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.

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

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

PZ Cussons at a Glance

152

Independent

Auditor’s Report

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

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



Overview  

Revenue

£592.8m

(2021: £603.3m)

2022 £592.8m

2021 £603.3m

2020 £587.2m

Adjusted net debt

£9.8m

(2021: £30.7m)

2022 £9.8m

2021 £30.7m

2020 £49.2m

LFL revenue growth

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

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



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

2022

PZ Cussons plc / Annual Report and Financial Statements 2022

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

JAN

2022

MAR

2022

Overview  









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

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.

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,











MUST

WIN

BRANDS

PORTFOLIO

BRANDS

PORTFOLIO

BRANDS

PZ Cussons plc / Annual Report and Financial Statements 2022

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.

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

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

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

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.

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



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

, 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



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

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

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.

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

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:

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

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.

Nigeria

Indonesia

ANZ

Strategic Report / Our markets

7.6m

4.4m

26.3m

4.2m

17.5m

5.0m

India

China

Nigeria

Pakistan

1.2%

1.9%

3.5%

1.2%

1.6%

1.2%

0.8m

Indonesia

7.6%

CAGR

2021–2026 market

growth in Baby

personal care

category

& 5

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

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

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

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

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

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

Nov Dec Jan Feb Mar Apr May Jun Jul

31.3

32.4

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

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

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

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

Growth Wheel

Shoppability

STRATEGY IN ACTION

Win where

the shopper

shops

Multi-channel

distribution

Market-leading

execution in

store

Accelerate

e-commerce

SHOPPABILITY MEANS:

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

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

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

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:

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

Growth Wheel

STRATEGY IN ACTION

Digital first

Consistent

execution

Distinctive and

purpose-led

Competitive

levels of

investment

Effective

activation

Memorability

MEMORABILITY MEANS:

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

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.

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

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.

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

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.

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





















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.

 / Sustainability report

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

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

 / 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

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





 / 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















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 



       

 / 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

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

















 / Sustainability report

Communities















Australia: Support for Foodbank Australia

























Nigeria: Cussons Baby Cares Campaign





















PZ Cussons plc / Annual Report and Financial Statements 2022

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.

 / 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









consumption and the sustainable sourcing of palm oil





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



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







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

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



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









 







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

 / 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

Plastic and packaging continued

In 









eight tonnes of plastic by changing the dimensions of



SUSTAINABILITY CONTINUED

FOR LIFE CONTINUED

In 





In 











Within our 



































 / Sustainability report



Childs Farm: sustainable































































Read more about

Childs Farm on our website /





PZ Cussons plc / Annual Report and Financial Statements 2022

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

 

 / Sustainability report

FY22

Current reporting year

FY21



1, 2, 3, 4

UK Global Total UK Global Total

      







      







 0   0  







        





      





 0   0  





      





 21 113 103 14  121

 

 



 



 





















































PZ Cussons plc / Annual Report and Financial Statements 2022

















Waste

  Comments

  



Water















  Comments

  















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

 / 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

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

 / 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

 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

 / 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

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

• 

• 























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

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









SUSTAINABILITY CONTINUED

 / 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

Animal testing















SUSTAINABILITY CONTINUED

FOR GOOD CONTINUED

Our approach to animal testing is available on our website /









 / 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

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) 







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

KEY PERFORMANCE INDICATORS CONTINUED



Basic earnings per share from

continuing operations adjusted for

the impact of adjusting items

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

as a % of revenue

Why we measure

Indicator of the return on sales

prior to adjusting items



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



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%

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











(4.8)%





80%



 / Annual Report and Financial Statements 2022



Basis of calculation

2020

£m

2021*

£m

2022

£m



continuing operations 18.3 71.5 65.3

Adjusting items

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

2021

78%

2021



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

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

2021

50,401

2020







80%



LTIFR

0.08





49,879

NON-FINANCIAL

2022



2022

 

 



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

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



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

91.4 91.7 87.3



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

2021

2022

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

OVERVIEW OF GROUP FINANCIAL PERFORMANCE

BUSINESS REVIEW

GROUP

PERFORMANCE





















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Strategic Report  

FY22 Revenue

£193.0m



(11.0)%

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





























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

FY22 Revenue

£173.8m



(7.2)%

Group percentage

of revenue

29.3%



BUSINESS REVIEW CONTINUED



PERFORMANCE BY GEOGRAPHY CONTINUED



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













































(29.3% of FY22 Group revenue) 2022

Reported

growth/

(decline) (%)

 £173.8m 

 3.0% n/a

  1.0%

 12.0% 

 £37.0m 





























Strategic Report  

FY22 Revenue

£222.0m



15.3%

Group percentage

of revenue

37.4%















continue to build penetration.









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

Africa

(37.4% of FY22 Group revenue) FY22

Reported

growth/

(decline) (%)

 £222.0m 15.3%

 22.3% n/a

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 10.0% 440bps

  217.8%

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



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











PZ Cussons plc / Annual Report and Financial Statements 2022

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

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





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











Adjusting items

















































Taxation



















































































uncertainty and cost volatility.

Dividend



















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

  

  



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

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.

Strategic Report / Risk management

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

LIKELIHOOD (GROSS)

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

Consumer, customer and economic trends

Talent development and retention

IT and information security

Sustainability and environment

Business transformation

Health & safety

Supply chain and logistics

Legal and regulatory compliance

Financial Controls (Treasury and tax)

Pandemic

PRINCIPAL RISKS AND UNCERTAINTIES

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

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.

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

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

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.

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

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

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

Gender diversity* Tenure Ethnicity

Female 0–3 years > 5 directors Other

Male 4–7 years > 4 directors British

44% 29%

44%

A DIVERSE AND

EXPERIENCED BOARD.

OUR BOARD

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.

Governance / Board of Directors

Caroline Silver

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

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

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

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

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

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

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

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

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

Chair

Audit & Risk Committee Nomination Committee

ESG Committee

Remuneration Committee

Director with responsibility for representing the employee



Committees

PZ Cussons plc / Annual Report and Financial Statements 2022

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.

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

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

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

Salary/ fees

2022 587,938 332,313

2021 575,000 135,417



2022 22,520 17,020

2021 22,508 7,092

Pension

2022 57,500 32,499

2021 57,500 13,542

 2022 667,958 381,832

2021 655,008 156,051

Bonus

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

Valeria

Juarez

Salary/ fees

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 – –



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

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

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

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

price at

date of

award (£)

price at

date of

vesting (£)

Gain

(£)

Vesting/

transfer

date

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

price at

date of

award (£)

price at

date of

vesting (£)

Gain

(£)

Vesting/

transfer

date

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

alue (£)

300

250

200

150

100

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

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%



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



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



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



















• 

• 



• 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%

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

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



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

£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)*

£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

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

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



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

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



£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