisation of software intangibles.

 

5

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). Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating the Group’s operating results in the same manner as the Group’s management.

 

Adjusted EBITDA has limitations as a financial measure and investors should not consider it in isolation or as a substitute for analysis of the Group’s results of operations as reported under IFRS. In addition to the limitations inherent to all Adjusted Results (as defined below), some other limitations are:

 

•

Although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised may have to be replaced in the future and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditure or lease extensions; and

 

•

Adjusted EBITDA does not reflect net finance expense/income, cash requirements for the Group’s working capital, transaction related costs, separation and admission costs and disposal costs.

 

Adjusted Results

Adjusted Results comprise Adjusted gross profit, Adjusted gross profit margin, Adjusted operating profit, Adjusted operating profit margin, Adjusted profit before taxation, Adjusted profit after taxation, Adjusted profit attributable to shareholders, Adjusted basic earnings per share, Adjusted diluted earnings per share, Adjusted cost of sales, Adjusted SG&A, Adjusted R&D, Adjusted other operating income, Adjusted net finance costs, Adjusted taxation charge, and Adjusted profit attributable to non-controlling interests. 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”, which are defined in “Item 3. Key Information—3.A. Selected Financial Data—Adjusting Items”).

 

We believe 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 compared against the majority of its peer competitors. As Adjusted Results include the benefits of restructuring programmes but exclude significant costs (such as Restructuring costs, Transaction-related costs and Separation and Admission costs) they should not be regarded as a complete picture of the Group’s

 

6

financial performance as presented in accordance with IFRS. In particular, when significant impairments, Restructuring costs and Separation and Admission costs are excluded, Adjusted Results will be higher than IFRS results. For information on the Adjusting Items and further commentary on Adjusted Results, see “Item 3. Key Information—3.A. Selected Financial Data”).

 

Constant currency

The Group’s reporting currency is Pounds 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 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 Pounds 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. The currencies which most influence the constant currency results of the Group and their exchange rates are shown in the below table.

 

		2021				2020				2019
Average rates:
USD/£			1.38				1.29				1.28
Euro/£			1.16				1.13				1.14
CNY/£			8.86				8.91				8.82
Swiss Franc/£			1.25				1.21				1.27

 

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).

 

Free cash flow conversion

Free cash flow conversion is calculated as free cash flow, as defined above, divided by profit after tax.

 

Free cash flow conversion is used by us to evaluate the cash generation of the business relative to its profit, by measuring the proportion of profit after tax that is converted into free cash flow as defined above.

 

7

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 us to more clearly identify the level of cash generated from operations that remains available for distribution after servicing the Group’s debt.

 

Organic revenue growth

Organic revenue growth represents the change in organic revenue at CER from one accounting period to the next.

 

Organic revenue represents revenue, as determined under IFRS and excluding the impact of acquisitions, divestments and closures of brands or businesses, revenue attributable to manufacturing service agreements (“MSAs”) relating to divestments and the closure of sites or brands, and the impact of currency exchange movements.

 

Revenue attributable to MSAs relating to divestments and production site or brand closures has been removed from organic revenue because these agreements are transitional and, with respect to production site closures, include a ramp-down period in which revenue attributable to MSAs gradually reduces several months before the production site closes. This revenue reduces the comparability of prior and current year revenue and is therefore adjusted for in the calculation of organic revenue growth.

 

Organic revenue is calculated period-to-period as follows, using prior year exchange rates to restate current year comparatives:

 

•

current year organic revenue excludes revenue from brands or businesses acquired in the current accounting period;

 

•

current year organic revenue excludes revenue attributable to brands or businesses acquired in the prior year from 1 January to the date of completion of the acquisition;

 

•

prior year organic revenue excludes revenue 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 revenue excludes revenue in respect of brands or businesses divested or closed in the previous accounting period in full; and

 

•

prior year and current year organic revenue excludes revenue attributable to MSAs relating to divestments and production site closures taking place in either the current or prior year,

 

each an “Organic Adjustment”.

 

8

To calculate organic revenue growth for the period, organic revenue for the prior year is subtracted from organic revenue in the current year and divided by organic revenue in the prior year.

 

By way of example:

 

•

The Pfizer Transaction (as defined in “Item 5. Operating and Financial Review and Prospects—Key factors affecting the group’s results of operations and financial position—Pfizer Transaction”) completed on 31 July 2019. Organic revenue growth for the period FY 2019 to FY 2020 excludes revenue attributable to brands acquired as part of the Pfizer Transaction in respect of the period 1 January 2020 to 31 July 2020.

 

•

The Group completed the disposal of Breathe Right on 1 October 2020. Organic revenue growth for the period FY 2019 to FY 2020 excludes revenue attributable to Breathe Right from the period 1 October 2019 to 31 December 2019. Organic revenue growth for the period FY 2020 to FY 2021 excludes revenue attributable to Breathe Right in FY 2020.

 

The Group believes that discussing organic revenue growth contributes to the understanding of the Group’s performance and trends because it allows for a year-on-year comparison of revenue in a meaningful and consistent manner

For a reconciliation of the closest measures prepared in accordance with IFRS to the applicable non-IFRS measures, see “Item 3. Key Information—Selected Financial Data”.

Rounding of Figures

Certain financial information presented in tables in this registration statement has been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this registration statement reflect calculations based upon the underlying information prior to rounding, and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. Certain percentage shareholdings have also been rounded and therefore totals of such percentage shareholdings may vary slightly from their actual arithmetic totals.

Pfizer’s Interest in the Group

As at the date of this registration statement, Pfizer’s 32 per cent. interest in the Group is held by PFCHH (as defined below), which holds all of the JVCo B Ordinary Shares (as defined below), representing 32 per cent. of the voting rights in CH JVCo. PFCHH is a direct wholly owned subsidiary of Anacor Pharmaceuticals, Inc. (“Anacor”) and both are wholly owned subsidiaries of Pfizer. Prior to the Demerger, Pfizer intends to undertake an intragroup reorganisation resulting in Pfizer becoming the direct sole owner of PFCHH.

Accordingly, except where otherwise stated, references in this registration statement, including in the structure charts in the section entitled “Separation” and “Item 4. Information on the Company—4.A. History and Development of the Company—The Demerger and Further Preparatory Steps,” to the ownership of, or transfer to the Company (pursuant to the terms of the Pfizer Exchange Agreement (as defined below)), of PFCHH by Pfizer and to the issuance of Haleon Shares and Non-Voting Preference Shares (as defined below) to Pfizer assume that this reorganisation takes place prior to the Demerger as expected. However, in the event that the

 

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PFCHH Transfer (as defined below) is not completed by the time of completion of the Demerger, then Anacor shall be the entity holding the ownership interests in PFCHH that are to be transferred to the Company pursuant to the Pfizer Exchange Agreement and, in consideration of such transfer, the Company shall issue Haleon Shares and Non-Voting Preference Shares to Anacor.

In addition, references in this registration statement to Pfizer’s or Anacor’s interest in 32 per cent. of the Haleon Shares include both Haleon Shares and Haleon ADSs in respect of such Haleon Shares.

Pfizer will continue to own its 32 per cent. ownership interest in the Company following the Separation. Pfizer has informed the Company that it intends to exit its position in the Company in a disciplined fashion, with an objective of maximising value for Pfizer shareholders.

No Incorporation of Website Information

The contents of any website mentioned in this registration statement or any website, directly or indirectly, linked to these websites have not been verified and do not form part of this registration statement, and information contained therein should not be relied upon.

Market and Industry Data

Other than in respect of statements of the type described in the paragraph below, unless the source is otherwise stated, the market and industry data in this registration statement constitute our estimates, using underlying data from independent third parties. Such data includes market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications and surveys (including publications and data compiled by Nicholas Hall and Euromonitor). Estimates extrapolated from this data involve risks and uncertainties and are subject to change based on various factors.

Unless otherwise stated, statements of market position are on the basis of sales to consumers in the relevant geographical market or product category in 2021, as reported by: (i) in the case of statements relating to Over the Counter (“OTC”) medicines and Vitamins, Minerals and Supplements (“VMS”), Nicholas Hall’s DB6 Consumer Healthcare Database at manufacturer’s selling prices; and (ii) in the case of statements relating to Oral Health, Euromonitor Passport ‘Oral Care’ at retail selling prices. The value of a market or product category and market size are provided on the basis of sales to consumers in 2021 in the relevant geographical market or product category, as reported by: (i) in the case of statements relating to OTC/VMS, Nicholas Hall’s DB6 Consumer Healthcare Database at manufacturer’s selling prices; and (ii) in the case of statements relating to Oral Health, Euromonitor Passport ‘Oral Care’ at manufacturer’s selling prices.

The Group confirms that all third-party data contained in this registration statement has been accurately reproduced and, so far as the Group is aware and able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading.

Where third-party information has been used in this registration statement, the source of such information has been identified. While industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, the accuracy and completeness of such information is not guaranteed.

This registration statement includes trade marks, trade names and trade dress of other companies. Use or display by us of other parties’ trade marks, other parties’ trade names or other parties’ trade dress or products is not intended to and does not imply a relationship with, or endorsement or sponsorship by the Group of, the trade mark, trade name or trade dress owners. Solely for the convenience of investors, the Group’s brands are referred to in this registration statement without the ^® symbol, but the absence of these references is not intended to indicate in any way that we will not assert our rights to these brands to the fullest extent permitted by law.

 

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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This registration statement includes forward-looking statements. Forward-looking statements give the Group’s current expectations or forecasts of future events. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales, efforts, expenses, the outcome of contingencies such as legal proceedings, dividend payments and financial results. You should not place undue reliance on these statements as no assurance can be given that any particular expectation or forecast will be met. Nor can there be any guarantee that the Company will be able to realise any of the potential strategic benefits or opportunities as a result of Separation. In addition, in the future we, and others on our behalf, may make statements that constitute forward-looking statements and, except as may be required by applicable legal or regulatory obligations, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking statements may include, without limitation, statements relating to the following:

 

•

our plans, objectives and goals;

 

•

our future economic performance and prospects;

 

•

the potential effect on our future performance of certain contingencies; and

 

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assumptions underlying any such statements.

You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as “believes,” “anticipates,” “expects,” “intends,” “estimates,” “plans,” “will,” “projects,” and “targets” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance are intended to identify forward-looking statements but these are not the exclusive means of identifying such statements.

Forward looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that are beyond our control or precise estimate. We caution you that a number of important factors could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Some of the factors that could cause actual results or events to differ from current expectations include the following:

 

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domestic and global economic and business conditions, including inflation and deflation;

 

•

geopolitical developments;

 

•

risks relating to fluctuations in currency exchange rates and related hedging activities;

 

•

failure to manage disruptions in the supply chain, including due to environmental events, widespread health emergencies (such as COVID-19), strikes, cybersecurity failures, industrial accidents and global shipping, logistics, transport and warehousing constraints;

 

•

failure to realise any or all of the anticipated benefits of Separation;

 

•

significant product innovations, technical advances or the intensification of price competition by our competitors, and any failure on our part to adequately respond to any such price competition or to develop commercially successful products or to deliver additional uses for existing products, including after significant resources have been invested;

 

•

changes in consumers’ discretionary spending on consumer healthcare products and any consequent changes in retailers purchasing stocks of consumer healthcare products;

 

•

failure to adapt to changes in consumer preferences, purchasing patterns and market dynamics;

 

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increasing awareness of the environmental impact of products and ingredients in our products;

 

•

changes in, and any failure to comply with, applicable law and regulation governing the consumer healthcare industries and affecting the cost of product development and the time required to reach the market and the uncertainty of successfully doing so;

 

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•

the outcome of, or provisions made for or costs incurred in relation to, litigation and government investigations, including those with respect to product liability, antitrust matters, the use of certain ingredients in manufacturing of our products and sales and marketing;

 

•

failure to appropriately collect, review or report human safety information and to act on any relevant findings in a timely manner;

 

•

failure to ensure appropriate controls and governance of quality in product development;

 

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failure to comply with good manufacturing or good distribution practice regulations in commercial or clinical trials, manufacturing and distribution activities;

 

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failure to comply with the terms of our product licences and supporting regulatory activities;

 

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failure to deliver a continuous supply of compliant finished product;

 

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inability to respond effectively to a crisis incident in a timely manner to recover and sustain critical operations;

 

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failure to successfully acquire and integrate other businesses, licence rights to technologies or products, form and manage alliances, or divest businesses;

 

•

failure to report accurate financial information in compliance with accounting standards and applicable legislation;

 

•

failure to comply with current tax law, or incurring significant losses due to treasury activities;

 

•

failure to comply with applicable and international anti-bribery and corruption legislation;

 

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failure to comply with pricing and antitrust regulations in commercial practices, including trade channel activities and tendering for business;

 

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failure to obtain, maintain and enforce sufficient intellectual property rights to protect our business;

 

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failure to control releases of substances harmful to the environment in both the short and long term, leading to incidents which could disrupt our R&D and supply activities, harm employees, and harm the communities and the local environment in which we operate;

 

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failure in the management of physical climate and environmental risks, current and future regulatory requirements for environmental policies and taxes, and delivery and performance of management environmental objectives;

 

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failure to collect, secure, use and destroy personal information in accordance with data privacy laws, which can lead to harm to individuals, including financial harm, stress and prejudice, and to us, including fines and operational, financial and reputational harm;

 

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unauthorised disclosure, theft, unavailability or corruption of our information or key information systems, which may lead to harm to our workforce and customers, disruption to our business and/or the loss of commercial or strategic advantage, damage to our reputation or regulatory sanctions; and

 

•

new and possibly increasing levels of price controls, pricing pressures or price restrictions with respect to our products in various markets.

We caution you that the foregoing list of important factors is not exhaustive. When evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, as well as the risk factors relating to our business, industry and Separation that are set out in “Item 3. Key Information—3.D. Risk Factors” of this registration statement.

 

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SEPARATION

The following provides only a summary of and certain questions relating to the terms of Separation. You should read the section entitled “Item 4. Information on the Company—4.A. History and Development of the Company—The Demerger and Further Preparatory Steps” below in this registration statement for a more detailed description of the matters identified below.

Overview

On 23 June 2021, GSK announced its intention to effect the separation of the Consumer Healthcare Business by way of a demerger of at least 80 per cent. of the GSK Group’s 68 per cent. holding in the Group. The Demerger is conditional on, amongst other things, the approval of holders of GSK Shares at the GSK General Meeting, the receipt of certain mandatory governmental/regulatory approvals in India, Japan and South Korea, and the approval of the Demerger Dividend by the board of directors of GSK.

Pursuant to the proposed Demerger, holders of GSK Shares and holders of GSK ADSs as of 6 p.m. London time for the GSK Shares and as of 5 p.m. New York time for the GSK ADSs on 15 July 2022 (the “Record Time”) will be entitled to receive Haleon Shares and Haleon ADSs, respectively. Holders of GSK Shares and GSK ADSs will continue to own their GSK Shares and GSK ADSs, respectively, unless they sell or transfer them in the usual course.

Pursuant to the proposed Demerger and subsequent Share Exchanges described below, the Company will come to own the entire issued share capital and other equity interests of each of GlaxoSmithKline Consumer Healthcare Holdings Limited, the GSK subsidiary which holds GSK’s interests in CH JVCo (“GSKCHH”) and PF Consumer Healthcare Holdings LLC, a wholly-owned subsidiary of Pfizer which holds Pfizer’s interest in CH JVCo (“PFCHH”) which, together, own the entire issued share capital of CH JVCo, the current parent company of the Group.

Questions and Answers about Separation

What is Separation?

Separation is the Demerger, Share Exchanges (as defined below) and other steps pursuant to which, among other things, the Company will become a listed company holding the Consumer Healthcare Business.

At the date of this registration statement, the ownership of the Group is as follows:

 

 

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The share capital of CH JVCo is comprised of: (i) 680,000 fully paid A Ordinary Shares in the capital of CH JVCo of £1 each (“JVCo A Ordinary Shares”); (ii) 300,000 non-voting fully paid Preference Shares in the capital of CH JVCo of £1 each (“JVCo Preference Shares”); and (iii) 320,000 fully paid B Ordinary Shares in the capital of CH JVCo of £1 each (“JVCo B Ordinary Shares”). The JVCo A Ordinary Shares and JVCo B Ordinary Shares each carry one vote per share. All JVCo A Ordinary Shares and JVCo Preference Shares are held by GSKCHH. Holders of the JVCo Preference Shares are entitled to 0.01% of the aggregate amount of any dividends declared by CH JVCo, and are not entitled to any proportion of the assets of CH JVCo available for distribution to shareholders on a return of capital on a winding-up of CH JVCo (excluding any intra-group re-organisation on a solvent basis). All JVCo B Ordinary Shares are held by PFCHH, which is a wholly owned subsidiary of Pfizer.

Accordingly, the share capital of CH JVCo is held as follows:

 

Shareholder		Class		Number of shares		Voting rights
GSKCHH		JVCo A Ordinary Shares JVCo Preference Shares		680,000 300,000		68 per cent. N/A
PFCHH		JVCo B Ordinary Shares		320,000		32 per cent.

GSKCHH has a share capital comprised of three classes of shares: (i) the fully paid A Ordinary Shares in the capital of GSKCHH (“GSKCHH A Ordinary Shares”); (ii) the fully paid B Ordinary Shares in the capital of GSKCHH (“GSKCHH B Ordinary Shares”); and (iii) the fully paid C Ordinary Shares in the capital of GSKCHH (“GSKCHH C Ordinary Shares”). As of the date of this registration statement, all of the GSKCHH A Ordinary Shares and GSKCHH B Ordinary Shares are held by GSK. As part of certain arrangements to fund GSK’s UK pension benefit obligations, on 25 March 2022, GSK transferred its entire holding of GSKCHH C Ordinary Shares to the SLPs, being the Scottish limited partnerships controlled by GSK.

The Demerger will be implemented by GSK declaring an interim dividend in specie to be satisfied by: (i) the transfer by GSK of the GSKCHH A Ordinary Shares to the Company in return for (ii) the issuance of Haleon Shares by the Company to holders of GSK Shares as of the Record Time (including GSK Shares held by the GSK ADS Custodian) on the basis of one Haleon Share for each GSK Share held by such holders of GSK Shares at the Record Time, save that the number of Haleon Shares to be allotted and issued to each of the four initial shareholders of the Company will be reduced by the number of Haleon Shares already held by them at the Record Time. In connection with the Demerger, each holder of GSK ADSs as of the Record Time will be entitled to receive one newly-issued Haleon ADS for each GSK ADS held by such holder of GSK ADSs as of the Record Time. The distribution of Haleon Shares is expected to occur on 18 July 2022 (the “UK Distribution Date”). The distribution of Haleon ADSs is expected to occur on 21 July 2022 (the “ADS Distribution Date”).

 

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Shortly following completion of the Demerger, a series of share-for-share exchanges will occur, under which the Company will come to own the entire issued share capital of GSKCHH and PFCHH, which together own the entire issued share capital of CH JVCo. The purpose of the share-for-share exchanges is to rationalise the Company’s shareholder structure such that all persons with an interest in the Group do so through holding shares in the Company, as listed parent company, and not further down the Group structure. Accordingly:

 

•

GSK will transfer its entire shareholding of GSKCHH B Ordinary Shares, representing an 8.01 per cent. stake in the ordinary share capital of GSKCHH, to the Company in exchange for 502,868,434 Haleon Shares, less a number of Haleon Shares that is equal to the number of Excess GSK Shares1 2. As at 30 May 2022, the number of Haleon Shares expected to be held by GSK at UK Admission is expected to represent up to 6 per cent. of the total issued share capital of the Company;

 

•

each of the SLPs will transfer their respective holdings of GSKCHH C Ordinary Shares, representing 11.03 per cent. in aggregate of the ordinary share capital of GSKCHH, to the Company in consideration for such number of new Haleon Shares as is required so that, after completion of the

Share Exchanges, the SLPs will together hold Haleon Shares representing 7.5 per cent. (in aggregate and to the nearest whole Haleon Share) of the total issued share capital of the Company; and

 

•

Pfizer will transfer its entire holding in PFCHH to the Company in consideration for (i) such number of new Haleon Shares as is required so that, on UK Admission, Pfizer will hold Haleon Shares representing 32 per cent. of the total issued share capital of the Company (to the nearest whole Haleon Share) and (ii) 25 million fully paid non-voting preference shares of £1 each in the capital of the Company (“Non-Voting Preference Shares” and the “Pfizer Share Exchange,” respectively).

together, the “Share Exchanges.”

Immediately following the Pfizer Share Exchange, Pfizer will sell its entire holding in the Non-Voting Preference Shares to one or more third party investor(s) (the “NVPS Sale”).

 

1	“Excess GSK Shares” any GSK Shares in issue at the Record Time in excess of (X) ((X) being the number of GSK Shares in issue on 30 May 2022).

2

To the extent any shares are issued by GSK (e.g. in respect of GSK employee share options) between 30 May 2022 and the Record Time, this would affect the post-Separation shareholdings in the Company. In summary, the effect of any such issuance would be that: (i) the total number of Haleon Shares issued to shareholders under the Demerger would increase by the number of GSK Excess Shares; and (ii) there would be a corresponding reduction in the total number of Haleon Shares issued to GSK under the GSK Share Exchange.

 

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Through the Demerger, the Share Exchanges and the NVPS Sale, the ordinary share capital of the Company will be held as follows³:

 

 

Shareholder		Class		Number of shares(1)		Voting rights
Pfizer		Ordinary		2,955,063,626		32 per cent.
SLPs (Scottish partnerships controlled by GSK)		Ordinary		692,593,037		7.5 per cent.
GSK		Ordinary		502,868,434(2)		up to 6 per cent.
Other holders of Haleon Shares (including Haleon Shares held by the Haleon ADS Custodian, which includes all Haleon Shares represented by Haleon ADSs)		Ordinary		5,084,048,734(2)		at least 54.5 per cent.

 

(1)	As at 30 May 2022.

(2)

The shareholdings of GSK and other holders of Haleon Shares (excluding Pfizer and SLPs) as at UK Admission may be different, with corresponding adjustments in the relevant voting rights, as illustrated in the right column. For example, to the extent any shares are issued by GSK (e.g., in respect of GSK employee share options) between 30 May 2022 and the Record Time, this would affect the post-Separation shareholdings of GSK and other holders of Haleon Shares (excluding Pfizer and SLPs).

 

3	In addition, immediately following the NVPS Sale, 25,000,000 Non-Voting Preference Shares will be held by one or more third party investor(s).

 

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Will the Group incur financial indebtedness in connection with Separation?

As part of the preparation for the Demerger, on 16 March 2022, GSK Consumer Healthcare Capital UK plc (the “UK Issuer”) and GSK Consumer Healthcare Capital NL B.V. acting as issuers and each of which is a wholly-owned subsidiary of CH JVCo (together with the UK Issuer, the “EMTN Issuers”), established a £10,000,000,000 Euro Medium Term Note Programme (the “Programme”) pursuant to which the EMTN Issuers may issue notes from time to time. As at the date of this registration statement, the EMTN Issuers have issued under the Programme: £300,000,000 2.875 per cent. notes due 29 October 2028, £400,000,000 3.375 per cent. notes due 29 March 2038, €850,000,000 1.250 per cent. notes due 29 March 2026, €750,000,000 1.750 per cent. notes due 29 March 2030 and €750,000,000 2.125 per cent. notes due 29 March 2034 (together, the “Pre-Separation Programme Notes”).

In addition, on 24 March 2022, GSK Consumer Healthcare Capital US LLC, a wholly-owned subsidiary of CH JVCo (the “US Issuer”), issued $700,000,000 3.024 per cent. callable fixed rate senior notes due 2024, $300,000,000 callable floating rate senior notes due 2024, $2,000,000,000 3.375 per cent. fixed rate senior notes due 2027, $1,000,000,000 3.375 per cent. notes due 2029, $2,000,000,000 3.625 per cent. fixed rate senior notes due 2032 and $1,000,000,000 4.000 per cent. fixed rate senior notes due 2052 and the UK Issuer issued $1,750,000,000 3.125 per cent. notes due 2025 (the “Pre-Separation USD Notes”) in each case, pursuant to a private placement to institutional investors in the USA and outside the USA.

The payment of all amounts owing in respect of: (i) notes issued under the Programme (including the Pre-Separation Programme Notes); and (ii) the Pre-Separation USD Notes is, as at the date of this registration statement, guaranteed by GSK. Following completion of the GSK Share Exchange, the guarantee provided by GSK will cease to be effective and a guarantee provided by the Company will come into full force and effect. Further details of the terms and conditions governing the notes issued under the Programme and the Pre-Separation USD Notes can be found in “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Resources and Indebtedness”.

The net proceeds of the Pre-Separation Programme Notes and the Pre-Separation USD Notes have been made available to GlaxoSmithKline Consumer Healthcare Finance Limited in order to fund the making of certain upstream loans to wholly-owned subsidiaries of GSK and Pfizer. As such:

 

•

on 24 March 2022, GlaxoSmithKline Consumer Healthcare Finance Limited made a loan of £4,465,197,183.55 to GlaxoSmithKline Finance plc and a loan of £2,101,269,262.85 to Pfizer Service Company Ireland Unlimited Company; and

 

•

on 29 March 2022, GlaxoSmithKline Consumer Healthcare Finance Limited made a loan of £1,798,139,950.68 to GlaxoSmithKline Finance plc and a loan of £846,183,506.20 to Pfizer Service Company Ireland Unlimited Company (together, the “Notes Proceeds Loans”) pursuant to certain upstream loan agreements as amended from time to time (the “Notes Proceeds Loan Agreements”).

The terms of the Notes Proceeds Loan Agreements require, among other things, that the Notes Proceeds Loans will be repaid in full to GlaxoSmithKline Consumer Healthcare Finance Limited on 13 July 2022 or such other date as agreed between the parties in writing. Following repayment of the Notes Proceeds Loans, the amounts received by GlaxoSmithKline Consumer Healthcare Finance Limited will be made available to CH JVCo in order to fund a portion of the Pre-Demerger Dividend (as defined below).

See also “Item 4. Information on the Company—4.A. History and Development of the Company—The Demerger and Further Preparatory Steps—Pre-Separation bond issuances.”

In addition, on 18 February 2022, CH JVCo entered into the Term Loan Facility (as defined in “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital Resources and

 

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Indebtedness”) with various relationship banks of the Group. The Term Loan Facility will be made available on customary ‘certain funds’ terms and the proceeds of any utilisation under the Term Loan Facility will be available for use, directly or indirectly, towards the payment of the Pre-Demerger Dividend.

What are the costs the Group expects to incur in connection with Separation?

The Group has incurred certain costs in connection with Separation, UK Admission and registration and listing of Haleon ADSs on the NYSE. In FY 2020, such costs (pre-tax) amounted to £66 million (£53 million net of tax). In FY 2021, such costs (pre-tax) amounted to £278 million (£231 million net of tax). In Q1 2022, such costs (pre-tax) amounted to £127 million (£103 million net of tax). The Group expects to incur additional costs in connection with such matters between 2022 and 2024.

Who is entitled to receive Haleon Shares and Haleon ADSs in the Demerger?

Pursuant to the proposed Demerger, holders of GSK Shares and holders of GSK ADSs as of the Record Time will be entitled to receive Haleon Shares and Haleon ADSs, respectively.

What is the expected date for distribution of Haleon Shares and Haleon ADSs in the Demerger?

The distribution of Haleon Shares is expected to occur on the UK Distribution Date. The distribution of Haleon ADSs is expected to occur on the ADS Distribution Date.

What do I have to do to participate in the Demerger?

If you hold GSK Shares or GSK ADSs as of the Record Time, you will not be required to take any action, pay any cash, deliver any other consideration, or surrender any existing GSK Shares or GSK ADSs in order to receive Haleon Shares or Haleon ADSs in the connection with the Demerger.

If I sell my GSK Shares or GSK ADSs on or before the respective UK Distribution Date or ADS Distribution Date, will I still be entitled to receive Haleon Shares or Haleon ADSs in the Demerger with respect to the sold GSK Shares or GSK ADSs?

To receive Haleon Shares in connection with the Demerger, you must hold GSK Shares at the Record Time.

If you hold GSK ADSs at the Record Time, you will be entitled to receive newly-issued Haleon ADSs in the Demerger. Beginning on the trading day prior to the Record Time and continuing up to (but excluding) the trading day that is two trading days prior to the ADS Distribution Date, we expect that GSK ADSs will trade on the “regular-way” market with the entitlement to receive Haleon ADSs in connection with the Demerger. Beginning on the trading day that is two trading days prior to the ADS Distribution Date and continuing up to and including the ADS Distribution Date, we expect that GSK ADSs will trade on the “ex-distribution” market without the entitlement to receive Haleon ADSs in connection with the Demerger. Therefore, if you sell GSK ADSs on the “regular-way” market, you will also be selling your right to receive Haleon ADSs in connection with the Demerger.

If you own GSK ADSs as of the Record Time and sell or otherwise dispose of your GSK ADSs on the “ex-distribution” market, up to and including the ADS Distribution Date, you will still receive the Haleon ADSs that you would be entitled to receive in respect of your ownership, as of the Record Time, of the GSK ADSs that you sold. You are encouraged to consult with your financial advisor regarding the specific implications of selling your GSK ADSs prior to the ADS Distribution Date.

 

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When will Haleon Shares and Haleon ADSs begin to trade on a standalone basis?

We expect that the Haleon Shares will commence trading on a standalone basis on the main market of the LSE at market open on 18 July 2022.

We expect that Haleon ADSs will commence “regular-way” trading on a standalone basis on the NYSE at market open on 22 July 2022. In addition, we expect that Haleon ADSs will begin trading on a “when-issued” basis on the NYSE from market open on 18 July 2022 and continue up to and including the ADS Distribution Date. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorised but not yet issued. If you own GSK ADSs at the Record Time, you would be entitled to receive Haleon ADSs in connection with the Demerger. You may trade this entitlement to receive Haleon ADSs, without trading the GSK ADSs you own, in the “when-issued” market at market open. On the first trading day following the ADS Distribution Date, we expect “when-issued” trading with respect to Haleon ADSs will end and “regular-way” trading in Haleon ADSs will begin.

What will be the ticker symbol of the Haleon Shares and Haleon ADSs?

We intend to apply to list the Haleon Shares on the main market of the LSE under the ticker symbol “HLN.” We intend to apply to list the Haleon ADSs on the NYSE under the ticker symbol “HLN.”

Will the GSK Depositary suspend the issuance and cancellation of GSK ADSs in connection with the Demerger?

Yes. The GSK Depositary will suspend the issuance and cancellation of GSK ADSs from 14 July 2022 until 25 July 2022. This means that during this time, you will not be able to convert your GSK ADSs into GSK Shares, surrender your GSK ADSs and receive underlying GSK Shares, or deposit your GSK Shares and receive GSK ADSs. However, the closing of the issuance and cancellation books does not impact trading, and you may continue to trade your GSK ADSs during this period.

What are the tax consequences to me of the Demerger?

See “Item 10. Additional Information—10.E. Taxation” for information regarding certain tax consequences of the Demerger.

Are there risks associated with holding Haleon Shares and Haleon ADSs?

Yes. Among other things, holding of Haleon Shares and Haleon ADSs is subject to risks relating to the Group’s business and industry, changes in law and the political and economic environment, regulation and legislation and Separation. Accordingly, you should carefully read the information set forth under “Item 3. Key Information—3.D. Risk Factors” in this registration statement.

Does the Company intend to pay dividends to holders of Haleon Shares and Haleon ADSs after the Demerger?

Following the Demerger, the Company will adopt a dividend policy. The initial dividend is expected to be at the lower end of a 30 to 50 per cent. pay-out ratio, subject to Board approval. The Company expects to pay a dividend to Haleon Shareholders in relation to the second half of 2022 in 2023, subject to Board approval and following approval of the Company’s FY 2022 results. See “Item 4. Information on the Company—4.B. Business Overview—Dividend Policy” for information regarding our dividend policy.

 

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Where can I get more information?

Helplines are available for holders of GSK Shares and GSK ADSs who have questions in relation to the Separation.

Please note that the helpline operators will not provide advice on the merits of the Demerger and Separation or give any legal, financial or taxation advice, for which you are recommended to consult your own legal, financial or taxation adviser. Alternatively, consult your stockbroker, bank manager, solicitor, accountant and/or other independent professional adviser.

Holders of GSK Shares

Holders of GSK Shares should call the helpline operated by Equiniti which is available on +44 (0) 800 917 0937. The helpline will be available from 8.30 a.m. to 5.30 p.m. (UK time) Monday to Friday (except public holidays in England and Wales) and will remain open until 12 August 2022. Calls to the helpline from outside of the UK will be charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored for security and training purposes.

Alternatively, holders of GSK Shares can go to https://www.shareview.co.uk/clients/gskshareholder for copies of relevant documents, frequently asked questions and other useful information.

If you hold GSK Shares via a bank, broker or nominee you should contact your respective bank, broker or nominee service provider for further information.

Holders of GSK ADSs

Holders of GSK ADSs registered with the GSK Depositary may refer queries relating to their accounts to the GSK Depositary. The telephone number is +1 877 353 1154 (from inside the USA) or +1 651 453 2128 (from outside the USA) or via the website log-in at www.shareowneronline.com.

If you hold GSK ADSs with a bank, broker or nominee you should contact your bank, broker or nominee service provider for further information.

For further information, please visit GSK’s website at www.gsk.com.

 

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