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GlaxoSmithKline PLC (GSK)

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Dod101
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Re: GlaxoSmithKline PLC (GSK)

#435171

Postby Dod101 » August 16th, 2021, 4:32 pm

TheMotorcycleBoy wrote:
scrumpyjack wrote:
TheMotorcycleBoy wrote:Hi G,

Always the inquisitive, that leaves me remaining with wondering why the NewGSK would wish to hold onto 20 or so% ownership of Healthcare. I can't see that it makes much difference to us existing shareholders. Perhaps it because some of the BUs have related internal teams and/or projects, so it was very difficult, hence not profitable to cleanly split.

Matt


Because it leaves the continuing GSK with a marketable asset they can turn into cash as and when they want to. The same is happening with Prudential and its demerger of Jackson Financial. They will have a holding of just under 20% of the quoted Jackson Financial and can sell some of those shares whenever they want to.

Always convenient for directors to have such a marketable asset to hand!

Thanks. Strictly speaking they are our shares, not the GSK directors'.
Matt


I think you have a very basic misunderstanding. Nobody is claiming that they are the GSK Director's shares. The shares will belong to that corporate body known as GlaxeSmithKline plc Like all other companies it has directors whose responsibility it is to run the company in the best interest of the shareholders in accordance with the various Companies Acts. Inter alia they have a fiduciary duty to the shareholders to administer these assets in the best interests of the shareholders. It is true that they have pretty much carte blanche within a set of parameters but some things have got to be put to the shareholders, although I doubt that a decision to sell some of the 20% or so of these shares would be one of them. So strictly speaking they are not our shares. They are the property of and will be held in the name of GSK or one of its subsidiaries.

Dod

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Re: GlaxoSmithKline PLC (GSK)

#435185

Postby Bouleversee » August 16th, 2021, 5:28 pm

It will be interesting to see how many of the CH shares we get in relation to the size of our GSK holdings and what the price of both are at demerger and afterwards. Another piddling holding I expect (2 in fact in my case as I hold within and without ISA, neither of which has increased in value since I bought them in one case a long time ago). Anglo American demerged Thungela Resources recently and the price of the latter has since shot up 250% (a surprise to me since they are a coal mining company) but my holding was only 66 shares so is still worth only £156.49; yet another titchy holding to try to keep track of but hardly worth the bother. Happily. Anglo has also risen quite a lot, especially compared with its Mar. 2020 price, probably because it has got rid of its coal shares to shareholders. I shall be pleasantly surprised if the CH shares shoot up similarly as Reckitt are not doing so well as in previous years and nor are Unilever and may be comparable to some extent.

BHP are planning to sell its oil shares to Woodside but we shareholders would, I understand, be landed with small holdings in Woodside which doesn't thrill me. I would not be surprised to see more of these sell-offs in order to improve the balance sheets of the parent companies.

Getting back to GSK, skipping through newspapers at the weekend, I read that AZN is to sue GSK for a very large sum in connection with a licensing agreement for one of their drugs. I thought it was in the Sunday Times but can't find the Business Section a.t.m. however, so can't provide further details. Maybe it was a previous edition. IIRC, the word ''billion" appeared in the text. I doubt if Emma will be too thrilled about that and no doubt huge sums will be spent in legal fees by both sides. I was horrified to read that the fees to advisers in relation to the Morrison's t/o were to amount to over £300m, and that was before there was any suggestion of a raised bid from Fortress or CDR.

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Re: GlaxoSmithKline PLC (GSK)

#435191

Postby TheMotorcycleBoy » August 16th, 2021, 6:03 pm

Dod101 wrote:
TheMotorcycleBoy wrote:
scrumpyjack wrote:
Because it leaves the continuing GSK with a marketable asset they can turn into cash as and when they want to. The same is happening with Prudential and its demerger of Jackson Financial. They will have a holding of just under 20% of the quoted Jackson Financial and can sell some of those shares whenever they want to.

Always convenient for directors to have such a marketable asset to hand!

Thanks. Strictly speaking they are our shares, not the GSK directors'.
Matt


Nobody is claiming that they are the GSK Director's shares.

I know. I was thinking out loud.

Dod101 wrote:So strictly speaking they are not our shares. They are the property of and will be held in the name of GSK or one of its subsidiaries.

Eh? I was under the impression that after the demerger I'll be a shareholder in two firms. CH and NewGSK. So I'll have ownership as Gengulphus remarked in his post earlier on:

Gengulphus wrote:The parent company is the company named GlaxoSmithKline plc (registered at Companies House as company 03888792), and it is owned by the shareholders of that company, including many of us. And that parent company is all that we shareholders own directly,

Matt

EDIT: Since GSK currently own 100% of GSK HC, also from Geng

One of GlaxoSmithKline plc's 100%-owned subsidiaries is a company called GlaxoSmithKline Consumer Healthcare Holdings Limited (registered at Companies House as company 08998608)

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Re: GlaxoSmithKline PLC (GSK)

#435211

Postby Dod101 » August 16th, 2021, 7:18 pm

I am just about giving up on this thread as a lost cause. Of course, I was writing about the 20% of the shareholding in the new healthcare company which it is currently planned will remain with GSK.

Of course you will be a shareholder in two firms, The original GSK (shorn of its healthcare company) and the new GSK which will be a 'pure' pharma company.

Dod

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Re: GlaxoSmithKline PLC (GSK)

#435216

Postby Gengulphus » August 16th, 2021, 7:46 pm

scrumpyjack wrote:Well the shares representing the 19.x% holding in the Consumer Healthcare are owned by GSK and so the decision on what to do with them and how to spend any sale proceeds lies with the directors of GSK as is the case with any other asset of GSK.

Well, ultimately that decision lies with the shareholders... But they cannot individually exert their right to make that decision - they can only do it acting collectively as a body, which if they cannot persuade the directors that their way is the right thing for the company to do basically means requisitioning a general meeting of the company to vote on appropriate resolutions aimed at getting the shareholders' wishes. Such resolutions typically involve replacing the board of directors with directors more amenable to the shareholders' wishes - but that's a risky procedure unless the shareholders can find replacement directors who are both amenable to the shareholders' wishes and convincingly competent at running the company's ordinary operations. They can of course try to avoid that by passing resolutions aimed at forcing the current directors to do what the shareholders want rather than replacing them - but if the directors feel strongly enough about the matter, they can resign rather than putting the resolutions into effect, putting the shareholders back in the position of having to find suitable replacement directors... Though the directors won't want to do that, as it involves giving up their probably-lucrative directorships...

Such director / shareholder conflicts basically boil down to both sides having a nuclear option that they're pretty unwilling to actually use because it's very costly for the company, both financially and in terms of reputation (the financial press will generally have a field day when such conflicts do occasionally boil over). So they're generally resolved by negotiation - but the negotiation will generally be with big shareholders and/or shareholders' association whose members collectively have a big shareholding even though they're individually small shareholders, so don't expect to be doing your own negotiating!

And equally, the whole business is expensive enough that in most cases simply going along without fuss with the directors' views on how to manage the company's assets is pretty clearly the best option for the shareholders.

Gengulphus

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Re: GlaxoSmithKline PLC (GSK)

#435217

Postby scrumpyjack » August 16th, 2021, 7:56 pm

Gengulphus wrote:
scrumpyjack wrote:Well the shares representing the 19.x% holding in the Consumer Healthcare are owned by GSK and so the decision on what to do with them and how to spend any sale proceeds lies with the directors of GSK as is the case with any other asset of GSK.

Well, ultimately that decision lies with the shareholders... But they cannot individually exert their right to make that decision

Gengulphus


Not really. The decision is for directors, though there are some rules about transactions that are so large, relative to the size of the company, that they require approval of shareholders. There are no circumstances where the shareholders can bypass the directors and make decisions about the company's assets directly themselves. Obviously they can eventually vote to change the directors but that is still not directly making a decision on the company's assets. Of course it hardly ever gets that far. The directors discuss things with major shareholders and will make their decisions taking some account of their views (perhaps).

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Re: GlaxoSmithKline PLC (GSK)

#435239

Postby Gengulphus » August 16th, 2021, 10:40 pm

scrumpyjack wrote:
Gengulphus wrote:
scrumpyjack wrote:Well the shares representing the 19.x% holding in the Consumer Healthcare are owned by GSK and so the decision on what to do with them and how to spend any sale proceeds lies with the directors of GSK as is the case with any other asset of GSK.

Well, ultimately that decision lies with the shareholders... But they cannot individually exert their right to make that decision

Not really. The decision is for directors, though there are some rules about transactions that are so large, relative to the size of the company, that they require approval of shareholders. There are no circumstances where the shareholders can bypass the directors and make decisions about the company's assets directly themselves. Obviously they can eventually vote to change the directors ...

So there are circumstances in which shareholders can make decisions about the company's assets themselves. Those circumstances are that they vote to change the directors, installing themselves as the new directors, and then make the decisions they want about the company's assets. They're not likely circumstances, especially with large companies - but I have seen cases in which some of a small company's shareholders have requisitioned a company general meeting to vote on a resolution to oust the current directors and install themselves as the new directors, because they fundamentally disagreed with the direction that the current directors were taking the company - and such disagreements are always basically about how they're using the company's assets.

Gengulphus

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Re: GlaxoSmithKline PLC (GSK)

#435323

Postby TheMotorcycleBoy » August 17th, 2021, 11:00 am

So what do people think of GSK leaving 20% of CH in the NewGSK? Does it help to present an image of the NewGSK being a "pure-play Pharma"?

BTW, I'm paraphrasing VRD somewhat, from his post in the dividend reduction thread.

vrdiver wrote:People have pondered what the benefit is that the board see in splitting the company into pharma and healthcare, rather than leaving the two combined into a single company.

My own assumption (hope) is that they are hoping for a rerating of the shares on the pharma side of the business as they become a pure-play and comparable to other pure-play pharma companies.

Matt

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Re: GlaxoSmithKline PLC (GSK)

#435326

Postby tjh290633 » August 17th, 2021, 11:06 am

TheMotorcycleBoy wrote:So what do people think of GSK leaving 20% of CH in the NewGSK? Does it help to present an image of the NewGSK being a "pure-play Pharma"?

Matt

It's a trade investment. Nothing unusual in that.

TJH

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Re: GlaxoSmithKline PLC (GSK)

#435354

Postby TheMotorcycleBoy » August 17th, 2021, 12:44 pm

tjh290633 wrote:
TheMotorcycleBoy wrote:So what do people think of GSK leaving 20% of CH in the NewGSK? Does it help to present an image of the NewGSK being a "pure-play Pharma"?

Matt

It's a trade investment. Nothing unusual in that.

TJH

I'm not suggesting it's unusual, just curious as why they want to keep 20%. I assume they'll utilise its cash flows to fund R&D for the Pharma stuff - which I imagine is what they do now, albeit with 100% rather than 20%.

Matt

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Re: GlaxoSmithKline PLC (GSK)

#435365

Postby Dod101 » August 17th, 2021, 1:11 pm

I should think it is a sort of 'hedging their bets'. The spin off may give more impetus to the healthcare company, and no doubt Glaxo would like to participate in that.

Dod

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Re: GlaxoSmithKline PLC (GSK)

#435367

Postby Dod101 » August 17th, 2021, 1:16 pm

Dod101 wrote:I am just about giving up on this thread as a lost cause. Of course, I was writing about the 20% of the shareholding in the new healthcare company which it is currently planned will remain with GSK.

Of course you will be a shareholder in two firms, The original GSK (shorn of its healthcare company) and the new GSK which will be a 'pure' pharma company.

Dod


My final sentence is of course incorrect. I should have said 'Of course you will be a shareholder in two firms, the original GSK (shorn of its healthcare company) and the new healthcare company itself'

I am sorry if I caused any confusion.

Dood

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Re: GlaxoSmithKline PLC (GSK)

#435373

Postby daveh » August 17th, 2021, 1:32 pm

TheMotorcycleBoy wrote:
tjh290633 wrote:
TheMotorcycleBoy wrote:So what do people think of GSK leaving 20% of CH in the NewGSK? Does it help to present an image of the NewGSK being a "pure-play Pharma"?

Matt

It's a trade investment. Nothing unusual in that.

TJH

I'm not suggesting it's unusual, just curious as why they want to keep 20%. I assume they'll utilise its cash flows to fund R&D for the Pharma stuff - which I imagine is what they do now, albeit with 100% rather than 20%.

Matt

The only cash flows they will have from the new HC company will be the dividends that the new HC company may or may not declare - just the same as me an you. They will be a minority share holder (the same as me and you - though holding a a much more significant holding).

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Re: GlaxoSmithKline PLC (GSK)

#435377

Postby TheMotorcycleBoy » August 17th, 2021, 1:54 pm

daveh wrote:The only cash flows they will have from the new HC company will be the dividends that the new HC company may or may not declare - just the same as me an you. They will be a minority share holder (the same as me and you - though holding a a much more significant holding).

Oh I see. I guess they can still use it as a cash cow then? I'm just angling for why they propose a percentage less than 100%.

I now recollect that previously scrumpyjack mentioned some words about this earlier,

scrumpyjack wrote:...What I think it means is that GSK is distributing shares in the Consumer Healthcare Business to shareholders and retaining some shares itself, but less than 20%. Holding less than 20% avoids accounting complications. They can them sell those shares when they need to raise cash for the pharma business....

But he'd suggested their investment as potentially just being used as a one-off at the time.

Thank you Dave!



Perhaps some of you here think I'm being overly curious/suspicious, but I don't think Emma's management of this firm has particularly impressed over the past few years, so basically anything they post regards the mechanics of this demerger has my attention/inspection.

FWIW, without risking disclosing any CCI I recently experienced an employer spinning off a considerable portion of their "assets". I remember being pretty pleased that I ended up going to one side not the other. I'm not saying anymore, but only to add that it's anything but straightforward.

Matt

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Re: GlaxoSmithKline PLC (GSK)

#435386

Postby daveh » August 17th, 2021, 2:18 pm

TheMotorcycleBoy wrote:
daveh wrote:The only cash flows they will have from the new HC company will be the dividends that the new HC company may or may not declare - just the same as me an you. They will be a minority share holder (the same as me and you - though holding a a much more significant holding).

Oh I see. I guess they can still use it as a cash cow then? I'm just angling for why they propose a percentage less than 100%.

I now recollect that previously scrumpyjack mentioned some words about this earlier,

scrumpyjack wrote:...What I think it means is that GSK is distributing shares in the Consumer Healthcare Business to shareholders and retaining some shares itself, but less than 20%. Holding less than 20% avoids accounting complications. They can them sell those shares when they need to raise cash for the pharma business....

But he'd suggested their investment as potentially just being used as a one-off at the time.

Thank you Dave!



Perhaps some of you here think I'm being overly curious/suspicious, but I don't think Emma's management of this firm has particularly impressed over the past few years, so basically anything they post regards the mechanics of this demerger has my attention/inspection.

FWIW, without risking disclosing any CCI I recently experienced an employer spinning off a considerable portion of their "assets". I remember being pretty pleased that I ended up going to one side not the other. I'm not saying anymore, but only to add that it's anything but straightforward.

Matt


Yes they can still use it as a cash cow, but they have no control. While they still held 100% of the HC company they had control on what the cash flows from the HC company were used for, be it dividends for shareholders, reinvestment in the pharma business or reinvestment in the HC business Once the HC business is hived off that control is lost and what happens to the cashflow will be up to the board of the HC company.

Personally I'm not sure hiving of the HC business is the correct decision. I am of the view that the dependable cash flow from the HC business is useful to back up the more cyclical cash flow from the pharma company and support pharma R&D over that cycle. The HC business may end up being the more dependable source of dividends. We'll have to wait and see if that is the case and see if the sum of the parts turns out to be more than the present whole.

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Re: GlaxoSmithKline PLC (GSK)

#438540

Postby idpickering » August 31st, 2021, 7:21 am

SK bio & GSK start Ph3 Covid-19 vaccine trial

· Advance to Phase 3 follows positive interim Phase 1/2 immunogenicity and safety data

· Global clinical trial will evaluate vaccine candidate GBP510 against the AZ/Oxford COVID-19 vaccine

· Aim is for global supply through the COVAX facility in the first half of 2022, subject to data and regulatory review

SK bioscience (SK) and GlaxoSmithKline plc (GSK) today announced the initiation of a Phase 3 clinical study of SK's COVID-19 vaccine candidate, GBP510, in combination with GSK's pandemic adjuvant following positive interim Phase 1/2 results.


https://www.investegate.co.uk/glaxosmit ... 00111086K/

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Re: GlaxoSmithKline PLC (GSK)

#453529

Postby idpickering » October 27th, 2021, 12:09 pm

3rd Quarter Results

GSK delivers strong Q3 sales of £9.1 billion +5% AER, +10% CER

Total EPS 23.3p -7% AER, +3% CER; Adjusted EPS 36.6p +3% AER, +10% CER

2021 full year EPS guidance improved


Highlights

Sales growth across Pharmaceuticals, Vaccines and Consumer Healthcare driven by strong commercial execution and underlying demand

· Pharmaceuticals £4.4 billion +5% AER, +10% CER with growth in New and Specialty medicines +24% CER; Respiratory +33% CER; Immuno-inflammation +32% CER ex-COVID-19 solutions; Oncology +34% CER; total HIV +8% CER

Vaccines £2.2 billion +7% AER, +13% CER with Shingrix £502 million +41% CER

COVID-19 solutions sales £209 million; Xevudy £114 million and pandemic adjuvant £94 million

Consumer Healthcare £2.5 billion +3% AER, +8% CER (+10% excluding divestments/brands under review)

Cost discipline supports delivery of EPS growth

Total Group operating margin 21.4%. Total EPS 23.3p -7% AER, +3% CER

· Adjusted Group operating margin 31.7%. Adjusted EPS 36.6p +3% AER, +10% CER. This included a contribution to growth from COVID-19 solutions of approximately +5% AER, +5% CER in Q3 (+6% AER, +6% CER in the nine months)

· Q3 net cash flow from operations £2.6 billion. Free cash flow £1.2 billion

And later;

The Board has declared a third interim dividend for 2021 of 19 pence per share (Q3 2020: 19 pence per share).

GSK recognises the importance of dividends to shareholders and aims to distribute regular dividend payments that will be determined primarily with reference to the free cash flow generated by the business after funding the investment necessary to support the Group's future growth.

The Board currently intends to maintain the dividend for 2021 at the current level of 80p per share, subject to any material change in the external environment or performance expectations.

At the New GSK Investor Update on 23 June GSK set out that from 2022 a progressive dividend policy will be implemented, guided by a 40 to 60 percent pay-out ratio through the investment cycle. This is a key part of the capital allocation framework. For 2022, for the first half of the year, GSK expects to declare a 27p dividend for the current group. GSK is on track to separate into two companies early in the second half of 2022. GSK expects the aggregate dividend, across the two new businesses to be 28p per share for the second half. In aggregate this would represent on a full year 2022 basis the equivalent of a Group dividend of 55p per share, representing a 31% decrease from the 80p/share dividend expected for 2021. This expected, aggregate 55p per share dividend for full year 2022 is comprised of 44p representing New GSK's policy, and an expected 11p from the Consumer Healthcare business. Dividend policy for the new Consumer Healthcare company will be set by its Board of Directors. In 2023, the first full year of standalone operations for New GSK, GSK expects to declare a full year dividend of 45p per share.

The ex-dividend date will be 18 November 2021, with a record date of 19 November 2021 and a payment date of 13 January 2022.


https://www.investegate.co.uk/glaxosmit ... 00004369Q/

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Re: GlaxoSmithKline PLC (GSK)

#453552

Postby Bouleversee » October 27th, 2021, 12:38 pm

Thanks, Ian. Not what I call progressive but better than nothing. I wonder at what rate directors' earnings will progress.

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Re: GlaxoSmithKline PLC (GSK)

#453615

Postby idpickering » October 27th, 2021, 3:12 pm

Bouleversee wrote:Thanks, Ian. Not what I call progressive but better than nothing. I wonder at what rate directors' earnings will progress.


You're very welcome. I'm not sure about the directors' pay, but for me that upcoming reduction in the dividend is a bit of a concern. I hold GSK in my HYP, and if it's no longer going to be a HY share, why should I continue holding it? I'll make my mind up nearer the time of the change. No knee-jerk reactions from me.

Ian.

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Re: GlaxoSmithKline PLC (GSK)

#453624

Postby Dod101 » October 27th, 2021, 3:38 pm

idpickering wrote:
Bouleversee wrote:Thanks, Ian. Not what I call progressive but better than nothing. I wonder at what rate directors' earnings will progress.


You're very welcome. I'm not sure about the directors' pay, but for me that upcoming reduction in the dividend is a bit of a concern. I hold GSK in my HYP, and if it's no longer going to be a HY share, why should I continue holding it? I'll make my mind up nearer the time of the change. No knee-jerk reactions from me.

Ian.


But there does not seem to be anything new in their comments on the dividend for this year and next. Just confirmation of what has already been said. Glaxo has been a very uninspiring investment I must say.

Dod


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