PZ Cussons PLC

Annual Report (ESEF) • Sep 30, 2022

XB3CXKKKED7OMV80FY352021-06-012022-05-31XB3CXKKKED7OMV80FY352021-06-012022-05-31pzcussonsplc:BusinessPerformanceExcludingAdjustingItemsMemberiso4217:GBPXB3CXKKKED7OMV80FY352021-06-012022-05-31pzcussonsplc:NetAdjustingItemsMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31pzcussonsplc:BusinessPerformanceExcludingAdjustingItemsMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31pzcussonsplc:NetAdjustingItemsMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31iso4217:GBPxbrli:sharesXB3CXKKKED7OMV80FY352022-05-31XB3CXKKKED7OMV80FY352021-05-31XB3CXKKKED7OMV80FY352020-06-01XB3CXKKKED7OMV80FY352020-05-31ifrs-full:IssuedCapitalMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:CapitalRedemptionReserveMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:OtherReservesMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfCashFlowHedgesMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:RetainedEarningsMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:NoncontrollingInterestsMemberifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:PreviouslyStatedMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:IssuedCapitalMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:CapitalRedemptionReserveMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:OtherReservesMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfCashFlowHedgesMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:RetainedEarningsMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:NoncontrollingInterestsMemberifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:IncreaseDecreaseDueToChangesInAccountingPolicyAndCorrectionsOfPriorPeriodErrorsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:IssuedCapitalMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:CapitalRedemptionReserveMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:OtherReservesMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:ReserveOfCashFlowHedgesMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:RetainedEarningsMemberXB3CXKKKED7OMV80FY352020-05-31ifrs-full:NoncontrollingInterestsMemberXB3CXKKKED7OMV80FY352020-05-31XB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:IssuedCapitalMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:CapitalRedemptionReserveMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:OtherReservesMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:ReserveOfCashFlowHedgesMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:RetainedEarningsMemberXB3CXKKKED7OMV80FY352020-06-012021-05-31ifrs-full:NoncontrollingInterestsMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:IssuedCapitalMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:CapitalRedemptionReserveMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:OtherReservesMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:ReserveOfCashFlowHedgesMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:RetainedEarningsMemberXB3CXKKKED7OMV80FY352021-05-31ifrs-full:NoncontrollingInterestsMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:IssuedCapitalMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:CapitalRedemptionReserveMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:OtherReservesMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:ReserveOfCashFlowHedgesMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:RetainedEarningsMemberXB3CXKKKED7OMV80FY352021-06-012022-05-31ifrs-full:NoncontrollingInterestsMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:IssuedCapitalMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:CapitalRedemptionReserveMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:OtherReservesMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:ReserveOfCashFlowHedgesMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:RetainedEarningsMemberXB3CXKKKED7OMV80FY352022-05-31ifrs-full:NoncontrollingInterestsMember Our Board Chair’s introduction to governance Board leadership and company purpose Governance Framework Nomination Committee Report Audit & Risk Committee Report ESG Committee Report Remuneration Committee Report Remuneration Policy Report Of The Directors PZ Cussons plc Annual Report and Financial Statements 2022 FOR EVERYONE, FOR LIFE, FOR GOOD. PZ Cussons plc Annual Report and Financial Statements 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 PZ CUSSONS IS A BRANDED CONSUMER GOODS BUSINESS FOR EVERYONE, FOR LIFE, FOR GOOD. 01 Overview / Contents FINANCIAL STATEMENTS 152 Independent Auditor’s Report 166 Consolidated income statement 167 Consolidated statement of comprehensive income 168 Consolidated balance sheet 170 Consolidated statement of changes in equity 171 Consolidated cash flow statement 172 Notes to the consolidated financial statements 236 Company balance sheet 237 Company statement of changes in equity 238 Notes to the Company financial statements STRATEGIC REPORT 12 Chief Executive’s review 16 Our story and purpose 18 Our values 20 Our markets 24 Our strategy 30 Strategy in action 38 Creating a dialogue with our stakeholders 40 Section 172(1) statement 44 Sustainability 64 TCFD Report 72 Non-financial and sustainability information statement 73 Key performance indicators 78 Business review 82 Financial review 84 Risk management 86 Principal risks and uncertainties 44 Better for All: ESG at PZ Cussons OVERVIEW 02 A word from our Chair 03 Financial highlights 04 2022: Year in review 06 PZ Cussons at a glance – Our brands – Our business model Read our report online www.pzcussons.com/ar22 06 PZ Cussons at a Glance 152 Independent Auditor’s Report 12 Chief Executive  GOVERNANCE 96 Our Board 98 Chair’s introduction to governance 100 Board leadership and Company purpose 104 Governance framework 106 Nomination Committee report 110 Audit & Risk Committee report 116 ESG Committee report 118 Remuneration Committee report 124 Remuneration Policy 132 Report on Directors’ remuneration 144 Report of the Directors ADDITIONAL INFORMATION 246 Glossary 247 Further statutory and other information A WORD FROM OUR CHAIR PZ Cussons plc / Annual Report and Financial Statements 2022 02 IT’S AN EXCITING TIME AS WE MOVE FROM TURNAROUND TO TRANSFORMATION. We have continued to develop our business  progress. Our strengthened leadership team brings experience of global consumer goods businesses,    our brands and markets intimately.       We have also established an ESG Committee of the Board ensuring the right level of Board engagement in this important topic.    to Board governance.    drive to build a stronger performance culture.    its pioneering spirit.      journey from the turnaround of our core business to our broader business transformation. See our Governance section / Pages 96–149     reduction in adjusted net debt. More importantly   a focus for both the Board and our management team.  track progress on the turnaround of our core business and also look to accelerate our broader transformation         for their continued drive and commitment, and our shareholders, customers and other key stakeholders for their ongoing support and partnership. Caroline Silver  03 Overview   Revenue £592.8m (2021: £603.3m) 2022 £592.8m 2021 £603.3m 2020 £587.2m Adjusted net debt 1 £9.8m (2021: £30.7m) 2022 £9.8m 2021 £30.7m 2020 £49.2m LFL revenue growth 1 2.9% (2021: 7.1%) 2022 2.9% 2021 7.1% (2.4)% 2022 Dividend per share 6.40p (2021: 6.09p) 2022 6.40p 2021 6.09p 2020 5.80p Adjusted basic earnings per share from continuing operations 2 12.71p (2021: 13.12p) Statutory earnings per share 12.02p (2021: 10.09p) 2022 12.71p 2022 12.02p 2021 13.12p 2021 10.09p 2020 12.17p 2020 5.59p Adjusted operating  2 11.5% (2021: 11.8%) Statutory operating  12.7% (2021: 11.2%) 2022 11.5% 2022 11.2% 2021 11.8% 2021 11.2% 2020 11.2% 2020 3.8% WE HAVE DELIVERED A RESILIENT PERFORMANCE OVER THE PAST YEAR, AGAINST THE BACKDROP OF CHALLENGING CONDITIONS IN OUR MARKETS. FINANCIAL HIGHLIGHTS         See our key performance indicators / Page 73 JUNE 2021 DEC 2021 FY 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 04 AUGUST – SEPTEMBER 2021 Executive Leadership Team We have continued to strengthen our Executive   Launch of Values We refreshed our   incorporating local involvement across our business units. See more on our Purpose and Values / Pages 16-19   Australia, marking our exit from the adult nutrition business. 2022: YEAR IN REVIEW See our Financial review / Page 82 APR 2022 FY 2022 FY 2022 JAN 2022 MAR 2022 05 Overview    Q2    Acquisition of Childs Farm  UK brand in baby and child personal  Must Win Brand. Read more about the acquisition of Childs Farm / Page 25 Positive momentum in trading     +2.9% Manchester Head   from home during the pandemic,   People Transformation  people management system that is enabling us to standardise and  single sourcing of data in real time  FY 2022  assets As part of our drive to simplify our  number of residential properties in  £18.4m Like-for-like revenue growth PZ Cussons plc / Annual Report and Financial Statements 2022 06 PZ CUSSONS AT A GLANCE PZ CUSSONS IS A BRANDED CONSUMER GOODS BUSINESS. Revenue £592.8m  £67.9m LFL revenue growth 2.9%  £66.6m FINANCIALS AT A GLANCE     creating products to delight, care for and nourish consumers. We are building on these foundations          EUROPE & THE AMERICAS Revenue £193.0m  £35.0m  £22.9m Priority market: Operations: The UK is home to our corporate headquarters in Manchester as well as our UK Personal Care and Beauty businesses, including a manufacturing centre of excellence. ASIA PACIFIC Revenue £173.8m  £20.9m  £37.0m Priority markets: Operations: We have offices in Indonesia, Australia and Thailand, with manufacturing facilities in Indonesia and Thailand. AFRICA Revenue £222.0m  £22.3m  £28.6m Priority market: Operations: Our largest office and manufacturing centre is in Lagos, Nigeria with smaller operations in other parts of Nigeria, Kenya and Ghana. Our joint venture, PZ Wilmar and our Electricals business are also located in Nigeria. 07 Overview / At a glance OUR BRANDS BUILDING BRANDS FOR LIFE TODAY AND FOR FUTURE GENERATIONS.    Our Must Win Brands have leading positions in our priority markets and are our focus for investment,   O T H E R 1 7 % B E A U T Y 1 4 % B A B Y 1 7 % H Y G I E N E 5 2 % C A T E G O R I E S :    MUST WIN BRANDS PORTFOLIO BRANDS PORTFOLIO BRANDS PZ Cussons plc / Annual Report and Financial Statements 2022 08 TRIAL AND LOYALTY Delight consumers through the use of our products. SALES AND DISTRIBUTION Establish customer partnerships and channels to deliver our products to wherever our shoppers shop. ADVERTISING AND MARKETING Invest in multi-channel advertising and marketing campaigns to connect with consumers and build memorable, trusted and well-loved brands. Our brands   Our infrastructure  and distribution capabilities in selected geographies Our people  employees. Leaders at all levels Our stakeholders   suppliers and communities Our financials Strong balance sheet reflecting our disciplined approach Our strength is in being a multi-local rather than multi-national business, with the level of focus, experience and dedication to our priority markets that this brings. OUR COMPETITIVE ADVANTAGE We are a branded consumer goods business. WHAT WE DO OUR BUSINESS MODEL WE BUILD BRANDS WHICH ENABLES US TO CREATE VALUE FOR ALL OUR STAKEHOLDERS. 09 Overview / Our business model Our business model creates shared, sustainable value for all our stakeholders. THE VALUE WE CREATE For consumers Innovative, high-quality and trusted brands ALL UNDERPINNED BY OUR PURPOSE, CULTURE, VALUES, GOVERNANCE AND ETHICS For employees Engaged teams and relationships, training and development opportunities and a supportive culture  For society Community and charitable initiatives linked to our priority markets For customers Our retail partners and customers benefit from  For investors A strong balance sheet, refreshed leadership and a plan to deliver sustainable, profitable revenue growth For the environment Sustainability at the heart of what we do. Sustainable sourcing, our 2023 Palm Oil Action Plan and reduced carbon emissions, water use and landfill waste INSIGHT AND INNOVATION Obtain insights into current consumer needs and longer- term trends. Through innovation, use these insights to continuously develop brands and products that consumers want and desire. SOURCING AND MANUFACTURING Service consumer demand by sourcing ethically-responsible raw materials and manufacturing them into high-quality finished products, either in our own world-class facilities or through carefully-selected, trusted third-party supplier relationships. PZ Cussons plc / Annual Report and Financial Statements 2022 10 At PZ Cussons, we aspire to be our BEST Our ‘BEST’ Values are introduced in more detail on page 18 and are individually referenced throughout this report. BOLD STRIVINGENERGETIC TOGETHER INTRODUCING OUR VALUES FEARLESS, PIONEERING AND PASSIONATE, OPEN AND HONEST, TRUE TO OURSELVES AND PROUD OF WHO WE ARE AS INDIVIDUALS WE ARE BOLD 11 Strategic Report / Introducing our BEST values STRATEGIC REPORT 12 Chief Executive’s review 16 Our story and purpose 18 Our values 20 Our markets 24 Our strategy 30 Strategy in action 38 Creating a dialogue with our stakeholders 40 Section 172(1) statement 44 Sustainability 64 TCFD Report 72 Non-financial and sustainability information statement 73 Key performance indicators 78 Business review 82 Financial review 84 Risk management 86 Principal risks and uncertainties Our BOLD value in action: WE ENGAGE WITH COURAGE AND AUTHENTICITY • accountability and integrity in all we do • reaching out and connecting, sharing views, taking feedback • speaking up and making a  PZ Cussons plc / Annual Report and Financial Statements 2022 12 RETURNING THE GROUP TO SUSTAINABLE GROWTH. Our performance during FY22 was   the resulting impact on consumer spending, consistent with others operating in our sector. Within this context, we are pleased to be able to report a second year of good progress,  both higher than two years ago, prior to the launch of our new strategy. As Covid-19 restrictions eased, we  markets, meeting customers, partners and consumers around the world. I also met many of our colleagues in  of the Board, I would like to thank the PZ Cussons team for their continued hard work and dedication. CHIEF EXECUTIVE’S REVIEW It has been just over two years since I joined PZ Cussons, and I am proud of the progress that our teams have made. We have established and embarked upon our new strategy with determination and pace, refreshing our values and establishing our corporate purpose, and have made a number   opportunities to ensure we can continue to create value for our stakeholders for years to come. Our response to the ongoing macro challenges Along with the wider consumer goods industry, we have experienced a number of challenges, with supply chains still fragile from Covid-19 being further impacted by the war in Ukraine. We have seen record  of raw materials and spikes in the cost of freight and other logistics. As expected, a further consequence in recent months has been a squeeze on household budgets in various parts of the world. Whilst we primarily operate in categories that are non-discretionary, we are working hard to ensure we  value for consumers. To that end, and given the challenging backdrop for input costs, our response has been focused on three areas: • Working hard to reduce costs that the consumer does not see or value such as optimising logistics, maximising procurement savings and reducing overheads; • Revenue Growth Management activity such as optimising trade investment, and managing our portfolio of product formats, their pricing and associated promotional activity and channel mix; and • Investing in the business to achieve long-term savings, particularly in our supply chain. During the year we began the process of re-locating our procurement function to improve performance, and over the medium   Our strategic progress: Building brands for life. Today and for future generations. In March 2021, we set out our new strategy: ‘Building brands for life. Today and for future generations.’  focusing on the core categories of Hygiene, Baby and Beauty, in our four priority markets of the UK, ANZ, Indonesia and Nigeria, with a particular focus on our Must Win Brands, using the ‘PZ Cussons Growth Wheel’ as our repeatable model for execution. 13 Strategic Report / Chief Executive’s review As travel restrictions eased following the Covid-19 pandemic, we were able to visit our teams, customers and other stakeholders around the world once again. For a number of our colleagues who have joined the business during lock-down, this was an opportunity to meet in person for  VISITING COLLEAGUES AND CUSTOMERS AGAIN “The good progress already made in addressing our legacy issues has strengthened the foundations of our business, from which we can now begin to transform.” Jonathan Myers  Underpinning this strategy, our growth will be enabled by strengthening our approach to capabilities, talent and leadership, culture and sustainability. Running through everything we do is a drive to dramatically reduce complexity across our business. Our long-term opportunities  term growth, in both our existing four priority markets, and beyond, including the US where we have a strong Beauty business. In Nigeria and Indonesia, Cussons Baby is a leading brand in Baby personal care, and these two markets are expected to grow by c.11% a year between 2021 to 2026 1  strong birth rates, with approximately 12 million babies born annually in Nigeria and Indonesia combined,  fastest growing markets globally on this basis. More broadly in Nigeria, the population is anticipated to reach 400 million by 2050 2 , making it the third most populous country in the world. With a number of leading brand positions, and a strong understanding of the market,  longer term growth. Elsewhere, while the markets of Australia and the UK are more  opportunities to maximise the potential of our brands, growing penetration of existing categories and expanding into further adjacencies where our brands have a right to win. Morning Fresh and Carex, our largest brands in these two markets respectively, are clear leaders of their categories, and have further increased their market shares during the year. Both have capacity for further product expansion over time, leveraging their existing brand equity. More broadly, we see opportunity to grow our brands outside of their home markets through the use of our own distribution networks as well as that of third-party distributors. Imperial Leather already generates around 40% of its revenue outside of the UK, where it grew revenue nearly 30% in part due to innovation-driven share gains in Kenya. Carex was re-launched in Nigeria during the year and is quickly establishing itself as an important player in the hand hygiene category. Looking further out, we see exciting opportunities for the expansion of Childs Farm, and are well progressed with plans here, having already made a number of operational changes  FURTHER READING See more on Building brands for life / Page 24 See our new Strategy in action / Page 30 See more on Leaders at all levels / Page 28 See more on Sustainability / Page 44 BEAUTY ONLINE % OF REVENUE: >30% INCREASED BRAND INVESTMENT +69% (VS. FY20, MUST WIN BRANDS) NEARLY 3/4 OF PLASTICS USAGE IS NOW RECYCLABLE, RE-USABLE OR COMPOSTABLE   2 Statista PZ Cussons plc / Annual Report and Financial Statements 2022 14  structural tailwinds, with strong category performance driven by growth in online sales and increasing demand for ‘self-care’ products. Over 30% of Beauty revenue was generated online in FY22 as we strengthen our  Our ability to capture these opportunities stems from our unique positioning as a ‘multi-local’ player. We have the centralised support and know-how to expand our brands internationally, but we are also agile in our decision-making, and adept at forging strong relationships with our local customers. Finally, sustainability is an increasingly important consideration for both consumers and our customers, and we believe that our competitiveness will strengthen, over time, as our businesses successively attain B Corp accreditation: clear evidence to our stakeholders of our products reaching the highest standards. Our Strategic Progress in FY22 Throughout the year, we made good progress across the key areas of our strategy: Build Brands Our primary strategic focus has been on building brands, investing in their long-term equity to drive awareness and consumer loyalty. There have been a number of major campaigns focused upon our Must Win Brands, including Carex, Original Source, Premier, and Sanctuary Spa, across TV and digital media, with several returning to TV commercials for  Overall, our Brand Investment in Must Win Brands is up nearly 70% compared to FY20. This has been funded by a reduction in investment in Portfolio brands, as well as  Carex’s ‘Life’s a Handful’ campaign for example saw double the typical return on investment, as measured by revenue per £ of marketing spend. We also welcomed Childs Farm to our stable of Must Win Brands, following the acquisition of the business in March 2022. Childs Farm is a leader in baby and child personal care in the UK and is highly complementary to our strategic focus behind the core categories of Baby and Hygiene. We see opportunities to leverage our brand building capabilities to strengthen its position in the UK market and to unlock potential internationally. Serve Consumers Serving consumers is about winning where the shopper shops. To that end,  share gains in e-commerce. In Australia, our dedicated e-commerce team has sought to replicate their in-store market share strength online, working to enrich our data, improving our ‘virtual shelf’ and optimising activation and promotions. As a result, we have seen our online share for  share. Also in Australia, an expanded product portfolio has allowed for increased listings of Morning Fresh, resulting in increased share of shelf and, ultimately, greater overall  In Nigeria, we have been transforming our route-to-market capabilities,  to improve overall distribution and customer service levels, in turn growing consumer penetration. We have more than doubled the numbers of grocery stores in which we are present over the last year and have   Reduce Complexity Reducing complexity helps reduce risk in our business, and allows our teams to  on driving the business forward. A major part of our overall focus has been in Nigeria where, in addition to route-to-market improvements, including the consolidation of suppliers and distribution centres, we are simplifying our portfolio with the sale of residential properties.  of our usage of our SAP system is underway, and we expect to begin to  For further information on our Nigeria   In the UK, we have consolidated our marketing agencies from over 70 to fewer than 20 and as part of the successful relaunch of Imperial  the number of SKUs, improving supply  Develop People Through the course of FY22 we created a number of new leadership roles, including Chief Marketing  Director – New Business Development  and other leadership roles, have been  leading consumer goods companies, allowing us to incorporate strong, relevant industry experience, as well as internal promotions. During the year, informed by a group of employee ‘culture ambassadors’, internal focus groups and our annual engagement survey, we refreshed our corporate values, and distilled our culture and ways of working, now and in the future, into four BEST values: Bold, Energetic, Striving and Together. “PZ Cussons has delivered a resilient performance over the past year, against the backdrop of challenging conditions in our markets. We have achieved this through our strategy to invest in our brands, focusing on the core categories of Hygiene, Baby and Beauty, while  Jonathan Myers  CHIEF EXECUTIVE’S REVIEW CONTINUED 15 Strategic Report / Chief Executive’s review Childs Farm We were also pleased that Childs Farm became a B Corp in July 2022, which is an outstanding achievement for the entire Childs Farm team, and something the broader business will now learn from as we continue to pursue B Corp  These initiatives have been well received by employees and we will continue to embed them throughout FY23. Grow Sustainably Our investment in sustainability is driven in large part by growing consumer demand for greener products which presents clear commercial opportunities for us. More sustainable products have been a feature of our performance in FY22.   typically lead to a reduction in plastic of at least 75%, have been rolled out across a number of brands. These include Morning Fresh in Australia, and Carex and Charles Worthington in the UK. In the case of Carex,  approximately 10% of the value sales of the liquid hand wash category in  larger than our closest competitor. Overall, 74.4% of our plastic is now recyclable, re-usable, or compostable. We were also pleased that Childs Farm  which is an outstanding achievement for the entire Childs Farm team, and something the broader business will now learn from as we continue to  our business units. There is more that we need to do to strengthen the business, but we have made good progress in addressing our legacy issues. Our focus now turns to the future opportunities we see, as we move from Turnaround to Transformation. Outlook   consumer spending, which will remain uncertain over the coming months, we expect to deliver FY23 results in line with current consensus estimates.   purchasing cover, we expect that the  be weighted towards H2. We expect to make investments of approximately £20 million over FY22-25 which will support the continuing transformation of the business and will be in part funded by further disposals of non- core assets. We expect these to be accounted for as adjusting items. Longer term, the actions we have been taking and the investments we will continue to make, will build a higher growth, higher margin, simpler and more sustainable business.  LFL revenue growth ambition to mid-single digit growth (compared to low-mid single digit growth previously) and maintaining our ambition for  the mid-teens. ‘Better for All’: our ESG framework We recognise that issues such as climate change, plastic pollution and inequality pose potential risks to our business, and that we must take  as well as reducing our contribution to these issues. Accordingly, in September 2021 we welcomed our  Company. Since then, we have been focusing on ensuring that the way in which we manage, monitor and improve our environmental, social and governance (ESG) impacts aligns to our purpose and delivers better results for everyone.  which align to our corporate purpose: ‘For Everyone’ (our impact on people), ‘For Life’ (our environmental impact), and ‘For Good’ (how we behave as  We will announce our new sustainability goals, based upon this framework, in more detail in our Sustainability Report on page 44. The goals are intended to be stretching enough that we can demonstrate real progress to our partners and  we are today, and the progress we have already made in many of these areas. Key environmental goals will include: • Net zero emissions by 2045, with carbon neutrality in operations  • Packaging sustainability: A one third reduction in virgin plastics by 2030, and ensuring packaging is 100%  by 2030; and • 30% reduction in water intensity  Summary In summary, we have had a second year of strategic progress, addressing our legacy issues and  performance. There is undoubtedly more to be done however as we move from Turnaround to Transformation and we remain excited to build towards a higher growth, higher margin, simpler and more sustainable business. Jonathan Myers  28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 16 We believe in our Purpose We champion the wellbeing of our consumers: people, families and communities everywhere. We protect the vitality of life, prevent harm and eliminate waste. When? Now and for generations to come. Why? Because we strive always to uphold the highest standards. And because it’s the right thing to do. OUR STORY AND PURPOSE At PZ Cussons we enjoy a rich heritage dating back over nearly 140 years. Our story is one of strong growth, built on family values that have guided generations, as the Company has expanded around the world, to do the right thing. PZ Cussons began in Sierra Leone, West Africa, in 1884, when founders George Paterson and George Zochonis began trading commodities with the UK. Nearly a century later, in 1975,  illustrious Cussons Group, creating the PZ Cussons we know today. Over all those years we’ve grown to become an international consumer goods group – home to some of the world’s best loved and most trusted brands. The bold spirit, pioneering energy and entrepreneurship of our founders, combined with strong beliefs about how best to do business and a love of learning, are still at the very core of who we are. PZ Cussons products have found a place in millions of households for generations. It’s a legacy that makes us both humble and proud. 17 Strategic Report / Our story and purpose EVERYWHERE GENERATIONS DO THE RIGHT THING   Our world faces challenges that our founders could never have imagined, but which we must rise together to meet if we’re to leave a better business – and planet – for those that come after. We know that delighting consumers is fundamental to this. Everywhere our products and brands touch people’s lives, from the USA to Europe, Africa to  to empower. We know that to grow sustainably, we must strive to be a force for positive change. That’s why we work together with communities, investors and our supply chain to continually improve environmental standards and ethical performance, to prevent harm, protect life and eliminate waste. Because it’s the right thing to do, and because it’s what the consumers of tomorrow will choose. WELLBEING PZ Cussons plc / Annual Report and Financial Statements 2022 18 OUR VALUES See our Values in action / Bold, page 11, Energetic, page 95, Striving, page 151 and Together, page 244 Read more about our Board’s involvement in the development of our Values / Page 99 We are clear that our culture is a critical enabler of our PZ Cussons purpose and strategy and employee  PZ Cussons people aspire to be our BEST FEARLESS, PIONEERING AND PASSIONATE, OPEN AND HONEST, TRUE TO OURSELVES AND PROUD OF WHO WE ARE BOLD AS INDIVIDUALS WE ARE DYNAMIC AND PROACTIVE, CAPABLE AND FLEXIBLE, EMBRACING CHANGE AND MOVING FAST INTO THE FUTURE RAISING THE BAR, PUSHING PERFORMANCE, AIMING HIGH AND ACHIEVING MORE ONE FAMILY, MANY VOICES; SUPPORTED, INCLUDED, RESPECTFUL, EMPOWERED, AND WITH JOY IN WHAT WE DO ENERGETIC IN OUR TEAMS WE ARE STRIVING AS A BUSINESS WE ARE TOGETHER OUR SHARED CULTURE BRINGS US THIS YEAR WE REDEFINED OUR VALUES IN DISCUSSION WITH – AND FOR – EVERYONE WORKING AT PZ CUSSONS. With support from a group of employee ‘culture ambassadors’ and via focus groups, our annual engagement survey and team discussions across our business, we distilled our culture and ways of working, now and in the future, into four BEST values: 19 Strategic Report / Our values Results are in: Global Engagement Survey 2022 We maintained our overall ‘employee engagement score’ at 72% despite the ongoing  teams, we also made big gains in questions relating to accountability and commitment, for example 88% of respondents agreed that we hold ourselves and our team members accountable for results (+9 benchmark) and 74% of respondents said they believe action will take place as a result of the global engagement survey (+15 benchmark). Participation rate 93% I understand what I am responsible for and what is expected of me 94% I know how my work contributes to the goals of PZ Cussons 93% I am aware of our BEST values 92% Survey run by Culture Amp. Benchmark Consumer Goods and Services 2022. 93% participation rate (2,515 out of 2,699 employees globally). Watch our Values video / www.pzcussons.com/careers-home/ All employees were invited to join the conversation. We ran a global launch event and multi-channel communication campaign spearheaded by our Executive Leadership Team with support from the Board. Our ‘leaders at all levels’ management development programme also launched in sequence and set the tone for what was to follow, with the campaign closely aligned to strategic updates in our bimonthly global Town Halls. PZ Cussons business units were then empowered to bring our BEST values to life in their own way, and our teams created huge energy locally with their storytelling activities and campaigns and continue to do so. Even the most light-hearted activity contributed to ensuring that everyone joined the conversation and understands the part they play in setting the right  BEST GLOBAL LAUNCH EVENT 2021 PZ Cussons plc / Annual Report and Financial Statements 2022 20 OUR MARKETS OUR PORTFOLIO IS BALANCED ACROSS DEVELOPED AND EMERGING MARKETS WITH FOUR PRIORITY MARKETS REPRESENTING THE MAJORITY OF OUR BUSINESS Our priority markets are: THESE FOUR PRIORITY MARKETS ARE HOME TO MOST OF OUR MUST WIN BRANDS, WHILE ST. TROPEZ IS THE LEADING PREMIUM TANNING BRAND IN THE US. We have many years of experience operating in these markets. We seek to harness our local knowledge and customer relationships as we compete against global competitors, while leveraging our global capabilities,  MULTI-LOCAL Most of our brands are considered ‘local heroes’: they are often leaders in their respective categories, and generate the majority of their revenue in their ‘home’ market. We view our business not as multi-national, but as multi-local, and our strategy focuses on the strong base in these four priority markets. UK Nigeria Indonesia ANZ 21 Strategic Report / Our markets 7.6m 4.4m 26.3m 4.2m 17.5m 5.0m India China Nigeria Pakistan US 1.2% 1.9% 3.5% 1.2% 1.2% 1.6% UK 1.2% 0.8m Indonesia 7.6% CAGR 2021–2026 market growth in Baby personal care category Focus on: The Baby Category in Indonesia and Nigeria Nigeria and Indonesia markets in numbers NIGERIA AND INDONESIA ARE AMONG THE MOST ATTRACTIVE BABY MARKETS IN THE WORLD, RANKING 3RD AND 5TH RESPECTIVELY FOR THE NUMBER OF ANNUAL BIRTHS. Combined, there are 12 million babies born annually in the two markets, which is nearly three times the amount born in the US. The Baby personal care category is expected to grow 7.6% over the period 2021–2026 in Nigeria, and 11.9% in Indonesia, driven by a combination of population growth and increased wealth. We are well-placed to take advantage of these attractive market trends, with leading positions through our Cussons Baby brand. 11.9% CAGR 2021–2026 market growth in Baby personal care category 3 rd & 5 th Ranked globally for annual births Indonesia total Baby market forecast to be worth >£500m in 2026 Sources: Population and birth rates data from Statista and worldpopulationview.com Market size and growth rates are PZ Cussons estimates based upon Euromonitor data. Nigeria expected to reach a population of 400m by 2050, making it the world’s third most populous country after China and India Global births (m) and birth rates (%) +12m Babies born a year in total across Nigeria and Indonesia PZ Cussons plc / Annual Report and Financial Statements 2022 22 OUR STRATEGY IS CENTRED AROUND THREE CATEGORIES: HYGIENE, BABY AND BEAUTY, EACH WITH ATTRACTIVE UNDERLYING DRIVERS. OUR MARKETS HYGIENE Removing costs that the consumer doesn’t value through activities such as logistics optimisation, procurement, or reducing  BABY Investing to make cost savings for the long term, such as  our factories. BEAUTY Driving revenue growth management such as optimising trade terms, and ensuring our portfolio of product formats, and their prices, are appropriate. Consumer awareness of the link between hygiene, wellness and health has grown over the long-term and has accelerated as a result of the Covid-19 pandemic. In particular, aspects of hand hygiene have risen in importance, driving consumer demand for ‘on the go’ hand sanitisers, for example. The global market for Baby personal care products is attractive. In some markets this is driven by strong birth rate growth, and in others by growing wealth and improved awareness of the products available, creating opportunities for premiumisation. The Beauty market has been impacted by Covid-19-related lockdowns since the beginning of 2020, but has for many years enjoyed a number of favourable underlying trends. These include the increased importance many consumers place on physical appearance in an age of social media and digital photography, as well as the growth in disposable income, particularly among women, who are typically the primary consumers of Beauty products. Addressing the short-term market challenges WHILE WE SEE STRONG UNDERLYING, STRUCTURAL TRENDS SUPPORTING OUR BUSINESSES, WE, ALONG WITH THE WIDER CONSUMER GOODS INDUSTRY, HAVE EXPERIENCED A NUMBER OF CHALLENGES OVER THE LAST YEAR.  with a combination of Covid-19 and, as it relates to the UK, Brexit, typically considered to be key drivers of the delays and increased costs in transporting goods around the world. Added to this, the war in Ukraine has put further pressure on global supply of commodities and other ingredients. The knock-on impact of these increases in global prices is being felt by the consumer. In the UK, for example,  energy prices, as well as other non-discretionary items such as their mortgage rates and food costs. WE HAVE BEEN FOCUSED ON THREE PRIMARY ACTIONS TO ADDRESS THESE CHALLENGES 23 Strategic Report / Our markets Macro drivers For more work on our sustainability / Pages 44-71 SUSTAINABILITY EMERGING MARKET CONSUMPTION CHANNEL DISRUPTION – WIN WHERE THE SHOPPER SHOPS Across the world, consumers are demanding ever higher standards of the brands they purchase, and of the companies which own those brands. Consumers increasingly seek reassurance that the ingredients used in products are ethically sourced, free from harsh chemicals or those that are bad for the environment, and to know that products have not been tested on animals. They are also more alert to the type of packaging being used, with virgin plastic replaced by recycled or recyclable materials. We are working hard to address the demands as evidenced by our sustainability targets, as well as our commitments  We continue to see long-term potential in many emerging markets. Nigeria is, for example, a market where the population is expected to double by 2050, making it the world’s third most populous country after China and India. Our geographic footprint, with approximately half our revenue derived from emerging markets, and the strength of our brands in these markets, leaves us well-  opportunities. Across a number of our markets, we are seeing changes to the way in which shoppers shop. The pandemic, for example, drove a  to purchase online, and we are also witnessing a shift in channels in both Nigeria and Indonesia, where consumers are moving towards supermarkets and modern retail, away from the legacy of markets and traditional trade. These shifts provide opportunities. In 2022, we have continued to increase our revenue from online, with Beauty online revenue now over 30% of total Beauty revenue. We have also begun to execute a  market approach in Nigeria. OUR STRATEGY IS INFORMED BY A NUMBER OF SIGNIFICANT CONSUMER AND MACRO-ECONOMIC TRENDS WHICH IMPACT ACROSS CATEGORIES. PZ Cussons plc / Annual Report and Financial Statements 2022 24 AMBITION OF MID-SINGLE-DIGIT REVENUE GROWTH AND MID-TEENS MARGINS DRAMATICALLY REDUCE COMPLEXITY AND ENABLE TRANSFORMATION SUSTAINABILITY LEADERSHIP CULTURE CAPABILITIES WHERE TO PLAY FOCUS ON LEADING BRANDS IN PRIORITY MARKETS HOW TO WIN Growth Wheel S h o p p a b i l i t y C o n s u m a b i l i t y A t t r a c t i v e n e s s M e m o r a b i l i t y TURNAROUND Fixing the core of the business TRANSFORMATION Building capabilities and growing from the core UNLOCK FULL POTENTIAL Expanding from the core and growing sustainably OUR STRATEGY OVERVIEW In March 2021, we set out our new strategy: ‘Building brands for life. Today and for future generations.’  will play, focusing on the core categories of Hygiene, Baby and Beauty, in our four priority markets of the UK, ANZ, Indonesia and Nigeria, with a particular focus on our Must Win Brands, using the PZ Cussons Growth Wheel as our repeatable model for execution. Underpinning this strategy, our growth will be enabled by strengthening our approach to sustainability, culture, leadership and capabilities. Running through everything we do is a drive to dramatically reduce complexity across our business. Our strategy can be summarised in 10 words: OUR PROGRESS Our journey is centred around three phases: WE ARE BUILDING BRANDS TO SERVE CONSUMERS BETTER, WITH HYGIENE, BABY AND BEAUTY AT OUR CORE. REDUCE COMPLEXITY GROW SUSTAINABLY DEVELOP PEOPLE BUILD BRANDS SERVE CONSUMERS 25 Strategic Report / Our strategy BUILDING THE CHILDS FARM BRAND In March 2022, we acquired Childs Farm a leader in baby and child personal care in the UK. Product lines include bath and shower, skincare and haircare, and are all anchored in a natural proposition and suitable for sensitive skin. We have taken a 92% stake in the company, with the founder, Joanna Jensen, continuing as a shareholder and a champion of the brand. Childs Farm has grown rapidly since it started trading in 2011, at highly attractive gross margins, and has established very strong sustainability credentials, through its cruelty-free and vegan products. In July 2022, Childs Farm was awarded  The Childs Farm brand is highly complementary to our core categories of Baby and Hygiene, and we will, over time, leverage our brand-building capabilities to improve its UK leadership position,  international potential. We are making good progress incorporating the brand in to PZ Cussons, and over time we expect  particularly in areas of digital, marketing, supply chain and support functions. Following strong growth driven by the Covid-19 pandemic, we have sought to strengthen Carex’s leadership position, appealing to both the functional and emotional aspects of the consumer purchase process. Functionally, New Product Development has been centred around the ‘2 hour protection’ innovation, clearly highlighting Carex’s advantages compared to its competitors. This is particularly important in a category with strong private label prevalence. At the same time, we have appealed to the emotional side, with a new ‘Through the Line’ (seeking both consumer reach and targeted conversion) marketing campaign: ‘Life’s a handful’. This campaign, which was carefully integrated across both TV and digital, has driven strong awareness, with improved Top of Mind awareness and Consideration scores. BUILD BRANDS PZ Cussons plc / Annual Report and Financial Statements 2022 26 35 33 31 29 27 Nov Dec Jan Feb Mar Apr May Jun Jul 31.3 32.4 31.6 31.6 33.0 34.2 +1.8 Online SERVE CONSUMERS SERVING CONSUMERS BETTER MEANS WINNING WHERE THE SHOPPER SHOPS.  e-commerce. In Australia, our dedicated e-commerce team have sought to replicate their in-store market share strength, online. We have worked to enrich our data, with virtual shelf basics, optimising activation and  larger portfolio brands, online share is now ahead of the    through expanding its product range, which now  products, and a bread sticks collaboration with one of Australia’s most iconic brands, Vegemite. % Market Share Sources: Market share data from Nielsen and IRI 27 Strategic Report / Our strategy £18.4m Gross proceeds from the sale of Nigerian residential properties 26 to 3 Reduction in Distribution Centres in Nigeria REDUCE COMPLEXITY ACROSS THE BUSINESS, WE HAVE SOUGHT TO SIMPLIFY MANY OF OUR OPERATIONS. Nigeria simplification  of our business in Nigeria where there is currently unnecessary complexity, given its scale. Greater  allowing our teams to focus on what they do best,  We have already made good progress in simplifying our business: • During the year we realised gross proceeds of £18.4 million through the sale of residential properties. • We consolidated our supplier base, approximately halving the total number of suppliers serving us. • We reduced the number of distribution centres from 26 to 3, allowing us to improve working capital, and improved delivery times and customer service rates. • We merged together a number of legal entities, reducing administrative burden. Looking ahead, we see further opportunities to simplify, and unlock value from this important part of the PZ Cussons business. A project to improve   processes from FY23. Read more / Page 190 Reducing complexity helps reduce risk and improve resilience in our business, and allows our teams to  the business forward. In the UK, we have consolidated our marketing agencies from over 70, to fewer than 20. While aggregated marketing spend is broadly unchanged, working with fewer agencies in this way allows them  better returns on our marketing expenditure. Across our IT infrastructure, we have decommissioned over 60 servers which had become redundant resulting  We have also begun the work to move towards a UK-based shared service model for procurement. This  while at the same time reducing complexity in our processes and operations. Over time, we see further opportunity for ‘near-shoring’ of certain activities.  a major component for our broader drive to reduce complexity. For more information on this, see below. PZ Cussons plc / Annual Report and Financial Statements 2022 28 DEVELOP PEOPLE WE HAVE CONTINUED TO STRENGTHEN OUR LEADERSHIP TEAM. Talent – Leaders at all levels At the heart of our talent strategy is disciplined talent management across all parts of PZ Cussons,   Founded on our Workday system, we have launched Performance Goals and Feedback to support our move to a high-performance culture. We continue to invest in building the future leadership capability needed to return the business  nurture a high-engagement, high-performance culture. In FY22 we delivered two leadership programmes for leaders in all our businesses and at all levels: Purposeful Leadership (tied to the launch of our purpose and values), and Our BEST Performance (focused on the fundamentals of great performance management). The programme will continue in FY23. In addition to this, our Non-Executive Directors support our leadership programme by each mentoring high potential colleagues in the business. Through the course of FY22 we successfully recruited for a number of newly created roles, including Chief  New Business Development, and Chief Sustainability  the Executive Leadership level, with a number of Group functions such as Finance, Legal, Governance  In addition, we have also sought to promote from within, including the appointment of new Managing Directors in our ANZ and UK businesses. A key part of our turnaround has been to ensure we have the right processes and systems in place to support us in the development of our people and in creating high-performing teams. Focus in 2022 has centred on the launch of a new people system: Workday. This platform gives us the ability to access transparent and accurate people data and insights, in real-time, to better support our teams, while  HR processes. During the year, building on our renewed Purpose, we established new Corporate Values: ‘BEST’. Read more about these and how our teams arrived at these Values / Pages 18-19 29 Strategic Report / Our strategy GROW SUSTAINABLY GROWING WITH SUSTAINABILITY IN MIND IS KEY TO OUR PLANS, AND WE ARE PROUD TO BE MAKING GOOD PROGRESS TOWARDS B CORP CERTIFICATION. It is important that as a business we grow sustainably. This work is becoming a business imperative, and brands’ sustainability credentials are, in many parts of the world, increasingly important to the consumer proposition and indeed the corporate brand. We are therefore pleased to be making good progress in this regard, driving improvements in packaging, using better ingredients, and encouraging consumers to purchase more sustainable products  now represents approximately 10% of the value sales of the Liquid Hand Wash category in the UK, with over 3 million shoppers using the product. This means that  competitor in the category. Each pack has around 85% less plastic, equating to around 625 tonnes saved a year. Overall across the Group, 74.4% of our plastic is now recyclable, re-usable, or compostable. Elsewhere, St. Tropez has also driven a number of initiatives. Its Self Tan Mousse packaging for example now includes 30% Post Consumer Recycled (PCR) resin, and it is  non-aerosol foamer pumps. Read more about our progress in this important area, as well as our new sustainability targets, in our expanded ESG and TCFD report / Page 44 PZ Cussons plc / Annual Report and Financial Statements 2022 30 M e m o r a b i l i t y A t t r a c t i v e n e s s C o n s u m a b i l i t y S h o p p a b i l i t y Growth Wheel Shoppability STRATEGY IN ACTION Win where the shopper shops Multi-channel distribution Market-leading execution in store Accelerate e-commerce SHOPPABILITY MEANS: 31 Strategic Report / Strategy in action Expanded into >300 more stores across the US, including Ulta in Target and Sephora in Kohls Growth in customers and distribution points through removal of exclusivity arrangements Improved share of shelf Best-in-class within homecare aisle and digital shelves Outstanding execution of major promotions PZ Cussons plc / Annual Report and Financial Statements 2022 32 M e m o r a b i l i t y A t t r a c t i v e n e s s C o n s u m a b i l i t y S h o p p a b i l i t y Growth Wheel STRATEGY IN ACTION Consumability CONSUMABILITY MEANS: Assortment covers target consumers and trends Innovation breaks down barriers to trial Product range delivers on usage needs and occasions 33 Strategic Report / Strategy in action  soap from Cussons Baby, with new formula which is clinically tested and safe for baby. Specially formulated to cleanse and nourish baby skin completely. Fragrance innovations “Moodscents” which helps to stimulate positive moods for baby. Healthy and Happy Bathing with Launch of ‘I’m Plant Based’, capturing growing trend towards sustainability and natural ingredients Read more about Original Source on our website / www.pzcussons.com/investornews PZ Cussons plc / Annual Report and Financial Statements 2022 34 M e m o r a b i l i t y A t t r a c t i v e n e s s C o n s u m a b i l i t y S h o p p a b i l i t y Growth Wheel STRATEGY IN ACTION Attractiveness Competitive offering for consumers Value created with customers and distributors Good, Better, Best portfolios Revenue Growth Management ATTRACTIVENESS MEANS: 35 Strategic Report / Strategy in action Attractiveness Multiple pricing increases throughout the year Product mix shift towards medicated soaps Portfolio re-alignment to  across the range, from Instant Glow to Luxe Read more about Premier on our website / www.pzcussons.com/investornews PZ Cussons plc / Annual Report and Financial Statements 2022 36 M e m o r a b i l i t y A t t r a c t i v e n e s s C o n s u m a b i l i t y S h o p p a b i l i t y Growth Wheel STRATEGY IN ACTION Digital first Consistent execution Distinctive and purpose-led Competitive levels of investment Effective activation Memorability MEMORABILITY MEANS: 37 Strategic Report / Strategy in action Step-change in online market share through increased digital investment and focus Read more about Rafferty’s Garden on our website / www.pzcussons.com/investornews ‘Through the line’ marketing campaign Read more about Carex on our website / www.pzcussons.com/investornews PZ Cussons plc / Annual Report and Financial Statements 2022 38 OUR APPROACH TO DOING BUSINESS IS FOUNDED ON THE PRINCIPLE OF CREATING SUSTAINABLE VALUE FOR ALL. CREATING A DIALOGUE WITH OUR STAKEHOLDERS See our Strategy / Pages 24–29 Link to 'our strategy in 10 words' BUILD BRANDS GROW SUSTAINABLY DEVELOP PEOPLE We have a strategic partnership with many of our key customers in our established markets, including  promotions and products and assisting with developing strategies. We listen to consumers to understand their needs and expectations through market research, social media, direct feedback and sales data. We regularly review market data from reliable third party sources to identify and respond to changing consumer habits so we can ‘win where the shopper shops’. We engage with employees regularly through local and global ‘Town Hall’ meetings, functional webcasts and leadership events. We also act on our employees’ views and feedback through an annual global engagement survey – see page 52. Dariusz Kucz, a Non-Executive Director, is our employee engagement champion,  the Board hears and understands the employee voice. For more information on the activities of our engagement champion – see workforce engagement on page 102. HOW WE ENGAGE WHAT MATTERS TO THEM WHY WE ENGAGE CUSTOMERS AND CONSUMERS EMPLOYEES One of our strengths is the ability to build close, long-term relationships with our customer base. Our customers give us their loyalty and trust and in turn we see them not just as customers, but as partners. Our goal is to serve more consumers and do it better than the competition. Understanding consumer trends and shopping habits is crucial to delighting consumers and helping our portfolio to win. We are one family, working together with one purpose, towards one ambition. We have worked hard to create a supportive environment in which everyone’s ideas  structure and open culture foster genuinely open communication between employees across the Company, regardless of seniority or geography. Both our customers and consumers are increasingly focused on environmental sustainability and transparency in the supply chain. Our consumers continue to seek access to our products through digital channels and this  Covid-19 pandemic.  and cost of living challenges, our customers and consumers are also extremely focused on value and so we are doing what we can to keep costs in check while also delivering excellent performance from our products. The annual global engagement survey allows us to understand the core areas that matter to them – strategy, purpose and values, safety and wellbeing, and careers and learning. We have also continued to adapt to new ways of working as a result of the Covid-19 pandemic, and look to understand  impact our employees. 39 Strategic Report / Creating a dialogue with our stakeholders We believe that PZ Cussons thrives in the long term when  stakeholders are balanced so that they all share in our success. It is therefore important that we fully understand all stakeholders’ priorities, expectations and concerns. The Chair and our Executive Directors periodically meet with our major shareholders. The CEO and CFO personally deliver the Group’s interim  Q&A sessions and roadshows for our major shareholders. We also organise ad hoc investor events and an Annual General Meeting to provide an opportunity for shareholders to meet the Directors and discuss the year’s results. Our Board members and our Company Secretary are always available to our shareholders to listen and respond to any concerns they may have or perspectives they may wish to share. During the year, we appointed an Investor Relations Director to further strengthen our engagement with the investment community. The specialists in our procurement function are dedicated to the maintenance of open, dynamic communication with our supplier base. Value alignment is a critical feature of our relationships with our partners and the Board engages directly with them through the CEO and CFO. Wherever we operate, we contribute to local community initiatives, from helping to build schools or roads in some of our developing markets, to donating products or mentoring and supporting local children to improve their life chances. INVESTORS DISTRIBUTORS AND SUPPLIERS COMMUNITIES  with shareholders as crucial to understanding and meeting their needs. We meet with them to discuss business performance, to understand their investment objectives and goals and to hear any concerns or advice they might have to help move the Company forward. We work with distributors and suppliers whose values and ethical standards align with our own – and who we know to be diligent, responsible, honest and fair. We prefer to treat our supplier relationships as long-term partnerships, working with them to create and sustain robust, lasting and  Ever since the business was founded in the 1880s, we have recognised the importance of developing good relations with local communities where we operate. We are committed to making a positive contribution to society and to minimising any negative impacts from our operations and we believe that investment in our communities also helps create enthusiastic consumers and advocates for our brands, as well as developing engaged employees. Our investors have been focused on how our updated strategy has been performing across the business. Investors continue to engage with us on our capital allocation decisions, and also on our approach to Environmental, Social and Governance (ESG). Our key suppliers seek stable,  relationships to remove unnecessary costs, improve product and service quality and promote innovation. The CFO reviews payment practices and policies and monitors trends in the Company’s performance twice yearly, reporting to the Audit & Risk Committee. Our communities are focused on our ESG strategy, in particular on the environmental impact of our products (packaging and formulation) and our carbon emissions. Many of our communities also continue to be concerned about the cost of living and living standards as we come out of the Covid-19 pandemic and manage rising energy prices. We continue to support the Foodbank in Australia, and The PZ Cussons Nigeria Foundation supported with the construction of a computing centre for a school in Agbor Delta State. PZ Cussons plc / Annual Report and Financial Statements 2022 40 SECTION 172(1) STATEMENT a) Long-term consequences PZ Cussons has a rich heritage of nearly 140 years. Our strategy is to ‘Build Brands For Life, today and for future generations’. In setting the direction of the Company,  the legacy we leave for generations to come. This was a key focus when we set our new purpose which has longevity and sustainability at its core. Section 172(1) of the Companies Act 2006 requires a director of a company to act in the way that he or she considers, in good faith, would most likely promote the success of the  In discharging their duty this year, the Directors, both individually and collectively, believe they have given due regard to the stakeholders and matters set out in s172(1)(a-f) of the Companies Act 2006. How we consider each is set out below. b) Our employees We have a diverse workforce spread across our locations in Africa, Asia, Australia, America and Europe – some  from home and others working in our factories or directly with customers and suppliers. We reviewed the global engagement survey to understand the views of our employees and receive regular reports from the Chief Human Resources  employee engagement Non-Executive Director. Our Directors travel to our markets when possible and hold dedicated employee engagement sessions on such trips. For more on how we engage with our employees and consider their interests, see Creating a dialogue with our stakeholders on page 38 and Sustainability – People on page 50. c) Our business relationships Our most important business relationship is with consumers. We build brands to serve consumers better with Hygiene, Baby and Beauty at our core. We work closely with partners and our joint venture partners and we value our strong relationships with key customers and suppliers. For more on how we engage with our consumers and partners see Creating a dialogue with our stakeholders on page 38 and Sustainability – Supply Chain on page 69. d) The community and environment Sustainability is in our DNA. Our business impacts communities, the environment and the climate through our use of land, procurement activities, carbon emissions and use of plastic, water and energy. We have set ourselves challenging sustainability goals which include our B-Corporation ambitions. We established an ESG Committee of the Board, and appointed  to our Executive Leadership Team, to ensure that our decisions are taken with due care for our sustainability goals. For more information on how we measure our environmental performance, see Sustainability – For life on pages 56–71. e) Our reputation The success of our business and our products depends on our reputation with our consumers, customers and suppliers as a business with integrity and dedicated to its purpose. f) Acting fairly We are conscious of the need to balance the interests of  fairly, particularly when they are not aligned. Principal decisions in FY22 The Board considers these and many other factors in all of the decisions it makes, with important decisions explicitly framed in the context of the interests of  stakeholders. In FY22, the Board continued to receive papers that included a summary of stakeholders likely to be impacted by the matter to be discussed and any decisions to be made. The following demonstrates how these matters were considered in three key decisions taken this year. 41 Strategic Report / Section 172(1) statement In making the decision, we considered: The long-term   everything from employee engagement, ability to recruit talent at all levels, how our customers, suppliers and consumers perceive our business, and how our shareholders relate to us. Our previous ‘CANDO’ values served the Company well for many years and the Board was very conscious of the need to develop a refreshed set of values that would support us for the long term. The values of the Company   and serve as an important underpin for our purpose, ‘for everyone, for life, for good’, and our strategy of  desire to be an enduring part of our consumers’ lives.   groups Customers and consumers  values focus on maintaining integrity and accountability, driving innovation, reacting with agility to changing consumer needs and leading with ambition and an entrepreneurial attitude. All of this is with the goal of strengthening our bonds with customers and ensuring our consumer is at the centre of everything we do. Employees Our business depends on our employees. Not only did the Board consider employees in developing our values, we ensured they were at the heart of the process. The values were developed internally, led  resonates with them about our strategy and what it means to work at PZ Cussons. In addition to being developed by our employees, our BEST values were then communicated and embedded throughout the Company by employees acting as culture ambassadors. What was important was that the values be launched locally in each market in an authentic way that ensured they would weave into our everyday employee experience. Through a combination of central communications, executive and Board-led messages and local contests and celebrations, our BEST values are being embedded in the organisation. Investors  both the top and bottom lines. Our BEST values focus on being entrepreneurial, innovative, challenging the status quo and raising the bar on performance. Distributors and suppliers Our BEST values place a premium on acting with accountability and integrity, both internally and with our distributors, suppliers and other stakeholders. With our distributors, we will focus on moving at pace to respond to challenges and build better partnerships. Community In our values we are BOLD and we set ambitious targets, including in areas like sustainability where our B-Corporation target was based on the idea that long-term, sustainable growth depends on continuing  honouring our family heritage and the importance we place on driving positive change in our communities. The environmental  Sustainability is at the heart of our strategy and purpose and this shines through in our BEST values, which focus on leading innovation to adapt to a changing world and leaving a legacy we can all be proud of. See further detail on our approach to sustainability on page 44.  our reputation   We considered appropriate ways to engage with key stakeholders and to understand their perspectives and priorities, including respecting the commitments we already made and our relationships with partners. We engaged with investors and employees in a series of events to explain our BEST values and understand their perspective. Principal decision 1: Launching our BEST Values Having refreshed our corporate strategy and purpose in FY21, in FY22 the Board worked with our  revenue growth. Our ‘BEST’ values were developed internally and given careful consideration, balancing and responding to the interests of numerous stakeholders, as set out below. PZ Cussons plc / Annual Report and Financial Statements 2022 42 SECTION 172(1) STATEMENT CONTINUED Principal decision 2: Formation of ESG Committee Recognising the importance of ESG across the whole Group and its governance, the Board established the ESG Committee in January 2022 to oversee the Company’s ESG strategy and performance targets. The Committee monitors performance against the ESG goals and how PZ Cussons considers, engages with, reports to, and maintains its reputation with key stakeholders. In forming the ESG Committee, we considered:  Our purpose is: for everyone, for life, for good. This applies to everything we do and the importance of doing the right thing for the business and the world around us. As part of our strategy we want to ensure we leave the world better than we found it.  Customers and consumers Many of our customers increasingly understand the impact they have on the environment and take a greater interest in how our products are made and sold. We want to make sure that our customers are well-informed and able to consume our products responsibly. Employees  are as a business. We want our employees to believe in our purpose and live our  ensure our teams remain aligned. Investors Many investors are creating portfolios for those companies that have a strong ESG strategy. Having clear targets and reporting against these targets helps to demonstrate the importance we place on ESG. Distributors and suppliers As part of our carbon reduction targets, we need to look at our extended carbon footprint from material extraction, manufacture of raw materials, transport, manufacture, distribution, consumer use and disposal at end of life. This allows us to identify pathways for carbon reduction as part of our long-term ambitions to be carbon neutral across the entire Group. Community We are committed to achieving positive social change and ensuring that we  our impact on the environment is crucial to the long-term sustainability of our communities.  A successful ESG framework and strategy will have a positive impact on the environment – on the atmosphere through our carbon emissions and air quality impacts; on the earth through the sourcing decisions we make and the way we manage waste and packaging; and on the oceans through our use of water and the impact of our products.   Forming the ESG Committee demonstrates our commitment to our purpose, and enhances our reputation as a business that understands the importance of doing the right thing. 43 Strategic Report / Section 172(1) statement Principal decision 3: Acquisition of Childs Farm  excited to add an excellent new brand to our Must Win Brands and also to welcome some great new members to our team who will help us build towards delivering our strategy. In deciding whether to acquire Childs Farm, we considered:     for growth through greater market penetration, innovation and new product development and possible international expansion. Childs Farm also had excellent  at the time of the acquisition, and successfully achieved B Corp status in July 2022.   investment for growth and longevity.  Customers and consumers One of the main reasons the Board was interested in the Childs Farm acquisition  to the skin care needs of her own children, the brand has a history of being loved and trusted by parents. The Childs Farm team also had great relationships with key customers in the UK which were complementary to our existing business, and in some cases will help us learn and improve going forward. Employees The Board considered employees in two ways when considering the Childs Farm acquisition. Firstly, it reviewed the team at Childs Farm and concluded that we would not just be buying a brand, but adding a team that brought some valued capabilities. When acquiring Childs Farm we did not make any redundancies or exits a condition of the transaction and we have engaged many of the Childs Farm team across our wider portfolio where they are really adding value. For our existing teams, we were conscious that the sustainability credentials of Childs Farm would be a strong demonstration to our employees of our commitments in this area. Investors  investor returns, when determining to make the acquisition. We strongly believe in   where our investors are leading us. Community Childs Farm has long been active in the communities in which it operates and shares core values with PZ Cussons in this regard. Ranging from donations to the NHS which aligned with similar activities of our Carex brand to their support of environmental groups such as Surfers Against Sewage, Childs Farm shared our commitment to having a positive impact on the communities in which we live and work.   environmental credentials were a strong driver of our acquisition of Childs Farm. We saw Childs Farm as a leader and innovator in plastic reduction and recycling.   The Board considered that the acquisition of Childs Farm would enhance our reputation and demonstrate the strength of our commitment to our strategy and our values. PZ Cussons plc / Annual Report and Financial Statements 2022 44           We have created a shared ESG ambition for the business   informed by an analysis of our material and important               investment should be focused to help us achieve this           can demonstrate real progress to our partners and    SUSTAINABILITY BETTER FOR ALL ESG AT PZ CUSSONS OUR ESG FRAMEWORK, BETTER FOR ALL, ALIGNS TO OUR NEW PURPOSE: FOR EVERYONE, FOR LIFE, FOR GOOD. 45  / Sustainability report Read more / 49 & 57 Read more / 46–71 Improving consumer awareness of responsible consumption        Better For All The United Nations Sustainable Development Goals         for all at all ages FOR GOOD FOR LIFE FOR EVERYONE   and its impacts  Ensure inclusive and equitable quality education and promote lifelong learning for all       Ensure sustainable consumption and production patterns   and marine resources for sustainable development     degradation and halt biodiversity loss  Strengthen the means of implementation and revitalise  PZ Cussons plc / Annual Report and Financial Statements 2022 46 SUSTAINABILITY CONTINUED Better for all is our new ESG framework. This sets out how we will manage    MANAGING OUR ESG IMPACT: OUR ESG FRAMEWORK       For more information /  FOR GOOD FOR EVERYONE          For more information / 49     impacts: on the atmosphere through our carbon emissions and air quality impacts; on the earth through the sourcing decisions     For more information /  56 FOR LIFE Better for all 47  / Sustainability report  Low priority Medium priority High priority                                 MATERIALITY    Materiality is an important part of engaging      deliver the optimum social and environmental      of our most important social and environmental               resources and impact on biodiversity is becoming    continue to shape our activities at a global and     Materiality Matrix PZ Cussons plc / Annual Report and Financial Statements 2022 48 SUSTAINABILITY CONTINUED Responsibility for ESG sits at the Board level. The Executive Leadership Team is responsible for approving the strategy, and monitoring our progress  MANAGING OUR ESG IMPACT: OUR GOVERNANCE       components of the ESG strategy at a central and  at a business unit and global level to support the          our business units and local teams are responsible for ensuring that each country develops appropriate    related publicly reported measures and performance        ESG Committee  Sustainability Team   Must Win Driver Steering Committee Oversight of the transformation scope Approval body for investments Executive Leadership Team (‘ELT’) Approval of direction of travel  Sustainability Steering Committee   49  / Sustainability report                 OUR ESG FRAMEWORK FOR EVERYONE  We are committed to providing high-quality and safe products to our consumers and customers and we regard quality and consumer safety as a fundamental business responsibility. Our products    We focus on creating products that deliver functional and   We have invested consistently in assuring product quality  apply robust management systems and the latest science to ensure that our products are safe for consumers and consistently deliver the functionality that consumers  Our main manufacturing sites are accredited to     Read more about refill packs on our website /       PZ Cussons plc / Annual Report and Financial Statements 2022 50        information about the products they buy and the   to publish this information to support consumer          retain and develop the most talented and capable   Read more about our Values /  Our people    SUSTAINABILITY CONTINUED FOR EVERYONE CONTINUED Health and safety We are committed to delivering globally consistent and           instrumental in improving our performance through the    on improving safety by challenging the unconscious or       2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Change from 2011-12 baseline Change year-on- year Fatalities 0 0 0 0 0 0 0 0 LTI/yr 15 13  3 2 4  +2 LTIFR          AAIFR           51  / Sustainability report Wellbeing                 Supporting employee health and wellbeing in Kenya  business has run a number of initiatives to support and improve employee health          are also supported through an    Supporting hybrid working and wellbeing in Australia    for managers and employees to ensure the     opportunity to be accredited in mental health   also given additional paid leave to recognise  PZ Cussons plc / Annual Report and Financial Statements 2022 52 Global engagement survey    and our engagement scores remained stable at        FY21 FY22 Wellbeing            Leadership and management   Learning   SUSTAINABILITY CONTINUED FOR EVERYONE CONTINUED Culture and purpose    our rich history and ensure our culture is right today and      For more information on our Values /   Diversity    Out of the learnings from our recent engagement survey         53  / Sustainability report Communities        Australia: Support for Foodbank Australia             Nigeria: Cussons Baby Cares Campaign           PZ Cussons plc / Annual Report and Financial Statements 2022 54 SUSTAINABILITY CONTINUED FOR EVERYONE CONTINUED We focus on creating products that deliver functional and wellbeing benefits to our consumers and that meet the growing consumer desire for more sustainable products. 55  / Sustainability report    developed a programme focused on supporting children to prepare for the return     educate them on the responsible disposal     Beauty: Hestia partnership   supports adults and children in crisis and   We provide products and donations  charities for children during the school holidays and animal therapy in Hestia  for employees to fundraise and volunteer  PZ Cussons plc / Annual Report and Financial Statements 2022 56     consumption and the sustainable sourcing of palm oil                            Comments   of plastic based on g/       •  •          content              OUR ESG FRAMEWORK FOR LIFE  We address all our environmental impacts with our purpose in mind. This means minimising our impact on the earth and oceans through: managing air quality and reducing our   SUSTAINABILITY CONTINUED 57  / Sustainability report                 3 million UK shoppers now refill their Carex bottles, which is 10% of all liquid hand soap sold In              In the            Reduce virgin plastic in our packaging by one third by 2030 from a 2021 baseline Ensure 100%  or compostable packaging by 2030  or recycled paper by 2025 PZ Cussons plc / Annual Report and Financial Statements 2022 58 Plastic and packaging continued In      eight tonnes of plastic by changing the dimensions of  SUSTAINABILITY CONTINUED FOR LIFE CONTINUED In    In       Within our                   59  / Sustainability report  Childs Farm: sustainable                                Read more about Childs Farm on our website /   PZ Cussons plc / Annual Report and Financial Statements 2022 60 Carbon and climate Reducing carbon emissions is a priority for our business.        number of initiatives including: •    •  reduction in the consumption of refrigerants •   •    •     during FY22 vs FY21 due to restrictions in the supply of         We continue to build our understanding of the footprints of    environmental impact assessment and scoring system for         SUSTAINABILITY CONTINUED FOR LIFE CONTINUED  Net zero emissions by 2045 across Scope 1, 2 and 3 Scope 1 and 2 emissions reductions aligned with SBTi1 methodology (from 2021 baseline) by 2030 Carbon neutral in our operations by 2025 Scope 3 targets calculated, validated and agreed by 2023   61  / Sustainability report FY22 Current reporting year 4 FY21  1, 2, 3, 4 UK Global Total UK Global Total           2           2  0   0      2            2          2  0   0    2          2   21 113 103 14  121        2                              PZ Cussons plc / Annual Report and Financial Statements 2022 62         Waste   Comments     Water          Comments    3        Carbon and climate continued   SUSTAINABILITY CONTINUED FOR LIFE CONTINUED   By 2030, we aim to send zero waste  appropriate infrastructure exists By 2030 we want to have reduced our water intensity by 30% from our FY21 baseline We intend to make a Water submission to the Carbon Disclosure Project (CDP) for FY23, with a view to full graded submission annually thereafter 63  / Sustainability report  Supporting the Mului tribe in Indonesia              Biodiversity        Reaching our palm oil target means using producers that     We continue to monitor our performance using Starling         Palm oil      are supplied by suppliers         Read more about Palm Oil Targets on our website /     We have made a Forestry submission to the Carbon Disclosure Project for  submitting annually thereafter We are renewing our commitment that 100% of our palm oil will come  compliant producers by 2023  or recycled by 2025 PZ Cussons plc / Annual Report and Financial Statements 2022 64 TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) Introduction                  Climate risk governance     have overall leadership of the delivery of this strategy under                             Scenario analysis Scenarios and approach                    provide business and organisational resilience to these   on Climate-related Financial Disclosures (TCFD) that businesses address and report on  SUSTAINABILITY CONTINUED FOR LIFE CONTINUED 65  / Sustainability report                 Acute      enhanced emissions           Risk Name  PZ Mitigation Plan   our products  regarding the sustainability of materials used in  possibility of introduction of carbon footprint     Short/Medium-term risk                   Short/Medium-term risk  ambitious targets to reduce GHG emissions    government policies and climate change actions   PZ Cussons plc / Annual Report and Financial Statements 2022 66  CONTINUED Risk Name  PZ Mitigation Plan     Emission reporting obligations are changing all     emissions reporting and assurance in the upcoming    Short-term risk         buildings and manufacturing sites to meet more    Short/Medium-term risk     Cost to           infrastructure to implement these technologies and  Medium-term risk  supply chain to phase out our reliance on fossil     Increased cost or          Short/Medium-term risk    environment are at the heart of everything  and formulas are competitive to mitigate cost and sustainable impacts for our customer and  aim to create a resilient sourcing programme that considers our suppliers and communities      SUSTAINABILITY CONTINUED FOR LIFE CONTINUED 67  / Sustainability report Risk Name  PZ Mitigation Plan  As credit ratings begin to incorporate climate   Short/Medium-term risk We have put in place a comprehensive         incorporate climate change considerations into      Short-term risk   the organisation to drive the sustainability      Failure to meet publicly stated sustainability goals    revenue and investment streams as customers   Medium/Long-term risk             to assets and indirect impacts from supply chain  Long-term risk     analysis and climate modelling to better   SUSTAINABILITY CONTINUED PZ Cussons plc / Annual Report and Financial Statements 2022 68 OUR ESG FRAMEWORK FOR GOOD  We behave ethically as a business, through the  our products, and through our corporate and ESG governance processes. Business, governance and ethics       Details of our business model /  Our non-financial KPIs on / 76 Our principal risks on /  to  Details of our employees /  and in the Report of the Directors / 147       approach include: •  • Modern Slavery Act Statement •  •                                          SUSTAINABILITY CONTINUED 69  / Sustainability report Supplier relations   Statement sets out our commitment to       statement and mirrors our ethical principles                                 requiring further detailed information before being considered for approval or        processes to ensure our suppliers meet our rigorous ethical standards and continuing development of our indirect procurement to further improve   PZ Cussons plc / Annual Report and Financial Statements 2022 70 Animal testing        SUSTAINABILITY CONTINUED FOR GOOD CONTINUED Our approach to animal testing is available on our website /     71  / Sustainability report        conduct baseline assessments of each of our businesses and commit to improvement programmes in collaboration     Each of our businesses has established initial improvement        a company must: •   •   •     on all of our businesses by 2026 PZ Cussons plc / Annual Report and Financial Statements 2022 72 Sections 414CA and 414CB of the Companies Act 2006 require us to disclose certain information to allow readers to understand our development, performance and position and the impact of our activities. These are set out below, with references to further disclosure throughout this report as appropriate. NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT CA Ref Disclosure Group approach (including policies and due diligence) A1        1(a)              1(d)    1(e)     2(a)   2(d)    2(e)     73 Strategic Report / Key performance indicators KEY PERFORMANCE INDICATORS HOW WE MEASURE OUR PERFORMANCE.  Revenue net of discounts, rebates and sales taxes (does not include JV revenue) Why we measure Sustainable revenue growth is a key strategic ambition  Like-for-like (LFL) growth adjusts for constant currency and excludes the impact of disposals and acquisitions Why we measure To provide an alternative measure on which to evaluate business performance, excluding the impact of foreign currency movements and M&A £592.8 2022 (2.4)% 7.1% 2021  £592.8m  2.9%     FINANCIAL £603.3m 2021 £587. 2m 2020 17.5% 2020 £49.2m 2020 £30.7m 2021 2022 £9.8m  Cash, short-term deposits and current asset investments, less bank overdrafts and borrowings Why we measure Indicator of the overall debt position of the Company and a way  of the Group  £9.8m   as trade receivables and inventory less trade payables) as a % of revenue Why we measure Indicator of the working capital (stock, debtors, creditors) required to support the sales that we make  2022   8.1% 7.1% 2021   before taxation and adjusting items Why we measure  internal and external targets and incentives £66.6m 2022 £68.6m 2021 £61.8m 2020   £66.6m   operations before tax Why we measure Important statutory measure of  £65.3m 2022   £65.3m £71.5m 2021 2020 £18.3m 2020 2022   / Annual Report and Financial Statements 2022 74 KEY PERFORMANCE INDICATORS CONTINUED  Basic earnings per share from continuing operations adjusted for the impact of adjusting items 3 Why we measure A key indicator of value enhancement to shareholders 12.71p 2022 12.02p 2022 13.12p 2021 10.09p 2021 12.17p 2020 5.59p 2020    12.71p  Basic earnings per share from continuing operations Why we measure A key indicator of value enhancement to shareholders   12.02p “We have delivered a resilient          operations before adjusting items 3 , as a % of revenue Why we measure Indicator of the return on sales prior to adjusting items 3  and taxation costs   operations as a % of revenue Why we measure Indicator of the return on sales  costs  2022  2022   11.5%   11.2% 11. 8% 2021 12.2% 2021 11. 2% 2020 2020  Cash generated from operating   Why we measure  performance indicator in terms of demonstrating the Group’s ability to convert earnings into cash  2022 70.3% 2021 133.3% 2020   66.4% FINANCIAL CONTINUED    3.8% 75 Strategic Report / Key performance indicators STRATEGIC  The growth of revenues generated from our Must Win Brands (MWB) Why we measure    2022   (4.8)% 11.0% 2021 9.5% 2020  From continuing operations, gross  Why we measure  to demonstrating progress on price/mix growth  2022 39.3% 2021 38.7% 2020   38.4%    Why we measure Measures operating performance of the Company 2022 2020  £50.2m £(9.4)m 2021 £19.7m £50.2m   Why we measure  performance indicator in terms of tangible return to shareholders 6.40p 2022 6.09p 2021 5.80p 2020  6.40p   12.71p    83   (4.8)%   80%     / Annual Report and Financial Statements 2022 76  Basis of calculation 2020 £m 2021 £m 2022 £m  continuing operations 18.3 71.5 65.3 Adjusting items 3 43.5 (2.9) 1.3   61.8 68.6 66.6 Please refer to page 83 for reconciliation of Alternative Performance Measures to statutory results.  Basis of calculation 2020 £m 2021 £m 2022 £m Average net working capital 102.5 42.9 48.3 Total revenue 587.2 603.3 592.8      KEY PERFORMANCE INDICATORS CONTINUED 87 2021 78% 2021 2  Grams of plastic per kilogram  Why we measure To monitor the progress against our Plastic Promise commitment to minimise waste and increase recyclability  Based upon a set of questions within our annual survey of employees Why we measure To monitor the wellbeing of our employees who are a key stakeholder for the business  Lost Time Incident Frequency Rate (LTIFR) is the number of health & safety occurrences which result in one or more days’ absence from work (excluding the day of the incident) per 200,000  Why we measure    Total absolute tonnes of Scope 1 & 2 CO 2 e Why we measure To monitor the impact of our operations on the environment 49,879 2022 0.06 2020 0.04 2021 0.08 2022 47,755 1 2021 50,401 2020 76 2020   83  80%  LTIFR 0.08   2 e 49,879 NON-FINANCIAL 83 2022  2022        77 Strategic Report / Key performance indicators  Basis of calculation 2020 pence 2021 pence 2022 pence Basic earnings per share 5.59p 10.09p 12.02p Impact of adjusting items 2 6.57p 3.03p 0.69p  per share 12.17p 13.12p 12.71p  Basis of calculation 2020 £m 2021 £m 2022 £m Cash and short-term deposits 78.7 87.0 163.8 Overdrafts (1.2) 0.0 (0.1) Current asset investments 0.3 0.3 0.5 Borrowings (127.0) (118.0) (174.0)  (49.2) (30.7) (9.8)  Basis of calculation 2020 £m 2021 £m 2022 £m Adjusted 2  continuing operations 65.9 71.0 67.9 Revenue 587.2 603.3 592.8        Basis of calculation 2020 £m 2021 £m 2022 £m  continuing operations 1 91.4 91.7 87.3  1 121.8 64.5 58.0  rate     Basis of calculation 2020 £m 2021 £m 2022 £m  22.4 73.9 66.6 Revenue 587.2 603.3 592.8        Basis of calculation 2020 £m 2021 £m 2022 £m MWB revenue reporting year 269.8 299.4 281.4 MWB revenue prior year 246.5 269.8 295.7    (4.8%)  Basis of calculation 2020 £m 2021 £m 2022 £m Revenue from continuing operations 587.2 603.3 592.8  continuing operations 227.0 236.9 227.5       Basis of calculation 2020 MT 2021 MT 2022 MT Total plastic (metric tonnes) 20,176 20,012 17,477  (metric tonnes) 263,809 230,675 211,386   76 87 83   1. Please refer to page 83 for reconciliation of Alternative Performance Measures to statutory results. 2. Further details on adjusting items are set out in note 3 on page 188. The information contained on this page is intended to assist the reader in reconciling between IFRS measures and the alternative performance measures (APMs) used within the preceding pages of this report. PZ Cussons plc / Annual Report and Financial Statements 2022 78 OVERVIEW OF GROUP FINANCIAL PERFORMANCE BUSINESS REVIEW GROUP PERFORMANCE                                     79 Strategic Report   FY22 Revenue £193.0m  (11.0)%                                      Europe and the Americas (32.6% of FY22 Group revenue) 2022 Reported growth/ (decline) (%)      n/a  £35.0m   18.1%                       Group percentage of revenue 32.6%  PERFORMANCE BY GEOGRAPHY PZ Cussons plc / Annual Report and Financial Statements 2022 80 FY22 Revenue £173.8m  (7.2)% Group percentage of revenue 29.3%  BUSINESS REVIEW CONTINUED  PERFORMANCE BY GEOGRAPHY CONTINUED                              (29.3% of FY22 Group revenue) 2022 Reported growth/ (decline) (%)  £173.8m   3.0% n/a   1.0%  12.0%   £37.0m                81 Strategic Report   FY22 Revenue £222.0m  15.3% Group percentage of revenue 37.4%        continue to build penetration.                Africa (37.4% of FY22 Group revenue) FY22 Reported growth/ (decline) (%)  £222.0m 15.3%  22.3% n/a  £22.3m 108.4%  10.0% 440bps   217.8%                     PZ Cussons plc / Annual Report and Financial Statements 2022 82 FINANCIAL REVIEW OTHER FINANCIAL ITEMS                   Adjusting items                         Taxation                                          uncertainty and cost volatility. Dividend          83 Strategic Report   Reconciliation of Alternative Performance Measures to Reported Results Year ended 31 May 2022 Year ended 31 May 2021   £71.5m  £1.3m      £1.3m £2.4m   £20.7m Adjusted EBITDA     £73.4m        1 66.4% 70.3%     £1.3m    £71.0m Revenue    11.5% 11.8%  12.02p    3.03p  12.71p 13.12p   £87.0m   –  £0.5m £0.3m        £87.3m            PZ Cussons plc / Annual Report and Financial Statements 2022 84 Our approach to risk management The Group uses a risk management process and common risk framework to ensure we identify, assess and mitigate risks that threaten the successful delivery of strategic objectives.  of risks, including emerging risks, at the operational level. These risks are then assessed, including an assessment of the potential impact of the risk on our business, whether the risk is increasing or decreasing and at what pace, and the extent to which the risk can be mitigated or controlled. The process also seeks to establish our appetite for each risk, and to balance the level of risk and opportunity in our overall portfolio. Risk management is the responsibility of the Board, which it has primarily delegated to the Audit & Risk Committee. The Board periodically reviews the top risks in the register  in either the Audit & Risk Committee (see pages 110 to 115 for further information) or in other committees which have   the risk management framework. The Executive Leadership Team (ELT) periodically reviews risk registers, operating both top-down and bottom-up    principal risks may be performed to ensure that controls are adequately resourced and maintain exposure within  is owned by a member of the ELT. The Group Internal Audit function provides independent assurance to both the executive and the Audit & Risk Committee on the  internal control systems. In recognition of the fact that the interim Head of Risk and Head of Internal Audit roles  steps to ensure independence of the Group Internal Audit function is maintained when necessary.  with our vision and culture. The Group is exposed to a number of risks as a result of its business activities. In reviewing these risks, and the opportunities and returns associated with them, the Board has determined to adopt a very low risk appetite for risks which may adversely impact RISK MANAGEMENT ENABLING OUR STRATEGIC PROGRESS its business opportunities or reputation. These include areas such as product safety and quality, health and safety, cyber-security, legal, compliance, climate change, environmental and regulatory risks. The Group also has a relatively low risk appetite through our supply chain and  credit risk exposure, ensure the resilience of our supply chain particularly amid the current period of volatility,  tax planning structures. Comparatively, the Board has a higher appetite for risks which are associated with growth and potential higher returns such as our focus on innovation and new product development, our involvement in emerging markets, our recent acquisition of Childs Farm or our ambitious sustainability targets including our B Corp ambitions. We seek to mitigate our risk exposure to within target levels through insurance cover, planning, or control processes internally or natural portfolio hedges such as the diversity of our brand and product ranges and our avoidance of over-concentration on a single category or market. Where the Group works with a joint venture partner, it seeks to apply the same risk management processes. The Group’s ability to unilaterally enact mitigation processes in relation to joint venture risks is sometimes constrained by our joint venture agreements, however, the Group  partners are aligned with us in their approach to risk. Our risk management processes are designed to manage rather than eliminate risks and provide only reasonable not absolute assurance against material misstatement or loss. In FY21, the Group adopted these risk management processes. Over the course of FY21 and FY22, the Board  improvement over the previous processes, the Board noted that risk management could be better integrated into the overall business planning and management processes. A new Head of Internal Audit is expected to join the Group in FY23 who will lead a review of the risk management processes and resourcing with a view to further embedding risk management within our business. 85 Strategic Report / Risk management I M P L E M E N T A S S E S S P L A N I D E N T I F Y M O N I T O R & R E P O R T OUR RISK MANAGEMENT PROCESS  risk mitigation activities are essential elements of ensuring that we are able to deliver on our strategy. Our approach to emerging risk  • Potential new and emerging risks are reported to the Board and considered during its periodic reviews of the Group risk register. • In formulating and evolving the Group risk register, the ELT and the Board take into account the principal  to determine whether there are any new risks which require Group-wide focus and mitigation. • At its annual strategy session, the Board assesses any emerging risks (or opportunities) which should be taken into account when formulating and executing strategy in the future. • These processes are informed by regular discussions with the Group’s network of external advisers including its lawyers across all relevant territories, accountants and tax advisers, internal audit partners, insurance brokers, health and safety advisers, and sustainability and PR advisers. The Company is also a member of various trade and industry bodies across the world and leverages the experience of its peers and external industry experts.  We continually assess, on a gross basis (i.e. before we take any mitigating actions), whether the principal risks facing the Group are increasing, showing no change or decreasing compared to the prior year. Those risks that we believe are currently most prominent  •  levels of cyber attacks which if not prevented or otherwise mitigated, could result in a loss of key business, systems and/or result in material losses. We manage this by employing cyber security systems and by deploying comprehensive awareness and training programmes. •  we continue to see cost of living challenges in most of  to increase our cost of goods. We manage this risk by focusing on reducing costs where possible without impacting the consumer experience and by building strong brands that can maintain strong margins. •    competition to recruit and retain top talent. We mitigate this challenge by focusing on creating an excellent working culture, investing in learning and development, ensuring our employees are engaged and have good career opportunities and by remaining competitive on remuneration. •  environmental and human safety implications of climate change and plastic pollution continues to intensify.  for competitive advantage, the risk of adverse consumer or customer reaction, increased cost and regulatory penalties continues to rise. We have set out an ambitious plan to mitigate this risk, including our new sustainability targets set out on page 44. Board of Directors Defines policy, sets risk appetite and assesses principal   Executive Leadership Team     Audit & Risk Committee          OUR RISK MANAGEMENT FRAMEWORK PZ Cussons plc / Annual Report and Financial Statements 2022 86 1 8 3 9 4 7 6 5 2 LIKELIHOOD (GROSS) 10 IMPACT OUR RISK PROFILE  LINK TO STRATEGY 1 Where To Play We have a clear focus on the leading brands in our core categories within our priority markets. 2 How To Win – the PZ Cussons Growth Wheel Adopting the PZ Cussons Growth Wheel enables us to build brands in a systematic and repeatable way. 3 Putting sustainability at the heart of everything we do We are elevating sustainability, broadening our ESG  measured over time. 4 Evolving our culture We have reshaped our purpose and our values, ensuring each person in the organisation is clear on their role and engaged in executing our new strategy. 5 Developing leaders at all levels We have re-established the rhythms and disciplines of talent management to develop leaders at all levels. 6 Building our capabilities We’re developing the skills and processes required for  7 Reducing complexity We are dramatically simplifying our complex operations and ways of working. RISKS 1 Consumer, customer and economic trends 2 Talent development and retention 3 IT and information security 4 Sustainability and environment 5 Business transformation 6 Health & safety 7 Supply chain and logistics 8 Legal and regulatory compliance 9 Financial Controls (Treasury and tax) 10 Pandemic PRINCIPAL RISKS AND UNCERTAINTIES 87 Strategic Report / Principal risks and uncertainties RISK 1: CONSUMER, CUSTOMER AND ECONOMIC TRENDS Trend: Link to Strategy: 1, 2, 7 Description of risk: In the aftermath of the Covid-19 pandemic,    including raw materials needed to  pressure on our cost of goods. At the same  a cost of living crisis amongst our consumers  how to allocate their resources. As our input costs rise, our ability to increase our prices may not completely cover such cost increases resulting in decreasing margins. Where we are able to successfully execute cost increases some of our valued consumers may choose to trade-down to lower-priced, lower-performing products which could impact sales volumes. We anticipate that there will be pressure from   examples of major consumer goods companies pulling goods from shelves of retailers where they could not agree new terms. Measures to manage risk: We continue to actively listen to our consumers via social media, market research and shopper insights to ensure that our product development pipelines respond rapidly and meet our consumers’ needs. We remain focused on cutting any costs we can from our  We may also increase prices where necessary in the face of increasing costs. We continue to focus on maintaining strong relationships with our existing customers and developing relationships with new customers. In our developed markets we have joint business plans in place with our key customers, with agreed KPIs that are subject to regular monitoring and performance reviews. Our strategy continues to be to operate across a number of both developed and developing markets and therefore we are able to mitigate, to a degree, regionalised risks. RISK 2: TALENT DEVELOPMENT AND RETENTION Trend: Link to Strategy: 1, 2, 3, 4, 5, 7 Description of risk: We recognise that to deliver sustained growth, we require the best calibre people. Failure to attract, develop and retain the correct  experienced and motivated employees could jeopardise our ability to meet our strategic objectives. Following the Covid-19 pandemic, companies saw a large increase in attrition, sometimes referred to as ‘the great resignation’. Since then, the competition  particularly in areas such as IT and e-commerce which saw accelerated growth through the pandemic. With the increasing global uncertainty and the enduring impacts of COVID-19, we also see employee wellbeing as an increasing risk along with increasing  and hybrid working solutions. Measures to manage risk: We are strengthening our human resources processes, with a focus on attracting, retaining and developing the right talent. We regularly review our reward and recognition programmes. We have also taken steps to improve the dialogue with our workforce, conducting a global engagement survey with encouraging scores which we have analysed to develop an appropriate response to drive further improvement in this area. We also maintain Group-wide social media/communication tools, as well as holding quarterly global  in our market aimed at providing wellness support and education and mental health support through our employee assistance hotline. Attracting key talent in some regions remains a challenge but our global appraisal and employee management process helps us to identify training requirements and validate succession plans, as well as to identify our future leaders and critical talent that needs to be retained within the business. Talent development, through our commitment to develop leaders at all levels of our business, forms a key part of our new strategy. A major development in the year has been the launch of the Workday IT system, providing  hybrid and virtual working arrangements across our markets, which are enabled by the  TREND Increased Same Decreased LINK TO STRATEGY 1 Where To Play 2 How To Win – the PZ Cussons Growth Wheel 3 Putting sustainability at the heart of everything we do 4 Evolving our culture 5 Developing leaders at all levels 6 Building our capabilities 7 Reducing complexity PZ Cussons plc / Annual Report and Financial Statements 2022 88 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED RISK 3: IT AND INFORMATION SECURITY Trend: Link to Strategy: 3, 6 Description of risk: We communicate with our customers and suppliers electronically and our manufacturing, sales and distribution operations are dependent on reliable IT systems and infrastructure. Prolonged disruption to these systems could have  performance of the Group. Additionally, cyber security threats are becoming more prevalent and sophisticated in nature, which could lead to unauthorised access to our systems and loss of sensitive information. Measures to manage risk: A centrally governed IT function continually monitors known and emerging threats that  informed by the outcome of in-depth externally facilitated reviews of information security  security incidents, which are being seen across all industries. We have continued during the year to further develop our IT policy suite and support this via a comprehensive training and awareness programme to ensure both business and personal information remain protected. Processes continue to be maintained to ensure that our critical data is backed up and recoverable and our ongoing investment in upgrades/patches of our systems and the applications we use ensures their security and reliability. We routinely test our systems to  and controls are appropriate to mitigate this risk, we also recognise the continually increasing sophistication of cyber-attacks and the increased regulatory focus on data security along with recent geo-political developments that are seeing increasing cyber-attack activity. RISK 4: SUSTAINABILITY AND ENVIRONMENT Trend: Link to Strategy: 1, 3, 6 Description of risk:  doing business is vital. This includes ensuring the raw materials we require are responsibly  are a responsible and integral part of the communities in which we operate. Failure to do so risks alienating key stakeholders, including consumers and customers, who are increasingly focused on environmental sustainability and transparency in the supply chain, and damaging the goodwill in our brands, with consequent limitation of our ability to grow and create value. Measures to manage risk:   Our ESG activities, in particular, our environment, sourcing and community programmes, ensure that we understand and take account of the sustainability impact of our operations and that we proactively seek opportunities to align the interests of our key stakeholders and create value for all. This includes taking account of the human rights of all those working within our supply chain and in local communities. We continue to make good progress on a number of key sustainability projects, including our recently announced sustainability goals set out on pages 44 and 45. We have also improved our processes aimed at ensuring that our supply chain aligns with our sustainability goals, including the launch of our new third party risk management platform provided by Dow Jones which helps us ensure that our supply chain is free from all forms of corruption and modern slavery. RISK 5: BUSINESS TRANSFORMATION Trend: Link to Strategy: 4, 6, 7 Description of risk: We will continue to strive to improve the way our business operates, leveraging additional  execute the new strategy; however, there is a risk that failure to execute these initiatives   impact the return we are able to make to our shareholders. The concept of reducing complexity is a core element of our new strategy. Measures to manage risk: Following the launch of our new strategy last year, we have been focusing on embedding this across all areas of the business. Various dedicated steering committees, often chaired by ELT members, including the CEO and CFO and project delivery teams, including ELT members, have been established, who conduct in-depth analysis of progress and make regular reports to the Board. Our new adjusting items policy and a dedicated ELT forum track the delivery, cost and accounting treatment for a number of these transformational projects. FY22 saw the launch of the controls transformation project and the successful delivery of Phase 1 of our HR transformation with the launch of our Workday platform. 89 Strategic Report / Principal risks and uncertainties RISK 6: HEALTH & SAFETY Trend: Link to Strategy: 1 Description of risk: The health and safety of everyone who is impacted by our business and the wellbeing of our consumers, employees and visitors are of paramount importance to us. This encompasses the safety and quality of our products, the safety of our facilities and  employees working from home under our new working model, including the mental health of our people as we all adapt to a new working model. A failure in the practices we adopt to ensure health and safety may result   regulators together with possible criminal liability for the Group. Measures to manage risk: We apply robust quality management standards and systems, rigorously monitoring them throughout all stages of the supply chain. This applies not only to our own production facilities but to our third-party manufacturers as well. We will soon be launching our new quality and consumer safety policy to ensure that our standards in this area are maintained and developed where necessary. We also maintain a dedicated consumer complaints hotline. Any incidents relating to the safety of our consumers or quality of our products are actively investigated to ensure  across the Group where we seek to identify, assess and respond to incidents to ensure we continuously improve our health and safety framework. Having delivered the new health and safety policy, our focus is on cultural initiatives to ensure that the policy is embedded in the business. This includes investment in health and safety awareness and training. RISK 7: SUPPLY CHAIN AND LOGISTICS Trend: Link to Strategy: 3, 6 Description of risk: Our production and distribution facilities could be severely impacted by adverse events, such as a failure of a key supplier, a health and safety incident, an environmental failure or global events. We have felt this risk increase recently as a result of Covid-19 lockdowns, including recent lockdowns in China, the war in Ukraine, well-publicised shipping and logistics challenges including port delays and the Suez Canal blockage and shortages of key commodities and input materials. Measures to manage risk: We undertake a rigorous selection process prior to engaging with new third-party suppliers and perform ongoing audits and performance monitoring to ensure that contracted standards are being maintained or exceeded. We use multiple suppliers where possible. Our dedicated Group procurement team has specialist knowledge and understanding of key raw materials and commodities markets and our systems allow us to review forward requirements and to obtain value. RISK 8: LEGAL AND REGULATORY COMPLIANCE Trend: Link to Strategy: 3, 6 Description of risk: We are subject to a wide spectrum of legislation, regulation and codes of practice that can vary between the geographies in which we operate. Examples include product safety, competition, anti-bribery and corruption and employment. Failure to adhere to such laws and regulations can result in reputational damage, as well as  criminal liability. Measures to manage risk: Our legal and regulatory specialists at both Group and regional level monitor and review the external legal and regulatory environment to ensure that we remain aware of and up to date with all relevant laws and legal obligations. They are also supported by a network of external experts who can be engaged as required. This is particularly important in developing countries where changes in the law can be sudden and unpredictable. Last year  policy, which had been launched the year before. This year, the focus has been on training  saw the appointment of a new Group Head of Ethics and Compliance reporting to our General Counsel, along with a dedicated Ethics and Compliance manager for Nigeria. We also provided training to our board and ELT on the recent rise in litigation related to sustainability claims. TREND Increased Same Decreased LINK TO STRATEGY 1 Where To Play 2 How To Win – the PZ Cussons Growth Wheel 3 Putting sustainability at the heart of everything we do 4 Evolving our culture 5 Developing leaders at all levels 6 Building our capabilities 7 Reducing complexity PZ Cussons plc / Annual Report and Financial Statements 2022 90 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED RISK 9: FINANCIAL CONTROLS (TREASURY AND TAX) Trend: Link to Strategy: 3 Description of risk: The international nature of our operations gives rise to both transaction exchange rate risk and translation exposure when the results, assets and liabilities of foreign subsidiaries are translated into sterling. In addition, in the event of a tax authority  jurisdiction in which we operate, there is a risk of an unplanned charge and resulting cash    Equally, as an international integrated Group, we must comply with transfer pricing and other related policies and laws in each of our markets which can change from time to time with little notice. Measures to manage risk:  our non-speculative approach to the management of foreign currency exposures, all overseen by our recently appointed Group Director of Treasury and Tax. Transactional currency exposures are managed within prescribed limits with short- to    Our in-house taxation expertise is also complemented by the use of specialist tax consultants and advisers to ensure compliance with all local and international tax regulations and treaties.  and improved where necessary as part of our recently launched Controls Transformation Project, which will be implemented with the support of the recently appointed Director of Internal Control. RISK 10: PANDEMIC Trend: Link to Strategy: 1, 2, 3, 6 Description of risk:  pandemic and associated lock-downs and other restrictions were more prevalent in FY21, these have not completely subsided and the world continues to be subject to uncertainty around travel restrictions,  variants or other strain on public health infrastructure resulting in further lockdowns. Like all businesses, we continue to maintain a high-risk awareness in this area, although we consider that the risk exposure has reduced through increased awareness across the business and the implementation of action plans across the business in response to the pandemic. There is also the continued risk to the business through both the wider economic uncertainty which the pandemic has generated and may yet continue to generate, as well as the potential impact on our day- to-day operations through, for example, the risk of operational disruption, supply chain  mitigated by the contingency plans which we have developed. Measures to manage risk: We continue to take a number of steps to address the risks relating to our people during  provision of the appropriate facilities to facilitate working from home, and keeping in close contact with all our people through formal and informal means, including employee surveys and virtual meetings, to ensure that we support each other.  supply and launch new products as required, to meet demand, despite the challenges in international sourcing due to the pandemic. We continue to explore ways to improve how we work with our suppliers and customers to ensure that we maintain our response to this  In relation to the wider economic uncertainty, the Group has continued to adopt strict   structures and an increased focus on working capital.  the lifting of restrictions, the vaccine roll out and the existence of contingency plans in the business, we recognise that pandemic risk will continue to present itself in many   China. We maintain our diligence in this area and have considered these elements in relation to separate risks. TREND Increased Same Decreased  LINK TO STRATEGY 1 Where To Play 2 How To Win – the PZ Cussons Growth Wheel 3 Putting sustainability at the heart of everything we do 4 Evolving our culture 5 Developing leaders at all levels 6 Building our capabilities 7 Reducing complexity 91 Strategic Report / Principal risks and uncertainties Going concern statement The Group’s business activities, together with the factors   position of the Group and liquidity position are described within the Financial Review. In addition, note 18 of the Consolidated Financial Statements includes policies in  management, and policies for managing credit risk, liquidity  and interest rate risk and capital risk. After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for a period of at least 12 months from the date of approving the Financial Statements. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. A viability statement has been prepared and approved by the Board and this is set out below.   In assessing the prospects of the Group, the Board has  •  portfolio of products, operations and customers, which  as well as large customer/ product combinations, strong product demand, especially in the current environment, the share of the market and product penetration our focus brands have and the resilience and strength of manufacturing facilities and overall supply chain. • The Group’s strong cash generation and its ability to renew and raise debt facilities in most market conditions.  facilities headroom in its existing committed banking arrangements.  In determining the appropriate viability period, the Board  •  four-year period. The strategic planning process is led by the CEO and is fully reviewed by the Board. • The investment planning cycle, which covers four years. The ELT considers, and the Board reviews, likely customer demand and manufacturing capacity for each of its  maximum lead time involved in developing new capacity. The Board considers that, in assessing the viability of the Group, its investment and planning horizon of four  appropriate period.  • ‘Top-down’ sensitivity and stress-testing. This included a recent review by the Audit & Risk Committee of four-year cash projections which were stress tested to determine  deteriorate before breaching the Group’s facilities. In  debt were stress tested. • The likelihood and impact of severe but plausible scenarios in relation to principal risks as described on  individually and collectively. While the principal risks all  of them are considered likely, either individually or collectively, to give rise to a trading deterioration of the magnitude indicated by the stress testing and to threaten the viability of the business over the four-year assessment period. PZ Cussons plc / Annual Report and Financial Statements 2022  PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED    SCENARIO MODELLED LINK TO PRINCIPAL RISKS MITIGATION 1. CONSUMER, CUSTOMER, ECONOMIC a. Pandemic / War (related economic downturn,  impacts to cost base) – 4% y-o-y reduction in revenue in UK, Beauty, Australia, and Indonesia.  markets. Testing basis derived through analysis of actual pandemic impacts during Covid-19 and using plausible rates based on this benchmarking. b. Competitive landscape leading to higher M&C spend – M&C % increased by 2ppt above base case, derived by reference to similar situations in FY20 and FY21. c. Nigeria impact (general economic & political uncertainty) – Naira devaluation and/or reduced    FY24, then resumes in line with the base case. 10. Pandemic / health crisis 1. Consumer, customer and economic trends The Group has and is continuing to strengthen its capabilities in revenue growth management, marketing and supply chain. These capabilities are important to counteract such pressures and the Group has already demonstrated its ability to   Procurement constantly works with vendors to obtain the best prices. Known cost increases are already factored into the budget and forecasts. 2. TALENT DEVELOPMENT AND RETENTION a. Revenue reduction & negative margin impact (i.e., worse performing team) – 5% y-o-y reduction in revenue in UK, Beauty, Australia, Indonesia and Nigeria Family Care. Reduction in TGM% vs base case by 5ppt in the same markets. Testing basis derived through analysis of actual pandemic impacts during Covid-19 and using plausible rates based on this benchmarking. b. Increased recruitment fees – y-o-y increase in  data for UK, ANZ, Nigeria and Indonesia. 2. Talent development and retention The Group has and is continuing to strengthen its culture, values and training in order to make PZ Cussons an attractive place to work in order to attract talented employees.  maintained and tightly controlled overheads. 3. IT / INFORMATION SECURITY AND FINANCIAL CONTROLS a. Fines (i.e., regulatory)  in FY23, based on GDPR penalty regime currently in place. b. Reputation – reduced revenue – Flat revenue Group wide for the duration of the plan from FY23 onwards. c. Business continuity (cyber-attack scenario) – short term business closure, etc - Loss of 1 month of Group revenue in FY23 (a recent study in the UK suggests that the median cost of a cyber-attack in  3. IT / information security 9. Financial controls  maintained and tightly controlled overheads. The temporary loss of system access  performance as there are detailed contingency plans in place to cover such  on hand to cover any temporary loss of production. 4. SUSTAINABILITY AND ENVIRONMENT a. Regulatory environment, e.g., taxes/levies  (extrapolating from assessment of unmitigated impact of recently introduced UK plastic tax). b. Consumer choice, e.g., Revenue impacts – Y-o-Y revenue growth reduced by 1ppt vs base case in all major markets (UK, Beauty, Australia, Indo, Nigeria).  – Loss of 3 months of revenue in FY23 in Indonesia. 4. Sustainability and environment Increasing the proportion of PCR plastic in the Group’s products to avoid tax on virgin plastics. Improving the Group’s capabilities in revenue growth management, marketing and supply chain. The temporary loss of production is highly   cover such eventualities. 93 Strategic Report / Principal risks and uncertainties The results of the bottom-up scenario modelling showed that no individual event or plausible combination of events  viability of the Group in the period assessed. It would, therefore, be likely that the Group would be able to withstand the impact of such scenarios occurring over the assessment period and would continue to operate in accordance with its bank covenants. The ratio of net debt to EBITDA at the end of FY22 of 0.1x remains substantially below the maximum covenant level under the Group’s  committed debt facilities mature in November 2023, however, management has held preliminary discussions with both current and prospective members of the banking  revolving credit facility will not be problematic.  Management has performed reverse stress-testing on the key banking covenants to assess by how much the performance of the Group would need to deteriorate for there to be a breach of the covenants. For the key leverage covenant to be breached EBITDA would need to fall  and the Board does not believe this scenario to be plausible. Management would take mitigating actions to avoid such a decline in performance long before it would occur, such as reducing the dividend payment, stopping capital expenditure or taking other actions to preserve cash. PZ Cussons plc / Annual Report and Financial Statements 2022 94 See Our Values / Page 18 DYNAMIC AND PROACTIVE, CAPABLE AND FLEXIBLE, EMBRACING CHANGE AND MOVING FAST INTO THE FUTURE IN OUR TEAMS WE ARE ENERGETIC PZ Cussons people aspire to be our BEST INTRODUCING OUR VALUES BOLD STRIVINGENERGETIC TOGETHER 95 Governance / Introducing our BEST values GOVERNANCE 96 Our Board 98 Chair’s introduction to governance 100 Board leadership and Company purpose 104 Governance framework 106 Nomination Committee report 110 Audit & Risk Committee report 116 ESG Committee report 118 Remuneration Committee report 124 Remuneration Policy 132 Report on Directors’ remuneration 144 Report of the Directors Our ENERGETIC value in action: WE ARE UP FOR EVERY CHALLENGE • adapting with agility to stay ahead • responding at speed, building momentum • evolving to overcome every obstacle in our way PZ Cussons plc / Annual Report and Financial Statements 2022 96 Gender diversity Tenure Ethnicity Female 0–3 years > 5 directors Other Male 4–7 years > 4 directors British 7 5 4 2 44% 29% 5 4 44% A DIVERSE AND EXPERIENCED BOARD. OUR BOARD 1 4 7 2 5 8 3 6 9 Directors’ core areas of expertise • UK institutional shareholders • Recent financial experience • Remuneration experience • Chair skills • Mentoring and coaching skills • Sector experience • Retail experience • Africa experience • South-East Asia and ANZ experience • Entrepreneurial experience • Operational experience • Strategy • M&A, strategic partnerships • M&A integration • Business transformation • E-commerce • Sales and marketing * As at 31 May 2022 and as at the date of the report. 97 Governance / Board of Directors Caroline Silver N E Non-Executive Chair Appointed: 2014 Skills & experience: Caroline Silver joined the PZ Cussons Board as a Non-Executive Director in 2014, becoming Senior Independent Director in 2016 and Chair in 2017. She is a chartered accountant and over a 30+ year career in investment banking. She has previously held senior corporate finance and mergers and acquisitions positions at Morgan Stanley, Merrill Lynch and most recently at Moelis and Company. She has a wealth of international experience, especially within African markets. Independent on appointment: Yes Other appointments: • Non-Executive Director of BUPA • Non-Executive Director of The Intercontinental Exchange, Inc. Jonathan Myers E Chief Executive Officer Appointed: 2020 Skills & experience: Jonathan is an experienced FMCG executive, having worked for a number of well-known global branded consumer goods businesses across a range of categories including beauty, personal care, home care and food. Prior to joining PZ Cussons on 1 May 2020, he was chief operating officer at Avon Products Inc, an international beauty company where he had overall responsibility for supply chain, marketing, digital, research & development and IT functions and was a core member of the executive team delivering a successful turnaround of the business. He spent the first 21 years of his career at Procter & Gamble, where he worked across a wide range of categories and had extensive experience in developed and developing markets across Europe, Asia, South America and beyond. At Procter & Gamble he progressed to general manager, oral care and feminine care for the Greater China Region, before moving to the Kellogg Company, the worldwide cereal and snacks group, where he held a number of senior leadership positions, serving as managing director, UK and Ireland from 2012 and then also vice president, European markets, from 2014. Independent: No Sarah Pollard E Chief Financial Officer Appointed: 2021 Skills & experience: Sarah joined PZ Cussons from Nomad Foods, Europe’s leading frozen food company, where she most recently served as deputy chief financial officer. Prior to that, she was CFO for their Birds Eye business. Sarah is a chartered management accountant, having qualified with PricewaterhouseCoopers, and subsequently worked in investment banking, specifically in mergers & acquisitions at Deutsche Bank. Prior to Nomad Foods, Sarah held a number of senior finance positions at Diageo, Tesco and Unilever. She has worked in commercial, operational and corporate finance roles including investor relations and so brings with her a deep understanding of creating shareholder value in the consumer goods sector. Independent: No Kirsty Bashforth N R E Non-Executive Director Appointed: 2019 Skills & experience: Kirsty is Chief Business Officer at Diaverum AB. Prior to this she ran her own consultancy business QuayFive for four years, advising CEOs on change, organisational culture and leadership, having previously held a number of senior executive positions during a 24-year career at BP. These included leading the strategic co- ordination of BP’s global B2B businesses and as group head of organisational effectiveness. Kirsty is an experienced remuneration committee chair and has assumed this role on the Board from 1 July 2020. Independent: Yes Other appointments: • Non-Executive Director of Serco Group plc Jeremy Townsend A R E Non-Executive Director Appointed: 2020 Skills & experience: Jeremy served as chief financial officer of Rentokil Initial plc until August 2020. An experienced FTSE 100 finance director, he was previously group finance director of Mitchells & Butlers and held senior finance positions at Sainsbury’s after starting his career with Ernst & Young. He is also a former Accounting Council member of the Financial Reporting Council. He currently serves as a non-executive director of NHS England and chairs its audit and risk committee. Independent: Yes John Nicolson A N E Senior Independent Director Appointed: 2016 Skills & experience: John has significant experience of global consumer goods for both developed and emerging markets. His early career in marketing and s at ICI, Unilever and Fosters Brewing Group, then in corporate development and general management. He was a plc board member at Scottish & Newcastle plc, regional president Americas and executive committee member at Heineken NV and more recently Chair of AG Barr plc. He has also held the positions of chairman at Baltika OAO, deputy chairman at CCU SA, director at United Breweries Ltd India, non-executive director at North American Breweries, and member of the advisory board at Edinburgh University Business School. Independent: Yes Dariusz Kucz A N E D Non-Executive Director Appointed: 2018 Skills & experience: Dariusz Kucz joined the PZ Cussons Board as a Non-Executive Director on 1 May 2018. Until recently, he was chief top-line officer of Haribo, the international confectionery company, leading its global commercial operations. He has previously held senior leadership roles at Danone, where he led the baby food business in the Asia Pacific, and Wrigley, where he was regional VP, Central and Eastern Europe. Independent: Yes Jitesh Sodha A R E Non-Executive Director Appointed: 2021 Skills & experience: Jitesh Sodha is an experienced FTSE director and is the chief financial officer at Spire Healthcare Group plc which he joined in 2018. He also sits on the disclosure committee, executive committee and safety, quality and risk committee at Spire Healthcare. Jitesh was previously chief financial officer at De La Rue between 2015 and 2018, and at Green Energy International, Mobile Streams, where he led their IPO, and T-Mobile International UK. Independent: Yes Other appointments: • CFO of Spire Healthcare Group plc Valeria Juarez R E Non-Executive Director Appointed: 2021 Skills & experience: Valeria is the SVP of digital commerce for Ralph Lauren International based in London. Over the last 25 years, she has worked across multiple regions at different companies including Ralph Lauren, Amazon, Diageo, Boston Consulting Group and Procter & Gamble. She is an international business leader with a focus on digital and business transformation. She has extensive experience of general management, digital, strategy, commercial, innovation and marketing covering fashion, branded consumer goods and online retailing. Independent: Yes 1 4 7 2 8 3 9 Chair Audit & Risk Committee Nomination Committee ESG Committee Remuneration Committee A N E R Director with responsibility for representing the employee  D Committees 5 6 PZ Cussons plc / Annual Report and Financial Statements 2022 98 CHAIR’S INTRODUCTION TO GOVERNANCE This past year has seen further strategic progress and continuing governance improvements as we strive to create a simpler business with the right focus on governance and controls. Caroline Silver Non-Executive Chair Internal controls We have continued to make improvements to our internal controls environment, both to continue to address some of the areas  controls review we commissioned in FY20, and also to prepare for anticipated changes to legislation and regulation relating to corporate governance and internal controls. This controls transformation project has been overseen by the Audit & Risk Committee, and more details are set out in the Audit & Risk Committee report on page 110. Following FY21’s launch of our new Group Code of Ethical Conduct, FY22 saw the launch of e-learning modules, training seminars in our  programme aimed at ensuring that the Code is fully-embedded throughout our business. I am pleased to say we saw a high degree of engagement both in terms of participation in the training modules and in overall awareness of the Code and its requirements. FY22 also saw the launch of a refreshed Supplier Code of Conduct, aimed at ensuring that our standards of ethics and integrity apply throughout our supply chain. Initial responses to the new Supplier Code of Conduct have been positive. Lastly, we partnered with Dow Jones to launch a third party risk management tool to enable us to  and due diligence throughout our supply chain. Board composition and succession planning It has been a relatively stable year for our Board with our most recent Directors, Jitesh Sodha and Valeria Juarez joining in July and September 2021 respectively. After a few years  and Executive Leadership Team, FY22 saw a focus on establishing our ways of working and ensuring good communications and performance.  improvements over the year in terms of Board processes and the quality of management reporting, which in turn has made for better Board meetings with a greater focus on strategy and growth. Our most recent internally facilitated Board evaluation showed that we believe our Board to have a strong mix of skills to lead the Company through its transformational journey and to meet the challenges that lie ahead. The appointment of Jitesh Sodha demonstrates our commitment to the board composition requirements of The Parker Review on ethnic diversity. Succession planning will be a priority for the Board in FY23. I will be reaching my ninth anniversary on the Board in April 2023, and in line with the Corporate Governance Code I do not intend to stand for re-election at the 2023 AGM. A process has begun to identify my successor, led by John Nicolson, as SID. Further details are set out in the Nomination Committee report. Also having recently strengthened our Executive Leadership Team, the Board will need to ensure that we refresh our  our new team structure, with the appropriate focus on inclusion and diversity. ESG As we announced in last year’s annual report and accounts, the Board has increased its focus on ESG, creating a standing ESG Committee of the Board. Over the course of the year, the Committee established its terms of reference and set out an ambitious agenda which included the approval of our revised sustainability targets which were recently published on our website at www.pzcussons.com and which are explained on page 116, and 44 of this Report. 99 Governance / Chair’s introduction to governance Values, Purpose and Culture After launching our new strategy just over a year ago, the Board also supported the launch of a new set of values for the Group. Our BEST values were launched earlier in FY22 to a very positive reception and the Board believe that these values strongly  culture and purpose. Our new values were developed internally through extensive consultation with our teams and so the Board sees a strong sense of ownership of our BEST values within our employee base. Following the launch of our BEST values, the Board engaged directly with  ways, from internal social media, to Town Hall and small group sessions held by a number of our Directors as they travelled to our priority markets. Further details on the launch of our BEST values are set out on page 18. Outlook Looking ahead, in FY23 we will be continuing our focus on ESG and the implementation of our sustainability strategy. Succession planning, both in terms of the current Chair succession activities but also refreshing longer term succession plans for key Board and Executive roles, will also be a priority through the work of the Nominations Committee. In addition, we will continue to focus on strengthening our governance processes and internal controls and continue to execute our transformational plans to simplify our business in line with our strategy.  correct strategy in place, supported by the right individuals at Board level and throughout the business, and that we will continue the progress we have made in driving performance and operational improvement throughout FY22. Caroline Silver Non-Executive Chair 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 100 BOARD LEADERSHIP AND COMPANY PURPOSE COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE Board leadership The Board’s role is to provide leadership and set the purpose, values and standards of the Company and the Group. PZ Cussons’ business model and strategy is set out on pages 8 and 24 of the Strategic Report and describes the basis upon which the Company generates and preserves value over the long term. How the Board operates The Board has overall authority for the management and conduct of the Group’s business, strategy and development and is responsible for ensuring that this aligns with the Group’s culture. The Board ensures the maintenance of a system of internal controls and risk management  compliance controls) and reviews the  in place. The Board delegates the day- to-day management of the business to the Executive Directors and the ELT. There is a schedule of matters reserved for the Board’s decision which forms part of a delegated authority framework. Matters for the Board’s decision include approval of the Group’s strategy and objectives, setting the purpose and values of the Group, annual budgets, material agreements and major capital expenditure. The schedule is reviewed regularly to ensure that it is kept up to date with any regulatory changes and  revision was undertaken in July 2022. As a company with a premium listing on the London Stock Exchange, PZ Cussons is required under the Financial Reporting Council (FRC) Listing Rules to comply with the Code Provisions of the Corporate Governance Code 2018 issued in July 2018 (the ‘2018 Code’), which is available on the FRC website (www.frc.org.uk). The principles and provisions of the 2018 Code have applied throughout the year ended  covered by this Annual Report and Financial Statements. Details of the way the 2018 Code has been applied can be found in the following pages: Division of responsibilities Page 103 Composition, succession and evaluation (including the Nomination Committee report) Pages 106 to 109 Audit, risk and internal control (including the Audit & Risk Committee report) Pages 110 to 115 Remuneration (the Directors’ Remuneration report) Pages 132 to 143 The Board held six scheduled meetings during the year. A rolling agenda and forward calendar has been agreed and the agenda for each meeting is agreed with the Chair and Executive Directors. Board papers are circulated to Directors in advance of the meetings. If a Director cannot attend a meeting, he or she is able to consider the papers in advance of the meeting and will have the opportunity to discuss them with the Chair or Chief Executive and to provide comments.  The Company Secretary keeps a register of all Directors’ interests. The register sets out details of situations where each Director’s interest may   is considered and reviewed at each Board meeting so that the Board may consider and authorise any new  Director concerns Directors have the right to raise concerns at Board meetings and can ask for those concerns to be recorded in the Board minutes. The Group has also established a procedure which enables Directors, in relevant circumstances, to obtain independent professional advice at the Company’s expense. 101 Governance / Board leadership and company purpose Board activity during the year July 2021 September 2021 November 2021 January 2022 March 2022 May 2022 • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Board evaluation report • Review proposed set up of ESG Committee • Governance review including updating the schedule of matters reserved for Board decision, statement of Board responsibilities • Market review – ANZ • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Approval of full-year results announcement • Dividend recommendation • Approval of Annual Report  statements • Approval of AGM materials • Approval of Company values • Market review – Indonesia • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Approval of ESG Committee terms of reference • Review of committee memberships • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Review of interim results • Market review – Nigeria • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Budget planning and approach • Market review – UK personal care • Functional review – Supply Chain • TCFD and ESG reporting requirements • CEO report and strategy discussions • CFO report and operational discussions • Report from Committee Chairs and Employee Engagement Champion • Budget approval • Market review – Beauty • Functional review – Finance • Review of committee terms of reference • Approval of Sustainability Charter Board Activity PZ Cussons plc / Annual Report and Financial Statements 2022 102 BOARD LEADERSHIP AND COMPANY PURPOSE CONTINUED Stakeholder engagement Workforce engagement The Board recognises that employee engagement is the responsibility of the whole Board. For FY22 a plan was approved by the Board setting out agreed principles on engagement, core themes to address based on feedback from the global employee survey and a calendar of events to ensure engagement takes place across the year, and across all markets. A designated Non-Executive Director, Dariusz Kucz, has responsibility for ensuring that the Board successfully engages with our workforce and reports on progress at most Board meetings. Core themes for the year have been: • Strategy, including new purpose, culture and values • Employee safety and wellbeing • Learning and careers • Adjusted working practices through and beyond the Covid-19 pandemic. As well as the global employee survey, other forms of engagement include regular Town Halls – both globally and locally, workforce engagement on executive remuneration, designated NED market visits, and regular meetings with Culture Ambassadors who play an important role in driving cultural change. The Board continues to monitor the Company’s culture throughout our business transformation, having received a training presentation on measuring company culture during the year and receiving periodic reports from management and its own engagements whether through employee surveys, town hall meetings, individual engagements during Board travel and through the launch of the BEST Values and our refreshed Company purpose. For FY23 the plan for employee engagement will continue to be developed, and will incorporate  employee survey, together with feedback from the engagement sessions that have taken place in the past year. Shareholder engagement  communication with the shareholders and is available to meet with investors periodically throughout the year. The Chair writes to key investors  management present to ensure any concerns or questions can be raised directly to the Non-Executive Directors. The CEO and CFO are the Company’s principal contacts for investors, analysts, press and other interested stakeholders. The Board receives investor feedback reports as part of the CEO’s report at each Board meeting, outlining recent dialogue with investors and the feedback received. Analyst reports are also made available to the Board. The Chair and Senior Independent Director are available to shareholders to discuss governance and strategy concerns as appropriate and the Committee Chairs are available at the AGM for shareholder questions. At the 2021 AGM, resolutions re-electing two Non-Executive Directors were passed with the necessary majority but with a number of votes against by the independent shareholders. Following this, the Board has engaged with shareholders and will continue to do so to balance the views of all shareholders. Annual General Meeting (AGM) At each AGM there is an update on the progress of the business over the last year and also on current trading conditions. All shareholders, including private investors, have an opportunity to present questions to the Board at the AGM, and the Directors make themselves available to meet informally with shareholders before and after the meeting. The notice of AGM is posted to all shareholders at least 20 working days before the meeting. Separate resolutions are proposed on all substantive issues and voting is conducted by a poll. The Board believes this method of voting is more democratic than voting via a show of hands since all shares voted at the meeting, including proxy votes submitted in advance of the meeting, are counted. For each resolution, shareholders will have the opportunity to vote for or against or to withhold their vote. Following the meeting, the results of votes lodged will be announced to the London Stock Exchange and displayed on the Company’s website. 103 Governance / Board leadership and company purpose Division of responsibilities  are clear and set out in writing. Role Responsibilities Chair of the Board Caroline Silver   •  part in the approval of the Group’s strategy and overall commercial objectives • Ensuring members of the Board receive accurate, timely and clear information • Reviewing and agreeing training and development for the Board • Ensuring an appropriate balance is maintained between Executive and Non-Executive Directors with the skills, experience and expertise to provide guidance, challenge and oversight to the Board and executive management •  • Ensuring that the performance of the Board as a whole, its Committees, and individual Directors is formally evaluated • Promoting high standards of integrity and corporate governance throughout the Group, particularly at Board level. Chief Executive  Jonathan Myers The CEO is accountable to the Chair and the Board for providing timely, accurate and clear information in relation to the Group’s performance and delivery of its strategy and overall commercial objectives. In addition the CEO is responsible for: • Developing the Group’s objectives and strategy for approval by the Board, and with regard for the Group’s shareholders, customers, employees and other stakeholders • The successful achievement of objectives and execution of the Group’s strategy •  are in place •  •  •  the Group’s integrity and purpose • Advising and making recommendations in respect of management succession planning and to make recommendations on the terms of employment and remuneration of the ELT • Ensuring open, honest and transparent dialogue between the Board and the ELT • Ensuring, with the support of the Company Secretary, that the Executive Leadership Team comply with their delegated authority and the matters reserved for the Board • Leading and overseeing the development and implementation of good governance policies relating to whistle- blowing, insider dealing, disclosure, anti-corruption, safety and sustainability • Promoting an entrepreneurial and ethical culture which welcomes and supports a diverse workforce • Championing the Group’s values and behaviours. Chief Financial  Sarah Pollard The CFO’s responsibilities include: •  •  •  Senior Independent Non-Executive Director John Nicolson The Senior Independent Non-Executive Director’s responsibilities include: • Acting as a sounding board for the Chair and serving as intermediary for the other Directors when necessary •  • Evaluating the Chair’s performance as part of the Board’s evaluation process and ensuring that an independent evaluation of the performance of the Chair is completed by an external evaluator at least once every three years • Chairing meetings of the Non-Executive Directors or other meetings where appropriate • Being available to shareholders should the occasion occur when there is a need to convey concern to the Board other than through the Chair or the Chief Executive. Non-Executive Directors All of the Non-Executive Directors: Jitesh Sodha, Valeria Juarez, Kirsty Bashforth, Jeremy Townsend, Dariusz Kucz and John Nicolson are responsible for: • Contributing to the development of the Group’s strategy • Promoting and supporting the Group’s values and commitment to high standards of corporate governance • Reviewing, oversight and constructive challenge to the ELT on the delivery of the Company’s objectives and strategy. PZ Cussons plc / Annual Report and Financial Statements 2022 104 GOVERNANCE FRAMEWORK THE BOARD THE EXECUTIVE LEADERSHIP TEAM (ELT) THE BOARD DELEGATES CERTAIN MATTERS TO ITS PRINCIPAL COMMITTEES, WHICH ARE RESPONSIBLE FOR: The Board’s role is to provide leadership and set the purpose, values and standards of the Company and the Group. The Board has ultimate responsibility for the long-term success and sustainability of the business. It approves the Group’s long-term objectives and commercial strategy and provides oversight of the Group’s operations. See pages 96 to 97 The Board has delegated responsibility for the delivery of the Group strategy and the day-to-day operational performance of the business to the Executive Directors who work closely with their wider ELT to deliver this strategy. Audit & Risk Committee Reviewing the Group’s accounting and financial policies, its disclosure practices, internal controls, internal audit and risk management and overseeing all matters associated with appointment, terms, remuneration and performance of the External Auditor. See pages 110 to 115 Nomination Committee Ensuring that the structure, size and composition of the Board and the ELT are best suited to deliver the Company’s strategy and meet current and future needs. See pages 106 to 109 Remuneration Committee Reviewing and recommending the framework and policy for remuneration of the Executive Directors and senior executives. See pages 118 to 143 ESG Committee Approving the Group’s ESG strategy and performance targets, monitor performance by the Group against its ESG strategy and how the Group engages with key stakeholders. See pages 116 to 117 * In addition to its principal Committees, the Board, from time to time, deals with certain matters in other Committees, both formal and ad hoc. Terms of reference for each Committee listed above are available on the Company’s website. 105 Governance / Governance framework Balance of independence The Board currently comprises six independent Non-Executive Directors (excluding the Chair) and two Executive Directors. The Board is of the opinion that the Non-Executive Directors remain independent, in  2018 Code and are free from any relationship or circumstances that  independent judgement. The Chair was independent on appointment. Company Secretary All Directors have access to the advice of the Company Secretary. The appointment and remuneration of the Company Secretary is a matter for the Board. Board time commitments All Directors are required to obtain permission of the Board in respect of any proposed appointments to other listed company boards prior to committing to them. The Non- Executive Directors are required, by their letters of appointment, to  expectations of their role as required by the Board from time to time.  of the Directors spend considerably more than this amount of time on Board and Committee activity. Attendance Each of the Directors has committed to attend all scheduled Board and relevant Committee meetings and  to attend ad hoc meetings, either in person or by telephone/video call. The Non-Executive Directors meet without the Executive Directors and the Chair present at least once a year. Board attendance Audit & Risk Committee attendance Remuneration Committee attendance Nomination Committee Attendance ESG Committee attendance Caroline Silver 6/6 4/4 2/2 Jonathan Myers 6/6 2/2 Sarah Pollard 6/6 2/2 John Nicolson 5/6 4/5 4/4 2/2 Kirsty Bashforth 6/6 3/4 4/4 2/2 Dariusz Kucz 6/6 5/5 2/2 4/4 2/2 Jeremy Townsend 6/6 5/5 3/4 1/1 2/2 Jitesh Sodha 4/6 3/5 1/2 1/1 1/2 Valeria Juarez 4/4 2/2 2/2 * Jitesh Sodha was on an extended leave of absence during 2022. ** Valeria Juarez joined the Board on 22 September 2021. PZ Cussons plc / Annual Report and Financial Statements 2022 106 NOMINATION COMMITTEE REPORT Caroline Silver Chair of the Nomination Committee NOMINATION COMMITTEE MEMBERSHIP The Directors who served on the Committee during the year are set out below: Committee members Member since Caroline Silver 2014 John Nicolson 2016 Kirsty Bashforth 2019 Dariusz Kucz 2018 Jeremy Townsend 2020 Jitesh Sodha 2021 Valeria Juarez 2021 * Directors who stepped down from committee on 23 November 2021. For attendance at the Nomination Committee, the Board meetings and other Board Committees, please see the full attendance table / Page 105 DEAR SHAREHOLDERS, On behalf of the Board, and as Chair of the Nomination Committee, I am pleased to present the Nomination Committee report for the year ended 31 May 2022. This year the Committee has focused on Board succession planning and continued to oversee the work being done on Talent development, Inclusion and Diversity across the Group. Following the appointments to the board of Jitesh Sodha in July 2021 and Valeria Juarez in September 2021, we believe the Board has the relevant skills and balance to oversee the implementation of the Group’s strategy. Succession planning will continue to be a priority for the next year, as I will be reaching my ninth anniversary on the Board in April 2023 and, in line with the provisions of the Corporate Governance Code, intend to transition to a new Chair to be appointed in due course. John Nicolson,  further down this report. The Board remains committed to the Company’s focus on inclusion and diversity and ensuring the Board  workforce and consumers in the countries in which we operate. The Board Diversity policy is available on the Company’s website. The Committee will ensure that enhancing the Board’s skills, succession planning and diversity remain at the top of the agenda in the forthcoming year. While we are pleased that we are in compliance with the guidelines for gender and ethnic diversity on Boards, we will continue to work to add more diversity through subsequent Board recruiting. This year the Committee has focused on Board succession planning and continued to oversee the work being done on Talent development, Inclusion and Diversity across the Group. 107 Governance / Nomination Committee report COMMITTEE ROLE • Regularly review the structure, size and composition of the Board and its Committees. • Review the leadership and succession needs of the organisation. •  • Evaluate the Board’s diversity and balance of skills. • Evaluate the performance of the Board. •  Senior Independent Director and Non-Executive Directors. Detailed responsibilities are set out in the Committee’s terms of reference, www.pzcussons.com/ PRIORITIES FOR 2023 • Continue to review talent and succession plans against the management objective of driving material improvement in succession planning. • Successfully identify a successor Board Chair. •  review. •  Board and senior management diversity. How the Committee operates The Committee meets a minimum of twice a year and more frequently as necessary. During the year the Committee met four times. Only members of the Committee are entitled to attend the meetings. Other individuals such as the Chief   advisers may be invited to attend for all or parts of any meeting as and when appropriate. The Committee however ensures that it dedicates  advisers present to facilitate candid exchanges of views by its members and to ensure the independence of the Committee is maintained. The terms of reference were reviewed and updated during the year to ensure that they are compatible with the Corporate Governance Code 2018 (the ‘2018 Code’) and best practice and are available on the Company’s website at www.pzcussons.com. Activities of the Committee during the year Succession planning During the year, the Nomination Committee established a subcommittee to lead the search and selection process of a new Chair. The appointment will be made to ensure a smooth transition. The subcommittee is committed to ensuring a diverse list in all aspects, in accordance with the Board and ELT inclusion and diversity statement and will consider diversity as part of the role description. Egon Zehnder was selected to assist with the Chair succession search as a result of a competitive process. Egon has no other interests in the Company and has been briefed as to the Board’s policies and commitment to diversity. ELT succession and appointments During the year, the Committee oversaw the appointment of four new ELT members. These included the Managing Directors of our UK and Australia business units and two newly created roles in Sustainability and Business Development. Talent and succession planning The Committee has concentrated on supporting the development of talent within and below our ELT and ensuring we have a robust succession pipeline for these leadership roles. The diversity of our succession pipeline has been improved, with half  and strong representation of our markets in our MD succession pipeline. Succession planning for CEO and CFO will be a focus for FY23 with both of  with external hires. The continued focus on ELT and their successors’ development has led to two new initiatives: 1. Board mentoring – supporting successors and high-potential senior leaders. 2. Individual ELT assessment and development building on ELT team development, working with EYLane4, an executive development consultancy. PZ Cussons plc / Annual Report and Financial Statements 2022 108 NOMINATION COMMITTEE REPORT CONTINUED Board and Board Committee membership During the year we have considered the composition of each of the Board Committees to ensure they have the relevant skills and members. Composition and independence The Nomination Committee is of the opinion that the Non-Executive  set out in the 2018 Code, are free from any relationship or circumstances  their independent judgement. The Chair was independent on appointment and having performed an executive role on an interim basis in 2020 to cover the CEO has now resumed her Non-Executive role. The balance of Directors (excluding the Chair) was two Executive Directors and six independent Non-Executive Directors. The Board complies with the provisions of the Code that require that each Director seeks re-election annually. The existence of a group of controlling shareholders (see the Report of the Directors on page 146) and the election or re-election of independent Directors is subject to a dual shareholder vote at the AGM, pursuant to which re-election or election must be approved by a majority vote of the shareholders of the Company and, separately, by a majority vote of the shareholders excluding the controlling shareholders. Diversity policy The Company is committed to having a  of our workforce and consumers in the countries in which we operate. The ELT and Board are committed to creating an inclusive work environment which encourages members from diverse backgrounds and with diverse perspectives and skills to collaborate and work together towards a common objective. The Board has approved an Inclusion and Diversity Policy for Board and ELT appointments which is available in full on the Company’s website and is summarised below. The Company is a signatory to the 30% Club. We believe that gender diversity is good for our business. The Company has already achieved the new FCA guidelines of 40% women on the Board, at least one member from a minority ethnic background and at least one senior position held by a woman. When evaluating candidates for the ELT or Board, the Company seeks to make decisions based on merit and objective criteria and the needs of the ELT and Board, having due  diversity, including (without limitation) diversity of age, gender, social and ethnic backgrounds, disability, sexual orientation, educational and professional backgrounds and cognitive and personal strengths. Where external recruitment agencies are used, the Company uses agencies who have signed up to the voluntary code of conduct on gender diversity and best practice or who can demonstrate equivalent commitments to inclusion and diversity. The Company aims to achieve long and short lists of candidates that  In respect of Board appointments, the Company considers candidates from non-traditional corporate backgrounds, including from non-  and academia and/or without prior listed board experience. As at 31 May 2022, the Board  Directors, equivalent to 44% female representation. Directly below Board level there were 14 ELT members, of whom 29% were female and 71% male. Direct reports of the ELT were 44% female and 56% male. Board induction The Nomination Committee, through the Company Secretary, oversees the induction of all Directors. The purpose of the inductions is to ensure that all Directors have an appropriate understanding of the business of the Company, the duties of the Board and its members and the legal and regulatory environment in which the Company operates. Directors who are to hold an executive role undertake additional induction activities organised by the Chief Human  Board skills matrix A Board skills matrix was reviewed as part of the FY22 Board evaluation. This matrix serves as a useful guide to future recruitment at both Board level and ELT level to ensure there was a balance of skills across both leadership teams and the balance of skills complemented each other. 109 Governance / Nomination Committee report   facilitated and internally run evaluations over a three-year cycle. The cycle of the Board evaluations is summarised as follows: YEAR 1 Externally facilitated Board evaluation using interviews. The next external evaluation will take place in 2023. YEAR 2 Follow-up on action prepared in response to the year one evaluation using internally facilitated questionnaires. YEAR 3 Continued follow-up on actions arising from the previous two years using internally facilitated questionnaires. 2022 Board and Board Committee  Internally facilitated reviews via questionnaire of the Board, Board Chair, Nomination Committee, Remuneration Committee and Audit & Risk Committee were used for the Board and Board Committee  Separate questionnaires were completed for each of the Board and the Board Committees. The Board questionnaire was completed by all of the Directors and the Company Secretary. Members of each Board Committee along with regular attendees at Committee meetings completed the Board Committee questionnaires. Each Committee considered the results of their evaluations. A separate questionnaire was also completed by all Directors and the Company Secretary on the performance of the Chair. On the whole, the evaluations were positive and concluded that good progress had been made, particularly in relation to the increased focus on ESG. Recommended objectives for FY23 which were adopted by the Board include, in addition to those listed in each Committee section: • Review risk management processes and develop a fuller view of the  emerging risks and risk appetite • Improve the use of technology and data to facilitate board discussion and decision-making purposes • Introduce more targeted Board training and development sessions including a travel programme to priority markets. Caroline Silver Nomination Committee Chair 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 110 AUDIT & RISK COMMITTEE REPORT Jeremy Townsend Chair of the Audit & Risk Committee AUDIT & RISK COMMITTEE MEMBERSHIP The Directors who served on the Committee during the year are set out below: Committee members Member since Jeremy Townsend 2020 John Nicolson 2016 Dariusz Kucz 2018 Jitesh Sodha 2021 For attendance at the Audit & Risk Committee, the Board meetings and other Board Committees, please see the full attendance table / Page 105 DEAR SHAREHOLDERS,  ended 31 May 2022 which sets out a summary of the work of the Committee and how it has carried out its responsibilities during the year. The Committee has continued to focus on embedding the processes and controls that have been put in place following the KPMG report in 2020. This control transformation update has been closely monitored by the  This regular focus from the Committee, recognising the progress made while supporting management to adapt plans where necessary, helps  support of Internal Audit. The Committee recognises that Internal Audit plays a key role in controls improvement and ensuring cultural changes are embedded is critical but  Over the course of FY22, the Committee reviewed and approved a number of improved accounting processes and controls improvements. In FY21 the Company moved away from the use of ‘exceptional items’ in favour of ‘adjusting items’. In FY22 the Committee adopted a formal  items and these are now routinely reviewed by the Committee against that framework for the purposes of  The Committee also reviewed and approved a controls transformation project which as well as being an evolution of a number of the individual items that had been proposed in response to the 2020 KPMG controls review, will introduce an improved internal control framework and environment in anticipation of future legislation and corporate governance reform, along with a  shared services organisation design,  These improvements and fresh approaches have given the Committee  path to building a more robust controls culture within the business. While progress has been made, the Committee is aware that this ambitious transformation will involve considerable work. The importance of this controls improvement process is only heightened by the current discussions and consultations around audit reform and regulatory change. During the year, the Committee also reviewed the Committee’s terms of reference to ensure continued alignment with the 2018 UK Corporate Governance Code and best practice. The Committee has continued to focus on embedding the processes and controls that have been put in place following the KPMG report in 2020. This control transformation update has been closely monitored by the Committee, with  111 Governance / Audit & Risk Committee report COMMITTEE ROLE •  reporting requirements, issues and judgements. • Recommend the appointment and removal, approve the terms and remuneration, and assess the  and quality of the audit. •  •  •  • Review the adequacy of the Group’s whistle-blowing arrangements and procedures for detecting fraud. Detailed responsibilities are set out in the Committee’s terms of reference, www.pzcussons.com/ PRIORITIES FOR 2023 • Oversee and assess management’s continued progress on internal controls. •  accounting and reporting.     the external audit process, and the approach to addressing those matters is set out in the table on page 112 of this report. An internal review of the Committee’s  the completion of a questionnaire by each of its members together with the Board Chair, the CEO, the CFO, the Company Secretary and the Group Financial Controller. The results were positive with objectives for FY22 achieved, and good management of relationships with key stakeholders. On the back of this review, objectives for FY23 include reviewing and  systems and auditor succession. Our regular programme of meetings and discussions, supported by our interactions with the Company’s management, External Auditor and the quality of the reports and information provided to us, enables the Committee members  and responsibilities. How the Committee operates The Committee meets a minimum of three times a year and more frequently as necessary. During  This enabled a focus on the full-year and interim results in September and January and a focus on internal audit, risk and audit planning in the remaining meetings. Only members of the Committee are entitled to attend the meetings. However, other Directors and other individuals (including representatives of external advisers) may be invited to attend for all or parts of any meeting as and when appropriate. The Chief  and Internal Audit and external audit lead partner are invited to attend meetings of the Committee on a regular basis. During the year the Chair of the Board, the Chief Executive  Controller routinely attended to  action plans. The Company Secretary acts as secretary to the Committee. As Chair of the Committee, I have held  roles throughout my career. I served  Initial Plc, the FTSE 100 commercial pest control and hygiene services business, until retiring in August 2020. I am a former Accounting Council Member of the Financial Reporting Council and have held non-executive director and audit committee chair roles in a number of businesses including Galliford Try plc and WM Morrison Supermarkets plc. The experience of the other Committee members is summarised on page 97. The Board considers each Committee member is independent and has a broad and diverse spread of commercial and relevant industry experience, such that the Board is  appropriate skills and experience to  Code requirement that at least one   Activities during the year Relationship with the External Auditor The Committee has primary responsibility for managing the relationship with the External Auditor, including assessing their performance,  annually and recommending to the Board their reappointment or removal. Following a comprehensive tender in 2017, Deloitte LLP (‘Deloitte’) were appointed as the Group’s Auditor  the Group. Jane Boardman has been lead partner since Deloitte became the Company’s auditors for FY18 and she will rotate  Deloitte will continue as auditor through FY23 under a new lead partner, John Charlton, while the Committee undertakes a tender exercise. The Committee intends to launch such a tender imminently and has had a number of positive discussions with potential successors. During the year, the members of the Committee regularly met with representatives from Deloitte without management present, to ensure that there were no issues in the relationship between management and the External Auditor which it should address. There were no material issues raised in this regard throughout FY22. PZ Cussons plc / Annual Report and Financial Statements 2022 112 AUDIT & RISK COMMITTEE REPORT CONTINUED The Committee considers the nature, scope and results of the External Auditor’s work and reviews, develops and implements a policy on the supply of any non-audit services that are to be provided by the External Auditor. It receives and reviews reports from the Group’s auditors relating to the Group’s Annual Report and Financial Statements and the external audit process.  year ended 31 May 2022, Deloitte presented their audit plan (prepared in consultation with management) to the Committee. The audit plan included an assessment of audit risks, and robust testing procedures. The Committee approved the implementation of the plan following discussions with both Deloitte and management. Audit and non-audit fees The Company paid £2.1 million in audit  31 May 2022. Regarding non-audit services, the Company has a practice of limiting Deloitte LLP to working on the audit or such other matters where their expertise as the Company’s auditor makes them the logical choice for the work. This is to preserve their independence and objectivity. In the year the Group paid £40,000 to Deloitte in respect of the review of the interim statement released in February 2022 and £700 in respect of services rendered to witness and report on the destruction of stock in Thailand. The non-audit to audit fee ratio is 1.9%.  The Chair of the Committee speaks  are any concerns, to discuss the audit reports and to ensure that the auditor has received support and information requested from management. In accordance with the guidance set out in the Financial Reporting Council’s ‘Practice aid for audit committees’ the assessment of the external audit has not been a separate compliance  but rather it has formed an integral part of the Committee’s activities. This has allowed the Audit & Risk Committee to form its own view on  of the external audit process, based on the evidence it has obtained during the year. Sources of evidence obtained and observations during the year: By referring to the FRC’s practice aid on audit quality. The Committee has looked to this practice aid for guidance and has ensured that assessment of the audit is a continuing and integral part of the Committee’s activities. Observations of, and interactions with, the External Auditor. The Committee has met with the lead audit partner without management and has had an open dialogue regarding the Committee’s view of Deloitte’s performance and overall working relationship between the Company and its external auditor. The audit plan, the audit  Auditor external report. The Committee scrutinises these documents and reviews them carefully at meetings and by doing so the Committee has been able to assess the external auditor’s ability to explain in clear terms what work they performed in key areas, and also assess whether this is consistent with what they communicated to the Committee at the audit planning stage. The Committee has also regularly discussed the content of these reports in the meetings. Input from those subject to the audit.  Head of Risk and Internal Audit and the Group Financial Controller during the audit process.  opinion that the External Auditor has demonstrated professional scepticism and challenged management’s assumptions where necessary.  objective. Key judgements and estimates The Committee reviewed the external reporting of the Group including the interim review and the Annual Report and Financial Statements. In assessing the Annual Report and Financial Statements, the Committee considers the key  ended 31 May 2022 are set out on the following page: 113 Governance / Audit & Risk Committee report  Decisions and improvements    throughout the year. The key areas covered involved the accounting treatment related to various claims, disputes and settlements; the treatment of trade expenditure and the processes and controls in place to manage associated risks; the process of identifying  impairment testing of goodwill, intangible assets and tangible assets and associated  within the Beauty business for impairment purposes. Additional focus was given  More information is available in note 1c. The Committee accepted the judgements recommended by management having challenged them and considered alternative options. Controls transformation The Committee monitored improvements to internal controls and increased its focus on embedding controls improvements throughout the Group. The Controls Transformation project is focused on improving the use of SAP, process controls and cultural issues.    Risk management The Committee reviewed the development of risk registers throughout the Group and how they are integrating with year-end risk reporting processes. There will be a mapping exercise of risks against the long-term strategy, and input will be sought from external stakeholders. Ethics and compliance Following the prior year launch of the Code of Ethical Conduct, the Committee reviewed    for fraud and compliance issues. TCFD The Committee engaged the services of Willis Towers Watson to conduct a physical and transition risk assessment to facilitate the Company reporting against four key themes – governance and responsibility, risks and opportunities, metrics and targets and mitigation plans. Risk Management and Internal Controls Internal control structure The Board oversees the Group’s risk management and internal controls and determines the Group’s risk appetite. The Board has, however, delegated responsibility for review of the risk management methodology, and the  the Audit & Risk Committee. Review of control environment Financial control improvements have been progressed including the further development of a Group-wide framework of control, balance sheet account reconciliations controls and the completion of a management self-assessment exercise. EY was engaged by the Company to review the Nigerian business’ SAP processes, and the Committee receives updates on the progress of this review and management’s responses to improve and simplify SAP processes in the Nigerian business. The Code of Ethical Conduct provides a framework document for the PZ Cussons ethics and compliance system. The Code is supported by a range of policies including: •  expectations for avoidance of  • Whistle-blowing policy – setting the expectation of a ‘speak-up’ culture • Gifts and hospitality policy – establishing the circumstances for gifts and hospitality • Inside information and share dealing policies – ensuring compliance with Listing and Market Abuse Regulations rules • Anti-fraud policy – establishing a zero tolerance for fraud • Failure to prevent the facilitation of tax evasion policy – ensuring compliance with the duty to prevent criminal facilitation of tax evasion • Risk management policy. While the Committee notes the controls improvements made over the course of FY22, the committee also reviewed and approved plans for a transformative change in our  controls and future proof the function against business and regulatory change. This project will require  PZ Cussons plc / Annual Report and Financial Statements 2022 114 AUDIT & RISK COMMITTEE REPORT CONTINUED Internal Audit function A key source of internal assurance is delivery of an internal audit plan, which is designed to help the organisation achieve its strategic priorities. The Internal Audit function is currently led by the interim Head of Internal Audit whilst we await the arrival of the new permanent Head of Risk and Internal Audit. The interim Head of Internal Audit supervises the Internal Audit teams based in the Company’s main markets. There are in-house Internal Audit teams in Africa and Asia and in the UK the function is co-sourced with the Company’s Internal Audit partner, KPMG LLP. The Internal Audit Charter provides a framework within which the Internal Audit function operates and formalises the arrangements approved by the Committee for the Group Internal Audit function within the Company. The Charter  function is an independent and objective assurance and consulting activity that is guided by a philosophy of adding value to improve the operations of the Company. It helps the Company in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate  the organisation’s governance, risk management and internal control. The FY22 Internal Audit Plan was approved by the Audit & Risk Committee in May 2021. The Group Head of Risk and Internal Audit reports progress against this plan and  Committee meetings. The Group Head of Risk and Internal Audit also has regular meetings with the Audit & Risk Committee Chair and the CFO. The Committee has assessed  Audit function as part of its annual performance evaluation process  arrangements remain appropriate  Risk management While the Board oversees the Group’s risk management it delegates responsibility for review of the risk management methodology and   internal controls to the Audit & Risk Committee. The Risk Management  recognises that the management of risk is an important component of good management practice and that the Group has an open and receptive approach to identifying, discussing and addressing risk. The risk policy is underpinned by a revised framework that outlines the Group’s underlying approach to risk management, documents the roles and responsibilities of key stakeholders and outlines key aspects of the risk management process  procedures. This risk management process and risk framework ensures that we capture and mitigate risks to the successful delivery of strategic objectives. The risk management process covers  emerging risks, assessment of the gravity of the risk, target risk and risk velocity, the extent to which risks can be mitigated and planning for and  activities. The Group operates both top-down and bottom-up approaches   The Group Internal Audit function provides independent assurance to both management and the Committee  risk management framework and as to whether sound internal control systems operate to mitigate these risks. Recognising that the roles of Head of Risk and Head of Internal Audit are combined, the Committee  independence of the Group Internal Audit function. Accordingly, the  management framework and internal  Risk Management pages 84 to 85). Whistle-blowing policy The Company is required to maintain, subject to the oversight by the Audit & Risk Committee, a mechanism for the  fraud and other wrongdoing. The Company has a standalone Whistle- blowing Policy as part of the Code of Ethical Conduct. Navex Global, a leading whistle- blowing system provider, is engaged to provide a telephone and web-based reporting system for use with the Whistle-blowing Policy. The whistle-blowing system is maintained by the Group General Counsel and the Group Head of Ethics and Compliance and is independently monitored by the Internal Audit function. The Committee receives regular whistle-blowing reports  of the Whistle-blowing Policy and reports regularly to the Board on these matters. Climate Related Risks The Company supports the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (‘TCFD’). The Committee received reports from the Chief Sustainability  compliance with TCFD, risk  plans. The Committee received and discussed the assurance process for  be found on pages 64 to 67. Statement of compliance  has complied with the terms of the Statutory Audit Services for Large Companies Market Investigation (Mandatory User of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 (the ‘Order’) throughout the year. In addition to requiring mandatory audit re-tendering at least every ten years for FTSE 350 companies, the Order provides that only the Audit Committee, acting collectively or through its Chair, and for and on behalf of the Board is permitted: 115 Governance / Audit & Risk Committee report • To the extent permissible in law and regulation, to negotiate and agree the statutory audit fee and the scope of the statutory audit • To initiate and supervise a competitive tender process • To make recommendations to the Directors as to the External Auditor appointment pursuant to a competitive tender process •  the audit engagement partner • To authorise an External Auditor to provide any non-audit services to the Group, prior to the start of those non-audit services. We undertook an audit tender in 2017, which resulted in the appointment of Deloitte LLP. The Committee has considered Deloitte’s performance annually as External Auditor and the Chairs of the Board and of the Committee met with Deloitte during the year to assess the operation of the audit from the perspective of both parties. As a result, the Committee recommended to the  for reappointment at the 2022 Annual General Meeting. The Board is ultimately responsible for the Group’s system of internal controls and risk management and discharges its duties in this area by: • Holding regular Board meetings to consider the matters reserved for its consideration • Receiving regular management reports which provide an assessment of key risks and controls • Scheduling regular Board reviews of strategy including reviews of the material risks and uncertainties (including emerging risks) facing the business • Ensuring there is a clear organisational structure with  of authority • Ensuring there are documented policies and procedures in place • Seeking assurance from the Group Internal Audit function • Reviewing regular reports containing detailed information  rolling forecasts, actual and forecast   Notwithstanding the continued focus on controls improvement to be delivered in FY23, the overall controls environment of the Company has improved year-on-year. Fair, balanced and understandable  that they consider, taken as a whole, that the Annual Report is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.  the controls over the accuracy and consistency of information presented in the Annual Report are satisfactory, that the information is presented fairly (including the calculations and use of alternative performance  Board that the processes and controls around the preparation of the Annual Report are appropriate, allowing the Board to make the ‘fair, balanced and understandable statement’ in the Directors’ Responsibilities Statement. Financial reporting The Company reports to shareholders  a year. During the 12 months prior to the date of this report, the Audit Committee reviewed the interim  months to 30 November 2021 and  Annual Report for the year to 31 May 2022. The principal steps taken by the Audit Committee during the past 12 months in relation to its review of the  •  statements and 2021 Interim Announcement and consideration of Deloitte’s comments on the drafts of these documents • Review of plan for preparing the  Report for the year ending 31 May 2022 •  judgements and estimates that  •  and Annual Report for the year ending 31 May 2022 and consideration of Deloitte’s comments on these documents. The Audit Committee monitors the implications of new accounting standards and other regulatory developments for the Company’s  receives technical updates from the External Auditor. These technical updates have kept the Committee informed on the UK Corporate Reform and the expected timescales, the Audit Market Reform and the possible introduction of UK regulation in respect of internal controls on  Viability statement and going concern The Committee has reviewed the basis for the Company’s Viability Statement that is drafted with reference to the   of Covid-19 and rising living costs on the global economy, the Committee placed additional scrutiny on the assumptions used in the forecasts to ensure they are appropriate. The Committee provides advice to the Board on the Viability Statement.  review was undertaken of   forecasts. Accordingly, the Committee recommended to the Board that the statement be approved. Similarly, the Committee placed additional focus on the appropriateness of adopting the going concern basis in preparing  the year ended 31 May 2022 and   statements and the related disclosure is appropriate. Jeremy Townsend Audit & Risk Committee Chair 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 116 ESG COMMITTEE REPORT Caroline Silver Chair of the ESG Committee ESG COMMITTEE MEMBERSHIP The Directors who served on the Committee during the year are set out below: Committee members Member since Caroline Silver 2022 Jonathan Myers 2022 Sarah Pollard 2022 John Nicolson 2022 Kirsty Bashforth 2022 Dariusz Kucz 2022 Jeremy Townsend 2022 Jitesh Sodha 2022 Valeria Juarez 2022 For attendance at the ESG Committee, the Board meetings and other Board Committees, please see the full attendance table / Page 105 DEAR SHAREHOLDERS, On behalf of the Board, and as Chair of the ESG Committee, I am pleased to present the ESG Committee report for the year ended 31 May 2022. In January 2022, the Board established the ESG Committee to oversee the Company’s ESG strategy and performance targets. The Committee monitors performance against the ESG goals and how PZ Cussons considers, engages with, reports to and maintains its reputation with key stakeholders. Recognising the importance of ESG across the whole Group and its governance, the Committee consists of all members of the Board, and is supported by the ELT through its Sustainability Steering Committee. The Committee’s focus initially has been on reviewing the sustainability strategy and monitoring developments  approving key sustainability KPIs. How the Committee operates The Committee meets a minimum of twice a year and more frequently as  in January 2022 and met again in May 2022. Only members of the Committee are entitled to attend the meetings. Other individuals such as the Chief  advisers may be invited to attend for all or parts of any meeting as and when appropriate. The Committee, however, ensures that it dedicates  advisers present to facilitate candid  and to ensure the independence of the Committee is maintained. The Company Secretary acts as secretary for the committee. The terms of reference were reviewed and updated during the year to ensure that they are compatible with the Corporate Governance Code 2018 (the ‘2018 Code’) and best practice and are available on the Company’s website at www.pzcussons.com. In January 2022, the Board established the ESG Committee to oversee the Company’s ESG strategy and performance targets. The Committee monitors performance against the ESG goals and how PZ Cussons considers, engages with, reports to, and maintains its reputation with key stakeholders. 117 Governance / ESG Committee report COMMITTEE ROLE • Approve the Group’s ESG strategy and performance targets. • Monitor performance by the Group against its ESG strategy. • Oversee how the Group engages with key stakeholders on ESG. Detailed responsibilities are set out in the Committee’s terms of reference, www.pzcussons.com/ PRIORITIES FOR 2023 • Progress with B Corp  • Set long-term goals to align with the sustainability strategy. • Agree plans for stakeholder engagement. • Review plans for ensuring inclusion and diversity across our businesses. Activities of the Committee during   The Committee debated and approved a new sustainability strategy and framework designed to align with the Company’s purpose: for everyone, for life, for good. The strategy provides operational focus and, alongside a  targets, will support the Company in achieving its goals. More information about the sustainability strategy can be found on page 44.  Our ambition is to certify our businesses as B Corps by 2026. The Committee has reviewed the process and timeline to achieve this goal and will continue to monitor this area at each Committee meeting. Caroline Silver ESG Committee Chair 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 118 REMUNERATION COMMITTEE REPORT Kirsty Bashforth Chair of the Remuneration Committee (from 1 July 2020) Background to remuneration decisions Business performance  of our new strategy: Build Brands for Life. Today and for future generations. The Group has made good progress,  performance while strengthening a number of key capabilities. Like most companies in our sector, our performance during FY22    pressures on consumer spending.  these headwinds, which included c.£40 million additional costs compared to FY21, we made good progress in FY22, including: • A second year of like-for-like revenue growth, reporting 2.9% growth in FY22; • Market share growth in seven of   and improved returns on Brand Investment; •  continuing operations declined 2.9% to £66.6 million given the challenging market environment, but was ahead of market  REMUNERATION COMMITTEE MEMBERSHIP The Directors who served on the Committee during the year are set out below: Committee members Member since Kirsty Bashforth: Chair 2019 Dariusz Kucz 2018 Jeremy Townsend 2020 Jitesh Sodha 2021 Valeria Juarez 2021 * Director who stepped down from committee on 23 November 2021. Dariusz Kucz retired at the 2021 AGM. For attendance at the Remuneration Committee, the Board meetings and other Board Committees, please see the full attendance table / Page 105 DEAR SHAREHOLDERS, On behalf of the Board, I am pleased to present our 2022 Remuneration Committee report. This report is divided into three sections: 1) This Remuneration Committee Chair Statement – providing a summary of key reward implementation decisions made in the year. 2) The Remuneration Policy – the 2021–2023 Policy which was approved by our shareholders in a binding vote at the 2020 AGM. 3) The Report on Directors’ Remuneration – a report on remuneration  year and how the Committee intends to apply the Policy in the  at our 2022 AGM. In line with its delegation from the Board, the Committee sets the Company’s Remuneration Policy for approval by shareholders and is responsible for the terms and conditions of the remuneration of members of the Board and the Executive Leadership Team (ELT). 119 Governance / Remuneration Committee report COMMITTEE ROLE • To set, develop and oversee the implementation of the Directors’ Remuneration Policy  principles of the wider organisation and the relationship between the remuneration of the members of the Board and the wider employee population. •   • To maintain an active dialogue with stakeholders, ensuring that the shareholders and other advisory bodies’ views are taken into account when setting the remuneration of  Detailed responsibilities are set out in the Committee’s terms of reference, www.pzcussons.com/ PRIORITIES FOR 2023 • Review the remuneration policy in advance of the 2023 Annual General Meeting (AGM). • Engage with shareholders on the remuneration policy and pay implementation. • Work with management to  the global cost-of-living challenges. • Total of £25.8 million proceeds from the disposal of non-core assets,  business and Nigerian residential properties; • Acquisition of Childs Farm, which completed in March 2022 and is now a MWB. The Board has also been focusing on  of our ELT to deliver the Group strategy and grow a robust bench of talent for the future. The Committee has given careful consideration to remuneration for the ELT to ensure there is alignment between Board level and below throughout the year.  The key remuneration developments concerning the wider employee population for FY22 are set out below: • Employee salary levels are reviewed annually against a range of relevant inputs which includes market data, economic forecasts, pay at the  budgets. The average salary increase awarded for the broader UK employee population for FY22 was 3% of salary. The average salary increase for FY23 is anticipated to be 3.5% of salary for the broader UK workforce. • To reward critical talent, and incentivise retention, share awards in the form of Restricted Stock Units (RSUs) have been granted below the ELT. • FY22 bonuses for the wider employee population varied depending on the achievement of performance metrics in business units. The typical bonus paid to employees in Group roles (below the ELT) was 82.4% of target. • The launch of our Share Incentive Plan (‘SIP’) in October 2021 further aligns employees with the business strategy and investors by encouraging equity participation through the wider employee population. • As in FY21, the Company did not engage in any Covid-19 related redundancy programmes nor did it utilise any voluntary government support packages in any of its markets for FY22. • In May, I met with the HR Leadership Team and Dariusz Kucz, in his role as representative of the employee voice, to discuss the Group  In addition to the above developments  has been a strong focus on wellbeing: •  refurbishment includes a fully equipped gym and studio with a full-time instructor. Access to the gym and classes, (including spinning, HiT and yoga), are free to all employees. The Aviator Way  Manchester Airport so our carpark has been made available to those travelling abroad for the duration of their holiday. • In Nigeria, a one-time Covid-19 payment was made to support working from home and  of the increasing cost of living. • In Australia and New Zealand, we re-launched our BEST values recognition award programme and introduced a quarterly half-day wellbeing leave initiative. • In a move to create more equitable rewards, we are no longer pro-rating bonuses for any period of family leave for employees in the US and UK. PZ Cussons plc / Annual Report and Financial Statements 2022 120 REMUNERATION COMMITTEE REPORT CONTINUED Shareholder considerations • Our share price saw some decline through FY22. The Committee did nonetheless consider whether a reduction to the LTIP grant level for FY23 would be prudent, but it concluded from its discussions that the Committee was comfortable that management’s performance  the risks arising from the impact of the broader volatile economic conditions. REMUNERATION DECISIONS The Committee carefully considered the progress made by management during the year, the impact of the trading environment on Group  of both the shareholders and wider  year when reviewing incentive plan outturns and setting performance conditions and targets for the forthcoming year. Its decisions are summarised below: Remuneration earned during the  The key aspects of remuneration earned during the year are as follows:  • As reported in last year’s report,   of 3% (from £575,000 to £592,250)  in line with the average applied to the UK employee population. •  also received a salary increase of 3% (from £325,000 to £334,750) with   • The FY22 annual bonus was based   30% revenue growth and 10% net working capital percentage, with the balance of the bonus being   –  opportunity) of bonus assessed  was achieved. – The Committee also assessed the performance against the  focused on Organisational   100% of the available 20% was earned. –  bonus was earned by the Chief   – Full details of the performance assessment against both the   page 133. • The overall performance outturn resulted in awards representing 82% of salary for the CEO and 68% of salary for the CFO. • The Remuneration Committee reviewed the formulaic bonus  Group performance and taking  of the key stakeholders including employees and shareholders during the year. The Committee agreed that the outcome was fair and therefore no discretion was applied to the bonus outturn for FY22. Long-term incentives • Given their recent appointments, there were no Performance Share Plan (‘PSP’) awards vesting to the  respect of performance periods ending 31 May 2022. • PSP awards granted to other participants in FY19 lapsed due to the EPS targets not being met. This award was made under the previous remuneration policy and therefore prior to our overhaul of the LTIP’s metrics and targets. • Jonathan Myers was granted a PSP award during 2022 over shares to the value of 150% of salary and Sarah Pollard was granted a PSP award over shares to the value of 125% of salary. These awards will  Brands and Sustainability targets are met over the period to 31 May 2024. Our approach to remuneration for  The approach to remuneration implementation for FY23 is in line with the approved remuneration policy and is largely unchanged from FY22. However, some key changes to the implementation of pay for FY23 include: • Base salaries – The base salary for the Chief  increased to £612,979 by 3.5%  2022 in line with the average level awarded to the wider employee population in the UK. – Sarah was appointed as Chief  She has since performed very strongly and has additionally played an instrumental role in building deeper capability  team. Sarah was appointed on a salary of £325,000, materially lower than the salary paid to her predecessor (£371,000) and this remained the case following her salary increase of 3% to £334,750 last year. 121 Governance / Remuneration Committee report In the FY21 Remuneration Committee report, when discussing the Chief Financial  Committee set out its intentions to ensure that base salary levels remain market competitive based on performance and increased  Committee determined, having  including, the Chief Financial  role, total compensation market   size in both the FTSE and other consumer goods companies and pay increases and positioning for our employees below the Board, to increase the Chief Financial   1 September 2022) which represents an increase of 10.5%. The Committee is cognisant that this increase is larger than we have historically made, however, we are comfortable that the circumstances warrant such an increase to ensure that pay  competitive and retentive. • Incentive plan measures, weightings and targets – Performance measures currently  strategy and are key milestones that pave the way for our goal to have all businesses become B Corp by 2026, therefore no changes are proposed to the overall performance, measures and weightings attached to the annual bonus and LTIP grant for FY23. However, some changes have been made to the underlying goals and targets  priorities of the Group: – The annual bonus Key Business  for FY23. – The LTIP sustainability targets for FY23 have been updated to  carbon neutrality, packaging sustainability and employee wellbeing. All of which are key   set out on page 136. –  measures have also been reviewed and updated slightly to  strategy. •   fees against market practice, no changes are proposed. Further details on how we intend to implement the policy in FY23 are set out in the ‘At a glance summary’ on page 122. Board Changes I would like to welcome to the Committee Jitesh Sodha and Valeria   director and CFO, Valeria brings sector  and e-commerce. Dariusz Kucz retired from the Committee following the 2021 AGM but continues to serve on the Board and holds responsibility for representing the employee voice. As such we continue to partner on wider workforce remuneration matters. I would like to thank him for his contributions over the course of his membership. Concluding remarks  remuneration is focused on providing clear alignment between pay and  of all the key stakeholders. We use a holistic, connected approach to  to avoid making pay decisions in isolation of the rest of the Group and our Group pay philosophy. I hope that the decisions summarised in this letter and pay decisions clearly demonstrate this commitment. I would like to thank the shareholders for their continued support for our pay policy and its implementation and hope to receive your support at the upcoming AGM. We would welcome your views on any of the matters set out in this report. Kirsty Bashforth Chair of the Remuneration Committee PZ Cussons plc / Annual Report and Financial Statements 2022 122 At a glance summary: how we will implement the policy in FY23 The table below summarises how the Committee intends to implement the Remuneration Policy for the forthcoming financial year ending 31 May 2023. Key policy features FY23 implementation Link to KPIs Salary Base salaries are normally reviewed  • The scope of the role and the markets in which PZ Cussons operates. •  individual. • Pay levels in other organisations of a  • Pay increases elsewhere in the Group. •  with the average increase awarded to the wider employee population. •  review in line with our stated intentions upon her recruitment in 2021 whereby her salary was set below the prior incumbent and market competitive levels. Further to a review of market practice, individual performance and Group pay decisions, it was determined necessary to make a more substantive increase to the Chief Financial Officer’s salary of 10.5%. Chief Executive Officer Chief Financial Officer Salary 612,979 370,000 Increase 3.5% 10.5% Pension/benefits/all-employee share schemes  benefits in line with those generally provided to employees in the location in which they are based. Directors receive market competitive benefits and may participate in all- employee benefit arrangements. •  Sarah Pollard, remain on pension rate of 10% of salary in line with UK employee population. •  line with that for the employees in the location where they are based. Annual bonus  Incentive scheme which focuses Directors on delivery of annual goals and milestones which are consistent with the Group’s longer-term strategic aims.  bonus payout does not reflect business performance or individual contribution. 25% of any bonus earned deferred into shares for three years. Recovery and withholding provisions apply. Chief Executive Officer Chief Financial Officer  150% of salary 125% of salary Performance metrics: •  • Revenue growth: 30% • Net working capital percentage: 10% •  The Committee considers that the bonus targets are commercially sensitive and therefore plans to disclose them only on a retrospective  •   • Revenue growth • Net working capital percentage • Strategic priorities REMUNERATION COMMITTEE REPORT CONTINUED  Governance / Remuneration Committee report Key policy features FY23 implementation Link to KPIs Long-term incentive plan  Long-term incentive scheme which focuses on generating sustained shareholder value over the longer term and aligning the Directors’ interests with those of the Company’s shareholders. Performance measures based on financial, strategic or share price-based metrics measured over three years.  to ensure it is reflective of underlying performance. Holding period applies for two years following vesting (i.e., five years from grant). Recovery and withholding provisions apply. Chief Executive Officer Chief Financial Officer LTIP award 150% of salary 125% of salary Performance metrics: Weighting Threshold target Threshold vesting Maximum target  60% 3% per annum 25% 7% per annum Revenue growth from Must Win Brands 20% 3% per annum 25% 9% per annum Sustainability 20% See page 137 The range of targets are set having had regard to internal planning,  future performance. The targets for our financial metrics are more stretching that those set for awards granted last year. •  basic EPS • Revenue growth • Sustainability Chair and Non-Executive Director fees Fees to reflect the time commitment in preparing for and attending meetings, the duties and responsibilities of the role and   Fees will be paid in line with the policy as shown: FY 22 FY 21 Increase Basic fees Chair 250,000 250,000 0%  55,000 52,500 5% Additional fees Senior Independent Director 10,000 5,000 100% Chair of Audit & Risk or Remuneration Committee 10,000 10,000 0% Chair of any other Committee 5,000 5,000 0% Director responsible for employee engagement 5,000 5,000 0% * The Company Chair does not receive additional fees for chairing other Board Committees. PZ Cussons plc / Annual Report and Financial Statements 2022 124 REMUNERATION POLICY Directors’ Remuneration Policy This part of the report complies with the relevant provisions of the Companies Act 2006 and Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). It has also been prepared taking into account the 2018 UK Corporate Governance Code and the requirements of the UKLA Listing Rules. The policy was approved by shareholders at the 2020 Annual General Meeting (AGM) and became  26 November 2020. The Remuneration Policy as approved can be viewed at www.pzcussons.com and is included on the following pages, updated for factual changes where appropriate. Approach to designing the Remuneration Policy The Committee is responsible for determining, and agreeing with the Board, the Directors’ Remuneration Policy, and has oversight of its implementation. The Committee has clear terms of reference and works with management and independent advisers to develop proposals and   decisions. This process is considered  of interest. When considering how to position the remuneration packages for the  considers market data from UK- listed companies of a similar size  also receives and takes into account information from the Chief Human  employment conditions applying to other Group employees, consistent with the Group’s general aim of seeking to reward all employees fairly according to the nature of their role, their performance and market forces. In designing an appropriate incentive  and other senior management, the Committee seeks to set challenging performance criteria that are aligned with the Group’s business strategy and the generation of sustained shareholder value. The Committee is also mindful of the need to avoid inadvertently encouraging risky or irresponsible behaviour, including behaviour that could raise environmental, social or governance issues. The Committee considered the principles listed in the 2018 UK Corporate Governance Code when designing the Directors’ Remuneration Policy and took these into account in its design and implementation: Clarity: Remuneration arrangements  transparently communicated to the shareholders and other stakeholders,  quantum and incentive plan pay- out schedules. We seek to provide  possible on how we set incentive plan performance targets and disclose targets in advance where they are not commercially sensitive. Incentive plan metrics are used in communicating and measuring Group performance on   participants and the shareholders have a clear view of pay for performance. Simplicity: The remuneration  is market typical thereby avoiding  generally accepted and reported performance metrics which are simple  Risk: Our incentive plans are designed to have a robust link between pay and performance, by using Group key performance indicators and having a layer of Committee review whereby  incentive outturns at the end of the performance period to mitigate any risk of payment for failure, or any risk  penalised by the structure of the incentive. Mitigation of behavioural  term share price movements through deferral of incentive payments in shares, recovery provisions and share ownership requirements. Predictability: The Committee seeks to maintain a consistent approach to its annual duties including target setting, reviewing incentive outturns and salary review. Consistency of process helps to ensure consistency of outcomes. Proportionality: The annual bonus and PSP have performance metrics which are aligned with the Company’s KPIs and Budget as set by the Board. The Committee may reduce payouts under the bonus and PSP if they are not in line with underlying performance. Alignment to culture: The Directors’ remuneration arrangements are cascaded down through the organisation as appropriate ensuring that there are common goals and outcomes. The Committee reviews remuneration arrangements throughout the Company and takes these into account when setting Directors’ remuneration. 125 Governance / Remuneration policy Remuneration framework  Element Purpose and  Operation Maximum opportunity Performance measures Fixed remuneration Base salary To provide an appropriate level of  recruit and retain talent through the provision of competitively positioned base salaries. Base salaries are normally reviewed annually taking into account: • The scope of the role and the markets in which PZ Cussons operates. •  of the individual. • Pay levels in other organisations of  • Pay increases elsewhere in the Group.   employees, there is no overall  under this policy. Salary increases are reviewed in  across the wider Group.  elsewhere in the Group would be considered very carefully by the Committee. The circumstances in which higher increases may be awarded include but are not limited to: • An increase in the scope and/or responsibility of a role. • An increase upon promotion to  • Where a salary has fallen significantly below market positioning. • The transition over time of a  recruited on a below market salary to a more competitive market positioning as the   None, although overall performance of the individual is considered by the Committee when setting and reviewing salaries. Benefits Recruitment and retention of senior  through the provision of a competitively positioned and cost-effective benefits package. Benefits may also be provided to assist in the effective performance  Director’s duties. Benefits that may be provided include car benefits, life assurance,  Director and family, permanent   participate in any all-employee share or benefits plans on the same basis as any other employees. Where relevant, additional benefits may be offered if considered appropriate and reasonable by the Committee, such as assistance with the costs of relocation.  be based on the cost of providing the benefits. This will be set at a level that the Committee considers appropriate to provide a sufficient level of benefit based on individual circumstances. Not applicable. Provision for retirement Designed to enable an  generate an income in retirement and to provide an overall remuneration package that is competitive in the market. Participation in a defined contribution pension plan or provision of a cash allowance in lieu of a pension contribution. A Company pension contribution in line with the rate provided to the wider workforce in the  based. For the UK this is currently 10% of base salary in respect of each financial year into the scheme on   contribution of 5% of base salary; or cash allowance of up to 10% of base salary. Not applicable. PZ Cussons plc / Annual Report and Financial Statements 2022 126 Element Purpose and  Operation Maximum opportunity Performance measures Variable remuneration Annual bonus scheme and deferred annual bonuses Designed to motivate  focus on annual goals and milestones that are consistent with the Group’s longer-term strategic aims. Measures and targets are set annually at the beginning of the relevant financial year and payout levels are determined by the Committee after the year-end based on performance against those targets. A minimum of 25% of the bonus earned will be deferred into shares. The deferral period will be three years (unless the Committee determines otherwise). A dividend equivalent may be payable on deferred shares that vest. The Committee may apply discretion to amend the bonus payout should this not, in the view of the Committee, reflect underlying business performance or individual contribution. Recovery and withholding provisions apply to cash and deferred shares.  opportunity that may be earned for any year is 150% of base salary.   Director roles is: •  •  125% of salary The performance measures and targets are set by the Committee each year.  annual bonus is based on challenging financial targets that are set in line with the Group’s KPIs. In addition, a smaller element of the annual  achievement against key  or personally tailored  For each financial  of the relevant part of the bonus becomes payable at the threshold performance level rising on a graduated scale to  performance level. The structure and nature of the strategic  it is not practical to specify any pre-set percentage of bonus that becomes payable for threshold performance.  bonus will only be paid for achieving significant financial outperformance above the budget set for the year. REMUNERATION POLICY CONTINUED 127 Governance / Remuneration policy Element Purpose and  Operation Maximum opportunity Performance measures Variable remuneration continued Performance Share Plan Designed to motivate  to focus on the generation of sustained shareholder value over the longer term, and to align their interests with those of the Group’s shareholders. Annual awards of rights over shares calculated as a percentage of base  attainment of predetermined performance targets measured over a performance period of at least three years. The performance period normally starts at the beginning of the financial year in which the date of grant falls. The Committee may use discretion to  the view of the Committee, not reflect underlying performance. Dividend  PSP awards and are paid on vesting in respect of those shares that vest. Award levels and performance conditions are reviewed before each award cycle to ensure that they remain appropriate. Any shares that vest will normally be  holding period. Recovery and withholding provisions apply to awards granted under the PSP. Award opportunities in respect of any financial year are limited to rights over shares with a market value determined by the Committee at grant of a    Director roles is: •  •  125% of salary   to challenging financial, strategic or share price-related targets measured over the performance period. Financial targets  and/or shareholder return measures) will apply to at least half of the total award. Vesting does not take place until the threshold performance requirement is met (as applicable to each relevant metric), at which point no more than 25% vests. Vesting increases on a graduated basis from threshold performance  Other aspects Shareholding guidelines Alignment of the  interests with those of the Group’s shareholders. Requirement to build up interests in the Company’s shares worth 200% of salary.  to retain a minimum of half the  from PSP awards towards the satisfaction of the guideline. Not applicable. Not applicable. Post- employment share ownership requirements Ensures there is an appropriate amount of  Directors post cessation of employment.  maintain a minimum shareholding of 200% of salary for the first year following ceasing to be a Board Director and 100% of salary for the second year, or in either case if lower, the full shareholding on cessation. Not applicable. Not applicable. PZ Cussons plc / Annual Report and Financial Statements 2022 128 REMUNERATION POLICY CONTINUED Recovery and withholding provisions The Committee may, in its discretion, apply malus and/or clawback to annual bonus and PSP awards at any time within three years of payment in circumstances of a misstatement of results, error in payout calculations or the calculation being based on incorrect information, misconduct, corporate failure or reputational damage. Malus may be applied at any time prior to the vesting of any award or payment of any declared bonus, and clawback can be applied after an award or bonus is paid or vests and where the triggering event occurs at any time prior to the third anniversary of the date the award or bonus vests/is paid. The clawback may be affected through a withholding of variable pay, by reducing the size of, or imposing further conditions on, any outstanding or future awards, or by requiring the individual to return the value of the cash or shares delivered to recover the amount overpaid. Element Purpose and link  Operation Maximum opportunity Performance measures Non- Executive Director fees To reflect the time commitment in preparing for and attending meetings, the duties and responsibilities of the role and the contribution   Directors. Fees are normally reviewed every year and amended to reflect market positioning and any change in responsibilities. The Committee recommends the remuneration of the Chair to the Board.  are determined and approved by the Board as a whole.  not participate in the annual bonus plan or any of the Group’s share incentive plans. The Company covers the costs of attending meetings and  reimbursed for any business   Fees are based on the level of fees paid  boards of similar sized UK-listed companies and the time commitment   fee and an additional fee for further  Committee or Senior Independent Director responsibilities).    Articles of Association. Not applicable.   and performance-related in order to encourage and reward superior Group and individual performance. The following  with a 50% increase in share price. Jonathan Myers Below threshold Target   (including share price growth) £699,277 £1,480,825 £2,538,214 £2,997,948 Performance scenarios  Annual Bonus Long-term incentive plans 100% 47%  16% 28%     46% Sarah Pollard Below threshold Target   (including share price growth) £423,000 £816,125 £1,348,000 £1,579,250 100% 52%     14% 44% 27% 29% 129 Governance / Remuneration policy Minimum performance Target performance Maximum performance Maximum performance including share price growth Fixed elements  Base salary as at 1 September 2022 (612,979 for Jonathan Myers and £370,000 for Sarah Pollard), an estimate of the value of benefits and pension contributions at 10% of base salary Annual bonus 0% 60% of maximum opportunity Jonathan Myers – 60% of 150% of salary Sarah Pollard – 60% of 125% of salary 100% of maximum opportunity Jonathan Myers – 150% of salary Sarah Pollard – 125% of salary 100% of maximum opportunity Jonathan Myers – 150% of salary Sarah Pollard – 125% of salary Long-term incentive plans 0% 25% of award Jonathan Myers –  Sarah Pollard –  100% of award Jonathan Myers – 150% of salary Sarah Pollard – 125% of salary 100% of award with a 50% increase in share price over the vesting period Jonathan Myers – 150% of salary Sarah Pollard – 125% of salary Recruitment remuneration arrangements  consistent with the Policy detailed in the table above. To facilitate the hiring of candidates of the appropriate calibre, the Committee may make an award to buy out variable remuneration arrangements forfeited on leaving a previous employer. In doing so, the Committee will take account of relevant factors including the form of award, the value forfeit, any performance conditions and the time over which the award would have vested. The intention of any buy-out would be to compensate in a like-for-like manner as far as is practicable.   bonus plan and PSP, i.e., a total face value opportunity of 300% of salary. The Committee will ensure that such awards are linked to the achievement of appropriate and challenging performance measures and will be forfeited if performance or continued employment conditions are not met. Appropriate costs and support will be covered if the recruitment requires relocation of the individual.     Name Date of appointment Jonathan Myers 1 May 2020 Sarah Pollard 4 January 2021  loss of office will normally be guided by the following principles: • The Committee shall seek to apply the principle of mitigation where possible, as well as seeking to find an outcome that is in the best interests of the Company and shareholders as a whole, taking into account the specific circumstances. • Relevant contractual obligations, as set out above, shall be observed or taken into account. •    modest provision in respect of legal costs and/or outplacement fees. • The treatment of outstanding variable remuneration shall be as determined by the relevant plan rules, as set out on the  •  PZ Cussons plc / Annual Report and Financial Statements 2022  REMUNERATION POLICY CONTINUED Performance Share Plan Cessation of directorship/employment within three years of date of grant: Death The award will normally vest as soon as practicable following death.  participant’s employing company or business out of the Group or any other reason if the Committee so decides.  taking into account, if the Committee considers it appropriate, time pro-rating and the   otherwise.  which the performance conditions have been met. Alternatively, the Committee has the discretion to allow the award to vest at the time of cessation of directorship/employment  been met up to that date. Unless the Committee determines otherwise, the Committee will reduce the award to  Any other reason The award will lapse upon cessation of directorship/employment. Cessation of directorship/employment after three years of date of grant (i.e., in respect of shares held for a compulsory holding period): Death The award will vest as soon as practicable following death. Lawful dismissal without notice by the Company The award will lapse upon cessation of directorship/employment. Any other reason The award will generally be released at the end of the holding period. Alternatively, the Committee has the discretion to allow the award to be released in part, or in full, at the  are released in these circumstances will be determined by the Committee taking into account the performance conditions. Annual bonus scheme – cash element  such proportion of cash and shares as it considers appropriate) taking into account the performance metrics and whether it is appropriate to time pro-rate the award for the time served during the year. Annual bonus scheme – deferred share element  retirement, the sale of the participant’s employing company or business out of the Group or any other reason if the Committee so decides. The award will vest on the normal vesting date unless the Committee determines otherwise. Any other reason The award will lapse upon cessation of directorship/employment.  accordance with the rules of such plan.  Governance / Remuneration policy Change in control The rules of the PSP provide that, in the event of a change of control or winding-up of the Company, all awards will vest  satisfied at that time and ii) the pro-rating of the awards to reflect the proportion of the performance period that has elapsed, although the Committee can decide not to pro-rate an award if it regards it as inappropriate to do so in the particular circumstances. Deferred bonus awards will normally vest in full on a takeover or winding-up of the Company. In the event of a special dividend, demerger or similar event, the Committee may determine that awards vest on the same basis. In the event of an internal corporate reorganisation, awards may be replaced by equivalent new awards over shares in a new holding company. Similarly, in the event of a merger of equals, the Committee may invite participants to  holding company.   determines the relevant performance metrics have been (or would have been) met. Statement of consideration of employment conditions elsewhere in the Company  employment conditions of all employees of the Group. The Group-wide pay review budget is one of the key factors when  regarding Board remuneration, it does comply with local regulations and practices regarding employee consultation more broadly. Communication with shareholders The Committee is committed to an ongoing dialogue with shareholders and seeks the views of significant shareholders  The Committee takes into account the views of significant shareholders when formulating and implementing the Policy.      appointment are set out below. Name Expiry of term Caroline Silver (Chair) 31 March 2023 Kirsty Bashforth 31 October 2022 Dariusz Kucz 30 April 2024 John Nicolson 30 April 2025 Jitesh Sodha 30 June 2024 Jeremy Townsend 31 March 2023 Valeria Juarez 22 September 2024  for inspection at the Company’s registered office during normal business hours and will be available at the Annual General Meeting. PZ Cussons plc / Annual Report and Financial Statements 2022     the Directors for the year ended 31 May 2022: Executive Directors Jonathan Myers Sarah Pollard 5 Salary/ fees 1 2022 587,938 332,313 2021 575,000 135,417  2 2022 22,520 17,020 2021 22,508 7,092 Pension 4 2022 57,500 32,499 2021 57,500 13,542  2022 667,958 381,832 2021 655,008 156,051 Bonus 3 2022 483,276 227,630 2021 862,500 164,734 PSP 2022 2021 Other 2022 2021 131,015 Total variable 2022 483,276 227,630 2021 862,500 295,749 Total 2022 1,151,234 609,462 2021 1,517,508 451,800 Non-Executive Directors Caroline Silver Kirsty Bashforth Dariusz Kucz John Nicolson Jeremy Townsend Jitesh Sodha 6 Valeria Juarez 7 Salary/ fees 1 2022 £250,000 £65,416 £60,416 £65,416 £65,416 £50,416 £38,076 2021 £250,000 £61,667 £57,500 £62,500 £26,679 – –  2 2022 – – – – – – – 2021 £537 – – – – – – Other 2022 – – – – – – – 2021 – – – – – – – Total 2022 £250,000 £65,416 £60,416 £65,416 £65,416 £50,416 £38,076 2021 £250,537 £61,667 £57,500 £62,500 £26,679 1 The amount of salary/fees payable in the period.    3 Details of the performance measures and weightings as well as results achieved under the annual bonus arrangements in place in respect of the year are shown on pages 133 to 135. As disclosed last year, £131,015 of Sarah Pollard’s FY21 bonus payment was to compensate her for outstanding shares forfeited on departure from her former employer. 4 Jonathan Myers and Sarah Pollard receive salary supplements of 10% of salary in lieu of pension contributions. 5 Sarah Pollard was appointed Chief Financial Officer on 4 January 2021. 6 Jitesh Sodha was appointed to the Board on 1 July 2021. 7 Valeria Juarez was appointed to the Board on 22 September 2021. Amounts are rounded to the nearest Pound Sterling.    taking effect from 1 September. Salaries are set with reference to the scope of the role and the markets in which   REPORT ON DIRECTORS’ REMUNERATION  Governance / Report on Directors’ remuneration  £592,250) with effect from 1 September 2021 which was in line with the average applied to the UK workforce. Sarah Pollard, Chief Financial Officer, also received a salary increase of 3% (from £325,000 to £334,750) with effect from 1 September 2021.   the Senior Independent Director was increased from £5,000 to £10,000 for FY22. This follows five years of no increase to either fee and further to a review of both market practice and pay increases within the Group.   Sarah Pollard, both participated in the annual bonus scheme.  Chief Financial Officer 125% of base salary (pro-rata for the period since appointment) with a quarter of any bonus  provisions and continued employment.   A summary of the performance targets and outturns are set out below. Financial targets  Proportion of total bonus Threshold (10% payout) Target (60% payout) Stretch (100% payout) Actual performance Proportion of total bonus payable  40% £63.5m £70.6m £74.1m £67.6m 15% Revenue growth 30% £591.3m £602.9m £615.5m £595.7m 9% Net working capital percentage 10% 11.1% 10.0% 9.5% 8.2% 10% 34% * the actual performance in the table is based on budgeted FX rates used for management reporting to determine the value of bonus payable Strategic targets  Metric Proportion of total bonus Milestones achieved Proportion of total bonus payable Organisational effectiveness 10% • New succession plans have been documented, reviewed and validated by the Board. • The organisational structure has been refined and strengthened, including hiring talent into key strategic roles (e.g., Chief Sustainability Officer, Chief Marketing Officer, and Business Development Director). Commercial Talent has been successfully integrated from Acquisitions. • Retention targets have been met – turnover of talent remained within plan for key segments of the business. 10% Strategic execution 10% • Successful implementation of significant cost management initiatives leading to significant growth and margin improvement in Nigeria. • Significant progress has been made with our People Agenda, with the launch of Workday phase one and introduction of our new Purpose and Values. • Supply chain manufacturing network optimisation plan has gone live in Singapore. • Revenue growth management capabilities strengthened through the implementation of the Turbo booster, Group role recruited, new toolkits created, and promotional management tools approved for implementation in FY23. 10%   of key stakeholders including employees and the shareholders during the year. The Committee agreed the outcome was fair and therefore no discretion was applied to the bonus outturn for FY22. PZ Cussons plc / Annual Report and Financial Statements 2022  REPORT ON DIRECTORS’ REMUNERATION CONTINUED    will continue to be 150% and 125% of salary respectively, which can be earned for delivery against challenging targets,      The Directors consider that the Group’s future targets are matters that are commercially sensitive; they could provide     Bonuses are payable at the discretion of the Committee and the Committee may apply discretion to amend the bonus  A minimum of one quarter of any bonus earned will be required to be deferred into shares for three years.  the Committee to recover amounts paid in circumstances of i) a material misstatement of audited results, ii) employee misconduct associated with the governance or conduct of the business, iii) an erroneous calculation of a performance condition, iv) reputational damage or v) corporate failure. The ability to apply these provisions operates for a period of up to  Long-term incentive plans Performance Share Plan   satisfaction of certain performance criteria established by the Committee. The current version of the PSP, the PZ Cussons plc Long-Term Incentive Plan 2020 (the ‘LTIP 2020’), was approved by shareholders and adopted at the 2020 Annual General Meeting. PSP awards granted to former Directors in FY19 which were due to vest in FY22 did not meet their performance criteria and lapsed.  As disclosed in last year’s Report on Directors’ Remuneration, and in line with the Company’s Remuneration Policy, during the year ended 31 May 2022 an award was made to J Myers under the PSP over shares with a value equal to 150% of base salary and S Pollard was also granted an award over shares worth 125% of base salary, pro-rated for the period from appointment as set out below: Performance Share Plan Scheme Basis of award Number of shares 1,2 Face value Percentage vesting for threshold performance Performance period end date Jonathan Myers LTIP 2020 150% of salary 403,806 £888,373 25% 23 September 2024 Sarah Pollard LTIP 2020 125% of salary 190,198 £418,435 25% 23 September 2024 1 Jonathan Myers was granted an award over 403,806 shares and Sarah Pollard was granted an award over 190,198 under the LTIP on 23 September 2021 calculated  accordance with the rules of the LTIP 2020.    salary to circa 175% of salary.  Governance / Report on Directors’ remuneration The performance metrics were aligned with the business’ mid- to long-term priorities with the introduction of a strategic revenue metric and a sustainability metric with a 20% weighting each to supplement the EPS growth metric (60% weighting). Measure EPS growth Strategic target Sustainability target Weighting 60% weighting 20% weighting 20% weighting Description  over three-year performance period Revenue growth from Must Win Brands measured relative to growth in revenue from Portfolio Brands 1 The targets were based on progress towards the Group’s ambitions to achieve B Corp certification and addressed our priorities with respect to (i) ethical sourcing, (ii) reduction in carbon intensity and (iii) our employees (each of which will determine the vesting of one-third of the 20% portion of the award based on sustainability). Threshold target (25% vesting) 2% per annum 2% Ethical Sourcing: • Publish a revised supplier code of conduct aligned to our recently approved Code of Ethical Conduct and embed it across the supplier base with at least 90% of suppliers by value having either signed up to it or demonstrated that they have in place their own code which  • Adopt and publish a PZ Sustainability Charter setting out our commitments across key ESG areas and encourage our supply base to sign up to our charter with at least 60% of our suppliers by value signing up to our Sustainability Charter by the end of the performance period. Carbon Disclosure Project (CDP) performance: • Improve from current ‘B-’ score to a ‘B’ score by the end of the performance period. Employee Engagement: • Improve the employee engagement scores to 73% (+1%) by the end of the performance period. Maximum target (100% vesting) 6% per annum 6% Ethical Sourcing: • In addition to threshold, (1) achieve 99% of suppliers by value signing up to our Supplier Code of Conduct; and (2) 90% of our suppliers by value signing up to our Sustainability Charter. CDP Performance: • Achieve an ‘A/A-’ score by the end of the performance period. Employee Engagement: • Improve the employee engagement score across the Group to 75% (+3%) by improving 1% each year of the performance period. PZ Cussons plc / Annual Report and Financial Statements 2022  REPORT ON DIRECTORS’ REMUNERATION CONTINUED  For awards to be granted in FY23, the EPS and strategic measures and weightings are the same as the awards granted in respect of FY22. The sustainability target weighting is unchanged. The measures have been revised and based on progress  (ii) package sustainability and (iii) our employees, wellbeing (each of which will determine the vesting of one-third of the 20% portion of the award based on sustainability). Weighting Carbon Neutrality Package Sustainability Employee Wellbeing Threshold target (25% payout) Carbon neutral in global operations (scopes 1+2) by end of the performance period. 10% reduction in virgin plastic by end of performance period (2021 baseline). Employee wellbeing scores average 72% across the three-year performance period. On-target (62.5% payout) Carbon neutral in global operations + 10% absolute reduction by end of performance period (scopes 1+2) + established verified baseline scope 3 measurement. 10% reduction in virgin plastic by end of performance period (2021 baseline) + 80% certified paper in packaging. Employee wellbeing scores average 75% across the three-year performance period. Maximum target (100% payout) Carbon neutral in global operations + 10% absolute reductions (scopes 1+2) by end of performance period + established verified baseline scope 3 measurement and SBT aligned reduction plan to 2045. 10% reduction in virgin plastic by end of performance period (2021 baseline) + 100% certified paper in packaging. Employee wellbeing score average 78% across the three-year performance period.   holding period. Statement of Directors’ shareholding and share interests  •  •  from the acquisition of shares pursuant to any of the Company’s share incentive plans. •   and (2) their shareholding on cessation. • As set out in the Remuneration Policy, to defer 25% of any bonus earned into shares for three years.   any connected persons) were: Ordinary shares held at 31 May 2022 Interests in share incentive schemes that are not subject to performance conditions as at 31 May 2022 Interests in share incentive schemes that are subject to performance conditions as at 31 May 2022 1 Value of shares held at 31 May 2022 as a % of base salary J Myers 101,175 48,760 839,852 17.08% S Pollard 29,485 9,312 261,171 8.81%    Governance / Report on Directors’ remuneration  while they have not yet met the guideline given their recent appointments to the Company and Board, progress is being  between 31 May 2022 and the date of this report.   The outstanding awards granted to each Director of the Company under the Performance Share Plan are as follows: Date of award Number of options/ awards at 1 June 2021 Granted/ allocated in year Exercised/ vested in year Lapsed in year Number of options/ awards at 31 May 2022 Share price at date of award (£) Share price at date of vesting (£) Gain (£) Vesting/ transfer date 1 J Myers 27-Nov-2020 375,000 – – – 375,000 2.285 – – 27-Nov-23 S Pollard 1-Feb-2021 70,973 – – – 70,973 2.480 – – 1-Feb-24 J Myers 23-Sep-2021 – 403,806 – – – 2.265 – – 23-Sep-24 S Pollard 23-Sep-2021 – 190,198 – – – 2.265 – – 23-Sep-24 J Myers 26-Nov-2021 – 61,046 – – – 1.958 – – 27-Nov-23    Under the annual bonus, 25% of any payment is deferred into shares for three years. Date of award Number of options/ awards at 1 June 2021 Granted/ allocated in year Exercised/ vested in year Lapsed in year Number of options/ awards at 31 May 2022 Share price at date of award (£) Share price at date of vesting (£) Gain (£) Vesting/ transfer date 1 J Myers 23-Sep-2021 – 98,011 – – 98,011 2.265 – – 23-Sep-24 S Pollard 23-Sep-2021 – 18,719 – – 18,719 2.265 – – 23-Sep-24 1 Awards ordinarily vest on the third anniversary of grant, conditional only on continued employment.  Directors are eligible for membership of the Company’s defined contribution pension arrangements and/or the provision of cash allowances in lieu of thereof. The contribution for Jonathan Myers and Sarah Pollard is set at 10% of salary, in line with the rate applicable to the wider UK employee population.  There were no loss of office or payments to former Directors during the year.  The Company’s share incentive plans may operate over newly issued ordinary shares, treasury shares or ordinary shares purchased in the market. In relation to all of the Company’s share incentive plans, the Company may not, in any ten-year period, issue (or grant rights requiring the issue of) more than 10% of the issued ordinary share capital of the Company to  of awards made during the year ended 31 May 2022 under the Company’s share incentive plans, no new ordinary shares were issued. PZ Cussons plc / Annual Report and Financial Statements 2022  REPORT ON DIRECTORS’ REMUNERATION CONTINUED Performance graph The graph below illustrates the performance of PZ Cussons plc measured by Total Shareholder Return (TSR) over the    PZ Cussons plc TSR vs the FTSE 250 index TSR V alue (£) 300 250 200 150 100 50 0 PZ Cussons plc ordinary shares FTSE 250 Index 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022  Total remuneration (£) Annual bonus % of maximum opportunity LTIP % of maximum opportunity 2021–22 1,151,234 54.4% n/a 2020–21 1,517,508 100% n/a 2019–20 1 659,665 n/a n/a 2018–19 802,335 0% 0% 2017–18 732,077 0% 0% 2016–17 1,586,330 100.0% 0% 2015–16 1,104,601 47.4% 0% 2014–15 1,463,325 72.8% 32.5% 2013–14 1,052,912 78.0% 0% 2012–13 1,104,089 69.5% 0%   Chair from 1 February 2020 through 30 April 2020 and the pay of J Myers since his appointment on 1 May 2020. No bonus was paid to any of these individuals and the 2017 and 2018 PSP awards lapsed in full.  Governance / Report on Directors’ remuneration Relative importance of spend on pay  ended 31 May 2021 and 31 May 2022, and the percentage change: 2022 £m 2021 £m change % Total employee costs 68.5 76.9 -11% Dividends paid 24.3 24.3 4.9%  1 66.6 68.6 -3%   Change in Directors’ remuneration and for employees  compared to the change in employee annual remuneration for a comparator group, from FY21 to FY22. The PZ Cussons (International) Limited employee population was chosen as a suitable comparator group because it is considered to be the most relevant, due to the UK employment location and the structure of total remuneration   Percentage change (FY22/FY21) Salary/fees Benefits Bonus UK Employee average 3.5% 0% -62% Jonathan Myers (CEO) 3.5% 0% -56% Sarah Pollard (CFO) 10.5% 0% 38% Caroline Silver (Chair) 0% -87% n/a Kirsty Bashforth 6.1% 0% n/a Dariusz Kucz 5.1% 0% n/a John Nicolson 4.7% 0% n/a Jeremy Townsend 4.7% 0% n/a Jitesh Sodha 100% 0% n/a Valeria Juarez 100% 0% n/a PZ Cussons plc / Annual Report and Financial Statements 2022 140 REPORT ON DIRECTORS’ REMUNERATION CONTINUED CEO to all-employee pay ratio Option A was used for the analysis because it is the ‘purest’ approach. Under Option A, companies are required to determine   are considered, as is the remuneration of the broader workforce. The Committee receives market updates from their   the individuals.   considered on an annual cycle.  employed at 31 May 2022, remuneration for that employee has been calculated as if the employee had been employed for  closest to that percentile has been used. If two employees were equally close to the relevant percentile then the employee  paternity or sick pay these amounts have been included in the calculation. CEO pay ratio FY21 FY22 Method A A  £1,517,508 £1,151,233 Upper quartile 19 15 Median 29 23 Lower quartile 40 30  2022 are set out below: 2022 Salary Total pay Upper quartile individual £70,000 £79,195 Median individual £45,000 £50,368 Lower quartile individual £25,596 £38,553  •  talent with restricted stock being a common form of incentive. Use of stock as part of an overall remuneration approach is a powerful tool to enable the alignment of interests of senior managers with the shareholders and the Committee believes it will also help retain and motivate key members of our current and future leadership teams. • The Committee reviews retention and recognition restricted stock awards twice a year. These awards are very well received by recipients. • The Committee reviewed the remuneration principles and strategy that were developed during the year for employees  • The Share Incentive Plan (SIP) launch in October 2021 created further alignment between employees and investors. Under HMRC rules only UK employees can participate. A diverse set of incentives (e.g. discretionary LTIP awards) are applied in other countries to ensure package value equity and provide shareholder alignment. 141 Governance / Report on Directors’ remuneration Employee engagement The Committee seeks to understand and incorporate the perspective of the broader workforce to inform its decisions: • Board engagement with Town Halls, digital forums and engagement surveys takes place throughout the year (see page 102 for further details). •    employees’ views.     The following Directors were members of the Remuneration Committee when matters relating to the Directors’ remuneration for the year were being considered: • Kirsty Bashforth (Chair from 1 July 2020) • Dariusz Kucz (retired at AGM) • Jeremy Townsend • Jitesh Sodha • Valeria Juarez During the year, the Committee appointed Willis Towers Watson (WTW) as remuneration consultants following a competitive tender process. WTW are members of the Remuneration Consultants Group and has signed the voluntary Code of Practice for remuneration consultants. During the year, it has advised the Committee in relation to market data and evolving market practice. The fees paid to WTW in respect of this work were charged on a time and materials basis  Director of the Company.     attended meetings by invitation. The Committee is supported by the Company Secretary who acts as Secretary to the Committee. Invitees are not involved in any decisions or discussions regarding their own remuneration.  considered, as is the remuneration of the broader employee population. PZ Cussons plc / Annual Report and Financial Statements 2022 142 REPORT ON DIRECTORS’ REMUNERATION CONTINUED  July 2021 September 2021 November 2021 January 2022 May 2022 • Presentation from the remuneration adviser on governance, remuneration trends and the implications for the business • Review of draft annual bonus awards for FY21 • Approval of financial targets for the annual bonus scheme for FY22 •  salary review • Review of timing of awards under the annual bonus and PSP • Review of vesting of past awards under the PSP and update on the progress of in-flight awards • Review of draft Remuneration Report in respect of FY21 • Update on post AGM trends and regulation from the remuneration adviser • Approval of financial targets for the annual bonus scheme for FY22 • Approval of PSP targets for the FY22 awards • Approval of Remuneration Report in respect of FY21 • Approval of actual annual bonus awards for FY21 performance • Review of cascade of non-financial targets  Directors • Consideration of salary   Directors) • Consideration of implementation of Employee Stock Purchase Plan (SIP) • Approval of the grant of the FY21 PSP awards • Consideration of AGM voting and investor feedback • Update on post AGM trends and regulation from the new remuneration adviser • Half-year review of FY22 annual bonus targets • Consideration of company-wide remuneration • Consideration of share plan participation for all employees • Approval and review of interim Performance Share Plan awards • Presentation from the remuneration adviser on governance remuneration trends and the implications for the business • Consideration of forecast performance in respect of FY19 PSP • Consideration of forecast performance in respect of FY22 annual bonus • Consideration of provisional FY23 PSP structure and targets • Consideration of provisional FY23 annual bonus targets • Consideration of overall Group remuneration structure and strategy • Consideration of Group salary proposals • Consideration of workforce engagement  remuneration • Consideration of Committee terms of reference • Consideration of CFO Remuneration package • Review of Board Chair’s fee KB, DK, JT KB, DK, JT KB, JT, DK KB, JT, JS, VJ KB, JT, VJ  Governance / Report on Directors’ remuneration Shareholder engagement The Committee recognises the importance of understanding the perspective of the shareholders when taking decisions.     Statement of shareholder voting    The Remuneration Committee Chair will be available to answer questions from the shareholders regarding remuneration at the 2022 AGM and looks forward to consultation during FY23 as the regular 3-year cycle of the Remuneration Policy update takes shape. The votes cast at the 2021 AGM in respect of the approval of the 2021 Report on Directors’ Remuneration and in respect of the approval of the Directors’ Remuneration Policy are shown below:  Votes for Votes against Number % Number % Votes cast Votes withheld 294,059,802 88.73 37,359,552 11.27 331,419,354 23,708  Votes for Votes against Number % Number % Votes cast Votes withheld 281,444,488 85.18 48,976,661 14.82 330,421,149 1,021,913 By order of the Board of Directors Kirsty Bashforth Chair of the Remuneration Committee 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 144 REPORT OF THE DIRECTORS  auditor for the year ended 31 May 2022. Principal activities The principal activities of the Group are the manufacture and distribution of soaps, detergents, toiletries, beauty products, pharmaceuticals, electrical goods, edible oils, fats and spreads and nutritional products. The subsidiary undertakings and joint ventures principally affecting the profits, liabilities and assets of the Group are listed in note 1 of the Consolidated Financial Statements. Results and dividends A summary of the Group’s results for the year is set out in the Financial Review on pages 82 and 83 of the Strategic Report.  shareholders on the register at the close of business on 19 October, which, together with the interim dividend of 2.67p (2021: 2.67p) paid on 7 April 2022, makes a total of 6.40p for the year (2021: 6.09p). Scope of the reporting in this Annual Report and Financial Statements The Group’s statement on corporate governance can be found on pages 96 to143 which is incorporated by reference and forms part of this Report of the Directors. For the purposes of compliance with DTR 4.1.5 R(2) and DTR 4.1.8 R, the required content of the Management Report can be found in the Strategic Report and this Report of the Directors, including the sections of the Annual Report and Financial Statements incorporated by reference. For the purposes of LR 9.8.4C R, the information required to be disclosed by LR 9.8.4 R can be found in the following locations: Section Topic Location 1 Interest capitalised Not applicable 2  Not applicable 3 Details of long-term incentive schemes and other employee share schemes Report on Directors’ Remuneration – pages 132 to 137 4 Waiver of emoluments by a Director Report on Directors’ Remuneration 5 Waiver of future emoluments by a Director Not applicable 6 Non-pre-emptive issues of equity for cash Not applicable 7  Not applicable 8 Parent participation in a placing by a listed subsidiary Not applicable 9  Not applicable 10 Provision of services by a controlling shareholder Not applicable 11 Shareholder waivers of dividends ESOT: see note 24 of the Consolidated Financial Statements 12 Shareholder waivers of future dividends ESOT: see note 24 of the Consolidated Financial Statements 13 Agreements with controlling shareholders Report of the Directors – page 146 All the information referenced above is hereby incorporated by reference into this Report of the Directors. 145 Governance / Report of the Directors The Board   Service in the year 31 May 2022 Caroline Silver Served throughout the year Jonathan Myers Served throughout the year Kirsty Bashforth Served throughout the year Dariusz Kucz Served throughout the year John Nicolson Served throughout the year Sarah Pollard Served throughout the year Jeremy Townsend Served throughout the year Jitesh Sodha Appointed on 1 July 2021 Valeria Juarez Appointed on 22 September 2021 Directors’ interests The Directors’ and connected persons’ interests in the share capital of the Company at 31 May 2022, together with their interests at 1 June 2021, or date of appointment if later, are detailed below: Ordinary shares  2022 Number 2021 Number Caroline Silver 42,500 42,500 Jonathan Myers 101,175 50,000 Kirsty Bashforth 10,210 5,000 Dariusz Kucz 7,500 7,500 Sarah Pollard 29,485 29,485 John Nicolson – – Jeremy Townsend 20,000 10,000 Jitesh Sodha 22,200 22,200 Valeria Juarez 7,500 – Total 240,570 144,485    and its subsidiaries including members of such employees’ and former employees’ immediate families. Some or all of the shares held in the ESOT may be the   by the ESOT.   (DSBP).   4 As at 21 September 2022, J Myers held 1,388 shares under the SIP Trust. 5 As at 21 September 2022, S Pollard held 1,261 shares under the SIP Trust.    PZ Cussons plc / Annual Report and Financial Statements 2022 146  Indemnities are in force under which the Company has agreed to indemnify the Directors, the Company Secretary and   the cost of defending criminal prosecution or a claim by the Company, its subsidiaries or a regulator provided that, where   as permitted by Section 233 of the Companies Act 2006. This insurance has been in place during the year and remains in place at the date of signing this report.    As at 21 September 2022 As at 31 May 2022 Number of shares % Number of shares % Zochonis Charitable Trust 63,019,193 14.70% 63,019,193 14.70% Sir J B Zochonis Will Trust 49,320,712 11. 50% 49,320,712 11.50% Heronbridge Investment Mgt 31,157,024 7.27% 31,157,024 7.27% FIL Limited 21,938,516 5.12% 16,943,415 3.95%  21,160,944 4.94% 21,160,944 4.94% J B Zochonis Settlement 19,927,130 4.65% 19,927,130 4.65% Lindsell Train Investment Management 18,682,474 4.36% 18,682,474 4.36% Mrs C M Green Settlement 15,322,741 3.57% 15,322,741 3.57% No shares were issued during the year. Further information about the Company’s share capital is given in note 23 of the Consolidated Financial Statements.  Relationship Agreement The Financial Conduct Authority’s Listing Rules require a premium listed company with a controlling shareholder  concert, 30% or more of the votes able to be cast on all or substantially all matters at a general meeting) to enter into a written and legally binding agreement that is intended to ensure that the controlling shareholder complies with certain independence provisions. These independence provisions are undertakings that transactions and arrangements with the controlling shareholder and/or any of their associates will be conducted at arm’s length and on normal commercial  preventing the listed company from complying with its obligations under the Listing Rules; and that neither the controlling shareholder nor any of its associates will propose or procure the proposal of a shareholder resolution that is intended or appears to be intended to circumvent the proper application of the Listing Rules (together, Independence Provisions). For the purposes of the Listing Rules, certain shareholders in the Company, principally comprising the founding Zochonis family, related family groups and trusts under their control are deemed to be controlling shareholders of the Company (together, the Concert Party). In FY21, the Takeover Panel approved the reconstitution of the Concert Party as comprising the core members of the founding Zochonis family, related family groups and certain related trusts holding. As of   with the Concert Party on 17 November 2014 containing the Independence Provisions and a procurement obligation   • The Company complied with the Independence Provisions in the Relationship Agreement • So far as the Company is aware, the Independence Provisions in the Relationship Agreement were complied with by the Concert Party and its associates • So far as the Company is aware, the procurement obligation included in the Relationship Agreement was complied with by the Concert Party. REPORT OF THE DIRECTORS CONTINUED 147 Governance / Report of the Directors  Charitable contributions in the UK during the year amounted to £184,561 (2021: £70,000). No political contributions were made (2021: £nil). Research and development The Group maintains in-house facilities for research and development in the UK, Indonesia, Thailand, Nigeria and Australia.   ‘Intangible Assets’. Greenhouse gas emissions Global greenhouse gas (GHG) emissions data for the year are contained within the Sustainability – Environment section on pages 60 to 61.  During the year the Group has maintained its policy of providing equal opportunities for the appropriate employment, training and development of people with disabilities. If any employees should become disabled during the course of their employment our policy is to oversee the continuation of their employment and to arrange training for these employees. Employee information   have been developed over the years by local management working with local employees in ways that suit their particular needs and environment, with the active encouragement of the parent organisation. Further details on our engagement with employees can be found on pages 38 and 50 to 52. Employee views are provided to the Board through updates from the  Inclusion and diversity   Thai, Greek, Australian, Nigerian, Ghanaian, Kenyan, American, Canadian and British. We are clear that we want our   age and we will not, in any circumstances, employ anyone below the age of 16. The Company has adopted a diversity   requirements of The Parker Review on ethnic diversity were also met with the board changes during the year, see page 96. Further details on the composition of our global employee population are set out in the table below: 2022 2021 2020 2019 2018 No. % No. % No. % No. % No. % Female employees 756 27 832 28 899 27 1,064 28 1,183 28 Male employees 2,005 73 2,111 72 2,461 73 2,717 72 3,003 72 Female senior managers 61 36 51 32 68 35 77 34 80 35 Male senior managers 109 64 110 68 125 65 150 66 147 65 Female Group Board Directors 4 44 3 43 4 50 3 38 3 38 Male Group Board Directors 5 56 4 57 4 50 5 62 5 62 Employees with over 15 years’ service 1,020 37 1,039 35 1,168 35 1,211 32 1,297 31 Employees over 50 years old 428 16 408 14 438 13 424 11 411 10 * Figures taken as of 31 May 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 148 Stakeholder engagement The Directors have had regard to the need to foster the Company’s business relationships with suppliers, customers and others and consider these relationships and factors in their decision-making. Further details can be found in the Strategic Report and our section 172(1) statement on page 40.     and, in accordance with section 485 of the Companies Act 2006, a resolution for its reappointment will be proposed at the forthcoming Annual General Meeting. A statement  Auditor is included in the Audit & Risk Committee Report 2006 on page 110. Principal risks and uncertainties facing the Group The Group’s business activities,   variety of risks or uncertainties. These are summarised in the Principal Risks and Uncertainties section on pages 86 to 93 of the Strategic Report. Annual General Meeting The Company’s 2022 Annual General Meeting will be held at the Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG at 10:30am on 24 November 2022. The resolutions that will be proposed at the 2022 Annual General Meeting are set out in the separate Notice of Annual General Meeting, which accompanies this Annual Report and Financial Statements. Share capital As of 31 May 2022, the Company’s issued share capital consisted of 428,724,960 ordinary shares of 1p each.  to shares  other shareholders’ rights, shares may be issued with such rights and restrictions as the Company may by ordinary resolution decide, or, if there is no such resolution or so far as it  as the Board may decide. Restrictions on voting Unless the Board decides otherwise, no member shall be entitled to vote at any meeting in respect of any shares held by that member if any call or other sum that is then payable by that member in respect of that share remains unpaid. Powers of Directors  Memorandum and Articles of Association, the Companies Acts 2006 and any directions given by special resolution, the business of the Company will be managed by  the powers of the Company. Articles of Association The rules governing the appointment and replacement of Directors are contained in the Company’s Articles of Association. Changes to the Articles of Association must be approved by shareholders in accordance with legislation in force from time to time. Purchase of own shares No shares were purchased from 1 June 2021 to 31 May 2022 (2021: nil) and no acquisitions were made by the ESOT (see note 24 of the Consolidated Financial Statements). Restrictions on the transfer of securities There are no restrictions on the transfer of securities in the Company  • that certain restrictions may from time to time be imposed by laws  relating to insider trading); and • pursuant to the Listing Rules of the Financial Conduct Authority whereby certain employees of the Company require the approval of the Company to deal in the Company’s ordinary shares. Going concern The Group’s business activities, together with the factors likely  performance and position are set out in the Strategic Report. The  liquidity position are described within the Financial Review. In addition,  Statements includes policies in  instruments and risk management, and policies for managing credit risk, liquidity risk, market risk, foreign  interest rate risk and capital risk. After making enquiries, the Directors  the Company and the Group have adequate resources to continue in  at least 12 months from the date of approving the Financial Statements. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Financial Statements. A viability statement has been prepared and approved by the Board and this is set out on page 92.  There are no material post balance sheet events since the year end date. REPORT OF THE DIRECTORS CONTINUED 149 Governance / Report of the Directors Additional disclosures Other information that is relevant to the Report of the Directors, and which is incorporated by reference into this report, can be located as follows: • Proposed future developments for the business are set out on pages 12 to 15. • Details of Group subsidiaries including overseas branches are set out in note 30 on pages 233 to 235. • Financial instruments and risk management are set out in note 18 on page 208. • Trade payables under vendor  in note 1 on page 182. Directors’ statement as to disclosure of  In the case of each of the persons who were Directors of the Company at the date when this report was approved: • so far as each of the Directors is aware, there is no relevant audit  Companies Act 2006) of which  is unaware; and • each of the Directors has taken all the steps that he or she ought to have taken as Director to make himself or herself aware of any relevant audit information and to establish that the Company’s  information.   The Directors are responsible for preparing the Annual Report and  in accordance with applicable law and regulations. Company law requires the Directors   law the Directors have prepared  in accordance with UK-adopted international accounting standards  in accordance with United Kingdom Generally Accepted Accounting Practice (and including FRS 101 (Reduced Disclosure Framework). Under company law, Directors must   a true and fair view of the state of   for that period. In preparing the  are required to: • select suitable accounting policies and then apply them consistently; • state whether applicable UK- adopted international accounting standards have been followed for  and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Company  any material departures disclosed  statements; •  estimates that are reasonable and prudent; and •  the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. The Directors are responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for keeping adequate accounting   transactions and disclose with reasonable accuracy at any time the  Company and enable them to ensure  the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of    The Directors consider that the Annual Report and Accounts and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s and Company’s position and performance, business model and strategy. Each of the Directors, whose names and functions are listed under Our  best of their knowledge: •  which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the   •  which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 101, give a true and fair view of  position of the Company; and • the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Company, together with a description of the principal risks and uncertainties that it faces. This information is given and should be interpreted in accordance with the provision of section 418(2) of the Companies Act 2006. By order of the Board of Directors. Kevin Massie Group General Counsel and Company Secretary 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 150 RAISING THE BAR, PUSHING PERFORMANCE, AIMING HIGH AND ACHIEVING MORE AS A BUSINESS WE ARE STRIVING PZ Cussons people aspire to be our BEST INTRODUCING OUR VALUES See our Values / Page 18 BOLD STRIVINGENERGETIC TOGETHER Our STRIVING value in action: WE WORK WITH RESILIENCE AND DETERMINATION • taking ownership of goals and commercial growth • leading with ambition and entrepreneurial in attitude • always learning to improve 151 Financial Statements / Introducing our BEST values FINANCIAL STATEMENTS 152 Independent Auditor’s Report 166 Consolidated income statement 167 Consolidated statement of comprehensive income 168 Consolidated balance sheet 170 Consolidated statement of changes in equity 171 Consolidated cash flow statement 172 Notes to the consolidated financial statements 236 Company balance sheet 237 Company statement of changes in equity 238 Notes to the Company financial statements PZ Cussons plc / Annual Report and Financial Statements 2022 152  1. Opinion In our opinion: •   for the year then ended; •  international accounting standards; •   Framework”; and •   • the consolidated income statement; • the consolidated statement of comprehensive income; • the consolidated and parent company balance sheets; •  •  •        2. Basis for opinion           INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PZ CUSSONS PLC 153 Financial Statements   3. Summary of our audit approach Key audit matters  •  • Impairment and related reversals of impairment of intangible assets; and •     Increased level of risk Similar level of risk   Materiality   Scoping       clearly the considerations for determination of adjusting items and implemented control                4. Conclusions relating to going concern    going concern basis of accounting included: •    •   •   •  •  analysing actual and forecast covenant positions at the period end date and throughout the going concern period; and •  PZ Cussons plc / Annual Report and Financial Statements 2022 154          5. Key audit matters         Key audit matter description Impairment of Assets                                INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   155   We have performed the following audit procedures in response to this key audit matter: •  into and how those various commercial negotiations have evolved over time to determine  •   •   • Accounting policies, changes in accounting estimates and errors  •   Key observations       PZ Cussons plc / Annual Report and Financial Statements 2022 156 5.2. Impairment and related reversals of impairments on intangible assets Key audit matter description                              with the FY22 impact being shown as an adjusting item in the income statement for the year         judgements over the discount rates to be applied and growth rates applicable within each  INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   157           •  •   • Worked with our valuation specialists to assess the discount rate used within the value in use models; •    • Evaluated and challenged the sensitivity analysis to determine whether it takes into   •   growth rates as well as judgements such as revenue and margin growth rates adopted therein; and •   Key observations      We also concluded that the disclosures made in respect of possible downside scenarios in    PZ Cussons plc / Annual Report and Financial Statements 2022 158 5.3. Provisions for uncertain tax positions Key audit matter description The Group operates in a number of overseas territories, including some with rapidly developing or ambiguous tax legislation. It also undertakes transactions with complex or subjective tax implications, such as divestments and intercompany transactions. As at 31 May 2022, there were a number of open tax claims against the Group in relation to its subsidiaries relating to 2013 onwards. The claims typically challenge the deductibility of certain expenses, or in the case of indirect taxes, the application of VAT rules. Historically, similar claims, whilst  In addition to the open claims with tax authorities, the Group, following the appointment of a new head of tax and treasury, undertook a detailed review of all tax risks and exposures  have, in accordance with IAS 37 Provisions, contingent liabilities and contingent assets, been  which, in error, had not been considered at that time. This resulted in a prior year adjustment with a net impact of £3.9m on the brought forward balance sheet. More details have been  Given the uncertain environments in which the Group operates there is a range of possible outcomes for provisions and contingencies and the Directors are required to make certain judgements in respect of estimates of tax exposures and contingencies in order to assess the adequacy of tax provisions and disclosures.  the potential exposures in Nigeria and Indonesia due to the ongoing material claims made by the authorities in these territories and the related judgements made by the Directors  disclosures. The accounting policy applied by the Group in relation to the provision for uncertain tax positions is described on page 178. The key sources of estimation uncertainty in relation to  disclosures in relation to tax provisions and contingent liabilities included in note 7. This matter is also discussed in the Audit and Risk Committee Report on page 113. How the scope of our audit responded to the key audit matter With the support of our UK taxation specialists across corporation tax and transfer pricing, and with input from tax specialists within our overseas component teams, we have assessed the appropriateness of the provision for uncertain tax positions and of the contingent liability disclosure by performing the following audit procedures: • Obtained an understanding of the relevant controls relating to provision for uncertain tax positions; •  for compliance with the guidance per IFRIC 23 and IAS 37 where such tax positions do not fall under IAS 12 Income tax or IFRIC 23 Uncertainty over income tax treatments; • Evaluated the transfer pricing methodology of the Group and associated approach to provisioning; • Considered evidence such as the actual results from the recent tax authority audits and  market practice in relevant jurisdictions; •  issues and which have been corrected via a prior year adjustment; we considered both the fact pattern relating to those issues and whether there are any other potential exposures which have not been previously considered or which have arisen in the current year; and • Assessed the disclosure in notes 1 and 7 in relation to provisions for uncertain tax positions and contingent liabilities. Key observations We concur that the Group has applied an appropriate and consistent approach to estimating  of the treatment of underpaid VAT in prior years including the recognition of the related  appropriately recorded and tax matters are appropriately disclosed. INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   159 6. Our application of materiality 6.1. Materiality       Materiality    determining materiality            to be the most relevant measure of performance for   make decisions and monitor performance as it   disposals of business or other transactions of similar    are most interested in the net assets of the company   Adjusted PBT  £2.8m  range £1.3m to £1.9m  threshold £0.14m  £66.6m PZ Cussons plc / Annual Report and Financial Statements 2022 160 6.2. Performance materiality      materiality   Basis and rationale   materiality  considered the following factors: •  •   year; •    •    considered the following factors: •  the entity and its environment; and •    6.3. Error reporting threshold     7. An overview of the scope of our audit                     INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   161 Full audit scope  Review at goup level Revenue Adjusted Prot before tax Net assets 75% 78% 73% 15% 11% 12% 12% 14% 10% 7.2. Our consideration of the control environment  •   •  to trade promotional spend undertaken with customers; and •             7.3. Our consideration of climate-related risks      disclosures relating to climate risks in the Sustainability section of the Annual Report and considered whether information included in the climate related disclosures of the Annual Report were consistent with our understanding  7.4. Working with other auditors           PZ Cussons plc / Annual Report and Financial Statements 2022 162 Due to the level of risk attached to the Nigerian component, the group audit team increased the level of interaction  planning stage of the audit through to the completion of those component audits. The group engagement team   undertake with component teams. To facilitate this oversight, the group team included an additional senior member of the engagement team with day to day responsibility of oversight of our component teams and their audit work, under the leadership of the engagement partner. Other senior members of the audit team were also involved in the  Where there were delays in completing our audit work at component level, we included group and component management on a number of the calls with component teams. 8. Other information     explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is  otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine  have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 9. Responsibilities of Directors    misstatement, whether due to fraud or error.   the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.     Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error     11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   163 11.1. Identifying and assessing potential risks related to irregularities   •   •  approved by the board; •   •   •  procedures relating to: –     –  alleged fraud; and –  •                          •   •  actual and potential litigation and claims; •  material misstatement due to fraud; PZ Cussons plc / Annual Report and Financial Statements 2022 164 •   •   •   straddled the year end; and •  entries and other adjustments; assessing whether the judgements made in making accounting estimates are       12. Opinions on other matters prescribed by the Companies Act 2006    •   •            during the audit: •   •   •  •   •   •  INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF PZ CUSSONS PLC Financial Statements   165 14. Matters on which we are required to report by exception 14.1. Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not received all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or •  We have nothing to report in respect of these matters. 14.2. Directors remuneration   with the accounting records and returns. We have nothing to report in respect of these matters. 15. Other matters which we are required to address 15.1. Auditor tenure Following the recommendation of the Audit and Risk Committee, we were appointed by the shareholders at the AGM    15.2. Consistency of the audit report with the additional report to the Audit and Risk Committee Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with ISAs (UK). 16. Use of our report     members as a body, for our audit work, for this report, or for the opinions we have formed. As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these  on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF   Jane Boardman, BSc FCA (Senior statutory auditor)  Statutory Auditor Manchester, UK 28 September 2022 PZ Cussons plc / Annual Report and Financial Statements 2022 166 CONSOLIDATED INCOME STATEMENT YEAR ENDED 31 MAY 2022 Notes Year ended 31 May 2022 (Restated) Year ended 31 May 2021 Business performance excluding adjusting items £m Net adjusting items (note 3) £m Statutory results for the year £m Business performance excluding adjusting items £m Net adjusting items (note 3) £m Statutory results for the year £m Continuing operations Revenue 2 59 2. 8 – 592 . 8 6 03 . 3 – 6 03 . 3 Cost of sales (365 . 3) – (365 .3) (36 6 .4) – (36 6 .4)  2 2 7. 5 – 2 2 7. 5 23 6.9 – 236.9 Selling and distribution costs (90 . 3) – (9 0 . 3) (10 0 . 3) – (10 0 . 3) Administrative expenses (75 . 9) (1. 3) (7 7. 2) (71. 2) 2.9 (68.3) Share of results of joint ventures 13 6.6 – 6 .6 5.6 – 5.6  2 6 7. 9 (1. 3) 66 .6 71.0 2.9 73 .9 Finance income 2.7 – 2 .7 1. 5 – 1. 5 Finance costs (4. 0) – (4. 0) (3 .9) – (3 .9)  6 (1. 3) – (1. 3) (2.4) – (2 .4)  66.6 (1. 3) 65. 3 68 .6 2 .9 71. 5 Taxation 7 (13 . 0) (0 .3) (13 . 3) (14 . 4) (14 . 9) (2 9. 3)  from continuing operations 4 53. 6 (1. 6) 52.0 54. 2 (12 . 0) 42 . 2 Discontinued operations Loss from discontinued operations 28 (1. 8) – (1. 8) (5 . 3) (4 6 . 3) (51 . 6)  51. 8 (1.6) 50. 2 48 .9 (58.3) (9.4)  Owners of the Parent 51 . 4 (2.9) 48.5 49. 6 (59. 0) (9.4) Non-controlling interests 0.4 1.3 1.7 (0 .7) 0.7 – From continuing operations Basic EPS (p) 9 12 . 7 1 (0 . 69) 12 . 0 2 13 .12 (3 . 03) 1 0.09 Diluted EPS (p) 9 12 . 6 4 (0 .69) 11 . 9 5 13 .1 0 (3 .03) 1 0.07 From continuing and discontinued operations Basic EPS (p) 9 12 . 2 8 (0 .69) 11 . 5 9 11. 8 5 (1 4 .1 0) (2.25) Diluted EPS (p) 9 12 . 2 1 (0. 69) 11 . 5 2 1 1 .84 (14 . 0 8) (2 . 24)   167 Financial Statements / Main statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED 31 MAY 2022 Notes 2022 £m (Restated) 2021 £m  50.2 (9.4)    22 3 7. 4 (9. 5)  20 (8 .4) 2.4  29. 0 (7. 1)   21.7 (31. 9) Deferred tax on foreign exchange related to quasi-equity loans – 1. 4  18 0. 2 (0. 6) Cost of hedging reserve 18 – 0.2 Recycle of foreign exchange equity reserves on repayment of quasi-equity loans (1.4) – Deferred tax on repayment of quasi-equity loans (1. 3) – Recycle of foreign exchange equity reserves on disposals (0. 2) 3 9.9 Recycle of equity reserves on disposal of subsidiary 0.3 –  19. 3 9. 0 Other comprehensive income for the year net of taxation 48.3 1. 9  98.5 (7. 5)  Owners of the Parent 94.9 (2.5) Non-controlling interests 3.6 (5.0)   PZ Cussons plc / Annual Report and Financial Statements 2022 168 CONSOLIDATED BALANCE SHEET AT 31 MAY 2022 Notes 31 May 2022 £m (Restated) 31 May 2021 £m (Restated) 1 June 2020 £m Assets Non-current assets Goodwill and other intangible assets 10 333 . 3 28 8. 9 2 8 7. 5 Property, plant and equipment 11 82.9 91. 5 112 . 3 Long-term right-of-use assets 26 16 . 9 11 . 7 13 . 7 Net investments in joint ventures 13 45. 4 34. 2 4 0 .9 Deferred taxation assets 20 4.5 5.9 15 . 4 Tax receivable 1. 2 1.7 6.9  22 69. 3 33 . 6 42.9 553. 5 467 .5 519. 6 Current assets Inventories 14 111. 8 91 .1 10 4 . 6 Trade and other receivables 15 105 . 0 11 0 . 7 10 4 .1  18 0.7 1.0 0.7 Current tax receivable 2.6 15 . 3 10.7 Current asset investments 16 0.5 0.3 0. 3 Cash and short-term deposits 17 16 3 . 8 8 7. 0 7 8 .7 38 4.4 305.4 2 9 9 .1 Assets held for sale 12 3.4 7. 6 20 .5 3 8 7. 8 313 . 0 319 . 6 Total assets 9 41. 3 78 0. 5 839. 2  Share capital 23 4.3 4.3 4.3 Currency translation reserve (69. 2) (8 7. 4) (10 0 . 5) Capital redemption reserve 0.7 0.7 0 .7 Other reserve (3 7. 1) (3 9 .1) (3 9. 0) Hedging reserve (0. 2) (0 .4) – Retained earnings 525. 6 474 . 6 514 . 0  4 2 4 .1 352 .7 37 9. 5 Non-controlling interests 25.2 18 . 8 24. 2  4 4 9. 3 3 71. 5 4 03 .7 169 Financial Statements / Main statements Notes 31 May 2022 £m (Restated) 31 May 2021 £m (Restated) 1 June 2020 £m   Borrowings 17,18 174 . 0 118 . 0 12 7. 0 Other payables 4.5 0.3 0.4 Long-term lease liability 26 14 . 0 8.7 10 .4 Deferred taxation liabilities 20 90 .7 73.0 62.4  22 13 .1 12 . 9 12 . 2 296. 3 2 12 . 9 2 12 . 4  Overdrafts 17 0 .1 – 1. 2 Trade and other payables 19 16 3 . 9 15 0 . 9 161 . 8 Short-term lease liability 26 2.9 3 .1 3.4  18 1. 6 0.8 0.9 Current taxation payable 21. 6 35. 2 4 7. 7 Provisions 21 5.6 5.6 8 .1 195.7 19 5 . 6 2 2 3 .1 Liabilities directly associated with assets held for sale 12 – 0.5 – 195.7 19 6 .1 22 3 .1  492. 0 4 0 9. 0 435 . 5  9 41. 3 78 0. 5 83 9. 2   The Financial Statements from pages 166 to 243 were approved by the Board of Directors and authorised for issue. They were signed on its behalf by: J Myers S Pollard 28 September 2022 PZ Cussons plc Registered number 00019457 PZ Cussons plc / Annual Report and Financial Statements 2022 170 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 MAY 2022 Notes  Non- controlling interests £m Total £m Share capital £m Currency translation reserve £m Capital redemption reserve £m Other reserves £m Hedging reserve £m Retained earnings £m At 1 June 2020 (as previously reported) 4.3 (10 0 . 5) 0 .7 (39. 0) – 530 . 3 25 .4 421. 2  1c – – – – – (16 . 3) (1. 2) (17. 5) At 1 June 2020 (restated) 4. 3 (10 0 . 5) 0 .7 (39. 0) – 514 . 0 24 . 2 4 03.7 Loss for the year – – – – – (9.4) – (9.4) Other comprehensive income/(expense): Re-measurement of post-employment obligations 22 – – – – – (9. 5) – (9. 5)  of foreign operations – (26 . 8) – (0 .1) – – (5.0) (31. 9)  year net of taxation 18 – – – – (0. 6) – – (0.6) Cost of hedging reserve 18 – – – – 0.2 – – 0. 2 Disposals – recycle of equity reserves – 39. 9 – – – – – 39.9 Deferred tax on re-measurement of post-employment obligations 20 – – – – – 2.4 – 2.4 Deferred tax on foreign exchange related to quasi-equity loans – – – – – 1. 4 – 1. 4  (expense) for the year – 13 .1 – (0 .1) (0 .4) (1 5 .1) (5.0) ( 7. 5)  Ordinary dividends 8 – – – – – (24 . 3) – (24 . 3) Non-controlling interests dividend paid – – – – – – (0 . 2) (0. 2) Acquisition of non-controlling interests – – – – – – (0. 2) (0. 2) Total transactions with owners  – – – – – (24 . 3) (0.4) (24 .7) At 31 May 2021 (restated) 4.3 (8 7. 4) 0 .7 (3 9 .1) (0.4) 474 . 6 18 . 8 371. 5 At 1 June 2021 (restated) 4. 3 (8 7. 4) 0 .7 (3 9 .1) (0.4) 474 . 6 18 . 8 371. 5  – – – – – 4 8.5 1. 7 50. 2 Other comprehensive income/(expense): Re-measurement of post- employment obligations 22 – – – – – 3 7. 4 – 3 7. 4  of foreign operations – 19. 8 – – – – 1. 9 21. 7  value gain in year net of taxation 18 – – – – 0.2 – – 0.2 Disposals – recycle of equity reserves – (0 . 2) – – – 0.3 – 0 .1 Deferred tax on re-measurement of post-employment obligations 20 – – – – – (8 .4) – (8 .4) Repayment of quasi-equity loans – (1. 4) – – – (1. 3) – (2 .7) Total comprehensive income for the year – 18 . 2 – – 0.2 76 . 5 3.6 98 .5  Ordinary dividends 8 – – – – – (25.5) – (25.5) Share-based payment charges – – – 2.0 – – – 2.0 Non-controlling interests dividend paid – – – – – – (0. 5) (0.5) Sale of non-controlling interests – – – – – – 3. 3 3.3 Total transactions with owners  – – – 2.0 – (25. 5) 2. 8 (20 .7) At 31 May 2022 4.3 (69. 2) 0 .7 (3 7.1) (0 . 2) 52 5.6 25. 2 4 4 9. 3 171 Financial Statements / Main statements CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 MAY 2022 Notes 2022 £m 2021 £m  Cash generated from operations 25 66.2 73.4 Taxation paid (12 . 3) (20.0) Interest paid (3.5) (2.9) Net cash generated from operating activities 50.4 50. 5  Interest income 2.6 1. 2 Investment income 0 .1 0.3 Purchase of property, plant and equipment and software 10,11 (8. 2) (8 .9) Proceeds from disposal of PPE and investment property 18 . 6 0 .1  7. 2 16. 2 Resolution of purchase price from disposal of company 28 (0.8) – Acquisition of subsidiary 29 (33 .6) – Cash receipts from repayment of loans by joint venture 8.4 3.4 Cash advances and loans provided to joint venture – (9. 6)  (5.7) 2.7  Dividends paid to non-controlling interests (0.5) (0. 2) Dividends paid to Company shareholders 8 (25. 5) (24 . 3) Acquisition of non-controlling interests – (1 .1) Proceeds from loans by joint ventures 0.6 – Repayment of lease liabilities 26 (4 . 0) (4 . 0) Proceeds from / (repayment of) loan facility 17 56 .0 (9. 0)  26 . 6 (38.6)  71. 3 14 . 6  17 8 7. 0 7 7. 5  17 5.4 (5 .1)  17 16 3 . 7 8 7. 0 PZ Cussons plc / Annual Report and Financial Statements 2022 172 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS General information PZ Cussons plc is a public limited company registered in England and Wales which is listed on the London Stock Exchange and is domiciled and incorporated in the UK under the Companies Act 2006. The address of the registered PZ Cussons plc  The principle activities of the Group are the manufacturing and distribution of soaps, detergents, toiletries, beauty products, pharmaceuticals, electrical goods, edible oils, fats and spreads and nutritional products. These Financial Statements are presented in Pound Sterling and have been presented in £ million to one decimal place. Foreign operations are included in accordance with the policies set out in note 1. For the year ended 31 May 2022 the following subsidiaries of the Company were entitled to exemption from audit under s479A of the Companies Act 2006 relating to subsidiary companies: Subsidiary Name Companies House Registration Number St. Tropez Holdings Ltd 05706646 PZ Cussons International Finance Ltd 08589433 Thermocool Engineering Company Ltd 09266188 Bronson Holdings Ltd 09771991 1. Accounting policies The Financial Statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The preparation of Financial Statements, in conformity with IFRSs, requires management to make estimates and  the reported amounts of revenues and expenses during the reporting year. Although these estimates are based  estimates. Key sources of estimation uncertainty can be found on page 184.     hedging activities; and its exposures to credit risk and liquidity risk. The Directors consider that adequate resources exist for the Group to continue in operational existence for a period   The Financial Statements have been prepared using consistent accounting policies except as stated below. (a) New and amended standards adopted by the Group The Group has reviewed the April 2021 IFRIC agenda decision regarding the treatment of costs related to cloud computing. The Group has implemented an amended accounting policy based on the guidance published within the IFRIC agenda decision. The Group has conducted analysis to identify those projects that, in light of the agenda decision, would have been recognised directly as expenses, rather than capitalised as intangible assets, related to cloud computing. The Group does not consider the impact to historic periods to be material and does not intend to make any adjustment to those periods related to this accounting policy adoption. The Group has instead derecognised the brought forward capitalised costs that were previously held within intangible assets, which total £1.0 million, and recorded these as expenses in the income statement in the year ended 31 May 2022. Given its nature and magnitude, the amount is disclosed as an adjusting item.  been early adopted by the Group.  reporting year and have not been early adopted by the Group. The Group will undertake an assessment of the impact of the following new standards and interpretations in due course but does not expect it to be material. • IFRS 17 ‘Insurance Contracts’; from FY23 • Amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28; date TBC • Amendments to IFRS 3 ‘Business Combinations’; from FY23 • Amendments to IFRS 16 ‘Leases’; from FY23 173 Financial Statements   • Amendments to IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’; from FY23 • Amendments to IAS 1 ‘Presentation of Financial Statements’; from FY24 • Amendments to IAS 8 ‘Accounting policies, changes in accounting estimates and errors’; and from FY24 • Amendments to IAS 12 ‘Income Taxes’. from FY24    Group’s tax positions, as well as considering the judgement related to the determination of Cash-Generating Units    of VAT to sales of particular goods and purchases of particular raw materials over a period between 2016 and 2019.  statements of the subsidiary or the Group. As at the FY22 reporting date, and in line with IAS 37, management have considered it appropriate to recognise a  it would have been correct to have recorded the provision in the years in which the incorrect assessment of VAT took place, being between 2016 and 2019. In line with IAS 8, and considering that this time period is before FY21, which is  of this comparative period. A provision of £4.9 million has been recorded within current liabilities and a corporation tax receivable has been recognised for £1.1 million, as a portion of the liability is tax deductible. A resulting reduction in retained earnings and non-controlling interest has been made for the net value of £3.8 million. Charles Worthington Impairment   focused on the four brands that make up the Group’s Beauty division, and was triggered by the Group’s new strategy, whereby two of the Beauty brands, St Tropez and Sanctuary, have been determined as Must Win Brands, with the  These four brands and their directly attributable assets were, on initial acquisition, treated as separate CGUs; however, the CGUs were combined in FY12, based on circumstances which management at the time believed supported the   The conclusion of this year’s review of this judgement is that the brands should always have been treated as separate  agreed with a customer across a range of brands and then incorporated into a single contract drawn up covering all  The directors have therefore concluded that each brand, together with its associated assets and liabilities, should have been treated as a separate CGU from the date of acquisition of the brand and not combined into one CGU in FY12. Management have undertaken work to assess the carrying value of each of the four CGUs as at 31 May 2020  • The Charles Worthington CGU would have been impaired by £16.9 million at 31 May 2020, and a reversal of this impairment of £8.3 million would have occurred in the year ended 31 May 2021. A further impairment charge of £11.6 million has also been recorded in respect of Charles Worthington for the year ended 31 May 2022. These   • The Sanctuary Spa, Fudge and St Tropez CGUs would not have been impaired at either 31 May 2020 or 31 May 2021. Therefore, in accordance with IAS 8, management have recognised prior year adjustments, which, in aggregate: • reduce the carrying value of intangible assets by £16.9 million and associated deferred tax liabilities by £3.2 million  • reduce the carrying value of intangible assets by £8.6 million and associated deferred tax liabilities by £2.2 million at   PZ Cussons plc / Annual Report and Financial Statements 2022 174 1. Accounting policies continued 31 May 2020 £m As previously reported Indirect tax  Charles Worthington impairments As restatedFY20 FY21 Balance sheet Goodwill and other intangible assets 304.4 – (16.9) – 287. 5 Current tax receivable 9.6 1.1 – – 10.7 Retained earnings 530.3 (2.6) (13.7) – 514.0 Non-controlling interests 25.4 (1.2) – – 24.2 Deferred taxation liabilities (65.6) – 3.2 – (62.4) Provisions (3.2) (4.9) – – (8.1) 31 May 2021 £m As previously reported Indirect tax  Charles Worthington impairments As restatedFY20 FY21 Consolidated income statement Administrative expenses (76.6) – – 8.3 (68.3)  63.2 – – 8.3 71.5 Corporation tax (28.2) – – (1.1) (29.3) Loss after tax (16.6) – – 7.2 (9.4) Balance sheet Goodwill and other intangible assets 297.5 – (16.9) 8.3 288.9 Current tax receivable 14.2 1.1 – – 15.3 Retained earnings 483.7 (2.6) (13.7) 7. 2 474.6 Non-controlling interests 20.0 (1.2) – – 18.8 Deferred taxation liabilities (75.2) – 3.2 (1.1) (73.0) Provisions (0.7) (4.9) – – (5.6)   The Consolidated Financial Statements incorporate the Financial Statements of PZ Cussons plc and entities controlled by PZ Cussons plc (its subsidiaries) made up to 31 May each year. The Group controls an entity when the Group is  returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.  non-controlling interests is stated as the non-controlling interest’s proportion of the fair values of the assets and liabilities recognised. Comprehensive income attributable to the non-controlling interests is attributed to the non-  The interest of non-controlling interests in the acquiree is initially measured at the non-controlling interest’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. Where non-controlling interests are acquired, the excess of cost over the value of the non-controlling interest acquired is recorded in equity. Where necessary, the accounts of subsidiaries are adjusted to conform to the Group’s accounting policies. All intra- Group transactions, balances, income and expenses are eliminated on consolidation. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   175  The acquisition of subsidiaries is accounted for using the acquisition method. The fair value of consideration of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.  IFRS 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date, except for non-current assets  discontinued operations’, which are recognised and measured at the lower of the assets’ previous carrying value and fair value less costs to sell. All acquisition costs are expensed as incurred as adjusting items. Where acquisitions are achieved in stages, commonly referred to as ‘stepped acquisitions’, and result in control being obtained by the Group as part of a transaction, the Group re-assesses the fair value of its existing interest in joint ventures as part of determining the fair value of consideration. In determining the fair value of the Group’s existing interest, reference is given to the fair value of consideration paid to increase the Group’s interest in joint ventures  impairment of the Group’s existing interest will be credited/charged to the Income Statement as an adjusting item. On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the   on acquisition) is credited to the Income Statement in the period of acquisition.  date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement  Goodwill Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess of the cost of  of the subsidiary or jointly controlled entity recognised at the date of acquisition. If, after re-assessment, the Group’s  of the business combination, the excess is recognised immediately in the Income Statement.  with IFRS 3 ‘Business Combinations’. Goodwill is initially recognised as an asset and is subsequently measured at cost less any accumulated impairment losses. Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected  tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is  unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity, the attributable    on the contractual rights and obligations of each investor. PZ Cussons plc has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted  comprehensive income. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures. After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its joint ventures. At each reporting date, the Group determines whether there is objective evidence that the investment in joint ventures is impaired. If there is such evidence, the Group calculates the amount   PZ Cussons plc / Annual Report and Financial Statements 2022 176 1. Accounting policies continued  Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, trade spend, rebates and sales-related taxes but including interest receivable on sales on extended credit. Sales of goods are recognised when control of goods has been transferred which is generally on receipt or collection by customers. Should management consider that the criteria for recognition are not met, revenue is deferred until such time as the consideration has been fully earned. Trade promotions, which consists primarily of customer pricing allowances, placement/listing fees and promotional allowances, are governed by agreements with our trade customers (retailers and distributors). Accruals are recognised  These accruals are reported within trade and other payables. Trade promotions The Group provides for amounts payable to trade customers for promotional activity. Where a promotional activity  and consumer uptake during the promotional period and the extent to which temporary promotional activity  Where promotions, rebates or discounts give rise to variable consideration, the Group accounts for this by using the most likely amount method and this is generally estimated using known facts with a high degree of accuracy. Revenue is constrained to the extent that variable consideration has been taken into account for the period and that no reversal in consideration is expected.  The Financial Statements of each Group entity are prepared in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the Consolidated Financial Statements, the  Company, and the presentational currency for the Consolidated Financial Statements. In preparing the Financial Statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the actual rate of exchange prevailing on the dates of the transactions, or at average rates of exchange if they represent a suitable approximation to the actual rate. At each balance sheet date, monetary assets and liabilities denominated in currencies other than the functional currency of the local entity are translated at the appropriate rates prevailing on the balance sheet date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities  comprehensive income. Foreign exchange gains and losses arising from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for  operations’ income statements and balance sheets denominated in foreign currencies are recorded as a separate  the Income Statement in the period of the disposal as part of the gain or loss on disposal.   Both are recognised in the Income Statement in the period in which they are incurred.   the criteria for capitalisation set out in IAS 38 ‘Intangible Assets’.   costs and taxation from continuing operations. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   177           updated on an annual basis, by independent actuaries, using the projected unit credit method. The present value of   terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. Pension charges/income recognised in the Income Statement consists of administration charges of the scheme, past service costs and a cost/income based on the net interest expense/income on net pension scheme liabilities/surpluses.     (excluding interest) are included directly in the Group’s Statement of Comprehensive Income.  actuarial assumptions are included directly in the Group’s Statement of Comprehensive Income.  rendered service entitling them to the contributions.  overseas laws in Thailand and Indonesia. The provision is assessed by an independent actuary using the projected unit credit method, with actuarial valuations carried out at the end of each annual reporting period. Re-measurement,  credit recognised in other comprehensive income in the period in which they occur.       judgement in assessing the particular items. The Directors believe that the separate disclosure of these items is relevant to an understanding of the Group’s  and make year-on-year comparisons. The same measures are used by management for planning, budgeting and reporting purposes and for the internal assessment of operating performance across the Group. Taxation   in which case it is recognised within the Statement of Other Comprehensive Income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively    of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of  PZ Cussons plc / Annual Report and Financial Statements 2022 178 1. Accounting policies continued Deferred taxation is not provided on the initial recognition of an asset or liability in a transaction, other than in a      against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax liabilities on a net basis.  against which the asset can be utilised. The Group maintains adequate provisions for potential liabilities that may arise from periods that remain open and not yet agreed by tax authorities. The ultimate liability for such matters may vary from the amounts provided and is dependent upon the outcome of agreements with relevant tax authorities. In assessing uncertain tax treatments, management is required to make judgements in determination of the facts and circumstances in respect of the tax position taken, together with estimates of amounts that may be required to be paid in ultimate settlement with the tax authorities. As the Group operates in a multinational tax environment, the nature of the uncertain tax positions is  Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Land and buildings held from before the date of transition to IFRS for use in the production or supply of goods or services, or for administration purposes, are stated in the Balance Sheet at deemed cost at the date of transition to IFRS less accumulated depreciation and any accumulated impairment losses.  lives, using the straight-line method, on the following basis: Freehold buildings at rates not less than 2% per annum Plant and machinery not less than 8% per annum   In the case of major projects, depreciation is provided from the date the project in question is brought into use.   expected from that asset. The gain or loss arising on the disposal or retirement of an asset is determined as the  Statement for the year when the asset is de-recognised. The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance sheet date. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Property, plant and equipment that has been impaired is reviewed for possible reversal of the impairment at each subsequent balance sheet date. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the value that would have been determined had an impairment loss not been recognised in prior years. A reversal of an impairment loss is   On acquisition, investment property is initially recognised at cost, or deemed cost where no monetary consideration is exchanged. Investment property is subsequently recognised in the accounts at cost and recorded as a separate line item within property, plant and equipment. Gains or losses on disposal are recognised within administrative  year or cumulatively. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   179 Other intangible assets An acquired brand is only recognised on the Balance Sheet where it is supported by a registered trademark, where  acquired as part of a business combination are recorded in the Balance Sheet at fair value at the date of acquisition. Trademarks, patents and purchased brands are recorded at purchase cost. In accordance with IAS 36 ‘Impairment of  is an indication that the asset may be impaired. Any impairment is recognised immediately in the Income Statement.   Group. Further, the Directors have the intention and the ability to maintain the brands. In forming this conclusion they have not taken into consideration planned future expenditure in excess of that required to maintain the asset at that  tested annually for impairment. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of    Expenditure on research activities is recognised in the Income Statement as an expense as incurred. Expenditure on  are capitalised if the product or systems meet the following criteria: • The completion of the development is technically and commercially feasible to complete; •  •  • The expenditure attributable to the development can be measured reliably. Development activities involve a plan or design for the production of new or substantially improved products or systems. Directly attributable costs that are capitalised as part of the software product or system include employee costs. Other development expenditures that do not meet these criteria as well as ongoing maintenance are recognised as an expense as incurred. Development costs for software are carried at cost less accumulated amortisation and are amortised on a straight-line basis over their useful lives (not exceeding ten years) at the point  Leases The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,   expense on a straight-line basis over the term of the lease. The nature of the Group’s leasing activities is mainly properties, with small elements of equipment and cars.  in (i) below. (i) Extension and termination options Extension and termination options are included in a number of property leases across the Group. These terms are  options held are exercisable only by the Group and not by the respective lessor.  The lease liability is initially measured at the present value of the lease payments, excluding those paid at the commencement date, discounted by using the Group’s incremental borrowing rate. PZ Cussons plc / Annual Report and Financial Statements 2022 180 1. Accounting policies continued Lease payments included in the measurement of the lease liability comprise: •  • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; and •   The lease liability is presented as a separate line in the Consolidated Statement of Financial Position.   The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use  • The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which  • The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is measured by discounting the revised lease payments using the   •  lease liability is measured by discounting the revised lease payments using a revised discount rate. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.  Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The Group does not have any leases that include purchase options or that transfer ownership of the underlying asset. Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs and are included in the line ‘Other operating expenses’ in the Income Statement. For short-term leases (lease term of 12 months or less) and leases of low-value assets, the Group has opted to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within administrative expenses in the Consolidated Income Statement. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.  Inventories are stated at the lower of cost and estimated net realisable value. Cost comprises direct materials and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to  with price and usage variances apportioned using the periodic unit pricing method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Where net realisable value is lower than cost, provision for impairment is made which is charged to cost of sales in  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   181 Assets held for sale  when their carrying amount will be recoverable principally through a sale transaction rather than through continuing  be available for sale immediately in their present condition. In addition, all of the following criteria must also be met: management is committed to the plan to sell; the assets are being actively marketed; actions required to complete  withdrawn; and a sale has been agreed or is expected to be concluded within 12 months of the balance sheet date.   measured at the lower of book value or fair value less disposal costs. Assets held for sale are neither depreciated nor amortised.    separate major line of business or geographical area of operations; or part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a  continuing operations.  Cash and cash equivalents include cash at bank and in hand, call and short-term deposits and other highly liquid investments with original maturities of three months or less which are readily convertible onto known amounts of  Bank overdrafts are repayable on demand and form an integral part of the Group’s cash management.   to the contractual provisions of the instrument.     For those derivatives designated as hedges and for which hedge accounting is appropriate, the Group documents at the inception of the transaction, the hedging relationship between hedging instruments and hedged items.    The Group also performs periodic assessment of whether the derivatives that are used in hedging transactions  with IFRS 9.  value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.    otherwise in a hedging relationship are recognised immediately in the Income Statement.      ownership of the asset to another entity. PZ Cussons plc / Annual Report and Financial Statements 2022 182 1. Accounting policies continued  Trade and other receivables are initially measured at transaction price, and subsequently at amortised cost.     each reporting date (i.e. the expected credit losses that will result from all possible default events over the expected life   conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.     The Group’s loans to the joint venture (presented in the Balance Sheet as part of the ‘net investment in joint ventures’)  of the loss allowance is calculated using a life time expected credit loss model. The Group assesses the ECL allowance for the loan from the joint venture as follows: •  on lifetime ECLs i.e. all credit losses expected from possible default events over the remaining life of the loan, irrespective of the timing of the default. •  loss allowance at an amount equal to 12-month ECL i.e. the portion of lifetime ECL that is expected to result from default events on the loan that are possible within 12 months after the reporting date.  recognition, the Group compares the risk of a default occurring on the loan at the reporting date with the risk of a default occurring on the loan at the date of initial recognition. In making this assessment, the Group considers,  increases in credit risk on other receivables. The Group has determined that the ECL for the loan to the joint venture should be based on lifetime ECLs at the reporting date and has determined that no provision is required in relation    entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Interest bearing loans and borrowings Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of direct issue costs, and are  Gains and losses arising on the repurchase, settlement or other cancellation of interest-bearing loans and borrowings  Trade payables Trade payables are initially recognised at fair value, normally being the invoiced amounts, and subsequently measured  originally invoiced amounts.  The Group may from time to time enter into arrangements with a bank or banking partners under which the bank      in the notes. The credit period does not exceed 12 months and are not discounted. As at the reporting date, account  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   183  An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all  Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related   The hedging reserve represents the accumulated movements in the fair value of both the hedged item and the hedging instrument, where the hedged item and hedging instrument are designated to be in a continuing and  hedging reserve.  transaction is no longer expected to occur, or included directly in the initial recognition value of where the hedged   Amounts in respect of the redemption of certain of the Company’s ordinary shares are recognised in the capital redemption reserve.   translation of the Group’s overseas operations from their local functional currency to the Group’s presentational currency.  Amounts in respect of the Employee Share Option Trust (ESOT) are recognised in the other reserve. Segmental reporting    in accordance with IFRS 8 ‘Operating Segments’, the Board aggregates operating segments with similar economic characteristics and conditions into reporting segments, which form the basis of the reporting in the Annual Report,  Further detail is included in note 2.  Provisions are recognised when the Group has a present legal or constructive obligation for a future liability as a result of a past event, where the amount of the obligation can be estimated reliably and it is probable that the Group will be required to settle that obligation. The amount recognised as a provision is the Group’s best estimate at the balance   A provision is held for indirect tax liabilities of a subsidiary entity. Further information is included in note 1c.  Warranties are provided within the Africa Electricals Division. Warranties are provided from the date of purchase and are typically 12 months in length. A warranty provision is included in the Financial Statements, which is calculated on the basis of historical returns as well as past experiences and industry averages for defective products. PZ Cussons plc / Annual Report and Financial Statements 2022 184 1. Accounting policies continued Share-based payments The Group operates a Performance Share Plan for senior executives, which involves equity-settled share-based payments. The awards under the Performance Share Plan are measured at the fair value at the date of grant and are expensed over the vesting period based on the expected outcome of the performance and service conditions. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the Income Statement, with a corresponding adjustment to equity.  Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s Financial Statements in the period in which the dividends are approved by the Company’s shareholders. In respect of interim dividends these are recognised once paid.   & Risk Committee. The application of these policies requires management to make assumptions and estimates about  judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Under IFRS an estimate or judgement may be considered critical if it involves matters that are highly uncertain or    Pensions  of the liabilities under these schemes and the return on assets held to fund these liabilities require a number of   of Comprehensive Income and on the pension liability/asset in the Balance Sheet. See note 22 for details of key estimates and assumptions applied in valuing the pension schemes. Current tax Current tax liabilities/assets relate to the expected amount of tax to be paid/received as a result of the operating performance of the Group’s entities. In calculating the appropriate tax charge, assumptions and judgements are made regarding application and interpretation of local laws. In situations where tax impacts are subject to uncertain treatment, interpretation of local rule or regulation, or   requirements, including IAS12 and IFRIC23 when considering income tax and IAS37 in relation to non-income taxes. Due to the uncertainty associated with such tax items, there is a possibility that on conclusion of open tax matters at   Income Statement in the period in which it is determined. Included within the current tax liability of the Group are current tax estimates with carrying values as at 31 May 2022 of £29.5 million (2021: £25.3 million), of which £18.8 million (2021: £17.1 million) relates to a single estimate arising   liability has been provided for in full due to the subjectivity of the legislation. It is expected that the range of possible outcomes could be a liability between £nil and £18.8 million. It has been provided for in full because the directors  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   185 Of the remaining £10.7 million (2021: £3.7 million), £5.1 million (2021: £2.8 million) relates to the perceived risk that due to the subjective nature of transfer pricing in certain jurisdictions, tax authorities may challenge the arm’s length nature of certain intercompany transactions. In addition to the provision items listed above, at 31 May 2022 the Group held further contingent tax liabilities of  as a result of these claims, they have been disclosed as contingent liabilities in accordance with IAS37. The material  probability of settlement.  Determination of CGUs  generating unit (‘CGU’) under IAS36. As disclosed in note 1c, during the year, the directors performed a review of the appropriateness of the judgement that the four brands making up the Group’s Beauty business represented a single  The directors concluded that the four brands each represents its own CGU which should be tested separately for impairment accordingly. The change in this critical area of judgement has resulted in the recognition of prior year adjustments in these accounts.    the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash   factors as their expected usage of the brands, typical product life cycles, the stability of the markets in which the brands are sold, the competitive positioning of the brands, and the level of marketing and other expenditure required to maintain the brands. PZ Cussons plc / Annual Report and Financial Statements 2022 186 2. Segmental analysis The segmental information presented in this note is consistent with management reporting provided to the Executive Leadership Team (ELT), which is the Chief Operating Decision Maker (CODM). The CODM reviews the Group’s internal reporting in order to assess performance and allocate resources and has determined the operating segments based on these reports which include an allocation of central revenue and costs as appropriate. The CODM considers  operating segments.  the Group’s trading entities by geographic location as these entities are considered to have similar economic characteristics. The number of countries that the Group operates in within these segments is limited to no more than  challenges.    products as well as Electrical products. The Central segment refers to the activities in terms of revenue of our in-house Fragrance business and in terms of cost of expenditure associated with the Global headquarters and above market functions net of recharges to our regions. The prices between Group companies for intra-Group sales of materials, manufactured goods, and charges for franchise fees and royalties, are carried out on an arm’s length basis.   information. Reporting segments Continuing operations 2022 Europe & the Americas £m Asia Pacific £m Africa £m Central £m Eliminations £m Total £m Gross segment revenue 196.3 179.2 222.0 77.3 (82.0) 592.8 Inter-segment revenue (3.3) (5.4) – (73.3) 82.0 – Revenue 193.0 173.8 222.0 4.0 – 592.8  before adjusting items and share of results of joint ventures 35.0 20.9 15.7 (10.3) – 61.3 Share of results of joint ventures – – 6.6 – – 6.6  before adjusting items 35.0 20.9 22.3 (10.3) – 67.9 Adjusting items (12.1) 16.1 6.3 (11.6) – (1.3)  22.9 37.0 28.6 (21.9) – 66.6 Finance income 2.7 Finance costs (4.0)  65.3 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   187 2021 (restated) Europe & the Americas £m Asia Pacific £m Africa £m Central £m Eliminations £m Total £m Gross segment revenue 220.9 194.5 192.6 50.9 (55.6) 603.3 Inter-segment revenue (4.0) (7.3) – (44.3) 55.6 – Revenue 216.9 187.2 192.6 6.6 – 603.3  before adjusting items and share of results of joint ventures 52.1 20.7 5.1 (12.5) – 65.4 Share of results of joint ventures – – 5.6 – – 5.6  before adjusting items 52.1 20.7 10.7 (12.5) – 71.0 Adjusting items 7. 2 0.1 (1.7) (2.7) – 2.9  59.3 20.8 9.0 (15.2) – 73.9 Finance income 1.5 Finance costs (3.9)  71.5   The Group’s Parent Company is domiciled in the UK. The split of revenue from external customers and non-current assets between the UK, Nigeria and the rest of the world (‘Other’) is: 2022 UK £m Nigeria £m Other £m Total £m Revenue 172.5 192.3 228.0 592.8  296.0 3.0 34.3 333.3  24.1 34.8 23.9 82.9 Long-term right-of-use assets 12.0 1.4 3.5 16.9 Net investment in joint ventures 45.4 – – 45.4 2021 (restated) UK £m Nigeria £m Other £m Total £m Revenue 197. 3 163.6 242.4 603.3 Goodwill and other intangible assets 260.3 3.0 25.6 288.9 Property, plant and equipment 24.1 42.8 24.6 91.5 Long-term right-of-use assets 7.3 1.2 3.2 11.7 Net investment in joint ventures 34.2 – – 34.2 The Group analyses its revenue by the following categories: 2022 £m 2021 £m Hygiene 305.9 322.4 Baby 103.4 100.0 Beauty 80.9 74.1 Electricals 91.5 79.4 Other 11.1 27.4 592.8 603.3   PZ Cussons plc / Annual Report and Financial Statements 2022 188 3. Adjusting items Year to 31 May 2022 Adjusting items  £m Taxation £m Adjusting items after taxation £m Adjusting items included within continuing operations:  7.8 (1.5) 6.3 HR Transformation (2.9) 0.6 (2.3) Control Transformation (0.7) 0.1 (0.6) Supply Chain Transformation (0.7) 0.1 (0.6)  0.7 – 0.7 Childs Farm acquisition-related costs (1.4) – (1.4) Compensation from Australian Competition & Consumer Commission 1.5 (0.5) 1.0 Recycling of foreign exchange on quasi-equity loans (1.5) (0.1) (1.6) De-recognition of capitalised costs related to cloud computing arrangements (1.0) 0.2 (0.8) Impairment of Charles Worthington brand intangible assets (note 10) (11.6) 2.9 (8.7)  (note 10) 8.5 (2.1) 6.4 Total adjusting items (1.3) (0.3) (1.6) Year to 31 May 2021 (restated) Adjusting items  £m Taxation £m Adjusting items after taxation £m Adjusting items included within continuing operations: Group and regional restructuring (2.8) 0.5 (2.3)  1.2 (0.3) 0.9  (3.8) 0.2 (3.6) Reversal of impairment of Charles Worthington brand intangible assets 8.3 (2.1) 6.2 UK tax rate change – deferred tax impact – (13.2) (13.2) 2.9 (14.9) (12.0) Adjusting items included within discontinued operations: Loss on disposal of Nutricima assets (40.7) (5.2) (45.9) Disposal of Luksja brand (0.4) – (0.4) (41.1) (5.2) (46.3) Total adjusting items (38.2) (20.1) (58.3)    Year to 31 May 2022     costs related to the impairment of factory assets and associated engineering spares held in inventory. These assets   note 11 for further information. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   189 HR Transformation The HR Transformation programme centres around investment in a new people system. The investment will enhance ways of working, build organisational capability and underpin our new culture, reduce organisational risk and embed     Controls Transformation This project is a three-year programme of change which, as well as ensuring we are ready for compliance deadlines with future corporate reform in Nigeria and the UK, will also embed an overall strong FTSE plc control environment  reducing the ongoing control issues and risks- with the right set of processes and systems and a properly resourced  process and systems issues. The Group has incurred £0.7 million of costs in the period and expects to incur around   The Supply Chain Transformation programme is a multi-year programme which responds to the longer-term business strategy of the organisation. The programme aims to align and improve supply chain capabilities and drive activities that will dramatically reduce business complexity. It focuses on leading brands for priority markets and outsourcing manufacturing that is no longer economically viable. It enhances capabilities where there is scale and strategic     yoghurt business in Australia. On this date, the control of the assets passed to the acquirer, Barambah Organics.     business or an exit from a geographic area of operation as per IFRS 5.32.  On 21 March 2022, the Group acquired all of the issued share capital in Childs Farm, the UK market-leading baby and child personal care brand. Joanna Jensen, founder of Childs Farm, made an investment into the PZ Cussons subsidiary that completed the acquisition such that PZ Cussons now owns a 92% interest in Childs Farm. The costs of the acquisition and subsequent integration with the Group are expected to be around £1.9 million, with £1.4 million  see note 29 on page 232 for further information.  In the period the Group received a payment of £1.5 million from the Australian Competition & Consumer Commission as compensation towards legal costs incurred by the Group in a successful defence of a legal case related to competition in the laundry market in Australia dating from 2008-2009.  £1.5 million of costs were recognised related to the recycling of accumulated historical foreign exchange losses following a decision taken in the period to repay the intercompany quasi-equity loan between PZ Cussons Ghana Ltd and PZ Cussons Holdings Ltd. The loan was originally intended to be long term, which is why it was treated as a quasi-equity loan, but a decision was made in the period to repay it due to the fact there was a surplus of cash available in PZ Cussons Ghana Ltd. PZ Cussons plc / Annual Report and Financial Statements 2022 190 3. Adjusting items continued  The Group has reviewed the April 2021 IFRIC agenda decision regarding the treatment of costs related to cloud computing. The net book value of those costs, as at 30 November 2021, was £1.0 million. The Group has de-recognised these brought-forward capitalised costs, that were previously held within intangible assets, and recorded these as expenses in the Income Statement for the period ended 31 May 2022. The impact of this de-recognition has been disclosed as an adjusting item due its nature and magnitude, in line with the Group’s adjusting items policy. Please see note 10 on page 197 for further information.  The Group performed a review of future growth assumptions in relation to Charles Worthington and concluded that the value-in-use of this cash-generating units was lower than the carrying value and therefore booked an impairment charge to intangible assets of £11.6 million per IAS 36. Please see note 10 on page 197 for further information.   value-in-use of this cash-generating units was higher than the carrying value and therefore reversed a previously recorded impairment charge to intangible assets of £8.5 million per IAS 36. Please see note 10 on page 197 for  Year to 31 May 2021   The Group incurred costs of £2.8 million relating to restructuring. These costs are predominantly redundancy costs  costs related to restructuring were included within the Group Structure and Systems adjusting item from FY20.  costs, particularly redundancy.   to classifying as held for sale (see notes 10 and 12 for further details). Costs of £0.3 million were incurred relating to advisory and legal fees associated with the sale of the brand. This has been included within continuing operations  geographical area of operation as per IFRS 5. The Directors have considered these costs adjusting in nature on the basis that they relate to the disposal of operations.  The Group incurred £3.8 million of costs related to redundancy and restructuring associated with the Nigeria  the write-down of assets due to the closure of our Coolworld retail electrical stores in Nigeria (£0.7 million), change in ownership of the joint ventures due to impact of merging PZ Wilmar Ltd and PZ Wilmar Food Ltd (£0.2 million)   include further costs related to restructuring as well as income associated with the disposal of residential property.  costs, and particularly redundancy, and write-down of assets and investments related to restructuring of activities.  The impact of changes to the enacted corporation tax rates has increased the tax charge by £13.2 million. The impact largely relates to the increase in the corporation tax rate in the UK from 19% to 25% resulting in the revaluation of deferred tax liabilities of which £8.9 million relates to intangible balances held only on consolidation. The Directors    The Group performed a review of future growth assumptions in relation to Charles Worthington brand and concluded value-in-use of this cash-generating units was higher than the carrying value for Charles Worthington and therefore reversed a previously recorded impairment charge to intangible assets of £8.3 million per IAS 36. Please see note 10 for further information. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   191   The Group recognised costs of £45.9 million relating to the sale of the Nutricima business. This represents the loss on disposal net of project-related costs of £40.7 million, which includes the recycling of foreign exchange losses from the currency reserve of £39.9 million related to intercompany loans and assets sold, and an attributable tax charge of £5.2 million. Further detail is provided in note 28. A further £5.9 million of costs were incurred against this project in the prior year within the Group Strategy project in adjusting items. The Directors have considered these costs        2022 £m (Restated) 2021 £m Net foreign exchange losses 7.1 16.0 Research and development costs 2.0 2.1 Impairment of property, plant and equipment (note 11) 5.9 0.5 Depreciation of property, plant and equipment (note 11) 9.3 11.0 Impairment reversal of intangible assets (note 10) (8.5) (9.8) Impairment of intangible assets (note 10) 11.6 – Amortisation of intangible assets (note 10) 6.6 6.3 Depreciation of right-of-use assets (note 26) 3.5 3.3  (15.9) 8.7 Raw and packaging materials and goods purchased for resale (note 14) 342.4 343.3 Inventory provisions (note 14) 6.9 6.6 Net trade receivable provision release (note 15) – (2.7) IFRS 16 short-term or low-value lease rentals (note 26) – 0.2 Employee costs (note 5) 68.9 76.9 Auditor’s remuneration (see below) 2.1 2.0   PZ Cussons plc / Annual Report and Financial Statements 2022 192  continued Auditor’s remuneration A more detailed analysis of Auditor’s remuneration on a worldwide basis is provided below: 2022 £m 2021 £m Fees payable to the Company’s Auditor for the audit of the Company’s annual Financial Statements and Consolidation 1.3 1.0 Fees payable to the Company’s Auditor and their associates for other services to the Group: – The audit of the Company’s subsidiaries 0.8 1.0 Total audit fees 2.1 2.0 Fees payable to the Company’s Auditor and its associates for other services: – Audit-related assurance services – – Total fees 2.1 2.0 Fees for permitted non-audit services paid to the Company’s Auditor included £40,000 (2021: £40,000) which were in respect of the review of the Group’s interim statement released in February 2022 and £700 in respect of services rendered to witness and report on the destruction of stock in Thailand. 5. Directors and employees  The average monthly number of employees (including Executive Directors) was as follows: 2022  2021  Production 1,783 2,009 Selling and distribution 668 744 Administration 401 399 2,852 3,152 The costs incurred in respect of the above were as follows: 2022 £m 2021 £m Wages and salaries 59.6 67.6 Social security costs 3.3 3.9 Pension costs 4.5 4.5 Share-based compensation costs 1.5 0.8 68.9 76.8 The pension costs (note 22) consist of: 2022 £m 2021 £m  1.7 1.6  2.2 2.4 Nigerian gratuity scheme 0.5 0.4  0.1 0.1 4.5 4.5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   193  The costs incurred in respect of the Directors, who are regarded as the key management personnel, were as follows: 2022 £m 2021 £m  1.5 2.4  0.1 0.1 Total 1.6 2.5 Additional details are within the Report on Directors’ Remuneration on pages 132 to 143.  2022 £m 2021 £m Interest receivable on cash deposits 2.1 0.9  0.6 0.6 Interest income 2.7 1.5 Interest payable on bank loans and overdrafts (2.5) (1.2) Interest payable to external third parties – (0.5)  (0.6) (0.6) Interest expense on lease liabilities (0.5) (1.0) Finance costs incurred on Revolving Credit Facility renewal (0.4) (0.6) Finance costs (4.0) (3.9)  (1.3) (2.4) 7. Taxation 2022 £m (Restated) 2021 £m Current tax UK corporation tax charge for the year 2.5 8.5 Adjustments in respect of prior years (0.5) 1.6 Double tax relief (1.1) (1.0) 0.9 9.1 Overseas corporation tax charge for the year 12.2 0.9 Adjustments in respect of prior years (0.5) (0.2) 11.7 0.7 Total current tax charge 12.6 9.8 Deferred tax  (2.5) 7. 2 Adjustments in respect of prior years 3.0 3.6  0.1 13.4 Total deferred tax charge 0.6 24.2 Total tax charge 13.2 34.0   PZ Cussons plc / Annual Report and Financial Statements 2022 194 7. Taxation continued  tax and £1.1 million is current tax. Further detail included in note 3.  other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. UK deferred tax is measured at 25% following the Finance Act 2021. Per the announcement made by the UK Government on the 23rd September 2022, the planned increase of Corporation tax from 19% to 25% will be abolished. In line with the Finance Act 2021, UK deferred taxes are currently shown in the Financial Statements at 25% and will be revalued to 19% in future reporting periods once this change has been enacted.   and tax residency of the Group. 2022 £m (Restated) 2021 £m  65.3 71.5 Loss before tax from discontinued operations (1.7) (46.9)  63.6 24.6 Tax at the UK corporation tax rate of 19.0% (2021: 19.0%) 12.1 4.7 Adjusted for:  6.6 15.8  (10.0) (2.4)  – 13.4  (2.0) (1.7)  2.2 2.4 Net adjustment to amount carried in respect of uncertain tax positions 0.2 (6.8) Movements in deferred tax assets not recognised – 8.1 Adjustments in respect of prior years (1.2) 5.0  5.3 (4.5) Tax charge for the year 13.2 34.0 Tax charge attributable to continuing operations 13.3 29.3 Tax (credit) / charge attributable to discontinued operations (0.1) 4.7 Tax charge for the year 13.2 34.0      change impacting the deferred tax charge. The Group operates in a number of overseas tax jurisdictions that have tax rates in excess of the current UK rate. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   195  the following: • Expenses not deductible/taxable amount to £6.6 million (2021: £15.8 million) relate to several items including the   • Items treated as non-taxable reduced the tax charge for the year by £10.0 million (2021: £2.4 million),   • Tax liabilities outside the UK increase the annual tax charge by £2.2 million, including unrelievable withholding taxes incurred on dividends received in the UK. •   Taxation on items taken directly to equity and other comprehensive income was a charge of £9.3 million   The Group operates in a multinational tax environment where the nature of uncertain tax positions is often complex and subject to change, and necessarily involves a degree of estimation and judgement in respect of certain items  The Group believes that it has made adequate provision for all open tax positions including those in current discussion with local tax authorities, and which totalled £31.0 million as at 31 May 2022 (2021: £28.3 million). Further information on uncertain tax positions can be found in note 1 under ‘Key sources of estimation uncertainty’. 8. Dividends 2022 £m 2021 £m  Final dividend for the year ended 31 May 2021 of 3.33p (2020: 3.13p) per ordinary share 14.3 13.1 Interim dividend for the year ended 31 May 2022 of 2.67p (2021: 2.67p) per ordinary share 11.2 11.2 25.5 24.3  per ordinary share 15.6 14.3  by shareholders at the Annual General Meeting and hence have not been included as liabilities in the Financial Statements at 31 May 2021 and 31 May 2022 respectively.    to owners of the Parent by the weighted average number of ordinary shares that were in net debt during the year. Diluted EPS demonstrates the impact if all outstanding share options that would vest on their future maturity dates   shares as at the balance sheet date. 2022  000 2021  000 Basic weighted average 418,476 418,402 Diluted weighted average 420,841 419,016 PZ Cussons plc / Annual Report and Financial Statements 2022 196  continued    Schemes and the Performance Share Plan. The average number of shares is reconciled to the basic and diluted weighted average number of shares below:  000  000 Average number of ordinary shares in issue during the year 428,725 428,725 Less: weighted average number of shares held by Employee Share Option Trust (10,249) (10,323) Basic weighted average shares in issue during the year 418,476 418,402  2,365 614 Diluted weighted average shares in issue during the year 420,841 419,016  2022 £m (Restated) 2021 £m  48.5   2.9 59.0  51.4  2022 pence 2021 pence    Adjusting items 0.69 14.10  12.28 11.85    Adjusting items 0.69 14.08 Adjusted diluted earnings per share 12.21 11.84    2022 £m (Restated) 2021 £m  50.3   2.9 12.7      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   197 2022 pence (Restated) 2021 pence    Adjusting items 0.69 3.03  12.71 13.12   10.07 Adjusting items 0.69 3.03 Adjusted diluted earnings per share 12.64 13.10    2022 £m 2021 £m     – 46.3    2022 pence 2021 pence    Adjusting items – 11.06  (0.43) (1.27)    Adjusting items – 11.05 Adjusted diluted losses per share (0.43) (1.26)  Goodwill £m Software £m Brands £m Total £m Cost At 1 June 2020 69.1 63.2 268.3 400.6 Currency retranslation (0.1) (0.8) 0.3 (0.6) Additions – 2.4 – 2.4 Acquisition of non-controlling interest 0.9 – – 0.9 Disposals (2.9) (0.8) – (3.7)  – 1.3 – 1.3  (21.5) – (32.8) (54.3) Revised analysis between cost and amortisation of intangible assets and between categories 8.4 0.7 (2.6) 6.5 PZ Cussons plc / Annual Report and Financial Statements 2022 198 Goodwill £m Software £m Brands £m Total £m At 31 May 2021 53.9 66.0 233.2 353.1 Currency retranslation 0.8 0.4 1.6 2.8 Additions 16.8 1.4 35.5 53.7 Derecognition of capitalised costs related to cloud computing - (2.2) - (2.2) At 31 May 2022 71.5 65.6 270.3 407.4 Accumulated amortisation and impairment At 1 June 2020 (restated) 26.3 27.5 59.3 113.1 Currency retranslation 0.3 (0.3) – – Amortisation charge for the year – 6.3 – 6.3 Disposals (2.9) (0.7) – (3.6) Impairment reversal – restated – – (9.8) (9.8)  (21.5) – (26.8) (48.3) Revised analysis between cost and amortisation of intangible assets and between categories 8.4 – (1.9) 6.5 At 31 May 2021 (restated) 10.6 32.8 20.8 64.2 Currency retranslation 0.5 0.3 0.6 1.4 Amortisation charge for the year – 6.6 – 6.6 Impairment charge – – 11.6 11.6 Impairment reversal – – (8.5) (8.5) Derecognition of amortisation related to cloud computing – (1.2) – (1.2) At 31 May 2022 11.1 38.5 24.5 74.1  At 31 May 2022 60.4 27.1 245.8 333.3 At 31 May 2021- restated 43.3 33.2 212.4 288.9   Transfers from property, plant and equipment mainly represent the capitalised element of software costs relating to IT network and security improvements. The Group has reviewed the April 2021 IFRIC agenda decision regarding the treatment of costs related to cloud computing. The net book value of those costs, as at 31 May 2021, was £1.0 million. The Group has derecognised these brought- forward capitalised costs, that were previously held within intangible assets, and recorded these as expenses in the Income Statement for the year ended 31 May 2021. The impact of this derecognition has been disclosed as an adjusting item due its nature and magnitude, in line with the Group’s adjusting items policy. Please see note 3 for further information. Revised analysis between cost and amortisation in 2021 relates to historic impairment losses which had been recorded against ‘Cost’, rather than in ‘Accumulated amortisation & impairment’, and historic currency retranslations which had all been recorded against ‘Accumulated amortisation & impairment’. In addition, £0.7 million of software costs were  Amortisation is charged to administrative expenses in the Income Statement. Software includes the ERP system (SAP). The carrying value of this asset as at 31 May 2022 is £21.4 million  The carrying amounts of software are reviewed at each reporting date to determine whether there is any indication of impairment. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED  continued Financial Statements   199 Goodwill and other intangible assets (excluding software), which include the Group’s acquired brands, all have  impairment. The method used is as follows: • Intangible assets (including goodwill) are allocated to appropriate cash-generating units (CGUs) based on the  goodwill. Brands are tested for impairment at the individual CGU level and goodwill is tested for impairment at the segment level. •    • Childs Farm has been reviewed for impairment on the basis of fair value less cost to sell (FVLCS) given the proximity of the acquisition to the year end.  as the business units acquired, as they represent the smallest group of assets which independently generate   since FY12 that the four Beauty brands, St Tropez, Sanctuary Spa, Fudge and Charles Worthington be combined into one Beauty CGU. The conclusion of this review is that the brands should always have been treated as separate CGUs  can be found in note 1c. In the year, the Group acquired Childs Farm, and has recognised £35.5 million in relation to the value of the brand and an additional £16.8 million in relation to goodwill, which represents the expected synergies and the deferred consideration arrangement in place for the Group to purchase the outstanding minority shareholding. Further information is available in note 29. The table below summarises the allocation of goodwill and brands to each CGU. Goodwill 2022 £m (Restated) Goodwill 2021 £m Brands 2022 £m (Restated) Brands 2021 £m Original Source – – 9.8 9.8 Charles Worthington 8.3 8.3 9.6 21.2 Sanctuary Spa 21.0 21.0 75.4 75.4 St Tropez 11.1 11.1 58.4 58.4 Fudge – – 24.6 24.6  – – 32.5 23.0 Childs Farm 16.8 – 35.5 – Nutricima – – – –  – – – 6.0 Other 1 3.2 2.9 – – Total 60.4 43.3 245.8 218.4  Nutricima – – – –  – – – (6.0) Total 60.4 43.3 245.8 212.4   1 Other includes goodwill arising on the purchase of shares in PZ Cussons Nigeria plc and PZ Cussons Ghana Ltd.   PZ Cussons plc / Annual Report and Financial Statements 2022 200  continued Assumptions in the budgets and plans include future revenue volume/price growth rates, associated future levels of marketing support, cost base of manufacture and supply and directly associated overheads. These assumptions are  which each CGU operates. Other key assumptions applied in determining value-in-use are: • growth rates – short-term growth rates are based on the latest approved management forecasts; • terminal growth rates, using the estimated long-term growth rate applicable for the geographies in which the CGUs operate; and • discount rate – the discount rate uses a pre-tax Weighted Average Cost of Capital (WACC) for comparable companies  CGU. The long-term growth rates and discount rates applied in the value-in-use calculations have been set out below: Pre-tax Discount rate FY21 Pre-tax Discount rate FY21 (restated) Long-term growth rate FY22 Long-term growth rate FY21 Original Source 8.0% 7.1% 1.5% 1.7% The Sanctuary 8.0% 7.7% 1.5% 1.7% St Tropez 8.0% 7.7% 1.5% 1.7% Charles Worthington 10.1% 8.0% 1.5% 1.7% Fudge 10.1% 8.0% 1.5% 1.7%  10.0% 6.9% 2.5% 3.0%    all discount rates include a size premium. For FY21, a size premium was only applied in respect of the four CGUs that make      rates from FY21 are driven by an increase in the pre-tax cost of debt, an increase in the risk free rates and a decrease in the country equity risk premiums. The external sources used for all three measures are consistent year on year. Long-term growth rates have been set for each CGU based on the GDP forecast long-term growth rates for the territories in which the CGUs operate, which have been deemed an appropriate proxy for long-term growth.  Having performed the annual impairment tests, certain impairments have been recognised in FY22, as set out below. For the Charles Worthington brand, the impairment tests showed a fair value of the brand of £9.6 million compared to the carrying value of £21.2 million, resulting in an impairment loss of £11.6 million. The tests were based on   indicated a reasonably possible additional downside of £2 million based on a sales decline of 4%.     low as £3 million on a reasonably possible downside based on a sales decline of 2.5% or a margin decline of 1%pt. For the remaining brands with intangible assets, namely St Tropez, Fudge, Sanctuary Spa and Original Source, the Directors do not consider that a reasonable possible change in the assumptions used to calculate the value in use of intangible  this conclusion the Directors reviewed a sensitivity analysis performed by management, which focused on the reasonably possible downsides of key assumptions, both individually and in reasonably possible combinations, and considered whether these reasonably possible downsides give rise to an impairment. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   201 11. Property, plant and equipment Land and  £m Investment property £m Plant and machinery £m Fixtures, fittings and vehicles £m Assets in the course of construction £m Total £m Cost At 1 June 2020 94.6 9.9 133.1 53.0 8.5 299.1 Currency retranslation (9.6) (1.5) (15.3) (2.6) (0.9) (29.9) Additions – – 0.5 – 6.0 6.5 Disposals (0.2) – (3.3) (1.3) – (4.8)  (1.0) – (7.7) – – (8.7)  0.1 – 5.0 0.2 (5.3) –  intangible assets – – – – (1.3) (1.3) At 31 May 2021 83.9 8.4 112.3 49.3 7.0 260.9 Currency retranslation 4.0 (0.7) 7.3 1.2 0.3 12.1 Additions – 0.2 – – 6.6 6.8 Disposals (0.6) (2.4) 0.5 (1.5) (0.1) (4.1)  (2.0) (1.7) – – – (3.7)  0.7 – 4.5 3.1 (8.3) –  (4.7) 4.7 – – – – At 31 May 2022 81.3 8.5 124.6 52.1 5.5 272.0 Accumulated depreciation and impairment At 1 June 2020 34.1 0.8 104.2 47.7 – 186.8 Currency retranslation (2.8) (0.1) (11.4) (2.3) – (16.6) Charge for the year 1.4 0.1 6.9 2.6 – 11.0 Disposals (0.1) – (3.2) (1.3) – (4.6)  (0.3) – (7.4) – – (7.7) Impairment loss 0.3 – – 0.2 – 0.5 At 31 May 2021 32.6 0.8 89.1 46.9 – 169.4 Currency retranslation 1.1 – 5.6 1.0 – 7.7 Charge for the year 1.8 – 5.8 1.7 – 9.3 Disposals (0.4) (0.7) 0.4 (1.5) – (2.2)  (0.4) (0.6) – – – (1.0)  (1.6) 1.6 – – – – Impairment loss 3.8 – 2.1 – – 5.9 At 31 May 2022 36.9 1.1 103.0 48.1 – 189.1  At 31 May 2022 44.4 7.4 21.6 4.0 5.5 82.9 At 31 May 2021 51.3 7.6 23.2 2.4 7.0 91.5 PZ Cussons plc / Annual Report and Financial Statements 2022 202 11. Property, plant and equipment continued Depreciation is charged to administrative expenses or cost of sales (for plant & machinery) in the Income Statement. At 31 May 2022, the Group had entered into commitments for the acquisition of property, plant and equipment amounting to £0.3 million (2021: £0.7 million). At 31 May 2022, the Group’s share in the capital commitments of the joint ventures was £nil (2021: £nil). Disposals are mainly related to the sale of a number of residential properties in Nigeria linked to the ongoing  Impairment losses of £5.9 million in land & buildings and plant & machinery in the year related to the impairment of factory assets in Nigeria. This amount has been recognised in adjusting items in the Consolidated Income Statement  Impairment losses in land & buildings in the prior year were related to re-assessment of the recoverable amounts of  Included in the brought forward Land & Buildings balance was £1.6 million NBV relating to land in the UK.    The fair value of the investment properties as at 31 May 2022 is £43.7 million (2021: £25.1 million).  2022 £m 2021 £m Disposal group held for sale Intangible assets (note 10) – 6.0 Property, plant and equipment (note 11) – 0.3 Inventory – 0.6 Employee-related accruals – (0.5)  – 6.4 Property, plant and equipment held for sale (note 11) 3.4 0.7 Total 3.4 7.1  Assets held for sale 3.4 7.6  Liabilities directly associated with assets held for sale – (0.5) Total 3.4 7.1 The property, plant and equipment held for sale relates to a carried forward balance of £0.7 million regarding disused   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   203 13. Net investments in joint ventures Joint ventures are contractual arrangements over which the Group exercises joint control with partners and where the parties have rights to the net assets of the arrangement, irrespective of the Group’s shareholding in the entity. Net investments in joint ventures include the Group’s equity investment in joint ventures, long-term loans issued to joint ventures and the Group’s share of the joint ventures’ net assets/liabilities. The table below reconciles the movement in the Group’s net investment in joint ventures in the year: Long-term loans issued to joint ventures £m Group’s share of net  assets of joint ventures £m Net investments in joint ventures £m Carrying value At 1 June 2020 44.4 (3.5) 40.9 Increased funding to joint ventures in year 0.1 – 0.1 Repayment of loans by joint ventures in year (3.4) – (3.4) Impairment of equity investment – (2.2) (2.2) Impact of change in JV ownership % during the period – (0.2) (0.2)  in equity – 0.2 0.2  as ‘permanent as equity’ recognised in equity (5.9) (1.2) (7.1)  repayments in period – 0.3 0.3 Share of result for the year taken to the Income Statement – 5.6 5.6 At 31 May 2021 35.2 (1.0) 34.2  in equity – 0.5 0.5  as ‘permanent as equity’ recognised in equity 4.4 (0.3) 4.1 Share of result for the year taken to the Income Statement – 6.6 6.6 At 31 May 2022 39.6 5.8 45.4 At the start and the end of the prior period, the Group held investments in two joint ventures as follows: Joint venture companies Operation Country of incorporation Parent Company’s interest Registered Office address PZ Wilmar Limited Manufacturing Nigeria 50% 45/47 Town Planning Way, Ilupeju, Lagos Wilmar PZ International Pte Limited Provision of services to joint venture companies Singapore 50% 56 Neil Road, Singapore PZ Cussons plc / Annual Report and Financial Statements 2022 204 13. Net investments in joint ventures continued   accordance with IFRS. PZ Wilmar Ltd 2022 £m 2021 £m Assets Non-current assets 51.1 46.5 Current assets Cash and cash equivalents 43.4 35.1 Other current assets 67.5 50.5 110.9 85.6 Total assets 162.0 132.1  Non-current liabilities (80.5) (71.7) Current liabilities (66.8) (59.1)  (147.3) (130.8) Net assets 14.7 1.3 PZ Wilmar Ltd 2022 £m 2021 £m Revenues 295.6 214.4  18.8 10.8  12.6 8.9 Total comprehensive income 12.6 8.9  on loans from the Group which are recognised in other comprehensive income within the Group’s Financial Statements.  venture recognised in the Consolidated Financial Statements is as follows: PZ Wilmar Ltd 2022 £m 2021 £m Net assets of joint venture 14.7 1.3 Proportion of Group’s ownership interest in the joint venture 50% 50% Carrying amount of the Group’s interest in the joint venture 7.4 0.7 Information regarding joint ventures that are not individually material: Wilmar PZ International Pte Ltd 2022 £m 2021 £m  – – The Group’s share of total comprehensive income/(expense) – – Carrying amount of the Group’s interest in the joint venture (1.6) (1.7) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   205 The long-term loans issued to joint ventures (PZ Wilmar Ltd) have been assessed for impairment in accordance with IFRS 9 ‘Financial Instruments’. These loans are considered to be in stage 2 as the credit risk has not increased  by assessing the value in use of PZ Wilmar Ltd, and on this basis, management has concluded that no impairment of these loans is required.   14. Inventories 2022 £m 2021 £m Raw materials and consumables 27.9 22.6 Work in progress 10.0 5.1 Finished goods and goods for resale 73.9 63.4 111.8 91.1 During the year the cost of inventories recognised as an expense, and included in cost of sales, amounted to £342.4 million (2021: £343.3 million). This included £6.9 million (2021: £6.6 million) which was charged to the Income Statement to write down slow-moving and obsolete inventories. Inventories are stated after provisions for impairment of £8.8 million (2021: £5.5 million).  IFRS 9 requires the Group to recognise an allowance for ECLs for all debt instruments not held at fair value through   applied the practical expedient to calculate ECLs using a provision matrix. The Group has assessed that current and    2022 £m 2021 £m Trade receivables 90.9 90.1 Less: provision for impairment of trade receivables (3.9) (4.1) Net trade receivables 87.0 86.0 Amounts owed by joint ventures 1.7 9.5 Other receivables 11.0 10.6 Prepayments 5.3 4.6 105.0 110.7 The Directors consider the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. Provisions are estimated by management based on the expected credit loss model. The creation and release of provisions for receivables is charged/credited to administrative expenses in the Income Statement. Receivables are   history of default. The credit risk of customers is assessed at a subsidiary and Group level, taking into account the local  credit limits are imposed based on these factors. The credit period given on sales is mainly 30 days, but ranges from  segments. No other receivables have been deemed to be impaired. PZ Cussons plc / Annual Report and Financial Statements 2022 206  continued The following table shows the age of net trade receivables at the reporting date: 2022 £m 2021 £m Not past due 72.8 71.3 Past due 0–90 days 11.0 13.9 Past due 90–180 days 1.1 0.5 Past due >180 days 2.1 0.3 87.0 86.0  Expected credit loss rate £m Gross trade  £m Lifetime ECL £m Specific provisions £m Total provision for impairment of trade  £m Not past due 0.4% 74.4 0.3 1.3 1.6 Past due 0–30 days 1.1% 8.9 0.1 – 0.1 Past due 31–60 days 12.5% 1.6 0.2 – 0.2 Past due 61–90 days 11.1% 0.9 0.1 – 0.1 Past due 90–180 days 15.4% 1.3 0.2 – 0.2 Past due >180 days 38.2% 3.4 1.3 – 1.3 Legal proceedings 100.0% 0.4 0.4 – 0.4 90.9 2.6 1.3 3.9  Expected credit loss rate £m Gross trade  £m Lifetime ECL £m Specific provisions £m Total provision for impairment of trade  £m Not past due 0.41% 73.1 0.3 1.5 1.8 Past due 0-30 days 0.00% 12.0 - - - Past due 31-60 days 16.7% 1.2 0.2 - 0.2 Past due 61-90 days 10.0% 1.0 0.1 - 0.1 Past due 90-180 days 16.7% 0.6 0.1 - 0.1 Past due >180 days 47.1% 1.7 0.8 0.6 1.4 Legal proceedings 100.0% 0.5 0.5 - 0.5 90.1 2.0 2.1 4.1 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   207 Movements in the Group provision for impairment of trade receivables are as follows: 2022 £m 2021 £m At 1 June (4.1) (7.9) Increase in provision for receivables impairment (0.9) (0.2) Provision utilised during the year 0.3 0.3 Provision released during the year 0.9 2.9 Currency translation (0.1) 0.8 At 31 May (3.9) (4.1) The Group’s net trade receivables are denominated in the following currencies: 2022 £m 2021 £m Sterling 36.3 32.1 US Dollar 12.5 11.0 Nigerian Naira 11.0 10.4 Euro 0.8 0.7 Australian Dollar 9.5 16.3 Indonesian Rupiah 12.1 11.5 Ghana Cedi 1.4 1.2 Other currencies 3.4 2.8 87.0 86.0 16. Current asset investments 2022 £m 2021 £m Unlisted 0.5 0.3 0.5 0.3  1 June 2021 £m Net cash flow £m Foreign exchange movements £m Other £m 31 May 2022 £m Cash at bank and in hand 79.4 24.1 2.3 – 105.8 Short-term deposits 7.6 46.9 3.5 – 58.0  87.0 71.0 5.8 – 163.8 Overdrafts – (0.1) – – (0.1)  87.0 70.9 5.8 – 163.7 Loans due in greater than one year (118.0) (56.0) – – (174.0) Current asset investments 0.3 – – 0.2 0.5  (30.7) 14.9 5.8 0.2 (9.8)  (11.8) 4.0 (0.5) (8.6) (16.9)  (42.5) 18.9 5.3 (8.4) (26.7) * Other includes lease additions in FY22 and an increase in the lease liability arising from the unwinding of interest element. PZ Cussons plc / Annual Report and Financial Statements 2022 208  continued 1 June 2020 £m Net cash flow £m Foreign exchange movements £m Other £m 31 May 2021 £m Cash at bank and in hand 77.8 6.1 (4.5) – 79.4 Short-term deposits 0.9 7.3 (0.6) – 7.6  78.7 13.4 (5.1) – 87.0 Overdrafts (1.2) 1.2 – – –  77.5 14.6 (5.1) – 87.0 Loans due in greater than one year (127.0) 9.0 – – (118.0) Current asset investments 0.3 – – – 0.3  (49.2) 23.6 (5.1) – (30.7)  (13.7) 1.9 – – (11.8)  (62.9) 25.5 (5.1) – (42.5) * Other includes lease additions in FY22 and an increase in the lease liability arising from the unwinding of interest element. 18. Financial instruments and risk management  currency rates, commodity prices and interest rate risk), credit risk and liquidity risk. Overall risk management is led by senior management and executed according to Company policy with the intention  strategies. Management of these risks, along with the day to day management of treasury activities is performed by      forecasts provided by the companies operating units. The Group also enters into contracts with suppliers for its principal raw material requirements and associated input costs. Commodity and associated input and manufacturing costs such as energy are part of the Groups normal purchasing activities.    commodity prices and interest rates) will have an impact on consolidated earnings.   to changes in foreign exchange rates. The Group is exposed to foreign exchange translation and transaction risks as follows: • Foreign exchange translation risks arise due to the translation of assets and liabilities denominated in currencies other than GBP. •  functional currency of the operating entity.  U.S. Dollars and Euros. The Company’s policy is to reduce this risk by using foreign exchange forward contracts which  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   209 When a derivative is entered into for the purpose of being a hedge, the Group negotiates the terms of the derivative  period of exposure from initial forecasting of the hedged item to the point of settlement. Hedge accounting is typically applied in order to remove any timing mismatch between the hedging instrument and   time as the hedged item. Where hedge accounting criteria is not met, the fair value of the derivative is accounted for  The majority of the Group’s assets and liabilities are denominated in the functional currency of the relevant subsidiary. The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date are as follows. The amounts listed under income statement show the Group’s exposure to foreign currency based on operations from entities denominated in foreign currency. 2022 2021 £m Assets  Income Statement Assets  Income Statement Nigerian Naira – – 5.5 – – (61.4) US Dollar 16.3 3.5 1.8 18.8 1.5 1.5 Euro 1.5 2.4 – 0.9 2.6 – Indonesian Rupiah – – 8.7 – – 8.5 Australian Dollar 0.1 – 11.6 – – 6.6 The following table demonstrates the sensitivity to a reasonably possible change in the Nigerian Naira, US Dollar, Euro, Indonesian Rupiah and Australian Dollar exchange rates, with all other variables held constant, on the current years  to the change in fair value of designated hedging contracts). 2022 2021 £m Change Effect   Effect on assets Effect on  Effect   Effect on assets Effect on  Nigerian Naira +5% (0.3) – – (3.1) – – –5% 0.3 – – 3.1 – – US Dollar +5% 0.1 0.8 0.2 0.1 0.9 0.1 –5% (0.1) (0.8) (0.2) (0.1) (0.9) (0.1) Euro +5% – 0.1 0.1 – 0.1 – –5% – (0.1) (0.1) – (0.1) – Indonesian Rupiah +5% 0.4 – – 0.4 – – –5% (0.4) – – (0.4) – – Australian Dollar +5% 0.6 – – 0.3 – – –5% (0.6) – – (0.3) – –     alignment of the critical terms between the hedging instrument and hedged item. The Group designates the forward component of forward contracts as the hedging instrument.   during the reporting period in relation to the use of foreign exchange forward contracts. PZ Cussons plc / Annual Report and Financial Statements 2022 210 18. Financial instruments and risk management continued The notional amounts of forward contracts outstanding as the reporting date, along with the weighted average hedge rates and average spot rates for the reporting period are shown below: 2022 2021 £m Notional Average rate Weighted average hedge rate Notional Average rate Weighted average hedge rate GBP/USD 43.1 1.34 1.29 19.9 1.33 1.36 GBP/EUR (8.3) 1.18 1.17 (7.2) 1.12 1.12 GBP/AUD 2.6 1.84 1.82 8.8 1.81 1.84 AUD/USD (23.1) 0.73 0.73 (14.2) 0.74 0.75 AUD/GBP (1.0) 0.54 0.57 – 0.55 – USD/SGD (2.0) 0.74 1.37 (0.7) 0.74 1.34 Total 11.3 6.5 The following table shows the notional value and fair value of the foreign currency forward contracts outstanding at  £m Gross notional amount Fair value Change in fair value As at 31 May 2022 Assets 66.0 0.7 (0.3) Liabilities (54.6) (1.6) (0.9) As at 31 May 2021 Assets 38.4 1.0 0.3 Liabilities (31.9) (0.7) 0.2  hedge reserve was (£0.1 million) (2021: loss of £0.3 million). It is anticipated that the purchases will take place during  anticipated that the raw materials will be converted into inventory and sold within 12 months of purchase.   Set out below is the reconciliation of each component of equity and the analysis of other comprehensive income: £m Cash flow reserve Cost of hedging reserve As at 1 June 2020 0.2 (0.2) Changes in fair value of hedging instruments net of taxation (0.6) 0.2 As at 31 May 2021 (0.4) – Changes in fair value of hedging instruments net of taxation 0.2 – As at 31 May 2022 (0.2) – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   211  As a result of the cessation of Sterling LIBOR on 31 December 2021, the Group transitioned borrowings under its existing revolving credit facility from LIBOR to SONIA, with the amendment and restatement of underlying loan documentation entered into on 12 Nov 2021.  Commodity risk is the risk that changes in underlying raw material prices have an adverse impact on the Company’s  The Group’s policy is to minimise the pricing volatility accompanied by unfavourable changes in commodity prices by  The Group does not enter into any commodity derivatives.    related interest rate hedging derivatives.    with the option time value accounted for a cost of hedging. The interest rate cap expired in December 2021. As a result of decisions taken by national regulators, GBP LIBOR and certain USD LIBOR time periods were phased out at the end of Dec 2021 and replaced by alternative reference indexes (SONIA and SOFR). Such changes have been  The below sensitivity analysis has been prepared on the basis of gross debt (excluding lease liabilities) as at 31 May 2022 and demonstrates the sensitivity to a reasonably possible change in interest rates. £m  decrease in  Effect   2022 Sterling +50 (0.9) +40 (0.7) +30 (0.5) +20 (0.3) +10 (0.2) -10 0.2 -20 0.3 -30 0.5 -40 0.7 -50 0.9 PZ Cussons plc / Annual Report and Financial Statements 2022 212 18. Financial instruments and risk management continued £m  decrease in  Effect   2021 Sterling +50 (0.6) +40 (0.5) +30 (0.4) +20 (0.2) +10 (0.1) -10 0.0 -20 0.1 -30 0.2 -40 0.4 -50 0.5 The Group’s sensitivity to interest rates has increased during the current year primarily due to an increase in drawn borrowing amounts under the Group Revolving Credit Facility which in turn have been used to support the acquisition of Childs Farm together with general working capital purposes.  The Group is exposed to counterparty credit risk from its operating activities (primarily trade receivables) and from its     investment of surplus cash and use of derivative instruments with reference to a minimum credit rating as maintained by Standard & Poors or Fitch, with further limits established for levels of exposure at various ratings levels. The below table provides an overview of the net assets (liabilities) attributed to each counterparty. £m 31 May 2022 Cash and cash  and financial derivatives 31 May 2021 Cash and cash  and financial derivatives AA- 11.3 26.1 A+ to A- 26.6 87.8 BBB+ to BBB- 8.3 1.4 BB+ to BB- 116.1 2.9 B+ to B- – 31.0 CCC+ - - Not rated 0.6 8.2 Total 162.9 157.4 * Ratings per S&P unless unavailable, in which case Fitch rating has been used. The level of exposure and the credit worthiness of the Group’s Banking counterparties is regularly reviewed to ensure  ceilings operating within those countries.   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   213  procedures in order to establish appropriate credit terms and trade receivable balances are monitored on an ongoing basis. The Group does not have material bad debts. Further detail of trade receivable balances is provided in note 15.    which it must comply with in order to maintain its current level of borrowings. There have been no breaches of the covenants throughout the year or in the post balance sheet period.     The Group’s net debt level can vary from month to month depending on seasonal trading patterns including the holding of inventory, timing of receipts from customer and payments to suppliers, and the timing of any capital and restructuring projects. Net debt levels as at the period end may therefore be subject to change during the reporting period.  interest rates where applicable, showing items at the earliest date on which the Company could be required to pay  rate, the undiscounted amount is derived from interest rates at the reporting date. Derivatives are presented on a notional basis in Sterling. 31 May 2022 £m < 3 months 3–12 months 1–2 years 2–5 years Total Trade and other payables 161.8 – – 4.5 166.3 Forward contracts sell 25.5 29.1 – – 54.6 Forward contracts buy (53.2) (12.8) – – (66.0) Gross borrowings – – 174.0 – 174.0 Lease liabilities 0.7 2.2 1.6 12.4 16.9 31 May 2021 £m < 3 months 3–12 months 1–2 years 2–5 years Total Trade and other payables 147.6 – – – 147.6 Forward contracts sell 17.5 13.6 0.8 – 31.9 Forward contracts buy (22.4) (15.2) (0.8) – (38.4) Gross borrowings – – 118.0 – 118.0 Lease liabilities 1.0 2.9 3.7 5.4 13.0 The Company has access to a Revolving credit facility of £325 million, expiring in November 2023 and which is available for general corporate purposes. As at 31 May 2022, this facility was £174 million (2021: £118 million) drawn. In addition, the Group retains other unsecured and uncommitted facilities that are primarily used for trade related activities. As at 31 May 2022, these amounted to £252.3 million (2021: £282.7 million) of which £53.8 million, or 21% were utilised (2021: £33.1 million or 12%). As at the reporting date, there was an additional overdraft of £0.1 million as shown in Note 17.  The objective of the Company when considering total capital is to protect the value of capital investments and to  derivatives used for the purposes of hedging currency and interest exposure on related loans and borrowings, but  PZ Cussons plc / Annual Report and Financial Statements 2022 214 18. Financial instruments and risk management continued In support of its objectives, the Company may undertake actions to adjust its capital structure. Actions may include, but are not limited to, raising or prepayment of Borrowings together with related derivative instruments, issuance of additional share capital, payment of dividends or share repurchase programmes. The Group considers Net debt (excluding lease liabilities) to be an important performance measure, on the basis that this measure forms the basis of the adjusted Net debt to adjusted EBITDA covenant in relation to the Group’s Revolving Credit Facility (RCF). As at 31 May 2022 the Group had net debt of £9.8 million (2021: £30.7 million). In 2018, the Group entered into a £325 million Revolving Credit facility with a syndicated bank group, which matures   any Relevant Period, the ratio of Total Net Debt on the last day of that Relevant Period to EBITDA in respect of that Relevant Period). The RCF facility also includes other customary provisions relating to events of default, including non-payment of principal, interest or fees, misrepresentations, breach of covenants, creditor process, cross default to other indebtedness of the borrowers and its subsidiaries. The Multicurrency Facility requires that a certain proportion of the Groups resources are covered via Material company obligations requiring that the aggregate EBITDA of the Guarantors (calculated on an unconsolidated basis) should be not less than 30% of the EBITDA of the Group, and the aggregate net assets of the Guarantors (calculated on an unconsolidated basis and including intercompany balances and investments in Subsidiaries of any member of the Group) were not less than 60% of the consolidated net assets of the Group.     £m 2022 2021  Derivatives designated as hedging instruments – revalued to other comprehensive income 0.4 0.1 Current asset investments 0.5 0.3  Trade and other receivables 98.0 96.6 Trade receivables from joint ventures 1.7 9.5 Current loans to Joint Venture – 8.5 Long-term loans to Joint Venture 39.6 35.2 Total current 100.6 115.0 Total non-current 39.6 35.2 Total 140.2 150.2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   215  £m Maturity 2022 2021  Unsecured borrowings/overdrafts 2023 0.1 –  Senior Revolving Credit Facility 2023 174.0 118.0  Derivatives designated as hedging instruments – revalued to other comprehensive income 0.5 0.3   – – Trade and other payables 166.3 147.6 Total current 162.4 147.9 Total non-current 178.5 118.0 Total 340.9 265.9  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company utilises certain assumptions that market participations would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, market corroborated, or generally unobservable inputs. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Level 1: Derived from quoted prices in active markets for identical assets or liabilities; Level 2: Derived from observable inputs other than level 1, including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data; and Level 3: Derived from valuation techniques that include inputs for the asset or liability that are not based on   judgement or estimation. PZ Cussons plc / Annual Report and Financial Statements 2022 216 18. Financial instruments and risk management continued There were no transfers between Level 1, 2 and 3 during the current or prior year. The following is a description of the valuation methodologies and assumptions used for estimating the fair value of  •    value of money. The Group Treasury Team carry out a quarterly analysis that assesses movements in underlying credit rating and credit  required adjustment relating to credit risk, no adjustment has been made. •  The notional amount of trade and other payables/receivable are deemed to be carried at fair value, short-term and settled in cash. •  The carrying value of cash and cash equivalents is deemed to equal fair value. •   be derived from the ownership of these investments. • Interest bearing loans and liabilities The fair value is deemed to approximate the carrying value.  2022 £m 2021 £m Trade payables 78.4 58.2  5.9 2.7 Amounts owed to joint ventures 0.6 – Other taxation and social security 2.1 3.3 Other payables 10.8 6.3 Accruals 72.0 83.1 Total current 163.9 150.9 2022 £m 2021 £m Other payables 4.5 0.3 Total non-current 4.5 0.3    a credit fee to the bank. The Group does not pay any credit fees and does not provide any additional collateral or guarantee to the bank. Other payables include £4.0 million of current and £3.2 million of non-current liabilities for the deferred consideration in relation to the acquisition of Childs Farm. Further information is available in note 29. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   217 20. Deferred tax Property, plant and  £m Retirement   £m Revaluation of property, plant and  £m Unremitted earnings £m Other timing differences £m Business  £m Accruals and provisions £m Tax losses £m Total £m At 1 June 2020 (restated) (7.0) (5.5) (6.9) – (6.4) (33.6) 5.9 6.5  Credit to income (3.4) (2.4) (0.3) (1.9) (3.0) (8.2) (0.6) (4.3)  Charge to equity – 2.4 – – 1.4 – – – 3.8 Currency translation 1.0 (0.2) 1.3 – 0.7 (0.2) (1.5) (0.9)  At 31 May 2021 (restated)       3.8 1.3  Charge / (Credit) to income 0.5 0.5 0.1 0.5 (3.0) 2.5 (0.2) (1.5)  Charge / (Credit) to equity – (8.4) – – (0.9) – – –  Acquisition – – – – – (8.9) – –  Currency translation (0.5) 0.2 (0.1) – (0.9) (0.2) 0.2 1.0  At 31 May 2022       3.8 0.8     comprises: • a Deferred tax liability on brands and goodwill of £6.8 million (2021: £6.3 million); • a Deferred tax asset on share-based payments of £0.6 million (2021: nil); and, • a Deferred tax liability on unrealised foreign exchange movements of £2.1 million (2021: £1.0 million). Unremitted earnings may be liable to overseas withholding taxes if anticipated to be distributed as dividends. A deferred tax liability has been recognised in respect of unremitted earnings in Indonesia of £1.4 million (2021: £1.9 million).   with investments in subsidiaries and joint ventures for which deferred tax liabilities have not been recognised totals approximately £14.3 million as at 31 May 2022 (2021: £12.7 million). The deferred tax liability of £48.6 million categorised as ‘Business Combinations’ relates to intangible assets recognised on consolidation.  PZ Cussons plc / Annual Report and Financial Statements 2022 218 20. Deferred tax continued  2022 £m (Restated) 2021 £m Deferred tax assets 4.5 5.9 Deferred tax liabilities (90.7) (73.0) (86.2) (67.1)   Deferred taxes have been measured at the tax rate expected to be applicable at the date such assets and liabilities are realised. All UK deferred tax items are recognised at 25%. Per the announcement made by the UK Government on the 23rd September 2022, the planned increase of Corporation tax from 19% to 25% will be abolished. In line with the Finance Act 2021, UK deferred taxes are currently shown in the Financial Statements at 25% and will be revalued to 19% in future reporting periods once this change has been enacted. Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related  At 31 May 2022 the Group recorded a deferred tax asset of £1.3 million on recognised but unused tax losses  expire or be disposed of, together with £14.0 million of unrecognised capital losses relating to the disposal of  21. Provisions Warranty provisions £m VAT provision £m Total £m At 1 June 2020 (restated) 3.2 4.9 8.1  (note 22) (1.1) – (1.1) Released to the Income Statement (0.2) – (0.2)  (0.2) – (0.2) Used during the year (1.0) – (1.0) At 31 May 2021 (restated) 0.7 4.9 5.6 Charged to the Income Statement 0.1 – 0.1  0.1 – 0.1 Used during the year (0.2) – (0.2) At 31 May 2022 0.7 4.9 5.6   Provisions as at 31 May 2022 relate to warranty costs in the Africa Electricals division (2021: £0.7 million).  indirect taxes for one of the Group’s subsidiaries. Further information is included in note 1c. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   219   schemes are in place in the UK and Indonesia, and associated obligations have all been measured in accordance with IAS 19 (revised).     • Main employees plan – for all historically eligible UK-based employees, excluding PZ Cussons plc Executive Directors • Directors’ plan – for PZ Cussons plc Executive Directors • Expatriate plan – for all eligible expatriate employees based outside the UK • Unfunded plan – unfunded unapproved retirement scheme  The assets of the schemes are administered by trustees and are held in trust funds independent of the Group. In relation to the unfunded plan, the Group made payments during the year to former Directors of £190,888 (2021: £188,388).     provisions in accordance with employment law in Indonesia and Thailand. Note that previously, these other obligations  appropriate place to classify these balances, as they fall within the scope of IAS 19, rather than IAS 37.    expensed to the Income Statement appropriately.  The trust deeds for the Directors’ and Main employees plan provides the Group with an unconditional right to a refund of surplus assets assuming the full settlement of plan liabilities in the event of a plan wind-up. Furthermore, in  due to members of the scheme. Based on these rights, any net surplus in these two UK schemes are recognised in full. The trust deed for the Expatriate plan provides the trustees with an unconditional right to wind up the scheme and distribute the surplus to members; therefore, the surplus on the Expatriate scheme has not been recognised in the Balance Sheet.  2022 2021 Surplus £m Deficit £m Total £m Surplus £m Deficit £m Total £m Expatriate plan 58.8 – 58.8 53.6 – 53.6 Directors’ plan 9.9 – 9.9 6.7 – 6.7 Main employees plan 59.4 – 59.4 26.9 – 26.9 Unfunded plan – (3.5) (3.5) – (4.5) (4.5) Other overseas units – (9.6) (9.6) – (8.4) (8.4) 128.1 (13.1) 115.0 87. 2 (12.9) 74.3 Restriction due to asset ceiling (58.8) – (58.8) (53.6) – (53.6)   69.3 (13.1) 56.2 33.6 (12.9) 20.7 PZ Cussons plc / Annual Report and Financial Statements 2022 220  continued  The UK’s main schemes expose the Group to actuarial risks such as investment risk, interest rate risk and longevity risk.  Description Mitigation Investment risk  liability is calculated using a discount rate (investment return) determined by direct reference to high quality corporate bond yields (for IAS 19 purposes) and gilt yields       expectations than lower risk bonds that are the best match for the Plans’ liabilities. To control the resulting investment risk, the funded Plans invest  the balances invested in liability-matching bond assets designed to control interest rate risk (see below). The split between growth assets and liability-matching bond assets for each funded Plan is regularly monitored to ensure investment risk is not excessive given the statutory funding assumptions and the Plans’ long-term funding objectives. Interest risk A decrease in the corporate bond yield and/or gilt yield will increase the present value of the Plans’ liabilities under the IAS 19 and statutory/ long-term funding bases respectively. The funded Plans make use of liability-driven investment techniques to protect them against the majority of the interest rate risk inherent in their liabilities. This is achieved by investing in gilts and investment grade corporate bonds such that changes in the Plans’ liabilities due to falling  similar movements in the value of the Plans’ overall assets.  interest risk relative to their statutory and long-term funding bases, the Plans’ liability- matching bond portfolios are predominantly invested in gilts, with the balance invested in investment grade corporate bonds to increase the expected return on the Plans’ assets in a risk-controlled way. In doing so, the exposures to investment grade corporate bonds also help mitigate the interest rate risk inherent in the Plans’ IAS 19 liabilities.   increases for members, which results in higher Plan liabilities. The Plans’ liability-matching bond assets are   This is achieved by investing in index-linked gilts. Longevity risk The value of the Plans’ liabilities are calculated by reference to the best estimate of the life expectancy of each Plan’s participants. An increase in life expectancy of the Plans’ participants will increase the Plans’ liabilities. To help control longevity risk all the Plans are  The Plans consider additional approaches to mitigating longevity risk, for example by buying annuities with an insurance company to cover the Plans’ liabilities. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   221 The movements in the year are as follows: Overseas retirement  and similar  £m UK retirement  £m Total £m At 1 June 2020 (7.7) 38.4 30.7  (1.1) – (1.1) Currency retranslation 1.0 – 1.0 Interest (expense) / income and administrative expenses (1.7) 0.1 (1.6) Contributions paid – 0.2 0.2 Utilised in the year 1.2 – 1.2 Past service cost – (0.2) (0.2) Re-measurement losses (0.1) (9.4) (9.5) At 31 May 2021 (8.4) 29.1 20.7 Currency retranslation (0.9) – (0.9) Interest expense and administrative expenses (1.5) (0.3) (1.8) Contributions paid – 0.2 0.2 Utilised in the year 0.6 – 0.6 Re-measurement gains 0.6 36.8 37.4 At 31 May 2022 (9.6) 65.8 56.2  The Directors’ and Expatriate plans are fully funded. During the year the employer paid £nil (2021: £nil) as a contribution towards the Main plan. PZ Cussons plc / Annual Report and Financial Statements 2022 222  continued   the data underlying the actuarial valuations as at 31 May 2022: Deferred Pensioner  2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 2062 2064 2066 2068 2070 2072 2074 2076 2078 2080 2082 2084 2086 2088 0 2 4 6 8 10 12 14 16 18  Notes      Information prepared as part of Company year-end IAS 19 reporting (full details of those results are in my report dated 15 June 2022).    been used. The scheme is unfunded and provision for future obligations included in the above table is £8.6 million   The last triennial actuarial valuations of the schemes administered in the UK were performed by independent professional actuaries at 1 June 2021 using the projected unit method of valuation.  independent actuary, has been updated on an approximate basis to 31 May 2022. There have been no changes in  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   223  2022 2021  2.75% 3.05% Discount rate 3.50% 1.95%  3.15% 3.20% The mortality assumptions used were as follows: 2022 Years 2021 Years Weighted average life expectancy on post-retirement mortality table used to  – Member age 65 (current life expectancy) 23.9 23.9 – Member age 45 (life expectancy at age 65) 25.5 25.5 Movements in the fair value of plan assets were as follows: Assets 2022 £m Assets 2021 £m 1 June 416.8 439.6 Interest income 8.0 7.1 Return on plan assets (excluding interest income) (41.7) (12.8)  0.2 0.2 Administrative expenses (0.9) (0.6)  (14.4) (16.7) 31 May   The assets in the schemes were: 2022 £m 2021 £m Equities 19.0 26.7 Bonds 329.3 356.6 Property 4.2 6.8 Cash and cash equivalents 15.5 26.7 Total fair value of scheme assets 368.0 416.8  (243.4) (334.1) Funded status 124.6 82.7 Restriction due to asset ceiling (58.8) (53.6)    Related deferred tax liability (13.4) (5.7)    Equities and bond assets are quoted in active markets with all other assets being unquoted. The UK scheme’s investment strategy is set by the trustee after taking appropriate advice from its investment consultant. The trustee’s primary objective is to invest the plan’s assets in the best interest of the members and  strategic management of the assets and control of the various investment risks to which the plan is exposed. PZ Cussons plc / Annual Report and Financial Statements 2022 224  continued  2022 £m 2021 £m Restriction due to asset ceiling at beginning of year 53.6 61.4 Interest on asset restriction 1.0 1.0 Other changes in asset restriction 4.2 (8.8) Restriction due to asset ceiling at end of year 58.8 53.6 The movements documented above in relation to the restriction on the asset ceiling for the Expatriate scheme have been included when reconciling the total assets and obligations of the schemes; however they have been excluded when reconciling the opening to closing Group Balance Sheet position, as the surplus on the Expatriate scheme has been derecognised on the Balance Sheet.   2022 £m  2021 £m 1 June (334.1) (339.8) Interest expense (6.4) (5.5) Past service cost – (0.2) Re-measurement gain / (loss) due to changes in demographic assumptions 2.9 (1.1)  78.9 (4.3) Re-measurement due to experience adjustments 0.9 –  14.4 16.8 31 May (243.4) (334.1) Plans that are wholly or partly funded (239.9) (329.6) Plans that are wholly unfunded (3.5) (4.5) (243.4) (334.1)   2022 £m 2021 £m  0.6 0.6 Past service cost – (0.2) Administration expenses paid by the scheme (0.9) (0.5)  (0.3) (0.1)  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   225 The reconciliation of the opening and closing Balance Sheet position is as follows: 2022 £m 2021 £m  29.1 38.4 Net pension interest income 0.6 0.6 Administration expenses paid by the scheme (0.9) (0.5) Past service cost – (0.2)  0.2 0.2 Re-measurement gain / (loss) due to changes in demographic assumptions 2.9 (1.1)  78.9 (4.3) Re-measurement due to experience adjustments 0.9 – Changes in asset ceiling / onerous liability (excluding interest income) (4.2) 8.8 Loss on scheme assets (excluding interest income) (41.7) (12.8) Net surplus at end of year 65.8 29.1   69.3 33.6  (3.5) (4.5) 65.8 29.1 Re-measurement gains and losses are recognised directly in the Statement of Comprehensive Income. The sensitivities on the key actuarial assumptions as at the end of the year in relation to the UK schemes were: Change in assumption   Discount rate Decrease of 0.25% Increase of 3.6%  Increase of 0.25% Increase of 2.9% Rate of mortality Decrease in life expectancy of 1 year Increase of 4.4% The sensitivities on the key actuarial assumptions as at the end of the year in relation to the overseas schemes were: Change in assumption   Discount rate Decrease of 1.0% Increase of 9.3% Salary rate Increase of 1.0% Increase of 8.9% The sensitivities shown above are approximate. Each sensitivity considers each change in isolation and is calculated   In practice it is unlikely that the changes would occur in isolation. During the year ending 31 May 2023 the Group expects to make cash contributions of £nil (2022: £nil) to funded   schemes is £2.2 million (2021: £2.4 million). The amount recognised as an expense in the Consolidated Income Statement in relation to the Nigerian Gratuity Scheme is £0.5 million (2021: £0.4 million). PZ Cussons plc / Annual Report and Financial Statements 2022 226  2022 2021  000 Amount £m  000 Amount £m  Ordinary shares of 1p each 428,725 4.3 428,725 4.3 Total called up share capital 428,725 4.3 428,725 4.3   As at 31 May 2022, the Group has three long-term incentive schemes in place – the 2014 Performance Share Plan (‘PSP’) and the PZ Cussons Plc Long-Term Incentive Plan 2020 (the ‘LTIP 2020’) for main Board Executive Directors and certain key senior employees. The 2020 LTIP was agreed at the Annual General Meeting on 26 November 2020. Additionally the Group operates a deferred bonus share scheme (the ‘DBSP’) for Executive Directors. The Group also operates a SIP scheme which is open to UK employees.  date in the year to 31 May 2023. The long-term incentive awards are structured so as to align the incentives of relevant Executives with the long-term  shares awards vest will depend upon the Group’s performance over the three year period following the award date. The fair value of the award is taken as the share price at the grant date. The Employee Share Option Trust (ESOT) purchases shares to fund the PSP and LTIP Schemes. As at 30 November 2021, the ESOT held 10,193,781 shares in PZ Cussons Plc at a book value of £40.0 million (May 2021: £40.0 million). The market value of these shares as at 31 May 2022 was £20.6 million (May 2021: £26.2 million). During the year, the ESOT purchased nil shares (2020: nil). The Trust has waived any entitlement to dividends in respect of all the shares it holds. The Trust remains in place to act as a vehicle for the issuance of new shares under   Executive Directors and certain senior employees are generally eligible to participate in the PSP, which provides for the grant of conditional rights to receive nil-cost shares subject to continued employment over a three-year vesting period and the satisfaction of certain performance criteria established by the Committee. In the current year, 1,348,831 performance share awards have been granted under the LTIP 2020 scheme. Participants’ awards will vest if certain targets are met, as detailed in the Remuneration Committee Report.  The PZ Cussons plc Long-Term Incentive Plan 2020 (the LTIP 2020) approved at the Annual General Meeting on 26 November 2020 permits a portion of the awards for senior employees, but not Executive Directors, to function like restricted stock. These share awards will vest in full subject only to continued employment with no performance conditions. In the current year, 612,378 restricted stock shares awards were granted under the LTIP 2020 scheme. Deferred Bonus Share Plan This share plan is limited to the Executive Directors and transfers the annual bonus award into a share award.  In the current year, 116,730 deferred bonus share awards were granted under the scheme. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   227  Employees can opt to make a salary deduction on a monthly basis to subscribe to shares. The company provides one matched share for each partnership share subscribed to, up to a maximum of £100 per employee per month. The matched shares are considered to be share based payments under IFRS 2. These share awards will vest in full subject to continued employment and a number of conditions associated with withdrawal. In the year to 31 May 2022, 35,389 matched share awards were granted under the scheme. The following tables show the options outstanding as at 31 May 2022 for each of the schemes, and the vesting date of those same options subject to the conditions related to each scheme being met. PSP  RSU  DBSP  SIP  Total  Options outstanding at 1 June 2021 3,315,616 370,947 – – 3,686,563 Options issued during the year 1,348,831 612,378 116,730 35,389 2,113,328 Options exercised during the year – (28,311) – – (28,311) Options lapsed during the year (198,10 0) (104,060) – (1,209) (303,369) Options lapsed – 2014 scheme (1,213,434) – – – (1,213,434) Options outstanding at 31 May 2022 3,252,913 850,954 116,730 34,180 4,254,777 PSP  RSU  DBSP  SIP  Total  31 May 2023 1,027,539 32,962 – – 1,060,501 31 May 2024 1,012,725 311,732 – – 1,324,457 31 May 2025 1,212,649 506,260 116,730 34,180 1,869,819  The fair value of the awards granted in the period was £5.0 million (2021: £3.4 million) based on the market price at the date the units were granted. This cost is allocated over the vesting period. The total cost allocation for all outstanding units in the period was an income statement charge of £1.5 million   There were 28,311 shares exercised during the year from the Restricted Share Plan. In the year, 1,213,434 shares belonging to the 2014 PSP scheme lapsed as the performance conditions had not been met. PZ Cussons plc / Annual Report and Financial Statements 2022 228  2022 £m (Restated) 2021 £m  65.3 71.5 Loss before tax from discontinued operations (1.7) (46.9)  63.6 24.6  1.3 2.4  64.9 27.0 Depreciation (note 11 & 26) 12.8 14.3 Amortisation (note 10) 6.6 6.3  17.5 0.5  (8.5) (9.8) Impairment of equity investment in joint venture (note 13) – 2.2 (Gain)/loss on sale of assets (14.0) 0.4 Derecognition of capitalised costs related to cloud computing arrangements 1.0 – Other recycling of foreign exchange losses 1.4 0.6  1.1 0.5  (1.7) 40.7 Share-based payment charges 1.9 – Share of results from joint ventures (6.6) (5.6)  76.4 77.1 Movements in working capital: Inventories (14.5) 2.2 Trade and other receivables 4.0 (5.9) Trade and other payables 0.4 1.3 Provisions (0.1) (1.3) Cash generated from operations 66.2 73.4   26. Leases The Group has lease contracts for various items of property, vehicles and other equipment used in its operations. Leases of property generally have lease terms between three and 12 years, while motor vehicles and other equipment generally have lease terms between one and four years. The Group also has certain leases of vehicles with lease terms of 12 months or less and leases of equipment with low-value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   229 Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Land and  £m Cars £m Other  £m Total £m As at 1 June 2020 11.5 2.0 0.2 13.7 Additions 1.8 0.5 – 2.3 Depreciation (2.4) (0.9) – (3.3)  (0.2) – – (0.2) Currency translation (0.4) (0.4) – (0.8) As at 31 May 2021 10.3 1.2 0.2 11.7 Additions 5.9 1.0 1.2 8.1 Depreciation (2.9) (0.2) (0.4) (3.5) Currency translation 0.3 0.3 – 0.6 As at 31 May 2022 13.6 2.3 1.0 16.9 Set out below are the carrying amounts of lease liabilities and the movements during the period:  Total £m As at 1 June 2020 13.7 Additions 1.8 Accretion of interest 1.0 Payments (4.0)  (0.2) Currency translation (0.5) As at 31 May 2021 11.8 Additions 8.1 Accretion of interest 0.5 Payments (4.0) Currency translation 0.5 As at 31 May 2022 16.9 Current liabilities 2.9 Non-current liabilities 14.0  16.9  2022 £m 2021 £m Depreciation expense of right-of-use assets 3.5 3.3 Interest expense on lease liabilities 0.5 1.0 Expense relating to short-term or low-value assets – 0.2  4.0 4.5 PZ Cussons plc / Annual Report and Financial Statements 2022 230  continued A maturity analysis of the future lease payments in respect of the Group’s lease liabilities is presented in the table below: Payments due 2022 £m 2021 £m Less than one year 2.9 3.1  6.3 7.1  7.7 1.6 16.9 11.8 27. Related party transactions PZ Wilmar Limited and PZ Wilmar Food Limited The following related party transactions were entered into by subsidiary companies during the year under the terms of a joint venture agreement with Singapore-based Wilmar International Limited. • At 31 May 2022 the outstanding long-term loan balance receivable from PZ Wilmar Limited was £39.6 million (2021: £35.2 million). These receivables relate to long-term loan investments that have been made by both joint venture partners and are presented as part of the Group’s net investment in its joint venture. These loans are non-interest bearing, repayable following a notice period of 12 months and not secured. • At 31 May 2022 the outstanding current loan balance receivable from PZ Wilmar Limited was £nil (2021: £8.5 million). These loans are interest bearing, repayable on demand and not secured. The interest received on this loan in the year was £0.2 million (2021: £0.2 million). • The value of goods purchased by the Group from PZ Wilmar Limited was £4.7 million (2021: £7.1 million). •   PZ Wilmar Limited and £nil PZ Wilmar Food Limited). All trading balances will be settled in cash. There were no provisions for doubtful related party receivables at 31 May 2022 (2021: £nil) and no charge to the Income Statement in respect of doubtful related party receivables (2021: £nil). PZ Foundation   PZ Foundation and the Group’s support is limited to annual donations to support the Foundation’s charitable works. Disclosure is made in this section on a voluntary basis in the interests of transparency. During the year contributions from the UK business to the PZ Foundation were £nil (2021: £nil). As at 31 May 2022 there were no outstanding balances with the PZ Foundation (2021: £nil). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   231 28. Discontinued operations On 28 August 2019, the Group entered into a sale agreement to dispose of Minerva S.A., which carried out the Group’s Food & Nutrition operations in Greece as part of the Europe & the Americas regional segment. The disposal was completed on 30 September 2019, on which date control of Minerva S.A. passed to the acquirer. As part of the sale agreement, the Group agreed to reimburse an amount of consideration, £0.8 million, if certain subsidies were not received by Minerva. This reimbursement was not provided in the previous years. The date for receipt of the grants has passed and as such, the Group has made the relevant settlements. This amount is shown in discontinued operations within the year to 31 May 2022. Additionally a warranty claim was made against the Group within the year related to the disposal of Minerva S.A. The Group has incurred costs of £1.1 million related to this claim. This amount includes an agreed settlement, which has been paid, a further amount which has been agreed to be paid if certain events occur, which are expected to be highly likely to occur, and legal costs. £0.2 million sundry income in the year relates to Nutricima, the assets and activities of which were disposed of in FY21. The results of the discontinued operations, which have been included in the Consolidated Income Statement,  31 May 2022 £m 31 May 2021 £m Revenue – 2.4 Sundry income 0.2 – Expenses (2.0) (8.2) Loss before tax (1.8) (5.8) Taxation – 0.5 Loss after tax incurred to date of disposal (1.8) (5.3) Adjusting items (note 3) Costs of liquidation following disposal of Luksja – (0.4)  – (40.7) Attributable tax expenses – (5.2) (1.8) (46.3) Net loss attributable to discontinued operations (attributable to owners of the Company) (1.8) (51.6)  31 May 2022 £m Minerva £m Nutricima £m 31 May 2021 £m Net cash (used in) / generated from operating activities (0.7) (0.8) 0.1 ( 7.5) Net cash generated from investing activities 0.1 0.1 – 16.0  – – – – Net (decrease) / increase in cash and cash equivalents (0.6) (0.7) 0.1 8.5 PZ Cussons plc / Annual Report and Financial Statements 2022 232 29. Acquisition On 21 March 2022 the Group acquired the entire issued share capital of Tadley Holdings Limited, the parent company of Childs Farm, through its subsidiary PZ Cussons Acquisition Co Limited. Childs Farm is a leading brand in UK baby and child personal care. Subsequently, Joanna Jensen, the founder of Childs Farm, made an investment into PZ Cussons Acquisition Co Limited, such that the Group now holds a 92% interest in Childs Farm. The Group’s consideration in respect of the acquisition was £36.8 million which was paid in cash. A mechanism is in place for the Group to purchase Joanna Jensen’s shareholding in two equal tranches following the    in place for the Group to purchase the outstanding 8% shareholding is contractual and is in substance a deferred consideration. A liability has been recorded as part of the acquisition representing the fair value of the liability,  ‘other payables’ of £3.2 million, and non-current liabilities: ‘other payables’ of £4 million on the basis of the contractual terms. The latest possible date for full settlement of the deferred consideration is 31 May 2025.  table below: £m Trade and other debtors 2.7 Inventory 2.2 Property, plant and equipment – Brand intangible asset recognised 35.5 Trade and other creditors (4.4) Deferred tax assets / (liabilities) (8.9)  27.1 Goodwill 16.8 Cash consideration 36.8 Deferred consideration 7.2 Total consideration 44.0  36.8 Cash consideration (3.4) Less: Cash and cash equivalent balances acquired 33.4 The fair value of the receivables is £2.3 million which is the same as the gross contractual value as the provision held against amounts expected not to be collected is immaterial. The goodwill arising from the acquisition of £16.8 million comprises primarily of expected synergies between the acquired business and the Group and recognition of the fair value of the deferred consideration.  between the date of acquisition and the reporting date. Acquisition related costs of £1.4 million have been recognised in the income statement in the year, disclosed within adjusting items. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED Financial Statements   233  Details of the Company’s subsidiaries at 31 May 2022 are as follows: Company Operation Country of incorporation Parent Company’s interest Proportion of voting interest Registered Office address PZ Cussons (Holdings) Pty Limited Holding company Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170 PZ Cussons Australia Pty Limited Manufacturing Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170 PZ Cussons Beauty Australia (Holdings) Pty Limited Holding company Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170  Pty Limited Dormant Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170 United Laboratories Limited Dormant Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170 PZ Cussons (New Zealand) Limited Distribution Australia † 100% † 100% Building A, Level 1,15 Compark Circuit, Mulgrave, Victoria, 3170 Paterson Services (Shanghai) Limited Dormant China † 100% † 100% Suite 635, 6th Floor, No.2000 Pudong Ave. China (Shanghai) Pilot Free Trade Zone Bronson Holdings Limited Holding company England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG Milk Ventures (UK) Limited Holding company England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons (Holdings) Limited Holding company England 100% 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons (International Finance) Limited Provision of services to Group companies England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons (International) Limited Provision of services to Group companies England 100% 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons (UK) Limited Manufacturing England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons Beauty LLP Distribution & holding partnership England † 100% † 100% 19-20 Berners Street, London, United Kingdom, W1T 3NW Seven Scent Limited Manufacturing England † 100% † 100% Agecroft Commerce Park, Lamplight Way, Swinton, Manchester, M27 8UJ St. Tropez Acquisition Co. Limited Holding company England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG St. Tropez Holdings Limited Holding company England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG Thermocool Engineering Company Limited Dormant England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG PZ Cussons Acquisition Co Limited Holding company England † 100% † 100% Manchester Business Park, 3500 Aviator Way, Manchester, United Kingdom, M22 5TG PZ Cussons plc / Annual Report and Financial Statements 2022 234 Company Operation Country of incorporation Parent Company’s interest Proportion of voting interest Registered Office address Tadley Holdings Limited Holding company England † 100% † 100% The Barn, Kestrel Court, Vyne Road, Sherborne St. John, Basingstoke, Hampshire, England, RG24 9HJ Childs Farm Ltd Distribution England † 100% † 100% The Barn, Kestrel Court, Vyne Road, Sherborne St. John, Basingstoke, Hampshire, England, RG24 9HJ PZ Cussons Ghana Limited Distribution Ghana † 95.68% † 95.68% Plot 27/3-27/7, Sanyo Road, Tema, PO Box 628 Parnon (Hong Kong) Limited Provision of services to Group companies Hong Kong † 100% † 100% 1/F., Hing Lung Comm. Bldg., 68-74 Bonham Strand, Sheung Wan PZ Cussons (Hong Kong) Limited Dormant Hong Kong † 100% † 100% 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong PZ Cussons India PVT Limited Provision of services to Group companies India † 100% † 100% 604, ‘C’ Wing Raylon Arcade Ram Mandir Road – Kondvita Road, Bhim Nagar, Andheri East, Mumbai 400093 PT PZ Cussons Indonesia Manufacturing Indonesia † 100% † 100% Jalan Halim Perdana Kusuma No. 144, Kebon Besar, Batuceper, Tangerang, Banten, Indonesia PZ Cussons (Europe) Limited Dormant Ireland † 100% † 100% The Greenway, Ardilaun Court, 112-114 St Stephen’s Green, Dublin, D02 TD28, Ireland Childs Farm Europe Ltd Dormant Ireland † 100% † 100% 4th Floor, 103/104 O’Connell Street, Limerick V94 AT85, Co. Limerick, Limerick, Ireland PZ Cussons (East Africa) Limited Manufacturing Kenya † 99.99% † 99.99% P.O. Box 3085 G.P.O Nairobi, Standard Street, Building: Lornho House Food For Life Nigeria Limited Dormant Nigeria † 99.99% † 99.99% 45/47 Town Planning Way, Ilupeju, Lagos  Limited Distribution Nigeria † 99.80% † 99.80% 45/47 Town Planning Way, Ilupeju, Lagos HPZ Limited¹ Manufacturing Nigeria † 74.99% † 74.99% 45/47 Town Planning Way, Ilupeju, Lagos Nutricima Limited Dormant Nigeria † 100% † 100% 45/47 Town Planning Way, Ilupeju, Lagos PZ Cussons Nigeria PLC Manufacturing Nigeria † 73% † 73% 45/47 Town Planning Way, Ilupeju, Lagos Roberts Pharmaceuticals Limited Dormant Nigeria † 99.99% † 99.99% 45/47 Town Planning Way, Ilupeju, Lagos PZ Cussons Polska SA Distribution Poland † 100% † 100% Ul. Chocimska 17, 00-791 Warszawa PZ Cussons Singapore Private Limited Provision of services to Group companies Singapore † 100% † 100% 5 Shenton Way, UIC Building #10-01, Singapore 068808 Guardian Holdings Company Limited Provision of services to Group companies Thailand † 49% † 49% 35 Moo 4, Tessamphan Road, Ban Chang Sub-District, Mueang Pathum Thani District, Pathum Thani Province PZ Cussons (Thailand) Limited Manufacturing Thailand † 99.99% † 99.99% 35 Moo 4, Tessamphan Road, Ban Chang Sub-District, Mueang Pathum Thani District, Pathum Thani Province NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED † Shares held by a subsidiary. continued Financial Statements   235 Company Operation Country of incorporation Parent Company’s interest Proportion of voting interest Registered Office address PZ Cussons Middle East and South Asia FZE Dormant UAE † 100% † 100% PO Box 17233, Jebel Ali, Dubai St. Tropez Inc. Distribution USA † 100% † 100% 140 Broadway, Suite 2240, New York NY 10005 Childs Farm, Inc. Dormant USA † 100% † 100% 251 Little Falls Drive Wilmington, DE 19808 ¹ HPZ Limited is 74.99% owned by PZ Cussons Nigeria PLC and is therefore consolidated. * Shares held by the Parent Company. † Shares held by a subsidiary. Joint venture companies Operation Country of incorporation Parent Company’s interest Registered Office address PZ Wilmar Limited Manufacturing Nigeria † 50% 45/47 Town Planning Way, Ilupeju, Lagos Wilmar PZ International Pte Limited Provision of services to joint venture companies Singapore † 50% 28 Biopolis Road, Singapore 138568 † Shares held by a subsidiary. All subsidiary entities have a year end of 31 May.  There are no material post balance sheet events since the year end date. PZ Cussons plc / Annual Report and Financial Statements 2022 236 Notes 31 May 2022 £m 31 May 2021 £m Non-current assets Investments 4 88.7 88.7 Debtors – amounts owed by subsidiary companies 5 99.0 89.9 187.7 178.6 Current assets Debtors 5 84.7 69.1 Investments 0.5 0.3 Cash at bank and in hand 0.4 0.5 85.6 69.9  6 (4.3) (6.0) Net current assets 81.3 63.9  269.0 242.5  (174.0) (118.0) Net assets 95.0 124.5 Capital and reserves Called up share capital 7 4.3 4.3 Capital redemption reserve 0.7 0.7 Hedging reserve – (0.1) Other reserve (40.0) (40.0)  130.0 159.6 Total shareholders’ funds 95.0 124.5  The Financial Statements from pages 166 to 243 were approved by the Board of Directors and authorised for issue. They were signed on its behalf by: J Myers S Pollard 28 September 2022 28 September 2022 PZ Cussons plc Registered number 00019457 COMPANY BALANCE SHEET 237 Financial Statements / Company statement of changes in equity Notes Called up share capital £m Capital redemption reserve £m Cash flow Hedge & Hedging reserve £m Other reserve £m Profit and loss account £m Total £m At 1 June 2020 4.3 0.7 (0.3) (40.0) 188.6 153.3 Loss for the year – – – – (4.7) (4.7)  reserve movement – – 0.2 – – 0.2 Ordinary dividends 3 – – – – (24.3) (24.3) At 31 May 2021 4.3 0.7 (0.1) (40.0) 159.6 124.5 Loss for the year – – – – (4.1) (4.1)  reserve movement – – 0.1 – – 0.1 Ordinary dividends 3 – – – – (25.5) (25.5) At 31 May 2022 4.3 0.7 – (40.0) 130.0 95.0 COMPANY STATEMENT OF CHANGES IN EQUITY PZ Cussons plc / Annual Report and Financial Statements 2022 238 1. Accounting policies Basis of preparation The Company Financial Statements of PZ Cussons plc have been prepared in accordance with Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101). The Financial Statements have been prepared under the historical cost convention and in accordance with the Companies Act 2006. As permitted by Section 408(3) of the Companies Act 2006, the Income Statement of the Parent Company is not  of Changes in Equity. Details of dividends paid are included in note 8 of the Consolidated Financial Statements.  consolidated into the Group Financial Statements of PZ Cussons plc which are included within this Annual Report.  estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions  PZ Cussons plc. The following exemptions from the requirements of IFRS have been applied in the preparation of these Financial Statements, in accordance with FRS 101: • Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based Payment’ (details of the number and weighted average exercise prices of share options, and how the fair value of goods or services received was determined) • IFRS 7, ‘Financial Instruments: Disclosures’ • Paragraphs 91 to 99 of IFRS 13, ‘Fair Value Measurement’ (disclosure of valuation techniques and inputs used for fair value measurement of assets and liabilities) • Paragraph 38 of IAS 1, ‘Presentation of Financial Statements’ comparative information requirements in respect of: (i) paragraph 79(a)(iv) of IAS 1; (ii) paragraph 73(e) of IAS 16, ‘Property, Plant and Equipment’; and (iii) paragraph 118(e) of IAS 38, ‘Intangible Assets’ (reconciliations between the carrying amount at the beginning and end of the period). • The following paragraphs of IAS 1, ‘Presentation of Financial Statements’: –  – 16 (statement of compliance with all IFRS); –  – 38B-D (additional comparative information); –  – 134-136 (capital management disclosures). • IAS 7, ‘Statement of Cash Flows’ • Paragraph 30 and 31 of IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’ (requirement for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not  • Paragraph 17 of IAS 24, ‘Related Party Disclosures’ (key management compensation) • The requirements in IAS 24, ‘Related Party Disclosures’ to disclose related party transactions entered into between two or more members of a group a) New and amended standards adopted by the Company There are no new accounting standards applicable to the Company for this reporting period.  been early adopted by the Group   NOTES TO THE COMPANY FINANCIAL STATEMENTS 239 Financial Statements    Assets and liabilities are translated at exchange rates prevailing at the date of the Company Balance Sheet.   Financial Statements have been presented in Sterling and have been rounded to £0.1 of a million. d) Current tax      e) Deferred tax   and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all         The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it  Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited to the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.  against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax liabilities on a net basis.   a party to the contractual provisions of the instrument. Financial instruments utilised by the Company during the years ended 31 May 2022 and 31 May 2021, together with information regarding the methods and assumptions used to calculate fair values, can be summarised as follows:   be derived from the ownership of these investments. Current assets and liabilities Financial instruments included within current assets and liabilities are generally short-term in nature and accordingly their fair values approximate to their book values.   loss model requires the Company to account for expected credit losses and changes in those expected credit losses  g) Borrowings Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of direct issue costs and are subsequently measured at amortised cost. Finance charges, including premiums payable on settlement or redemption  interest method and are added to the carrying amount of the instrument to the extent they are not settled in the year in which they arise. PZ Cussons plc / Annual Report and Financial Statements 2022 240 1. Accounting policies continued  Intercompany debtors are recognised initially at fair value and subsequently measured at amortised cost using the   recognition that the Company will not be able to collect all amounts due according to the original terms of the    Intercompany creditors are not interest-bearing, repayable on demand and are initially stated at fair value and subsequently measured at amortised cost.   entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.   Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where the Company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax   Investments in subsidiaries are held at cost, less any provision for impairment. Where equity-settled share-based payments are granted to the employees of subsidiary companies, the fair value of the award is treated as a capital  The carrying amounts of the Company’s investments are reviewed annually to determine whether there is any indicator of impairment. If any such indicator exists, the asset’s recoverable amount is estimated. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value-in-use. An impairment loss is recognised whenever the carrying amount of the investment, or its cash-generating unit,  An impairment loss is reversed when there is an indication that the impairment may no longer exist and there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.   n) Own shares held by the ESOT Transactions of the Company-sponsored Employee Share Option Trust (ESOT) are treated as being those of the  and sales of shares in the Company are debited and credited directly to equity.  Dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s Financial Statements in the period in which the dividends are approved by the Company’s shareholders. In respect of interim dividends these are recognised once paid. p) Share based payments The Company operates a Performance Share Plan for senior executives, which involves equity-settled share-based payments. NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 241 Financial Statements   The awards under the Performance Share Plan are measured at the fair value at the date of grant and are expensed over the period to which the performance relates based on the expected outcome of the vesting conditions. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the Income Statement, with a corresponding adjustment to equity. The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the change will be treated as a cash-settled transaction.  Estimates and accounting judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.   In the course of preparing the Company’s Financial Statements, no key source of estimation uncertainty has been   Annually the Directors consider whether there are any indicators of impairment that may suggest that the recoverable amount of the Company’s investments in subsidiaries is less than their carrying amount. The assessment of impairment indicators requires management to apply judgement in assessing current and forecast trading  Details of the Company’s investments are set out in note 4 and in the current year the Directors have concluded that no indicators of impairment existed. 2. Directors’ emoluments 2022 £m 2021 £m Aggregate amount of Directors’ emoluments 2.2 1.5 Emoluments of the highest paid Director 1.0 0.7 For the year ended 31 May 2022 the highest paid Director received Company pension contributions of £0.06 million (2021: £0.1 million). Additional information on Directors’ emoluments, including details of gains or losses made on the exercise of share options in the year and the Directors’ interests in the Group have been included in the Report on Directors’ Remuneration on pages 132 to 143.  group. 3. Dividends 2022 £m 2021 £m  Final dividend for the year ended 31 May 2021 of 3.33p (2020: 3.13p) per ordinary share 14.3 13.1 Interim dividend for the year ended 31 May 2022 of 2.60p (2021: 2.67p) per ordinary share 11. 2 11.2 25.5 24.3   15.6 14.3  by shareholders at the Annual General Meeting and hence have not been included as liabilities in the Financial Statements at 31 May 2021 and 31 May 2022 respectively. PZ Cussons plc / Annual Report and Financial Statements 2022 242  Shares £m Loans £m Total £m Cost at 1 June 2020 88.7 – 88.7  88.7 – 88.7  88.7 – 88.7 Details of the Company’s direct subsidiaries at 31 May 2022 are shown below. For a full listing of all subsidiaries see note 30 in the Group’s Consolidated Financial Statements.  Operation Country of incorporation Parent Company’s interest Proportion of voting interest PZ Cussons (Holdings) Limited Holding company England 100% 100% PZ Cussons (International) Limited Provision of services to Group companies England 100% 100%  2022 £m 2021 £m  Amounts owed by Group companies 99.0 89.9  Amounts owed by Group companies 80.3 65.2 Other receivables 4.4 3.9 183.7 159.0 £179.3 million (2021: £155.1 million) of amounts owed by Group companies. The Company is currently the sole borrower on the Group RCF facility with all external amounts borrowed being lent on to other Group companies, with interest charged matching the external interest liability. £nil (2021: £nil) of amounts owed by Group companies are non-interest bearing. All of the balances are unsecured and are repayable on demand. Although amounts are   6. Creditors Due within one year 2022 £m 2021 £m Amounts owed to Group companies 4.1 5.8 Accruals 0.2 0.2 4.3 6.0 Due in greater than one year Bank loans 174.0 118.0 174.0 118.0 £nil (2021: £nil) of amounts owed to Group companies are interest bearing. Amounts owed to Group companies are       NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED 243 Financial Statements     2022 2021  000 Amount £m  000 Amount £m  Ordinary shares of 1p each 428,725 4.3 428,725 4.3 Total called up share capital 428,725 4.3 428,725 4.3  The Company is one of a group of guarantors, including other Group companies, to a borrowing facility relating to loans provided to certain Group UK entities. The amount borrowed under this agreement at 31 May 2022 was £174.0 million (2021: £118.0 million).  There are no material post balance sheet events since the year end date. BOLD STRIVINGENERGETIC TOGETHER PZ Cussons plc / Annual Report and Financial Statements 2022 244 PZ Cussons people aspire to be our BEST See our Values  INTRODUCING OUR VALUES ONE FAMILY, MANY VOICES; SUPPORTED, INCLUDED, RESPECTFUL, EMPOWERED,  OUR SHARED CULTURE BRINGS US TOGETHER 245  / Introducing our BEST values ADDITIONAL INFORMATION Our TOGETHER value in action: WE ARE TOGETHER AND IT GIVES US STRENGTH • powering our pioneering spirit • helping each other unleash potential • innovating and exciting, sharing and celebrating 246 Glossary 247 Further statutory and other information PZ Cussons plc / Annual Report and Financial Statements 2022 246 GLOSSARY Term Definition Adjusting Items Cash, short-term deposits and current asset investments, less bank overdrafts and borrowings. Excludes IFRS 16 lease liabilities B Corp  B Lab as meeting rigorous standards of environmental, social and governance performance, accountability and transparency. Brand Investment An operating cost related to our investment in brands (previously 'Media & Consumer')  % score based upon a set of questions within our annual survey of employees  Cash generated from operations less capital expenditure    Growth on the prior year, adjusting for constant currency and excluding the impact of disposals and acquisitions Must Win Brands The brands in which we place greater investment and focus. They comprise: Carex, Childs Farm (acquired in March 2022), Cussons Baby, Joy, Morning Fresh, Original Source, Premier, Sanctuary Spa and St Tropez Portfolio Brands The brands we operate which are not Must Win Brands PZ Cussons Growth Wheel Our 'repeatable model' for driving commercial execution, comprising 'Consumability', 'Attractiveness', 'Shoppability' and 'Memorability'’ Revenue Growth Management Maximising revenue through ensuring optimised price points across customers and  SKUs Stock keeping unit Through the line Marketing campaign incorporating both mass reach and targeted activity 247  / Further statutory and other information FURTHER STATUTORY AND OTHER INFORMATION  Annual General Meeting The Annual General Meeting will be held at 10:30am on 24 November 2022 at: Manchester Business Park, 3500 Aviator Way, Manchester, M22 5TG  The key dates for PZ Cussons’  our website: www.pzcussons.com  PZ Cussons plc Manchester Business Park 3500 Aviator Way Manchester M22 5TG Tel: 0161 435 1000 www.pzcussons.com Registered number Company registration number – 00019457 Registrars Computershare Investor Services Plc The Pavilions Bridgwater Road Bristol BS13 8AE Tel: +44 (0370) 707 1221 www.computershare.com  Kevin Massie  This report contains certain forward-looking statements relating to expected or anticipated results, performance or events. Such statements are subject to normal risks associated with the uncertainties in our business, supply chain and consumer demand along with risks associated with macro-economic, political and social factors in the   factors outside the control of the PZ Cussons Group, such as cost of materials or demand for our products, or within our control such as our investment decisions, allocation of resources or changes to our plans or strategy. The PZ Cussons Group expressly disclaims any obligation to revise forward-looking statements made in this or  the forward-looking statements contained within this announcement.  controlled sources. This publication was printed by an FSC®-recognised printer that holds  100% of the inks used are vegetable oil based. 100% of all dry waste associated with this production has been recycled. The paper is Carbon Balanced with World Land Trust, an international conservation  conservation value land. Through protecting standing forests, under threat of clearance, carbon is locked-in, that would otherwise be released. FSC LOGO PLACEHOLDER PZ Cussons plc Manchester Business Park 3500 Aviator Way Manchester M22 5TG