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"GSK to sell £900m stake in British consumer goods giant Haleon

GSK is poised to sell its £900m stake in British consumer goods giant Haleon.

The pharmaceutical giant announced on Thursday plans to offload 270m shares in Haleon, equivalent to approximately 2.9pc of the company’s listed stock. "

From today's Telegraph, as I suggested a few months ago, 335 or thereabouts is an upper boundary for HLN as the committed sellers ie GSK and Pfizer are keen to offload their major interest here .

Holders should recognise this and consider their positions accordingly, remembering that GSK and Pfizer between them hold about half of Haleon stock.

HI Iain.. it's impossible to predict SP reaction to trading updates, largely because so much trading is automated these days, minor moves in either direction are magnified as the "bots" mindlessly follow the trend, after all that's what they are programmed to do, and is largely responsible for the erratic behavior of stocks in the short term. As a sensible investor, the best plan is to use your own judgment and occasionally to buck the trend, it works for me.

Today's figures are the usual picture of steady well-managed growth for a company in a sweet s[spot in the market. If the SP falls sharply I will add, otherwise, I will sit quietly not panicking, safe in the knowledge that despite an extended P/E there is much more mileage here.

Or possibly a year or two.

Upfront .. I sold my RR stock a little while ago in the 190's,realising significant profits, on the basis that it had come so far in a short time that it might plateau or fall, well Ok I may have sold too soon BUT the facts are that RR had risen 40 % in three months and 300% over a year. For a FTSE company that is astounding volatility and my thesis was , and still is, that there would be a pause or a pullback. Recent minor SP falls are just that, minor ,and may not presage significant further falls BUT as asset managers come to tidy up their portfolios for the end-year analysis (and the calculation of their bonus!!)they might be inclined to take and book profits here.

The other factor to be aware of is that RR is valued at £18 billion and for company that has barely broken even for the last six years that includes an awful lot of optimism (not the stuff generated here but the stuff that has propelled bigger investors to buy)

I still believe that RR's future is likely to be much brighter than it's past, but also that the SP has got a long way ahead of reality.

I'm comfortable on the sidelines , but will re-invest as/when? The SP is sharply below today's.

HI Fleccy , thanks for your usual thorough research all of which is IMV perfectly sound with the exception of your last sentence-

"Hopefully the rises in interest rates will feed through dramatically as a reduction in both the IAS 19 and actuarial deficits, but much will depend on the reduction in asset values along with the fall in liabilities."

My point is this:

It's best to think of the asset values as you would of an annuity, ie at the point of taking the annuity you effectively surrender the capital in favour of a lifetime revenue stream, that revenue stream then remains constant (or will appreciate by the rate of inflation depending on its terms).

For the duration of the annuity the capital value no longer matters, your only concern is the maintenance of the revenue stream.

Now I know that's a simplification but it's essentially how life insurers manage their business and IMV renders the consequences of a fall in capital values as of low significance.

As an aside your point about the longevity swap is well made, and again with my positive hat on is an opportunist strategy to fix at a point in time when longevity had, in fact, fallen. The BT pension trustees are clearly pretty shrewd.

However, I hope we both agree that the news on the pension front for BT is better than it's been in decades and this will eventually filter through to the SP.

Hi Fleccy

I don't really share your concerns , the sharp reduction in the deficit last year was, I Suspect primarily down to the very large funding top ups, Interest rates then were just about 1%, and would only have had a minor effect. As you no doubt know they are very much higher now and the effect of that on investment returns is enormous . Without knowing the duration split of bonds in the fund it's impossible to calculate, but it is not unreasonable to assume that a fair portion of the bonds held by the BT pension fund can be (or already have been) turned over to generate much, much, higher coupons now and for future years.

Any actuarial assessment must be based on a reasonable assumption that we have a window of opportunity to lock in higher returns for many years to come.There is also the unfortunate but significant effect of a reversal of the recent longevity increases, for the first time in decades lifespans have shortened.

I am adding to my bond/prefs holdings and I cannot believe all pension fund providers aren't doing the same.

It's also why I have added to my holdings in LGEN and MNG.

In the hope of (yet again) turning the discussion here to the merits of BT as an investment, I set out a few thoughts on the skeleton in the closet, which may by now have stopped rattling... or in more prosaic language to discussing BT 's pension fund deficit.

Prompted by a piece in today's FT on the rapidly improving state of pension funds generally, I thought I would return to the specifics of BT.

A brief summary first:

As of March 2021 the deficit had fallen from £5.1 bill to £ 1.1bill, partly due to significant top-up payments (funded out of revenue) and the beginnings of the interest rate rises which continue, however even then, BT had committed to further top-up funding of £1.3 billion in three installments in 2022/3 and a residual series of payments of £10 mill pa out to 2035.

Now we await the findings of the June 2023 evaluation and it will be no surprise if that evaluation finds that the pension fund is now fully funded or very nearly so. I would guess that the outstanding balance of funding of about £1.4 billion will be deferred or more probably cancelled.

IMV it is highly probable that BT is in negotiation with external pension providers , many of whom will be dying to take on board the UK's largest pension fund which is now fully funded.

The obvious first-order effect of that would be to lift the millstone that has hung around BT's neck for decades, secondly to free up over £1billion for funding the fibre rollout, thirdly to get rid of the jibe-a pension fund with a telecom business attached.

Finally, and for my part as a shareholder most importantly, to give a significant fillip to the SP .

The publication of the triennial review may not be imminent but I am happy to await , the very positive news it will bring.

Cheap... yes, once you have bought a bond the return(the rate of interest) is fixed, whatever happens to the capital value of the bond. If you sell the bond after a period in which interest rates have risen you will get less for it than at purchase, if you sell after rates have fallen you will get more(all else equal). As you say, if a bond matures you get back the "face value" and if interest rates have risen you can buy another bond at the same face value but offering a higher coupon (i.e. interest rate).

Meco... greyg is wrong, in a short- term market crisis, bonds which are the most liquid market on the planet will hold their value better than other assets, after all, if you have a liquidity problem it's pretty hard to sell an airport, or a water company or an office block and hence you are more likely to get a price near the market value in selling bonds than in selling any other asset.

There is legislation being proposed to relax the rules on the type of assets held by banks, insurers etc to encourage the holding of "infrastructure" much of which is in the hands of private equity who benefit from having few short-term commitments to clients.

Grey .....try rereading my post and then respond

Cheapshare...I am amazed at how many allegedly informed commentators in today's business press, just don't understand how bonds work. MNG like a lot of insurers has little choice but to hold a significant stock of bonds because the rules of the PRA and FCA force them to hold "liquid assets" so that in crises, they can sell assets at or near their underlying value.

Now all investors and economic commentators should know that, as interest rates rise, bond values fall, and interest rates have been rising steadily over the last year or so, hence bond values and thus the asset values of ALL banks, insurers, and any other holders of bonds(including me) have fallen. BUT, it isn't significant because the income stream that those bond holdings provide REMAINS EXACTLY THE SAME and will continue to match the liabilities they are designed to meet. In fact, it's actually better than that for insurers, because when the shortest dated of those bonds mature, they can be replaced at the same cost with newer bonds bearing a higher coupon(i.e. interest rate).

I made the same points on the LGEN board around the time of the Truss meltdown, the near panic engendered by the media was based on a flawed understanding of the bond markets which still persists.

If any of this isn't as clear as I hoped, I'll answer any sensible questions.

Possibly the most boring share in the FTSE and that's why I hold, the likelihood of significant SP rises is slim unless the FTSe explodes upwards, but a secure, rising divi and various moves in the pension industry which augur well for the medium-term. A part of my folio which I am gently moving from SP growth to total return. I will continue to add gently.

Trading statement neutral IMV, but Ocado retail is irrelevant to the long term value here. Investment here is and will remain, an assumption that the longer term future of grocery delivery in the developed world is a play on automation, reduction in store and staff costs facilitated by OCDO's technological solutions.ALL indicators whether it be wage rises, store rates bills, shoplifting, fuel costs..... point towards the benefits of food delivery as provided by Ocado solutions. Tho' I exited much of my position here at the recent highs I still hold some and will add at prices below today's.

But it also helps to be lucky!!

In my last post here in May, I reaffirmed my belief that the SP (then 215 'ish)was clearly indicating that the takeover would NOT happen and that assuming a sharp fall in the SP when the news broke, I had placed shrewdly judged limit buys at 190/180/160 to take advantage of the fall. I then set off for my place in rural France and didn't check for while , when I did I found that all three limit buys had been activated in the low 130's in the first few minutes of the post-bid news trading day!!!

Fortunately, that was a momentary low and today's results which TBH, I think are a bit patchy suggest that a recovery is on the way , WG is EBITDA positive , debt is more manageable and the income stream seems sound. I don't expect fireworks from here, indeed a slight fallback is possible, but I return to being a medium to longer-term holder and remind myself that even the best laid plans can backfire , but in this case, to good effect.

A bit of realism for my last post here for a while:

See this from the latest half-year results re SMR

"Rolls-Royce SMR is progressing well through the regulatory process in the UK, entering stage 2 of the Generic Design Assessment (GDA) process. First power is still planned in the early 2030s, which will be dependent on securing orders and the outcome of the final investment decision by the UK Government."

and note "FIRST POWER IN THE EARLY 2030's", until then and for some time beyond ,SMR's will be a cash drain on RR, the figures are

"an increased operating loss of £(78)m versus £(48)m in the prior period."

ie an annual run rate LOSS of £156mill , a figure which is likely to increase and RR are unlikely to turn a profit on SMR's Until the mid 2030's if ever.

That is why the current SP , not surprisingly, does not include any uplift against the SMR activity and IMV will sensibly not do so for at least 5 years .

bye for a while......(is that cheering I hear in the distance........)

HI Bassilika, thanks for the response , I will dig further...

Apols for the formatting of my post , on this site it often comes out less clearly than when I wrote it, BUT what I am trying to clarify is this:

This half-year report shows a figure of £934 mill. as "financing income" last year's first half showed only £215 mill. in that category, so the accounts are flattered by over £700 mill of unexplained income. The note does say the cash is related to SMR's BUT it doesn't tell us whether it is a gift (highly unlikely!!), whether it is paid for in shares (apparently not as it would be notifiable), a working capital loan and if so what conditions are attached , like for example a profit share of the resultant SMR tech. , or formal debt with interest payments and a repayment term.......

Roughly, that sum explains ALL of the difference in profits between this year's first half and last and IMV distorts the accounts without full explanation .

I shall pursue your comment about Qatar(for which thanks) and the UK Gov. involvement but until I have satisfactorily resolved this anomaly I will hold off re- investment here.

I started a thread with a serious analysis of the latest RR half-year report, based on a detailed scrutiny of the last five first half reports, to establish the underlying reasons for a somewhat surprisingly good financial outcome and yet the responses degenerate into a moan about day traders. FYI I held RR from October 2020, when I spotted an almost sure fire medium-term winner as a result of a brutal rights issue, to late July this year, ie about 1000 days, during which time I realised a 200% profit!

LTH is fine so long as it doesn't mean ignoring the information widely available to continually monitor and research your holdings. That is what I do and maybe explains my successful investment record over almost three decades. How about some of you engaging with my specific points and refuting/explaining them for our mutual benefit?

NOTE I sold at 192 p a short while ago and do not currently hold so feel free to treat me as a less committed commenter than most of you.Anyway....

I know I'm a little late, as all the rest of you will have thoroughly perused the half-year results and watched the presentation as I have, but I refrained from commenting until I'd resolved the obvious puzzle as to why the results looked so much better than expected. It's taken me a while but I think I have it sussed.

The results show an operating profit of £673m cf £125m for the 2022 first half while total revenues were up, but by nothing like the same percentage, however further down the accounts it shows "Financing income " of £934 mill cf a figure of only

£215 mill in the previous first half. Note 4 to that figure says

" Relates to NCI investment received in the year, in respect of Rolls-Royce SMR Limited"

Now all I can find is a UK Gov investment of £200mill for RR in relation to SMR work- so where has the rest come from?

The other major difference between this year's first half and last is under "net financing costs" where this year's first half financing deficit is £313mill cf last year's first half of £2.269 bill. That enormous difference is almost certainly a result of the ITP sale funds being used to pay back £2bill of Government loans.

Having watched the presentation of the results it is very obvious that Tufan is an accountant, not an engineer and has gone for a comprehensive purge of costs, and as many accounting "tweaks" as he can,to get off to a positive start.

He monopolised the question and answer session and didn't mention any engineering, or strategic change at all.

I will repeat I don't currently hold and will watch and wait, I suspect that once the analysts have worked through the latest accounts they may moderate their positivity and I may be wrong, but I suspect the very sharp run-up in the SP over the last year or so may be due a pause.

I am taking advantage of the temporary SP drop to add here. Todays news of the acquisition is positive despite the knee-jerk price drop from the markets. Whether we like it or not the world's international stability has been rocked by the first significant war in Europe in our lifetime. The shock that has created will not dissipate for years, maybe decades and defence procurement with its long timescales will be markedly higher for a considerable time. Modern warfare depends upon data and much data is now supplied by satellite systems and that will only increase. BAE's purchase is likely to be profit accretive immediately and they are expecting a 10% YOY growth, IMV that is ultra - conservative.

The purchase is at a forward p/e of 13 , not at all unreasonable, as to why the Ball corp. has sold , well their primary profit is from beer cans and aerosols so they probably cannot see a way to invest sufficiently to keep up with a dynamic sector.

Finally,it is worth noting that the purchase will be funded from new debt(which even when taken on BAE say will not adversely affect their cash conversion or margins) and cash so we holders will not have to stump up in an equity offer.

I suspect that when the market digests the news they will take a different and more positive view of BAE's medium term prospects. I do

It is an unavoidable fact that results published by banks and insurers are extremely difficult to interpret and snap reactions are often wrong. It is also true as I have noted before that in some ways LGEN is a leveraged call on the FTSE and responds to FTSE movements by a greater percentage move.

That said, I have been going through today's RNS and my conclusion is that today's fall is no big deal. I am adding and here is why.

Operating profit is down by 1% BUT that is entirely explained by this sentence in the RNS

"H1 2023 investment variance was driven by the unrealised mark to market impact of higher rates on our portfolio"

What that means is that the figure " Pre-tax PTP of £324mill "as compared to £697 mill for the comparable period last year, is due to the fall in the value of LGENs bond portfolio caused by rising interest rates(cos we all know that rising rates causes falling bond prices don't we?)

BUt as I stressed here some months ago , in a perverse way, that is good news for providers of pensions, like LGEN, because those rising interest rates provide a higher revenue stream to meet pension demands.

The fall is a one-off (well probably a two- off 'cos the same thing will occur at the full-year figures )BUT IMV will not happen again after that, as interest rates will have levelled off and will subsequently fall.

there's loads more to examine in the results and I will update if I find any significant stuff, In the meantime I'm adding a few at today's prices , happy with a company providing me strong divis which has reiterated the promise to maintain them and I am expecting a gentle SP climb as the market absorbs the details.

Bumble .. that's a Carrefour express, ie large supermarket chain, it ought to be almost as cheap as Leclerc, usually the lowest , BUT it might be on an autoroute ....I will be driving back down to my place in France next Thursday so will let you know from a snap survey. As an aside, having spent most of the summer in France, shop prices there are 20-50% higher than UK for identical goods- folks here should stop moaning about inflation .....

Mike your post is accurate, but markets seek to look forward not back ,and have a time horizon of maybe 6/12/18 months out. In many respects the medium term future looks better, interest rates may not have peaked yet but they will in no more than a few months, inflation is falling and base effects mean it's pretty ceratin to continue to fall for some time yet , most "experts" predict a CPI rate of ~5% by year end.That being so I think interest rates have no more than 0.5-0.75% to go at most and lenders will be desperate to reduce rates to stimulate business, ther are ven now signs of this .

The half year ended on 30 June contains two or three of the big house purchase months , but see this

https://www.statista.com/statistics/290623/uk-housing-market-monthly-sales-volumes/

July to october is an equally significant period for salespartly due to the time lapse between viewing and completion , so I suspect the second half will be no worse and may be better.

I will hold /add with as said before, a timescale of 12-18 months to see a SP rise.