![]() ### BUILDING BRANDS ### FOR LIFE. TODAY ### AND FOR FUTURE ### GENERATIONS. PZ Cussons plc / Annual Report and Accounts 2024 PZ Cussons plc / Annual Report and Accounts 2024 ![]() 2024 2023 2022 £527. 9m £656.3m £592.8m 2024 2023 2022 (19.6)% 10.7% (1.7)% 2024 2023 2022 4.4% 6.1% 2.9% 2024 2023 2022 (15.9)% 9.1% 11.1% 2024 2023 2022 11.0% 11.2% 2024 2023 2022 £(115.3)m £5.7m £(9.8)m 11.3% 2024 2023 2022 3.60p 6.40p 6.40p 2024 2023 2022 (13.60)p 8.70p 11.88p Financial performance in FY24 has been materially impacted by the devaluation of the Nigerian Naira which commenced in June 2023. #### Summary of Financial Performance FOR EVERYONE, FOR LIFE, #### FOR GOOD. Revenue £527.9m Operating margin – Statutory (15.9)% Dividend per share 3.60p Revenue growth – Statutory (19.6)% Operating margin – Adjusted¹ 11.0% Basic (loss)/earnings per share – Statutory (13.60)p LFL revenue growth¹ 4.4% Net (debt)/cash £(115.3)m 2024 2023 2022 8.02p 11.23p 12.57p Adjusted basic earnings per share¹ 8.02p 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. PZ Cussons plc / AnnualReportandAccounts2024 ![]() Europe and the Americas Asia Pacific Africa Revenue split 38% 29% 33% SeeKeyPerformanceIndicatorsonpage 16 Readourreportonline www.pzcussons.com/investors #### Contents CONTENTS AT A GLANCE STRATEGIC REPORT 02 A Word from our Chair 04 PZ Cussons at a Glance 06 FY24 A Year in Review 10 Chief Executive's Review 14 Business Model 16 Key Performance Indicators 18 Financial Review 22 People and Culture 28 Sustainability 38 Taskforce on Climate- Related Financial Disclosures 42 Risk Management and Principal Risks 51 Viability and Going Concern 54 Non-Financial and Sustainability Information Statement 55 Section 172(1) Statement GOVERNANCE 64 Our Board 66 Our Executive Committee 68 Chair’s Introduction to Governance 70 Board Activity at a Glance 72 Corporate Governance Statement 2024 80 Nomination Committee Report 84 Audit and Risk Committee Report 90 Environmental and Social Impact Committee Report 92 Remuneration Committee Report 98 Remuneration Policy 107 Report on the Directors’ Remuneration 120 Report of the Directors FINANCIAL STATEMENTS 128 Independent Auditor’s Report 138 Consolidated Income Statement 139 Consolidated Statement of Comprehensive Income 140 Consolidated Balance Sheet 142 Consolidated Statement of Changes in Equity 143 Consolidated Cash Flow Statement 144 Notes to the Consolidated Financial Statements 198 Company Balance Sheet 199 Company Statement of Changes in Equity 200 Notes to the Company Financial Statements ADDITIONAL INFORMATION 206 Alternative Performance Measures 210 Greenhouse Gas Emissions (former reporting methodology) 211 Glossary 212 Shareholder Information 06 #### FY24 A Year in Review 28 #### Sustainability 18 #### Financial Review 22 #### People and Culture Wecurrentlyreporttheactivitiesofourbusiness acrossthreeoperationalsegments,describedright: HOW WE REPORT 64 #### Governance01 FINANCIAL STATEMENTS ADDITIONAL INFORMATIONGOVERNANCESTRATEGIC REPORT ![]() #### A Word from our Chair #### During the year, the Board #### carried out a detailed strategic #### review which we believe will #### maximise shareholder value #### inthe years ahead. David Tyler Chair DEAR SHAREHOLDER I am pleased to present the Annual Report for PZ Cussons for the year ending 31 May 2024. TheGroupwasbadlyaffectedbythesteepdeclineinthevalue oftheNaira,theNigeriancurrency,fallingby70%againstSterling overthecourseofthetwelvemonths.Despitesignificantprofit growthintheUKandsomeotherpartsoftheGroup,weare thereforesettingoutadisappointingsetofresultsinthepages whichfollow.Earningspersharedeclinedsubstantiallyandwe thereforeintendtoreducetheannualdividendby44%. Duringtheyear,theBoardcarriedoutadetailedstrategicreview. Asaresultofthis,weannouncedaplantofocusourportfolio onfeweractivities–thosewherewecanbemostcompetitive. Webelievethatthiswillmaximiseshareholdervalueinthe yearsahead. FY24 performance InmyChair’sStatementthistimelastyear,Iwarnedaboutthe seriouseffectofthedevaluationoftheNairaontheCompany. Sincethen,ithasfallenfurther.Thishasbeenbyfarthemost significantchallengewehavefacedinthelasttwelvemonths, especiallyasNigeriahasbeenoneoftheGroup'slargest marketsformanyyears. ThisdevaluationhasputenormouspressureontheNigerian consumerandonourbusinessinNigeria.Ithasalsoputpressure ontheGroup’sfinancialpositionbecauseofthehighlevelsof cashheldinNaira,thevalueofwhichdeclinedgreatlywiththe devaluation.ThecashhadbeenleftinNairabecauseofthe barriersinplaceinNigeriatoinhibitoverseascompaniesreturning profitsanddividendstotheirparents.Thedevaluationreduced thevalueoftheGroup’scashby£140million. Theexecutiveteamhasworkedtirelesslyintheyeartofind effectivemeanstoreducetheGroup’sfutureexposuretothe Naira.IthasalsofoundwaystorepatriatecashfromNigeriawhich hashelpedustopaydowntheGroup’sgrossdebt.Thereisnow minimalsurpluscashinNigeria. ThisissuehasnaturallybeenamajorfocusfortheBoardthroughout theyear.ItremainsfirmlyinourmindstodayastheNairahas weakenedfurtheroverrecentmonths. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 02 ![]() OutsideNigeria,however,wemadeprogressagainstthestrategic prioritieswesetoutatthestartofFY24.Ihavebeenparticularly pleasedtoseethegrowthofrevenueandprofitinourUK personalcarebusinesswhichbenefitedfromnewleadership andfromorganisationalchangesannouncedpartwaythrough theyear.ChildsFarmcontinuestomakegoodprogressandour Australianbusinessout-performedexpectations,growingits profitmateriallyinFY24. Maximising shareholder value through portfolio transformation TheBoard’smainobjectiveistomaximiselong-termshareholder value.Inthelightofthisyear’sresults,wehavespentsignificant timedeliberatingonwhatouroptimalportfolioforthefuture shouldbe,andvigorouslydebatingthealternatives.Asaresult,we haveagreedtofocustheGrouponfeweractivities–thosewhere wehavethepotentialforcompetitiveadvantageinmarketswhich canbeexpectedtogrow.So,weannouncedinApriltheplanned saleofSt.TropezandastrategicreviewofourAfricaportfolio. St.Tropezisaveryattractivebrandwithenormousgrowth potential.However,webelievethattheseopportunitieswouldbe bettercapturedunderalternativeownershipandasalesprocess isthereforenowwellunderway. OurportfolioinAfricaiscomplexandsoweareevaluating strategicoptionsbothtoreduceriskandtomaximiseshareholder value.Thereisnopre-determinedoutcomebut,havingreceived expressionsofinterestfromanumberofparties,theBoardisnow exploringtransactionsthatcouldleadtothepartialorfullsaleof ourAfricanbusiness. TheaimwithbothoftheseprocessesistotransformPZCussons intoabusinesswithamorefocusedportfolio,delivering sustainable,profitablegrowth.Weplantouseanyproceeds initiallytopaydowndebt.Beyondthat,weplantoinvest organicallyinthebusinesstoenhanceperformanceandtolookin adisciplinedwayatpotentialacquisitionsofbrandsorbusinesses whichfitcloselywithourfuturemorefocusedactivities.We willupdateinvestorsinduecourseaboutprogressinexecuting thisstrategy. Directorate changes JeremyTownsendsteppeddownfromtheBoardofPZCussons inFebruarytofocusonhisexecutiveresponsibilitiesandIwould liketothankhimforhiscontributiontotheCompany.Overhis fouryearsontheBoard,JeremywasastrongandeffectiveNon- ExecutiveDirectorandwearegratefulforhischairmanshipofthe AuditandRiskCommittee. InMay,weweredelightedtowelcomeVivekAhujatothe BoardasaNon-ExecutiveDirectorandasChairoftheAudit andRiskCommittee.Hebringsawealthofexperiencefromhis extensivecareerinseniorfinancialandgeneralmanagement rolesininternationalfinancialservicesandprivateequity.Heis alreadymakingasignificantcontributiontotheBoardandthe widerbusiness. Inaddition,IwouldliketoexpressmygratitudetoJohnNicolson whohasdecidedtostanddownfromtheBoardatourAGMon 21November2024.JohnhasbeenaDirectorforeightandahalf yearsandourSeniorIndependentDirectorfornearlyallofthat time.Hiswisdomandhiscourtesyhavemadetheirmarktogreat effectaroundtheBoardtableovertheyearsandtheCompanyhas benefitedfromhislongexperienceatinternationalfast-moving consumergoodscompanies. WehavedecidednottobringanotherNon-ExecutiveDirector ontotheBoardtoreplaceJohnatpresent,preferringinsteadto waitforourplannedstrategicchangestoprogressbeforedeciding whatadditionalskillswillbemostimportantfortheBoardinthe comingyears.However,wehavedecidedthatVivekAhujawill beappointedasournewSeniorIndependentDirectoronJohn’s retirement.Ilookforwardtoworkingcloselywithhim. Finally,onbehalfoftheBoard,Iwouldliketothankallour colleaguesverymuchfortheirskillandhardworkinwhathas beenachallengingyear.Iwouldalsoliketothankourcustomers, suppliers,shareholdersandotherstakeholdersfortheir partnershipandtrustinPZCussons. David Tyler Chair 03 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### PZ Cussons at a Glance #### WE ARE A BRANDED #### CONSUMER GOODS BUSINESS. £527.9m Revenue in FY24 #### 140 years Of heritage 4.4% LFL revenue growth 1 in FY24 2,500+ Employees 4 Priority markets With140yearsofheritage,weemploy over2,500peopleacrossouroperations inEurope,NorthAmerica,AsiaPacific andAfrica.Sinceourfoundingin1884, wehavebeencreatingproductsto delight,careforandnourishconsumers. Wearebuildingonthesefoundations withourstrategyandbusiness transformation,aswelooktothefuture. 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. 2 ExcludingGroupcentralrevenue. #### Must Win Brands(51% of FY24 revenue) 2 • Competitivebrandinvestmentlevels • Stronginnovationpipeline • Focusforcommercialcapabilities • Validated,repeatablegrowthwheel • Robustandregularmanagementreview. #### Portfolio Brands(49% of FY24 revenue) 2 • Brilliantexecution • Clearroleforeachbrand • Resourcestailoredtospecificrole • Incubatorsupportforbrandswithfurtherpotential. Weseeourbrandsasbeing‘locally-loved’,solidifyingtheirmarket presencebyusinglocalknowledgeandcustomerrelationshipsto competeagainstglobalrivals.Simultaneously,wecapitaliseonour globalcapabilities,efficienciesandbestpracticestoout-perform domesticoperators. #### Locally-loved brands Itisthisapproachthatpositionsourbusinessnotasmulti- national,butas'multi-local'. Acrossthesemarkets,ourMustWinBrands,andthemajorityof ourPortfolioBrands,arecentredaroundthethreecorecategories ofHygiene,BabyandBeauty. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 04 ![]() #### Our Markets in Focus #### Macro-economic #### environment Changing economic conditions drive near-term trading performance Anumberofourmarketshaveseenchallengingmacro-economicconditionsduringFY24.Mostnotably,Nigeria inJune2023experiencedadevaluationofitscurrency,theNaira.Inadditiontocreatinginflationarypressures inthemarket,thishashadamaterialimpactonthetranslationoftheGroup'sreportedresults. Evolving stakeholder expectations create a number of commercial risks and opportunities Consumersnowhavehigherexpectationsforthebrandstheybuyandthecompaniesbehindthem.They areactivelyseekingreassuranceregardingethicallysourcedingredients,absenceofharshchemicalsand environmentalhazards,aswellasaguaranteethatproductsarecruelty-free.Additionally,consumersare becomingmoreconsciousofpackagingchoices,favouringrecycledandrecyclablematerialsovervirginplastic. Africa and Indonesia are expected to benefit from long-term growth Notwithstandingshort-termvolatilityanddisruptionasnotedabove,weseelong-termopportunitiesinour developingmarkets.Nigeria,forexample,isexpectedtoseeitspopulationdoubleby2050,becomingthe world’sthirdmostpopulouscountry,trailingonlyChinaandIndia. Changing consumer buying habits have implications for our route-to-market strategy Acrossanumberofourmarkets,weareseeingchangestothewayinwhichconsumerssearchfor,andpurchase, goods.Indevelopedmarkets,consumersareincreasinglybuyingonline,frequentlyhavinglearnedabout productsandofferingsthroughdigitalmedia.Whileindevelopingmarkets,weareseeingashiftasconsumers movetowardssupermarketsandmodernretailandawayfromthelegacymarketsandtraditionaltrade. Rapidly changing technologies can offer risks and opportunities and drive investment choices TechnologicalchangeiseverpresentandwecontinuetoseeasignificantriseintheuseofgenerativeArtificial Intelligence(AI).Whileitremainsearlydays,thetechnologycouldhaveprofoundimplicationsformanyaspects ofourbusiness,creatingefficienciesandrequiringnewwaysofworking. #### Channel #### disruption #### Technology #### Sustainability #### Developing #### markets #### Trends affecting our businessFY24 revenue split Our priority markets are: UK Nigeria Indonesia Australia/New Zealand Themajorityofourbrandsoperateinthesefourmarkets. UK LeadingpositionsinWashingand Bathing,withstrongdistribution andin-housemanufacturing ANZ LeadingHomecareandBaby Foodbrands,focusedon Australia’stwoleadinggrocers NIGERIA StrongfootprintinFamilyCare withjointventurepartnerships inElectricalsandEdibleOils INDONESIA Leadingtoiletriesbrandwith CussonsBaby #### By region 34% 18% 24% 11% 13% OTHER\* \* OtherrevenueprimarilyrelatestoouroperationsintheUS,GhanaandKenya,andothermarketsaccessedthroughdistributors. 05 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### FY24 A Year in Review #### Our progress Investinginour brandstodrive awarenessand consumer loyalty. Winningwhere the shopper shops. Simplifyingour operationsand portfolioto improve returns andreducerisk. Investinginour teamstostrengthen capabilities. Actinginthe rightwayfor long-termgrowth. BUILD BRANDS BUILD BRANDS SERVE CONSUMERS REDUCE COMPLEXITY DEVELOP PEOPLE DEVELOP PEOPLE GROW SUSTAINABLY GROW SUSTAINABLY InMarch2021,wesetoutourstrategy:‘Buildingbrandsforlife.Todayandforfuturegenerations.’Wedefinedwherewe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.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. Throughouttheyear,wemadegoodprogressacrossthekeyfocusareasofourstrategy. #### Introduction #### OUR STRATEGY #### AND PROGRESS. #### A new people strategy Weestablishedanewpeoplestrategytoenableusto attract,growandretaintalentedpeopleatPZCussons. Aspartofthis,wecreatedanextendedleadership teamcalled‘PZPioneers’-agroupofaround50 ofourmostseniorleaderswhoreporttoour ExecutiveCommitteewithamissiontodrivebusiness performanceandemployeeengagement.Wehave alsorenewedourcommitmenttoDiversity,Equityand Inclusiontoensurethatouremployeesfeelapartof, andreflect,thecommunitiesthatweserve. #### Brand specific sustainability plans Wedevelopedtailoredsustainabilityplansforbrandssuchas SanctuarySpaandOriginalSource,withanarrativethatisintimately linkedtoeachbrandpurpose.Aspartofthis,apackaging‘future plan’wasdesignedforourUKandIrelandandANZbusinessunits, withprioritisedupstreamtechnologiesandotherchangesthatwill allowustomeetourcorporatepackaging-relatedgoalsby2030. AUG 2023 SEP 2023 Read more on page 22 Read more on page 32 PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 06 ![]() GROW SUSTAINABLY #### Reducing our impact #### on the environment Ourcommitmenttosustainabilityis reflectedintherobustgovernance structurewehaveestablishedfor managingScopes1and2emissions, waterandwasteinthelastdecade.In FY24,wehavemadesolidimprovements inmeasuringourScope3emissionsasan annualpractice,beingabletocalculate andverifyourFY21baselinewithan improvedmethodology,andourFY23 inventory.Thisbuildsonourrobustclimate planandimprovedperformanceinour CDPsubmission,progressingourscore in2023comparedto2022. FEB 2024 BUILD BRANDS BUILD BRANDS REDUCE COMPLEXITY SERVE CONSUMERS GROW SUSTAINABLY #### Joining the UN Global Compact InDecember2023,wejoinedtheUNGlobalCompact, whichhelpsustovalidateandshowcaseprogressin ourEnvironmentalandSocialImpactprogramme. TheUNGlobalCompactisthelargestcorporate sustainabilityinitiativeintheworldandavoluntary leadershipplatformtoalignbusinessstrategyand operationswithtenuniversallyacceptedprinciples intheareasofhumanrights, labour,environmentand anti-corruption. #### Simplifying our business and investing in capabilities Aspartofourcontinuedefforttotransformthecapabilitiesofthe Group,wehavemadeafundamentalchangetoourorganisational structureaswereorganiseandsimplifyourUKbusinesswhile strengtheningouroverallGroupbrand-buildingandinnovation capabilities.Firstly,wehavemergedourUKPersonalCareandBeauty businessunitsintooneUKandIreland(UKI)businessunit.Thechange willdrivesignificantlygreaterscaleandfasterdecision-making,with oneteamandone‘facetothecustomer’.Secondly,wehavecreateda GrowthMarketsbusinessunit,andwearestrengtheningfurtherour brand-buildingcapabilities,particularlybehindourbrandswiththe mostgrowthpotential. #### Reaching underserved consumers CharlesWorthingtonlaunchedanew innovation,calledMenoPlex.Thisisarange offourproducts,developedandtestedon perimenopausalandmenopausalwomen. With87%ofmenopausalwomenfeeling overlookedbybrandsaccordingtothe GenMInvisibilityreport 1 ,theseproducts helptostrengthenhairanditsdensity.Our commitmenttosupportingunderserved consumerswasdemonstratedbyusbeing thefirsthaircarebrandtopartnerwithGen Mandtoproudlydisplaythe‘MTick’on thepackaging. DEC 2023 FEB 2024 FEB 2024 Read more on page 28 Read more on page 33 Read more on pages 11 to 12 DEVELOP PEOPLE #### Diversity, Equity and Inclusion WehaveadiverseandexperiencedBoard. TheBoardcompriseseightDirectors, threeofwhomarewomen.Wehavethree minorityethnicDirectors,wellaheadof theParkerReviewtargetofatleastone. MAR 2024 Read more on page 26 BUILD BRANDS #### Making handwashing fun Carexlaunchedathree-yearpartnershipwithMagic LightPictures,thelicenceownerofthemuch- lovedpicturebookThe Gruffalo,tohelpcombat thespreadofgermsamongstchildren.HalfofUK parentssurveyed 2 thinkmakinghandwashingmore funwillencouragechildrentoimprovetheirhand hygiene.Thishandwashusesartworkfromthe popularchildren’sbookonitspackaging,featuring abrightpurplecolour,anodtotheiconic‘purple prickles’fromtheGruffalo’sback. MAR 2024 1 FurtherinformationregardingtheGenMinvisibilityreportcanbefoundontheirwebsitewww.gen-m.com. 2 ResearchcommissionedbyPZCussonsandconductedbyToluna.Asurveyof151UKparentsconcludedthatalmosthalf(42%)thinkmakinghandwashingmorefunwillencourage handwashingamongstchildren. 07 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() REDUCE COMPLEXITY #### Maximising shareholder value #### through portfolio transformation InApril,followingastrategicreviewofour brandsandgeographies,weannounced ourdecisiontorefocusourPZCussons portfolioonwherethebusinesscan bemostcompetitiveandwhereitcan createmostvalueforshareholders. Weannouncedourintentiontosell theSt.Tropezbrand,andthatwewere exploringstrategicalternativesforour Africabusiness. BUILD BRANDSSERVE CONSUMERS Recruiting the next generation of #### parents in Indonesia and Nigeria InIndonesia,ourinnovative,newCussons BabyMinyakTelonPlusrangecanbeused atallstagesofababy’sdevelopmentand incorporatesTelonOil,whichisingrained inIndonesianculturethankstoitscalming propertiesandmosquitoprotection. InNigeria,ourCussonsBabybrand hasdrivendemandthroughahospital programme,focusingonpartnerships withhospitalsandhealthcare professionalsandeducatingand reassuringover800,000pregnant andnewmumsaroundthecountry. FY24 #### Geographic expansion ChildsFarmisdisruptingthebabycategoryinmultiplemarketswithuniqueselling points.InFY24,wesawdouble-digitgrowthonAmazonintheUS.ByNovember 2023,thebrandbecamethefastestgrowingbabybrandintheportfolioof Germany'sleadingpharmacychain,drogeriemarkt(dm),withover200 four-orfive-starreviewsinthefirstthreemonthsoflaunch. ThebrandislaunchinginAlNahdi,thenumberonepharmacychaininSaudi ArabiaalongsideourpresenceinBootsInternational;andwithRossmananddm, thebrandalsolaunchedintheCzechRepublic,IcelandandMaltaandinBIPA storesinSwitzerland. OriginalSourcelaunchedinSpaininFY23,andFY24hasseenanumberoffun anddisruptivecampaignstodriveawarenessandtrial.InGermanyandPoland, thebrandisinnovatingwithnew,sweetfragrancestosuitregionalpreferences. ImperialLeatherlaunchedinThailand,expandingintothepremiumherbaland healthsegmentwithnewbarsoaps,andalsotargetingyoungerconsumersin collaborationwithlocalinfluencersandfashionbrands. SERVE CONSUMERS #### FY24 A Year in Review continued FY24APR 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 08 ![]() #### Driving value for consumers FollowingthelaunchofCussonsCreations inMay2022,thebrandcontinuesto performwell,deliveringtoitsbrand positioningof'Alittlefun,alotofvalue', andhadthefastestvolumegrowthinthe WashingandBathingcategory.Thisgrowth hascomefromservingmoreconsumers– withdistributiongainsandgoodproduct development,including‘MallowMagic’, andafocusonseasonaleventssuchas Christmaswith‘Dachshundthroughthe snow’and‘DrivingGnomeforChristmas’ trends.Thebrandisalsostartingtomove intoadjacentcategories,withthelaunch ofGiftingSKUsandplansinplacetoenter theKid’sHaircarecategory. FY24 SERVE CONSUMERS BUILD BRANDS #### A locally-loved brand in ANZ Radiantlaundrydetergentlaunchedin Australiain1988.Asalocally-lovedbrand, Radianthasbeensteadilygrowingmarket shareinrecentyearsandisoneofthe mosttrustedlaundrydetergentbrands inthecategory.Radiantsaleshavegrown morethan50%overthepasttwoyears; brandgrowthhasbeenfuelledbyamajor re-stageincludingoptimisationofpack pricearchitecture,evolvedpromotional programmesandafocusoninnovation.Of notehasbeentherecentlaunchofRadiant intothefast-growingCapsulessegment. Radiantisnowthenumberthreebrand usedbyoneinsevenANZhouseholds. FY24 BUILD BRANDS #### A brand for all seasons Stella,thelargestbrandinourFamily CarebusinessinNigeria,isamoisturising jellythatisusedinthedryernorthof thecountryandparticularlyduring theHarmattandryseason.InFY24,we workedto‘de-seasonalise’tradingand communicatewiderusageoccasionsfor ourconsumersbyemphasisingthebenefit ofdailymoisturisationandtargeting5,000 stores in prominent open markets. FY24 09 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() We remain confident in the long-term potential for PZ Cussons as a business with stronger brands in a more focused portfolio, delivering sustainable, profitable growth. Jonathan Myers Chief Executive Officer #### TRANSFORMING #### PZ CUSSONS. #### Chief Executive’s Review INTRODUCTION FROM OUR CHIEF EXECUTIVE OFFICER Fouryearsago,weembarkeduponamulti-yearjourneyto transformPZCussons–acompanywithinherentlystrongbrands, excellentpeopleandattractiveunderlyingmarketsandcategories. Wedefinedourstrategybyfocusingonthecorecategoriesof Hygiene,BabyandBeautyinourfourprioritymarkets:theUK, ANZ,Indonesia,andNigeria.Wehavebeenprioritisingspending onthosebrandswhereweseethegreatestopportunityforreturn oninvestment:ourMustWinBrands.Underpinningthisstrategy, ourgrowthisenabledbystrengtheningourcapabilities,talent, leadership,culture,andourapproachtosustainability.Running througheverythingwedoisadrivetoreducecomplexityacross ourbusiness.Assuch,wehavesummarisedourstrategyaround fivechoices:BuildBrands,ServeConsumers,ReduceComplexity, DevelopPeopleandGrowSustainably. Overthistime,wehavecomealongway.Wehavestrengthened ourbrands,re-energisedandprofessionalisedtheorganisation, andraisedthebaronperformance.Nevertheless,ourFY24 reportedresultsfellshortofourinitialexpectations,primarily duetothemacroeconomicdevelopmentsinNigeria,which,as weindicatedlastyear,wouldsignificantlyaffectourresults.The 70%currencydevaluation 1 overthecourseofthefinancialyear has,therefore,causedasignificantimpactnotonlyonourlocal businessbutalsoontheprofitabilityandfinancialpositionof the Group. Againstthisbackdrop,oureffortshavebeenfocusedonour strategicprioritiesforFY24,whicharedetailedbelow.Wehave, therefore,soughttoaddressourchallengesandopportunities head-on.Inparticular,wehavemadegoodprogressin strengtheningandsimplifyingouroperationsinNigeriatothe pointwherethebusinessnolongerreliesonlendingfromthe GrouptoprovideitwithUSDollars.Thereisnowminimalsurplus cashinNigeriafollowingtherepatriationofcashtotheUK. 1 Referencetodevaluationisbasedupon 31 May 2023 to 31 May 2024. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 10 ![]() LFL revenue growth 1 +4.4% Cash repatriated from Nigeria c.£50m Recycled, reusable or compostable packaging 85.6% AsweannouncedinApril2024,thereismuchmoretodo todeliveratransformationofPZCussonsandunlockthefull potentialofthebusiness.Despitetheprogressalreadymadein reducingcomplexity–bothintermsofourportfoliofootprintand operations–theGroupremainstoocomplexforitssize.Resource isspreadtoothinlytogenerateconsistentlyhighreturnsandwe cannotalwaysfullybenefitfromcompetitiveadvantageswhere wehavethem.ThereisasignificantopportunityfortheGroup toout-competebothlargermultinationalplayersandsmaller localplayersbyconcentratingonastrongportfoliooflocally- lovedbrandswithoperationsfocusedinmarketswherewecan leverageourexistinginfrastructure,suchasmanufacturingor commercialcapabilities.However,thereisonlysomuchthatcan beachievedwithintheframeworkofourexistingportfolio,which spansmultiplemarketsandcategories.Tothisend,thedisposal ofSt.Tropezisprogressingandwearenowconsideringapartial orfullsaleofourAfricanbusiness,havingreceivedexpressions ofinterestfromanumberofparties. Weremainconfidentinthelong-termpotentialforPZCussons asabusinesswithstrongerbrandsinamorefocusedportfolio, deliveringsustainable,profitablegrowth. OnbehalfoftheBoard,IwouldliketothankthePZCussons teamsfortheircontinuedenergyandtenacityamidst challengingconditionsandoursuppliersandcustomers fortheirvaluedpartnership. Delivering against FY24 strategic priorities Throughouttheyear,wemadegoodprogressacrosstheyear’s strategicpriorities: #1: Further simplifying and strengthening Nigeria AmajorfocusfortheGroupthroughouttheyearhasbeenforeign exchangeandcashmanagementactivityinNigeria.Wehave reducedourrequirementsforforeigncurrencywhilstexpanding anddiversifyingouraccesstoUSDollarssowecanrepatriate cashfromNigeriaandrepayUKborrowings.Indoingso,wehave beenabletoreducegrossborrowingsandlimittheimpactof furthercurrencydevaluation.Specifically,wehaverepatriated approximately£50millionoverthecourseoftheyear,resultingin minimalsurpluscashinNigeriaasattheendoftheyear.Critically, thebusinesswilleffectivelybeself-fundinggoingforward,with littlerelianceonGrouplending. Wehavebeenfocusedonstrengtheningtheoperationsofthe Nigerianbusiness,andgiventhenumberofcompetitorsexiting themarket,therehavebeenopportunitiesformarketsharegains. Inaddition,duringtheyear,weidentifiedmorenon-tradingassets inNigeriatobedivested.Weexpecttheseassetstobesoldduring thecourseofFY25andproceedswillberepatriatedtotheUKand usedtoreducegrossdebtfurther. Ourplanstode-listandbuyoutminorityshareholdersofour Nigerian-listedentitywerepausedduringtheyear,inpartas aresultoftheGroup’sbroaderportfoliotransformationplans, announcedinApril2024. 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. 11 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #2: Returning the UK to sustainable, profitable growth OurUKPersonalCarebusinesshasperformedverystronglyin FY24withdouble-digitrevenuegrowthandasignificantmargin improvement.Thisperformanceistheresultofastrengthened leadershipteamandamoredeterminedfocusonbuildingback coreexecutionalcapabilities.Wearemoredisciplinednow infocusingontherightbrands,intherightsizes,intheright channelsattherightprices.Wehaveseenparticularsuccesswith OriginalSource–growingrevenuebyover20%andreaching itshighest-everlevelsofhouseholdpenetration.Therehas beensuccessfulRevenueGrowthManagement(RGM)activity acrosstheportfolio,andcontinuedsuccesswiththere-staging ofImperialLeatherandthelaunchofCussonsCreations.Carex alsoreturnedtogrowthfortheyearasawhole,supportedbyits successfulcollaborationwiththeGruffaloandthelaunchofthe 1-litrerefillpacks. Lookingahead,thereremainsfurtheropportunitytoregain previousprofitabilitylevelsinourUKPersonalCarebusinessand weareworkingtoimprovetheperformanceofourotherUK brands,suchasSanctuarySpa,CharlesWorthington,andFudge, whichhavepreviouslybeenmanagedaspartofourBeauty businessunit. #3: Driving further expansion from the core WehavehadcontinuedsuccesswithChildsFarmduringthe year,whichreporteditssecondyearofdouble-digitrevenue growth.Inaddition,wehaveseenfurthergrowthindistribution, withsuccessfulinternationallaunchesintheyear.IntheUS,we continuedtobuildourpositionwithAmazon,andinAugust2024, welaunchedthebrandinWegmans,apremiumgrocerychain, throughitsonlineandin-storeofferings.InGermany,thebrand waslaunchedviadm–amajorretailer–andourSleepMist productbecamethenumberoneonlineSKUwithinthecategory indm. OriginalSourceinSpaincontinuestodevelop,andduringtheyear weextendedourdistributioninoneoflargesthypermarketsin Spain,Carrefour. #4: Continuing to transform capabilities Wecontinuetostrengthenthebusiness'scapabilitiestosupport ourgrowthplans.Duringtheyear,wemadeasignificantchange tosimplifyourorganisationalstructure,allowingustostrengthen ourUKbusinesseswhileimprovingbrand-buildingcapabilitiesand strengtheninggrowthplansacrosstheGroup. Firstly,havingpreviouslyoperatedastwoseparatebusinessunits, withtwoleadership,twocommercialandtwosupportteams, wehavemadegoodprogressincombiningourUKPersonalCare andBeautybusinesses.Withonecombinedleadershipteamand one‘facetothecustomer,’weanticipatebenefitsfromgreater scaleandfaster,moreefficientdecision-making.Wehavealready seensomebenefitsemergeaswecombineshelvingspaceatkey retailersandleveragetheUKPersonalCarecommercialexecution withBeautyinfluenceranddigitalmediaexpertise. #### Chief Executive’s Review continued Secondly,wehavetakenfurtherstepstostrengthenbrand- buildingteamcapabilitiesunderPaulYocum,previouslyManaging DirectorofBusinessDevelopment,inthenewroleofChiefGrowth andMarketingOfficer.Theorganisationalchangeswillleadto greaterconsolidationofcentralR&Dandinnovationresources whichwillallowustoevaluateopportunitiesmoreeffectively andprovidebettersupporttoourBusinessUnits.Thiswillenable ustoleveragethebenefitsofcentralisingcertainactivitieswhile retainingthelocalinsightsourmulti-localportfoliofootprint canprovide. Growing sustainably Wearemakinggoodprogresstowardsbecomingamore sustainablebusiness.KeyachievementsinFY24included: • A42.8%reductioncomparedtobaselineinScopes1and2 carbonemissions(FY23: -0.3%) • A9.2%reductioninvirginplasticcomparedtobaseline (FY23: -7.8%) • 85.6%packagingisnowrecyclable,reusableorcompostable (FY23:84.4%). Wehavedecidedtostrengthenourcommitmenttosustainability byjoiningtheUNGlobalCompact,thelargestcorporate sustainabilityinitiativeintheworld.Bybecomingaparticipant, wehavecommittedtoaligningourstrategyandoperationswith theUN’sTenPrinciplesforhumanrights,labour,environment, andanti-corruption.Wewillalsocommittosubmittinganannual CommunicationonProgressreport. FY25 priorities FY25issettobeayearofsignificantchangeforPZCussons. Wearespecificallyfocusedonthreeprioritiestosupportour transformation: 1. driveourbusinessesintheUK,ANZandIndonesia; 2. strengthenourbrand-buildingcapabilitiesandembed ournewoperatingmodel;and 3. delivertheportfoliotransformationtomaximise shareholdervalue. Jonathan Myers Chief Executive Officer 18September2024 PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 12 ![]() 13 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Business Model #### WE BUILD BRANDS ENABLING US TO CREATE VALUE FOR ALL #### OUR STAKEHOLDERS. #### Our competitive advantage 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 brands High-quality,trusted andwell-lovedbrands Our people Diverse,skilledandpassionate employees.Leadersatalllevels Our infrastructure World-classmanufacturing anddistributioncapabilities inselectedgeographies Our stakeholders Closeworkingrelationships withcustomers,consumers, suppliersandcommunities Our financials Strongbalancesheetreflecting ourdisciplinedfinancialapproach We are a branded consumer goods business. #### What we do All underpinned by our purpose, #### culture, values, governance and ethics #### Trial and loyalty Delightconsumersthrough theuseofourproducts Advertising and #### marketing Investinmulti-channeladvertising andmarketingcampaignstoconnect withconsumersandbuildmemorable, trustedandwell-lovedbrands Sales and #### distribution Establishcustomerpartnershipsand channelstodeliverourproductsto whereverourshoppersshop PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 14 ![]() Our business model creates shared, sustainable value for all our stakeholders. FOR CONSUMERS Innovative, high-quality and trusted brands FOR EMPLOYEES Engaged teams and relationships, training and development opportunities and a supportive culture and values FOR SOCIETY Community and charitable initiatives linked to our priority markets FOR CUSTOMERS Our retail partners and customers benefit from selling our leading brands FOR INVESTORS A plan to transform PZ Cussons into a business with a more focused portfolio and stronger brands, delivering sustainable, profitable growth FOR THE ENVIRONMENT Sustainability at the heart of what we do. Sustainable sourcing practices on plastic, paper and palm oil; for better products and reduced carbon emissions, water use and landfill waste; for better operations #### The value we create Insight and #### innovation Obtaininsightsintocurrent consumerneedsand longer-termtrends.Through continuous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 15 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Key Performance Indicators #### HOW WE MEASURE #### OUR PERFORMANCE. #### FINANCIAL KEY PERFORMANCE INDICATORS Financial performance in FY24 has been materially impacted by the devaluation of the Nigerian Naira which commenced inJune 2023. Revenue growth Revenuegrowthallowsmanagementandinvestorstomeasureourrelativeperformance.Sustainablerevenuegrowth isakeystrategicambition. Operating margin – Statutory (19.6)% (15.9)% 2024 2023 2022 (19.6)% 10.7% (1.7)% LFL revenue growth 1 Operating margin – Adjusted 1 4.4% 11.0% 2024 2023 2022 4.4% 6.1% 2.9% 2024 2023 2022 (15.9)% 9.1% 11.1% 2024 2023 2022 11.0% 11.2% 11.3% Revenue growth – Statutory Profit margin Profitmarginallowsmanagementandinvestorstodetermineourrelativeperformance. Basic (loss)/earnings per share Basicearningspershareprovidesmanagementandinvestorswithakeyindicatorofvalueenhancementtoshareholders. (13.60)p 3.60p 2024 2023 2022 (13.60)p 8.70p 11.88p Adjusted basic earnings per share 1 8.02p (115.3)m 2024 2023 2022 8.02p 11.23p 12.57p 2024 2023 2022 3.60p 6.40p 6.40p 2024 2023 2022 £(115.3)m £5.7m £(9.8)m Basic (loss)/earnings per share – Statutory Dividend per share Dividendpaymentsallowinvestorstoreceiveacashreturn ontheirinvestmentinPZCussonsplc.Dividendgrowthisa keyindicatorintermsoftangiblereturntoshareholders. Net (debt)/cash Netdebtisanindicatoroftheoveralldebtpositionanda waytoevaluatethefinancialstrengthoftheGroup. 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 16 ![]() #### NON-FINANCIAL KEY PERFORMANCE INDICATORS Our sustainability key performance indicators embody our ongoing commitment to key strategic priorities, providing management and investors with a clear measure of our progress. Scope 1 and 2 (market-based) 42.8% Reduction since 2021 Carbon neutrality in our operations 26% of our emissions in 2024 Carbon reduction and neutrality Achieve42%reductioninScopes1and2carbon emissions(alignedwithscience-basedtargets)by2030. Packaging reduction Reducevirginplasticby33%by2030froma2021baseline. 69% Reduction since 2021 Waste reduction Achievezerowastetolandfillby2030inthosecountries whereappropriateinfrastructureexists. Engagement score³ Theglobalengagementsurveyallowsmanagementand investorstoassesshowwellouremployeesareengaged, whichisakeydriverofbusinessperformance. 9.2% Reduction in virgin plastic since 2021 85.6% Recyclable, reusable or compostable packaging in 2024 73 Engagement score 2 Refertopages28to41forfurtherdetailsonoursustainabilitytargetsandouremissionsreportingmethodology. 3 Refertopage27forfurtherdetailsonouremployeeengagementsurvey. SUSTAINABILITY 2 EMPLOYEE Achievecarbonneutralityinouroperationsby2025. Achieve100%recyclable,reusableorcompostable packagingby2030. 17 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Financial Review #### MANAGING THROUGH #### VOLATILITY. OVERVIEW OF GROUP FINANCIAL PERFORMANCE OurFY24financialperformancehasbeendefinedbythematerial adverseimpactofthedevaluationoftheNigerianNaira,which firsttookplaceinJune2023.Ithassignificantlyimpactedthe tradingofourNigeriabusinessandhascausedadeterioration intheGroup’sbalancesheet. AkeyfocusfortheGroupthroughouttheyearhastherefore beeninmitigatinganyfurtherimpactthroughstrengtheningthe operationsoftheNigerianbusinesswithafocusonprofitability andrepatriatingcashtotheUK–reducingexposuretofurther devaluationandallowingustorepaygrossborrowings.Atthe sametime,wecontinuedtoinvestacrossthebusinesstoensure continueddeliveryagainstourstrategy. Revenuedeclinedby19.6%,impactedbytheNairadevaluation. LFLrevenuegrowth¹was4.4%,whichreflectedprice/mixgrowth of6.8%andvolumedeclinesof2.4%. Adjustedgrossprofitmargin¹increasedby60bpsto39.8%.This increaseprimarilyreflectsthestrongunderlyingimprovementin theEuropeandAmericassegment.Therewasalsoafavourable currencymixeffectasAfrica,withlowermargins,representeda smallerproportionofrevenuecomparedtotheprioryearasa resultoftheNairadevaluation. MarketinginvestmentwasreducedslightlyinFY24,mainlydue toareductioninallocationtoourUK-basedBeautybrands. Centralcostsincreasedby£11.9millioncomparedtotheprior year,butincludedan£8.9millioncostrelatedtothecancellation ofadebtpreviouslyattributabletoourAfricaregion.PZWilmar, ourcookingoilsjointventurewithWilmarInternational, performedstronglyandcontributed£10.7milliontooperating profit(FY23:£7.5million). Adjustedoperatingprofit¹declinedby£15.0millionatreported FXrates.AdjustedEPS¹declinedby28.6%–lowerthanthe 39.7%declineinadjustedprofitbeforetax¹duetoareduction intheEffectiveTaxRateandalowernon-controllinginterest.On astatutorybasis,theoperatinglosswas£83.7millionprimarily duetotheforeignexchangelossof£107.5million,whicharose primarilyonthetranslationandsettlementofUSD-denominated liabilitiesinourNigeriansubsidiariesfollowingtheNairadevaluation. Freecashflow¹was£41.6million,whichwaslowerthantheprior year’s£69.9million,dueprincipallytoloweroperatingprofitand workingcapitaloutflow. Ournetdebtwas£115.3million,whichrepresentsamaterial changefromthe£5.7millionnetcashpositionintheprioryear, drivenlargelybythe£139.9millionreductioninthevalueofcash heldinNigeriaduetothedevaluation. A key focus for the Group throughout the year has been in mitigating any further impact of the Naira devaluation through strengthening the operations of the Nigerian and repatriating cash to the UK. Sarah Pollard Chief Financial Officer 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 18 ![]() #### PERFORMANCE #### BY GEOGRAPHY EUROPE AND THE AMERICAS (38.0% OF FY24 GROUP REVENUE) £m, unless otherwise stated FY24 FY23 Reported growth/ (decline) (%) Revenue 200.7 205.8 (2.5)% LFLrevenuegrowth¹ (1.9)% (0.5)% n/a Adjusted operatingprofit¹ 32.6 29.3 11.3% Adjustedmargin¹ 16.2% 14.2% 200bps Operatingprofit 0.7 0.4 75.0% Margin 0.3% 0.2% 10bps Revenuedeclinedby1.9%onalike-for-likebasis¹duetothe declineinourBeautybrands,partlyoffsetbystronggrowthin ourUKPersonalCarebusiness.Price/mixgrowthwas0.1%and volumedeclinedby2.1%. OurUKPersonalCarebusiness,consistingprimarilyofCarex, OriginalSource,andImperialLeather,hasdelivereddouble-digit revenuegrowth.TheUKwashingandbathingcategorygrew6%in valuetermsasconsumersbegantoincreasespendingfollowinga periodofcost-of-livingchallenges.Ourmarketsharegrew140bps involumetermswithimprovementsinallsub-categoriesandwas unchangedonavaluebasis.Carexreturnedtogrowthfortheyear asawholeanddeliveredimprovingtrendsthroughouttheyear, supportedbyitssuccessfulcollaborationwiththeGruffaloandthe launchofthe1-litrerefillpacks.OriginalSourcerevenuegrewby over20%duetostrongcampaignactivityandincreasedlistings, withdistributionpointsgrowingby12%.Wehaveseencontinued successoftheImperialLeatherrelaunch,whichbeganinFY22 andwhichwassupportedbythelaunchofCussonsCreationsata valuepricepoint,withthebrandstogethergrowingdouble-digits inFY24.CussonsCreationswasoneofthefastest-growingbrands intheWashingandBathingcategory.ImperialLeathermaintained itsmarketsharewithimprovedpackaging,whichprovided increasedin-storeprominence. InourlegacyBeautybusinessunit,whichconsistsprimarily ofSt.Tropez,SanctuarySpa,Fudge,andCharlesWorthington, revenuedeclinedbydouble-digits.Thisdeclinewasprimarily drivenbySt.Tropez,whereweexperiencedde-stockingfroma majorcustomerandslowertradingintheUS,drivenbyoverall softerconsumersentimentandpoorweather.SanctuarySpa’s revenuedeclinedinthefirsthalfoftheyear,reflectingthe decisiontoreducetheChristmasgiftingproductportfolioto protectprofitability.However,itsawgoodrevenuegrowthin thesecondhalfoftheyear. ChildsFarmreportedasecondfullyearofdouble-digitrevenue growthunderourownership.Thisgrowthwasdrivenbycontinued strongcommercialexecution,witha5%increaseindistribution points,andongoingbrandstrengtheningwithawareness improvingandaneardoublingofsocialmediafollowersoverthe pasttwoyears.Together,theseelementshaveresultedingood marketsharegains. Despitethereductioninrevenue,adjustedoperatingprofit¹ andadjustedmargin¹improved.At19.5%,theH2FY24adjusted operatingprofitmargin¹isthehighestsincetheCovid-19peak inFY21andwasachieveddespiteasofterperformancefrom ourhigher-marginbrandssuchasSt.Tropez.Thisimprovement inadjustedoperatingmargin¹wasprimarilydrivenbyourUK PersonalCarebusinessfollowingthestrongRGMandcost initiativesthroughouttheyear.ChildsFarmrecordedpositive adjustedoperatingprofit¹,primarilyduetoimprovedadjusted grossprofitmargin¹.Onastatutorybasis,operatingprofitwas £0.7million,whichincludesinvestmentintransformationprojects andtheimpairmentofSanctuarySpainthefirsthalfoftheyear. ASIA PACIFIC (33.3% OF FY24 GROUP REVENUE) £m, unless otherwise stated FY24 FY23 Reported growth/ (decline) (%) Revenue 175.2 190.7 (8.1)% LFLrevenuegrowth¹ (3.4)% 4.4% n/a Adjustedoperating profit¹ 28.0 27.5 1.8% Adjustedmargin¹ 16.0% 14.4% 160bps Operatingprofit 27.0 29.6 (8.8)% Margin 15.4% 15.5% (10)bps Revenuedeclined8.1%duetoadeclineinLFLrevenue¹and unfavourableFX,drivenbyadepreciationintheIndonesianRupiah andAustralianDollar.OnaLFLbasis¹,revenuedeclined3.4%with consistentgrowthinANZoffsetbyadeclineinIndonesia. CussonsBabyinIndonesiadeclinedslightly,reflectingsofter consumersentimentandareductionindistributorstocklevels throughoutmuchoftheyear.Thebusinessreturnedtorevenue andmarketsharegrowthinQ4,however,anddistributorstock asattheendoftheyearhadreturnedtonormallevels.Despite somelossofmarketsharefortheyearasawhole,CussonsBaby retained#1or#2positionsinmostofthesub-categoriesinwhich itplays.ThelaunchofCussonsBabyintothewarmingoilsegment, acategoryestimatedtobeusedbyover80%ofIndonesianmothers, hasgonewell.Wecontinuetoseemeaningfulopportunitieswith thisinnovation. 19 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Financial Review continued ANZdeliveredcontinuedsolidgrowth.ThiswasledbyRadiant, updouble-digits,resultinginitbecomingthethirdlargestbrand inthelaundrymarket(upfromsixthpreviously).Growthcame throughbothpricevolumeandprice/mix,drivenbythesuccessful launchofcapsulesalongsidetheexistingpowderandliquid products.MorningFreshalsoperformedwell,maintainingits nearly50%categoryshare.TheFY23launchoftheMorningFresh autodishwashrangealsocontributedtorevenue,althoughits performancehasbeensofterthaninitiallyanticipatedduetoa strongcompetitorresponse.Ourlong-termambitiontoleverage thesignificantbrandequityofMorningFreshtoextend‘beyond thesink’isunchanged.Rafferty’sGardenrevenueslightlydeclined butmarketsharewasstable. Despitethedeclineinrevenue,adjustedoperatingmargin¹ grewby160bps.Thiswasprincipallyduetoafurthersignificant improvementinprofitabilityinANZ,wherenewproduct innovationhasbeenhighlyaccretivetomargins,andreduced freightcosts.Profitabilitywasalsoimprovedduetothereduction incostassociatedwithourwidermanufacturingoperationsin Asia,albeitoffsetbythechallengingtradinginIndonesia.Ona statutorybasis,marginsdeclinedby10bps. AFRICA (28.7% OF FY24 GROUP REVENUE) £m, unless otherwise stated FY24 FY23 Reported growth/ (decline) (%) Revenue 151.7 256.3 (40.8)% LFLrevenuegrowth¹ 26.5% 13.4% n/a Adjustedoperating profit¹ 30.3 37. 2 (18.5)% Adjustedmargin¹ 20.0% 14.5% 550bps Operating(loss)/ profit (50.7) 48.3 n.m. Margin (33.4)% 18.8% (5,220)bps TheresultsshouldbeseeninlightoftheNairadevaluation throughoutthisyear.Thisdevaluationhascreatedhighinflation levels,andwehaveneededtocarryoutnearly30roundsofprice increasesduringtheyear.Thishasbeenakeydriverofthe26.5% LFLrevenuegrowth¹.Volumesdeclinedby4.7%inFY24,butthis trendimprovedthroughouttheyear.Onareportedbasis,revenue declinedby40.8%duetotheNairabeing57%lowerinFY24 comparedtotheprioryear.Thecontinuedtransformationofour route-to-markethasbeenamajordriverofrevenuegrowthinour Nigerianbusinessandhashelpedtolimitthedeclineinvolumes. Firstly,wehavecontinuedtoincreasetheavailabilityofour productsthroughexpandingthenumberofstoresserveddirectly asopposedtoviawholesalers.Weserveapproximately151,000 storestoday–over50%higherthanattheendofFY23andmore thandoublethenumberoftwoyearsago.Secondly,wehave alsocontinuedtoincreasethenumberof‘priority’stores–those whichattractgreatercommercialfocusandaretypicallysupplied withawiderrangeofproducts.Thirdly,theproductivityofour existingdistributionhasincreasedwithvansandbikesreaching morecustomerandconsumerlocations.Oursalespervanhave morethandoubledduetothisincreasedefficiency. Asaresultoftheimproveddistribution,themarketsharesofour keyNigerianbrandshaveremainedlargelyunchangeddespite thesignificantpriceincreases.MorningFresh,however,hasseen somesharelossduetoitspricingrelativetocompetitorproducts. Revenueinourelectricalsbusinessgrewover20%onaLFLbasis, contributingrevenueof£56.6million.Grossmarginsdeclinedas priceincreasesdidnotfullyoffsettheincreasedcostsresulting fromthedevaluationoftheNaira.Comparedtotherestofour Nigerianbusiness,theelectricalsbusinessseesgreaterinput costsdenominatedinUSDollars. ThePZWilmarjointventurecontributed£10.7million (FY23:£7.5million)toadjustedoperatingprofit¹.Compared totheprioryear,thisimprovementreflectscontinuedstrong commercialexecution. Adjustedoperatingprofitmargin¹grewby550bps.Profithowever includedan£8.9millioncreditfromsomeintra-Groupdebt forgiveness,withthelossbeingrecordedinourCentralsegment. Excludingthis,Africaadjustedoperatingprofitmargin¹declined by40bps.Onastatutorybasis,wereportedanoperatinglossof £50.7million,reflectingtheincreasedvalueoftradeandloan liabilitiesdenominatedinUSDollars. 1 AlternativeperformancemeasuresareexplainedandreconciledtothemostdirectlycomparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. 2 Referenceismadetoaninterim,ratherthanfinal,dividendduetothedistributablereservesintherelevantCompanybeingnegativeasat31May2024.TheGrouphassubsequently reversedthispositionandfuturedividendpaymentswillnotbeaffected. #### OTHER #### FINANCIAL ITEMS ADJUSTING ITEMS Adjustingitemsintheyeartotalledanetexpenseof£140.6million beforetax.Thisrelatedprimarilytoa£107.5millionforeignexchange lossarisingfromthedevaluationoftheNigerianNaira.Acharge of£24.4millionwasincurredduetotheimpairmentofthe SanctuarySpabrand,andcostsof£10.1millionwereincurred onsimplificationandtransformationprojects. ThedevaluationoftheNigerianNairahashadasignificantimpact onourfinancialresultsandcomparisonstotheprioryear.The foreignexchangelossof£107.5millionprimarilyaroseonthe translationandsettlementofUSD-denominatedliabilitiesinour Nigeriansubsidiariesandiswhollytheresultofthedevaluation oftheNaira,whichfellby70%from31May2023to31May2024. SeefurtherdetailsontheNairaratesusedinourfinancial statementsinthetableonpage21. Afteraccountingforadjustingitems,theGroup'sstatutory operatinglosswas£83.7millioncomparedtoastatutory operatingprofitof£59.7millionintheprioryear. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 20 ![]() FOREIGN EXCHANGE ThedevaluationoftheNairaresultedina£130.6millionadverse impactonyear-on-yearrevenueinFY24whentranslatedinto Sterling.OutsideofNigeria,thegeneralstrengtheningofSterling againstothercurrenciesresultedina£19.3millionreductionin FY24revenuecomparedtoFY23. Average FX rates % of FY24 revenue FY23 FY24 Revenue impact (£m) GBP 34% 1.0 1.0 – NGN 24% 536.3 1,256.7 (130.6) AUD 17% 1.8 1.9 (6.7) IDR 12% 18,174.2 19,549.7 (5.3) USD 6% 1.2 1.3 (1.9) Other 7% – – (5.4) Total 100% – – (149.9) GiventhematerialityofthemovementintheNigerianNairain recentperiods,theratesusedinrecentreportingperiodsare summarisedbelow.Thecurrencydevaluedby70%from31May 2023to31May2024,andwasonaverage57%lowerforthe financialyearasawhole: NGN/GBP FY22 FY23 FY24 RateusedforP&L 558 536 1,256 Rateusedfor balancesheet 530 577 1,893 ThevalueoftheNigerianNairacontinuedtodepreciate subsequenttotheyearend.AttheendofQ1FY25,theclosing Naira/GBPratewas2,100(31May2024:1,893)andtheaverage Naira/GBPratewas1,979(31May2024:1,256). TAXATION Onanadjustedbasis,theeffectivetaxratewas14.5%(FY23:27.1%) reflectingtheunderlyingcashtaximpacttoGroup.Theyear-on- yearreductionwasprimarilyduetoachangeinthetaxregime operatinginNigeriawhereby,forloss-makingbusinesses,taxis assessedonthebasisofrevenueratherthanprofitability,together withthetaxdeductibilityofrealisedFXimpactsarisingasaresult ofthecashrepatriationfromNigeriatotheUK. Onareportedbasis,thetaxcreditfortheyearwas£24.1million comparedtoataxchargeof£15.4millionintheprioryear. Theeffectivetaxratefortheyearis25.0%(2023:24.9%). LIQUIDITY Cashandcashequivalentsat31May2024were£51.3million (FY23:£256.4million).Thedecreasewasdrivenprincipallyby £109.7millionnetcashoutflowsfromfinancingactivitiesand adverseforeignexchangemovementsof£120.7millionwhich werepartiallyoff-setbynetcashinflowsfromoperatingand investingactivitiesof£12.9millionand£12.4millionrespectively. Thereductioninnetassetsfrom£422.1millionto£235.2million isprimarilytheresultoflossesrelatingtothedevaluationofthe Nairaanda£24.4millionimpairmentoftheSanctuarySpabrand, partlyoffsetbytheGroup'sunderlyingnetprofit. TheGrouphasa£325.0millioncommittedcreditfacilitywhich isavailableforgeneralcorporatepurposes.Thecreditfacility incorporatesbothatermloan,ofupto£125.0million,withthe balanceasarevolvingcreditfacility(RCF)structure.Enteredinto inNovember2022,thetermloanisatwo-yearfacilityandthe RCFafour-yearfacility,withbothfacilitiesretainingtwo,one-year extensionoptions,thefirstofwhichwasexecutedinOctober 2023.At31May2024,thisfacilitywas£161.0milliondrawn (FY23:£252.0million). Totalfreecashflow¹was£41.6million,whichwaslowerthanthe prioryear’s£69.9milliondueprincipallytoloweroperatingprofit andaworkingcapitaloutflow. DIVIDEND TheBoardannouncesitsintentiontodeclareaninterimdividend of2.10ppershare 2 ,down44%comparedtolastyear'sfinal dividendof3.73p.Thisrepresentsafullyeardividendof3.60p whichisalsodown44%,reflectingtheimpactoftheNaira devaluationonearningspersharewhilemaintaininganearnings coverofapproximatelytwotimes. Thedividendwillbepaidon4December2024toshareholders ontheregisteratthecloseofbusinesson1November2024. OUTLOOK Current trading TheFY25financialyearhasstartedpositively,withGroupLFL revenuegrowth¹of4.7%drivenbystronggrowthinbothAfrica andEuropeandtheAmericas. Operating profit guidance GuidancehasbeenprovidedtoseparatetheimpactoftheNaira uncertaintyontheGroup’sresults.Assumingthattheaverage FXratesinQ1FY25prevailforthebalanceoftheyear,theGroup expectstodeliveradjustedoperatingprofit¹intherangeof £47–53million.Basedontheseexchangerates,FY24adjusted operatingprofit¹wouldhavebeenapproximately£40million. MovementsintheNairaareexpectedtobeakeydeterminant oftheGroup’sreportedFY25result.Suchmovementsimpactthe translationoflocalcurrencyearningswhenreportedinSterling,as wellastheforeignexchangerevaluationofintra-groupliabilities. Theadjustedoperatingprofit¹sensitivityrelatedtothelatterhas increasedinFY25duetonecessaryaccountingchangesbrought aboutbytheincreasedlikelihoodoftherepaymentofinter- companyloansfollowingthereceiptofexpressionsofinterest relatingtoourAfricanbusiness.Wewillprovideananalysisofthe impactoftherevaluationoftheseliabilitiesonourearningsin futurefinancialresults. Sarah Pollard Chief Financial Officer 18September2024 21 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### DEVELOPING PEOPLE #### AT PZ CUSSONS. #### AT PZ CUSSONS WE ARE GUIDED BY OUR PURPOSE, ‘FOR #### EVERYONE, FOR LIFE, FOR GOOD’, #### CHAMPIONING THE WELLBEING OF #### OUR CONSUMERS, OUR PEOPLE #### AND OUR COMMUNITIES AROUND #### THE WORLD. Asamulti-localbusinesswithapproximately2,500employees workingforus,wecontinuetoalignourpeoplestrategy withourbusinessstrategy.Thisistoensurewehavean agile,future-fitorganisationwithpioneeringleadershipand aperformanceculture.Ourfocusisalsoon‘brilliantbasics’, simplifyingourpeopleprocessesandinvestingintechnology toprovidedataandinsightstoinformdecision-making.The deliveryofourpeoplestrategywillcontinueinFY25,andwe arealreadymakinggoodprogress. STRATEGY DEPLOYMENT Thisyearwere-energisedourorganisationwithconversations aboutourbusinessstrategyandchangestoouroperatingmodel. Wecreatedanextendedleadershipteam,thePZPioneers.These leadersare‘changeagents’,drivinghigherlevelsofperformance andembeddingnewwaysofworkingtohelpusachieveour goals.TheExecutiveCommitteeisnowengagingwiththisgroup regularly,fromglobalvirtualeventsandbriefingsoncriticaltopics tointeractiveQ&Asessions. Tobuildonthis,weinvitedourUKPZPioneerstoaninnovative andinteractivepilot‘StrategyExperience’eventwhichwasheld overseveraldaysandconsistedofavarietyofeventformats rangingfrompresentationstoteamactivities.Ouraimwasto ensurethateveryoneunderstoodourstrategicdirectionandthe changestonewprocessesandwaysofworkingthatneedtobe made.Thiseventallowedustheopportunitytoensureallour PZPioneersunderstoodtheirroleandcommitmentsasleadersin drivingthischange.WithhelpfromourPZPioneers,weextended thisconversationtoeveryoneworkingforusviaaseriesofevents inourmarketshostedbytheExecutiveCommittee,withplentyof opportunitytoaskquestionsandgetinvolved. #### We have a powerful PZCussons purpose, ‘For everyone, for life, forgood’, championing the wellbeing of our consumers: people, families and #### communitieseverywhere. #### People and Culture PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 22 ![]() LEADERS AT ALL LEVELS Pioneeringleadershipisacriticalenablerofeverythingwewantto achieve,andourfocushasturnedtohowweleadatPZCussons andtoensuringthatcolleaguesaresetupforsuccess.Buildingon thelaunchofourPZPurposeandBESTvaluestwoyearsago,we workedwithcolleaguestodevelopagloballeadershipframework thatwillapplytoallleadersglobally.Thiswillbeembeddedinto ourprocessesinFY25includingperformancemanagement, recruitmentanddevelopmenttoensurethatweareattracting, developingandretainingleaderswhowillbesuccessful. Duringtheyear,weestablishedanewDiversity,Equityand Inclusion(DEI)strategy.Wecontinuedtoinvestin‘EarlyCareers’, partofourdiverseworkforce,andwewelcomedacohortofsix multi-disciplinegraduatesintothebusinessintheUK,whowill rotatearoundkeyfunctionsoverthenexttwoyears.Inparallel, wehavealsorecruitedafurthersixgraduatesintoPZCussonswho willjointhekeycapabilityfunctionsofCommercial,Marketing, SupplyChainandITinOctober2024. OUR VALUES OurBESTvaluesweredefinedbyourpeople,forourpeopleand wehaveembeddedtheseintoourprocessesandcommunications, ensuringthateveryoneisfamiliarwiththemandunderstandsour waysofworking. FEARLESS, PIONEERING AND PASSIONATE, OPEN AND HONEST, TRUE TO OURSELVES AND PROUD OF WHO WE ARE RAISING THE BAR, PUSHING PERFORMANCE, AIMING HIGH AND ACHIEVING MORE DYNAMIC AND PROACTIVE, CAPABLE AND FLEXIBLE, EMBRACING CHANGE AND MOVING FAST INTO THE FUTURE ONE FAMILY, MANY VOICES; SUPPORTED, INCLUDED, RESPECTFUL, EMPOWERED, AND WITH JOY IN WHAT WE DO #### BOLD AS INDIVIDUALS WE ARE AS A BUSINESS WE ARE IN OUR TEAMS WE ARE OUR SHARED CULTURE BRINGS US #### STRIVINGENERGETICTOGETHER 23 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### FULFILLING CAREERS. PAUL YOCUM Chief Growth and Marketing Officer Passionate about anticipating and responding to what our consumers need and want PaulYocumbecameChiefGrowthandMarketingOfficerin FY24,withresponsibilityforacceleratingthefuturegrowth ofthebusinessininternationalmarkets,andleadingour brand-building,innovationandbrand-planningcapabilities inlinewithourbusinessstrategy. HejoinedPZCussonsasInterimManagingDirectorof ourBeautybusinessin2021,successfullyleadingthe teamduringabusytransitionperiod,andremainingon theExecutiveCommitteetoaccepttheroleofManaging Director,BusinessDevelopment,andthenChiefGrowth andMarketingOfficerinDecember2023. Paulbringsablendofover25years’experiencein consumermarketing,salesandgeneralmanagement. HestartedhiscareeratProcterandGamble,quickly progressingthroughvariousseniormanagementrolesto ManagingDirectorforCosmeticsInternationalOperations anddrivinghouseholdpenetrationforbrandsincluding MaxFactorandOlay. Paul’spassionforunderstandingtheconsumerisinspiring. Heencourageshisteamstostaycurious.Recently,Paul sharedthat"turninginsightsintopowerfulideasiskeyto unlockingourbrands'potential."Thisbeliefiscentralto hisvisionforbuildingworld-classmarketingcapabilities andinnovation. #### People and Culture continued KATIE BARKER Marketing and Innovation Director Building brands for life KatiehasbeenwithPZCussonssinceSanctuarySpawas acquiredin2008andhersuccessfulcareeristestament totheexpertise,energyandcommitmentshebringsto anychallenge. BeginninginproductmanagementmarketingonSanctuary SpaandthenSt.Tropez,shequicklyprogressedtoHeadof MarketingforHaircare,workingonseveralbrandre-stages includingCharlesWorthingtonandFudgeProandthentook asecondmentroleasGeneralManagerofourUSoffice. FollowingtheGroup’sacquisitionofChildsFarm,Katie movedtooverseemarketing,commercialandtechnical responsibilities,includingspearheadingthebrand’sfirst everTVcommercial. Morerecently,KatiehasbeenpromotedtoMarketingand InnovationDirectorforourGrowthMarketsbusinessunit, combiningherexperienceonglobalbrandsanddistributors tohelptodrivegrowthinternationally. Katiesays:“IhavebeenveryluckyatPZCussonstocomein viaaproductmarketingrolewithamarketingbackground, andtohavetheopportunitiestomoveintofullbrand management,thentoleadacommercialfunctionandto haveaninternationalsecondment.Allthetimeworking withtalentedcolleaguesacrosstheGroup.Iampassionate aboutPZ’sbrandsandseeingthedifferencethattheymake inthelivesofourconsumers.” Four colleagues share their stories here: #### PZ Cussons remains committed to creating opportunities for career development for talented colleagues #### at all levels of the business. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 24 ![]() WAHYU WIKANDARI Head of Manufacturing A trailblazer in manufacturing in Indonesia Earlythisyear,wepromotedWahyuWikandari(knownas 'Wiwi')toHeadofManufacturingatourTangerangfactory, nearJakarta,Indonesia. WiwibeganherjourneywithPZCussons20yearsago inthefactory.Hercareerdevelopmenthasbeenshaped byhercommitmenttoexcellenceineveryprojectand everyinnovation,andbyturningeverychallengeinto an opportunity. Herinclusiveandinsightfulleadershipstylehasdriven strongresultsatthefactory,andshehasalsonurtureda generationoffutureleaders.Whenaskedwhatdrivesher passionforPZafteralltheseyears,Wiwisaid:“PZCussons islikemysecondhome.IsharethevaluesoftheCompany, soIalsofeeltheresponsibilitytoensuremycontribution tothebusinessismeaningful.Havingtheopportunityto grow,tobeinvolvedinpositivechangewheretheproducts aremanufacturedandbeacatalystforotherstodevelop, iswhatdrivesmeeveryday.” Giventhestereotypesthatcansometimesprevailwithinthe manufacturingenvironmentinIndonesia,Wiwiisatrailblazer andarolemodelforotherwomeninmanufacturing. IFEANYICHUKWU ABADOM Supply Chain Director An expert ‘ahead of the curve’ in Africa ChemicalEngineerbytraining,IfeanyichukwuAbadom beganhiscareerwithPZCussonsin2002,whenhejoined thesoapplantinNigeriaasaproductionManager. Ifeanyichukwu’sexpertiseinoptimisationandcontrol, coupledwithexperienceoftheFood,Pharmaceuticals andChemicalssectors,madeIfeanyichukwuwell-placed toexcelincapabilitybuilding,capacityexpansion,process managementandpeoplemanagement. Overtime,IfeanyichukwuprogressedtobecomingFactory ManagerandlaterHeadofManufacturingforPZCussons NigeriaandmostrecentlyhebecameSupplyChainDirector forourAfricaregion.Ifeanyichukwuisfocusedonbuilding asustainable,valuechainforPZCussonstomeetthe businessambitionsfortodayandforthefuture.Heleads thisthroughteamwork,developinggreatrelationshipsand supportingpeopletoperformtheirrolestotheverybest oftheirability.Ifeanyichukwubringsenergyanddrivetoall ofhisroles,andsaysheis'drivenbyadesiretobe‘ahead ofthecurve’inanunpredictableenvironment'.Heisan excellentexampleofhowwellcareerscanprogressand developatPZCussonsandisalsoarolemodelforothers. 25 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### People and Culture continued WELLBEING Ourphilosophyforsupportingthewellbeingofourpeopleis acombinationofimmediatesupportwhereitisneededmost, aswellasmorelong-termpositiveandpreventativeapproaches tohelppeopletothriveatwork. Weofferflexibleworkingincludinghybridworkingtosupport peopletoperformattheirbestandmaintaintheirwork-life balance.Annually,andtargetedbymarket,wealsoofferour teamsawellbeingdaytotakeimportantdowntimefollowing theirhardworkduringtheyear.Privatehealthcareandemployee assistanceprogrammessupportcolleaguesallyeararound,and ourline-managersareexpectedtohaveregularonetooneswith theirdirectreportsaspartofourperformanceprocesstoensure visibilityandresponsivenessforanyconcerns. Wepromotetheimportanceofphysicalwellbeinginsupportof mentalwellbeingandofferonlineandin-personfitnessfacilitiesto helpcolleaguesbuildtimeintotheirschedules,fromonlineapps andgymstotimeforwellbeingwalks. Ourwellbeingapproachisparticularlystrongwhenourinternal initiativesalignwithourmarketingactivityandinclude: • CelebratingInternationalWomen'sDayandthencelebrating InternationalMen’sDaywithPremierCooltotalkaboutmen’s mental health • OurDEIstrategylaunchinconjunctionwithourexternal MenoPlexlaunch • ProvidingCussonsBabygiftpackstonewparentsworkingat PZCussons. Wealsorecognisetheimportanceofpromotinghealthyfinancial wellbeingand,inadditiontoprovidingtargetedcost-of-living supportincertainmarketsduringhighinflation,wehavealso offeredarangeoffinancialseminarsandeventsacrosstheGroup. DIVERSITY, EQUITY AND INCLUSION (DEI) IS AT THE HEARTOF OUR PEOPLE STRATEGY WehaveadiverseandexperiencedBoard.Wehavethreewomen Directorsrepresenting37.5%oftheBoard.Oneofthefoursenior positionsontheBoardisheldbyawoman.Inaddition,threeof ourDirectorsarefromaminorityethnicbackgroundwhichmeans thatweexceedtheParkerReviewtargetofhavingoneethnic minorityDirector. TheParkerReviewhasaskedeveryFTSE-350companytoseta targetfor2027fortheproportionofitsseniormanagementgroup madeupofexecutivesfromminorityethnicbackgrounds.Wehave setatargetof35%for2027andtheshareofthemanagement groupinDecember2023was33%. This is the first DEI strategy for PZ Cussons, and it comprises four pillars: CULTURE OF BELONGING PIONEERING LEADERSHIP TALENT DIVERSITY OUR COMMUNITIES Inadditiontothegloballaunchcall,weheldlocaleventsand associatedactivitiesinallofourbusinessunitsaroundtheworld. InIndonesia,wehostedacoffeemorningforfemaleemployees, wherewomenfromaroundthebusinesscametogethertoshare inspiringstories.InAfrica,theteampartneredwiththreefemale relatedbrands,createdanInternationalWomen’sDaynewsletter andhostedatalkon‘InspiringInclusion’.IntheUK,inadditionto celebratingwomenatPZCussonsbyencouragingpledgesfrom theteams,wetooktheopportunitytolaunchthegroundbreaking MenoPlexhaircarerangeforperimenopausalandmenopausal womenduringthesameweek,whichwaswellreceivedbyboth themarketandcolleagues. IntheUK,our'ProudlyPZ'employeeengagementgrouphasalso raiseddiversityawarenessthroughaseriesofeventsincluding RaceEqualityWeek,aRamadanone-dayFast,DeafAwareness focusandnewsletterscelebratingPridemonth,BlackHistory MonthandLGBTHistoryMonth. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 26 ![]() BOARD PRIORITISING ENGAGEMENT Designated Non-Executive Director for employee engagement: Kirsty Bashforth Kirstyplaysanactiveroleensuringthatworkforceengagement continuestobepartoftheBoard’sagenda.Bytakingpartina wideselectionofinternalmeetingssheisabletosharewiththe Board,onaregularbasis,anyobservationsandinsightsforthe Boardtoconsider,includingkeychallengesandopportunitiesin ourmarkets.Herpresenceasaparticipantenablescolleaguesto understandhowtheBoardworksandtoseetheNon-Executive Directorroleasconnectedwiththebusiness.Thisyear,Kirsty hastakenpartinglobalTownHalls,anInternationalWomen's Dayevent,internalproductlaunchesforTelonOil;inJakartaand MenoPlex;globally,aPeopleLeadershipTeammeetingdiscussing insightsonworkforcethemesinkeymarkets,aUKannualpriority- settingevent,andafocusgrouparoundevolvingourculturefor thenextphaseofourtransformation. #### Global Engagement Survey 2024 Wearepleasedtohavemaintainedouroverallemployee engagementscoreat73(2023:73)againstanindustry benchmarkof71whilewecontinuedtonavigatethechallenges ofourexternalenvironmentandchangestoourbusinessunits. Coincidentally,wealsoachievedthesame96%participation rateasin2023followingasustainedeffortacrossPZtoensure thateveryonehadtheopportunitytotelluswhatisworking andwherewecanimprove.Thisincludedkiosksforcolleagues workinginfactoriesandprovidingappropriatetranslation. Employeesrespondedfavourablytoquestionsabouttheir work/lifebalanceatPZCussons,andalsowhatisexpected ofthemintheirroles,bothofwhichareencouraging culturalindicators.Thesetwoscoresareparticularlyhighin comparisontoourindustrybenchmark.Thereremainsahigh awarenessofourBESTvalues,whichwillbeimportantaswe continuetoevolveourculture. Weanticipatedthatour‘TotalRewardoffer’wouldbealower scoreinthesurveyresultsthisyearandincludedspecific, additionalquestionsthatwillhelpustodevelopthiswork inFY25.Wewilldevelopatargetedrewardandrecognition planthatmeetsglobalandlocalmarketneeds,aspartofour peoplestrategy. AcceptingthatchangewillbeaconstantinFY25,wewill engageourPZPioneerleadershipaswecontinuetotransform PZCussonsandsupportourpeoplewitheffectivechange managementandcommunications.Colleagueshavetoldusin surveycommentsthattheywantmoresupportwhenweare makingorganisationalchanges,andthattheywouldlikemore supportonstructuredcareerprogression. HOW THE GLOBAL ENGAGEMENT SURVEY INFORMS OUR WORK GlobalTownHallcalls,hostedbytheChiefExecutiveOfficer andExecutiveCommittee,takeplaceeachquarter.The purposeistocommunicatewitheverycolleagueonimportant topicsinatransparentwayandtherebydriveunderstanding, engagement,advocacyandcommitment.TheEngagement Surveyisreferencedregularly.Eachmarkethasitsownaction plan,createdasaresultoftheGlobalEngagementSurvey scoresandsentiments.TheIndonesiateamforexamplehas createdtheBESTLunch,amonthlyinitiativewhereasmall groupofemployeesshareamealwiththeleadershipteam, withtheaimofbreakingdownhierarchiesandpromoting openandhonestdialogue.InAustraliaandNewZealandand AfricatheyhaveaspotlightonRecognition.InAfrica,they haveintroducedtheBESTAwards,withquarterlywinners showcasedtotherestoftheregion’semployeesandthe overallwinnerselectedinDecember.TheUKhasfocusedon personaldevelopmentandalsovolunteering,partneringwith ourchosencharities. I am proud to work for PZ Cussons 86% (2023: 88%) I would recommend PZ Cussons as a great place to work 85% (2023: 85%) SurveyrunbyCultureAmp.BenchmarkConsumerGoodsandServices,January2024. 27 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Sustainability INTRODUCTION TO ENVIRONMENTAL AND SOCIAL IMPACT AT PZ CUSSONS Werecogniseourimpactsontheplanetandsociety,takeresponsibilityforaddressingtheseimpactsandworkinpartnershipwithoursuppliers, customersandcommunitiestomakeadifference.OurCompany'spurposeguidesus:ForEveryone,ForLife,ForGood,whichhelpsusconsider theconsumers,customersandcommunitiesweserve,ouremployees,andtheplanetwhenwemakedecisionsasabusiness. OurEnvironmentalandSocialImpact(ES)framework,whichwecall‘BetterforAll’,alignswithourpurpose,andoursustainabilitystrategy helpseveryoneinthebusiness,whatevertheirrole,understandhowtheycanhelpusachieveourtargets.Theframeworkisalsosupported bytheKPIswehaveset.AGroup-widematerialityassessmentvalidatedanddeterminedtheareaswithintheframeworkwefocuson. THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALSAND GLOBAL COMPACT The17UNSustainableDevelopmentGoals(SDGs)andtheirassociatedtargetsofferablueprintforachievingamorepeacefuland prosperousworldby2030.TodelivertheSDGs,businessesmustfocustheireffortswheretheiractualandpotentialimpactisgreatest. Inlinewiththis,wehaveidentifiedtheSDGswherewecanhavethemostsignificantimpactasabusiness.ThisSustainabilityReport showswherethesegoalsguideouractions. InFY24,westrengthenedourcommitmentbyjoiningtheUNGlobalCompact,thelargestcorporatesustainabilityinitiativeintheworld. Bybecomingaparticipant,wehavecommittedtoaligningourstrategyandoperationswiththeUN’sTenPrinciplesinhumanrights, labour,environment,andanti-corruption.We’llalsocommittosubmittinganannualCommunicationonProgressReport. #### IT’S IN THE DNA OF #### PZCUSSONS TO BE A FORCE #### FORPOSITIVECHANGE. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 28 ![]() #### Decision & #### monitoring Board Environmental and Social Impact Committee –approvalofstrategyandmonitoringofdelivery, includingcorporateKPIs. Sustainability team Functional workstreams–developmentand managementofplanstoachievestrategicaims andKPIsfromaworkstreamperspective. Market delivery projects –fullP&L accountability,hastoalignwithbusinesscontext; responsiblefordeliveryofESprojectsona businessunitlevel. ES Executive Committee Forum (sub-setoftheExecutiveCommittee)–makesoperationaland investmentsdecisions. Sustainability Steering Group (SSG)(reporttoExecutiveCommittee)–monitoringofESgoals; oversightofinternalandexternalcommunications. Decision, #### collaboration #### & monitoring #### Delivery #### FOR EVERYONE Our impacts on people: Thisaddressesourimpactonpeople,our employees’safetyandwellbeing,andthe communitiesthatweserve. Formoredetailsseepage 30 This section of our Annual Report provides a summary of our sustainability activity. Formoredetailsvisitourwebsite: www.pzcussons.com/sustainability Our environmental impacts: Thisaddressesourenvironmentalimpactson theatmospherethroughourcarbonemissions impact;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. #### FOR LIFE Our behaviours as a business: Thisaddresseshowwebehaveasabusinessand thedecisionswemake,includingthewaywe marketandsellourproducts,managementof oursupplychain,ESandcorporategovernance. #### FOR GOOD GOVERNANCE TheBoardoverseesoursustainabilitystrategyviaasub-committee,theEnvironmentalandSocialImpact(ES)Committee.TheExecutive Committeeisresponsiblefordevelopingthestrategy,presentingittotheBoardESCommitteeforapproval,andmonitoringprogresstowards oursustainabilitykeyperformanceindicators(KPIs). TheSustainabilitySteeringGroup(SSG)reportstotheESExecutiveCommittee.TheSSGcomprisesrepresentativesfromourdifferent marketsandbusinessfunctions,anditsroleistoreviewtheplansinplaceandourprogresstowardsourcorporateandmarketKPIs. TheSSGmonitorsprogresstowardourESgoalsandoverseescommunicationeffortstobothinternalandexternalaudiences.Itensures theeffectiveimplementationofourESstrategyacrosstheGroupandmarketlevels,supportingtheachievementofourKPIs. TofacilitatetheexecutionofourESobjectives,wehaveestablishedfunctionalandregionalworkingteamsthatreporttotheSSG. Theseteamsmeetregularlytodevelopandimplementbusinessunitandfunctionallevelprojects. InthesecondhalfofFY24,theglobalSustainabilityFunctionwasintegratedintotheGlobalbrand-buildingorganisation.Thisstrategic moveaimstoembedsustainabilitypracticesmoredeeplyintoouroperations,enhancebrandvalue,andcreateoperationalefficiencies.  Formoredetailsseepage 32  Formoredetailsseepage 36 29 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() ## 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. AllourmanufacturingsitesareaccreditedtoISO9001forquality. WeusetheprinciplesestablishedinISO10377,thestandardfor consumerproductsafetytoassessandimproveourperformance. Ourambitionistoinspireresponsibleconsumptionofour productsanddisposalofourpackagingbyadaptingourpack communicationsoconsumerscanmakeinformedchoices. WearemembersoftheEcoBeautyScoreConsortium,which aimstodevelopanenvironmentalimpactassessmentand scoringsystemforcosmeticproductstoenableconsumersto makeinformedandsustainablechoices.Wearealsoadopting anon-packrecyclinglabels(OPRL)labellingsystemacrossthe UKportfoliobeforetheEPR(ExtendedProducerResponsibility) mandatorydeadline. HEALTH AND SAFETY OurmanufacturingsitesremainaccreditedtoISO45001,andinFY24,wecontinuetomakepositiveprogressinhealthandsafetyacross ourKPIs.Wecontinuestrengtheningourhealthandsafetyculturethroughoutouroperationsbyfocusingonbehaviouralsafetyand reporting/closureoftheleadingsafetyindicators.InFY24,wehaveseena14%reductioninthenumberofhealthandsafetyincidents recordedversusthepreviousyear. Unfortunately,wedidreporttwolosttimeincidents(LTI)fromoneofourmanufacturingsitesinAfrica.Theseincidentswerefully investigated,andanauditwascarriedoutonthehealthandsafetyconditions.Wefullyexpectthattheactionsimplementedafter theseincidentswilldeliverthedesiredresultsofcreatingaworkenvironmentandculturethatleadstoazeroLTImentality. FY23 FY24 Change vs prior year Fatalities 0 0 0 LTI 1 /Yr. 1 2 +1 LTIFR 2 0.02 0.04 +0.02 AAIFR 3 1.15 0.82 -0.33 1 LTIdefinedasLostTimeIncidents.LTIreferstoanincidentsustainedatworkthathasresultedinthelossofproductiveworktimeintheformofabsenteeism.Thisapplieswhentimeis loststartingfromthenextworkingday. 2 LTIFRdefinedasLostTimeIncidentFrequencyRate. 3 AAIFRdefinedasAllAccidentIncidentFrequencyRate. #### Sustainability continued PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 30 ![]() #### Aligning to the SDGs COMMUNITIES Wewanttocreatepositivesocialchangeinthecommunitieswhereweoperate.OurCodeofEthicalConductrequiresthatourcharitable donationsarefreefrompoliticalaffiliationsorconflictsofinterest.InFY24,werolledoutourCharityPartnershipFrameworkacross theGrouptoidentifygapsandimproveourcommunityprogramme.WealsojoinedtheBusinessforSocietalImpact(B4SI)networkto helpusmeasureandunderstandoursocialimpact.Inthenextyear,wewilllooktooptimiseoursocialimpact,continuingtoencourage partnershipsthatalignwithourcorporatepurposeandbrands,withanadditionalemphasisonemployeeengagement. Formoredetailsvisitourwebsite: www.pzcussons.com/sustainability/for-everyone EmployeesinUKandIrelandparticipatedinadragonboatracetofundraisefor WoodStreetMission,whosupportfamilieslivingonalowincome. EmployeesinNigeriacollectedplasticwastefromthelocalcommunityanddonatedit toGreenhillRecycling,helpingreduceuseofvirginmaterials. EmployeesinAustraliavolunteeredwithFoodbank,whoprovidefoodandgroceryreliefto thoseinneed. PZCussonsIndonesia,togetherwiththePKKMotherscommunity,commemorated theFamilyEmpowermentandWelfareMovementUnityDay,whichaimstoimprove communitywelfare. 31 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() ## FOR LIFE. #### We address all our environmental impacts through the lens of our purpose. WearecommittedtominimisingourimpactontheEarthand oceans.Wedothisbyreducingourcarbonemissions,considering oursourcingdecisions,andmanagingourpackaging,wasteand wateruse. Wemeasure,manageandreportourperformanceintheareaswe believearemostimportanttothebusinessandwherewehave themostsignificantimpactincluding: • Carbonemissions • Waterusage • Landfillwaste • Plasticconsumptionanddisposal • Sustainablesourcingofpalmoilandpaper. Allouroperatingsitescomplywithlocalregulationsandour Groupstandards.Inadditiontothis,allourmanufacturingsites arecertifiedtoISO14001,includingourKenyasitethatreceived thecertificationinFY24.Weoperateacontinuousimprovement programmeinourfactories,whichreducesourcarbonemissions, wateruseandlandfillwaste. PLASTICS AND PACKAGING Thepackagingagendaishighonourlistofpriorities.Reducingour packagingfootprintisasimportantasitischallenging. Thisyear,wedevelopedspecificprogramsforbrandswithhigher consumerexpectationsforsustainability,bothenvironmental andsocial,likeSanctuarySpaandOriginalSource.Wehavebeen choicefulaboutthesustainabilitynarrativethatisintimatelylinked tothebrandpurposeandwillhelpinformactivationplansand behind-the-scenesinterventionsforthenearandlongterm. Furthermore,wehavedevelopedafuturepackagingtrajectory forourUKandANZbusinessunitstohelpprioritiseupstream technologiesandotherchangesrequiredtomeetourcorporate packaging-relatedgoalsby2030.OtherBUswillfollow. Ourglobalpapertargetalignswithourbusinessstrategyand underscoresourcommitmenttosustainability.Weareactively increasingtheuseofcertifiedorrecycledpaper,ensuringthatour materialscomefromresponsiblymanaged,certifiedforestssuch asFSC,PEFCorequivalentcertification.Thisapproachnotonly makesthemostofpreciousforestresources,butalsoreducesthe pressure to harvest more trees. FY24 current reporting year FY23 previous reporting year Reducevirginplasticin ourpackagingbyone thirdby2030froma 2021baseline -9.2% compared to baseline -7.8%compared tobaseline Ensure100% recyclable,reusableor compostablepackaging by2030 85.6% 84.4%1 Use100%certifiedor recycledpaperby2025 97%2 96% 1 FY23recyclable,reusableorcompostable%coveragehasbeencorrectedfrom88.4% to 84.4%. 2 Thedatacoversover95%(bytonnage)ofourmanufacturedandthird-party sourcedconsumergoods.Certificationandrecycledcontentisbasedonsupplier documentationandhasnotbeenindependentlyverifiedorphysicallyreviewed. #### Sustainability continued PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 32 ![]() Target FY24 current reporting year FY23 previous reporting year Achievecarbonneutralityinour operationsby2025 26% of our emissions 19%ofour emissions 3 Achievea42%reduction inScopes1and2carbon emissions(alignedwithscience- basedtargets)by2030 -42.8% compared to baseline -0.3% comparedto baseline Achievenetzeroemissions acrossScopes1,2and3 by2045 -11.7% vs baseline 4 n/a 1 Vercoprovidelimitedassurance,followingtheISO14064-3:2019GHG–Part3. Boundary:PZCussonsandallsubsidiariesworldwideonanoperationalcontrolbasis. Basedontheverificationworkundertaken,VercoconsiderthatallmaterialGHG emissionsourceshavebeenappropriatelyidentified,measured,andreported.It isVerco’sconclusionthatthereisnoevidencetosuggestthattheGHGemissions statementforFY24arenotmateriallycorrectorarenotafairrepresentationofPZ’s operations.ItisVerco’sconclusionthatthereisnoevidencetosuggestthattheGHG emissionscalculationhavenotbeenpreparedinaccordancewiththeWRI/WBCSD GHGProtocol. 2 EcoActprovidedalimitedlevelofverificationalignedwiththeISO14064-3:2019 standardwithspecificationandguidancefortheverificationandvalidationof greenhousegasstatements.TheorganisationalboundaryofPZCussonswas establishedastoincludeoperationsitesinFY23.EcoActusedtheoperationalcontrol approach,whichiswherethebusinesshasfulloperationalcontrol.Basedonthedata andinformationprovidedbyPZCussonsandtheprocessesandproceduresfollowed, nothinghascometoEcoAct'sattentiontoindicatethattheGHGScope3emissions totalsreportedforFY23arenotfairlystatedandfreefrommaterialerror. 3 FY23carbonneutrality%coveragehasbeencorrectedfrom22%to19%dueto calculationmethodologychangefromusingmarket-basedemissionsinFY23vsusing location-basedemissionsinFY24. 4 CalculatingandverifyingScope3dataisacomplexandtime-consumingexercise. ThefigurespresentedforFY24currentreportingyeararefromthelatestavailabledata whichforScope3istheFY23inventoryandforScopes1&2istheFY24inventory.Both areverifiedbythird-partyexperts.TheGroupwillseektoprogressthetimelinesofour reportingsuchthattheScope3inventorydisclosurealignstothereportingfinancial cycleinthefuture. REDUCING CARBON EMISSIONS Reducingcarbonemissionsisapriorityforourbusiness,and wecontinuetosubmitafullclimatereporttotheCarbon DisclosureProject(CDP).OurScopes1and2near-term reductiontargetsandourScope3long-termcommitments alignwithscience-basedmethodology. InFY24,theGroup’scarbonfootprintforScopes1and2(market- based)decreasedby42.8%comparedtoourbaseline,andwe reducedourenergyconsumptionby32%comparedtoFY23.This reductionhasbeenachievedthroughtheoutsourcingofpower generationatourIkorodufactoryinNigeria,enteringamore reliablegassupplycontractforourAbafactoryinNigeriaand furthercontinuousimprovementofenergyefficiencyinitiatives acrossallouroperations. InFY24,wecontinuetoachievecarbonneutralityintheUK, Beauty,ANZ,andAsianoperations.Carbonneutralitymeans wehaveoff-setourremainingScopes1and2emissionsby purchasingGoldStandardVERcarboncredits.Wehavedonethis byincreasingenergyefficiency,movingtorenewableelectricity andpurchasingcarbonoff-sets.Wepurchased13,000tonnesof CO 2 eoff-sets,supportingtransformationacrosstwoprojects,in NigeriaandIndonesia.Bothprojectsmeettherequirementsofthe GoldStandard,aninternationallyrecognisedoff-settingprovider. Wecompletedtheenergyassessmentforourorganisationsinthe UKthatmeetthequalificationcriteriaundertheUKGovernment EnergySavingsOpportunityScheme(ESOS)phase3. WefollowtheUKGovernment’senvironmentalreporting guidance,includingtheStreamlinedEnergy&CarbonReporting (SECR)requirements.Inaddition,wehavealsousedtheGHG ProtocolCorporateAccountingandReportingStandardRevised Edition.OuremissionsarecalculatedusingtheUKGovernment GHGConversionFactorsforCompanyReportingandtheIEA factorsforoverseaselectricity. Verco1hasassuredouremissionsdataforScopes1and2and EcoAct2forScope3,bothofwhichareindependent third-partyexperts. #### Aligning to the SDGs33 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Sustainability: For Life continued EMISSIONS TABLES Greenhouse gas emissions and energy consumption\*: FY24 current reporting year FY23 FY21 baseline year UK Global Total UK Global Total UK Global Total Energyconsumptionusedtocalculate emissions (MWh) 6,361 112,883 119,244 6,518 169,868 176,386 6,209 158,214 164,423 Scope 1 1 Emissions from activities for which the Company owns or controls including combustion fuel & operation of facilities (Scope 1) (tCO 2 e) 507 20,238 20,745 642 32,912 33,554 785 30,637 31,422 Scope 2 1 Emissions from purchase of electricity, heat, steam and cooling purchased for own use (Scope2location-based)(tCO 2 e) 741 6,396 7,137 676 5,569 6,245 833 7,815 8,648 Emissions from purchase of electricity, heat, steam and cooling purchased for own use (Scope2market-based)(tCO 2 e) 0 1,903 1,903 0 5,569 5,569 0 7,81 5 7,815 Total Scopes 1 & 2 1 TotalgrossScope1and2location-based emissions(tCO 2 e) 1,248 26,634 27,882 1,318 38,481 39,799 1,618 38,451 40,069 TotalgrossScope1andScope2market-based emissions(tCO 2 e) 507 22,141 22,648 642 38,481 39,123 785 38,451 39,236 IntensityratiotCO 2 e(Scope1and2 market-based)/£100,000revenue 0.25 6.78 4.29 0.31 8.61 5.96 0.18 21.55 6.50 Total Out of Scope Emissions (tCO 2 e) 6 0 2,028 2,028 0 2,390 2,390 0 2,159 2,159 Scope 3 2,3,4 Cat1Purchasedgoodsandservices 504,712 594,048 521,474 Cat2Capitalgoods 373 332 312 Cat3Fuelandenergyrelatedactivities  7,952 8,486 6,315 Cat4Upstreamtransportanddistribution 89,055 102,670 155,957 Cat5Wastegeneratedinoperations 1,802 1,565 1,950 Cat6Businesstravel 1,200 726 227 Cat7Employeecommuting 1,872 1,915 2,268 Cat8Leasedassets 545 561 608 Cat9Downstreamtransportanddistribution 30,404 30,926 48,390 Cat10Processingofsoldproducts n/a n/a n/a Cat11Useofsoldproducts 5,616,201 6,206,104 6,364,955 Cat12End-of-lifetreatmentofsoldproducts 64,533 61,372 69,634 Cat13Downstreamleasedassets n/a n/a n/a Cat14Franchises n/a n/a n/a Cat15Investments 5 432,568 462,727 463,188 \* AllemissionshavebeencalculatedfollowingtheGreenhouseGasProtocolandusingtheUKGovernmentGHGConversionFactorsforCompanyReporting.Scopes1and2emissions havebeencalculatedusingactualdata.Scope3emissionshavebeencalculatedusingspenddataandindustryaverageemissionfactors. 1 InformationassuredandverifiedbyVercoAdvisoryServicesLimited. 2 InformationassuredandverifiedbyCarbonClearLimitedtradingas'EcoAct'forFY23andFY21inventories.FY22isunverifiedbutadjustedinlinewithverificationrecommendations. 3 InFY24,wehaveimprovedthemethodologyofourScope3emissionsfor2021andsubsequentyearsinlinewithverificationrecommendation.Duetochangesinthemethodology approach,therevisedGHGScope3emissiontotalsforFY21resultedinadecreaseof12%incomparisontotheScope3emissionsinitiallyreportedinFY23AnnualReport.Thedecrease wasaresultofimproveddataqualityandreportingprocedures,includinguseofactualactivitydataasbasisofthecalculations,standardisationofdatareportingacrossBUsand rectificationoferrorsidentifiedintheScope3emissionsinitiallyreportedintheoriginalFY21baseline.Correctionstodataerrorsweremostlyrelatedtodownstreamtransportation anddistribution,wastegeneratedinoperationsandbusinesstravel. 4 CalculatingandverifyingScope3dataisacomplexandtime-consumingexercise.ThefigurespresentedforFY24currentreportingyeararefromthelatestavailabledatawhichfor Scope3istheFY23inventory.ForFY23disclosurethisistheFY22Scope3inventory.Bothareverifiedbythird-partyexperts.TheGroupwillseektoprogressthetimelinesofour reportingsuchthattheScope3inventorydisclosurealignstothereportingfinancialcycleinthefuture. 5 Category15InvestmentsincludeemissionsassociatedwiththePZWilmarjointventure6Outofscopeemissionsrelatetoouruseofbiomassforthegenerationofsteaminour Kenyanoperations. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 34 ![]() WASTE InFY24,wereducedourabsoluteamountofoverallwastetolandfillby69%comparedtoaFY21baseline,withourUKoperations maintainingzerowastetolandfillachievement.Weareprogressingtowardsourtargetofzerowastetolandfillby2030inthe marketswhereappropriateinfrastructureexists.Weaimtoreducetheamountofsolidwastesenttolandfillyear-on-year,andallour factoriesandlocationshavewastereductionprogrammesinplace,achievinga40%reductioninFY24versusthepreviousyearwhere infrastructureexists.Westudyandmapourlandfillwastetoidentifyimprovementactions,whichweimplementviaourcontinuous improvementprogramme. Target FY24 current reporting year FY23 previous reporting year FY21 baseline year By2030,weaimtosendzerowaste tolandfillinthosecountrieswhere appropriateinfrastructureexists -69% reduction from a FY21 baseline -49%reductionfroma FY21baseline 141 tonnes WATER Reducingtheamountofwaterweuseisessential,andwehaveacontinuousimprovementprogrammetoensureweuseiteffectively.In FY24,wereducedourwaterconsumptionpertonneoffinishedproductby16%comparedtoaFY21baseline.Ourabsoluteoperational water 1consumptionwasreducedby29%comparedtoaFY21baselineand7%reductionversuslastyear.Followingonfromourfirst watersubmissiontotheCarbonDisclosureProject(CDP)lastyearweexpecttomakeafullsubmissionin2024. Target FY24 current reporting year FY23 previous reporting year FY21 baseline year Reducewaterintensityby30%from 2021baselineby20302 -16% reduction from a FY21 baseline -12%reductionfroma FY21baseline 5.64m 3 /tofproduction 1 Operationalwaterisdefinedasthetotalwaterusednetofwaterinourfinishedproducts. 2 Waterintensityisdefinedastheoperationalwaterusepertonneofproduction. BIODIVERSITY Wepurchaseandsourcerawmaterialsthat,insomecases,impactbiodiversityandforests.Ourmostsignificantpurchasesarepaper- basedmaterialsandpalmoil.WehavebeendisclosingdataontheimpactsofthosecommoditiesyearlytoCDP. Targets Continuetouse100%responsiblepalmoilinourproducts(nodeforestation,peatorexploitation) 100%ofourpaperwillbecertifiedorrecycledby2025 Wecontinueworkingtowards100%NDPE(NoDeforestation,NoPeatandNoExploitation)palmoilsupply. Our progress in palm 99%ofourcrudepalmoil(CPO) andpalmkerneloil(PKO)is suppliedbydirectsuppliers withNDPEcommitments alignedwithours. 98%ofpalmoilderivativesare suppliedbysupplierswithNDPE commitmentsalignedwithours. 98%oftheCPO/PKOweuseis fullytraceabletomill. 98%ofthederivativesweuseare fullytraceabletomill. Wearecommittedtouse100%certifiedorrecycledpaperby2025andhavereached97%inFY24. Formoredetailsvisitourwebsite: www.pzcussons.com/sustainability/for-life 35 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Sustainability continued ## FOR GOOD. We behave ethically as a business through our decisions and our corporate, environmental and #### social impact governance processes. Weoperateinanopen,honestandfairbusinessenvironmentwithoursuppliers,customersandbusinesspartners.Ourethicalprinciples, rootedinrespectandintegrity,guideourdealingswithallstakeholders,ensuringtheyfeelvaluedandrespected. Thepoliciesandstandardswhichgovernourapproachinclude: • CodeofEthicalConduct • ModernSlaveryStatement • SupplierCodeofConduct. #### Code of Ethical Conduct TheCodeofEthicalConduct(theECCode)setsoutour statementofethicalprinciplesandthebehavioursexpected acrossthebusiness.Itprovidesrulesandguidancetoensure wecomplywiththeUKBriberyActandequivalentlegislation inothercountries.TheECCodeappliestoallemployees, contractors,Directorsandseniormanagement,jointventure partners,suppliers,agents,consultantsandadvisers. TheECCodealsosetsoutourpositiononanimaltesting, anti-slaveryandforcedlabour,supplychainduediligence, ourresponsibilitiestowardsouremployees,theprevention offinancialcrime(includingzerotoleranceofallformsofbribery andcorruptionandtheprohibitionofpaymentofbribes, kickbacks,andfacilitationpayments)andtheprotectionof whistle-blowers.TheECCodeissupportedbyanumberof otherpolicies,detailedintheAuditandRiskCommitteeReport onpages84to89ofthisAnnualReportandAccounts. InFY24,weconductedourannualECCodeconfirmationsurvey whichwascompletedbyalleligibleemployees.Theconfirmation soughtfeedbackonthelevelofembeddednessofourECCode andhowwellitwasunderstoodacrossourbusiness.Thefeedback showedastrongunderstandingoftheECCodeandtheprocedures inplacetomakewhistle-blowingreports. Thenewjoinersprocessisworkingwell,andwiththeuseof WorkdayandtheTraceInternationallearningmanagement systemportal,allnewjoinersaretrackedtoensurethey havereadtheECCodeandcompletedtheAnti-Briberyand Corruptiontraining.TheHeadofEthics&Complianceand localcompliancechampionsconductedadditionalface-to-face trainingontheECCodeinhigh-riskmarkets.Wealsoconducted face-to-facetrainingforemployeesatseveralfactorysites, withover400employeesattending. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 36 ![]() #### Modern Slavery Act and Supplier Code of Conduct OurSlaveryandHumanTraffickingStatementsetsoutour commitmenttodetectingandpreventingtheuseofallformsof slaveryinoursupplychain.ItissupportedbyourSupplierCodeof Conduct(SCOC)andprocurementpoliciestoensurethatwedo notengagedirectlyorindirectlywithslaveryorhumantrafficking. OurSCOCincorporatesourModernSlaveryActstatementand mirrorsourethicalprinciplessetoutintheECCode,requiring oursupplierstoadheretothesamestandardstowhichwehold ourselves,includingbutnotlimitedtocompliancewithrelevant lawsandregulatorystandardsinallcountriesinwhichwe operateaswellascommittingtonottestfinishedproductsor ingredientsonanimals.99.8%ofourhigh-valuedirectsuppliers havesignedtheSCOCordemonstratedtheymaintainan equivalentcodewithintheirbusiness. InFY24,weimplementedourSupplierSustainabilityPrinciples\*,a statementofkeyprinciplesaroundsuppliersustainabilitybehaviour. ItbuildsonourSupplierCodeofConducttoencouragemore sustainablebehaviourinoursupplychainandcanbefound onourwebsite.88.5%ofourhigh-valuedirectsuppliershave acknowledgedtoworktowardsthoseprinciples. Wehaveevolvedoursupplierriskduediligenceinthepast 12monthsbyconductingaglobalriskassessmentacrossour vendorbaseandourregionsofoperations. OurriskassessmentcoversspecificsectorrisksacrossPeople& Ethics,EnvironmentalandSupplyChainriskmanagement.We havecalibratedourinternalriskusingexternalcontrolsacross DowJonesandSedex,whileourSCOChasfurtherreducedour riskprofileacrossoursupplierlandscape. Inparallel,weplantoreducethenumberofsupplierswe workwithtoimprovegovernanceandcontrol. \* Samedocumentisbeingreferencedonpage112astheSustainabilityCharter. Formoredetailsvisitourwebsite: www.pzcussons.com/sustainability/policies-and-disclosures 37 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Wesetoutbelowourclimate-relateddisclosureswhichcomply withUKLR6.6.6Rbyincorporatingclimate-relatedfinancial disclosuresconsistentwiththeTaskForceonClimate-related FinancialDisclosures(TCFD)recommendationsandrecommended disclosuresaswellastheguidanceforallsectorsassetoutinthe 'Annex'publishedinOctober2021. OurTCFDreportingcomplieswithallrequirementsexcept forStrategy(b)disclosure.Weanticipatebecomingfully compliantinthecomingyearswhentheexpectedregulationon climatetransitionplansforUKlistedissuersisintroduced.The finalisationofourtransitionplanandimpactofclimate-related risksandopportunitieswillthenbefurtherembeddedintoour financialplanning. GOVERNANCE Board oversight PZCussons’climateriskisultimatelygovernedandoverseenby theBoard.TheBoardapprovesandoverseesoursustainability strategy,committingtheGrouptoenvironmental,socialand governanceperformanceandthatwedeliveragainstourgoals. TheBoardisalsoresponsibleforsettingourriskappetiteand monitoringtheapplicationofourRiskManagementFramework andmethodology. ThreeBoardCommitteesarealsocloselyinvolvedinreviewing theelementsofsustainabilitythatimpactthekeyareasof ourbusiness: • TheEnvironmentalandSocialImpactCommitteereviews andapprovesthesustainabilitystrategy,goalsand implementationplans • TheAuditandRiskCommitteeensuresoversightoftherisk managementprocess.TheAuditandRiskCommitteeassesses theextenttowhichclimatechangeandotherESGrisksare likelytohaveamaterialimpactuponourfinancialstatements • TheRemunerationCommitteeensuresongoingfocusonkey environmentalandsocialcommitmentsthroughtheirapproach totheRemunerationPolicyandrelatedincentiveschemesas detailedonpages92to95ofthisreport. SeeourESgovernanceinfographiconpage 29 TheEnvironmentalandSocialImpact(ES)Committeemetthree timesduringtheyear.Throughouttheyear,theESCommittee monitoredprogressagainstthegoalssetoutintheGroup’s sustainabilitystrategy.Thestrategyprovidesoperationalfocus and,alongsideasetofclearlydefinedperformancetargets, supportstheCompanyinachievingitsgoals.TheESCommittee ispleasedtoseethattheCompanyisontracktomeetingits targetsofbeingcarbonneutralinoperationsby2025,reachinga 42%reductionagainst2021by2030,andnetzeroacrossScopes 1,2and3by2045.TheESCommitteewillcontinuetomonitor andadviseonprojectswhichwillbestachievethesetargets.Key prioritiesfortheESCommitteeforFY25includecontinuously reviewingtheGroup’ssustainabilitystrategyandgoalsand monitoringprogressagainsteach,ensuringrequiredprocesses andcapabilitiesareinplacetodeliverthegoalsandfurther optimisingsustainabilityreporting. Readmoreaboutourprioritieson page 91 Management’s roles and responsibilities OurChiefExecutiveOfficerisresponsibleforourenvironmental andsocialimpactpoliciesandclimatecommitments.Key management-levelindividuals,suchastheChiefSupplyChain Officer,ChiefFinancialOfficer,andHeadofRisk,aretaskedwith identifyingandenactingclimate-relatedchangeswithinthe business.Sustainabilitymanagementisresponsibleforpresenting climate-relatedissuestotheESCommitteeatleasttwiceayear beforeannualreporting.Wehaveestablishedarobustgovernance structurethatoperatestop-downthroughtheESCommittee, asdescribedonpage29.PZCussonshasadedicatedTCFD workinggroupwithrepresentativesfromtheSustainability, RiskManagementandFinancefunctions. Sustainability strategy Wehaveidentifiedclimatechangewithinthe"Sustainabilityand theEnvironment"principalrisk.Tobetterunderstandthepotential impacts,wehaveconductedquantitativescenarioanalysisof physicalandtransitionrisksovertheshort,mediumandlong termtotesttheresilienceofourbusiness,underarangeoffuture climatescenarios.Asaninternationalconsumergoodsbusiness withmainmarketsintheUK,Nigeria,IndonesiaandAustralia, ourbusinessisexposedtomultipleandvaryinggeographical physicalandtransitionrisks.Thenatureofourbusinessmeans thatwehaveofficesandmanufacturingfacilitiesspreadglobally, whichfurtherincreasesourrelativeexposuretophysicalrisks likeextremeweatherandtransitionrisks,includingchanging regulatoryenvironments. Scenario modelling Wehaveassessedpotentialimpactsacrosstwofuturescenarios coveringphysicalandtransitionrisksandopportunitiesthatmay impactourbusinessinthefuture. 1) Net zero scenario: Thelowcarbonrevolutionisanambitious scenariothatlimitsglobalwarmingto<2°Cby2100throughstringent andimmediatelyintroducedclimatepoliciesandinnovation,reaching netzeroCO 2 emissionsaround2050.ItislinkedtoRCP2.6,which involvesmoretransitionrisksearlyonbutmanagestolimit physicalriskstoaminimum(NGFSScenario:NetZero2050). 2) Current policies: Assumesthatonlycurrentlyimplemented policiesarepreserved.Theworlddoesnotcutemissions,and climatechangeaccelerates,causing2.5°Cofwarmingby2050and >4°Cby2100,bringingirreversiblechanges.ItislinkedtoRCP8.5, andinvolveslittletonotransitionrisksearlyonbutresultsin irreversibleandgloballydisruptingphysicalrisks(Networkforthe GreeningtheFinancialSystem(NGFS)Scenario:CurrentPolicies). Transition riskswereassessedbyconsideringpossiblerisksand opportunitiesfortheGroupovertheshort,medium,andlong termresultingfromeconomic,marketandregulatorychanges. Financialmodellinghasbeenconductedforthesetransitionrisks usingavailablePZCussonsdataandassumptionsandexternal datafromsourcesincluding: • InternationalEnergyAgency(IEA) • NetworkfortheGreeningtheFinancialSystem(NGFS) • InternationalInstituteforAppliedSystemsAnalysispreparing theSharedSocio-economicPathways(SSP) • IntergovernmentalPanelonClimateChange(IPCC). #### Taskforce On Climate-Related Financial Disclosures (TCFD) PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 38 ![]() Physical riskswereassessedbymodellingtheexposureofallPZ Cussons’facilitiesacrossmanufacturing,storageanddistribution operationswiththeassistanceofathird-partyprovider,leveraging toolsandmodelsdevelopedfortheinsuranceindustrythat integrateclimateprojections.Wealsoassessedtherisktoselected keyglobalsuppliersofrawandpackagingmaterialsandfinished goods.Exposurewasassessedforarangeofacuteandchronic climaterisksundertwophysicalriskscenarios,specificallyRCP2.6 andRCP8.5.Wewillcontinuetoanalysethedetailsofthese physicalrisksandtheorganisation'sresilienceandputmitigation plansinplace.Ourprogresswillbedisclosedinnextyear's AnnualReport. Wedefinelow/medium/highrelativeimpactbasedonthenetprofit financialimpactthresholdsfromourRiskManagementMethodology: Lowrisk Insignificanttomoderatefinancialimpact: <8%ofadjustedoperatingprofit 1 Mediumrisk Majorfinancialimpact:>8%and<12%of adjustedoperatingprofit 1 Highrisk Severefinancialimpact:>12%ofadjusted operatingprofit 1 1 Alternativeperformancemeasuresareexplainedandreconciledtothemostdirectly comparablefinancialmeasurepreparedinaccordancewithIFRSonpages206to209. Time horizons: Wehaveassessedpotentialimpactsacrossthree timehorizons(short/medium/longterm)accordingtoourcurrent targets,commitmentsandusefulassetlives.Wehaveselected thesehorizonsinaccordancewithTCFDandtheirrelevanceto ourbusinessasexplainedbelow. Short: 1-5years,whichislinkedtoourshort-termfinancial planninghorizons Medium: 5-10years,whichislinkedtoourmedium-term commitmentsandtargets Long: 10+years,whichislinkedtotheoperationallifetime ofourexistingassetsandournetzerocommitment Considering risks on our business, strategy and financial planning Climateriskshavebeenconsideredthroughourfinancial modellingoftransitionandphysicalriskstoestablishtherelative low/medium/highimpactonthebusinessoverthreedifferent timehorizonsandtwoclimatescenarios.Wehaveconsideredthe impactoftheidentifiedclimate-relatedrisksandopportunities onthebusinessandstrategy.Toprepareforthesescenarios,we haveembeddedmitigatingactionsamongourtransitionrisksand opportunitiestomanagepotentialrisksandcapitaliseonpotential opportunities.Seepages40and41. PZCussonsisundertakingfurtheranalysistofullyembedclimate risksintothebusinessandstrategy,especiallywithinthefinancial planningprocesses. Weaimtodisclosehowtheserisksareconsideredinourfinancial planningprocessesinfuturedisclosures. Wearecontinuallyreviewing,updatingandenhancingour understandingofclimate-relatedrisksandopportunitiesand theresultantimpactsonourbusinessinlightofexternaltrends, newinformationandchangestoourbusiness.Wewillcontinue toassesschangestoouroverallresilienceasourunderstanding ofclimate-relatedrisksandopportunitiesmatures,andifour businessstrategieschange.Wearedevelopingourtransitionplan inlinewiththeTransitionPlanTaskforce(TPT),whichdescribes ourprogresstodateagainstourclimate-relatedtargetsand initiativesforreducingcarbonemissions. Basedonourriskassessmentandscenarioanalysisresults,the transitiontoalow-carboneconomyconsistentwitha2°Corlower scenario(our‘netzero’scenariodescribedabove)isnotexpected tofundamentallyimpactourbusinessmodel.However,theGroup hasseveraldirectandsupplieroperationsinlocationsexposedto heatstress,floodingandheavyprecipitation.Webelievethatthe mitigationplansthatareinplaceandfurthermitigationactions willprovidebusinessandorganisationalresiliencetoourshort- andmedium-termrisks,andweconsiderourstrategiestobe appropriateformanagingouridentifiedrisks.Wewillcontinueto assessourclimate-relatedrisksandopportunitiesunderdifferent scenariosanddetermineouroverallresilience,asweacknowledge thatchangestointernalandexternalfactorsovertimewillimpact theresilienceofourbusinessstrategiestoclimatechange. RISK MANAGEMENT Climaterisksareintegratedintoouroverallriskmanagement process.Ourriskmanagementprocessisbasedonacommon riskframeworktoensureweidentify,assessandmitigateallrisks, i.e.,productsafetyandquality,healthandsafety,cybersecurity, legalcompliance,climatechange,environmentalandregulatory compliancerisksthatthreatenthesuccessfuldeliveryof ourstrategicobjectives.Youcanfindfulldetailsonourrisk managementprocessonpages42to50ofthisAnnualReport andAccounts. Specifically,ourRiskManagementMethodologyonpage43 describesourprocessesforidentifying,assessingandmitigating allrisks,includingclimate-relatedrisks.Wealsoidentifynewand emergingrisksthroughanumberofapproachesthatarelistedon page44.Climatechangeformspartofoursustainabilityandthe environment’sPrincipalRisk,withfurtherinformationonhowwe managethisriskprovidedonpage49. L M H 39 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### PHYSICAL RISKS Group operations Description of material risk or opportunity: BusinessinterruptionoftheGroup’soperationcausedbyclimatechangeimpacts,suchas extremeheat,extremerainfall,heatstress,precipitationstress,droughtstress,fireandsealevelrise. Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT TheGroup’sdirectoperations mightbeaffectedbyphysical impacts,whichmayleadto increasedcostsforrepair/ retrofitofimpactedassets anddecreasedrevenuedue tooperationaloutages. Exposureofeachasset isdeterminedbasedon locationandtheseverity/ intensityofaclimate hazardoccurringateach location,withthevalue exposedbeingthefull assetvaluelocatedinan areaofmaterialclimate hazardintensity. Netzero L H H TheGroupwillcontinuetoanalysea varietyoflocationswhicharekeytothe business,coveringimportantpartsofthe valuechain,ourinternaloperationsand importantcustomermarkets,anduse scenarioanalysisandclimatemodelling tobetterunderstandtherangeofphysical riskstheGroupisexposedto. Highest exposure countries: Nigeria,Indonesia Currentpolicies L H H Supplier operations Description of material risk or opportunity: BusinessinterruptionoftheGroup’ssuppliers’operationscausedbyincreasedfrequencyand severityoffloodrisk. Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT TheGroup’ssupplychain mightbedisruptedby physicalrisksresultingin increasedcostsandlossof revenueduetochangesin theavailabilityofgoodsand servicesfromsuppliers. Exposureofeachasset isdeterminedbasedon locationandtheseverity/ intensityofaclimate hazardoccurringateach location,withthevalue exposedbeingthefull assetvaluelocatedinan areaofmaterialclimate hazardintensity. Netzero L H H TheGroupanalysesexposureforarange ofacuteclimaterisksandputsmitigation plansinplace.Furthermitigationactions willprovidebusinessandorganisational resiliencetoacute/chronicrisks. Alternativesupplierswithlower exposuretoclimateriskmightbetaken intoconsiderationtomitigatetheriskin thefuture. Highest exposure countries: China,Taiwan Currentpolicies L H H L Low risk M Medium risk H High risk #### TRANSITION RISKS Carbon pricing Description of material risk or opportunity: Increasedcostsassociatedwithcarbonpricingandtaxation. Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT Carbonpricingalreadyexists insomeoftheGroup's jurisdictions,includingthe EUandUK.Underdifferent scenarios,carbontaxesare expectedtoincrease,which couldincreasetheGroup's directoperatingcosts, resultinginalossofrevenue. CarbonpricesfromNGFS appliedtoourlong-term emissionsforecasts. Scope1&2: netzero L L L Inoursustainabilitystrategy,weare settingambitioustargets;seepage33, toreduceGHGemissionsthroughoutour valuechain,reducingourdependenceon futurecarbontaxesandvoluntaryoff-set markets.Wealsomonitorgovernment policiesandclimatechangeactionsand take necessary steps to minimise the impactonourbusiness. Highest exposure countries: Nigeria Currentpolicies L L L Scope3: netzero L H H Currentpolicies L L L #### Taskforce On Climate-Related Financial Disclosures (TCFD) continued ST Short-term MT Medium-term LT Long-term PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 40 ![]() Extended producer responsibility Description of material risk or opportunity: IntroductionofcarbonfootprintlabellingandExtendedProducerResponsibility(EPR). Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT Increasingregulatory pressureandtaxesregarding thesustainabilityofmaterials usedinthemanufacturing ofproductsmayimpact profitabilitythrough increasedcostofgoods. EstimatedEPRcosts appliedtoourlong-term packagingforecasts. Netzero L H H Wemonitorregulatorydevelopmentsand workwiththewiderindustrytoprepare. Weareafoundingmemberofthe EcoBeautyScoreConsortium,whichaims todevelopanenvironmentalimpact assessmentandscoringsystemfor cosmeticproductstoenableconsumers tomakeinformedandsustainable choices.Wearealsoadoptingon-pack recyclinglabels(OPRL)labellingsystem acrosstheUKportfoliobeforetheEPR mandatorydeadline. Highest exposure country:UK Currentpolicies L L L Cost of energy Description of material risk or opportunity: Abruptandunexpectedshiftsinenergycosts. Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT TheGroupanticipates higherlevelsofenergyprice volatility.Thiswillimpact energycostsassociatedwith theGroup’soperations,which willalsoaffectoursupply chainresultinginincreased costsandlossofrevenue. EnergypricesfromNGFS appliedtoourlong-term energyforecasts. Netzero L L L Throughourcontinuousimprovement programmeinourfactories,wecontinue toincorporateenergyreductioninitiatives acrossoursitestominimisetheriskof increasedenergycosts. Highest exposure country:Nigeria Currentpolicies L L L #### OPPORTUNITY Energy efficiency Description of material risk or opportunity: Reducedenergycoststhroughefficiencygainsandcostreductions. Potential financial impact Modelling approach Scenario Relative impact How we’re respondingST MT LT Reducedenergycosts maydecreasetheGroup’s operationalcosts. EnergypricesfromNGFS appliedtoourlong-term energyforecasts. Netzero L L L Wewillcontinueimprovingtheenergy efficiencyofourassetsandsuppliers throughourcontinuousimprovement programmes,whichwillalsoresultin loweroperationalcosts.InFY24,we completedtheoutsourcingofpower generationatourIkorodu(Nigeria) manufacturingsite,reducingourcost perkWhby17%. Highest exposure country:Nigeria Currentpolicies L L L Metrics and targets Weconsidergreenhousegasemissions,energyconsumption,landfillwasteandpackagingreductionsasprincipalmetricsthatallow ustomonitorprogressregardingclimate-relatedrisksandopportunities.Weensureongoingfocusonourenvironmentalandsocial commitmentsthroughourapproachtotheRemunerationPolicyandrelatedincentiveschemes.Wedonotcurrentlyhaveaninternal carbonpricingmechanism.However,wewillcontinuetoassessthefeasibilityofintroducingonetomitigateourexternalexposureto carbontaxationandlegislation. Wewillcontinuetoensureourmetricsandtargetsareappropriateforourriskprofileandexpandourmetricsinthefuture,considering theTCFDall-sectorandcross-industrymetricguidance.Wecurrentlyuseourexistingenvironmentalmetricstotrackprogressagainstour targetsandwillfurtherdevelopprocessestobettertrackandmanageourprogressovertime. Fulldetailsonourmetricsandtargets,includingtheKPIsweusetotrackprogress,canbefoundonpages 32 to 35ofthisAnnualReportandAccounts 41 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Risk Management and Principal Risks #### HOW WE #### MANAGE RISK. RISK CULTURE PZ Cussons is committed to conducting its business responsibly, prioritising safety and adhering to all legal requirements. We integrate risk awareness into our decision-making processes, ensuring informed responses to both opportunities and potential threats. As an international business, we acknowledge the inherent risks and uncertainties associated with executing our strategy across our key markets. Through effective risk management practices and proactive identification of opportunities, we strengthen our capacity to achieve our strategic objectives. GOVERNANCE AND OVERSIGHT TheBoardhasultimateresponsibilityforestablishingthe Group'sriskappetiteandensuringtheeffectivenessoftheRisk ManagementFramework.Thislatterresponsibilityisdelegatedto theAuditandRiskCommittee,whichreviewsthemostsignificant risksfacedbytheGroupatleasttwiceayear.TheBoardhas completedarobustassessmentoftheGroup'semergingand principal risks. WhiletheAuditandRiskCommitteeconductsin-depthreviewsof specificrisks,otherBoardCommitteesandsub-committeesalso reviewrisksrelevanttotheirrespectiveareasofoversight. Atthemarketlevel,businessunitleadershipteamsimplementthe RiskManagementFrameworkwiththesupportofanetworkof RiskChampions.LeadershipteamssupportedbyRiskChampions areresponsibleforensuringtheaccuracyandrelevanceofmarket levelriskinformation,thatmayrequireescalationtotheAuditand RiskCommitteeasnecessary. AttheGrouplevel,theExecutiveCommitteeadoptsacombined top-downandbottom-upapproachtoreviewingrisksacrossthe Group.Thisensurestheidentificationandmonitoringofboth strategicandoperationalrisksofsignificantimpact.TheExecutive CommitteealsoassessallPrincipalRisksandemergingrisksand mayconductdeeperanalysesofcriticalPrincipalRiskstoverify adequateresourceallocationforcontrolsandmitigations. OwnershipofeachPrincipalRiskisassignedtoaspecificExecutive Committeemember.TheGroupInternalAuditFunctionprovides independentassurancetoboththeExecutiveCommitteeandthe AuditandRiskCommitteeregardingtheeffectivenessoftheRisk ManagementFrameworkandinternalcontrolsystems.Forjoint ventureagreements,whereapplicable,theGroupimplementsits establishedriskmanagementprocesses. ItisimportanttonotethattheGroup'sriskmanagement processesaredesignedtomanage,noteliminate,riskentirely. Theseprocessesprovidereasonable,butnotabsolute,assurance againstmaterialmisstatementorloss. #### Board of Directors Definespolicy,setsriskappetiteandassessesPrincipalRisksfortheGroup. Hasoverallresponsibilityforsoundriskmanagementandinternalcontrols. AUDIT AND RISK COMMITTEE Assessesandreviews theeffectivenessofthe Group’sRiskManagement Frameworkandinternal control systems. EXECUTIVE COMMITTEE EnsuresthattheRisk ManagementFramework isembeddedandoperates throughouttheGroup. Regularlyreviewsthe regionalandconsolidated riskregistersandensures thatmitigationactivities are in place. GROUP RISK TEAM Overseestheconsistent applicationoftheGroup’sRisk ManagementFramework. REGIONAL AND BUSINESS UNIT MANAGEMENT EnsuresthattheRisk ManagementFramework isembeddedataregional andlocallevel.Regularly reviewstheriskregister andensuresthatmitigation activitiesareinplace. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 42 ![]() RISK APPETITE TheBoardiscommittedtomanagingriskinawaythatisalignedwithourvisionandculture.Weareawareofthemanyrisksthat ourbusinessfacesandwehaveaprocessinplacetoidentify,assessandmitigatetheserisks. Wehavealowerriskappetiteforrisksthatcoulddamageourreputationorbusinessopportunities.Theseincluderisksrelatedto: • Productsafetyandquality • Healthandsafety • Legalcompliance • Environmentalandregulatorycompliance • Cybersecurityanddataprotection. Wehaveahigherappetiteforrisksthatareassociatedwithgrowthandtheachievementofourboldstrategicambitions.Theseinclude: • Ourinvolvementinemergingmarkets • Businesstransformation. Weseektomitigateourriskexposuretowithinappetitethroughavarietyofmeansincludinginsurancecover,planningandcontrol processes,andnaturalportfoliohedgessuchasthediversityofoursupplychain,brandandproductranges,andglobalfootprint. OUR RISK MANAGEMENT METHODOLOGY TheGroupleveragesacomprehensiveriskmanagementprocessandstandardisedframeworktoproactivelyidentify,assess,andmitigate risksthatcouldimpedethesuccessfulexecutionofourstrategicobjectives.Theriskmanagementmethodologyandframeworkare appliedconsistentlyacrossalllevels,encompassingPrincipalRisksdowntomarketandoperatingunitlevels. InFY24,weenhancedourriskmanagementmethodologyandframework,ensuringconsistencyofapplication,relevantriskassessment criteriaandanimprovedbottom-upprocess.Thestrengthenedframeworkandmethodologyhavebeenbolsteredbyadedicated programofengagementandtrainingactivities,includingworkshops,theembeddingofRiskChampionsacrosstheGroup,andenhanced reportingandinsights.TheseinitiativescontributesignificantlytofosteringarobustriskculturethroughouttheGroup. Theinitialidentificationofrisks, includingemergingrisksatthe operationallevel. Theresultsandstatusofthose riskactionsaremonitoredbythe GroupRiskTeam,management andsecondlineassurance functions. Thestatusofriskactionsis reportedfrequentlytothe AuditandRiskCommittee. These risks are then assessed, includinganassessmentofthe potentialimpactoftheriskon ourbusiness,andtheextentto whichtheriskcanbemitigated orcontrolled. Actionsareimplemented byregionalandbusiness unitmanagement. Mitigatingactionsare then planned,agreedand communicatedtotherelevantrisk ownersthroughouttheGroup. 43 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Risk Management and Principal Risks continued EMERGING RISKS Aformal,biannualreviewofemergingrisksisundertakenbytheAuditandRiskCommitteeinconjunctionwiththePrincipalRisks assessment.Inaddition,newandemergingrisksareidentifiedinanumberofwaysasillustratedinthediagrambelow. Webelievethatourapproachtoidentifyingnewandemergingrisksiscomprehensiveandeffective.Bytakingavarietyofapproaches,we areabletoidentifyrisksthatmaynotbeimmediatelyobviousandtotakestepstomitigatethembeforetheycauseharmtoourbusiness. OUR PRINCIPAL RISKS Themostsignificantrisks,thosethatcouldaffectourstrategic ambitions,futureperformance,viabilityand/orreputation, formourPrincipalRisks. ThefollowingtablesetsoutourPrincipalRisks.Thisincludesa summaryofkeyinformation,includingthetypeofrisk,linkstoour strategicdriversandresidualrisktrends.Thislistdoesnotinclude allourrisks.Otherrisks,notpresentlyknown,orthosewecurrently considertobelessmaterial,mayalsohaveadverseeffects. Changes to our Principal Risks in the year: AsperourRiskManagementFramework,weformallyassessthe PrincipalRisksfacingtheGrouponabi-annualbasis;theresults ofthatassessmenthaveidentifiedchangestothePrincipalRisks: Macro-economic and Financial Volatility, inc. Foreign Exchange AsaglobalGroup,macro-economicandfinancialfactorsimpact theGroupinanumberofwaysincludingglobalfinancialmarket volatilityimpactingexchangerates,particularlyinNigeria,political changeresultinginevolvingtaxregimes,andworldwidemarket dynamicsimpactingaccesstocapital.TheGrouphaveupdated thisPrincipalRisktomoreaccuratelyreflectthebroadscope ofriskfactors,havingpreviouslybeencalled'FinancialControls (ForeignExchange,TreasuryandTax)'. Geopolitical Instability GiventheglobalfootprintoftheGroup,theeffectsofincreasing geopoliticaltensionsandescalatingconflicts,alongsideglobal politicalupheavalrelatedtoelectionsandenergycrises,impactour businessoperationsandsupplychain.TheGrouphaveupdatedthis PrincipalRisk,previouslycalled‘MarketandEconomicDisruption inc.EmergingMarkets’tobetterreflecttheimpactstotheGroup. Consumer Safety Inpreviousyears,the'HealthandSafety'PrincipalRiskhas encompassedbothemployeehealthandsafetyandconsumer safety.Recognisingthatconsumersafety,especiallyinbaby foodproductssoldinAustraliaandNewZealand,istheprimary riskdriver,theGrouphasupdatedthisPrincipalRiskwhilestill includingtheemployeehealthandsafetyelements. The Principal Risks that have increased in the year: Talent Development and Retention ThestrategicreviewofourAfricanbusinessincreasesthe‘Talent DevelopmentandRetention’PrincipalRiskintheregionowingto uncertainty,coupledwiththisistherelatedtalentandpeoplerisks associatedwithotherongoingstrategictransformationprogrammes. Business Transformation Wearestrategicallytransformingthebusinessbyenhancingour organisationaldesignandimprovinginternalefficienciestoreduce complexity.Consequently,duetoitssignificanceforthefutureof theGroup,the‘BusinessTransformation’PrincipalRiskisincreasing. Reporting to the Board: Potentialnewandemergingrisks arereportedtotheBoardand consideredduringitsperiodic reviewsofGrouprisks. Discussions with external advisers: 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Groupisalso amemberofvarioustradeand industrybodiesacrosstheworldand leveragestheexperienceofitspeers andexternalindustryexperts. Considering Principal Risks: Informulatingandevolvingthe Groupriskregister,theExecutive CommitteeandtheBoardconsider thePrincipalRisks,andthose identifiedbyindividualmarketsand functionstodeterminewhether thereareanynewriskswhichrequire Group-widefocusandmitigation. Awareness of emerging macro trends: Ourin-houseGroupRiskTeamensures weareawareofemergingmacro trendsandrisksassociatedwithour industryandgeographicalfootprint. R E P O R T I N G P R I N C I P A L R I S K S A W A R E N E S S E X T E R N A L A D V I S O R S PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 44 ![]() TREND Increased No change Decreased New LINK TO STRATEGY Build Brands Serve Consumers Reduce Complexity Grow Sustainably Develop People RISK 1: MACRO-ECONOMIC AND FINANCIALVOLATILITY INC. FOREIGN EXCHANGE Trend: Link to Strategy: Description of risk: How we manage the risk: Duetoourinternationalfootprint,weare exposedtoavarietyofexternalfinancialrisks inrelationtoForeignExchange,Treasuryand Tax.Macro-economicvolatilityanddisruption cancausetherelativevalueofexchangerates tofluctuatesignificantlyand,asaresultofour globaloperations,canhaveamaterialimpacton financialperformance.Inaddition,becausewe consolidateourfinancialstatementsinGBP,we aresubjecttoexchangerateriskassociatedwith thetranslationofourunderlyingnetassetsand earningsofourforeignsubsidiaries. Givenourgeographicfootprint,wearealso subjecttoexchangeratefluctuationsand macro-economicpoliticaldecisionsand theconsequencesthereofinsomeofour jurisdictionsthatimpactourabilitytoaccess foreigncurrencytosettleintercompanyliabilities thatmayincludetherepatriationofcashto theUKbywayofdividendpayments.InFY24, wesawthismacroeconomicandfinancial volatilitymateriallyimpacttheGroupduetoour operationsinNigeriaandexposuretotheNaira. Amaterialshortfallinouroperatingcashflow and/orourabilitytoaccessappropriatesources andlevelsoffundingcouldundermineour ongoingbusinessactivityandthenextstageof businesstransformation.Intimesoffinancial volatility,wemaynotbeabletoraisefunds oraccesscreditinanappropriatejurisdiction duetomarketilliquidity.Wearealsoexposed tocounterpartyriskswithbanks,suppliers, customersandothercreditproviderswhich themselvescouldbeimpactedbymacro- economicvolatilityandhencecouldresult infinanciallossestotheGroup. Taxisacomplexandeverevolvingareawhere lawsandtheirinterpretationchangefrequently, andwhichmayleadtounexpectedornewtax exposures.AsaglobalGroup,wearesubjectto transferpricingandgeneraltaxationpoliciesand regulation,whicharealsosubjecttointernational andlocalregulatorychangesthatmayhavean impactonbusinessperformance. • ManagingtheGroup'sexposuretotheNairaisakeypriorityfortheExecutive Committee.AdedicatedSteeringCommitteemeetsregularlytocloselymonitor foreignexchangeriskanddevelopstrategiestomanagetheGroup'sexposure • TheAuditandRiskCommitteeoverseestreasuryandtaxrelatedrisks,witha significantfocusandoversightonforeignexchangeexposurerelatedtotheNigerian currency,theNaira.Additionally,theCommitteeoverseestaxandtreasurystrategy, potentialtaxobligations,andfinancialcontrols • Aspartofthemonthlybusinessperformancecycle,cashflowforecastsfromoperating unitsarereviewed,scrutinisedandconsolidated;themonthlyperformancecycle alsoincludesindepthanalysisoftheoutlookforallcovenantsrelatedtoourbanking facilitiestoinformstrategicdecision-making • WemaintainanestablishedGroupTreasuryfunctionandourGroupTreasuryPolicy definesournon-speculativeapproachtothemanagementofforeigncurrencyand otherfinancialmarketexposures • Transactionalcurrencyexposuresaremanagedwithinprescribedlimitswith short-tomedium-termforwardexchangecontractstakentoreduceourexposure tofluctuations • Marginimprovementprojectstodeliversavingsandmitigatethecostimpactof currencydevaluation,aswellascashrepatriationstrategiestomovecashfrom NigeriatotheUKandreduceborrowingcostsandinterestpayments,areinplace • Localsourcingofrawmaterialsandservicestakesplacewherepossibletoreduce exposuretoforeigncurrencytransactionsandinflation • AGrouptaxationstrategyisinplacethatdefinesthewayinwhichweconduct ourselveswithrespecttoourtaxaffairs.Ourin-houseGroupTaxcapabilityis complementedbytheuseofspecialisttaxconsultantstoensurecompliancewith alllocalandinternationaltaxregulationsandtreaties,andtoensurethatchanges inregulationsaretakenintoconsiderationaspartofourfuturebusinessstrategy • Treasuryandtaxcontrolsareanimportantpartofouroverallfinancialcontrol framework,whichcontinuestoevolvetoremainfitforpurposeandreflective ofthenatureofbusinessrisks. 45 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() RISK 2: IT AND INFORMATION SECURITY Trend: Link to Strategy: Description of risk: How we manage the 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 asignificantnegativeimpactontheperformance oftheGroup. Ongoingglobalinstabilityanduncertaintyhave kepttheriskofcyberattackshigh,potentially affectingthesecurityofthepersonaldatawe holdaswellasbusiness-criticalinformation, andtheautomatedsystemsweuseacrossour supply chain. Additionally,thegrowinguseofgenerativeAI introducesnewandadaptivecybersecurity threats,increasingtherisksassociatedwith databreaches. • AcentrallygovernedITfunctioncontinuallymonitorsknownandemergingthreats that may impact us • Anindustry-approvedcybersecuritycontrolframeworkhasbeendeployedand externalreviewsofthisframeworkhavebeenconducted,evidencingitseffectiveness • Wehavedeliveredacomprehensiveinformationsecurityawarenessprogrammeto ensurebothbusinessandpersonalinformationremainprotected • Criticaldataisbackedupregularlyinaccordancewithourcontrolframeworkand recoverytestingisundertaken • WehavefurtherembeddedourrelationshipwithourdedicatedCybersecuritypartner, includingmakinguseofadditionalmodulesintheyear • WehavecontinuedourrelationshipwiththeNationalCyberResilienceCentre toensureweareawareofemergingrisksaroundCyberIncidentResponse(and reactions,includingransomapproach),industryinsightsandapproachesand cyberintelligence • WehaveanITriskgovernanceframeworkinplace,withriskinformationreviewed monthlybytheITLeadershipTeam,managingtheriskprofileforthedeliveryof ITServicesacrossCybersecurity,ITOperationalRisk,AuditandComplianceand DisasterRecovery • TheITinformationSecurityRiskCommitteeisnowfullyestablished.Thisgroupmeets monthlyandhasrepresentationfromHR,Marketing,SupplyChain,Legal,Audit andRiskandIT.TheCommitteegovernsandreviewsitemssuchastheuseofAI, cyberattacksandremediations,andotherITsecurityrisks • AcomprehensivesuiteofITpoliciesisinplacecoveringacceptableuse,network security,removablemedia,informationsecurity,ITandthird-partysecurity,access controlandmanyothers. RISK 3: BUSINESS TRANSFORMATION Trend: Link to Strategy: Description of risk: How we manage the risk: Businesstransformationencompassesboththe reviewoforganisationaldesignandongoing functionalandoperationalchanges,aimedat reducingcomplexities,drivingefficienciesand deliveringenhancedshareholdervalue. Wecontinuetotransformthebusinessacrossall functionalareasandmarketstoachieveourlong- termstrategicaims.Wemustsuccessfullymanage theimpactsoftheseongoingactivities,whileat thesametimedeliveringunderlyinggrowth. Therearebusinessrisksrelatedtothe achievementofourtransformativeobjectives, includingouracquisitionsanddisposalsstrategy, organisationaldesignchangesaswellas technologyandinfrastructuralchallenges. Wehaveawide-rangingnumberof transformationprogrammes;failuretoexecute theseinitiativeseffectivelycouldresultin adeclineinbusinessperformanceoran under-deliveryoftheexpectedbenefitsand consequentlyimpactthereturnweareable tomaketoourshareholders. • Periodicreportingonkeybusinessandfunctionalbusinesstransformationinitiatives isprovidedtotheAuditandRiskCommittee • Allsignificanttransformationprogrammesaresponsoredandownedbyamember ofourExecutiveCommittee • AcrossourtransformationprogrammewehavededicatedSteeringCommittees,often chairedbyExecutiveCommitteemembers,includingtheChiefExecutiveOfficerand ChiefFinancialOfficerandprojectdeliveryteams,whoconductin-depthanalysisof progressandregularlyreporttotheBoard • OurGroupwideControlsTransformationProject,whichimprovestheglobalcontrol framework,hasbeenbroughtin-houseandnowoperatesas'businessasusual' • AnewGlobalTransformationDirectorhasbeenappointedtooverseetheCompany transformationagenda,whichwillfurtherstrengthenthemanagementofthisrisk intoFY25 • OurGroupInternalAuditfunctionissupportingthemanagementandoversight ofkeytransformationprogrammesasabusinesspartneringexercise • Thetransformationofourinternalbusinessandconsumerdatacapabilityisled byadedicatedspecialistteamtosupportourwiderdigitaltransformation. #### Risk Management and Principal Risks continued PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 46 ![]() TREND Increased No change Decreased New LINK TO STRATEGY Build Brands Serve Consumers Reduce Complexity Grow Sustainably Develop People RISK 4: TALENT DEVELOPMENT AND RETENTION Trend: Link to Strategy: Description of risk: How we manage the risk: Werecognisethattodeliversustained,profitable growthwerequirethebesttalent.Weare focusedonattracting,developingandretaininga diverserangeofskilledpeoplewiththepotential todeliverourambitiousgrowthagenda. Thecompetitionfortoptalentremains high;attractingkeytalentinsomeregionsis challengingduetomarketdynamicssuchasin Nigeriawiththetrendtoemigrationofnationals, andinbothIndonesiaandtheUKwithhighly competitiveemploymentmarkets. Withcontinuedglobaluncertainty,wealsosee employeeengagement,rewardandwellbeingas continuedpriorities. Theimpactofthestrategicreviewofour Africanbusiness,alongwithothertransformation programmes,isalsofactoredintothisPrincipalRisk. • Specificemployeeretentionstrategieshavebeenimplementedwithinourbusiness toensureappropriateemployeemanagementandmaintenanceisachievedduring aperiodoftransformationalchange • Wecontinuallymeasureoverallengagementandourengagementscoreshavebeen consistentoverthelastthreeyears,despitealandscapeofinternalandexternal change.96%ofourpeoplecompletedthesurvey,andweachievedanengagement scoreof73% • Wecontinuetohavevibrantandopenconversationswithourpeople,throughGroup- widesocialmedia,communicationplatformsandquarterlyglobalTownHallmeetings; theseareaugmentedbyweeklyteamandmarket‘Pulses’andregular‘PZTalks’ designedtokeepemployeesinformedofkeystrategicinitiativesandgoals • Wehaveacontinuedfocusonwellbeing,withspecificinitiativesinourmarketsaimed atsupportaroundhealthandwellnesseducation.Weencouragework/lifebalance, includingonFridays,whenmanyofouroffice-basedpeopleareabletofinishwork at 1pm • Ourglobalperformancemanagementprocesshelpsourpeopletoreachhigh performance,growtheirskillsandexperience,andprogresstheircareer • ThroughtheuseofLinkedInLearningandotherexternallyhostedtrainingplatforms, wehavemadecontinuousskillsdevelopmentavailabletoall • Wemanagearegularcycleoftalentandsuccessionplanningforourseniorleadersat alllevelsofthebusiness.Usingourpeoplesystem(Workday),wehavevisibilityofthe experience,potentialandaspirationofourpeople;unlockingourabilitytoidentify andmovetalentaroundPZCussons.Wehavealsoassessedtherisktoandimpact ofretentionofourfutureleadersandcriticaltalent • FY24sawthefurtherembeddingofourWorkdaysystem,drivingbetteremployee performancemanagement,feedback,talentmanagementandlearning.Allemployeescan seetheexplicitlinkbetweenemployeegoals,performance,developmentandreward • Wecontinuetoofferhybridandvirtualworkingarrangementsacrossourmarkets, whichareenabledbythedeploymentofITplatformssuchasMicrosoftTeamsand Office365aswellasensuringourofficesaresetuptechnologicallyforbothhome andofficeworkingemployeestocollaborate. 47 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() RISK 5: CONSUMER AND CUSTOMER TRENDS Trend: Link to Strategy: Description of risk: How we manage the risk: Ourconsumerscontinuetofacecost-of-living crisesacrossourmarkets.Theriskofcompetition inthemarketplace,especiallyinonline-only offeringsandacrosslowerquality,lower pricedproducts,continuestorepresentarisk tothefinancialperformanceoftheGroupas consumerscontinuallyreviewexpenditureon keyhouseholditems. Failuretounderstandourconsumers,manage ourcustomerrelationshipsandinnovatein responsetounderlyingtrendscouldleadto financialandreputationallossfortheGroup. • Weusethelatestmarketresearchandinsightsdata,includingtheuseofAItomonitor ourconsumers’needs • Specialistonline-onlymarketingandsalesteamsareinplace • Wecontinuetofocusonmaintainingstrongrelationshipswithourexistingcustomers anddevelopingrelationshipswithnewcustomers • Weremainfocusedoncuttinganycostswecanfromourproductsthatdonotimpact theconsumerexperienceorsacrificeperformanceorquality • Wehavediversifiedourproductoffering,includingbrandstargetedatamorecost focusedconsumerbase • Wehaveinvestedinourinternalbusinessandconsumerdatacapabilitytomore closelyanalyse,andadaptto,changingconsumertrends • WehaverenewedourfocusonR&Dandinnovation,placingitattheheartof ourstrategy. RISK 6: GEOPOLITICAL INSTABILITY Trend: Link to Strategy: Description of risk: How we manage the risk: Geopoliticalevents,includingconflicts,trade wars,economicandpoliticalpolarisation, nationalisationofsupplychainsandenergy crisescoulddisruptouroperationsbothwithin themarketsinwhichweoperateandalsoinour widersupplychain. Additionally,politicalinstabilitycanleadto changesingovernmentpolicies,regulations, andtaxes.Thisriskisparticularlystarkacross emergingmarkets,mostnotablywithin Nigeria,andcanleadtodisruptiontobusiness operations,increasedcosts,anddifficultyin strategicforwardplanning. Politicalinstabilityinresource-richregionscan leadtosignificantfluctuationsinthepriceof rawmaterialsandenergy,impactingproduction costs.Tradewarsandembargoescanleadto increasedtariffsandimport/exportrestrictions, drivingupthefinalcostofgoods.Geopolitical volatilitycanalsoincreaseinsurancepremiums forbusinessesoperatinginriskyregions. Failuretoreacttochangingmarketconditions couldleadtoamaterialeffectontheGroup’s financialperformance,marketshareor reputationalstanding. • WehaveadedicatedGroupRiskManagementFunctionthatreportstotheBoard, viatheAuditandRiskCommitteematerialmattersofconcerninrelationtoemerging Geopoliticalrisks • Wehavebrandsacrossmultiplesegmentsandpricepointsacrossmultiplemarkets, whichensureswehavesufficientdiversificationacrossourproductmixtocaterfora widerangeofconsumersandwecontinuetodiversifyourproductioncapabilitiesand thesimplificationofourglobalsupplychain • OurGlobalProcurementTeamestablishesforwardcontractswherepossibleto mitigatetheexposuretoinstabilityinrawmaterialcommodityprices • Wehaveextensiveexperienceoperatingwithinemergingmarketsandusethis experiencetomanageregionalisedinstabilityrisks • Withbothourin-houseandexternallegalexpertise,weensureweareawareof emergingmarket-relatedlegalandcompliancerelatedrisks • Trendsinrelationtogeopoliticalinstabilityaremonitoredandmodelledregularlyand integratedintoourmonthlybusinessperformancecycle. #### Risk Management and Principal Risks continued TREND Increased No change Decreased New LINK TO STRATEGY Build Brands Serve Consumers Reduce Complexity Grow Sustainably Develop People PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 48 ![]() RISK 7: LEGAL AND REGULATORY COMPLIANCE Trend: Link to Strategy: Description of risk: How we manage the 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significantfinesandthepossibilityof criminalliability. AstheuseofgenerativeAIcontinues,thereisan increasedriskofIPinfringementandleakageof confidentialinformationasemployeesestablish howtousethenewtools.Thereisalsoan increasedriskthatregulationsfailtokeeppace withtheemergingtechnologies,exposingthe Grouptopotentialissues. Alongsidethis,likeallcompanies,weareexposed tolitigationriskinthemarketsinwhichwe operateandmustcontinuallyremainvigilant totheriskoffinancialliabilityinrespectofour contractualobligations. • WehaveanexperiencedEthicsandComplianceTeam,ledbyourHeadofEthics& Compliance,reportingintotheGeneralCounsel,withourethicsandcompliance programmebeingoverseenbytheAuditandRiskCommitteeandCompanySecretary • OurGroupRiskTeamisnowestablished,overseenbytheAuditandRiskCommittee • 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areuptodatewithallrelevantlawsandlegalobligations • Wearesupportedbyanetworkofexternalexpertswhocanbeengagedasrequired andhelpustohorizonscanandidentifyemergingrisks.Thisisparticularlyimportant indevelopingcountrieswherechangesinthelawcanbesuddenandunpredictable • WehaveaGroup-wideCodeofEthicalConductwhichemployeessignuptoandthis iscomplementedbyanannualcertificationexercise • Wehaveacomprehensivetrainingprogrammeincludingethicsandcomplianceand anti-briberyandcorruptionmodules • WehaveacomprehensiveAIAcceptableUsePolicywhichisavailabletoallemployees viatheintranet,thisisoverseenbytheInformationSecurityRiskCommittee • In-houselegalleadswithineachMarketleadershipteam • Athird-partyconfidentialwhistle-blowinglineisinoperation,whichgivesemployees andcontractorsthechancetoraiseissuestobeinvestigatedbytheEthicsand ComplianceTeam. RISK 8: SUSTAINABILITY AND THE ENVIRONMENT Trend: Link to Strategy: Description of risk: How we manage the risk: Theeffectsofclimatechangerepresenta materialrisktothebusiness,thereforethe needtofindmoresustainablewaysofdoing businessisvital.Thisincludesensuringtheraw materialswerequireareresponsiblysourcedand efficientlyusedandthatwearearesponsible andintegralpartofthecommunitiesinwhich weoperate. Oneofourkeystrategicobjectivesistogrow sustainably.Tothatend,wehavesetourselves sciencealignedsustainabilitygoals;failure toachievethosetargetsrisksalienating keystakeholders,includingconsumersand customers,whoareincreasinglyfocusedon environmentalsustainabilityandtransparencyin supplychains,anddamagingthegoodwillinour brands,withconsequentlimitationofourability togrowandcreatevalue. • OurBoard-appointedEnvironmentalandSocialImpactCommitteeprovides governanceandoversightoverourSustainabilityFunctionandactivities.Belowthis, workingforumsareinsitu,includingregularfunctionalandregionalforumswith SustainabilityChampionsacrossdifferentdepartmentsandbusinessunits • DowJonesandSedexsupplierriskmanagementtools,whichincludesustainability factorsandrequirementsarenowwellembedded • FY24sawtherolloutofourSupplierSustainabilityPrinciples,outliningourkey expectationsandrequirements • Todriveawarenessandrelevancyofsustainabilitytoemployees’jobsandpersonal lives,wehaveanemployeeintranethuboutliningourstrategicaims,sustainability ambitions,ourprogrammealliancesandpartnershipsandgeneralsustainableliving practicesandexamplesforemployeesintheirdailylives • OurcarboninventoryforScope1,2and3isverifiedbythird-partyexpertsandis publishedonourwebsite. 49 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() RISK 9: CONSUMER SAFETY Trend: Link to Strategy: Description of risk: How we manage the risk: Ourbrandportfolioincludeswashingandbathing items,beautyproductsandfooditems,assuch thesafetyandqualityofourproductsisof paramountimportancetotheGroup;theriskof contamination,mislabellingorunsafeuseofraw materialsremainsasignificantrisktotheGroup. Afailureinthepracticesweadopttoensure consumersafetymayresultinreputational damage,significantfinanciallossfromproduct recallsandfinesfromregulators,togetherwith possiblecriminalliabilityfortheGroup. • Weapplyrobustqualitymanagementstandardsandsystems,rigorouslymonitoring themthroughoutallsupplychainstages.Thisappliesnotonlytoourownproduction facilitiesbutalsotoourthird-partymanufacturers • Welaunched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thequalityofourproductsareactivelyinvestigatedto ensurethattimelyandeffectiveactionistaken • ThesameappliestohealthandsafetyincidentsacrosstheGroup,whereweseek toidentify,assessandrespondtoincidentstoensurewecontinuouslyimproveour HealthandSafetyFramework. RISK 10: SUPPLY CHAIN AND LOGISTICS Trend: Link to Strategy: Description of risk: How we manage the risk: Ourproductionanddistributionfacilitiescould beseverelyimpactedbyadverseeventsaffecting thecontinuityofsupply,suchasafailureofa keysupplier,ahealthandsafetyincident,an environmentalfailure,orglobalevents. Ourconsumersandcustomerscouldbeseverely impactedbymaterialincreasesininputcostsof rawmaterials,freightanddistributioncostsand aninabilitytosupplyfinishedproducts. Failuretogettheproducttoourconsumersor failingtoprovidethatproductatareasonable pricecouldhaveamaterialeffectonbusiness performanceandourreputationalstanding. • Weundertakearigorousselectionprocessbeforeengagingwithnewthird-party suppliersandperformongoingauditsandperformancemonitoringtoensurethat contractedstandardsarebeingmaintainedorexceeded • Wehaveinplaceathird-partyriskmanagementsolution,whichenablesustoforesee emergingthirdparty-relatedrisksandissues • WeusemultiplesupplierswherepossibleandhaveadedicatedGlobalProcurement Teamwhocansourcealternativesupplierswherenecessary,complementedbyaQuality ManagementTeamabletoappropriatelyassesspotentialreplacementproducts • 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 • Weuseourgloballyrecognisedlogisticspartnerstoensureweareadequatelyaware ofspecificgeopoliticalorsecurityriskswithinthemarketsinwhichweoperate. #### Risk Management and Principal Risks continued TREND Increased No change Decreased New LINK TO STRATEGY Build Brands Serve Consumers Reduce Complexity Grow Sustainably Develop People PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 50 ![]() #### Viability and Going Concern GOING CONCERN STATEMENT TheGroup’sbusinessactivities,togetherwiththefactorslikely toaffectitsfuturedevelopment,performanceandpositionare setoutintheStrategicReport.Thefinancialpositionofthe Group,liquiditypositionandavailableborrowingfacilitiesare describedwithintheFinancialReview.Inaddition,note19ofthe ConsolidatedFinancialStatementsincludespoliciesinrelation totheGroup’sfinancialinstrumentsandriskmanagementand policiesformanagingcreditrisk,liquidityrisk,marketrisk,foreign exchangerisk,pricerisk,cashflowandinterestrateriskand capital risk. TheGroupmeetsitsfundingrequirementsthroughinternalcash generationandborrowings.Borrowingsareamountsdrawnunder bothcommittedanduncommittedborrowingfacilities.TheGroup hasa£325.0millioncommittedcreditfacilitywhichisavailable forgeneralcorporatepurposes.Asat31May2024,theGroup hadheadroomonthecommittedfacilityof£164.0millionand netdebtof£115.3millioncomprisingcashof£51.3millionand borrowingsof£166.6million. Inassessinggoingconcern,theGrouphaspreparedbothbase caseandseverebutplausiblecashflowforecastsforaperiodof 18monthsuntiltheendofNovember2026(the“goingconcern reviewperiod”),whichisatleast12monthsfromthedateof approvalofthefinancialstatements.TheGroup’sbasecase forecastsarebasedontheBoard-approvedbudgetandthe firstyearofthecurrentfive-yearplan,andindicateforecasted continuedcompliancewithitsbankingcovenantsandsufficient liquiditythroughoutthegoingconcernreviewperiod. TheDirectorshaveconsideredaseverebutplausibledownside scenario(excludingtheuncertaintyregardingtheNigerianNaira) whichmodelsthefollowingassumptions: • 5%reductioninGrouprevenue;and • Groupgrossmargindeclineof200bps. Thisdownsidescenarioalsoshowsbothcontinuedcompliance withitsbankingcovenantsandsufficientliquiditythroughoutthe goingconcernreviewperiod. However,overthepastyeartherehavebeensignificant fluctuationsintheNairaexchangeratewhich,duetothesize oftheGroup’soperationsinNigeria,needstobeconsidered aspartofourgoingconcernassessment.TheDirectorshave thereforeconsideredanadditionalseverebutplausibledownside NairaexchangeratescenariotostresstesttheGroup’sfinancial forecasts,usingaNairaexchangeratedeclineofgreaterthan10% fromtherateasatthestartofSeptember2024.Thisunmitigated downsidescenarioshowsapotentialbreachoftheinterestcover financialcovenantasat29November2024whichifmanagement mitigationactionsprovedinsufficient,wouldresultintheGroup needingtonegotiateawaiverofitsinterestcovercovenantto ensurethebusinessmeetsitsborrowingfacilityobligationsover thegoingconcernreviewperiodasthecommittedcreditfacility maybecomerepayableondemand.TheDirectorsaresatisfied thatthisunmitigateddownsidescenariodoesnotpotentially breachanyoftheGroup’sotherfinancialcovenants. Managementconsidertheretobesignificantandfeasible mitigationsinplace.Theseincludebothshort-termandstructural costreductions,aswellasthepotentialdisposalofnon-core, non-operatingassets.Althoughmanagementacknowledges thatcertainofthesemitigationsareoutsidetheircontrolin theveryshortterm,anumberofthesemitigatingactionsare alreadyunderway. TheGroupiscurrentlyengagedinaprocesstosellitsSt.Tropez brandandisexploringpotentialtransactionsthatcouldleadtoa partialorfullsaleofitsAfricabusiness,havingreceivedanumber ofexpressionsofinterest.ApartialorfullsaleoftheGroup’s AfricabusinesscouldmateriallyreducetheGroup’sexposureto fluctuationsintheNairaexchangerate.TheBoardhascommitted tousinganyproceedsfromthesetransactionstofirstreduce grossborrowings,andconsequentlytheleveloftheGroup’snet interest cost. Afterreviewingthecurrentliquidityposition,financialforecasts, stresstestingofpotentialrisksandconsideringtheuncertainties describedabove,andbasedonthecurrentfundingfacilities,the DirectorsexpecttheGrouptohavethefinancialresourcesto continuetooperatethebusinessfortheforeseeablefuture.For thesereasons,theDirectorscontinuetoadoptthegoingconcern basisofaccountinginpreparingtheGroupfinancialstatements. However,shouldmanagementmitigationsproveinsufficient, theimpactofNairaexchangeratevolatilityonforecastinterest cover covenant compliance represents a material uncertainty that maycastsignificantdoubtupontheGroup’sabilitytocontinue asagoingconcern.Thefinancialstatementsdonotinclude theadjustmentsthatwouldresultiftheGroupwereunableto continueasagoingconcern. VIABILITY STATEMENT Assessment of prospects InassessingtheprospectsoftheGroup,theBoardhastaken accountofthefollowing: • TheBusinessmodelonpages14to15andtheGroup’s diversifiedportfolioofproducts,operationsandcustomers, whichreduceexposuretospecificgeographiesandmarkets, aswellaslargecustomer/productcombinations,strongproduct demand,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cashgenerationandthattheGroupcurrently hassignificantcommittedfacilitiesheadroominitsexisting committedbankingarrangements. 51 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Viability and Going Concern continued Assessment of viability Indeterminingtheappropriateviabilityperiod,theBoardhas takenaccountofthefollowing: • Thefinancialandstrategicplanningcycle,whichcoversa five-yearperiod.Thestrategicplanningprocessisledbythe ChiefExecutiveOfficerandisfullyreviewedbytheBoard • Theinvestmentplanningcycle,whichalsocoversfiveyears. TheExCoconsiders,andtheBoardreviews,likelycustomer demandandmanufacturingcapacityforeachofitskeymarkets. Thefive-yearperiodreflectsthetypicalmaximumleadtime involvedindevelopingnewcapacity.TheBoardconsiders that,inassessingtheviabilityoftheGroup,itsinvestmentand planninghorizon,supportedbydetailedfinancialmodelling, thatfiveyearsistheappropriateperiod. Assessment period TheBoardhavedeterminedthatthefive-yearperiodtoMay 2029isanappropriateperiodoverwhichtoprovideitsviability statement.ThisperiodformspartoftheGroup’sstrategicplanning processandreflectstheBoard’sbestestimateofthefuture viabilityofthebusiness. Scenario testing TotesttheviabilityoftheCompany,wehaveundertakenarobust scenarioassessment: • ‘Top-down’sensitivityandstress-testing.Thisincludeda recentreviewbytheAudit&RiskCommitteeoffive-yearcash projectionswhichwerestresstestedtodeterminetheextent towhichtradingcashflowswouldneedtodeterioratebefore breachingtheGroup’sfacilities.Inaddition,thefinancial covenantsattachedtotheGroup’sdebtwerestresstested • Thelikelihoodandimpactofseverebutplausiblescenariosin relationtoprincipalrisksasdescribedonpages44to50.These principalriskswereassessedbothindividuallyandcollectively. Whiletheprincipalrisksallhavethepotentialtoaffectfuture performance,none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five-year assessmentperiod. InconcludingonthefinancialviabilityoftheGroup,having consideredthescenariosreferredtoabove,theDirectorshavea reasonableexpectationthattheCompanyandtheGroupwillbe abletocontinueinoperationandmeetallitsliabilitiesastheyfall dueuptoMay2029.Fortheviabilityassessment,management consideredtheavailabilityofcommittedcreditfacilitiesthrough theviabilityperiod.Duringtheprioryear,theGroupagreedanew £325.0millioncommittedcreditfacilitywhichincorporatesaterm loanandarevolvingcreditfacility,andtheBoardisconfidentthat duringtheperioditwillbeabletoexercisetheoptionsavailable toextendthefacility,andtoreplacethetermloanfacilitywhich maturesduringtheviabilityperiodatthesamelevelifrequired. Thescenariosmodelledareoutlinedonpage53andmanagement considertheretobesignificantandfeasiblemitigationsinplace suchthatnoindividualeventorplausiblecombinationofevents wouldhaveafinancialimpactsufficienttoendangertheviability oftheGroupintheperiodassessed.Thesemitigationsinclude bothshort-termandstructuralcostreductions,aswellasthe potentialdisposalofnon-core,non-operatingassets.Furthermore, thescenariosdonotreflectthattheGroupiscurrentlyengaged inaprocesstosellitsSt.Tropezbrandandisexploringpotential transactionsthatcouldleadtoapartialorfullsaleofitsAfrica business,havingreceivedanumberofexpressionsofinterest. TheBoardhascommittedtousinganyproceedsfromthese transactionstofirstreducegrossborrowings.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. Reverse stress testing 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significantlyfromthecurrentlevel, andtheBoarddoesnotbelievethisscenariotobeplausible. Insuchanevent,managementwouldtakemitigatingactionsto reducetheimpactofareductioninEBITDAby,forexample,strict managementoftheGroup’scostbase,andtightmanagementof theGroup’scash,forexample,reducingthedividendpayment, stoppingcapitalexpenditureandtakingotheractionsto preserve cash. Viability statement Afterconductingtheirviabilityreview,theBoardconfirm thatsubjecttothematerialuncertaintynotedinthebasisof preparationinnote1oftheConsolidatedFinancialStatements theyhaveareasonableexpectationthattheGroupwillbeableto continueinoperationandmeetitsliabilitiesastheyfalldueover thefive-yearperiodoftheirassessmentto31May2029. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 52 ![]() 2024 Scenarios modelled Link to Principal Risks Mitigation 1. MACRO-ECONOMIC AND GEOPOLITICAL Inability to repatriate cash back to the UK due to local market illiquidity –nocashrepatriatedtotheUKfromNigeriainFY25 andFY26. Nigerian Naira devaluation –reducedprofitabilityasaresult ofa50%devaluationoftheNigerianNairathroughoutthe viabilityperiod. 1.Macro-economic andfinancial viability 6.Geopolitical instability Sufficientcommittedcreditfacilitiesheadroom maintainedandtightcostcontrol. Adedicatedsteeringcommitteewhichdevelops strategiestomanageforeignexchange exposureandmarginimprovementprojectsto deliversavingsandmitigatethecostimpactof currencydevaluation. 2. CONSUMER AND CUSTOMER Competitive landscape and consumer trends leading to pricing pressures –5%year-on-yearreductioninGrouprevenue comparedtobase. Consumers impacted by high inflationary environment with inability to pass through cost inflation –5%year-on-yearreduction inrevenueinUKandIndonesiamarkets;reductioningrossmargin percentagecomparedtobasecaseby250bpsinthesamemarkets. Competitive landscape leading to higher marketing and consumer spend–M&Cspendpercentageincreasedby5ppt abovebasecase. 5.Consumerand customertrends TheGrouphasandiscontinuingtostrengthen itscapabilitiesinrevenuegrowthmanagement, marketingandsupplychainoptimisation.In additiontothis,ourdiverseproductportfolio, renewedfocusonR&Dandinnovation,and investmentinconsumerdatainsightsare important to counteract such pressures. TheGrouphasalsoalreadyconsistently demonstrateditsabilitytomitigatesignificant inputcostinflationoverrecentyears. 3. SUPPLY CHAIN AND LOGISTICS Closure of UK in-house manufacturing for six months –no revenuefromin-housemanufacturedproductsforsixmonths inFY26. 10.Supplychain andlogistics AdedicatedGlobalProcurementTeamwhocan sourcealternativesupplierswherenecessary, complementedbyaqualitymanagement teamabletoappropriatelyassesspotential replacementproducts. 4. IT, LEGAL AND REGULATORY COMPLIANCE AND CONSUMER SAFETY Fines–one-offchargeof5%ofworldwiderevenueinFY26. 2.ITandinformation security 7.Legalandregulatory compliance 9.Consumersafety TheGrouphasspecialistteamsinplacewhich managetherisksrelatingtoITandinformation security,legalandregulatorycompliance,and consumersafety. ByorderoftheBoard,on18September2024. Kareem Moustafa General Counsel and Company Secretary 53 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Non-Financial and Sustainability Information Statement CA Ref Disclosure Group approach (including policies and due diligence) Reference A1 Climate-related financial disclosures OurTCFDdisclosures OurEnvironmentalandSocialImpactframework andgovernance OurEnvironmentalandSocialImpactCommitteehasTerms ofReferencewhichareapprovedbytheBoardandwillbe reviewedannually Page38 Page29 1(a) Environment Wemeasureanumberofmetricstoreflectour environmentalimpact,includingcarbonemissions,water usage,landfillwaste,plasticconsumptionandsustainable sourcingofpalmoil Ourenvironmentalperformance,policiesanddue diligenceactivities Pages28to37 1(b) Employees Ouremployeeengagementpoliciesandpractices Page56 1(c) Society Weareproudofthecontributionsweareabletomaketothe communitiesinwhichweoperate Pages31and57 1(d) Human rights Ourpoliciesandduediligencetoensuretheintegrityofour supply chain Page37 1(e) Anti-corruption and anti-bribery Wehavezerotoleranceforcorruptionorbriberyandthisis setoutinourCodeofEthicalConduct Page36 2(a) Business model OurBusinessModel Page14 2(d) Principal risks OurPrincipalRisks Ourapproachtoriskmanagement Page44 Page42 2(e) Non-financial key performance indicators Ourprimarynon-financialkeyperformanceindicators Page17 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. Forfurtherdetailsonoursustainabilitypoliciesanddisclosures,seeourwebsite www.pzcussons.com/sustainability PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 54 ![]() #### Section 172(1) Statement #### CREATING A DIALOGUE #### WITH OUR STAKEHOLDERS. #### OUR APPROACH TO DOING BUSINESS IS FOUNDED ON THE PRINCIPLE OF CREATING #### SUSTAINABLE VALUE FOR ALL OUR STAKEHOLDERS. WebelievethatPZCussonsthrivesinthelongtermwhentheinterestsofdifferent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 IMPACT OF STAKEHOLDER ENGAGEMENT ON BOARD DECISION-MAKING Wemakeuseofvariousengagementchannelstoreceiveinformativefeedbackfromourkeystakeholderswhichcanbefactoredintoour principaldecisionsandactivities. Section 172(1) of the Companies Act 2006 (Section 172(1)) 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 company for the benefit of its members as a whole. ThetablebelowsetsoutwhereyoucanreadmoredetailinthisAnnualReportandAccountsonhowtheBoardhasdischargeditsSection 172(1)dutythisyear.TheDirectors,bothindividuallyandcollectively,believetheyhavegivendueregardtothestakeholdersandmatters setoutinSection172(1)(a)to(f)aslistedbelow: Section 172(1) factor (a) to (f) Relevant disclosures Page number or website (a) consequence of any decision in the long-term • Companyvalues • OurBusinessModel • Ourstrategy • Boardactivity Page23 Page14 Page6 Page70 (b) the interests of the company’semployees • Peopleandculture • Diversityandinclusion • EnvironmentalandSocialImpactCommitteeReport • Boardactivity Page22 Page26 Page90 Page70 (c) the need to foster the company’s business relationships with suppliers, customers and others • SustainabilityReport • ModernSlaveryStatement • Boardactivity Page28 Page37andwebsite Page70 (d) the impact of the company’s operations on the community andtheenvironment • SustainabilityReport • ModernSlaveryStatement • Boardactivity • Palm oil promise Page28 Page37andwebsite Page70 Page35andwebsite (e) the desirability of the company maintaining a reputation for high standards of business conduct • ModernSlaveryStatement • CodeofEthicalConduct Page37andwebsite Page36andwebsite (f) the need to act fairly as between members of the company • Shareholderengagement • AGM • RemunerationPolicy • Votingrights Page57 Page69 Page98 Page123 55 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATIONADDITIONAL INFORMATIONFINANCIAL STATEMENTSGOVERNANCE ![]() #### Section 172(1) Statement continued #### Why We Engage #### Key Priorities #### How The Group #### Engages #### Board Activity/ #### How The Board #### Engages #### Strategic Objective Priorities For #### The Year Ahead • Toensureloyaltyandtrust • Tocontinuedelightingconsumers • Tohelpourportfoliotowin • Tocreateenthusiasticconsumersand advocatesforourbrands. • Environmentalsustainabilityandtransparency in the supply chain • Customerservice • Accesstoourproductsthroughdigitalchannels • Valueandcosts. • Strategicpartnershipwithkeycustomers: – shopperinsights – proposingpromotionsandproducts – assistingwithdevelopingstrategies. • Market research • Socialmedia • Directfeedback • Salesdata. • Visitallmarketsandmeetwithcustomers andconsumersonanadhocbasisduring site visits • TheBoardreceivesregularmarketreviews frombusinessunitleadershipteams • Reviewingcustomerservice,consumer insightsanddataaspartofmonitoring businessperformance. • Toimproveouroperationaldashboard tofacilitatetheBoard’soversightofhow weservecustomersandconsumersand continuetoincreasehouseholdpenetration. • Successionplanningandensuringarobust talentpipelineofdiversetalentthroughout the Group • TocontinuetoworkwithExecutiveCommittee todefineourDiversity,EquityandInclusion strategyandimplementationplans. • Tocreateasupportiveenvironment,where everyonefeelsvaluedandliketheybelong • Tovalueideasequally • To maintain an open culture • Tofostergenuinelyopencommunication • Todevelopengagedemployeesandunlock theirpotential • Toincreaseproductivityandperformance throughanengagedworkforce. • Strategy • Purposeandvalues • Safetyandwellbeing • Careerdevelopment,learningandleadership • Waysofworking. • Localandglobal‘TownHall’meetings • FunctionalTeamscalls • Leadershipevents • StrategyDeploymentevents. • KirstyBashforthisourdesignatedNon- ExecutiveDirectorforemployeeengagement, withaspecificmandatetoensuretheBoard hearsandunderstandstheemployeevoice • OurDirectorstraveltoourmarketswhen possibleandholddedicatedemployee engagementsessionsonsuchtrips. Customers and Consumers Employees The following table shows how our stakeholders are integral to delivering our strategy. We have grouped our stakeholders into five key categories and provided an overview of why we value them, the key priorities to our stakeholders and the ways in which the Group, and the Board in particular, have engaged with them during this financial year. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 56 ![]() • Toensureoursupplierrelationships remainaslong-termpartnerships • Tocreateandsustainrobust,lasting andmutuallybeneficialrelationships. • Toensurestable,long-termandmutually beneficialrelationships • Nottoincreasecosts • Toensureproductandservicequality • Tobeinnovative. • TheBoardengagesviaadedicated procurementfunction • TheBoardensuresopen, dynamiccommunication. • TheCFOreviewspaymentpractices andpoliciesandmonitorstrendsin theCompany’sperformancetwice yearly,reportingtotheAuditand RiskCommittee • CEOandCFOengagedirectlywith distributorsandsuppliers. • Itisofutmostimportancethatwe developgoodrelationswiththelocal communitieswhereweoperate • Tomakeapositivecontribution to society • Tominimiseanynegativeimpactsfrom ouroperations. • Toreducetheenvironmental impactofourproducts (packagingandformulation) • Toreduceourcarbonemissions • Tobeawareofcost-of-livingand livingstandards • Toengageemployeesandhavea positiveimpactonlocalcommunities. • Wehaveestablishedkeycharity partnershipsinourbusinessunits • Thesepartnershipsarealignedtoour corporatepurposeandbrands • Employeeengagementisencouragedto optimiseimpactonourlocalcommunities. • TheBoard’sEnvironmentalandSocial Impact(ES)Committeeisresponsiblefor sustainabilityanditsdirectionoftravel • TheESCommitteeapprovedthe environmentalandsocialimpact framework‘Betterforall’. Distributors and Suppliers Communities • Tounderstandtheirinvestment objectivesandgoals • Topursueourstrategicobjectives • TohelpmovetheCompanyforward. • Todebateandsetthenextphaseof ourstrategyfocusingonstrategic growthoptionsandthejourney fromturnaroundtotransformation. • ToimproveBoardmaterialsanddata presentationtofacilitatetheBoard’s oversightofoperationalperformance ensuringweareservingourcustomers andoptimisingoursupplychain • TocontinuetoworkwithExecutive Committeetodriveoursupplychain transformationprogramme. • ToencourageBoardtraveltoour prioritymarketstoengagewithour Communitystakeholders • TocontinuetheESCommittee’swork progressingtheSustainabilityprogramme • Continuetoensurethatthevoiceof ourcommunitiesarereflectedinBoard deliberationsanddecision-making. • Financialandoperatingperformance ofthebusiness • Purpose,valuesandcultureof thebusiness • Risksandopportunities • Long-termsustainableand profitablegrowth • Sustainabilityissues • Capitalallocationdecisions • Goodgovernance. • Q&Asessionsandroadshowsforour majorshareholders • Adhocinvestorevents • OurAnnualGeneralMeeting(AGM)isan opportunitytolistentoourshareholders andrespondtoanyconcernstheymayhave orperspectivestheymaywishtoshare • OurdedicatedInvestorRelations Directorwhosepurposeisto strengthenourengagementwith the investment community. • TheChairandourExecutive Directorsperiodicallymeetwith ourmajorshareholders • TheCEOandCFOdeliverthe Group’sinterimandfinalresults, withpresentations • OurBoardmembersandourCompany SecretaryattendtheAGM • TheChair,theSeniorIndependent DirectorandtheCompanySecretary areavailableatalltimestohearany concernsraisedbyshareholders. Investors LINK TO STRATEGY Build Brands Serve Consumers Reduce Complexity Grow SustainablyDevelop People 57 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Section 172(1) Statement continued #### Our stakeholders are #### integral to delivering #### our strategy. #### It is important that we considerhow our decision- #### making affects them. Customers and #### Consumers #### Distributors #### and Suppliers #### Employees #### Communities #### Investors PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 58 ![]() PRINCIPAL DECISIONS IN FY24 TheBoardconsidersallitsdutiesundertheCompaniesAct2006includingSection172(1)factors(a)to(f)andmanyotherfactorsin allofthedecisionsitmakes.Principaldecisionsareexplicitlyframedinthecontextoftheinterestsofandimplicationsforallaffected stakeholders.InFY24,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. Principal decision 1: Portfolio choices Thisyear,wehavemadefurthersignificantstrategicprogressinsimplifyingourbusiness.TheBoardconductedastrategicreviewof ourbrandsandgeographiesandcommencedplanstotransformourportfolio,refocusingonwherewecanbemostcompetitive.The conclusionofthereviewwasthattheGroupistoocomplexforitssize,withfinancialandhumanresourcesspreadacrosstoomany brandsandproducts,therebyreducingtheabilitytocompetewithlargemultinationalcompanies,andsomefocused,smallerones. Asaresult,thedecisionwasmadetoselltheSt.Tropezbrand.Thisprojecthascommencedandisintheearlystages. In making the decision, we considered: The long-term effect TheSt.Tropezbrandhasgrownsignificantlysinceitwasfirstacquired.Thereremainsfurtherlong-termgrowthpotentialanditisintendedthat asaletoanewowner,thatisbetterpositionedtomaximisethebrand'spotential,willfurtherunlockthelong-termpotentialofthebrand.For PZCussons,thedecisiontorefocustheportfolioonwherethebusinesscanbemostcompetitivewillbettersupportouraimtosupportlong- termsustainablegrowthandcreatevalueforshareholders.TherewillbeagreaterfocusontheMustWinBrandstoincreasebrandinvestment andimprovereturns. Affected stakeholder groups Customers and consumers St.Tropezhasestablishedaleadingpositioninitskeypremiumself-tanningmarketoftheUS.Thedecisiontosellthebrandisdrivenbyits impactoncustomersandconsumers.Thedisposalwillallowforlong-termgrowthpotentialintheUS,aswellasinnewgeographicalareasand relatedproductcategories.Consideringthestrengthofthebrand'sequity,significantpotentialremains.However,achievingthisgrowthunder ourcurrentownershipischallengingduetoallocationofresourcesacrossproductcategories.Thedecisionhasbeenmadetosellthebrand inthebestinterestsofcustomersandconsumers.Moreover,proceedsfromthesalecan,inpart,beappliedtoimprovingourservicesand performanceforexistingandnewcustomersandconsumersinourcoremarketsandcategories. Employees TheBoardcarefullyexaminedplansforhowtomanagetheimpactedemployees.Communicationactivitywasputinplaceandonthedayof theannouncementourCEOhostedaglobalTownHallforallemployees.Thisprovidedaforumfortherationalebehindthedecisiontobe explainedandforanyquestionstoberaised. Investors Ourinvestorswantimprovedfinancialperformanceandlong-termsustainablegrowth.Theactionswearetakingwillcrystallisevalueforour investorsfromassetsbettersuitedtoalternativeownershipstructures.Thiswillenableustoinvestourresourcesinthekeygeographiesand categoriesinwhichwecanwinandgeneratesuperiorreturns.WearetransformingPZCussonsintoabusinesswithstrongerbrandsinamore focusedportfolio,deliveringsustainableprofitablegrowth. Distributors and suppliers Ourpartnersarecrucialtous,soweareensuringthatatransitionplanisinplace.Communicationwithoursuppliersanddistributorsanda detailedmigrationplanarekeypartsoftheplanningprocessaroundthisproject. The environmental impact Simplifyingourbusinessandoperationswillsupportoursustainabilitystrategybyreducingtheenvironmentalimpactofouroperationsandour carbonfootprint. The impact on our reputation and the need to act fairly ThecontinuedcommitmenttosimplifyingourbusinessandoperationsandbuildingourMustWinBrandsshowsourcommitmenttothe agreedstrategy. 59 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Section 172(1) Statement continued Principal decision 2: Change to interim dividend InconsideringtheFY24interimresultsandthepaymentofapotentialdividend,theBoarddeterminedthatanFY24interimdividendbepaid of1.50p.Thiswasa44%reductionontheFY23interimdividendandwasannouncedwiththeFY24interimsresultsinFebruary2024. ForfulldetailsofthetotaldividendsinyearseetheReportoftheDirectorsonpage 120 In making the decision, we considered: The long-term effect Inlightoftheverychallengingmacro-economiccircumstancesofthedevaluationoftheNaira,theBoardconsidereditaprudentstepto reducetheFY24interimdividend.TheBoardconsideredthelong-termeffectsofthisdecisionanditsimpactonvariousstakeholdergroups. Affected stakeholder groups Investors Wecreatevalueforinvestorsbygeneratingstrongandsustainableresultsthatwillenabledividendstobepaid.Ourinvestorsalsowantlong- termsustainablegrowth.Afterdueconsiderationofthedividend,theBoarddetermineditwouldbeprudenttoreducetheinterimdividend. Employees ThedividenddecisionwasannouncedintheFY24interimresults.Whileouremployeesarenotdirectlyaffectedbythisdecision,werecognise theimportanceofmaintainingopencommunicationandfosteringapositivecompanyculture.Assuch,ourCEOissuesglobalcommunications toallemployeesfollowingthereleaseofinterimandfull-yearresults,summarisingthecontentandensuringthatouremployeesare keptinformed. Customers and consumers Ensuringongoingstrategicinvestmentinourbusinessandlong-termsustainablegrowthenablesustocontinuetobuildanddeliverour portfolioofbrandsandproductsandbetterserveourcustomersandconsumers. Community ThefoundingZochonisfamilyremainmajorshareholdersinPZCussons.SirJohnZochonisfoundedtheZochonisCharitableTrust(theTrust)in 1977tosupportcharitiesoperatingprimarilyintheNorthWestofEngland,closetotheManchesterheadquartersofPZCussons.Thisremains theprincipalfocusoftheTrustwithimportantsupportalsobeinggiventocharitiesoperatinginGhanaandSierraLeone.TheZochonisfamily managestheTrustindependentlyfromtheCompanyusingdividendsfromitsPZCussonsshareholdingtofunditscharitabledonations.The BoardwasmindfuloftheimpactofareduceddividendontheTrust'sincome.However,theBoarddeterminedthatthereductionwastheright decisioninthecontextoflong-termsustainablegrowthforallshareholdersandinvestors. Areductioninthedividendwouldnothaveasignificantimpactonthelocalcommunityotherwise.TheCompanyremainscommittedto supportingthecommunitythroughitsvariousinitiativesandprogrammes. The environmental impact Long-termsustainablegrowthisvitaltothesuccessfulsupportofourenvironmentalandsocialimpactframework. The impact on our reputation and the need to act fairly TheCompanyisnotrequiredtohaveaformaldividendpolicy.TheBoarddeterminesthepaymentandlevelofdividendbasedonaffordability andsufficiencyofdistributablereserveswhilecarefullyconsideringwhatisreasonableandalternativescenarios.TheBoardisconcernedwith findingtheoptimalbalancebetweengeneratingvalueandreturnforourshareholders,whilealsoensuringthesustainabilityandlong-term successofthebusiness. PZ Cussons plc / AnnualReportandAccounts2024 / Strategic Report 60 ![]() Principal decision 3: Creation of a combined UK and Ireland business unit WesawafundamentalchangetoourorganisationalstructureinFY24astheUKbusinesswasreorganisedandsimplifiedintothecreation ofonecombinedUKandIrelandbusinessunit,incorporatingourPersonalCareandBeautyteams.TheBoardwaspleasedtosupport thisworkandreceivedregularupdateswhichsawtheappointmentofoneleaderacrossthecombinedUKbusinesscomparedtothe previouslyseparatePersonalCareandBeautyapproach.Adedicatedteamwasalsocreatedtofurtherstrengthenouroverallbrand- buildingandinnovationcapabilities. In deciding to create a new combined UK and Ireland business unit, we considered: The long-term effect Thiswasafurthersuccessfulstepinourstrategytoreducecomplexityandbuildahighergrowth,highermargin,simplerandmoresustainable business,allowingustooperatemoreefficientlyandengagewithourretailcustomersmoreeffectively. Affected stakeholder groups Customers and consumers Ourcustomersandconsumersareatthecoreofourstrategy.Ourambitiontocreate‘onefacetothecustomer’hasbeenakeystepinour strategicactivity.IncommonwithourSupplyChainTransformationprogramme,thesimplificationworktocreateoneUKbusinessunitenables ustolookforopportunitiestoscaleandremoveunnecessarycoststhatourcustomersandconsumersdonotvalue. Employees TheBoardcarefullyreviewedplansformanagingimpactedemployees.Acommunicationplanwasimplementedtoensureregulardialogue betweenleadersandimpactedcolleagues.Whererelevant,othercolleaguesintheGroupwerenotifiedofthechanges,sothatthey understoodwhytheywerehappeningandweregiventheopportunitytoaskquestions. Investors Ourinvestorsarefocusedonachievinglong-term,sustainablegrowth.Thedecision-makingprocessconsideredtheannualisedbenefitsarising fromtheformationofacombinedbusinessunit. Distributors and suppliers Wepartnerwithlargeretailerstogrowourbusinessandtheirs.Thechangetoourstructurehasprovidedmoresimplifiedoperationsforour retailcustomerswithasinglebusinessunittosupportourdriveforcategorygrowthandsalestoourmutualbenefit. The environmental impact Deliveryofoursustainabilityambitionsarecentraltoourstrategyandoperationalactivitiesanddecisions.ThecreationofacombinedUK andIrelandbusinessunitisafurtherstepinoursimplificationandtransformationactionswhichwillassistinthedeliveryofamorefocused sustainabilityagenda. The impact on our reputation and the need to act fairly TheBoardconsideredtheplansandtheinterestsofstakeholdersthroughout,cognisantofthecommitmenttostrategyandourvalues.The creationoftheUKbusinessunitdemonstratesthestrengthofourcommitmentsandoverarchinggoalofsustainableprofitablerevenuegrowth. 61 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() PZ Cussons plc / AnnualReportandAccounts2024 / Governance 62 ![]() 64 Our Board 66 Our Executive Committee 68 Chair’s Introduction to Governance 70 Board Activity at a Glance 72 Corporate Governance Statement 2024 80 Nomination Committee Report 84 Audit and Risk Committee Report 90 Environmental and Social Impact Committee Report 92 Remuneration Committee Report 98 Remuneration Policy 107 Report on the Directors’ Remuneration 120 Report of the Directors # CORPORATE # GOVERNANCE 63 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Male Female 0–3 years 4–7 years Asian/Asian British White British 8-9 years Mixed/Multiple Gender diversity Tenure Ethnic background 62.5% 37.5% 62.5% 25.0% 12.5% 62.5% 25.0% 12.5% #### Our Board #### A DIVERSE AND #### EXPERIENCED BOARD. Committees AuditandRiskCommittee NominationCommittee RemunerationCommittee DesignatedNon-Executive Directorforemployee engagement Executive EnvironmentalandSocial ImpactCommittee Chair Allfiguresareasatthedateofthis AnnualReportandAccounts. Other David Tyler N Non-Executive Chair Kirsty Bashforth R D E N Non-Executive Director Jonathan Myers E Chief Executive Officer Jitesh Sodha A N R Non-Executive Director Sarah Pollard Chief Financial Officer John Nicolson A N Senior Independent Director Valeria Juarez E N R Non-Executive Director Vivek Ahuja A N Non-Executive Director PZ Cussons plc / AnnualReportandAccounts2024 / Governance 64 ![]() David Tyler Non-Executive Chair Appointed: 2022 Skills & experience:DavidTylerjoinedthePZCussons BoardasaNon-ExecutiveDirectorin2022,becoming ChairinMarch2023.Hisbusinessexperiencespans theconsumer,retail,businessservicesandfinancial servicessectors.Hisexecutivecareer(1974to2006) wasspentinfinancialandgeneralmanagementat Unilever,NatWest,Christie’sandGUS.Since2007,he hashadanon-executivecareer,chairingSainsbury’s, Logica,Hammerson,3iQuotedPrivateEquity,the WhiteCompany,ImagrandHampsteadTheatre.He hasalsobeenaNon-ExecutiveDirectoratExperian, Burberry,ReckittBenckiserandRubix.Davidcurrently chairsDomestic&General,JoJoMamanBébéandthe Government-backedParkerReviewonethnicdiversity inUKbusiness. Other appointments: • DirectorandChairofDomestic&GeneralLimited • DirectorandChairofJoJoMamanBébéLtd. Kirsty Bashforth Non-Executive Director Appointed: 2019 Skills & experience: Kirstyisanexperienced remunerationcommitteechairandholdsspecific expertiseinorganisationalcultureandchange management.Inherexecutivecareerofmorethan 30years,sheiscurrentlyChiefPeople&Culture OfficeratDelinianTradingLtd,havingcompleted athree-yearassignmentasChiefBusinessOfficer atDiaverumAB,and24yearsatBPplcinsenior executivepositions,includingGroupHeadof OrganisationalEffectivenessandleadingthestrategic coordinationofthecompany’sglobalB2Bbusiness. KirstyalsochairstheCorporateResponsibility CommitteeatSercoGroupplc. Other appointments: • Non-ExecutiveDirectorofSercoGroupplc(Chair oftheCorporateResponsibilityCommittee) • Chair,TheNorthernSuperchargersLtd. 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, hewasChiefOperatingOfficeratAvonProductsInc, withoverallresponsibilityforsupplychain,marketing, digital,researchand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, workingacrossawiderangeofcategorieswith extensiveexperienceindevelopedanddeveloping markets,progressingtoGeneralManager,oralcare andfemininecarefortheGreaterChinaRegion.He hasalsoheldseniorleadershippositionsattheKellogg Company,servingasManagingDirector,UKand IrelandandalsoVicePresident,Europeanmarkets. Jitesh Sodha Non-Executive Director Appointed: 2021 Skills & experience:JiteshSodhaisanexperienced FTSEdirector.JiteshwasmostrecentlyChiefFinancial OfficeratSpireHealthcareGroupplc,wasChairof theSustainabilityCommitteefrom2018to2024, andsatontheDisclosureCommittee,Executive CommitteeandSafety,QualityandRiskCommittee. Priortothat,JiteshwasChiefFinancialOfficerat DeLaRuebetween2015and2018,andatGreenergy International,MobileStreams,whereheledtheir IPO,andT-MobileInternationalUK. Vivek Ahuja Non-Executive Director Appointed: 2024 Skills & experience:Vivekisaglobalbusinessleader withover30yearsofseniorgeneralmanagement experienceininternationalfinancialservicesandprivate equity.Inhisexecutivecareer,hewasmostrecently CEOofTerraFirma,aleadingEuropeanPrivateEquity firmandpriortothatDeputyGroupCFOatStandard Charteredplc.Heisanexperiencednon-executive directorandcurrentlychairstheRiskCommitteeat NatWestMarketsplcandservesontheCouncilatKings CollegeLondon.Withextensiveboardandchairrolesas anInvestorDirector,Vivekbringsawealthofstrategic andfinancialexpertisetomultisectorbusinesses. Other appointments: • Non-ExecutiveDirectorofNatWestMarketsplc (ChairoftheRiskCommittee). Sarah Pollard Chief Financial Officer Appointed: 2021\* Skills & experience:SarahjoinedPZCussons fromNomadFoods,Europe’sleadingfrozenfood company,wheresheservedasDeputyChiefFinancial Officer.Priortothat,shewasChiefFinancialOfficer fortheirBirdsEyebusiness.Sarahisachartered managementaccountant,havingqualifiedwith PricewaterhouseCoopers,andsubsequentlyworked ininvestmentbanking,specificallyinmergersand 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. 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 saleswasspent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SeniorIndependentDirectoratStock SpiritsGroupplc,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EdinburghUniversity BusinessSchoolAdvisoryBoard. Valeria Juarez Non-Executive Director Appointed: 2021 Skills & experience:Valeriaisaninternational businessleaderwithafocusondigital,brand- buildingandbusinesstransformation.Overthelast 27years,shehasworkedforbothdevelopedand emergingmarketsatRalphLauren,Amazon,Diageo, BostonConsultingGroupandProcter&Gamble.She hasextensiveexperienceofgeneralmanagement, digital,strategy,commercial,innovationand marketingcoveringbrandedconsumergoods, fashionandonlineretailing.SheistheformerSVP ofdigitalcommerceforRalphLaurenInternational. #### Directors’ core areas of expertise • UKinstitutionalshareholders • Retailexperience • M&A,strategicpartnerships • Recentfinancialexperience • Africaexperience • M&Aintegration • Remunerationexperience • South-EastAsiaandANZexperience • Businesstransformation • Chairskills • Entrepreneurialexperience • E-commerce • Mentoringandcoachingskills • Operationalexperience • Salesandmarketing • Sectorexperience • Strategy \* AllDirectorswereindependentonappointmentexceptforJonathanMyersandSarahPollard. 65 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Our Executive Committee Sarah Pollard Chief Financial Officer Appointed to current role: 2021 Jawaz Illavia Chief Information Officer Appointed to current role: 2023 Robert Spence Managing Director – UK & Ireland Appointed to current role: 2024 Steve Noble Chief Supply Chain Officer Appointed to current role: 2021 Ningcy Yuliana Managing Director – PZ Cussons Indonesia Appointed to current role: 2023 Jonathan Myers Chief Executive Officer Appointed to current role: 2020 Oghale Elueni Managing Director – Africa Consumer Business Appointed to current role: 2023 Alastair Smith Managing Director – ANZ Appointed to current role: 2022 Cath Bailey Chief People Officer Appointed to current role: 2023 Kareem Moustafa General Counsel and Company Secretary Appointed to current role: 2024 Dimitris Kostianis Transformation Leader, and Chief Executive Officer – PZ Cussons Nigeria Plc Appointed to current role: 2023 Paul Yocum Chief Growth and Marketing Officer Appointed to current role: 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Governance 66 ![]() 67 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Chair’s Introduction to Governance DEAR SHAREHOLDER ItistheresponsibilityoftheBoardtoestablishandupholdhigh standardsofcorporategovernancebysettinganappropriatetone fromthetop.IampleasedtopresentthisGovernanceReportfor theyearended31May2024onbehalfoftheBoard. Ithasbeenabusyandchallengingyearwithsignificantstrategic progressmade,forexampleinthecreationofonecombinedUK andIrelandbusinessunitwhichsupportsourstrategytobuilda simplerandmoresustainablebusiness.However,therehavealso beensignificantchallengesinourmarketswhichwediscussinthe StrategicReport. Weannouncedon18September2024thatJohnNicolsonwill beretiringfromtheBoardofDirectorsandnotstandingfor re-electionattheAGMon21November2024.Onbehalfof theBoard,IwouldliketothankJohnforhisverysignificant contributiontotheCompanyovereightandahalfyears. HehasbeenavaluedBoardDirectorandhehasalsoserved asSeniorIndependentDirectorformorethansevenyears. WewishJohnallthebestforthefutureandwethankhimvery muchforhisservice.Wewillmisshiswitandhiscourtesyaround theBoardtable. Wealsoannouncedon1December2023thatJeremyTownsend wassteppingdownbecauseheneededtoconcentrateonhis executivecommitmentsatMarksandSpencerGroupplcwherehe hasbeenservingasCFOinrecentyears.Iwouldliketoexpressmy gratitudeforhiscommitmenttotheCompanyoverhisfouryears ontheBoardandfortheclarityofhisthinkingandadviceover thisperiod. IdrawattentionasfollowstokeyareasoffocusfortheBoard duringtheyear. BOARD EFFECTIVENESS AninternalreviewoftheeffectivenessoftheBoardandits Committeeswasconductedduringtheyear.Thisconcluded thattheBoardworkedwellbutopportunitieswereidentified forfurtherimprovement,asdetailedinthe2024Boardand Committeeevaluationonpage83.Effectivegovernanceiscrucial forthesuccessofpubliclytradedcompanies,andtheBoard recognisesthatitsownefficiencyplaysacentralroleinachieving this.IcanalsoconfirmthateachDirector’sperformancecontinues tobeeffectiveandthattheydemonstratedahighlevelof commitment to their roles. BOARD COMPOSITION AND SUCCESSION PLANNING TheBoardiscomposedofaNon-ExecutiveChair,ChiefExecutive Officer,ChiefFinancialOfficerandfiveindependentNon-Executive Directors.Wewillcontinuetofocusthisyearonsuccessionplanning fortheBoardandparticularlyfortheExecutiveCommittee. FormoreonBoardeffectiveness,Boardchangesinthelastyearandplans forthefuture,seetheNominationCommitteeReportonpage 80 EFFECTIVE GOVERNANCE AND A STRONG BOARD ARE ESSENTIAL FOR THE LONG-TERM SUCCESS OF OUR ORGANISATION. WEHAVE AWELL-FUNCTIONING BOARD WITHA DIVERSE RANGE OF SKILLS AND PERSPECTIVES. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 68 ![]() BOARD COMMITTEES OurBoardCommitteeshavefocusedonkeyactivitiesundertheir remitasfollows: • TheAuditandRiskCommitteeoversawtheonboarding ofPricewaterhouseCoopersLLP(PwC)followingtheir appointmentasourGroupauditors.Inaddition,theCommittee continuedtoreviewprogressagainstourmulti-yearcontrols improvementjourney • TheRemunerationCommitteehasappliedthenewDirectors’ RemunerationPolicywhichwasapprovedbyshareholdersat the2023AnnualGeneralMeeting(AGM) • TheEnvironmentalandSocialImpact(ES)Committeehas continuedtomakeprogressinoursustainabilityjourneyand approvedtheCompanyjoiningtheUNGlobalCompact • TheNominationCommitteehascontinuedtofocuson successionplanning. DIVERSITY, EQUITY AND INCLUSION TheBoardwaspleasedtoapprovetheCompany’sDiversity, EquityandInclusion(DEI)strategythisyear.Diversityremainsa priorityfortheBoardandwearecommittedtocreatingabusiness environmentwhereeveryonefromeverybackgroundcanthrive andfeelwelcome.DEIinfluencestheorganisation’scultureand theeffectivenessofdecision-makingbymanagement. ThereisalsoanInclusionandDiversityPolicyforBoardand ExecutiveCommitteeappointmentswhichisavailableinfull ontheCompany’swebsite. STAKEHOLDER ENGAGEMENT TheBoardregularlyengageswithshareholderstohelpinform strategicdecision-makingandtounderstandtheirviews. Throughouttheyear,theBoardreceivedupdatesonshareholders, includingtheirfeedbackandkeyareasoffocusandviews. StakeholderfeedbackiscriticaltotheBoard,influencingits decision-making.TheChairoftheBoardandtheCommittee Chairsareavailabletoshareholderstorespondtoquestions. Directorsseekopportunitiestoengage,whetherinpersonatthe AGMorothershareholderengagementevents,orthroughour InvestorRelationsteamreachingouttokeyshareholders,offering meetingsonrelevanttopics. Formoreondialoguewithourstakeholders,seepage 55 OUTLOOK Inthecomingyear,theBoardwillcontinuetooverseethe Company'sperformanceanditsstrategy,inparticularonthe planstofocusonfeweractivities. THE ANNUAL GENERAL MEETING OurAGMthisyearwillbehostedattheCompany’soffices, ManchesterBusinessPark,3500AviatorWay,Manchester, M225TGon21November2024.Togetherwithmyfellow Directors,IlookforwardtomeetingshareholdersatourAGM. Wewillwelcomeyourfeedbackonthatoccasionand,indeed, atanytimeduringtheyear. David Tyler Non-Executive Chair 18September2024 #### 2024 FOCUS AREAS. Strategic review DEI strategy UN Global Compact Auditor onboarding Succession planning Remuneration Policy implementation 69 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Board Activity at a Glance ServeConsumers ReduceComplexity Link to strategy BuildBrands GrowSustainablyDevelopPeople STRATEGY Board matters discussed Stakeholders affected Link to strategy FY24 Strategy day • Portfoliotransformation • Organicgrowth • M&Aambitions • Digitalcapabilities • Sustainability • Organisationaldesign • Customers/Consumers • Investors • Communities–Environment • Suppliers Strategic review of brands and geographies • Customers/Consumers • Investors • Employees • Communities • Suppliers ES strategy and frameworks • Communities • Investors • Employees Diversity, Equity & Inclusion strategy • Employees OPERATIONS Board matters discussed Stakeholders affected Link to strategy UK and Ireland business unit integration • Investors • Customers/Consumers • Suppliers • Employees Digital strategy • Customers/Consumers • Employees • Investors Inlinewiththeannualrollingagenda,theBoardconsideredanumberoftopicsonaregularbasis.Theseincludedthefollowingstanding agendaitems: • Executivereports,includingoperationalandfinancialperformance,marketsummaries,healthandsafetyandothermatters • Strategyandstrategicprojects • ReportsfromeachBoardCommitteefollowingCommitteemeetings • ReportsfromthedesignatedNon-ExecutiveDirectorforemployeeengagement • Governance,complianceandlegalmatters. Inadditiontothestandingitems,thematterssetoutbelowwereconsideredandapproved. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 70 ![]() FINANCE Board matters discussed Stakeholders affected Link to strategy Central costs and efficiencies • Investors • Suppliers • Employees Results reporting, including Annual Report and Accounts • Investors • Employees Dividend payments • Investors Principal and emerging risks • Investors • Employees • Community Budget approval • Employees • Investors Group tax strategy • Investors GOVERNANCE Board matters discussed Stakeholders affected Link to strategy Director appointment and reappointment and Board composition • Employees • Investors Shareholder communications including Annual General Meeting • Investors Governance disclosures including Modern Slavery Statement • Employees • Community Board and Committees evaluation • Customers/Consumers • Investors • Communities–Environment • Suppliers Review of Board policies Board reserved matters Statement of Board responsibilities Terms of Reference • Investors 71 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Corporate Governance Statement 2024 ThisCorporateGovernanceStatementasrequiredbytheUKFinancialConductAuthority’sDisclosureGuidanceandTransparencyRules 7.2(DTR7.2),togetherwiththerestoftheCorporateGovernanceReportandtheCommitteeReports,formspartoftheReportofthe DirectorsandhasbeenpreparedinaccordancewiththeprinciplesoftheFinancialReportingCouncil’sUKCorporateGovernanceCode 2018(the2018Code).Acopyofthe2018CodecanbefoundontheFinancialReportingCouncil’swebsite:www.frc.org.uk. AdditionalrequirementsundertheDTR7.2arecoveredingreaterdetailthroughouttheAnnualReportandAccountsforwhichwe providereferenceasfollows: TheGroup’sriskmanagementandinternalcontrolarefoundonpage 87 InformationwithregardstosharecapitalispresentedintheReportoftheDirectorsfrompage 120 InformationonBoardandCommitteecompositioncanbefoundonpage 64 InformationonBoarddiversityincludingtheBoardInclusionandDiversityPolicycanbefoundonpage 81 TheCompany’sobligationistostatewhetherithascompliedwiththerelevantprinciplesandprovisionsofthe2018Code,ortoexplain whyithasnotdonesouptothedateofthisAnnualReportandAccounts.TheCompanyhascompliedwiththeprinciplesandprovisions ofthe2018Codeduringthefinancialyearended31May2024saveforthefollowing.Inrelationtoprovision24,themembershipofthe AuditandRiskCommitteecomprisedoftwodirectorsduringtheperiodfrom28February2024to1May2024,howevernomeetingsof theCommitteewereheldduringthisperiod. ThefollowingpageswilloutlinehowtheCompanycomplieswiththeprinciplesandprovisionsofthe2018Code.Wheresupporting informationisfoundoutsideoforinadditiontothisGovernanceReport,thepagereferenceisgiveninthetablesbelow. BOARD LEADERSHIP AND COMPANY PURPOSE Code Principle and Description Annual Report and Accounts Reference A EffectiveBoard • NominationCommitteeReport Seepage 80 B Purpose,strategy,values andculture • StrategicReport Seepage 14 C Prudentandeffectivecontrols andBoardresources • StrategicReport–Howwemanagerisk Seepage 42 D Stakeholderengagement • Creatingadialoguewithourstakeholders Seepage 55 E Workforcepoliciesandpractices • Non-FinancialInformationandSustainabilityStatement • AuditandRiskCommitteeReport Seepages 54 and 84 Effective Board TheBoardunderstandsthatitsroleistoprovideleadershipandsetthepurpose,valuesandstandardsoftheCompanyandtheGroup. PZCussons’strategyandbusinessmodelaresetoutonpages6and14oftheStrategicReportanddescribesthebasisuponwhichthe Companygeneratesandpreservesvalueoverthelongterm. TheCompanyisledbyaneffectiveandentrepreneurialBoard,whoseroleistopromotethelong-termsustainablesuccessofthe Company,therebygeneratingvalueforinvestorsandcontributingtowidersociety. AninternalBoardevaluationwascarriedoutinAprilandMay2024. Formoreonthis,seetheNominationCommitteeReportonpage 83 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. Board development and training TheChairisresponsibleforleadingthedevelopment,andmonitoringtheeffectiveimplementation,oftrainingpoliciesandprocedures fortheDirectors.Onappointment,eachDirectorreceivesaformalandtailoredinduction.Thereisalsoaprogrammeofongoingtraining forDirectors.TheDirectorsarecommittedtotheirownongoingprofessionaldevelopmentandtheChairdiscussestrainingwitheach Non-ExecutiveDirectoratleastannually.TheBoardundertakesacycleoftrainingonrelevantcorporategovernancemattersandmatters relevanttooperationalandstrategicobjectives.TrainingistypicallyprovidedbytheCompany’sexternaladvisers. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 72 ![]() Stakeholder engagement Werecognisetheimportanceofclearcommunicationandproactiveengagementwithallofourstakeholders.Duringtheyearunder review,theBoardusedvariousengagementchannelstoreceivevaluablefeedbackfromourkeystakeholders. FormoredetailsseeourSection172(1)Statement:Creatingadialoguewithourstakeholdersonpage 55 Shareholder engagement Atthe2023AGM,theresolutiontoapprovetheDirectors’RemunerationPolicywaspassedwiththenecessarymajoritybutwithmore than20%againstbyshareholders.Anupdatestatementwasprovidedtoshareholderson10May2024.ThePolicywasproposedafter thoroughengagementandconsultationwithmajorshareholdersandtheBoard,andtheRemunerationCommitteewillkeepinmindthe viewsexpressedbyshareholderswhenplanningfuturerenewalsofthePolicy. STATEMENT OF ENGAGEMENT WITH EMPLOYEES TheBoardrecognisesthatemployeeengagementistheresponsibilityofthewholeBoardandthatouremployeesareourbiggestasset. TheBoardhasanapprovedplan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. Corethemesfortheyearhavebeen: • Strategy,includingcultureandleadership • ExecutiveDirectorremunerationanditsalignmentwithbroaderworkforceremunerationpolicies • Employeesafetyandwellbeing • Learningandcareers • Diversityandinclusion. Aswellastheglobalemployeesurvey,otherformsofengagementincluderegularTownHalls–bothgloballyandlocally,employee engagementonexecutiveremuneration,designatedmarketvisitsbyNon-ExecutiveDirectors,Boarddinnerswithseniormanagement andregularmeetingswithCultureAmbassadorswhoplayanimportantroleindrivingculturalchange. Designated Non-Executive Director for employee engagement Inlinewiththe2018Code,KirstyBashforthisourdesignatedNon-ExecutiveDirectorforemployeeengagementwithresponsibility forensuringthattheBoardengageseffectivelywithourworkforce. Engagement methods • Attendedanumberofsessionsondifferentplatforms • EngagementsincludedglobalTownHalls,globalInternationalWomen’sDayeventandsmallergroupsessions. Workforce concerns • Confidencearoundchange • Reward,inflationandcostofliving. FormoredetailsseePeopleandCulture:BoardPrioritisingEngagementonpage 27 Purpose, culture and values Ourbusinessmodelisunderpinnedbyourpurpose,cultureandvaluesandthestrategythattheBoardhasset.TheBoardcontinues tounderstand,monitorandassesstheCompany’sculturethroughvariousmethods,including: • Employeeengagement:TheBoardreceivesanannualreportfrommanagementontheresultsoftheemployeeengagementsurvey whichgivestheBoardinsightsintoworkforceexperiencesandconcerns,ensuringalignmentwithourculture,purpose,andstrategic priorities.ThedesignatedNon-ExecutiveDirectorforemployeeengagementalsoprovidesregularreportstotheBoard • Safety:TheBoardreceivesregularreportsonHealthandSafetythroughtheCEOReporttoeachBoardcycle • Sitevisits:Directorsconductsitevisitsandexperiencetheculturefirsthandanddeepentheirunderstandingofourbusiness. Recently,variousmembersoftheBoardhavevisitedourNigeriaandIndonesiabusinessesandinteractedwithemployees • Policiesandprocedures:Practicesandprocessesareinplacetosupportourculture,coveringareaslikesustainability,ethicalconduct, anti-bribery,andwhistle-blowing.Thesepoliciesarereviewedandupdatedasnecessary • Whistle-blowing:TheBoardthroughtheAuditandRiskCommitteereviewsreportsagainsttheGroup’sCodeofEthicalConduct includingfromtheGroup’swhistle-blowingfacilityandevaluatestheeffectivenessofthesearrangements. 73 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Corporate Governance Statement 2024 continued STATEMENT OF ENGAGEMENT WITH OTHER BUSINESS RELATIONSHIPS TheDirectorshaveregardfortheneedtofostertheCompany’sbusinessrelationshipswithsuppliers,customersandothers,andthe effectofthatregard,includingontheprincipaldecisionstakenbytheCompanyduringthefinancialyear. ThisstatementshouldbereadinconjunctionwithourSection172(1)Statement:Creatingadialoguewithourstakeholdersonpage 55, theNon-FinancialInformationandSustainabilityStatementon page 54andBoardprincipaldecisionsonpage 59 DIVISION OF RESPONSIBILITIES Code Principle and Description Annual Report and Accounts Reference F Boardroles • OurBoard Seepage 64 G Independence • OurBoard • NominationCommitteeReport Seepages 64 and 80 H Externalcommitments • OurBoard Seepage 64 I Boardefficiency:KeyBoardactivities • Section172(1)Statement Seepage 55 Board roles TheresponsibilitiesoftheChair,ChiefExecutiveOfficer,SeniorIndependentDirectorandBoardandBoardCommitteesareclear,setout inwritingandregularlyreviewedbytheBoard.ThereisacleardivisionbetweentheExecutiveandNon-Executiveresponsibilities. Role Responsibilities Chair of the Board DavidTyler TheChairoftheBoardisresponsibleforensuringoverallBoardandindividualDirectoreffectivenessandfor creatingandembeddingtherightgovernanceframeworkwithintheBoard.Specificresponsibilitiesinclude: • EffectiverunningoftheBoardincludingsettingtheagendaandensuringthattheBoardplaysafulland constructive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thereiseffectivecommunicationwiththeGroup’sshareholdersandotherstakeholders • EnsuringthattheperformanceoftheBoardasawhole,itsCommitteesandindividualDirectorsisformally evaluatedand • PromotinghighstandardsofintegrityandcorporategovernancethroughouttheGroup,particularlyat Boardlevel. Chief Executive Officer Jonathan Myers TheChiefExecutiveOfficer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. Specificresponsibilitiesinclude: • 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 • ManagingtheGroup’sriskprofileinlinewiththeCompany’sriskappetiteandensuringthateffectiveinternal controls are in place • Ensuringeffectivecommunicationswithshareholders • ExecutivemanagementmattersaffectingtheGroupandleadingtheExecutiveCommittee • PromotingandconductingtheaffairsoftheGroupwithstandardsofintegrityandcorporategovernance thatalignto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ExecutiveCommittee • Ensuringopen,honestandtransparentdialoguebetweentheBoardandtheExecutiveCommittee • Ensuring,withthesupportoftheCompanySecretary,thattheExecutiveCommittee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and • ChampioningtheGroup’svaluesandbehaviours. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 74 ![]() Role Responsibilities Chief Financial Officer SarahPollard TheChiefFinancialOfficer’sspecificresponsibilitiesinclude: • ImplementingtheGroup’sfinancialstrategy,includingbalancesheetmanagementandcapitalallocation • SupportingtheChiefExecutiveOfficerinthedeliveryoftheGroup’sstrategyandfinancialperformanceand • Overseeingfinancialreportingandinternalcontrols. Senior Independent Director JohnNicolson TheSeniorIndependentDirector’sspecificresponsibilitiesinclude: • ActingasasoundingboardfortheChairandservingasintermediaryfortheotherDirectorswhennecessary • BeingavailableforconfidentialdiscussionswithotherNon-ExecutiveDirectors • 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and • 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Officer. Non-Executive Directors TheNon-ExecutiveDirectors’specificresponsibilitiesinclude: • ContributingtothedevelopmentoftheGroup’sstrategy • PromotingandsupportingtheGroup’svaluesandcommitmenttohighstandardsofcorporategovernanceand • Reviewing,oversightandconstructivechallengeoftheExecutiveCommitteeonthedeliveryoftheCompany’s objectivesandstrategy. GOVERNANCE FRAMEWORK TheBoardrecognisesthatagoodgovernancestructureisnotstaticbutallowstheGrouptogrowanddevelop. 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(includingfinancial,operationalandcompliancecontrols)andreviewstheoveralleffectivenessofthesystemsinplace. TheBoarddelegatestheday-to-daymanagementofthebusinesstotheExecutiveDirectorsandtheExecutiveCommittee.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budget,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isfitforpurpose. 75 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() THE BOARD DELEGATES RESPONSIBILITY FOR CERTAIN MATTERS TO ITS PRINCIPAL COMMITTEES\* #### Corporate Governance Statement 2024 continued 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. TheBoardhasdelegatedresponsibilityforthedeliveryoftheGroup’sstrategyandtheday-to-dayoperationalperformance ofthebusinesstotheExecutiveDirectorswhoworkcloselywiththewiderExecutiveCommitteetodeliverthisstrategy. Audit and Risk Committee ReviewingtheGroup’s accountingandfinancial policies,itsdisclosure practices,internal controls,internalaudit &riskmanagement andoverseeingall mattersassociatedwith appointment,terms, remunerationand performanceofthe ExternalAuditor. Nomination Committee Ensuringthatthe structure,sizeand compositionofthe BoardandtheExecutive Committeearebestsuited todelivertheCompany’s strategyandmeetcurrent andfutureneeds. Remuneration Committee Reviewingand recommendingthe frameworkandpolicy forremunerationofthe ExecutiveDirectorsand seniorexecutives. Environmental and Social Impact (ES) Committee ApprovingtheGroup’sES strategyandperformance targets,monitoring performancebytheGroup againstitsESstrategyand howtheGroupengages withkeystakeholders. THE BOARD THE EXECUTIVE COMMITTEE \* 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. BALANCE OF INDEPENDENCE TheBoardcurrentlycomprisesfive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linewiththedefinitionsetoutinthe2018Codeandarefree fromanyrelationshiporcircumstancesthatcouldaffect,orappeartoaffect,theirindependentjudgement.TheChairwasindependent on appointment. CONFLICTS OF INTEREST TheCompanySecretarykeepsaregisterofallDirectors’interests.TheregistersetsoutdetailsofsituationswhereeachDirector’sinterest mayconflictwiththoseoftheCompany(situationalconflicts).TheregisterisconsideredandreviewedateachBoardmeetingsothatthe Boardmayconsiderandauthoriseanynewsituationalconflictsidentified. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 76 ![]() 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devotesufficienttimeto meettheexpectationsoftheirroleasrequiredbytheBoardfromtimetotime.TheBoardremainssatisfiedthatalltheDirectors spendconsiderablymorethanthisamountoftimeonBoardandCommitteeactivity. BOARD MEETING ATTENDANCE EachoftheDirectorshascommittedtoattendallscheduledBoardandrelevantCommitteemeetingsandhascommittedtomakeevery effort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.ThefollowingtablesetsouttheattendanceofDirectorsatthescheduledBoard meetingsheldduringtheyear.AttendanceisshownasthenumberofmeetingsattendedbyeveryDirectoreligibletoattend.Attendance atCommitteemeetingsisshowninthetablesatthebeginningofeachCommitteereport. Board members Member since Meetings attended DavidTyler 2022 7/7 Jonathan Myers 2020 7/7 SarahPollard 2021 7/7 JohnNicolson 2016 7/7 KirstyBashforth 2019 7/7 DariuszKucz 1 2018 1/1 JeremyTownsend 2 2020 4/5 JiteshSodha 2021 7/7 ValeriaJuarez 2021 7/7 VivekAhuja 3 2024 1/1 1 SteppeddownasaDirectoron14September2023. 2 SteppeddownasaDirectoron28February2024. 3 AppointedasaDirectoron1May2024. BOARD ACTIVITY Duringtheyear,theBoardheldsixscheduledmeetingsandaBoardstrategyday.Arollingagendaandforwardcalendarhave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Officerandtoprovidecomments. Inlinewiththeannualrollingagenda,theBoardconsideredanumberoftopicsonaregularbasis. Formoredetailsseepages 70 to 71 PrivatemeetingsoftheNon-ExecutiveDirectorsarealsoheldonaregularbasisattheconclusionofBoardmeetings. 77 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Corporate Governance Statement 2024 continued BOARD COMPOSITION, SUCCESSION AND EVALUATION Code Principle and Description Annual Report and Accounts See page J AppointmentstotheBoard • OurBoard Seepage 64 K Boardcomposition • Boardskillsandexperience • Succession • OurBoard • NominationCommitteeReport Seepage 64 Seepage 80 L Evaluation • NominationCommitteeReport Seepage 80 Appointments to the Board VivekAhujawasappointedtotheBoardon1May2024.SeeOurBoardonpage64forhisbiography,skillsandexperience. Skills, experience and knowledge OurBoardisadiverseandeffectiveteam,focusedonpromotingthelong-termsuccessoftheGroupforthebenefitofallstakeholders. FormoredetailsseeOurBoardonpages 64 and 65for: – Directors’coreareasofexpertise  – Genderdiversity – Ethnicbackground   – Tenure – Independence    – Externalappointments AUDIT, RISK AND INTERNAL CONTROL Code Principle and Description Annual Report and Accounts See page M EffectivenessofExternalAuditorand internalaudit&integrityofaccounts • AuditandRiskCommitteeReport Seepage 84 N Fair,balancedandunderstandable assessmentofCompany’sprospects • AuditandRiskCommitteeReport • ReportoftheDirectors Seepage 84 Seepage 120 O Internalfinancialcontrolsand riskmanagement • AuditandRiskCommitteeReport • RiskManagementandPrincipalRisks Seepage 84 Seepage 42 TheBoard’sobjectiveistogiveshareholdersafair,balancedandunderstandableassessmentoftheGroup’spositionandprospectsfor thebusinessmodelandstrategyandithasresponsibilityforpreparingtheAnnualReportandAccounts.TheBoardisalsoresponsible formaintainingadequateaccountingrecordsandseekstoensurecompliancewithstatutoryandregulatoryobligations.Youcanfind anexplanationfromtheDirectorsabouttheirresponsibilityforpreparingthefinancialstatementsintheStatementofDirectors’ responsibilitiesintheReportoftheDirectorsonpage125. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 78 ![]() REMUNERATION TheCodeprovidesthatremunerationpoliciesandpracticesmustbedesignedtosupporttheCompany'sstrategyandpromotelong-term sustainablesuccess.TheBoarddelegatesresponsibilitytotheRemunerationCommittee,comprisedofexclusivelyindependent Non-ExecutiveDirectors,toensurethatthereareformalandtransparentproceduresinplacefordevelopingthepolicyforthe remunerationofExecutiveDirectorsandseniormanagementandtheapplicationofthepolicy. Code Principle and Description Annual Report and Accounts See page P Linkingremunerationpurpose andstrategy • RemunerationCommitteeReport • RemunerationPolicy Seepage 92 Seepage 98 Q Aformalandtransparentprocedure fordevelopingpolicy • RemunerationPolicy Seepage 98 R Independentjudgementanddiscretion • RemunerationCommitteeReport Seepage 92 TheRemunerationCommitteeReportsetsouttheDirectors’RemunerationPolicy,howtheDirectors’RemunerationPolicywasapplied throughoutFY24andhowitwillbeappliedduringFY25.  Formoredetailssee: – Financialreportingpage 89 – Significantfinancialjudgements page 87 – Internalfinancialcontrolspages 84 to 89 – Assuranceoverexternalreportingpages 128 to 137 – Internalandexternalauditpages 84 to 89 – Auditoronboarding page 86 – Riskmanagementpages 44 to 50 – Businesscontinuityanddisasterrecoverypage 46 – Cybersecuritypage 46 – ReportontheDirectors’Remunerationpage 108 79 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Nomination Committee Report #### THIS YEAR, THE #### COMMITTEEHAS FOCUSED #### ON THE PROCESS FOR #### BOARD ANDEXECUTIVE #### COMMITTEESUCCESSION. #### COMMITTEE MEMBERSHIP AND ATTENDANCE Committee members Member since Attendance DavidTyler 2022 2/2 JohnNicolson 2016 2/2 KirstyBashforth 2019 2/2 JeremyTownsend 1 2023 1/1 JiteshSodha 2023 2/2 ValeriaJuarez 2023 2/2 VivekAhuja 2 2024 1/1 1 SteppeddownasaDirectoron28February2024. 2 AppointedtotheCommitteeon1May2024. #### ACTIVITIES OF THE COMMITTEE DURING THE YEAR • Successionplanning • 2024BoardandCommitteesinternalevaluation • ReviewedtheBoardandCommitteemembershipand composition(includingdiversity). DEAR SHAREHOLDERS, On behalf of the Board, and as Chair of the Nomination Committee, I am pleased to present its report for the year ended 31 May 2024. Duringtheyear,theCommitteefocuseditstimeonBoardand ExecutiveCommitteesuccessionplanninganditsinternalBoard evaluation.Considerationwasalsogiventotheimpacton membershipoftheCommitteesoftheBoardasaresultofthe changestotheBoard’smembership.Successionplanningforthe Board,itsCommitteesandtheExecutiveCommitteewillcontinue tobeakeyfocusfor2025. HOW THE COMMITTEE OPERATES TheCommitteemeetsaminimumoftwiceayearandmore frequentlyasnecessary.Duringtheyear,theCommitteemet formallytwice. OnlymembersoftheCommitteeareentitledtoattendthe meetings.Otherindividuals,suchastheChiefExecutiveOfficer, ChiefPeopleOfficerandexternaladvisers,maybeinvitedto attendallorpartsofanymeetingasandwhenappropriate.The Committee,however,ensuresthatitdedicatessufficienttimeto discussionswithout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duringtheyeartoensure thattheyarecompatiblewiththeCorporateGovernanceCode 2018(the2018Code). David Tyler Nomination Committee Chair PZ Cussons plc / AnnualReportandAccounts2024 / Governance 80 ![]() #### COMMITTEE ROLE • Regularlyreviewtheleadershipandsuccessionneeds ofthebusiness • Regularlyreviewthestructure,sizeandcomposition oftheBoardanditsCommittees • Identifyandnominateforapprovalcandidatestofill Boardvacancies • EvaluatetheBoard’sdiversityandbalanceofskills • EvaluatetheperformanceoftheBoard • Ensureadiversepipelineforsuccession. #### PRIORITIES FOR 2025 • ToapproveformalsuccessionplansfortheBoard, itsCommitteesandseniormanagement • ConductaninternalBoardevaluation. DetailedresponsibilitiesaresetoutintheCommittee’s TermsofReference,whichcanbefoundontheCompany’s websitewww.pzcussons.com BOARD MEMBERSHIP On1December2023,JeremyTownsendinformedtheCompany thathewouldstepdownfromtheBoardwitheffectfrom 28February2024.TheCommitteeengagedexecutivesearchfirm EgonZehnder,whohasnootherconnectiontotheCompanyor itsDirectorsandisasignatorytotheVoluntaryCodeofConduct forExecutiveSearchFirms,tosupportthesearchforanew Non-ExecutiveDirector.Followingtheselectionprocess,the NominationCommitteerecommendedandtheBoardapproved theappointmentofVivekAhujaasaNon-ExecutiveDirectorand thenewChairoftheAuditandRiskCommitteewitheffectfrom 1 May 2024. TheCommitteeapprovedarecommendationtotheBoardthat JiteshSodhabereappointedasaNon-ExecutiveDirectorwith effectfrom1July2024ashisfirstthree-yeartermexpiredon 30 June 2024. BOARD COMMITTEE MEMBERSHIP VivekAhujajoinedtheAuditandRiskCommitteeandNomination Committeeonappointment.Theup-to-datemembershipsof eachCommitteecanbeseenonpage64. KirstyBashforthcontinuestobethedesignatedNon-Executive Directorforemployeeengagement. INDEPENDENCE TheNominationCommitteeisoftheopinionthattheNon- ExecutiveDirectors,inlinewiththedefinitionsetoutinthe2018 Code,arefreefromanyrelationshiporcircumstancesthatcould affect,orappeartoaffect,theirindependentjudgement.The Chairwasindependentonappointment.ThebalanceofDirectors (excludingtheChair)wastwoExecutiveDirectorsandfive independentNon-ExecutiveDirectorsonthedateofthisreport. TheBoardcomplieswiththeprovisionsofthe2018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120)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. BOARD INCLUSION AND DIVERSITY TheCompanyiscommittedthatthemembershipoftheBoard (includingtheBoardCommittees)andtheExecutiveCommittee reflectthediversityofourworkforceandconsumersinthe countriesinwhichweoperateandisproudtosupportthe FTSEWomenLeadersReviewandParkerReview. TheBoardandExecutiveCommittee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 ExecutiveCommitteeappointmentswhichisavailableinfullon theCompany’swebsite. OurBoardmeetsthetargetsetbytheParkerReviewonethnic diversitybyhavingthreeDirectorsfromaminorityethnicbackground. Webelievethatgenderdiversityisgoodforourbusiness.The Board’sfemalerepresentationatthedateofthisreportis37.5%. Wearecommittedtothe40%targetintheFTSEWomenLeaders Review,whichtheCompanymetforsometimepreviously.However, therelativelysmallsizeofourBoardmeanstheimpactofasingle changeismagnifiedascomparedtolargerboards.Wecontinueto meettheFTSEWomenLeadersReviewtargetforatleastonesenior positiontobeheldbyawoman.Wewillbearinmind,whenmaking futureappointmentstotheBoard,thatwehaveamodestshortfall againstthetargetforfemalerepresentation. Whenevaluatingcandidates,theCompanyseekstomake decisionsbasedonmeritandobjectivecriteriaaswellasthe needsoftheBoardandExecutiveCommittee,havingdueregard tothebenefitsofalltypesofdiversity,including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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 reflectitsdiversitycommitments.InrespectofBoardappointments, theCompanyconsiderscandidatesfromnon-traditionalcorporate backgrounds,includingfromnon-profitorganisations,thepublic sectorandacademia.Priorlistedboardexperienceisnota requirementforeveryappointment. 81 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Datainrelationtothegenderofemployeesiscollectedvoluntarily viaourpeoplemanagementinformationsystemWorkdaythrough whichtheindividualself-reportstheirgenderidentity(orspecifies theydonotwishtoreportsuchdata).Thecriteriaofthestandard formquestionnairearefullyalignedtothedefinitionsspecified intheUKListingRules,withindividualsrequestedtospecify:self- reportedgenderidentity.Selectionfrom‘a’male;‘b’female;‘c’ othercategory/pleasespecify;‘d’notspecified(duetolocaldata privacylaws);or‘e’prefernottosay.ForNon-ExecutiveBoard members,wecollectdatavoluntarilythroughamanualprocess. Datainrelationtoethnicityiscurrentlycollectedviaamanual process.EachindividualBoardmemberandmemberof theExecutiveCommitteeisrequestedtoself-reportethnic backgroundinaccordancewiththeclassificationsprescribedin theUKListingRulesasdesignatedbytheUKOfficeofNational Statistics.Assetoutinthetableabove,theseare‘a’WhiteBritish orotherWhite;‘b’MixedorMultipleEthnicGroups;‘c’Asian orAsianBritish;‘d’Black;‘e’Otherethnicgroup/pleasespecify; or‘f’notspecified/prefernottosay. BOARD AND EXECUTIVE MANAGEMENT DIVERSITY DATA WereportourBoardandexecutivemanagementdiversitydataasfollowsasatourchosenreferencedateof18September2024 (thedateofthisAnnualReportandAccounts)furthertotheUKListingRulesrequirements. Asat31May2024and18September2024,theBoardincludedthreewomenDirectorsrepresenting37.5%oftheBoard.Oneofthefour seniorpositionsontheBoardwasheldbyawomanandthreeDirectorswerefromaminorityethnicbackground. TheCompanyiscommittedtohavingaBoardandExecutiveCommitteethatreflectthediversityofourworkforceandconsumersinthe countriesinwhichweoperate. ThenamesofourBoardandExecutiveCommitteemembersaresetoutonpages64to66. Board and executive management reporting on gender identity or sex No. of Board members % of the Board No. of senior positions on the Board (CEO, CFO, SID and Chair) No. in executive management 1 % of executive management Men 5 62.5% 3 9 75% Women 3 37.5% 1 3 25% Othercategories 0 – 0 0 – Notspecified/prefernottosay 0 – 0 0 – 1 ExecutivemanagementmeanstheExecutiveCommittee(themostseniorexecutivebodybelowtheBoard).TheChiefExecutiveOfficerandChiefFinancialOfficerareincludedinthe datafieldsforboththeBoardandtheExecutiveCommitteeastheyaremembersofbothrespectively. Board and executive management reporting on ethnic background No. of Board members % of the Board No. of senior positions on the Board (CEO, CFO, SID and Chair) No. in executive management 1 % of executive management WhiteBritishorotherWhite (includingminority-whitegroups) 5 62.5% 4 8 66.7% Mixed/MultipleEthnicgroups 1 12.5% 0 1 8.3% Asian/AsianBritish 2 25.0% 0 2 16.7% Black/African/Caribbean/BlackBritish 0 0 0 1 8.3% Otherethnicgroup,includingArab 0 0 0 0 0 Notspecified/prefernottosay 0 0 0 0 0 1 ExecutivemanagementmeanstheExecutiveCommittee(themostseniorexecutivebodybelowtheBoard).TheChiefExecutiveOfficerandChiefFinancialOfficerareincludedinthe datafieldsforboththeBoardandtheExecutiveCommitteeastheyaremembersofbothrespectively. #### Nomination Committee Report continued SENIOR MANAGEMENT AND THEIR DIRECT REPORTS AS AT 31 MAY 2024 Seniormanagement\*andtheirdirectreports(excluding administrativestaff)aredisclosedinaccordancewiththe 2018Code. 52% 48% \* Thedefinitionof‘seniormanagement’forthispurposeistheExecutiveCommittee. ThenamesofourExecutiveCommitteemembersaresetoutonpage66. Male Female Gender diversity PZ Cussons plc / AnnualReportandAccounts2024 / Governance 82 ![]() SUCCESSION PLANNING Progresshasbeenmadeanddiscussionshavetakenplaceonthismatterduringtheyear.TheCommitteewillcontinuetofocuson successionplansduringFY25. TheCommitteewillalsocontinuetoensurethatenhancingtheBoard’sskillsanddiversityremainonitsagenda. 2024 BOARD AND COMMITTEE EVALUATION Toevaluateitsowneffectiveness,inaccordancewithbestpracticeandtherequirementsofthe2018Code,theBoardundertakesannual effectivenessreviewsusingacombinationofexternallyfacilitatedandinternallyrunevaluationsoverathree-yearcycle.Eachprocessis facilitatedbytheCompanySecretary,workingwiththeChair.ThecycleoftheBoardevaluationsissummarisedasfollows: YEAR 1 ExternallyfacilitatedBoardevaluation usinginterviews. YEAR 2 Follow-uponactions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. TheCommitteeispleasedtoreportthattheBoardhasmadeprogressagainsttheprioritiesitsetinthe2023evaluation.Inparticular,the Boardhasworkedpurposefullyandwithfocustoensurethatthesuccessfulexecutionofstrategyisdelivered.Continuedexecutionofthe strategyremainsapriorityfortheBoardassetoutbelow.ThesizeandcompositionoftheBoard,whichwasalsoamatterforreviewin the2023priorities,wasconsideredandaffirmedbytheCommitteeintheyear. TheBoardrecognisestheimportanceofcontinuallymonitoringandimprovingitsperformance.Inaccordancewiththethree-yearcycle, aninternalevaluationtookplacethisyearfacilitatedbytheCompanySecretary. Process Conclusions and actions agreed from 2024 evaluation Asreportedlastyear,the2023Boardevaluationwas externallyfacilitatedbyapartnershipofBoardClic, BoardIntelligenceandAlisonPurdueAssociates.The 2024internalBoardevaluationreportwascompiled followingcompletionoftailoreddigitalsurveys createdbyBoardClicinwhichallDirectorssubmitted responses. TheBoardevaluationalsoincludedareviewofthe AuditandRiskCommitteeandtheRemuneration Committee.QuestionsinthemainBoardevaluation werealsospecificallyrelatedtotheNomination Committee,ChairandSeniorIndependentDirector. Thisyear'sreviewhasyieldedpositiveresults,confirmingtheeffectivenessofthe Boardasawhole.ThetwoCommitteesevaluatedwerealsofoundtobeeffective. AreasidentifiedtoenhancetheBoard'seffectivenessforthecomingyearare detailedbelow.Someoftheseareashaveevolvedfromthepreviousyearand arebeingactivelyprogressed. • Executionoftherevisedstrategy,includingstrategicactionsrelatingto portfoliotransformationandthecontinuedjourneyfromturnaround totransformation • Continuetore-balanceBoardagendastoincreasethefocusonmatters ofstrategicimportanceandmonitoringtheimplementationofstrategic decisions.EnablebetteruseoftheDirectors'skillsbetweenBoardmeetings • FosterbothasupportiveandchallengingenvironmentfortheExecutive DirectorsaroundtheexecutionanddeliveryoftheCompany'splans • ContinuetoengagestakeholdersindeterminingCompanyriskappetiteto informthestrategy.Continuetostrengthenriskmanagementprocessesto enablegreaterunderstandingofriskandtomanagewithintolerances • Focusontalentdevelopmentandestablishacultureofagilityandeffective decision-makingthatempowersemployees,fostersinnovationanddrives businesssuccess • KeepunderreviewthesizeandcompositionoftheBoardtoalignwiththe Groupsizeandstructure. Thefindingsandrecommendationsoftheevaluation werepresentedtoandconsideredbytheBoardatits Maymeeting. TheAuditandRiskandRemunerationCommittees consideredtheresultsoftheirownevaluations. Anumberofrecommendationsweremadetothe Boardandactionsagreed. David Tyler Nomination Committee Chair 18September2024 83 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Audit and Risk Committee Report #### THE COMMITTEE WILL #### FOCUS ON THE GROUP'S #### RISK MANAGEMENT #### AND CONTROLS #### EFFECTIVENESS. #### COMMITTEE MEMBERSHIP AND ATTENDANCE Committee members Member since Attendance VivekAhuja 1 2024 1/1 JeremyTownsend 2 2020 2/3 JohnNicolson 2016 4/4 DariuszKucz 3 2018 1/1 JiteshSodha 4 2021 4/4 1 AppointedtotheCommitteeandappointedChairon1May2024. 2 SteppeddownasaDirectorandChairoftheCommitteeon28February2024. 3 SteppeddownasaDirectoron14September2023. 4 ActedasChairforthemeetingon5February2024inJeremyTownsend'sabsence. #### ACTIVITIES OF THE COMMITTEE DURING THE YEAR Overthecourseofthisfinancialyear,theCommittee: • OversawtheonboardingofPricewaterhouseCoopersLLP(PwC) followingitsappointmentastheCompany’sExternalAuditor. Thisfollowedacompetitivetenderprocessasdetailedinlast year’sCommitteereport • OversawcontinuedprogressoftheControlsTransformation Projectwhichstartedin2022andwillresultinanimprovedinternal controlframeworkandenvironment,andanimprovementinthe financesharedservicesorganisationdesign,capability,control andefficiency • Hasreviewedthesignificantfinancialreportingmattersand judgementsidentifiedbythefinanceteamandPwCthroughthe externalauditprocess,andtheapproachtoaddressingthose mattersissetoutinthetableonpage87ofthisAnnualReport andAccounts • Closelymonitoredimprovementsinpaymentpracticeswhich areregisteredwiththeGovernment’sonlineportal • Helda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toeffectivelydischargeourdutiesandresponsibilities • Oversawandmonitoredtheriskmanagementprocess,ensuring alignmentwiththeriskmanagementframework,includingthe identificationandassessmentofemergingandPrincipalRisks. Vivek Ahuja Audit and Risk Committee Chair PZ Cussons plc / AnnualReportandAccounts2024 / Governance 84 ![]() DEAR SHAREHOLDERS, I am pleased to present the Committee’s report for the financial year ended 31 May 2024 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monitortheembeddingof theprocessesandcontrolsthathavebeendesignedaspart ofourongoingcontrolsimprovementprogramme(Controls Transformation),theCommitteeseethemainbenefitsof thisprogrammerelatingtoriskreduction.Theimportanceof theControlsTransformationworkisonlyheightenedbythe Government’sproposedregulatorychangeandcorporate governancecodereformleadingtoincreasedfuture requirementsofauditassuranceandDirectors'declarations overtheeffectivenessofmaterialinternalcontrolsover reporting.TheCommitteerecognisestheprogressbeing madeinthisareaandsupportsmanagementinadaptingplans wherenecessarytoensurecontinuedfocusonimprovingthe overall control environment. TheCommitteerecognisesthatInternalAuditandRiskplaysakey roleincontrolsimprovementandensuringculturalchangesare embeddediscriticalbutcanbedifficulttomeasureandquantify. #### COMMITTEE ROLE • Monitortheintegrityofthefinancialstatementsand announcementsandreviewsignificantfinancialreporting requirements,issuesandjudgements • Recommendtheappointmentandremoval,approvethe termsandremuneration,andassesstheindependenceand performanceoftheExternalAuditor,reviewingthescope, findings,costeffectivenessandqualityoftheaudit • ReviewtheadequacyandeffectivenessoftheGroup’srisk managementsystemsandmitigationprogrammes • ReviewtheadequacyandeffectivenessoftheGroup’ssystems andprocessesforinternalfinancialcontrol • Reviewtheindependence,effectivenessandoutputofthe Group’sInternalAuditandRiskFunctionandprogramme • ReviewtheadequacyoftheGroup’swhistle-blowing arrangementsandproceduresfordetectingfraud. #### PRIORITIES FOR 2025 • Overseeandassessmanagement’scontinuedprogressonthe strengtheningofinternalcontrols,enablingreadinessfor corporategovernancereform • Reviewsignificantfinancialreportingmattersandjudgements astheyrelatetotheGroup'sinterimandfullyearfinancialresults • OversightandsupporttotheExternalAuditorduringtheirsecond year-endaudit • Leveragingtheriskmanagementframeworktoproactively supporttheGroupasitadvancesitstransformativejourney. TheCommitteewillconcentrateontheevolvingriskprofile andoverseemitigationsinresponsetostrategicand operationalinitiatives • ContinuetosupporttheimprovementoftheInternalAuditand RiskFunction,supportingacultureofriskmanagementand embeddingandstrengtheninginternalcontrolsacrosstheGroup • IncreasedoversightofrisktoleranceastheGroupcontinuesto strengthenitsriskappetiteframework. DetailedresponsibilitiesaresetoutintheCommittee’s termsofreference,whichcanbefoundontheCompany’s websitewww.pzcussons.com HOW THE COMMITTEE OPERATES TheCommitteemeetsaminimumofthreetimesayearandmore frequentlyasnecessary.DuringtheyeartheCommitteemetfour times.Thisenabledafocusonthefull-yearandinterimresults inSeptemberandFebruaryrespectively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FinancialOfficer,GroupInternalAuditandRiskDirector 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Officerandothermembersofthe managementteamroutinelyattendedtoreviewspecificrisksand mitigatingactionplans. TheCompanySecretaryactsassecretarytotheCommittee. TheexperienceoftheCommitteemembers,includingmyself,is summarisedonpage65.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satisfiedthattheCommitteehastheappropriateskills andexperiencetobefullyeffectiveandmeetsthe2018Code requirementthatatleastonememberhassignificant,recent andrelevantfinancialexperience. 85 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() RELATIONSHIP WITH THE EXTERNAL AUDITOR TheCommitteehasprimaryresponsibilityformanagingtherelationshipwiththeExternalAuditor,includingassessingtheirperformance, effectivenessandindependenceannuallyandrecommendingtotheBoardtheirreappointmentorremoval. JonathanStudholmehasbeenleadpartnersincetheappointmentofPwCasExternalAuditorin2023. Duringtheyear,themembersoftheCommitteeregularlymetwithrepresentativesfromPwC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FY24. 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 ExternalAuditorrelatingtotheGroup’sAnnualReportandAccountsandtheexternalauditprocess. Inrespectoftheauditforthefinancialyearended31May2024,PwCpresenteditsauditplantotheCommittee.Theauditplanincluded anassessmentofauditrisks,scopeandmateriality,androbusttestingprocedures. TheCommitteeapprovedtheimplementationoftheplanfollowingdiscussionswithbothPwCandmanagement. Audit and non-audit Fees TheCompanypaid£4.0millioninauditfeesforthefinancialyearended31May2024.TheCompanyalsopaidformerExternalAuditor, DeloitteLLP,£0.4millioninrespectoflatefeesrelatingtotheirauditofthe2023AnnualReportandAccounts. Regardingnon-auditservices,theCompanyhasapracticeoflimitingPwCtoworkingontheauditorsuchothermatterswheretheir expertiseastheCompany’sExternalAuditormakesthemthelogicalchoiceforthework.Thisistopreservetheirindependenceand objectivity.Intheyear,theGrouppaid£0.3milliontoPwCinrespectofthereviewoftheinterimstatementreleasedinFebruary2024. Thenon-auditfeewas7.5%oftheauditfees. Effectiveness and independence TheChairoftheCommitteespeakstotheauditpartnertodiscussanyconcerns,todiscusstheauditreportsandtoensurethatthe External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exercise,oranannualone-offexercise,butratherithasformedanintegralpartof theCommittee’sactivities. ThishasallowedtheCommitteetoformitsownviewonauditquality,andontheeffectiveness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PwC’sperformanceandoverallworkingrelationshipbetweentheCompanyandits ExternalAuditor. The audit plan, the audit findings and the External 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 TheCommitteehasrequestedtheinsightsfromtheChiefFinancialOfficer,theGroupInternalAudit&RiskDirector andtheGroupExternalReportingDirectorduringtheauditprocess. HavingregardtothesematterstheCommitteehasconsideredtheeffectivenessoftheexternalauditprocessandisoftheopinionthat theExternalAuditorhasdemonstratedprofessionalscepticismandchallengedmanagement’sassumptionswherenecessary. TheCommitteeissatisfiedwiththescopeofPwC’swork,andthatPwCcontinuestobeindependentandobjective. #### Audit and Risk Committee Report continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 86 ![]() KEY JUDGEMENTS AND ESTIMATES TheCommitteereviewedtheexternalreportingoftheGroupincludingtheinterimreviewandtheAnnualReportandAccounts. InassessingtheAnnualReportandAccountstheCommitteeconsidersthekeyjudgementsandestimates.Thesignificantissues andimprovementsconsideredbytheCommitteeinrespectoftheyearended31May2024aresetoutbelow: Significant issues and judgements Decisions and improvements Areas of significant financial judgement TheCommitteeconsideredanumberofareasofsignificantfinancialjudgementthroughouttheyear.Thekey areascoveredincludedconsiderationoftheimpactofNigerianNairadevaluationontheGroup;thetreatment aspermanentasequityofcertainintercompanybalancesheldwithourNigerianbusinesses;impairmenttesting ofgoodwill,intangibleassetsandtangibleassetsandassociateddiscountrates;thetreatmentofuncertaintax positionsacrosstheGroup;andtheclassificationanddisclosureofadjustingitemsandthetreatmentoftrade expenditureandtheprocessesandcontrolsinplacetomanageassociatedrisks.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theworkunderwayto designandthenembedcontrolsimprovementsthroughouttheGroup.TheControlsTransformationprojectis focusedonimprovingtheuseofSAP,standardisingprocessesandembeddingcontrols.Itaimstoestablishan effectiveinternalcontrolsframeworkinanticipationoffuturecorporategovernancereformchangesaswellas improvingfinancesharedservices,organisationdesign,capabilityandefficiency. Risk management TheCommitteereviewedthedevelopmentofriskmanagementacrosstheGroupandapprovedtheappointment ofthenewGroupInternalAuditandRiskDirectoraswellasanewHeadofGroupRisk. Ethics and compliance TheCommitteemonitoredinvestigationreportsandwassatisfiedthatmanagementwassignificantlyreducingthe Company’sriskprofileforfraudandcomplianceissues. TCFD TheCommitteereceivedreportsonthestepstoachievecompliancewithTCFD,riskidentificationandrelated mitigationplans.TheCommitteereceivedanddiscussedtheassuranceprocessforthefinalTCFDstatement. 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thereviewoftheriskmanagementmethodology,andtheeffectivenessofinternalcontrolstothe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. 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: • Conflictsofinterestpolicy–settingexpectationsfortheavoidanceofconflicts • 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RulesandMarketAbuseRegulations • 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Framework. Duringthepreviousyear,theBoardreviewedtheirapproachtoriskmanagementandasaresultanewGroupRiskManagement FrameworkwasapprovedbytheAuditandRiskCommitteein2023,andhasbeenoperationalacrosstheGroupinFY24.This complementstheworkthattheAuditandRiskCommitteehassetforthemulti-yearcontrolsimprovementplanstoaddressexisting weaknessesidentifiedincludingupgradingthesystemsusedtorecordtradepromotions,improvingourjoiners,moversandleavers processesthroughoptimisationofourhumanresourcessystemandaddressingoutstandingsegregationofdutyconflictswithinour enterprisemanagementsystems. 87 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() TheCommitteenotesthecontrolsimprovementsmadeoverthe courseofFY24,includingthedesignandfurtherdevelopment ofaGroup-wideframeworkofinternalcontrolsoverfinancial reportingandanimprovementintheprocesstotrackandclose auditactions.TheCommitteealsoreviewedandapprovedfurther plansincludingtheworkneededtoensureappropriatematerial controlsoverbothreportingdisclosuresandprincipalrisksarein placeandoperatingeffectivelyinadvanceofregulatorychange. Thisproject,enabledthroughatransformativechangeinour financefunction,willcontinuetorequiresignificantworkin FY25andbeyond. INTERNAL AUDIT FUNCTION InternalAuditisanindependentandobjectivefunctionthat deliversassuranceovertheGroup’sgovernance,internal controls,andriskmanagementstructures.ItassiststheGroup inaccomplishingitsobjectivesbybringingasystematicand disciplinedapproachtoevaluatetheeffectivenessofsystems, processes,andcontrolsacrosstheGroup. InternalAuditisacomponentoftheGroupInternalAuditand Riskteam,reportingtotheCommitteeandadministrativelytothe ChiefFinancialOfficer.TheGroupInternalAuditandRiskDirector overseestheInternalAuditteamintheCompany'skeymarkets, includingin-houseteamsinAfricaandAsia.IntheUK,thefunction issupportedbyourexternalpartner,KPMGLLP. TheGroupAuditCharterprovidestheframeworkfordischarging theresponsibilitiesoftheInternalAuditfunction.TheAudit CharterisapprovedannuallybytheAuditandRiskCommittee andformallydefinesthepurpose,authority,andresponsibilities ofInternalAudit.TheGroupInternalAuditandRiskDirector isresponsibleforensuringthatInternalAuditfulfiltheir responsibilitiesandmandateoutlinedinthisAuditCharter. TheAuditandRiskCommitteeapprovestherisk-basedinternal auditplanonanannualbasis.Anyamendmentsmadethroughout theyearrequireCommitteeapproval.Theinternalauditplanis continuallyevaluatedandadjustedtoensureitremainsrelevantin lightofevolvingrisks,businesspriorities,andexternalconditions. TheGroupInternalAuditandRiskDirectorupdatestheCommittee onprogressandsignificantfindingsrelatedtotheInternalAudit PlanduringCommitteemeetings.Regulardiscussionswiththe AuditandRiskCommitteeChairandtheChiefFinancialOfficerare undertakenbytheGroupInternalAuditandRiskDirectoroutside theCommitteemeetingsasappropriate. AspertheAuditCharter,anExternalQualityAssessment(EQA) wasperformedintheyearbythirdparty,BDOLLP,thefunction wasdeemed‘effective’withsomeimprovementopportunities identifiedtofurtherstrengthenactivities.TheCommitteeis satisfiedthatthecurrentarrangementsremainappropriate andeffectivefortheCompany. RISK MANAGEMENT WhiletheBoardoverseestheGroup’sRiskManagementFramework, itdelegatesresponsibilityforreviewoftheriskmanagement methodologyandframeworkandtheeffectivenessofinternal controlstotheAuditandRiskCommittee.TheGroupusesadefined, standardisedandannuallyapprovedRiskManagementFramework thatreaffirmstheBoard’srecognitionthatthemanagementofrisk isanimportantcomponentofgoodmanagementpractice,italso ensuresthattheGrouphasanopenandreceptiveapproachto identifying,discussingandaddressingrisk. TheRiskManagementFrameworkensurestheGroupidentifies, assesses,mitigatesandmonitorsrisksthatthreatenthesuccessful deliveryofourstrategicobjectives.Theframework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methodology. Theriskmanagementmethodologycoversinitialrisk identification,includingemergingrisks,assessmentand evaluationofrisk,theextenttowhichriskscanbemitigated, theimplementationofeffectiveriskmitigationactivities,and theeffectivemonitoringandreportingofrisk. TheGroupoperatesbothtop-downandbottom-upapproaches toensurethatsignificantstrategicandoperationalrisksare identified,includingreviewandapprovalofthePrincipalRisksas canbeseenonpages42to50.TheGroupInternalAuditFunction providesindependentassurancetobothmanagementandthe CommitteeontheeffectivenessoftheGroup’sRiskManagement Frameworkandastowhethersoundinternalcontrolsystems operatetomitigatetheserisks. TheCommitteehascompletedarobustassessmentofthe Group'semergingandprincipalrisksandissatisfiedthattheRisk ManagementFrameworkiseffective.Theframeworkcontinues toprovideastrongfoundationforthefurtherembeddingofrisk managementprinciplesacrosstheGroup. SeeRiskManagementandPrincipalRiskssectiononpage 42for furtherdetails WHISTLE-BLOWING POLICY TheCompanyisrequiredtomaintainamechanismforthe confidentialreportingofsuspectedfraudandotherwrongdoing. TheCompanyhasastandaloneWhistle-blowingPolicywhichlinks totheCodeofEthicalConduct,thisissubjecttooversightbythe AuditandRiskCommittee. 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CompanySecretaryalongwiththeGroupHeadof EthicsandCompliance.TheCommitteereceivesreportsonthe effectiveness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onthesteps toachievecompliancewithTCFD,riskidentificationandrelated mitigationplans.TheCommitteereceivedanddiscussedthe assuranceprocessforthefinalTCFDstatement,whichcanbe foundonpages40to41. #### Audit and Risk Committee Report continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 88 ![]() STATEMENT OF COMPLIANCE TheCompanyconfirmsthatit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andRiskCommittee,actingcollectivelyor throughitsChair,andforandonbehalfoftheBoardispermitted: • 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 • Toinfluencetheappointmentof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. 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defined responsibilitiesandlevels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 regardingfinancialperformance,rollingforecasts,actualand forecastcovenantcompliance,cashflowsandfinancialand non-financialKPIs. Notwithstandingthecontinuedfocusoncontrolsimprovement tobedeliveredinFY25,theoverallcontrolsenvironmentofthe Companyhasimprovedyear-on-year. FAIR, BALANCED AND UNDERSTANDABLE TheDirectorsarerequiredtoconfirmthattheyconsider,takenas awhole,thattheAnnualReportandAccounts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Committeehassatisfieditselfthatthefinancialreporting processesandcontrolsovertheinformationpresentedinthe AnnualReportandAccountsaresatisfactory,thattheinformation ispresentedfairly(includingthecalculationsanduseofalternative performancemeasures)andhasconfirmedtotheBoardthatthe financialreportingprocessesandcontrolsaroundthepreparation oftheAnnualReportandAccountsareappropriate,allowingthe Boardtomakethe‘fair,balancedandunderstandablestatement’ intheReportoftheDirectorsonpage125. FINANCIAL REPORTING TheCompanyreportstoshareholdersonitsfinancialperformance twiceayear.Duringthe12monthspriortothedateofthisreport, theCommitteereviewedtheinterimfinancialstatementsforthe sixmonthsto2December2023andthefull-yearAnnualReport andAccountsfortheyearto31May2024.Theprincipalsteps takenbytheCommitteeduringthepast12monthsinrelation toitsreviewofthepublishedfinancialstatementswere: • Reviewofthe2023interimfinancialstatementsand2023 interimannouncementandconsiderationofPwC’scomments onthedraftsofthesedocuments • ReviewofplanforpreparingtheAnnualReportandAccounts fortheyearending31May2024 • Reviewofthesignificantjudgementsandestimatesthatimpact thefinancialstatements • ReviewoftheAnnualReportandAccountsfortheyearending 31May2024andconsiderationofPwC’scommentsonthese documents. TheCommitteemonitorstheimplicationsofnewaccounting standardsandotherregulatorydevelopmentsfortheCompany’s financialreportingandregularly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proposed introductionofUKregulationinrespectofinternalcontrolson reportingandauditassurancepolicy. VIABILITY STATEMENT AND GOING CONCERN TheCommitteehasreviewedthebasisfortheCompany’sviability statementonpage51to53thatisdraftedwithreferencetothe financialforecastsforthenextfouryears.Inlightoftheimpact ofrisinglivingcostsontheglobaleconomyandthedevaluation oftheNairacurrencyinNigeriawheretheGroupoperates,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. TheCommitteeensuredsufficientreviewwasundertakenofthe adequacyofthefinancialarrangementsandcashflowforecasts. Accordingly,theCommitteerecommendedtotheBoardthatthis statementbeapproved. Similarly,theCommitteeplacedadditionalfocusonthe appropriatenessofadoptingthegoingconcernbasisinpreparing theGroup’sfinancialstatementsfortheyearended31May2024 andsatisfieditselfthatthegoingconcernbasisofpresentationof thefinancialstatementsandtherelateddisclosureisappropriate. TheDirectorsnotethataseverebutplausibledownsidescenario againsttheGroup’sFY25forecastofadeclineintheNaira exchangerateofmorethan10%,ifnotcounteredbymanagement mitigations,couldresultinabreachoftheGroup’sinterestcover covenantasat29November2024.Furtherdetailsareprovided onpage51. Vivek Ahuja Audit and Risk Committee Chair 18September2024 89 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Environmental and Social Impact Committee Report ON BEHALF OF THE BOARD, #### THE COMMITTEE WAS #### PLEASED TO APPROVE #### THEDEI STRATEGY FOR #### THE GROUP. #### COMMITTEE MEMBERSHIP AND ATTENDANCE Committee members 1 Member since Attendance ValeriaJuarez 2 2022 3/3 Jonathan Myers 2022 3/3 KirstyBashforth 2022 3/3 1 DirectorsDavidTyler,SarahPollard,JohnNicolson,DariuszKucz,JeremyTownsend andJiteshSodhasteppeddownfromtheCommitteeon19June2023. 2 AppointedasChairoftheCommitteeon19June2023. DEAR SHAREHOLDERS, On behalf of the Board, and as Chair of the Environmental and Social Impact (ES) Committee, I am pleased to present its report for the year ended 31 May 2024. TheCommitteeispleasedtoreportthecontinuedprogress againstthegoalssetoutintheGroup'sESstrategy.Duringthe year,theCommitteereviewedtheGroup'sESprioritiesand initiativestoensuretheeffectivenessoftheprogrammeand itsalignmentwithourwiderstrategicgoals. TheCommitteeoverseesandmonitorsperformanceagainstthe Company’ssustainabilitystrategyandgoalsandhowPZCussons considers,engageswith,reportstoandmaintainsitsreputation withkeystakeholders.TheCommitteeissupportedbythe ExecutiveCommitteethroughitsESForumwhichoversees theexistingandfutureworkstreamswithintheCompanyon importantESmattersandtheSustainabilitySteeringGroupwhich comprisesrepresentativesfromacrossourdifferentmarketsand businessfunctions. InaccordancewiththeTermsofReference,theCommitteemet threetimesintheyear.OnlymembersoftheCommitteeare entitledtoattendthemeetings.However,otherDirectorsand otherindividualsmaybeinvitedtoattendforallorpartsofany meetingasandwhenappropriate.TheCompanySecretaryacts assecretarytotheCommittee. TheCommittee’sTermsofReferencewereupdatedintheyear toreflecttheCommittee’srevisedremitandresponsibilityfor environmentalandsocialimpactmattersandtoensurethat theyarecompatiblewiththeCorporateGovernanceCode2018 (the2018Code). Valeria Juarez Environmental and Social Impact Committee Chair PZ Cussons plc / AnnualReportandAccounts2024 / Governance 90 ![]() #### COMMITTEE ROLE • RegularlyreviewtheGroup’sESstrategyand performancetargets • MonitorprogressbytheGroupagainstitsESstrategyandgoals • OverseehowtheGroupengageswithkeystakeholdersonES • Considertheclimate-relatedriskandopportunitiesfacing the Group. #### PRIORITIES FOR 2025 • ContinuouslyreviewtheGroup’sESstrategyandgoalsand monitorprogressagainsteach • Ensurerequiredprocessesandcapabilitiesareinplaceto deliverthegoals • Overseetheimplementationandembeddingofthe UNGlobalCompact • FurtherembedtheDEIstrategyandgoalsandthedevelopment oftargetsandmetrics • FurtheroptimiseESreporting. DetailedresponsibilitiesaresetoutintheCommittee’s TermsofReference,whichcanbefoundontheCompany’s websitewww.pzcussons.com ACTIVITIES OF THE COMMITTEE DURING THE YEAR Diversity, Equity and Inclusion (DEI) strategy FollowingthecompletionofanexternalDEImaturityassessment, aDEIstrategywasdevelopedtoformalisetheCompany’sclear intentionandcommitmenttoaccelerateandfocusonDEIand wasapprovedbytheCommitteeinNovember2023.Thestrategy waslaunchedacrossthebusinessonInternationalWomen’sDay inMarch2024.TargetsandmetricswillbesetforFY25tomonitor progressagainstthestrategyduringthecomingyear. UN Global Compact TheCommitteesupportedtheExecutiveCommittee’s recommendationtoseektojointheUNGlobalCompactand committoaligningourstrategyandoperationstoitstenprinciples regardinghumanrights,labour,theenvironmentandanti- corruption.TheCompanywassuccessfulinbeingacceptedasa participantinDecember2023.Thisstrengthensourcommitment totheUN17SustainableDevelopmentGoals(SDGs)andtheir associatedtargets. Charity Partnership Framework and Business for Societal Impact (B4SI) Duringtheyear,theCommitteesupportedtheroll-outofthe CharityPartnershipFramework,toaligncommunityactivity withcorporatepurposeandtooptimisethesocialimpactof ourpartnerships.Alongsidetheroll-out,theCompanyhasalso adoptedtheBusinessforSocietalImpact(B4SI)framework tobetterassess,measureandreviewthesocialimpactofour partnershipsandcharitableinvestmentonindividuals,the community,theenvironmentandthebusiness. Carbon-neutrality and reduction commitments TheCommitteeispleasedtoseethattheCompanyisontrack tomeetingitstargetstoreduceandoff-setitsGHGemissions. InFY24,PZCussonsachievedcarbonneutralityinitsUK,Beauty, ANZandAsianoperationsandisontracktoreachcarbon neutralityacrossitsglobaloperationsby2025.TheCompanyis alsoontracktoreachitsnearandlongtermambitiontoreduce emissions:a42%reductioninScopes1and2againstthe2021 baselineby2030andnetzeroacrossScopes1,2and3by2045. TheneartermgoalwasachievedinFY24astheGroupreported a42.8%reductioninScopes1and2againstthe2021baseline. TheCommitteewillcontinuetomonitorandadviseonprojects whichwillbestachievethesetargets. Plastic and packaging reduction InFY24,wereducedtheuseofvirginplasticinourpackagingby 9.2%vsbaselineand85.6%ofourpackagingisnowrecyclable, reusableorcompostable.InAustralia,MorningFreshhas commencedincorporationofPostConsumerRecycledmaterials (PCR)intoitsmanualdishwashingrangeofproducts. ES strategy Throughouttheyear,theCommitteemonitoredprogress againstthegoalssetoutintheGroup’sESstrategy.Thestrategy providesoperationalfocusand,alongsideasetofclearlydefined performancetargets,supportstheCompanyinachievingitsgoals. TheCommitteehasreviewedoverallinitiativesacrosstheCompany andprioritisedthecriticalinitiativestodelivertheESstrategy. MoreinformationabouttheESstrategycanbefoundonpage 28 Valeria Juarez Environmental and Social Impact Committee Chair 18September2024 91 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Committee Report #### FIRST YEAR #### IMPLEMENTATION OF #### THE REMUNERATION #### POLICY. #### COMMITTEE MEMBERSHIP AND ATTENDANCE Committee members Member since Attendance KirstyBashforth 2019 5/5 JeremyTownsend 1 2020 n/a JiteshSodha 2021 5/5 ValeriaJuarez 2 2021 4/5 1 SteppeddownfromtheCommitteeon19June2023priortothefirstmeeting oftheyearandtheBoardon28February2024. 2 DidnotattendtheinterimAugust2023meeting. DEAR SHAREHOLDERS On behalf of the Board, I am pleased to present our 2024 Remuneration Committee Report. This report is divided into three sections as set out below. (1)ThisRemunerationCommitteeChairStatement–providing asummaryofkeyrewardactivityduringtheyear. (2)TheDirectors’RemunerationPolicy(thePolicy)–our2023–26 Policyasapprovedbyourshareholdersinabindingvoteatour 2023AnnualGeneralMeeting(AGM)on23November2023. (3)TheReportonDirectors’Remuneration–settingouthowthe Directors’RemunerationPolicywasappliedthroughoutFY24 andhowtheCommitteeintendstoapplyitinFY25. Iwouldliketostartmystatementbyacknowledgingthe2023 AGMvoteonthe2023–26Policy.ThePolicywasproposedafter thoroughengagementandconsultationwithmajorshareholders andIwouldliketoexpressmyappreciationforthetimetaken tomeetwithme,thelevelofengagementandthefeedback givenduringthosemeetings.WhiletheCommitteewaspleased thatover70%ofshareholdersvotedforthe2023–26Policy,it understandsthatthevotesagainstwereprimarilyattributable totheadoptionofaRestrictedSharePlan(RSP)whereanumber ofshareholdersexpressedopposingviewsduringconsultation. TheCommitteeprovidedanexplanationintheFY23Directors' RemunerationReportofthereasonsforthemigrationtoaRSP, whichincludedaneedtoprovidecompetitivevariablepayforits seniorleadershipandtoaligntheinterestsoftheexecutivewith thelong-terminterestsofourshareholders. TheCommittee'sviewisthatitactedinthebestinterestsofthe Companyandallitsstakeholders,howevertheCommitteewill keepinmindtheviewsexpressedbyshareholdersonthisissue asitplansforfutureamendmentsandrenewalsoftheDirectors' RemunerationPolicy. Kirsty Bashforth Remuneration Committee Chair PZ Cussons plc / AnnualReportandAccounts2024 / Governance 92 ![]() #### COMMITTEE ROLE • Toset,developandoverseetheimplementationoftheDirectors’RemunerationPolicyfortheExecutiveDirectorsandsenior executives,havingregardfortheremunerationprinciplesofthewiderorganisationandtherelationshipbetweentheremuneration ofthemembersoftheBoardandthewideremployeepopulation • ToevaluatetheperformanceofanddeterminespecificremunerationpackagesforeachExecutiveDirector,theChair,theCompany Secretaryandtheotherseniorexecutives • 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seniorexecutivesandmembersoftheBoard. DetailedresponsibilitiesaresetoutintheCommittee’sTermsofReference, whichcanbefoundontheCompany’swebsite: www.pzcussons.com BUSINESS CONTEXT FOR THE YEAR ENDED 31 MAY 2024 TheGroup'sfinancialperformanceinFY24fellbelowourinitial expectations,largelyasaresultoftheadverseimpactofthe devaluationoftheNigerianNairawhichtookplaceinJune 2023.Thisresultedinasignificantdeclineinreportedrevenue, operatingprofitandearningspershare.Asaresult,theBoard hasannounceditsintentiontodeclareaninterimdividendof 2.10pcomparedtolastyear'sfinaldividendof3.73ppershare, representingafullyeardividendof3.60p. TheCommitteeconsidersthatthebusinessdeliveredimproved financialperformanceinanumberofareas,includingintheUK andANZ,whilemakingkeyinterventionsintheNigerianbusiness tolimittheimpactofthedevaluation.TheGroupalsomadegood progressagainstitsstatedstrategicprioritiesforFY24.Inparticular: • Simplifying and strengthening Nigeria:theGroupimproved itssourcingofUSDollarsinNigeriawhichhasenabledthe repatriationofcashsoastopaydownSterling-denominated borrowingsandreducestheriskoffurtherdevaluation. • UK growth:theGroupdeliveredstrongrevenuegrowthinits UKPersonalCarebusiness–withdouble-digitgrowthinOriginal Source,ImperialLeatherandChildsFarmandwithCarexback ingrowth. • Expansion from the core:ChildsFarmhaslaunched successfullyintheUSandGermany,andthebrandasawhole hasdeliveredanotheryearofdouble-digitgrowth. Furthermore,inApriltheGroupannounceditsplanstomaximise shareholdervaluethroughthedisposalofSt.Tropezandthrough aprocesstoevaluatestrategicoptionsfortheAfricaportfolio.The announcementfollowsastrategicreviewoftheGroup'sportfolio ofbrandsandgeographies. REMUNERATION DECISIONS YEAR ENDED 31 MAY 2024 Variable remuneration earned during the year TheCommitteecarefullyconsideredtheprogressmade bymanagementduringtheyear,theimpactofthetrading environmentonGroupperformanceandtheexperienceofboth theshareholdersandwiderworkforcethroughthefinancialyear whenreviewingincentiveplanoutturns.Asummaryofdecisions, andthecontextinwhichtheyweremade,follows. Annual bonus payout Assetoutinlastyear'sreport,wemadeanumberofchangestothe annualbonusforFY24.Were-weightedtheprofitmeasureto50% from40%,therevenuemeasureto20%from30%andmaintained theweightingofthecash-basedmeasureat10%.Wealsomoved toAdjustedOperatingProfitfromProfitBeforeTaxandFreeCash FlowfromNetWorkingCapital.Assetoutpreviously,theuseof AdjustedOperatingProfitreducesvolatilityandthepotentialfor windfallgainswhileprovidingenhancedfocusonaligningpaywith profitability.FreeCashFlowisamorecomprehensivemeasureof theCompany’sabilitytogeneratecash,explicitlyconsideringthe costofcapitalinvestment.Theapproachtokeybusinessobjectives wasalsoupdatedforFY24tofurtheralignthemwithourstrategy andkeyprioritiesforFY24. TheCommitteereviewedthebonusoutcomeinthecontext ofoverallGroupperformance,takingintoconsiderationthe experienceofthekeystakeholders,includingemployeesand shareholdersduringtheyear.TheCommitteeconsideredboth thedriversandoutcomesofadjustedandstatutoryfinancial performance,togetherwiththeindividualcontributionofthe CEOandCFOinnavigatingachallengingenvironment,particularly inourAfricabusinesswhichwasmateriallyimpactedbya volatileandlargedevaluationoftheNigerianNaira.Takingall thesefactorsintoaccount,theCommitteeexerciseddownwards discretionof2.2%forfinancialperformancefortheExecutive Directors.Postthisadjustment,theCommitteeconcludedthatthe bonusoutcomewasafairreflectionofunderlyingandindividual performanceandagreedthefollowing: • 51.4%ofthe80%ofmaximumopportunityofbonusassessed againstfinancialperformancewasachieved.Fulldetailsof thetargetsandperformanceagainstthemcanbefoundon pages108and109. • TheCommitteealsoassessedtheperformanceagainstthekey businessobjectivesanddeterminedthat15%oftheavailable 20%wasearnedforbothExecutiveDirectors. • Assuch,66.4%ofthemaximumbonuswasearnedbytheCEO andCFO,resultinginawardsof99.6%ofsalaryfortheCEOand 83.0%ofsalaryfortheCFO.40%ofthebonusearnedwillbe deferredintosharesfortwoyears,achangefromtheprevious Policywhere25%wasdeferredforthreeyears.Fulldetailsof theperformanceassessmentagainstboththefinancialandkey businessobjectivescanbefoundonpages108and109. 93 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Vesting of the FY22 Performance Share Plan (PSP) PSPawardsrelatingtotheyearended31May2022(FY22)were basedonthreekeyperformanceindicators:60%EarningsPer Share(EPS)growth,20%revenuegrowthfromMustWinBrands measuredrelativetogrowthinrevenuefromPortfolioBrandsand 20%relatingtosustainabilitytargets.BoththeEPSgrowthand revenuegrowthtargetswerenotmet. Theelementrelatingtosustainabilitywasbasedonthreekey measures,(i)ethicalsourcing,(ii)CarbonDisclosurePerformance and(iii)ouremployeeengagement,eachofwhichdeterminethe vestingofone-thirdofthe20%portionoftheawardbasedon sustainability.Assessmentoftheperformanceagainstthesethree measuresissetoutinfullonpage112andresultsin8.67%ofthe maximumawardvesting,equivalentto13.0%fortheCEOand 10.8%fortheCFO. Board changes JeremyTownsendsteppeddownfromtheCommitteeon19June 2023andtheBoardon28February2024.Iwouldliketotakethis opportunitytothankJeremyforhiscontributiontotheCommittee overthecourseofhismembership. VivekAhujajoinedtheBoardasaNon-ExecutiveDirectoron 1May2024.HehaschairedtheAuditandRiskCommitteesince hisdateofjoiningandisamemberoftheNominationCommittee. TheNon-ExecutiveDirectorfeespayabletoJeremyandVivek duringFY24wereagreedbytheBoardandpro-ratedtoreflect thetimeeachservedontheBoard.DetailoffeespaidtoNon- ExecutiveDirectorsduringFY24canbefoundonpage107. OUR APPROACH TO REMUNERATION FOR THE YEAR ENDING 31 MAY 2025 ThekeychangestotheimplementationofpayforFY25include: Base salaries ThebasesalariesfortheCEOandCFOhavebeenincreased by4%to£665,600and£416,000respectivelywitheffectfrom 1September2024.Thisisbelowtheaverageincreaseforthe wideremployeepopulationintheUK. FY25 annual bonus FortheFY25annualbonus,theAdjustedOperatingProfitmeasure hasbeenincreasedfrom50%to60%andtheFreeCashFlow measurefrom10%to20%toprioritisefocusfortheExecutive Directorsonprofitabilityandcashmanagement.Whilebelow thePolicylevel,toalignbehaviours,revenueremainsaweighted bonusmetricforlocalleadersandwillbeconsideredaspartofthe Committee'sholisticreviewoffinancialperformanceattheendof theyear.Theremaining20%continuestobelinkedtokeybusiness objectives,whichhavebeenupdatedtofurtheralignthemwithour strategyandkeyprioritiesforFY25.Moredetailontheweightings andmeasuresisprovidedonpage110.Aminimumof40%ofthe bonusearnedwillbedeferredintosharesforatleasttwoyears. Therearenochangestothethreshold,targetormaximumlevel ofaward. TheCommitteesettheFY25annualbonustargetsona business-as-usualbasisnotwithstandingtheCompany’srecent announcementthatitintendstoselltheSt.Tropezbrandandwill undertakeastrategicevaluationofGroupoperationsinAfrica. TheCommitteewillreviewtheappropriatenessofthetargets setortheoutcomeoftheFY25annualbonusshouldasale occur,andalsofollowingthestrategicreview,toensurethatthe originaltargetsremainappropriatelystretchingandthattheFY25 annualbonusoutcomeisafairreflectionofunderlyingfinancial performanceandtheshareholderexperience. FY25 RSP awards AtthetimetheCommitteeapprovedtheFY25RSPawardfor theExecutiveDirectors,itnotedthesharepriceperformance sincethepreviousyear'sgrantandparticularlythelinkbetween thelargestdevaluationinthehistoryoftheNigerianNaira, theprudentrevisionintheFY24profitoutlookandreduction inthehalf-yeardividend.TheCommitteealsoconsideredthe proactivestepstakenbyleadershiptomitigatetheimpactof this,includingdeliveryoftherevisedprofitoutlookforFY24and theannouncementofthesaleofSt.Tropezandstrategicreview ofoperationsinAfrica,aswellastheimpactontheexisting shareholdingsoftheCEOandCFO. Basedonthis,theCommitteeconcludedthatitwouldnotbe appropriatetoreducetheleveloftheFY25RSPawardandas such,theCEOwillbegrantedanawardof90%ofsalaryandthe CFO,75%ofsalary.TheCommitteedoesnotbelievethereisarisk oftheCEOandCFObenefitingfroma'windfallgain',however,the Committeewillconsiderthisandtherelevantunderpinswhen determiningthelevelofvestingattheendofthethree-year vestingperiod.Thefollowingunderpinswillcontinuetobeapplied fortheFY25award: • Nomaterialweaknessintheunderlyingfinancialhealthor sustainabilityofthebusiness. • Maintenanceofappropriategovernanceframeworks,including acceptablecontrolsandcomplianceperformanceandnoevents thatresultinsignificantreputationaldamagetotheCompany (asdeterminedbytheBoard). • ToensureongoingfocusonourcriticalESGcommitments, satisfactoryperformanceagainstenvironmentalandsocietal commitments. TheCommitteeretainsthediscretiontoreducevesting, potentiallytonil,subjecttoperformanceagainsttheunderpins acrossthevestingperiod. Non-Executive Director fees TherewillbenofeeincreaseforNon-ExecutiveDirectorsin FY25.ThisfollowsacomprehensivereviewoffeesinFY24and anincreasetothebasefeeandAuditandRiskCommitteeand RemunerationCommitteeChairfeesfrom1September2023 asdisclosedinlastyear'sreport. FurthersummarydetailsonhowweintendtoimplementthePolicyin FY25aresetoutinthe‘Ataglancesummary’onpages 96 and 97with fulldetailsonpages 98 to 106 #### Remuneration Committee Report continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 94 ![]() Wider employee experience TheCommitteecontinuestotakeaccountofremuneration policiesandpracticesacrosstheGroupwhenconsideringthe remunerationarrangementsfortheExecutiveDirectorsandother seniorexecutives.Duringtheyear,therewereanumberofchanges totheExecutiveCommittee,reflectingchangestothestructureof thebusiness.TheCommitteecarefullyconsideredtheremuneration approachforthewideremployeegroup,alongsiderelevantmarket datawhenmakingremunerationdecisionsforthisgroup. Updatesonthewideremployeeexperiencecontinuetobe regularlyprovidedtotheCommitteebythemanagementteam, particularlyinlightoftheongoingchallengingmacro-economic environment.InmyroleasdesignatedNon-ExecutiveDirector foremployeeengagement,aswellasChairoftheRemuneration Committee,ImetagainwiththeHRLeadershipTeamduringthe year,todiscusstheGroupremunerationstrategyandcontext.Once again,thiswasawide-rangingdiscussionthatgavetheCommittee goodinsightsintoourcolleagues’viewsonremuneration.Ialso hadtheopportunitytojoinanumberofengagementsessions withemployeeswhichaddedfurthercontext. Thekeyremunerationactivitiesforthewideremployee populationforFY24consideredbytheCommitteewhenmaking itsdecisionsaresetoutbelow: • Employeesalarylevelscontinuetobereviewedannuallyagainst arangeofrelevantfactorswhichincludemarketdata,economic forecastsandGroupfinancialbudgets.Thesalaryincrease budgetforFY24forUK-basedemployeeswas5%,withsalary awardsbasedonindividualperformance,assessedthroughour performancemanagementprocess.Manyofourothermarkets wereabovethistoreflectlocaleconomicfactorsandourneed toattractandretainthetalentneededtodeliverourambitious strategy.Forexample,thebudgetinNigeriawas23%andin Indonesiawas6%. • Wealsocontinuedtomonitorandreviewthesupportwe offeredouremployeesduringthecost-of-livingchallenges facingmanyofourmarkets.Thisremainedparticularlyevident inAfricawhereweonceagainmadeone-offpaymentstosupport ourpeople.Thebusinesscontinuestokeepthisunderreview. • ForFY24,allbonusesforeligibleemployeescontinuedto includeanelementofGroupperformance.Thisgavethe potentialforemployeestoberewardedfortheircontributionto theoverallsuccessofthePZCussonsGroupaswellastheirown businessunit.Ourleaderscontinuetohaveanelementrelating totheirpersonalcontribution. • Wecontinuetorewardcriticaltalentandsupportretention bygrantingshareawardsintheformofRSPstoseniorleaders andmanagers.WebelievethattheuseofRSPsenablesthe Companytocompeteinternationallyforthebestexecutive talentandprovidesapowerfultooltohelpretainandmotivate keymembersofourcurrentandfutureleadershipteams. Theseawardsarewellreceivedbyparticipants. • TheShareIncentivePlan(SIP),launchedin2021,created furtheralignmentbetweenemployeesandinvestors.Under HMRCrules,onlyUKemployeescanparticipate.Thecurrent take-upoftheSIPis39%.Arangeofmarket-alignedincentives areappliedinothercountriestoprovideshareholderalignment. Concluding remarks InreachingitsdecisionsonDirectors'remunerationforFY24and FY25,theCommitteecarefullyconsideredthereportedfinancial performanceoftheGroupalongsidethestrategicprogressthat hasbeenmade,aswellasourshareholderandwiderstakeholder experience.TheCommitteebelievesthatdecisionsmade reflectunderlyingfinancialandindividualperformance,andthe approachforFY25continuestosupportclearalignmentbetween remunerationandkeyareasofstrategicfocus.Iwelcomeyour viewsonanyofthematterssetoutinthisreportandlookforward togainingyoursupportattheAGM. Kirsty Bashforth Remuneration Committee Chair 18September2024 95 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Committee Report continued AT A GLANCE SUMMARY: DIRECTORS’ REMUNERATION AND HOW IT WILL BE IMPLEMENTED IN FY25 TheCommitteeisresponsiblefordetermining,andagreeingwiththeBoard,theDirectors’RemunerationPolicyandhasoversightofits implementation,inlinewithitsclearTermsofReference. ThefollowingtablesetsoutasummaryoftheDirectors’RemunerationPolicyasapprovedbyshareholdersattheNovember2023AGM andhowitwillbeimplementedinFY25.Fulldetailisprovidedonpages98to106. Key policy features Implementation in FY24 Proposed approach for FY25 Salary Base salaries are normally reviewedannuallytakinginto accountanumberoffactors includingsizeofrole,performance andexperienceoftheindividual andpayincreasesacrossthe widerworkforce. Salaries from 1 September 2023: • CEO:£640,000 • CFO:£400,000. Salaries from 1 September 2024: • CEO:£665,600(4%increase) • CFO:£416,000(4%increase). Pension/benefits/all-employee share schemes ExecutiveDirectorswillreceive pension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. CEOandCFO:10%ofsalaryinlinewithUK employeepopulation. CEOandCFO:10%ofsalaryinlinewith UKemployeepopulation. 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. Opportunity: Policymaximumof150%ofsalary. MaximumbonusforFY24: • CEO:150%ofsalary • CFO:125%ofsalary. Performance metrics: • 50%:AdjustedOperatingProfit • 20%:Revenuegrowth • 10%:FreeCashFlow • 20%:Keybusinessobjectives. Actualbonusoutcomeof66.4%ofmaximum fortheCEOandCFO. 40%ofanybonusearneddeferredintoshares fortwoyears. Opportunity: Policymaximumof150%ofsalary. MaximumbonusforFY25: • CEO:150%ofsalary • CFO:125%ofsalary. Performance metrics: • 60%:AdjustedOperatingProfit • 20%:FreeCashFlow • 20%:Keybusinessobjectives. 40%ofanybonusearneddeferredintoshares fortwoyears. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 96 ![]() Key policy features Implementation in FY24 Proposed approach for FY25 Long-Term Incentive Plan (LTIP) LTIPwhichfocusesongenerating sustainedshareholdervalueover thelonger-termandaligningthe Directors’interestswiththoseof theCompany’sshareholders. RestrictedSharePlan(RSP)subjectto underpins. Opportunity: AwardsmadeinFY24totheCEOandCFO equivalentto: • CEO:90%ofsalary • CFO:75%ofsalary. Underpins: ThevestingoftheRSPissubjecttothe underpinssetoutbelow.TheCommitteeretains theabilitytoreducevesting(includingtonil) subjecttotheunderpinsmeasuredoverthe vestingperiod.Theunderpinsare: • Nomaterialweaknessintheunderlying financialhealthorsustainabilityof thebusiness • Maintenanceofappropriategovernance frameworks,includingacceptablecontrols andcomplianceperformanceandnoevents thatresultinsignificantreputationaldamage totheCompany(asdeterminedbytheBoard) • ToensureongoingfocusonourcriticalESG commitments,satisfactoryperformanceagainst environmentalandsocietalcommitments • Aholdingperiodappliesfortwoyears followingvesting(i.e.fiveyearsfromgrant). Recoveryandwithholdingprovisionsapply. RestrictedSharePlan(RSP)subjecttounderpins. Opportunity: AwardsmadeinFY25totheCEOandCFO equivalentto: • CEO:90%ofsalary • CFO:75%ofsalary. Underpins: Therearenochangestotheunderpinsorholding periodforFY25. Recoveryandwithholdingprovisionscontinue to apply. Shareholding guidelines AlignmentoftheExecutive andNon-ExecutiveDirectors’ interestswiththoseofthe Group’sshareholders. RequirementforExecutiveDirectorstobuildup interestsintheCompany’ssharesworth200% ofsalary. ExecutiveDirectorswillbeexpectedtoretaina minimumofhalftheafter-taxnumberofvested sharesfromcurrentPSPandRSPawardsuntil theysatisfytheshareholdingguideline. TheChairandNon-ExecutiveDirectorsare expectedtobuildupinterestsintheCompany’s sharesworth100%oftheirnetbasefeewithin fouryearsofappointment. NochangeforExecutiveDirectors,Chairand Non-ExecutiveDirectors. CurrentshareholdingoftheExecutiveDirectors andNon-ExecutiveDirectorsisshowonpage114. 97 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Policy #### DIRECTORS’ REMUNERATION POLICY ThispartofthereportsetsouttheDirectors’RemunerationPolicy and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(the2018Code)andthe requirementsoftheUKLAListingRules. TheDirectors’RemunerationPolicyreceivedapprovalthougha bindingvoteatthe2023AGMheldon23November2023.The RemunerationPolicy;asapprovedbyshareholders,canbefound intheAnnualReport&FinancialStatements2023ontheCompany website:www.pzcussons.com/investors/general-meetings. TheCommitteeconsideredtheprincipleslistedinthe2018Code whendesigningtheDirectors’RemunerationPolicyandtookthese intoaccountinitsdesignandimplementation: Clarity, simplicity and balance: Remunerationarrangements havedefinedparameterswhicharetransparentlycommunicated toshareholdersandotherstakeholders,includingmaximum incentivequantumandincentiveplanpay-outschedules.Withthe proposedintroductionoftheRSP,wehavesoughttosimplifyour remunerationarrangementsfurther,whilemaintainingfocusand balancebetweenshort-andlong-termperformance. Linked to the strategy and performance of the business:Our remunerationframeworksincentivisebothshort-termobjectives throughtheannualbonusplanandourlong-termtransformation objectivesandshareholdervaluecreationthroughourRSP. DIRECTORS’ REMUNERATION POLICY TABLE ThecomponentsofExecutiveDirectors’remunerationaredescribedbelow: Element Purpose and link to strategy Operation Maximum opportunity Performance measures Fixed remuneration Base salary Toprovideanappropriatelevelof fixedcashincometo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 • Theperformanceandexperienceoftheindividual • Paylevelsinotherorganisationsofasimilarsizeandcomplexity • PayincreaseselsewhereintheGroup. ToavoidsettingexpectationsofExecutiveDirectorsandotheremployees, thereisnooverallmaximumforsalaryincreasesunderthispolicy. Salaryincreasesarereviewedinthecontextofsalaryincreasesacross thewiderGroup. AnyincreaseinexcessofthoseelsewhereintheGroupwouldbe consideredverycarefullybytheCommittee.Fulldisclosurewouldbe includedintherelevantRemunerationReport.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ExecutiveDirector • Whereasalaryhasfallensignificantlybelowmarketpositioning • ThetransitionovertimeofanewExecutiveDirectorrecruitedona belowmarketsalarytoamorecompetitivemarketpositioningasthe ExecutiveDirectorgainsexperienceintherole. None,althoughoverallperformanceoftheindividualisconsidered bytheCommitteewhensettingandreviewingsalaries. Benefits Recruitmentandretentionof seniorexecutivetalentthrough theprovisionofacompetitively positionedandcost-effective benefitspackage. Benefitsthatmaybeprovidedincludecarbenefits,lifeassurance,healthinsurance foreachExecutiveDirectorandfamily,permanenthealthcoverandpersonal taxadvice. ExecutiveDirectorsmayalso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. Themaximumopportunitywill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Executive Directorto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countrytheExecutiveDirectorisbased. FortheUK,thisiscurrently10%ofbasesalaryinrespectofeach financialyearintotheschemeonbehalfoftheExecutiveDirector (or cash payment in lieu). Notapplicable. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 98 ![]() Shareholder value and alignment:Remunerationshouldsupport andalignwithourshareholders'long-terminterestsbylinking theannualbonustoourkeystrategicmeasuresandhaving therightunderpinsinplacefortheRSP.Ourincreasedbonus deferral,alongsideourRSP,deliversasignificantproportionof remunerationinshares,someofwhichhavetoberetainedin linewithourshareholdingguidelines.Wearealsointroducinga shareholdingguidelineforourNon-ExecutiveDirectorstoensure aconsistentfocusonsustainablegrowthofshareholdervalue. Alignment to culture, purpose and the wider workforce: Ourpurpose–ForEveryone,ForLife,ForGood–supports theapproachofcascadingdowntheDirectors’remuneration arrangements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. Risk, proportionality and governance:Ourincentiveplansare designedtohavearobustlinkbetweenpayandperformance,by usingGroupkeyperformanceindicatorsthroughtheannualbonus andRSPunderpins.TheCommitteeisabletoexercisediscretionto adjustincentiveoutturnsattheendoftheperformanceperiodto mitigateanyriskofpaymentforfailure,oranyriskthatExecutives havebeenundulypenalisedbythestructureoftheincentive. Provisionsarealsoinplacetoallowfortheapplicationof clawbackand/ormalusinspecificcircumstances. Predictability:TheCommitteeseekstomaintainaconsistent approachtoitsannualdutiesincludingsettingtargetsand underpins,reviewingincentiveoutturnsandsalaryreview. Consistencyofprocesshelpstoensureconsistencyofoutcomes. DIRECTORS’ REMUNERATION POLICY TABLE ThecomponentsofExecutiveDirectors’remunerationaredescribedbelow: Element Purpose and link to strategy Operation Maximum opportunity Performance measures Fixed remuneration Base salary Toprovideanappropriatelevelof fixedcashincometo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 • Theperformanceandexperienceoftheindividual • Paylevelsinotherorganisationsofasimilarsizeandcomplexity • PayincreaseselsewhereintheGroup. ToavoidsettingexpectationsofExecutiveDirectorsandotheremployees, thereisnooverallmaximumforsalaryincreasesunderthispolicy. Salaryincreasesarereviewedinthecontextofsalaryincreasesacross thewiderGroup. AnyincreaseinexcessofthoseelsewhereintheGroupwouldbe consideredverycarefullybytheCommittee.Fulldisclosurewouldbe includedintherelevantRemunerationReport.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ExecutiveDirector • Whereasalaryhasfallensignificantlybelowmarketpositioning • ThetransitionovertimeofanewExecutiveDirectorrecruitedona belowmarketsalarytoamorecompetitivemarketpositioningasthe ExecutiveDirectorgainsexperienceintherole. None,althoughoverallperformanceoftheindividualisconsidered bytheCommitteewhensettingandreviewingsalaries. Benefits Recruitmentandretentionof seniorexecutivetalentthrough theprovisionofacompetitively positionedandcost-effective benefitspackage. Benefitsthatmaybeprovidedincludecarbenefits,lifeassurance,healthinsurance foreachExecutiveDirectorandfamily,permanenthealthcoverandpersonal taxadvice. ExecutiveDirectorsmayalso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. Themaximumopportunitywill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Executive Directorto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countrytheExecutiveDirectorisbased. FortheUK,thisiscurrently10%ofbasesalaryinrespectofeach financialyearintotheschemeonbehalfoftheExecutiveDirector (or cash payment in lieu). Notapplicable. 99 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Element Purpose and link to strategy Operation Maximum opportunity Performance measures Variable remuneration Annual bonus scheme and deferred annual bonuses DesignedtomotivateExecutive Directorsto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. Typically,aminimumof40%ofthebonusearnedwillbedeferredinto shares.Thedeferralperiodwillusuallybetwo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. Themaximumannualbonusopportunitythatmaybeearnedforany yearis150%ofbasesalary. ThemaximumopportunityforcurrentExecutiveDirectorsare: • ChiefExecutive:150%ofsalary • OtherExecutiveDirectors:125%ofsalary. TheperformancemeasuresandtargetsaresetbytheCommittee each year. Themajorityofthe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bonusmaybesubject toachievementagainstkeybusinessobjectivesand/orpersonally tailoredobjectives. Foreachfinancialobjectiveset,upto10%oftherelevantpartof thebonusbecomespayableatthethresholdperformancelevel risingonagraduatedscaletothemaximumperformancelevel. Thestructureandnatureofthestrategicobjectivesvary,suchthat itisnotpracticaltospecifyanypre-setpercentageofbonusthat becomespayableforthresholdperformance. Restricted Share Plan (RSP) Designedtosimplifylong-term incentivesandalignrewardfor theExecutiveDirectorswiththe deliveryofshareholdervalue creationthroughsustainable sharepricegrowthandcontinued dividendpaymentsbydeliveryof thebusinessstrategy. Annualawardsofrightsoversharescalculatedasapercentageofbasesalary. Awardsnormallyvestthreeyearsfromthedateofgrantsubjecttoreviewby theCommitteeofperformanceagainstpre-determinedunderpins.Ifanyofthe underpincriteriaarenotmet,theCommitteewillconsiderwhethertoreduce vesting(includingtonil).Aftervesting,sharesareusuallysubjecttoanadditional two-yearholdingperiod. Inadditiontotheunderpins,theCommitteeretainsgeneraldiscretiontoadjust thevestinglevelstoensuretheyappropriatelyreflecttheunderlyingperformance oftheGrouporindividual. DividendequivalentsaccrueonsharessubjecttoRSPawardsandarepaidon vestinginrespectofthosesharesthatvest. Awardlevelsandunderpinsarereviewedbeforeeachawardcycletoensurethat they remain appropriate. RecoveryandwithholdingprovisionsapplytoawardsgrantedundertheRSP. 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maximumof90%ofbasesalary. ThecurrentmaximumopportunityforExecutiveDirectorrolesis: • ChiefExecutive:90%ofsalary • FinancialOfficer:75%ofsalary. Performanceunderpinsmaybebasedaroundkeyfinancial, governanceandstrategicmeasures.Theywillbesettakinginto accountthebusinessstrategyandmayvaryfromyear-to-yearifthe Committeedeemsitappropriate.Fulldisclosureoftheunderpins willbeprovidedintherelevantRemunerationReport. Other aspects Shareholding guidelines AlignmentoftheExecutive Directors’interestswiththose oftheGroup’sshareholders. RequirementtobuildupinterestsintheCompany’ssharesworth200%ofsalary. ExecutiveDirectorswillberequiredtoretainaminimumofhalftheafter-tax numberofvestedsharesfromcurrentPSPandRSPawardsuntiltheysatisfythe shareholdingguideline. Notapplicable. Notapplicable. Post- employment share ownership requirements Ensuresthereisanappropriate amountof‘tailrisk’forExecutive Directorspostcessation ofemployment. Executiveswillberequiredto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. #### Remuneration Policy continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 100 ![]() Element Purpose and link to strategy Operation Maximum opportunity Performance measures Variable remuneration Annual bonus scheme and deferred annual bonuses DesignedtomotivateExecutive Directorsto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. Typically,aminimumof40%ofthebonusearnedwillbedeferredinto shares.Thedeferralperiodwillusuallybetwo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. Themaximumannualbonusopportunitythatmaybeearnedforany yearis150%ofbasesalary. ThemaximumopportunityforcurrentExecutiveDirectorsare: • ChiefExecutive:150%ofsalary • OtherExecutiveDirectors:125%ofsalary. TheperformancemeasuresandtargetsaresetbytheCommittee each year. Themajorityofthe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bonusmaybesubject toachievementagainstkeybusinessobjectivesand/orpersonally tailoredobjectives. Foreachfinancialobjectiveset,upto10%oftherelevantpartof thebonusbecomespayableatthethresholdperformancelevel risingonagraduatedscaletothemaximumperformancelevel. Thestructureandnatureofthestrategicobjectivesvary,suchthat itisnotpracticaltospecifyanypre-setpercentageofbonusthat becomespayableforthresholdperformance. Restricted Share Plan (RSP) Designedtosimplifylong-term incentivesandalignrewardfor theExecutiveDirectorswiththe deliveryofshareholdervalue creationthroughsustainable sharepricegrowthandcontinued dividendpaymentsbydeliveryof thebusinessstrategy. Annualawardsofrightsoversharescalculatedasapercentageofbasesalary. Awardsnormallyvestthreeyearsfromthedateofgrantsubjecttoreviewby theCommitteeofperformanceagainstpre-determinedunderpins.Ifanyofthe underpincriteriaarenotmet,theCommitteewillconsiderwhethertoreduce vesting(includingtonil).Aftervesting,sharesareusuallysubjecttoanadditional two-yearholdingperiod. Inadditiontotheunderpins,theCommitteeretainsgeneraldiscretiontoadjust thevestinglevelstoensuretheyappropriatelyreflecttheunderlyingperformance oftheGrouporindividual. DividendequivalentsaccrueonsharessubjecttoRSPawardsandarepaidon vestinginrespectofthosesharesthatvest. Awardlevelsandunderpinsarereviewedbeforeeachawardcycletoensurethat they remain appropriate. RecoveryandwithholdingprovisionsapplytoawardsgrantedundertheRSP. 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maximumof90%ofbasesalary. ThecurrentmaximumopportunityforExecutiveDirectorrolesis: • ChiefExecutive:90%ofsalary • FinancialOfficer:75%ofsalary. Performanceunderpinsmaybebasedaroundkeyfinancial, governanceandstrategicmeasures.Theywillbesettakinginto accountthebusinessstrategyandmayvaryfromyear-to-yearifthe Committeedeemsitappropriate.Fulldisclosureoftheunderpins willbeprovidedintherelevantRemunerationReport. Other aspects Shareholding guidelines AlignmentoftheExecutive Directors’interestswiththose oftheGroup’sshareholders. RequirementtobuildupinterestsintheCompany’ssharesworth200%ofsalary. ExecutiveDirectorswillberequiredtoretainaminimumofhalftheafter-tax numberofvestedsharesfromcurrentPSPandRSPawardsuntiltheysatisfythe shareholdingguideline. Notapplicable. Notapplicable. Post- employment share ownership requirements Ensuresthereisanappropriate amountof‘tailrisk’forExecutive Directorspostcessation ofemployment. Executiveswillberequiredto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. 101 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Policy continued LEGACY AWARDS TheCommitteeretainstheabilitytomakeanyremuneration paymentsorpaymentsforlossofofficenotwithstandingthat theyarenotinlinewiththePolicysetoutabovewhere: • ThetermsofpaymentwereagreedbeforethePolicycame intoeffect,aslongastheywereinlinewiththeshareholder- approvedDirectors’RemunerationPolicyinforceatthetime theywereagreed • Thetermsofthepaymentwereagreedatatimewhenthe relevantindividualwasnotaDirectoroftheCompanyand thepaymentwasnotinanticipationoftheindividualbecoming aDirectoroftheCompany,intheCommittee’sopinion. PERFORMANCE SCENARIOS TheCommitteebelievesthatan appropriateproportionoftheexecutive remunerationpackageshouldbevariable andperformance-relatedtoencourage andrewardsuperiorGroupandindividual performance.Thefollowingchart illustratesexecutiveremunerationin specificperformancescenariosincluding amaximumperformancescenariowitha 50% increase in share price. MINOR AMENDMENTS TheCommitteeretainstheabilitytomakeminoramendmentsto thePolicyforregulatory,exchangecontrol,taxoradministrative purposesortotakeaccountofachangeinlegislationwithout seekingshareholderapproval. Jonathan Myers Minimum 100% 32% 42% 25% 39% 31% 31% £754,908 £1,952,988 £2,352,348 £2,651,868 28% 38% 34% Target Maximum Maximum (includingshare pricegrowth) Fixedpay Annualbonus Long-TermIncentivePlan NON-EXECUTIVE DIRECTORS REMUNERATION POLICY TABLE ThecomponentsofNon-ExecutiveDirectors’remunerationaredescribedbelow: Element Purpose and link to strategy 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expectedfromthe Non-ExecutiveDirectors. Feesarenormallyreviewedeveryyearandmaybeamendedtoreflectmarket positioningandanychangeinresponsibilities. TheCommitteerecommendstheremunerationoftheChairtotheBoard. FeespaidtoNon-ExecutiveDirectorsaredeterminedandapprovedbytheBoard asawhole. TheCompanycoversthecostsofattendingmeetingsandNon-ExecutiveDirectors maybereimbursedforanybusinessexpensesincurred(includinganytaxdue)in fulfillingtheirroles. FeesarebasedontheleveloffeespaidtoNon-ExecutiveDirectors servingonboardsofotherrelevantUK-listedcompaniesandthetime commitmentandcontributionexpectedfortherole. Non-ExecutiveDirectorsreceiveabasicfeeandanadditionalfee forfurtherduties(forexample,chairingofaCommitteeorSenior IndependentDirectorresponsibilities). ThemaximumleveloffeespayabletotheNon-ExecutiveDirectorswill notexceedthelimitsetoutintheCompany’sArticlesofAssociation. Notapplicable. Other aspects Shareholding guidelines AlignmentoftheNon-Executive Directors’interestswiththoseof theGroup’sshareholders. ExpectationthatNon-ExecutiveDirectorsbuildupinterestsintheCompany’s sharesworth100%oftheirbasefee,netofstatutorydeductions,withinfouryears ofappointment. Notapplicable. Notapplicable. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 102 ![]() DISCRETION TheCommitteewilloperatetheannualbonusandawardsunder theLTIPinaccordancewiththeplanrules,shareholderapproved PolicyandListingRuleswhereapplicable. Aspertypicalmarketpractice,theCommitteeretainsdiscretionin anumberofareasincluding(butnotlimitedto)theparticipants, timing,vehicleandsizeoftheaward.TheCommitteemayamend orsubstituteanyperformanceconditionsorunderpinsiftheyare oftheviewthattheoriginalconditionsarenolongerappropriate andthenewconditionsarenotmateriallylessdifficulttosatisfy. Inexceptionalcircumstances,theCommitteehasthediscretion tochangethevestingleveltoensurethattheoutcomesarefair, appropriateandreflectiveoftheunderlyingfinancialperformance oftheGroup. Anawardmaybesubjecttoadjustmentsintheeventofa variationoftheCompany'ssharecapital,demerger,delisting, specialdividendorothercorporateeventmateriallyimpactsthe valueofawards. RECOVERY AND WITHHOLDING PROVISIONS TheCommitteemay,initsdiscretion,subjecttoapplicable laws,applymalusand/orclawbacktoannualbonus,PSPand RSPawardsatanytimewithinthreeyearsofgrantorpayment asapplicable,incircumstancesofamaterial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. Sarah Pollard Minimum 100% 36% 40% 24% 43% 28% 28% £474,848 £1,098,848 £1,306,848 £1,462,848 32% 36% 32% Target Maximum Maximum (includingshare pricegrowth) Fixedpay Annualbonus Long-TermIncentivePlan NON-EXECUTIVE DIRECTORS REMUNERATION POLICY TABLE ThecomponentsofNon-ExecutiveDirectors’remunerationaredescribedbelow: Element Purpose and link to strategy 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expectedfromthe Non-ExecutiveDirectors. Feesarenormallyreviewedeveryyearandmaybeamendedtoreflectmarket positioningandanychangeinresponsibilities. TheCommitteerecommendstheremunerationoftheChairtotheBoard. FeespaidtoNon-ExecutiveDirectorsaredeterminedandapprovedbytheBoard asawhole. TheCompanycoversthecostsofattendingmeetingsandNon-ExecutiveDirectors maybereimbursedforanybusinessexpensesincurred(includinganytaxdue)in fulfillingtheirroles. FeesarebasedontheleveloffeespaidtoNon-ExecutiveDirectors servingonboardsofotherrelevantUK-listedcompaniesandthetime commitmentandcontributionexpectedfortherole. Non-ExecutiveDirectorsreceiveabasicfeeandanadditionalfee forfurtherduties(forexample,chairingofaCommitteeorSenior IndependentDirectorresponsibilities). ThemaximumleveloffeespayabletotheNon-ExecutiveDirectorswill notexceedthelimitsetoutintheCompany’sArticlesofAssociation. Notapplicable. Other aspects Shareholding guidelines AlignmentoftheNon-Executive Directors’interestswiththoseof theGroup’sshareholders. ExpectationthatNon-ExecutiveDirectorsbuildupinterestsintheCompany’s sharesworth100%oftheirbasefee,netofstatutorydeductions,withinfouryears ofappointment. Notapplicable. Notapplicable. 103 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Policy continued FIXED ELEMENTS OF REMUNERATION Basesalaryasat1September2024(£665,600forJonathanMyersand£416,000forSarahPollard);anestimateofthevalueofbenefits andpensioncontributionsat10%ofbasesalary. Minimum performance Target performance Maximum performance Maximum performance including share price growth 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 Plan – RSP 0% 100% of award JonathanMyers–90%ofsalary SarahPollard–75%ofsalary 100% award JonathanMyers–90%ofsalary SarahPollard–75%ofsalary 100% of award with a 50% increase in share price over the vesting period JonathanMyers–90%ofsalary SarahPollard–75%ofsalary RECRUITMENT REMUNERATION ARRANGEMENTS WhenhiringanewExecutiveDirector,theCommitteewillsetthe ExecutiveDirector’songoingremunerationinamannerconsistent withthePolicydetailedinthetableabove.Ourapproachto remunerationonrecruitmentisconsistentwithouroverall philosophyofofferingapackagesufficienttoattracttalentofthe calibreneededwhileaimingtopaynomorethanisnecessary. Newappointmentsmayhavetheirsalariessetatalower levelwhiletheybecomeestablishedintheirrolewithhigher thantypicalincreasesmadeonaphasedbasissubjecttothe individual’sperformanceandcontributiontotheGroup. Tofacilitatethehiringofcandidates,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. Themaximumlevelofvariablepaythatmaybeawardedtonew ExecutiveDirectors(excludingbuy-outarrangements)inrespect oftheirrecruitmentwillbeinlinewiththemaximumlevelof variablepaythatmaybeawardedundertheannualbonusplan andLTIP.TheCommitteewillensurethatsuchawardsarelinked totheachievementofappropriateandchallengingperformance measuresand/orunderpinsasappropriate. Appropriatecostsandsupportwillbecoverediftherecruitment requiresrelocationoftheindividual. IfanExecutiveDirectorispromotedinternally,existingawards andongoingpriorremunerationobligationswillusuallycontinue torunandtheywilltypicallycontinuetoparticipateinplans orbenefitsthatwereinplacepriortotheirappointmentto theBoard. OnrecruitmentofaNon-ExecutiveDirector,thePolicyelements setoutinthetableabovewillapply. EXECUTIVE DIRECTOR CONTRACTS AND LOSS OF OFFICE PAYMENTS ExecutiveDirectorshaveindefiniteservicecontractsandno ExecutiveDirectorhasanoticeperiodinexcessofoneyear oracontractcontaininganyprovisionforpre-determined compensationonterminationexceedingoneyear’ssalaryand contractualbenefits.DetailsofthecurrentExecutiveDirectors’ servicecontractsareshownbelow: Name Date of appointment Jonathan Myers 1 May 2020 SarahPollard 4 January 2021 UpontheterminationofanExecutiveDirector’semployment,the Committee’sapproachtodetermininganypaymentfor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 • TheCommitteereservestherighttomakeadditionalexit paymentswheresuchpaymentsaremadeingoodfaithto satisfyanexistinglegalobligation(orbywayofdamagesfor breachofanysuchobligation)ortosettleorcompromiseany claimorcostsarisinginconnectionwiththeemploymentof anExecutiveDirectororitstermination,ortomakea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nextpage • Anypaymentsforlossofofficeshallonlybemadetotheextent thatsuchpaymentsareconsistentwiththisPolicy. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 104 ![]() LONG-TERM INCENTIVE PLANS Cessation of directorship/employment before the vesting date: Death Theawardwillnormallyvestassoonaspracticablefollowingdeathandwillnottypicallybesubjecttoa holdingperiod. Injury,illhealth,disability,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normallyvestontheoriginalvestingdate.TheCommitteewillhavesolediscretionastothe extenttowhichtheawardwillvest,takingintoaccounttheextenttowhichtheperformanceconditions andperformanceunderpinshavebeenmetforthePSPandRSPrespectively. Alternatively,theCommitteehasthediscretiontoallowtheawardtovestatthetimeofcessation ofdirectorship/employmentbytheGroup,takingintoaccounttheextenttowhichtheperformance conditionsorunderpinshavebeenmetuptothatdate. AwardswillbesubjecttoanyapplicableholdingperiodunlesstheCommitteedeterminesotherwise. TheCommitteewillreducetheawardtoreflecttheperiodthathaselapsedatthetimeofcessationunless theCommitteedeterminesotherwise. Any other reason Theawardwilllapseuponcessationofdirectorship/employment. Cessation of directorship/employment during the holding period (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 unlesstheCommitteedeterminesotherwise. Annual bonus scheme – cash element TheextenttowhichanyannualbonusispaidinrespectoftheyearofdeparturewillbedeterminedbytheCommittee(in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.Thebonuswillbepaidattheusualtimeunlessinexceptionalcircumstances whentheCommitteemaydeterminetoacceleratethepayment. Annual bonus scheme – deferred share element Death,injury,disability,redundancy,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. RETIREMENT BENEFITS RetirementbenefitswillbereceivedbyanyExecutiveDirectorwhoisamemberofanyoftheGroup’spensionplansinaccordancewith therulesofsuchplan. 105 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Remuneration Policy continued COMMUNICATION WITH SHAREHOLDERS TheCommitteeiscommittedtoanongoingdialoguewith shareholdersandseekstheviewsofsignificantshareholders,their representativebodiesandotherinterestedpartiessuchasproxy agencieswhenformulatingandimplementingthePolicy. TERMS AND CONDITIONS FOR NON-EXECUTIVE DIRECTORS Non-ExecutiveDirectorsareappointedpursuanttotheterms oftheirappointmentlettersforaninitialperiodofthreeyears, normallyrenewableonasimilarbasis.Notwithstandingthis, allNon-ExecutiveDirectorsaresubjecttoannualre-election attheCompany’sAGMandtheirelectionissubjecttoadual- voteincludingthevotesofonlythoseshareholderswhoarenot membersoftheConcertPartyshareholders.Theexpirydatesof thelettersofappointmentaresetoutbelow. Name Expiry of term DavidTyler(Chair) 23November2025 KirstyBashforth 31October2025 JohnNicolson 30 April 2025 JiteshSodha 30 June 2024 ValeriaJuarez 22September2024 VivekAhuja 1 30 April 2027 1 AppointedtotheBoard1May2024. ThelettersofappointmentofNon-ExecutiveDirectorsandservice contractsofExecutiveDirectorsareavailableforinspectionatthe Company’sregisteredofficeduringnormalbusinesshoursandwill beavailableattheAGM. CHANGE IN CONTROL TherulesoftheLong-TermIncentivePlanprovidethat,inthe eventofachangeofcontrolorwinding-upoftheCompany,all awardswillvestearlytakingintoaccount:i)theextenttowhich theCommitteeconsidersthattheperformanceconditionsor underpinshavebeen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voluntarilyexchangetheir awardsthatwouldotherwisevestforequivalentnewawardsover sharesinanewholdingcompany. TheCommitteemay,inthecircumstancesreferredtoabove, determinetowhatextentanybonusshouldbepaidinrespectof thefinancialyearinwhichtherelevanteventtakesplace,takinginto accounttheextenttowhichtheCommitteedeterminestherelevant performancemetricshavebeen(orwouldhavebeen)met. STATEMENT OF CONSIDERATION OF EMPLOYMENT CONDITIONS ELSEWHERE IN THE COMPANY WhenreviewingandsettingExecutiveDirectorremuneration,the Committeetakesintoaccountthepayandemploymentconditions ofallemployeesoftheGroup.TheCommitteeisprovidedwith informationateachmeetingsettingoutmanagementapproach topayaroundtheGroup.Duringthelastyear,thishascovered arangeofitemsincludingmanagement’sactivitiestosupport employeesduringthecost-of-livingcrisis,otherrewardactivities acrosstheGroupaswellastheGroup-widepayreviewbudget whichisoneofthekeyfactorsconsideredbytheCommittee whenreviewingthesalariesoftheExecutiveDirectors.Although theGrouphasnotcarriedoutaformalemployeeconsultation regardingBoardremuneration,itdoescomplywithlocal regulationsandpracticesregardingemployeeconsultation morebroadly. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 106 ![]() #### Report on the Directors’ Remuneration ThisReportonDirectors’Remuneration,setsouthowthecurrentPolicywasappliedthroughoutFY24andhowourDirectors’ RemunerationPolicywillbeappliedduringFY25.TheReportonDirectors’Remunerationissubjecttoanadvisoryvoteatour2024AGM. InformationcontainedwithintheReportonDirectors’Remunerationhasnotbeensubjecttoauditunlessstated. SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED) Thetablebelowsetsoutinasinglefigurethetotalamountofremuneration,includingeachelementreceivedbyeachoftheDirectorsfor theyearended31May2024(amountsareroundedtothenearestPoundSterling): EXECUTIVE DIRECTORS Jonathan Myers Sarah Pollard Salary/fees 1 2024 633,245 392,500 2023 607,797 361,188 Benefits 2 2024 22,748 17,24 8 2023 22,575 17,075 Pension 3 2024 63,324 39,250 2023 62,073 36,850 Total fixed 2024 719,317 448,998 2023 692,445 415,113 Bonus 4 2024 637,4 4 0 332,000 2023 736,331 370,382 PSP 5 2024 34,045 16,036 2023 140,463 20,385 Total variable 2024 671,485 348,036 2023 876,794 390,767 Total 2024 1,390,802 797,034 2023 1,569,239 805,880 NON-EXECUTIVE DIRECTORS David Tyler 6 Kirsty Bashforth Dariusz Kucz 7 John Nicolson Jeremy Townsend 8 Jitesh Sodha Valeria Juarez Vivek Ahuja 9 Salary/fees 1 2024 280,219 74,375 17,500 68,750 52,667 58,750 63,577 6,413 2023 25,048 65,000 60,000 65,000 65,000 55,000 55,000 – Benefits 2 2024 – – – – – – – – 2023 – – – – – – – – Total 2024 280,219 74,375 17,500 68,750 52,667 58,750 63,577 6,413 2023 25,048 65,000 60,000 65,000 65,000 55,000 55,000 – 1 Theamountofsalary/feespayableintheperiod,reflectingthepayincreaseseffective1September2023. 2 Taxablebenefitscompriselifeassurance,healthcareinsuranceandcarallowance.InrespectoftheNon-ExecutiveDirectors,certaintravelandaccommodationexpensesinrelationto attendingBoardmeetingsarealsotreatedasataxablebenefit. 3 JonathanMyersandSarahPollardreceivesalarysupplementsof10%ofsalaryinlieuofpensioncontributions. 4 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108and109. 5 Thevalueofthe2020PSPhasbeenupdatedsincethepreviousAnnualReport.Calculationsnowuseactualvestingsharepricesof£1.442and£1.302.JonathanMyers'LTIPvaluehas alsobeenupdatedtoincludetheadditional2020LTIPawardgrantedon26November2021andvestedon27November2023which,inerror,wasnotincludedinthesinglefiguretable lastyear.The2021PSPwasvaluedbasedonathree-monthaveragesharepriceon31May2024of£0.972.Thesharepriceatthedateofawardwas£2.265.Ofthevestedamountsfor theExecutiveDirectors,nothingwasattributabletosharepriceappreciationovertheperformanceperiod.TheCommitteedidnotexerciseanydiscretioninrelationtothevestingof theawardsorsharepricechanges. 6 DavidTylerwasappointedtotheBoardon24November2022andasChairon23March2023. 7 DariuszKuczretiredfromtheBoardon14September2023. 8 JeremyTownsendretiredfromtheBoardon28February2024. 9 VivekAhujawasappointedtotheboardon1May2024. 107 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Report on Directors’ Remuneration continued BASE SALARY (AUDITED) BasesalariesforindividualExecutiveDirectorsarereviewedbytheCommitteeannually,withincreasestakingeffectfrom1September. SalariesaresetwithreferencetothescopeoftheroleandthemarketsinwhichPZCussonsoperates,theperformanceandexperience oftheindividual,paylevelsinotherorganisationsofasimilarsizeandcomplexityandpayincreaseselsewhereintheGroup. ThefollowingtablesetsoutdetailsofthechangestobasepayfortheExecutiveDirectors. Jonathan Myers CEO Sarah Pollard CFO Salary with effect from 1 September 2024 £665,600 £416,000 Salarywitheffectfrom1September2023 £640,000 £400,000 JonathanMyers’andSarahPollard'sbasesalarieshavebothbeenincreasedby4%from1September2024.Thisisbelowtheaverage levelawardedtothewideremployeepopulationintheUK. NON-EXECUTIVE DIRECTOR FEES (AUDITED) TherearenoincreasestofeesforNon-ExecutiveDirectorsforFY25. From 1 September 2024 From 1 September 2023 Increase Basic fees Chair 1 £286,125 £286,125 0% Non-ExecutiveDirector £60,000 £60,000 0% Additional fees SeniorIndependentDirector £10,000 £10,000 0% ChairofAudit&RiskorRemunerationCommittee £12,500 £12,500 0% ChairofanyotherCommittee £5,000 £5,000 0% Directorresponsibleforemployeeengagement 2 £5,000 £5,000 0% 1 TheChairoftheBoarddoesnotreceiveadditionalfeesforchairingotherBoardCommittees. 2 TheChairoftheRemunerationCommitteealsoactedastheNon-ExecutiveDirectorresponsibleforemployeeengagementfrom14September2023. ANNUAL BONUS FOR THE YEAR ENDED 31 MAY 2024 (AUDITED) Inrespectoftheyearended31May2024,theCEO,JonathanMyers,andtheCFO,SarahPollard,bothparticipatedintheannual bonusscheme. Underthisscheme,theCEOwaseligibletoearnacashbonusofupto150%ofbasesalaryandtheCFO125%ofbasesalary.Underthe newRemunerationPolicy,40%ofanybonusearnedwillbedeferredintoCompanyshareswhichvestaftertwoyearsandaresubjectto recoveryandwithholdingprovisionsandcontinuedemployment. Assetoutlastyear,theFY24annualbonuswasbasedonthreekeyfinancialindicators:50%AdjustedOperatingProfit,20%revenue growthand10%FreeCashFlow,withtheremaining20%ofthebonusbeingsubjecttodeliveryagainstkeybusinessobjectivesrelatingto deliveryofthestrategyandkeybusinesspriorities/personalobjectivesforFY24.Asummaryoftheperformancetargetsandoutturnsare setoutinthefollowingtables. FY24 FINANCIAL TARGETS Thefinancialtargetsandourperformanceagainstthemaresetoutbelow: Proportion of total bonus Threshold (10% payout) 1 Target (60% payout) 1 Stretch (100% payout) 1 Actual performance2 % of total bonus payable AdjustedOperatingProfit3 50% £65.4m £72.7m £76.3m £73.4m 34.0% Revenuegrowth3 20% £568.6m £606.3m £636.6m £604.9m 11.7% FreeCashFlow3 10% 73% 86% 100% 92.6% 7.9 % Total 53.6% 1 Thefinancialtargetsweresetonaconstantcurrencybasis,consistentwithprioryearsandtypicalmarketpracticetomitigateparticipantsbenefittingorbeingpenalisedforcurrency movementsoutsidetheircontrol. 2 TheactualperformanceinthetableisbasedonbudgetedFXratesusedformanagementreportingtodeterminethevalueofbonuspayable. 3 Alternativeperformancemeasuresareexplainedonpages206to209andintheGlossaryonpage211. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 108 ![]() FY24 KEY BUSINESS OBJECTIVES TheFY24KeyBusinessObjectives(KBO)andmilestonesachievedaresetoutinthetablebelow.KBO1issharedbetweentheCEOand CFO,KBO2isspecifictotheCEOandKBO3isspecifictotheCFO. KBO Milestones achieved 1 Deliver FY24 Priorities: CEO and CFO • ThesaleoftheSt.TropezbrandandastrategicreviewoftheAfricabusinesshasbeeninitiated. • ImprovedsourcingofUSDollarshasreducedtheriskoffurtherdevaluationofthe NigerianNaira. • SignificantprogresswasmadeacrosstheGrouptoreduceoverheadcosts.Activitiesincluded: – TherestructureoftheUKbusinessasdescribedbelow. – Africareducedoveralloverheadcostsandimplementedmultiplepriceincreasesinyear. – TheThailandsoapfactorywasclosedaspartofthesupplychainoverallsimplificationplan. – ThemovetoanewofficeinANZ. • Therewascontinuedfocusonbrand-buildingcapabilitieswhichincluded: – AnewglobalBrand-buildingorganisation,incorporatingR&Dandsustainability,was createdtoenablefuturelong-terminnovationandgrowth. – Anewmarketingcapabilitiesprogrammetoacceleratebuildingmarketinginnovationskills hasbeendeveloped. • Anewdigitalstrategyhasbeendeveloped,buildinginnewcapabilitiesindataandanalytics. • Developmentofleadershipforthefuture: – AnewleadershipframeworkhasbeencreatedtosupportthedeliveryofourBuilding BrandsforLifestrategy.Thiswillbeintegratedintorecruitmentandtalentacquisition, leadershipdevelopmentandperformancemanagement. – AnewPZGrowthAcademyhasbeendevelopedtoprovideclearcareerpathsforour marketingtalenttogrowtheircareersatPZCussons. 2 Develop new Operating Model: CEO • IntheUKIgeographies,anewoperatingmodelwascreatedwhichsimplifiesourorganisation bycombiningthreebusinessunitsandinvestingincapabilitiesforBrand-building.Thenew organisationenablesonePZCussonsfacetothecustomer. • Anew,smallerExecutiveCommitteeOperatingModelwasimplementedduringtheyear,to reflectthechangestothebusinessoutlinedabove. • Aglobalfunctionsleadersgroupwasinitiatedtobuildstrategiccapabilitiesandactasan advisoryboardfortheCEO. • AnextendedPZPioneersgroupwascreatedtoactaschangeagentsalongsidethe ExecutiveCommittee. 3 Further evolve finance capabilities and governance: CFO • Significantprogresshasbeenmadetoimprovefinancialcontrolsandfinancialreporting. • AGlobalFinanceSharedServicesTeamhasbeenestablishedinIndonesia,tocentralise FinanceSharedServicesinonelocationwithalowercostbase. • Standardcontrolsandcompliancearenowinplaceacrossthebusiness,globally. • Ournewauditorswerefullyonboardedduringtheyear. TheCommitteereviewedthebonusoutcomeinthecontextofoverallGroupperformance,takingintoconsiderationtheexperience ofthekeystakeholders,includingemployeesandshareholders,duringtheyear.TheCommitteeconsideredbothoutcomesanddrivers ofadjustedandstatutoryfinancialperformanceandthedriversofthese,togetherwiththeindividualcontributionoftheCEOandCFO innavigatingachallengingtradingenvironment;particularlyinourAfricabusinesswhichwasmateriallyimpactedbyalargedevaluation oftheNigerianNaira.Takingallthesefactorsintoaccount,theCommitteeexerciseddownwardsdiscretionamountingtoanadjustment of2.2%fortheExecutiveDirectors,resultingin51.4%ofmaximumbeingearnedforfinancialperformance. TheCommitteealsoreviewedtheperformanceoftheExecutiveDirectorsagainsttheobjectivessetoutabove,whilealsotakingintoaccount theexperienceoftheCompany’swiderstakeholders,anddeterminedabonuspayoutof15%outofamaximumof20%againsttheKBOs. 40%oftheFY24annualbonus,totalling£254,976fortheCEOand£132,800fortheCFOwillbedeferredintosharesfortwoyears. 109 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() ANNUAL BONUS FOR THE YEAR ENDING 31 MAY 2025 ExecutiveDirectorswillcontinuetobeeligibletoparticipateintheannualbonusschemeinrespectoftheyearending31May2025 underthePolicy.TheannualbonusopportunityfortheCEOandCFOwillcontinuetobe150%and125%ofsalaryrespectively,whichcan beearnedfordeliveryagainstchallengingtargets,with60%ofmaximumpayableforon-targetperformanceunderthefinancialmetrics. FortheFY25annualbonus,theAdjustedOperatingProfitmeasurehasincreasedfrom50%to60%andtheFreeCashFlowmeasurefrom 10%to20%toprioritisefocusfortheExecutiveDirectorsonprofitabilityandcashmanagement.Revenueremainsaweightedbonus metricforlocalleadersandwillbeconsideredaspartoftheCommittee'sholisticreviewoffinancialperformanceattheendoftheyear. Theremainingportionofthebonus(20%)willbebasedonkeypersonalandbusinessobjectivesrelatingtodeliveryofthestrategyand keybusinessprioritiesforFY25. TargetsfortheFY25bonushavebeensetbytheCommitteetobeappropriatelydemandingandalsoreflectiveofcurrentcommercial circumstances,internalplanningandmarketexpectations.Targetshavebeensetonabusiness-as-usualbasis,notwithstandingthe Company'srecentannouncementthatitintendstoselltheSt.TropezbrandandwillundertakeastrategicevaluationofGroupoperations inAfrica.TheCommitteewillreviewtheappropriatenessofthetargetssetortheoutcomeoftheFY25annualbonusshouldasale occurandfollowingthestrategicreview,toensurethattheoriginaltargetsremainappropriatelystretchingandtheFY25annualbonus outcomeisafairreflectionofunderlyingfinancialperformanceandtheshareholderexperience.TheDirectorsconsiderthattheGroup’s futuretargetsarecommerciallysensitiveandcouldprovideourcompetitorswithinsightsintoourbusinessplansandexpectations.As such,theyshouldthereforeremainconfidentialtotheCompanyatthistime(althoughtheywillberetrospectivelydisclosedinnextyear’s Directors’RemunerationReport). BonusesarepayableatthediscretionoftheCommitteeandtheCommitteemayapplydiscretiontoamendthebonuspayoutshouldit not,intheviewoftheCommittee,reflectunderlyingbusinessperformanceorindividualcontribution. InlinewiththePolicy,aminimumof40%oftheFY25bonusearnedwillbedeferredintoshares.Thedeferralperiodwilltypicallybetwo years(unlesstheCommitteedeterminesotherwise). Awardsmadeundertheannualbonusschemewillbesubjecttorecoveryandwithholdingprovisionsthatwouldenable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threeyearsforawardstoExecutiveDirectorsandotherseniorexecutives. #### Report on Directors’ Remuneration continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 110 ![]() LONG-TERM INCENTIVE PLANS Thefollowingsetsoutdetailsof: • PerformanceSharePlanAwards • RestrictedSharePlanAwards • DeferredBonusAwards. ExecutiveDirectorsandcertainseniorexecutiveswereeligibletoparticipateinthePSP,whichprovided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.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.FollowingshareholderapprovalofthePolicyatthe AGMinNovember2023,theExecutiveDirectors,andotherseniorexecutives,weregrantedawardsundertheRSP.Moredetailsare providedbelow. PERFORMANCE SHARE PLAN AWARDS (AUDITED) 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 2023 Granted/ allocated in year Exercised/ vested in year Lapsed in year Dividend Equivalent shares Number of options/ awards at 31 May 2024 Share price at date of award (£)1 Share price at date of vesting (£) Vesting/ transfer date 2 Exercise date Exercise price 2 Share price at date of exercise J Myers 27-Nov-20 3,4 375,000 – 75,000 300,000 9,043 – 2.285 1.442 27-Nov-23 27-Nov-23 Nil 1.442 SPollard 01-Feb-21 3,4 70,973 – 14,194 56,779 1,462 – 2.480 1.302 01-Feb-24 22-Feb-24 Nil 1.000 J Myers 23-Sep-21 403,806 – – – – 403,806 2.265 – 23-Sep-24 – – – SPollard 23-Sep-21 190,198 – – – – 190,198 2.265 – 23-Sep-24 – – – J Myers 26-Nov-21 3 61,046 – 12,209 48,837 1,156 – 1.958 1.442 27-Nov-23 – – – J Myers 23-Sep-22 461,580 – – – – 461,580 2.005 1 – 23-Sep-25 – – – SPollard 23-Sep-22 232,178 – – – – 232,178 2.005 1 – 23-Sep-25 – – – 1 Sharepriceatdateofawardforthe23September2022awardshadbeenupdatedinthisyear'sReportonDirectors'Remunerationbyoneday,movingfromsharepriceasat22 September2022,tosharepriceasat23September2022. 2 Subjecttoperformanceconditions.Sharesvestingundertheawardaresubjecttoatwo-yearpost-vestingholdingperiod. 3 Thevalueof2020LTIP(vestingFY23)hasbeenupdatedsincethedisclosureintheAnnualReportlastyear,basedonthesharepriceatthedateofvesting.Thetablehasalsobeen updatedtoincludethePSPawardgrantedtotheCEOon26November2021,whichwaspreviouslyomittedinerror.Therefore,theCEOreceived375,000sharesatagrantshareprice of£2.285withrespecttotheawardgrantedon27November2020,and61,046sharesatagrantsharepriceof£1.958withrespecttotheawardallocatedon26November2021.On27 November2023,nil-costoptionsvestedoveratotalof87,209shares,plus10,199dividendequivalentshares(97,408intotal).Thetotalvalueofthosesharesonthedateofvestingwas £140,462basedonasharepriceof£1.442.Noneofthiswasduetosharepriceappreciationbetweenthedateofawardanddateofvesting.Allnil-costoptionswereexercisedonthe samedateasvestingandastheoptionpricewasnilandsharepricewas£1.442,theoptionagainwasalso£140,462.  On1February2021,theCFOwasgrantedanil-costoptionover70,973shares.On1February2024,theawardvestedoveratotalof14,194sharesplus1,462dividendequivalent shares(15,656intotal).Thetotalvalueofthe15,656sharesonthedateofvestingwas£20,384,basedonasharepriceatthedateofvestingof£1.302.Noneofthiswasduetoprice appreciationbetweenthedateofawardanddateofvesting.On22February2024,anil-costoptionwasexercisedoverall15,656shareswhichresultedinanoptiongainof£15,656, basedonasharepriceatthedateofexerciseof£1.00. 4 Awardsgrantedon27November2020and1February2021arenil-pricedoptions,allotherawardsareconditional.Theseoptionswereexercisedonthedateofvesting. 111 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() VESTING OF PSP AWARDS GRANTED IN THE YEAR ENDED 31 MAY 2022 PSPawardsweremadetotheCEOandCFOintheyearto31May2022andareduetoveston23September2024.Theyarebasedon performanceovertheperiodfrom1June2022to31May2024.TheCEOandCFOweregranted403,806and190,198sharesrespectively onthedateofgrant(23September2021),usingasharepriceof£2.265.Theawardsshallveston23September2024at8.67%of maximum,basedontheperformancecriteriadetailedinthefollowingtable.Athree-monthaveragesharepriceto31May2024(£0.972) hasbeenusedtoestimatethevalueoftheseawards. Theperformancemetrics,asdisclosedinFY22,werealignedwiththebusiness’mid-tolong-termpriorities.Thetablebelowsetsoutthe relativeweightingsandadescriptionofeachmeasure,aswellasthetargetsforthresholdandmaximumlevelsofvesting.Detailsofthe performanceagainsteachofthemetricsisalsosetout. Weighting Threshold (25% payout) Maximum (100% payout) Actual performance % of maximum payable EPSgrowth 60% 2% p.a. 6% p.a. -15.1% 0% RevenuegrowthfromMustWinBrands 20% 2% 6% -1.2% 0% Sustainabilitytargets 20% Seebelow Seebelow Seebelow 8.67% Total 8.67% TheFY22LTIPwasthesecondyearofsustainabilitytargetsandtheoverallvestinglevelforFY22awardshasbeendiscussedindetailat boththeESandRemunerationCommitteeswithbothCommitteesinfullagreementonthevestinglevel.Thefollowingtablesetsoutthe detailedperformanceagainstthetargets.Eachelementisequallyweighted. Target Sustainability target Performance description Performance achievement % Ethical sourcing Threshold target: • 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meetsorexceedsourown. • 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. Stretch target: 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. 99.8%ofourhigh-valuedirectsuppliershavesigned uptoourSupplierCodeofConductand88.5%ofour directsuppliershavecompletedourSustainability Charter.Directsuppliersareprovidersofthegoods, rawmaterialsandthird-partymanufacturedproducts thatimpactourreputationalriskasembeddedinto ourBrands. WhiletheoutputforcompletingourSustainability Charterisbelowmaximum,thereisamaximumlevelof performanceforsigningourSupplierCodeofConduct. Thelevelofvestingreflectstheapplicationofahigher weightingtotheSupplierCodeOfConduct,giventhe legalandoperationalimpactsofnon-compliance.Our SustainabilityCharterisvoluntaryandreflectsour long-termsustainabilitygoalsandprinciplesandisa guidelineforcontinuousimprovement.TheCommittee determinedan80%vestingforthiselement. 5.33% Carbon Disclosure Project (CDP) performance Threshold target: • Improvefromcurrent'B-'scoretoa'B'scorebythe endoftheperformanceperiod. Stretch target: • Achievean'A/A-'scorebytheendofthe performanceperiod. OurCDPperformanceisexternallymeasuredbythe CarbonDisclosureProject.Thisisaglobalnon-profit organisationwiththeprimaryfocusofcollectingand analysingdatarelatedtoclimatechange,watersecurity anddeforestation.Thisdataismadeavailableto investors,policymakersandthepublicatwww.cdp.net topromotetransparency,accountability,andinformed decision-making. ThelatestscorespositionPZCussonsata'B'score forclimate.Thisisequivalenttoathresholdlevel ofperformance. 1.67% Employee engagement Threshold target: • Improvetheemployeeengagementscoresto73% (+1%)bytheendoftheperformanceperiod. Stretch target: • Improvetheemployeeengagementscoreacrossthe Groupto75%(+3%)byimproving1%eachyearof theperformanceperiod. Thelatestemployeeengagementscore,providedby ourexternalsurveyprovider,is73%.Thisisequivalent toathresholdlevelofvesting. 1.67% Total 8.67% TheCommitteehasreviewedtheoveralllevelofvestingof8.67%ofmaximuminthecontextofwiderbusinessperformanceand stakeholderexperienceandiscomfortablethatvestingisjustifiedatthislevelwithnoneedtoapplydiscretion. #### Report on Directors’ Remuneration continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 112 ![]() RESTRICTED SHARE PLAN AWARDS (AUDITED) TheoutstandingawardsgrantedtoeachDirectoroftheCompanyundertheRestrictedSharePlanareasfollows: Date of award Number of awards at 1 June 2023 Granted/ allocated Face value Vested Lapsed in year Number of awards at 31 May 2024 1 Share price at date of award (£) Share price at date of vesting (£) Gain (£) Vesting/ transfer date 1 J Myers 27-Nov-23 – 411,899 £576,000 – – 411,899 1.442 – – 27-Sep-26 SPollard 27-Nov-23 – 214,530 £300,000 – – 214,530 1.442 – – 27-Sep-26 1 JonathanMyersandSarahPollardweregrantedtheaboveawardson27November2023,calculatedusingthefive-dayaveragemid-marketquotationatcloseofbusinesson24 November2023of£1.3984.ThesharepriceusedtodeterminethenumberofsharessubjecttotheawardwasinaccordancewiththerulesoftheLTIP2020.Theawardswereinthe formofConditionalShares.Sharesvestingundertheawardaresubjecttoatwo-yearpost-vestingholdingperiod. Assetoutinlastyear’sreportandfollowingshareholderapprovalofthePolicyattheAGM,theExecutiveDirectorsweregranteda conditionalawardundertheRSPatalowervalueandwithunderpins,ratherthanPSPawards.Themaximumawardwas90%ofbase payfortheCEOand75%ofbasepayfortheCFO.TheawardvestingdateforExecutiveDirectorswasalignedwiththatoftherestofthe Company’sLTIPawardsat27September2026.Postvesting,awardswillbesubjecttoafurthertwo-yearholdingperiod. ThevestingoftheRSPissubjecttothreeunderpinsdetailedbelowoverthethreefinancialyearstoMay2026.TheCommitteewillalso retaintheabilitytoreducevesting(includingtonil)subjecttoperformanceagainsttheunderpinsmeasuredoverthevestingperiod: • Nomaterialweaknessintheunderlyingfinancialhealthorsustainabilityofthebusiness • Maintenanceofappropriategovernanceframeworks,includingacceptablecontrolsandcomplianceperformanceandnoeventsthat resultinsignificantreputationaldamagetotheCompany(asdeterminedbytheBoard) • ToensureongoingfocusonourcriticalESGcommitments,satisfactoryperformanceagainstenvironmentalandsocietalcommitments. TheCommitteeretaineddiscretiontoensurethatoverallvestinglevelsarealignedtotheunderlyingfinancialperformanceonbotha Groupandindividualbasis.RecoveryandwithholdingprovisionsassetoutinthePolicywillalsoapplytotheseawards. TheExecutiveDirectorswillbegrantedawardsundertheRSPintheyearended31May2025.Themaximumawardwillbe90%ofbase payfortheCEOand75%ofbasepayfortheCFO.Postvesting,awardswillbesubjecttoafurthertwo-yearholdingperiod.Awardsare expectedtobemadeinSeptember2025.ThevestingoftheRSPwillremainsubjecttothethreeunderpinsdetailedaboveoverthethree financialyearstoMay2027.TheCommitteewillretaintheabilitytoreducevesting(includingtonil)subjecttoperformanceagainstthe underpinsmeasuredoverthevestingperiod,aswellasthediscretiontoensurethatoverallvestinglevelsarealignedtotheunderlying financialperformanceonbothaGroupandindividualbasis.RecoveryandwithholdingprovisionsassetoutinthePolicywillalsoapply totheseawards. DEFERRED BONUS AWARDS (AUDITED) UnderthecurrentDirectors'RemunerationPolicy,40%ofanybonusisdeferredintosharesfortwoyears.Thetablebelowisreflective ofthepreviousPolicywhere25%ofanypaymentwasdeferredintosharesforthreeyears. Scheme Date of award Basis of award Number of awards at 1 June 2023 Granted/ allocated in year 1 Face value of awards in year Vested in year Lapsed in year Number of awards at 31 May 2024 Share price at date of award (£)2 Share price at date of vesting (£) Gain (£) Vesting/ transfer date 3 J Myers DBSP 2021 23-Sep-21 25%of annual bonus 98,011 – – – – 98,011 2.265 – – 23-Sep-24 SPollard DBSP 2021 23-Sep-21 25%of annual bonus 18,719 – – – – 18,719 2.265 – – 23-Sep-24 J Myers DBSP 2021 23-Sep-22 25%of annual bonus 60,653 – – – – 60,653 2.005 – – 23-Sep-25 SPollard DBSP 2021 23-Sep-22 25%of annual bonus 28,569 – – – – 28,569 2.005 – – 23-Sep-25 J Myers DBSP 2021 27-Sep-23 25%of annual bonus – 115,659 £184,083 – – 115,659 1.510 – – 27-Sep-26 SPollard DBSP 2021 27-Sep-23 25%of annual bonus – 58,177 £92,595 – – 58,177 1.510 – – 27-Sep-26 1 JonathanMyersandSarahPollardweregrantedtheaboveawardson27September2023,calculatedusingthefive-dayaveragemid-marketquotationatcloseofbusinesson27 September2023of£1.5916.ThesharepriceusedtodeterminethenumberofsharessubjecttotheawardwasinaccordancewiththerulesoftheDBSP2021. 2 Thesharepriceatdateofawardforthe23September2022awardshasbeenupdatedinthisyear'sReportonDirectors'Remunerationfromsharepriceasat22September2022to sharepriceasat23September2022. 3 Awardsordinarilyvestonthethirdanniversaryofgrant,conditionalonlyoncontinuedemployment. 113 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() AsdisclosedintheReportonDirectors’Remunerationfortheyearended31May2021,andinlinewiththeCompany’sRemuneration Policyatthetime,25%oftheannualbonusearnedfortheyearended31May2021wasdeferredintoshares,intheformofconditional awards,forbothJonathanMyersandSarahPollard.Thesearesetoutinthepriortable.Theseawardsveston23September2024, onthethirdanniversaryofgrant,conditionalonlyoncontinuedemployment. Lastyear’sReportonDirectors’Remunerationsetoutthedeferralofannualbonusearnedfortheyearended31May2023forboth JonathanMyersandSarahPollard.InlinewiththeCompany’sRemunerationPolicyatthetime,25%wasdeferredintoshareswith awardsordinarilyvestingonthethirdanniversaryofgrant,conditionalonlyoncontinuedemployment.Theseawardsaredetailed inthepriortable. STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS TheCommitteehasestablishedshareownershipguidelinesthatrequireExecutiveDirectors: • Tobuildupandretainholdingsofshares(and/ordeferredsharesnetoftax)worth200%ofsalary • Untilthisshareownershipthresholdismet,toretainshareswithavalueequalto50%ofthenetgainaftertaxarisingfromthe acquisitionofsharespursuanttoanyoftheCompany’sshareincentiveplans • AssetoutintheRemunerationPolicy,todefer40%ofanybonusearnedintosharesfortwoyears • AfterceasingtobeaDirector,tomaintainthelowerof:(1)ashareholdingofatleast200%oftheirbasesalaryforthefirstyear followingcessationoftheiremployment,and100%forthesecondyear;and(2)theirshareholdingoncessation. Inaddition,thereisanexpectationthatNon-ExecutiveDirectorsbuildupinterestsintheCompany’ssharesworth100%oftheir basefee,netofstatutorydeductions,withinfouryearsofappointment. INTERESTS IN SHARES (AUDITED) TheinterestsintheCompany’ssharesofeachoftheExecutiveDirectorsasat31May2024(togetherwithinterestsheldbyany connectedpersons)were: Ordinary shares held at 31 May 2024 Interests in share incentive schemes that are not subject to performance conditions as at 31 May 20241 Interests in share incentive schemes that are subject to performance conditions as at 31 May 2024 1 Options that have vested but not yet been exercised as at 31 May 2024 Shares held under the SIP as at 31 May 20242 Value of shares held at 31 May 2024 as a % of base salary J Myers 212,771 686,222 865,386 0 4,960 100.30% SPollard 37,738 319,995 422,376 0 4,822 58.56% 1 IncludesunvestedawardsunderthePSPthatremainsubjecttoperformanceconditions. 2 Between31May2024and12September2024,JonathanMyersandSarahPollardeachacquired721sharesundertheSIP. WhiletheExecutiveDirectorshavenotyetmettheguidelinegiventheirdatesofappointmenttotheCompanyandBoard,progressis beingmadetowardsachievingthe200%ofsalaryguideline. TheinterestsintheCompany’ssharesofeachoftheNon-ExecutiveDirectors(togetherwithinterestsheldbyanyconnectedpersons) asat31May2024,ordateofresignationifearlier,aredetailedbelow: Name Shareholding requirement as % of net fee Ordinary shares held at 31 May 2024 or date of resignation if earlier Total price paid to acquire shares Shareholding as % of fee at 31 May 2024 or date of resignation if earlier DavidTyler 100% 59,005 £76,687 51% KirstyBashforth 100% 22,469 £38,524 121% DariuszKucz 1 n/a 7,50 0 n/a n/a JohnNicolson 100% 0 0 0 JeremyTownsend 2 n/a 20,000 n/a n/a JiteshSodha 100% 22,200 £54,923 173% ValeriaJuarez 100% 23,860 £35,386 111% VivekAhuja 100% 20,000 £18,995 60% 1 Asatdateofresignation,14September2023. 2 Asatdateofresignation,28February2024. Assetoutabove,Non-ExecutiveDirectorsareexpectedtobuildupinterestsintheCompany’ssharesworth100%oftheirbasefee, netofstatutorydeductions,withinfouryearsofappointment.Asat31May2024,theNon-ExecutiveDirectorsexceededthisexpectation, withtheexceptionofDavidTyler,JohnNicholsonandVivekAhuja,whojoinedtheBoardon1May2024. TherehavebeennochangesintheinterestsofanyNon-ExecutiveDirectorbetween31May2024and12September2024. #### Report on Directors’ Remuneration continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 114 ![]() PENSION BENEFITS (AUDITED) DirectorsareeligibleformembershipoftheCompany’sdefinedcontributionpensionarrangementsand/ortheprovisionofcash allowancesinlieu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.NoExecutiveDirectorhasaccruedbenefitrelatingtolegacyDefinedBenefitpensionschemes previouslyoperatedbytheGroup. LOSS OF OFFICE PAYMENTS AND PAYMENTS TO FORMER DIRECTORS (AUDITED) TherewerenolossofofficeorpaymentstoformerDirectorsduringtheyear. LIMITS ON SHARES ISSUED TO SATISFY SHARE INCENTIVE PLANS 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satisfyawardstoparticipants,normore than5%oftheissuedordinarysharecapitalforexecutiveshareplans.Inrespectofawardsmadeduringtheyearended31May2022 undertheCompany’sshareincentiveplans,nonewordinaryshareswereissued. PERFORMANCE GRAPH ThegraphbelowillustratestheperformanceofPZCussonsplcmeasuredbyTotalShareholderReturn(TSR)overtheten-yearperiodto 31May2024againsttheTSRofaholdingofsharesintheFTSE250Indexoverthesameperiod,basedonaninitialinvestmentof£100. TheFTSE250IndexhasbeenchosenasPZCussonsplcisaconstituentofthatindex. CHIEF EXECUTIVE OFFICER REMUNERATION FOR PREVIOUS TEN YEARS Total remuneration (£000) Annual bonus % of maximum opportunity LTIP % of maximum opportunity 2023–24 Jonathan Myers 1,391 66.4% 8.67% 2022–23 Jonathan Myers 1,569 80.1% 20.0% 2021–22 Jonathan Myers 1,151 54.4% n/a 2020–21 AlexKanellis 1,518 100.0% n/a 2019–20 1 AlexKanellis 660 n/a n/a 2018–19 AlexKanellis 802 0% 0% 2017–18 AlexKanellis 732 0% 0% 2016–17 AlexKanellis 1,586 100.0% 0% 2015–16 AlexKanellis 1,105 47.4% 0% 2014–15 AlexKanellis 1,463 72.8% 32.5% 1 For2019–20thefigurefortotalremunerationrepresentsthepayofAKanellisfrom1June2019to31January2020,thefeespaidtoCSilverwhileactingasExecutive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. PZ Cussons plc TSR vs the FTSE 250 index TSR Value (£) 300 200 250 150 100 50 0 PZ Cussons plc FTSE 250 Index 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 115 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() RELATIVE IMPORTANCE OF SPEND ON PAY ThetablebelowshowsPZCussons’distributionstoshareholdersandtotalemployeepayexpenditureforthefinancialyearsended 31May2022and31May2023,andthepercentagechange: 2024 £m 2023 £m Change % Total employee costs 79.7 87.21 -9% Dividendspaid 21.9 26.8 -18% 1 RestatedtoincludethecostsofChildsFarmemployees. CHANGE IN DIRECTORS’ REMUNERATION AND FOR EMPLOYEES ThetablebelowshowsthechangeinannualDirectorremuneration(definedassalary,taxablebenefitsandannualbonus),comparedto thechangeinemployeeannualremunerationforacomparatorgroup,fromFY23toFY24. 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(employeesareabletoearnanannual bonusaswellasreceivingabasesalaryandbenefits),andbecausePZCussonsplchasnoemployeesotherthantheExecutiveDirectors. UK Employees Jonathan Myers (CEO) Sarah Pollard (CFO) David Tyler (Chair)1 Kirsty Bashforth Dariusz Kucz2 John Nicolson Jeremy Townsend3 Jitesh Sodha Valeria Juarez Vivek Ahuja4 2023–24 Salary/fees 5% 4.2% 8.7% n/a 14.4% n/a 5.8% n/a 6.8% 15.6% n/a Benefits 7.2% 0.8% 1.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Bonus -26.2% -13.4% -10.4% n/a n/a n/a n/a n/a n/a n/a n/a 2022–23 Salary/fees 3.5% 3.4% 8.7% n/a -0.6% -0.7% -0.6% -0.6% 9.1% 44.4% – Benefits 0.0% 0.2% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% – Bonus 41.6% 52.4% 62.7% n/a n/a n/a n/a n/a n/a n/a – 2021–22 Salary/fees 3.5% 3.5% 10.5% – 6.1% 5.1% 4.7% 4.7% 100.0% 100.0% – Benefits 0.0% 0.0% 0.0% – 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% – Bonus -62.0% -56.0% 38.0% – n/a n/a n/a n/a n/a n/a – 2020–21 Salary/fees 3.0% 0.0% n/a – 17.5% 0.0% 0.0% (19.0)% – – – Benefits 0.0% 0.1% n/a – -100.0% -100.0% -100.0% n/a – – – Bonus 0.0% n/a n/a – n/a n/a n/a n/a – – – 1 DavidTylerwasappointedtotheBoardon24November2022andasChairon23March2023.The%increasefor2023–24wasskewedduetotheprioryear'sfigurereflectingan incompletefinancialyearofservice;therefore,thefigureisinappropriateandnotpresentedinthetable. 2 DariusKuczretiredfromtheBoardon14September2023.The%feeincreasefor2023–24wasskewedonthecurrentyear'sfigure,reflectinganincompletefinancialyearofservice; therefore,thefigureisinappropriateandnotpresentedinthetable. 3 JeremyTownsendretiredfromtheBoardon28February2024.The%feeincreasefor2023–24wasskewedduetothecurrentyear'sfigurereflectinganincompletefinancialyearof service;therefore,thefigureisinappropriateandnotpresentedinthetable. 4 VivekAhujawasappointedtotheBoardon1May2024. #### Report on Directors’ Remuneration continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 116 ![]() 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total full-timeequivalenttotalremunerationforallUKemployeesfortherelevantfinancialyear.TheCEOsinglefigureisthepayreceived byJonathanMyersinrelationtoFY24.Assetout,insettingremunerationfortheCEO,bothinternalandexternalbenchmarksare considered,asistheremunerationofthebroaderworkforce.TheCommitteereceivesmarketupdatesfromtheirindependentadvisers whichprovidecontextfromotherlistedcompanies.ExecutivepaypolicyfortheCEO,otherDirectorsandseniormanagementisthenset astobeappropriatelypositionedforthesizeandscopeoftherolesandexperienceoftheindividuals. Theratioisconsideredtobereflectiveofthepay,rewardandprogressionpolicieswithintheCompany’sUKemployeepopulation.Pay levelsforrolesaresettakingintoaccountinternalrelativitiesandexternalbenchmarksandpromotionsareconsideredonanannualcycle. Employeedataincludesthoseemployedasat31May2024.Foranyemployeewhojoinedafter1June2023andwasstillemployedat 31May2023,remunerationforthatemployeehasbeencalculatedasiftheemployeehadbeenemployedforthefullyear.Wherethere wasnoidentifiableemployeeatthe25th,50thor75thpercentile,thenthedatafortheemployeeclosesttothatpercentilehasbeen used.Iftwoemployeeswereequallyclosetotherelevantpercentilethentheemployeewiththemostrepresentativepaymixwasselected. Additionally,wherepayincludesstatutorypaysuchasmaternity,paternityorsickpaytheseamountshavebeenincludedinthecalculation. Method CEO Single figure (£000) Upper quartile Median Lower quartile 2023–24 A 1,391 14 20 30 2022–23 1 A 1,569 18 29 44 2021–22 A 1,151 15 23 30 2020–21 A 1,518 19 29 40 2019–20 A 660 9 13 19 1 CEOsinglefigurehasbeenupdatedtoreflectactualvestingsharepriceandtheadditionalFY21PSPaward.Seenote5undersinglefiguretable. Itshouldbenotedthatthepayratioislikelytochangeyear-on-yeargivenasignificantproportionoftheCEO’sremunerationpackage comprisesofvariablepay. Thesalaryandtotalpayfortheindividualsidentifiedatthelowerquartile,medianandupperquartilepositionsasat31May2024areset outbelow: 2024 Salary Total pay Upperquartileindividual £77, 218 £99,940 Medianindividual £51,989 £68,091 Lowerquartileindividual £33,503 £46,382 117 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() CONSIDERATION BY THE DIRECTORS OF MATTERS RELATING TO DIRECTORS’ REMUNERATION Throughouttheyear,theCommitteehascomprisedexclusivelyindependentNon-ExecutiveDirectorsinaccordancewiththe2018Code. TheCommitteeheldfourscheduledandoneadditionalmeetingduringthe2024financialyearwithouractivitiessummarisedinthe tablebelow. 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) • JeremyTownsend(steppeddownfromtheCommitteeon19June2023andBoardon28February2024) • JiteshSodha • ValeriaJuarez. Duringtheyear,theCommitteereceivedadvicefromWillisTowersWatson(WTW)inrelationtomarketpractice.WTWisamember oftheRemunerationConsultantsGroupandhassignedthevoluntaryCodeofPracticeforremunerationconsultants.Thefeespaidto WTWinrespectofthisworkwerechargedonatimeandmaterialsbasisandtotalled£53,450excludingVATfortheyear.WTWdoesnot haveanyotherconnectionswithPZCussonsplcoranyDirectoroftheCompany.TheCommitteeappointedWTWfollowingafullreview processandissatisfiedthattheadviceprovidedbyWTWisobjectiveandindependent. Duringtheyear,theCommitteeconsultedDavidTyler(inhiscapacityasNon-ExecutiveChair)onissueswhereitfelthisexperienceand knowledgecouldbenefititsdeliberationsandheattendedmeetingsbyinvitation.TheCommitteealsoconsultedJonathanMyersas CEOonproposalsrelatingtotheremunerationofmembersoftheGroup’sseniormanagementteamandhetooattendedmeetingsby invitation.TheCFO,ChiefPeopleOfficerandGroupRewardDirectoralso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. InsettingremunerationforExecutiveDirectorsandseniormanagers,bothinternalandexternalbenchmarksareconsidered,asisthe remunerationofthebroaderemployeepopulation. COMMITTEE ACTIVITIES DURING THE YEAR ENDED 31 MAY 2024 July 2023 • RemunerationPolicyreview • ReviewofdraftRemunerationReportinrespectofFY23 • Updateonexternalenvironmentfromindependentadvisor • ReviewannualbonusawardsforFY23 • Reviewofstructureandfinancialtargetsfortheannual bonusschemeforFY24. • Approvalofexecutivesalaryreview • ReviewofvestingofpastawardsunderthePSPandupdate ontheprogressofin-flightawards • Reviewoflevelsofshareownership • ReviewofCompany-wideremunerationdashboard. August 2023 • Reviewandapprovaloffinancialtargetsfortheannualbonus schemeforFY23. • CPOFY23incentiveassessment. September 2023 • Updateonexternalenvironmentfromindependentadvisor • Approvalofshareholdercommunication • ApprovalofFY23Directors’RemunerationReport • ReviewofpostauditannualbonusawardsforFY23 • ReviewoffinaltargetforFY24annualbonus • ReviewofExecutiveDirectorFY24KeyBusinessObjectives. • InflightPSPawardupdate • ApprovalofExecutiveDirectorFY21PSPvesting • ReviewandapprovalofFY24RSPandDeferredBonusShare Planawards • ReviewofCompany-wideremunerationdashboard • Goodleaverapproval. March 2024 • Updateonexternalenvironmentfromindependentadvisor • UpdateonFY24annualbonusperformance • Updateontheprogressofin-flightPSPawards • Reviewofseniormanagementinterimsalaryproposals. • ReviewoftherevisedCorporateGovernanceCode rewardprovisions • ReviewofCompany-wideremunerationdashboard • Goodleaverapproval • ReviewofinterimFY24RSPawards. May 2024 • Updateonexternalenvironmentfromindependentadvisor • UpdateonFY24annualbonusperformance • ConsiderationofFY25annualbonusdesignprinciples • Updateontheprogressofin-flightPSPawards. • ReviewofCompany-wideremunerationdashboardincluding salaryreviewproposals • Reviewofapproachtointerimremunerationchangesfor ExecutiveCommittee • ReviewofBoardChair’sfee. #### Report on Directors’ Remuneration continued PZ Cussons plc / AnnualReportandAccounts2024 / Governance 118 ![]() SHAREHOLDER ENGAGEMENT TheCommitteerecognisestheimportanceofunderstandingtheperspectiveoftheshareholderswhentakingdecisions.We communicatewithourshareholdersduringbothRemunerationPolicyreviewsandinadvanceofanysignificantchangestothe implementationofourpolicy.Whilewenotethattherearearangeofdifferentviewsamonginstitutionalinvestorsonthemost appropriatepaymodelsandperformancemetrics,wewillalwaysconsidertheviewsexpressedtousandexplainwhywetakeadifferent approachifwechoosetodoso. STATEMENT OF SHAREHOLDER VOTING TheCommitteeisdirectlyaccountabletotheshareholdersand,inthiscontext,iscommittedtoanopenandtransparentdialoguewith theshareholdersontheissueofexecutiveremuneration.Forexample,duringFY23,thistooktheformofconsultationontheproposed Policy,aswellasquestionsatthe2023AGM. TheRemunerationCommitteeChairwillbeavailabletoanswerquestionsfromtheshareholdersregardingremunerationatthe2024 AGMandlooksforwardtoongoingdialoguewithshareholdersduringFY25. Thevotescastatthe2023AGMinrespectoftheadvisoryvoteonthe2023ReportonDirectors’Remunerationandinrespectofthe bindingvotefortheDirectors’RemunerationPolicyareshownbelow: ADVISORY VOTE ON THE 2023 REPORT ON DIRECTORS’ REMUNERATION AND THE CHAIR'S ANNUAL STATEMENT (2023 AGM) Votes for Votes against Votes cast Votes withheldNumber % Number % 321,140,960 93.34 22,924,118 6.66 344,065,078 47,535 BINDING VOTE ON AMENDMENTS TO THE DIRECTORS’ REMUNERATION POLICY (2023 AGM) Votes for Votes against Votes cast Votes withheldNumber % Number % 236,473,923 71.24 95,488,209 28.76 331,962,132 12,150,481 ByorderoftheBoardofDirectors Kirsty Bashforth Remuneration Committee Chair 18September2024 119 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Report of the Directors TheDirectorspresenttheirreporttogetherwiththeauditedConsolidatedFinancialStatementsandtheReportoftheAuditorfor theyearended31May2024. PRINCIPAL ACTIVITIES TheprincipalactivitiesoftheGrouparethemanufactureanddistributionofsoaps,detergents,toiletries,beautyproducts, pharmaceuticals,electricalgoods,edibleoils,fatsandspreadsandnutritionalproducts.Thesubsidiaryundertakingsandjointventures principallyaffectingtheprofits,liabilitiesandassetsoftheGrouparelistedinnote28oftheConsolidatedFinancialStatements. RESULTS AND DIVIDENDS AsummaryoftheGroup’sresultsfortheyearissetoutintheFinancialReviewonpages18to21oftheStrategicReport. TheDirectorshaveannouncedtheirintentiontodeclareaninterimdividendof2.10p(2023:3.73p)perordinarysharetobepaidon 4December2024toordinaryshareholdersontheregisteratthecloseofbusinesson1November2024,which,togetherwiththe interimdividendof1.50p(2023:2.67p)paidon4April2024,makesatotalof3.60pfortheyear(2023:6.40p). SCOPE OF THE REPORTING IN THIS ANNUAL REPORT AND ACCOUNTS TheGroup’sstatementoncorporategovernancecanbefoundonpages72to79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Accountsincorporatedbyreference. TheinformationrequiredtobedisclosedbytheUKListingRules,UKLR6.6.1R(forthepurposesofUKLR6.6.4R)andsection416(1)(a) oftheCompaniesActcanbefoundinthefollowinglocations: Section Topic Location 1 Detailsoflong-termincentiveschemesandother employee share schemes ReportonDirectors’Remuneration–pages107to119 2 WaiverofemolumentsbyaDirector ReportonDirectors’Remuneration–pages107to119 3 Shareholderwaiversofdividends EmployeeShareOwnershipTrust(ESOT):seenote24ofthe ConsolidatedFinancialStatements 4 Shareholderwaiversoffuturedividends ESOT:seenote24oftheConsolidatedFinancialStatements 5 Agreementswithcontrollingshareholders ReportoftheDirectors–page122 AlltheinformationreferencedaboveisherebyincorporatedbyreferenceintothisReportoftheDirectors. THE BOARD TheDirectorswhoservedthroughouttheyear,andunlessstatedotherwisewereinofficeuptothedateofsigningthefinancial statements,aredetailedbelow: Service in the year ended 31 May 2024 Service in the year ended 31 May 2024 DavidTyler Servedthroughouttheyear KirstyBashforth Servedthroughouttheyear Jonathan Myers Servedthroughouttheyear JeremyTownsend Serveduntil28February2024 SarahPollard Servedthroughouttheyear JiteshSodha Servedthroughouttheyear JohnNicolson Servedthroughouttheyear ValeriaJuarez Servedthroughouttheyear DariuszKucz Serveduntil14September2023 VivekAhuja Appointedon1May2024 PZ Cussons plc / AnnualReportandAccounts2024 / Governance 120 ![]() DIRECTORS’ INTERESTS DetailsoftheDirectors’andconnectedpersons’interestsinthesharecapitaloftheCompanycanbefoundintheReportonDirectors' Remunerationonpage114.NoDirectorhadanybeneficialinterestduringtheyearinsharesordebenturesofanysubsidiarycompany. Savefortheirservicecontractsorlettersofappointment,therewerenocontractsofsignificancesubsistingduring,orattheendof,the financialyearwiththeCompanyoranyofitssubsidiariesinwhichaDirectoroftheCompanywasmateriallyinterested. OTHER SUBSTANTIAL INTERESTS TheCompanyhadbeennotifiedofthefollowingdirectorindirectinterestsamountingto3%ormoreofitsissuedsharecapitalasatthe endofthefinancialyearandat12September2024: As at 12 September 2024 As at 31 May 2024 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 21,848,999 5.10% 21,848,999 5.10% MajedieAssetmanagement 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24oftheConsolidated FinancialStatements. 121 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Report of the Directors continued ADDITIONAL STATUTORY INFORMATION Directors’ indemnification and insurance IndemnitiesareinforceunderwhichtheCompanyhasagreedtoindemnifytheDirectors,theCompanySecretary andofficersofGroupsubsidiaries,totheextentpermittedbylaw,againstclaimsfromthirdpartiesinrespectof certainliabilitiesarisingoutof,orinconnectionwith,theexecutionoftheirduties.Theindemnifiedindividuals arealsoindemnifiedagainstthecostofdefendingcriminalprosecutionoraclaimbytheCompany,itssubsidiaries oraregulatorprovidedthat,wherethedefenceisunsuccessful,theindemnifiedpersonmustrepaythose defencecosts. TheCompanypurchasesandmaintainsinsurancefortheDirectorsandofficersoftheCompanyinperformingtheir duties,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. Significant agreements – Relationship Agreement TheFinancialConductAuthority’sUKListingRulesrequireapremiumlistedcompanywithacontrolling shareholder(beingashareholderwhoexercisesorcontrols,ontheirownortogetherwithanypersonwithwhom theyareactingin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terms;thatneitherthecontrollingshareholdernoranyof itsassociateswilltakeanyactionthatwouldhavetheeffectofpreventingthelistedcompanyfromcomplyingwith itsobligationsundertheUK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UKListingRules(together,Undertakings). ForthepurposesoftheUK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31May2024,theConcertPartyheldintheaggregate,approximately42.89%ofthe issuedsharecapitaloftheCompany. AsrequiredbytheUKListingRules,theBoardconfirmsthattheCompanyenteredintoawrittenrelationship agreementwiththeConcertPartyon31May2024containingtheUndertakingsandaprocurementobligation (theRelationshipAgreement).Thisreplacedtherelationshipagreementdated17November2014.TheBoardalso confirmsthat: • theCompanycompliedwiththeUndertakingsintheRelationshipAgreement; • sofarastheCompanyisaware,theUndertakingsintheRelationshipAgreementwerecompliedwithbythe ConcertPartyanditsassociates;and • sofarastheCompanyisaware,theprocurementobligationincludedintheRelationshipAgreementwas compliedwithbytheConcertParty. Political and charitable contributions CharitablecontributionsintheUKduringtheyearamountedto£0.3million(2023:£0.5million). Nopoliticalcontributionsweremade(FY23:£nil). Research and development TheGroupmaintainsin-houseteamsandfacilitiesforresearchanddevelopmentintheUK,Indonesia,Nigeriaand Australia.Inaddition,researchanddevelopmentissubcontractedtoapprovedexternalorganisations.Currently allsuchexpenditureischargedagainstprofitintheyearinwhichitisincurred,asitdoesnotmeetthecriteriafor capitalisationunderIAS38‘IntangibleAssets’. Greenhouse gas emissions GlobalgreenhousegasemissionsdatafortheyeararecontainedwithintheSustainability–Environmentsection onpages33and34. Employment of people with disabilities 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. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 122 ![]() Employee information TheGrouprecognisesthebenefitsofkeepingemployeesinformedoftheprogressofthebusinessandofinvolving themintheirCompany’sperformance.Themethodsofachievingsuchinvolvementaredifferentineachcompany andcountryand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. EmployeeviewsareprovidedtotheBoardthroughupdatesfromthedesignatedNon-ExecutiveDirectorfor employeeengagement. Furtherdetailsonourengagementwithemployeescanbefoundonpages22to27. Inclusion and diversity PZCussonsisanextremelydiverseorganisationintermsofitsethnicandculturalmake-upandthisissomething thatwecontinuetopromote.WeemploymanydifferentnationalitiesincludingIndian,Chinese,Polish, Indonesian,Singaporean,Thai,Greek,Australian,Nigerian,Ghanaian,Kenyan,American,CanadianandBritish. Weareclearthatwewantourleadershipteamtoreflectthediversityofthemarketsinwhichwefunctionand forthatreasonwearefocusedondevelopinglocaltalentwhounderstanddifferentcultures.Wedonotemploy anypersonbelowthelocallegalworkingageandwewillnot,inanycircumstances,employanyonebelowthe ageof16. TheCompanyhasadoptedadiversityandinclusionstatementthatsetsouttheCompany’scommitmenttohaving aBoard(includingitsCommitteesoftheBoard)andanExecutiveCommitteethatreflectsthediversityofour workforceandconsumersinthecountriesinwhichweoperate. ForthepurposesofdisclosureunderSection414C(8)oftheCompaniesAct,furtherdetailsonthecompositionof ourglobalemployeepopulationasat31May2024aresetoutinthetablebelow: 2024 2023 2022 2021 2020 No. % No. % No. % No. % No. % Femaleemployees 688 28 726 27 756 27 832 28 899 27 Male employees 1,749 72 1,918 73 2,005 73 2,111 72 2,461 73 Femaleseniormanagers 75 43 74 40 61 36 51 32 68 35 Maleseniormanagers 101 57 109 60 109 64 110 68 125 65 FemaleGroup BoardDirectors 3 37 3 33 4 44 3 43 4 50 Male Group BoardDirectors 5 63 6 67 5 56 4 57 4 50 External Auditor PricewaterhouseCoopersLLP(PwC)hassignifieditswillingnesstoactasExternalAuditortotheCompanyfor theyearending31May2025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(AGM).Astatementonthe independenceoftheExternalAuditorisincludedintheAuditandRiskCommitteeReportonpage86. Principal risks and uncertainties facing the Group TheGroup’sbusinessactivities,financialconditionandresultsofoperationscouldbeaffectedbyavarietyofrisks oruncertainties.ThesearesummarisedintheRiskManagementandPrincipalRiskssectiononpages42to50of theStrategicReport. Annual General Meeting TheCompany’s2024AGMwillbeheldatManchesterBusinessPark,3500AviatorWay,Manchester,M225TG at10:30amon21November2024.TheresolutionsthatwillbeproposedattheAGMaresetoutintheseparate NoticeofAGM,whichaccompaniesthisAnnualReportandAccounts. Share capital Asof31May2024,theCompany’sissuedsharecapitalconsistedof428,724,960ordinarysharesof1peach. Rights and obligations attaching to shares Subjecttoapplicablestatutesand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doesnotmake specificprovision,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 SubjecttotheCompany’sMemorandumandArticlesofAssociation,theCompaniesAct2006andanydirections givenbyspecialresolution,thebusinessoftheCompanywillbemanagedbytheBoard,whichmayexerciseallthe powersoftheCompany. 123 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Report of the Directors continued ADDITIONAL STATUTORY INFORMATION CONTINUED 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2023to31May2024(2023: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except: • thatcertainrestrictionsmayfromtimetotimebeimposedbylawsandregulations(forexample,relatingto insidertrading);and • pursuanttotheUK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toaffectitsfuturedevelopment,performanceand positionaresetoutintheStrategicReport.ThefinancialpositionoftheGroupandliquiditypositionaredescribed withintheFinancialReview.Inaddition,note19oftheConsolidatedFinancialStatementsincludespoliciesin relationtotheGroup’sfinancialinstrumentsandriskmanagement,andpoliciesformanagingcreditrisk,liquidity risk,marketrisk,foreignexchangerisk,pricerisk,cashflowandinterestrateriskandcapitalrisk. Aftermakingenquiries,andsubjecttothematerialuncertaintynotedinnote1totheConsolidatedFinancial Statements,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Accounts.AviabilitystatementhasbeenpreparedandapprovedbytheBoardandthisissetout onpages51to53. Events after the balance sheet date Therewerenopostbalancesheetevents. Engagement with Employees, suppliers and Customers PleaseseeStatementofengagementwithemployeesonpage73,Statementofengagementwithotherbusiness relationshipsonpage74andtheSection172(1)Statementonpage55. 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10to12 • DetailsofGroupsubsidiariesincludingoverseasbranchesaresetoutinnote28oftheConsolidated FinancialStatements • Financialinstrumentsandriskmanagementaresetoutinnote19oftheConsolidatedFinancialStatements • Tradepayablesundervendorfinancingarrangementsaresetoutinnote20oftheConsolidated FinancialStatements. PZ Cussons plc / AnnualReportandAccounts2024 / Governance 124 ![]() STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS TheDirectorsareresponsibleforpreparingtheAnnualReportandAccountsandthefinancialstatementsinaccordancewithapplicable lawandregulations. CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheDirectorshaveprepared theGroupFinancialStatementsinaccordancewithUK-adoptedinternationalaccountingstandardsandtheCompanyFinancial StatementsinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UnitedKingdomAccountingStandards, compromisingFRS101ReducedDisclosureFramework,andapplicablelaw). Undercompanylaw,Directorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewof thestateofaffairsoftheGroupandCompanyandoftheprofitorlossoftheGroupforthatperiod.Inpreparingthefinancialstatements, theDirectorsarerequiredto: • selectsuitableaccountingpoliciesandthenapplythemconsistently; • statewhetherapplicableUK-adoptedinternationalaccountingstandardshavebeenfollowedfortheGroupFinancialStatementsand UnitedKingdomAccountingStandards,comprisingFRS101,havebeenfollowedfortheCompanyFinancialStatements,subjecttoany materialdeparturesdisclosedandexplainedinthefinancialstatements; • makejudgementsandaccountingestimatesthatarereasonableandprudent;and • preparethefinancialstatementson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recordsthataresufficienttoshowandexplaintheGroup’sand Company’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheGroupandCompanyandenable themtoensurethatthefinancialstatementsand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financialstatementsmaydifferfromlegislationinotherjurisdictions. DIRECTORS’ CONFIRMATIONS TheDirectorsconsiderthattheAnnualReport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Boardonpage64confirmthat,tothebestoftheirknowledge: • TheGroupFinancialStatements,whichhavebeenpreparedinaccordancewithUK-adoptedinternationalaccountingstandards,givea trueandfairviewoftheassets,liabilities,financialpositionandprofitoftheGroup; • TheCompanyFinancialStatements,whichhavebeenpreparedinaccordancewithUnitedKingdomAccountingStandards,comprising FRS101,giveatrueandfairviewoftheassets,liabilitiesandfinancial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. 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information(asdefinedbytheCompaniesAct2006)ofwhichthe Company’sExternalAuditorisunaware;and • eachoftheDirectorshastakenallthestepsthattheyoughttohavetakenasDirectortomakethemselvesawareofanyrelevantaudit informationandtoestablishthattheCompany’sExternalAuditorisawareofthatinformation. ByorderoftheBoardofDirectors. Kareem Moustafa General Counsel and Company Secretary 18September2024 125 STRATEGIC REPORT GOVE R NANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 126 ![]() 128 Independent Auditor’s Report 138 Consolidated Income Statement 139 Consolidated Statement of Comprehensive Income 140 Consolidated Balance Sheet 142 Consolidated Statement of Changes in Equity 143 Consolidated Cash Flow Statement 144 Notes to the Consolidated Financial Statements 198 Company Balance Sheet 199 Company Statement of Changes in Equity 200 Notes to the Company Financial Statements # FINANCIAL # STATEMENTS STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 127 #### CAREX RANGE ![]() REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion Inouropinion: • PZCussonsplc’sgroupfinancialstatementsandcompanyfinancialstatements(the“financialstatements”)giveatrueandfairviewof thestateofthegroup’sandofthecompany’saffairsasat31May2024andofthegroup’slossandthegroup’scashflowsfortheyear thenended; • thegroupfinancialstatementshavebeenproperlypreparedinaccordancewithUK-adoptedinternationalaccountingstandardsas appliedinaccordancewiththeprovisionsoftheCompaniesAct2006; • thecompanyfinancialstatementshavebeenproperlypreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccounting Practice(UnitedKingdomAccountingStandards,includingFRS101“ReducedDisclosureFramework”,andapplicablelaw);and • thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006. Wehaveauditedthefinancialstatements,includedwithintheAnnualReportandAccounts2024(the“AnnualReport”),whichcomprise: theConsolidatedandCompanyBalanceSheets,asat31May2024;theConsolidatedIncomeStatement,theConsolidatedStatementof ComprehensiveIncome,theConsolidatedandCompanyStatementsofChangesinEquity,theConsolidatedCashFlowStatementforthe yearthenended;andthenotestothefinancialstatements,comprisingmaterialaccountingpolicyinformationandotherexplanatory information. OuropinionisconsistentwithourreportingtotheAuditandRiskCommittee. Basis for opinion WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UK)(“ISAs(UK)”)andapplicablelaw.Ourresponsibilities underISAs(UK)arefurtherdescribedintheAuditors’responsibilitiesfortheauditofthefinancialstatementssectionofourreport.We believethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion. Independence Weremainedindependentofthegroupinaccordancewiththeethicalrequirementsthatarerelevanttoourauditofthefinancial statementsintheUK,whichincludestheFRC’sEthicalStandard,asapplicabletolistedpublicinterestentities,andwehavefulfilledour otherethicalresponsibilitiesinaccordancewiththeserequirements. PricewaterhouseCoopersLLPinadvertentlyprovidedataxcomplianceservicetotheGroup,intheformofareportingtoolusedfor theIndirectTaxComplianceprocess,forafeeof£2,000duringtheyearended31May2024.AstheGroupisapublicinterestentity, taxcomplianceservicesareimpermissible,andtheprovisionofthisserviceamountedtoabreachofparagraph5.40oftheFRCEthical Standard2019. Weconfirmthat,basedonourassessmentofthisbreach,thenatureandscopeoftheserviceandthesubsequentactionstaken,the provisionoftheservicehasnotaffectedourprofessionaljudgementsinconnectionwithourauditoftheyearended31May2024. Otherthanthematterreferredtoaboveandtothebestofourknowledgeandbelief,wedeclarethatnonon-auditservicesprohibitedby theFRCEthicalStandard2019wereprovidedtotheGroup. Otherthanthosedisclosedinnote4,wehaveprovidednonon-auditservicestothecompanyoritscontrolledundertakingsintheperiod underaudit. #### Independent Auditor’s Report to the Members of PZ Cussons plc PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 128 ![]() Material uncertainty related to going concern Informingouropiniononthefinancialstatements,whichisnotmodified,wehaveconsideredtheadequacyofthedisclosuremade innote1tothegroupfinancialstatementsandnote1tothecompanyfinancialstatementsconcerningthegroup’sandthecompany’s abilitytocontinueasagoingconcern.TheDirectorshaveconsideredanadditionalseverebutplausibledownsideNairaexchangerate scenariotostresstesttheGroup’sandCompany’sfinancialforecasts,usingaNairaexchangeratedeclineofgreaterthan10%fromthe rateasatthestartofSeptember2024.Thisunmitigateddownsidescenarioshowsapotentialbreachoftheinterestcoverfinancial covenantasat29November2024withinthegoingconcernreviewperiodwhichwouldrequirenegotiatingawaiverofitsinterest covercovenanttoensuretheGroupandCompanymeettheirborrowingfacilityobligationsoverthegoingconcernreviewperiodasthe committedcreditfacilitymaybecomerepayableondemand.Theseconditions,alongwiththeothermattersexplainedinthosenotes tothefinancialstatements,indicatetheexistenceofamaterialuncertaintywhichmaycastsignificantdoubtaboutthegroup’sandthe company’sabilitytocontinueasagoingconcern.Thefinancialstatementsdonotincludetheadjustmentsthatwouldresultifthegroup andthecompanywereunabletocontinueasagoingconcern. Inauditingthefinancialstatements,wehaveconcludedthatthedirectors’useofthegoingconcernbasisofaccountinginthe preparationofthefinancialstatementsisappropriate. Ourevaluationofthedirectors’assessmentofthegroup’sandthecompany’sabilitytocontinuetoadoptthegoingconcernbasisof accountingincluded: • Weobtainedfrommanagementtheirlatestassessmentsthatsupporttheboard’sconclusionswithrespecttothegoingconcernbasis ofpreparationforthefinancialstatements; • Weevaluatedmanagement’sforecastandassesseddownsidescenariosandchallengedtheadequacyandappropriatenessofthe underlyingassumptionstoensurethattheyareappropriatelyseverebutplausible; • Wereviewedmanagementaccountsforthefinancialperiodtodateandcheckedthatthesewereconsistentwiththestartingpointof management’sscenariosandsupportedthekeyassumptionsincludedintheassessments; • Weevaluatedthehistoricalaccuracyofthebudgetingprocesstoassessthereliabilityofthedata; • Wechallengedmanagementwithregardstotheimpactofclimatechangeandhowthishasbeentakenintoaccountintheforecasts; • WereviewedthetermsandtheavailabilityoftheRevolvingCreditFacility(‘RCF’)andtheTermLoanandmanagement’sanalysisof bothliquidityandcovenantcompliancetosatisfyourselvesthatnobreachesareanticipatedovertheperiodofassessment. • Wetestedthemathematicalintegrityofmanagement’sgoingconcernforecastmodels;and. • Wereviewedthedisclosuresmadeinrespectofgoingconcernincludedinthefinancialstatements. Inrelationtothedirectors’reportingonhowtheyhaveappliedtheUKCorporateGovernanceCode,otherthanthematerialuncertainty identifiedinnote1tothegroupfinancialstatementsandnote1tothecompanyfinancialstatements,wehavenothingmaterialtoaddor drawattentiontoinrelationtothedirectors’statementinthefinancialstatementsaboutwhetherthedirectorsconsidereditappropriate toadoptthegoingconcernbasisofaccounting,orinrespectofthedirectors’identificationinthefinancialstatementsofanyother materialuncertaintiestothegroup’sandthecompany’sabilitytocontinuetodosooveraperiodofatleasttwelvemonthsfromthedate ofapprovalofthefinancialstatements. Ourresponsibilitiesandtheresponsibilitiesofthedirectorswithrespecttogoingconcernaredescribedintherelevantsectionsofthis report. Our audit approach Context PZCussonsplcisalistedmanufacturerofpersonalhealthcareproductsandconsumergoods.Ithasglobaloperations,headquartered intheUK,preparingconsolidatedfinancialstatementswhichareprimarilyanaggregationoflegalentitiesfromcountriesaroundthe world.Theyearended31May2024isourfirstyearasexternalauditorsoftheGroupandCompany.Aspartofouraudittransition, weperformedspecificproceduresoveropeningbalancesbyreviewingthepredecessorauditors’workingpapersandriskassessment andre-evaluatingthepredecessorauditors’conclusionsinrespectofkeysourcesofestimationuncertaintyandcriticaljudgements intheopeningbalancesheetat1June2023.Wealsoperformedprocesswalkthroughstounderstandandevaluatethekeyfinancial processesandcontrolsacrosstheGroup.Asweundertookeachphaseofthisfirst-yearaudit,weregularlyreconsideredourrisk assessmenttoreflectauditfindings,includingourassessmentoftheGroup’scontrolenvironmentandtheimpactonourplanned auditapproach.GiventhenatureoftheGroup’soperationsandrecentresults,weconsideredthevaluationofthegoodwilland indefinite-livedintangibleassetsforspecificcashgeneratingunits(CGUs),impairmentofinvestmentsinsubsidiaries,tradepromotions -rebatesanddesignationofloansaspermanentasequitytobetheareasofhigherriskandjudgementandthereforehaveincluded themaskeyauditmatters. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 129 ![]() Overview Audit scope • Ourauditfocusedonthoseentitieswiththemostsignificantcontributiontothegroup’srevenue.Ourworkincorporatedfullscope auditsofeightcomponents,theauditoftheCompany,auditproceduresonspecificbalancesforafurthercomponent,andon consolidationentries. • AllfourUKcomponentaudits,aswellastheauditoftheCompany,wereperformedbytheGroupengagementteam,withthe remainingfourcomponentauditscompletedbyoverseasPricewaterhouseCoopersComponentauditteams. • Theentitieswhereweconductedauditwork,togetherwithauditworkperformedattheconsolidatedlevel,accountedfor approximately90%oftheGroup’srevenue. Key audit matters • Materialuncertaintyrelatedtogoingconcern • Impairmentofgoodwillandotherindefinitelifeintangibleassets(group) • Tradepromotions-rebates(group) • Permanentasequitybalances(group) • Impairmentofinvestmentinsubsidiaries(parent) Materiality • Overallgroupmateriality:£5.3millionbasedon1.0%ofrevenue. • Overallcompanymateriality:£0.6millionbasedon1.0%oftotalassets. • Performancemateriality:£2.6million(group)and£0.3million(company). The scope of our audit Aspartofdesigningouraudit,wedeterminedmaterialityandassessedtherisksofmaterialmisstatementinthefinancialstatements. Key audit matters Keyauditmattersarethosemattersthat,intheauditors’professionaljudgement,wereofmostsignificanceintheauditofthefinancial statementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud) identifiedbytheauditors,includingthosewhichhadthegreatesteffecton:theoverallauditstrategy;theallocationofresourcesinthe audit;anddirectingtheeffortsoftheengagementteam.Thesematters,andanycommentswemakeontheresultsofourprocedures thereon,wereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwe donotprovideaseparateopiniononthesematters. Inadditiontogoingconcern,describedintheMaterialuncertaintyrelatedtogoingconcernsectionabove,wedeterminedthematters describedbelowtobethekeyauditmatterstobecommunicatedinourreport.Thisisnotacompletelistofallrisksidentifiedbyour audit. #### Independent Auditor’s Report to the Members of PZ Cussons plc continued PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 130 ![]() Key audit matter How our audit addressed the key audit matter Impairment of goodwill and other indefinite life intangible assets (group) Asat31May2024,thegrouprecognisedindefinite-livedbrandsof£206.3m (2023:£230.8m)andgoodwillof£54.7m(2023:£56.4)aspernote10of thefinancialstatements.Animpairmentchargeof£24.4minrelationtothe SanctuarySpabrandwasrecognisedduringtheyear. Duringtheyearended31May2024,thegroupperformeditsannual impairmentassessmentforindefinitelivedbrandsandgoodwillasrequired byIAS36.Thegroupundertakesatwostepapproachfirsttestingthe brands;eachbrandisconsidereditsowncashgeneratingunit(‘CGU’),and thengoodwillisallocatedtotheCGUorgroupsofCGUsasappropriateand representingthelowestlevelwhichgoodwillismonitoredbymanagement. Forstepone,theprocessinvolvesdeterminingthecarryingamountofeach brandCGUbyattributingandallocatingassetsexcludinggoodwilltothe CGUandpreparingdiscountedcashflowsanalysestodeterminetheCGUs’ recoverableamount.Basedonourreviewofthecashflowmodelsandthe significantassumptions,weconsiderCharlesWorthington,Rafferty’sGarden, SanctuarySpaandChildsFarmbrandstobethemostsensitivetothechanges inassumptions. Forsteptwo,goodwillisallocatedtoabrandCGUortoagroupofbrand CGUs(wheremorethanonebrandbenefitsfromthegoodwillsynergies) todeterminethesteptwoCGUcarryingamountsforgoodwillimpairment testing.Thediscountedcashflowanalysesusedforthepurposesofstepone arealsousedtodeterminetherecoverableamountoftheCGUsforgoodwill impairmenttesting. Refertopage87oftheAuditandRiskCommitteeReportandNote1and Note10withintheNotestotheConsolidatedFinancialStatementsofthe AnnualReport&Accounts2024. Inassessingtheappropriatenessofvaluationofgoodwill andindefinite-livedintangibleassetswehaveperformed thefollowingprocedures: • weevaluatedandassessedtheGroup’sfuturecashflow forecasts,theprocessbywhichtheyweredrawnup andtestedthemathematicalaccuracyoftheunderlying valueinusecalculations; • weevaluatedmanagement’srationalefordetermining theCGUsandtheallocationofassetsincludinggoodwill tothebrandorgroupofbrands; • wecomparedkeyassumptionsaroundrevenuegrowth ratestoexternalmarketresearchongrowthratesand othersupportingevidencewheretheGroupexpectsto growinexcessofthemarket; • wecomparedactualresultswithpreviousforecaststo assesshistoricalaccuracyofmanagementforecasts anddiscussedanyvarianceswiththeDirectorsand managementtounderstandreasonsforvariances; • weagreedforecastsusedbacktotheboardapproved budgetandafiveyearplan; • weassessedmanagement’sassumptionsformarginsby comparingtohistoricaldataandreviewedthecentral costsallocation; • wereconciledtheassetsusedinthemodelbacktothe groupconsolidation; • weconsideredmanagementbiasthroughoutthe assumptionsusedandconsideredanycontradictory evidence; • weengagedourinternalvaluationsexpertstoreview themodel,assessmanagement’skeyassumptionsfor thediscountratesusedbyassessingthecostofcapi- talcalculationsfortheGroupandcomparingagainst comparableorganisationsandthelong-termgrowth ratesbycomparingwithexternalforecasts; • wecarriedoutsensitivityanalysistochecktheimpactof changesinthekeyassumptionssuchasrevenuegrowth rate,longtermgrowth,discountratesandthegross marginrate,onthevalueinuse;and • weassessedtheadequacyofthedisclosureprovided innote10oftheGroupfinancialstatementsinrelation totherelevantaccountingstandards.Weconsider disclosurestobeadequateandinlinewiththe requirementsoftherelevantstandards. Basedontheaboveproceduresweconcludedthatno additionalimpairmentsarerequired,andthedisclosures madeareappropriate. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 131 ![]() Key audit matter How our audit addressed the key audit matter Trade promotions - rebates (group) DuetotheindustryinwhichPZCussonsoperates,beingconsumergoods,itis customarythatthereisassociatedtradeandpromotionalspendincurred. Tradepromotionscomprisefixedandvariableelementsandweconsider thevariableelementtobeasignificantaccountingestimate.Anumberof estimatesaremadeinarrivingatthetradepromotionsliabilitiesandrelated adjustmentstorevenue,whichcouldbepronetomanagementbiasand error. Asat31May2024,thegrouprecognisedtradepromotionliabilitiesof £25.8mandthetotaltradepromotions(adjustmentstorevenue)included intheconsolidatedincomestatementamountedtoc.£120.3m.Thereisa levelofestimationinvolvedinaccruingforsucharrangementsandapotential formanagementtomanipulateprofitandwehaveconsideredittobea significantriskinrelationtocompletenessandaccuracyofliabilitiesand relatedadjustmentstorevenueduetofraudorerror. Refertopage87oftheAuditandRiskCommitteeReportandNote1within theNotestotheConsolidatedFinancialStatementsoftheAnnualReport& Accounts 2024. Inassessingthecompletenessandaccuracyoftrade promotionliabilitiesandtherelatedadjustmentsto revenue,wehaveperformedthefollowingprocedures: • weobtainedtheyearendincentiveaccrualcalculation andtheschedulethatreconcilestheopeningaccrualto theclosingaccrual; • wetestedtheinputsoftheaccrualcalculationbytracing asampleofopenaccrualstosupportingevidence; • wetestedasampleofincentivespaidinthecurrentyear toensuretheaccrualwasmadebeforetheclaimwas paidorsettled.Forthissamesample,werecalculated thevalueoftheaccrual,andcorroboratedtothirdparty evidence; • weperformedalookbacktest,byselectingasample ofaccrualsintheopeningbalance,andtestingthemto subsequentclaimorsettlementdata; • wetestedpost-yearendclaimsandsettlements,and comparedthemtotheamountsaccruedfor;and • wealsoobtaineddetailsof“live”offersinthelastfew daysofthefinancialyearbyvisitingkeyretailers,online andinperson.Wecomparedthesetoarrangements accruedforatyearend. Basedonourauditwork,wehavefoundtheestimates madeinrelationtotradepromotionstobeacceptable. Wealsoconsiderthedisclosuresmadeinthefinancial statementstobeappropriate Permanent as equity balances (group) PZCussonsadoptsapermanentasequityapproach(i.e.theprovisionof loansthatareintendedtobepermanentasequity,insteadofsubscribing foradditionalequityshares)asamethodofinvestinginitssubsidiariesin developingmarkets,specificallyinAfrica(NigeriaandGhana). Duringtheyear,twosettlementsofthepermanentasequitybalances relatingtoPZWilmarweremadeamountingtoUSD10m(2023:nil).In addition,inApril2024thegroupalsoannouncedtheirintentiontoreview strategicoptionsfortheAfricanoperations.Thisledtoareassessmentofthe permanentasequitydesignationmadebymanagement.Thisresultedinall balancespreviouslymeetingtherequirementsofIAS21tobedesignatedas permanentasequity,tobede-designated.Asatyearend31May2024,the grouphasnoloans(2023:£152.9m)designatedaspermanentasequity. Weconsiderthedesignationofloans,andtherelevantdateofde-designation tobeasignificantjudgement.Theforeignexchangemovementsonthese loans are material. Refertopage87oftheAuditandRiskCommitteeReportandNote1and Note14withintheNotestotheConsolidatedFinancialStatementsofthe AnnualReport&Accounts2024. Inassessingtheclassificationofloansaspermanentas equityandrelatedforeignexchangemovements,wehave performedthefollowingprocedures: • wereviewedthetermssurroundingloansandpayable balancesdesignatedaspermanentasequity; • wechallengedmanagementwithregardstotheir intentionsfortheseloansgoingforward,toassess whetherdesignationaspermanentasequitymetthe requirementsofIAS21; • wereviewedtheevidencethatsuggestedfurther settlementoftheloansarelikely; • wechallengedmanagementtoconsiderhowexcess cashinNigeriawouldbeusedifitwasavailable;and • wealsoreviewedthedisclosuresmadeinthefinancial statementsinrelationtocurrencymatters. Wearecomfortablethatthede-designationoftheloans isappropriate.Wearecomfortablewiththedisclosures madeinthefinancialstatements. #### Independent Auditor’s Report to the Members of PZ Cussons plc continued PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 132 ![]() Key audit matter How our audit addressed the key audit matter Impairment of investment in subsidiaries (parent) TheCompanyhasinvestmentsinsubsidiariesof£36.8m(2023:£63.2m). Giventhemagnitudeofthebalanceweconsideredtheretobeariskthatthe performanceofthesubsidiaryundertakingsisnotsufficienttosupportthe carryingvalueoftheinvestmentsandmaybeimpaired. Managementhasconsideredtheinvestmentbalancesforimpairmentand identifiedimpairmentindicatorsrelatingtotheinvestmentinPZCussons (International)Limited.Thesubsidiaryisinanetliabilitypositionasat31May 2024andisloss-makingbecausesomeofthecostsitincursarenotableto berecharged.Itwillnotbeprofit-makinginthefutureanditreliesonthe Grouptoguaranteeitsliabilitiesandprovidethenecessarysupporttobeable tocontinueasagoingconcern.Followinganassessmentofitsrecoverable amount,managementhasrecordedanimpairmentchargeof£28.2millionto reducetheinvestment’scarryingvalueto£nil. RefertoNote4withintheNotestotheCompanyFinancialStatementsofthe AnnualReport&Accounts2024. Inassessingtheappropriatenessofvaluationof investmentinsubsidiarieswehaveperformedthe followingprocedures: • weobtainedascheduleofinvestmentsin subsidiariesandensuredthisisreconciledtothe financialstatements; • weperformedareviewoftheperformanceand netassetsofeachmaterialsubsidiaryagainstthe carryingvalueoftheinvestmentstoidentifytriggers forimpairment; • weobtainedmanagement’saccountingpaperdetailing theimpairmentconsiderationsmadeinrelationtothe investmentinPZCussons(International)Limited; • wehaveconsideredmanagement’spositionthatthe entityisinanetliabilityposition,hasconsistently generatedlosses,andisnotexpectedtomakeaprofitin theforeseeablefuturegiventheGroup’scostrecharge arrangements; • wehaveconsideredmanagement’sconsiderationsin thecontextofauditworkperformedinotherareasand concludedthatnocontradictoryevidencewasnoted; • wechallengedmanagementtoconsiderwhetherthe Companyneededtorecogniseafinancialguarantee liabilitygiventhenetliabilitypositionandthe expectationthatPZCussons(International)Limited isnotexpectedtobeprofitmakinginthefuture.We understandthatthefinancialguaranteeliabilityis recognisedinanothersubsidiaryoftheCompany; • weassessedtheadequacyofthedisclosureprovided intheCompanyfinancialstatementsinrelationtothe relevantrequirementsoftheaccountingstandards. Basedontheaboveproceduresweconcludedthatthere werenotriggersidentifiedinrelationtotheinvestmentin PZCussonsHoldingsLimited.Wearecomfortablethatthe investmentinrelationtoPZCussonsInternationalLimited isfullyimpaired,andthedisclosuresmadeareappropriate. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 133 ![]() #### Independent Auditor’s Report to the Members of PZ Cussons plc continued How we tailored the audit scope Wetailoredthescopeofouraudittoensurethatweperformedenoughworktobeabletogiveanopiniononthefinancialstatements asawhole,takingintoaccountthestructureofthegroupandthecompany,theaccountingprocessesandcontrols,andtheindustryin whichtheyoperate. TheGroupisamanufacturerofpersonalhealthcareproductsandconsumergoods.TheGroupoperatesworldwideespeciallyinAfrica andothercommonwealthnations,withNigeria,IndonesiaandAustraliabeingthemostsignificantterritories. InestablishingtheoverallapproachtotheGroupaudit,wedeterminedthetypeofworkthatneededtobeperformedattheentitiesby us,astheGroupengagementteam,orcomponentauditorsoperatingunderourinstructions.Whereworkwasperformedbycomponent auditors,wedeterminedthelevelofinvolvementweneededtohaveinthisworktobeabletoconcludethatsufficientappropriateaudit evidencehadbeenobtained.Ourworkincorporatedfullscopeauditsofeightcomponentsandauditproceduresonspecificbalancesfor afurthercomponent. The impact of climate risk on our audit Wemadeenquiriesofmanagementtounderstandtheprocesstheyhaveadoptedtoassesstheextentofthepotentialimpactofclimaterisk onthegroup’sfinancialstatements,includingtheircommitmentsmadetoachievingNetZerocarbonemissionsforScope1,2&3by2045. Thekeyareasofthefinancialstatementswheremanagementevaluatedthatclimateriskhasapotentialimpactaresetoutinnote1,inthe notestothefinancialstatements.Thedirectorshavereachedtheoverallconclusionthattherehasbeennomaterialimpactonthefinancial statementsforthecurrentyearfromthepotentialimpactofclimatechange. Weusedourknowledgeofthegrouptochallengemanagement’sassessment.Weparticularlyconsideredhowclimateriskwouldimpact theassumptionsmadeintheforecastspreparedbymanagementusedintheirimpairmentanalyses,goingconcernandviability.Wealso consideredtheconsistencyofthedisclosuresinrelationtoclimatechange(includingthedisclosuresintheTaskForceonClimate-related FinancialDisclosures(TCFD)section)withintheAnnualReportwiththefinancialstatementsandourknowledgeobtainedfromouraudit. Ourproceduresdidnotidentifyanymaterialimpactinthecontextofourauditofthefinancialstatementsasawhole,oronourkeyaudit mattersfortheyearended31May2024. Materiality Thescopeofourauditwasinfluencedbyourapplicationofmateriality.Wesetcertainquantitativethresholdsformateriality.These, togetherwithqualitativeconsiderations,helpedustodeterminethescopeofourauditandthenature,timingandextentofour auditproceduresontheindividualfinancialstatementlineitemsanddisclosuresandinevaluatingtheeffectofmisstatements,both individuallyandinaggregateonthefinancialstatementsasawhole. Basedonourprofessionaljudgement,wedeterminedmaterialityforthefinancialstatementsasawholeasfollows: Financial statements - group Financial statements - company Overall Materiality £5.3 million. £0.6 million. How we determined it 1.0%ofrevenue 1.0%oftotalassets Rationale for benchmark applied Weconsideredmaterialityinanumberofdifferentways, andusedourprofessionaljudgementhavingapplied ‘ruleofthumb’percentagestoanumberofpotential benchmarks.Onthebasisofthis,weconcludedthat 1.0%ofrevenueisanappropriatelevelofmateriality consideringtheoverallscaleofthebusinessandfocusof usersofthefinancialstatements. Webelievethattotalassetsistheprimarymeasureused bytheshareholdersinassessingtheperformanceofthe entity,andisagenerallyacceptedauditingbenchmark fornon-tradingcompanies. Foreachcomponentinthescopeofourgroupaudit,weallocatedamaterialitythatislessthanouroverallgroupmateriality.Therange ofmaterialityallocatedacrosscomponentswasbetween£0.3millionand£3.5million. Weuseperformancematerialitytoreducetoanappropriatelylowleveltheprobabilitythattheaggregateofuncorrectedand undetectedmisstatementsexceedsoverallmateriality.Specifically,weuseperformancematerialityindeterminingthescopeofouraudit andthenatureandextentofourtestingofaccountbalances,classesoftransactionsanddisclosures,forexampleindeterminingsample sizes.Ourperformancematerialitywas50%ofoverallmateriality,amountingto£2.6millionforthegroupfinancialstatementsand£0.3 millionforthecompanyfinancialstatements. Indeterminingtheperformancemateriality,weconsideredanumberoffactors-thehistoryofmisstatements,riskassessmentand aggregationriskandtheeffectivenessofcontrols-andconcludedthatanamountatthelowerendofournormalrangewasappropriate. WeagreedwiththeAuditandRiskCommitteethatwewouldreporttothemmisstatementsidentifiedduringourauditabove£0.3 million(groupaudit)and£0.03million(companyaudit)aswellasmisstatementsbelowthoseamountsthat,inourview,warranted reportingforqualitativereasons. PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 134 ![]() Reporting on other information TheotherinformationcomprisesalloftheinformationintheAnnualReportotherthanthefinancialstatementsandourauditors’report thereon.Thedirectorsareresponsiblefortheotherinformation.Ouropiniononthefinancialstatementsdoesnotcovertheother informationand,accordingly,wedonotexpressanauditopinionor,excepttotheextentotherwiseexplicitlystatedinthisreport,any formofassurancethereon. Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,consider whethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheaudit,or otherwiseappearstobemateriallymisstated.Ifweidentifyanapparentmaterialinconsistencyormaterialmisstatement,weare requiredtoperformprocedurestoconcludewhetherthereisamaterialmisstatementofthefinancialstatementsoramaterial misstatementoftheotherinformation.If,basedontheworkwe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basedontheseresponsibilities. WithrespecttotheStrategicreportandReportoftheDirectors,wealsoconsideredwhetherthedisclosuresrequiredbytheUK CompaniesAct2006havebeenincluded. Basedonourworkundertakeninthecourseoftheaudit,theCompaniesAct2006requiresusalsotoreportcertainopinionsandmatters asdescribedbelow. Strategic report and Report of the Directors Inouropinion,basedontheworkundertakeninthecourseoftheaudit,theinformationgivenintheStrategicreportandReportof theDirectorsfortheyearended31May2024isconsistentwiththefinancialstatementsandhasbeenpreparedinaccordancewith applicablelegalrequirements. Inlightoftheknowledgeandunderstandingofthegroupandcompanyandtheirenvironmentobtainedinthecourseoftheaudit,wedid notidentifyanymaterialmisstatementsintheStrategicreportandReportoftheDirectors. Report on the Directors’ Remuneration Inouropinion,thepartoftheReportontheDirectors’Remunerationtobeauditedhasbeenproperlypreparedinaccordancewiththe CompaniesAct2006. Corporate governance statement TheListingRulesrequireustoreviewthedirectors’statementsinrelationtogoingconcern,longer-termviabilityandthatpartofthe corporategovernancestatementrelatingtothecompany’scompliancewiththeprovisionsoftheUKCorporateGovernanceCode specifiedforourreview.Ouradditionalresponsibilitieswithrespecttothecorporategovernancestatementasotherinformationare describedintheReportingonotherinformationsectionofthisreport. Basedontheworkundertakenaspartofouraudit,wehaveconcludedthateachofthefollowingelementsofthecorporategovernance statementismateriallyconsistentwiththefinancialstatementsandourknowledgeobtainedduringtheaudit,and,exceptforthematters reportedinthesectionheaded‘Materialuncertaintyrelatedtogoingconcern’,wehavenothingmaterialtoaddordrawattentiontoin relationto: • Thedirectors’confirmationthattheyhavecarriedoutarobustassessmentoftheemergingandprincipalrisks; • ThedisclosuresintheAnnualReportthatdescribethoseprincipalrisks,whatproceduresareinplacetoidentifyemergingrisksand anexplanationofhowthesearebeingmanagedormitigated; • Thedirectors’statementinthefinancialstatementsaboutwhethertheyconsidereditappropriatetoadoptthegoingconcernbasis ofaccountinginpreparingthem,andtheiridentificationofanymaterialuncertaintiestothegroup’sandcompany’sabilitytocontinue todosooveraperiodofatleasttwelvemonthsfromthedateofapprovalofthefinancialstatements; • Thedirectors’explanationastotheirassessmentofthegroup’sandcompany’sprospects,theperiodthisassessmentcoversandwhy theperiodisappropriate;and • Thedirectors’statementastowhethertheyhaveareasonableexpectationthatthecompanywillbeabletocontinueinoperation andmeetitsliabilitiesastheyfalldueovertheperiodofitsassessment,includinganyrelateddisclosuresdrawingattentiontoany necessaryqualificationsorassumptions. Ourreviewofthedirectors’statementregardingthelonger-termviabilityofthegroupandcompanywassubstantiallylessinscopethan anauditandonlyconsistedofmakinginquiriesandconsideringthedirectors’processsupportingtheirstatement;checkingthatthe statementisinalignmentwiththerelevantprovisionsoftheUKCorporateGovernanceCode;andconsideringwhetherthestatement isconsistentwiththefinancialstatementsandourknowledgeandunderstandingofthegroupandcompanyandtheirenvironment obtainedinthecourseoftheaudit. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 135 ![]() Inaddition,basedontheworkundertakenaspartofouraudit,wehaveconcludedthateachofthefollowingelementsofthecorporate governancestatementismateriallyconsistentwiththefinancialstatementsandourknowledgeobtainedduringtheaudit: • Thedirectors’statementthattheyconsidertheAnnualReport,takenasawhole,isfair,balancedandunderstandable,andprovides theinformationnecessaryforthememberstoassessthegroup’sandcompany’sposition,performance,businessmodelandstrategy; • ThesectionoftheAnnualReportthatdescribesthereviewofeffectivenessofriskmanagementandinternalcontrolsystems;and • ThesectionoftheAnnualReportdescribingtheworkoftheAuditandRiskCommittee. Wehavenothingtoreportinrespectofourresponsibilitytoreportwhenthedirectors’statementrelatingtothecompany’scompliance withtheCodedoesnotproperlydiscloseadeparturefromarelevantprovisionoftheCodespecifiedundertheListingRulesforreview bytheauditors. Responsibilities for the financial statements and the audit Responsibilities of directors for financial statements AsexplainedmorefullyintheStatementofdirectors’responsibilitiesinrespectofthefinancialstatements,thedirectorsareresponsible forthepreparationofthefinancialstatementsinaccordancewiththeapplicableframeworkandforbeingsatisfiedthattheygiveatrue andfairview.Thedirectorsarealsoresponsibleforsuchinternalcontrolastheydetermineisnecessarytoenablethepreparationof financialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror. Inpreparingthefinancialstatements,thedirectorsareresponsibleforassessingthegroup’sandthecompany’sabilitytocontinueas agoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlessthe directorseitherintendtoliquidatethegrouporthecompanyortoceaseoperations,orhavenorealisticalternativebuttodoso. Auditors’ responsibilities for the audit of the financial statements Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterial misstatement,whetherduetofraudorerror,andtoissueanauditors’reportthatincludesouropinion.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andareconsideredmaterialif,individuallyorintheaggregate,theycould reasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements. 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. Basedonourunderstandingofthegroupandindustry,weidentifiedthattheprincipalrisksofnon-compliancewithlawsandregulations relatedtotheconsumerprotectionregulations,generalproductsafetyregulationsandbriberyacts,andweconsideredtheextentto whichnon-compliancemighthaveamaterialeffectonthefinancialstatements.Wealsoconsideredthoselawsandregulationsthat haveadirectimpactonthefinancialstatementssuchasCompaniesAct2006andtaxlegislation.Weevaluatedmanagement’sincentives andopportunitiesforfraudulentmanipulationofthefinancialstatements(includingtheriskofoverrideofcontrols),anddetermined thattheprincipalriskswererelatedtopostingjournalentriestomanipulaterevenueandfinancialperformance,andmanagementbias withinaccountingestimatesandjudgements.Thegroupengagementteamsharedthisriskassessmentwiththecomponentauditorsso thattheycouldincludeappropriateauditproceduresinresponsetosuchrisksintheirwork.Auditproceduresperformedbythegroup engagementteamand/orcomponentauditorsincluded: • challengingassumptionsandjudgementsmadebymanagementintheirsignificantaccountingestimates,inparticulararoundthe tradepromotions,uncertaintaxpositions,designationofloansaspermanentasequity,valuationofpensionliabilitiesandvaluationof brandsandgoodwill • identifyingandtestingjournalentries,inparticularanyjournalentriespostedwithunusualaccountcombinations; • discussionswiththeAuditandRiskCommittee,management,internalauditandthein-houselegalteamincludingconsiderationof knownorsuspectedinstancesofnon-compliancewithlawsandregulationorfraud; • reviewingminutesofmeetingsofthosechargedwithgovernancethroughouttheyearandpostyearendtoidentifyanyoneoffor unusualtransactions; • enquiringofmanagement,theAuditandRiskCommitteeandin-houselegalcounselconcerningactualandpotentiallitigationand claims;and • inaddressingtheriskoffraudwithinpromotionaltradespendaccruals,performingretrospectivereviewsofprioryearpositions; performingsubstantivetestingovertheaccrualbalanceandagreeingtocontracts;andconsideringwhetherpostyearendsettlements supportorcontradictthosejudgementsreached. Thereareinherentlimitationsintheauditproceduresdescribedabove.Wearelesslikelytobecomeawareofinstancesofnon- compliancewithlawsandregulationsthatarenotcloselyrelatedtoeventsandtransactionsreflectedinthefinancialstatements.Also, theriskofnotdetectingamaterialmisstatementduetofraudishigherthantheriskofnotdetectingoneresultingfromerror,asfraud mayinvolvedeliberateconcealmentby,forexample,forgeryorintentionalmisrepresentations,orthroughcollusion. #### Independent Auditor’s Report to the Members of PZ Cussons plc continued PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 136 ![]() Ouraudittestingmightincludetestingcompletepopulationsofcertaintransactionsandbalances,possiblyusingdataauditing techniques.However,ittypicallyinvolvesselectingalimitednumberofitemsfortesting,ratherthantestingcompletepopulations.We willoftenseektotargetparticularitemsfortestingbasedontheirsizeorriskcharacteristics.Inothercases,wewilluseauditsamplingto enableustodrawaconclusionaboutthepopulationfromwhichthesampleisselected. AfurtherdescriptionofourresponsibilitiesfortheauditofthefinancialstatementsislocatedontheFRC’swebsiteat: www.frc.org.uk/auditorsresponsibilities.Thisdescriptionformspartofourauditors’report. Use of this report Thisreport,includingtheopinions,hasbeenpreparedforandonlyforthecompany’smembersasabodyinaccordancewithChapter3 ofPart16oftheCompaniesAct2006andfornootherpurpose.Wedonot,ingivingtheseopinions,acceptorassumeresponsibilityfor anyotherpurposeortoanyotherpersontowhomthisreportisshownorintowhosehandsitmaycomesavewhereexpresslyagreedby ourpriorconsentinwriting. Other required reporting Companies Act 2006 exception reporting UndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion: • wehavenotobtainedalltheinformationandexplanationswerequireforouraudit;or • adequateaccountingrecordshavenotbeenkeptbythecompany,orreturnsadequateforouraudithavenotbeenreceivedfrom branchesnotvisitedbyus;or • certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or • thecompanyfinancialstatementsandthepartoftheReportontheDirectors’Remunerationtobeauditedarenotinagreementwith theaccountingrecordsandreturns. Wehavenoexceptionstoreportarisingfromthisresponsibility. Appointment FollowingtherecommendationoftheAuditandRiskCommittee,wewereappointedbythememberson1November2023toauditthe financialstatementsfortheyearended31May2024andsubsequentfinancialperiods.Thisisthereforeourfirstyearofuninterrupted engagement. Other matter ThecompanyisrequiredbytheFinancialConductAuthorityDisclosureGuidanceandTransparencyRulestoincludethesefinancial statementsinanannualfinancialreportpreparedunderthestructureddigitalformatrequiredbyDTR4.1.15R-4.1.18Randfiledonthe NationalStorageMechanismoftheFinancialConductAuthority.Thisauditors’reportprovidesnoassuranceoverwhetherthestructured digitalformatannualfinancialreporthasbeenpreparedinaccordancewiththoserequirements. Jonathan Studholme (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Manchester 18September2024 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 137 ![]() | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £m | £m | | Revenue | 2 | 527 .9 | 65 6.3 | | Costofsales | | (39 6 . 8) | (3 9 9.0) | | Gross profit | | 131 . 1 | 257 .3 | | Sellinganddistributionexpense | | (82 . 8) | (1 0 5. 3) | | Administrativeexpense | | (1 3 9. 3) | (9 9.8) | | Shareofresultsofjointventure | 14 | 7. 3 | 7. 5 | | Operating (loss)/profit | 2 | (8 3.7) | 59 .7 | | Financeincome | | 12 .2 | 1 5.4 | | Financeexpense | | (24 . 2) | (1 3 . 3) | | Net finance (expense)/income | 6 | (1 2 . 0) | 2.1 | | Netmonetarylossarisingfromhyperinflationaryeconomies 3 | | (0 . 2) | — | | (Loss)/profit before taxation | | (95. 9) | 61 . 8 | | Taxation | 7 | 24.1 | (1 5 . 4) | | (Loss)/profit for the year¹ | 4 | (71 . 8) | 4 6.4 | | Attributable to: | | | | | OwnersoftheParent | | (5 7. 0) | 36.4 | | Non-controllinginterests | | (14 . 8) | 10.0 | | | | (71. 8) | 46.4 | | | | pence | pence | | (Loss)/earnings per share 1 | | | | | Basic (p) | 9 | (13.60) | 8 .7 0 | | Diluted(p) 2 | 9 | (13.60) | 8 .67 | 1 Whollyderivedfromcontinuingoperations. 2 In2024,thebasicanddilutedlosspershareareequalasaresultoftheGroupincurringalossfortheyear. 3 RepresentsthehyperinflationimpactinrelationtoGhana. #### Consolidated Income Statement For the year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 138 ![]() 2024 2023 | | | | | | --- | --- | --- | --- | | | | Notes £m | £m | | (Loss)/profit for the year | | (71. 8) | 46.4 | | Other comprehensive (expense)/income | | | | | Items that will not be reclassified subsequently to income statement | | | | | Remeasurementlossonnetretirementbenefitsurplus | 23 | (6 . 8) | (32. 8) | | Taxationonothercomprehensiveexpense | 21 | 1.7 | 7. 4 | | Total items that will not be reclassified to income statement | | (5.1) | (25 . 4) | | Items that may be reclassified subsequently to income statement | | | | | Exchangedifferencesontranslationofforeignoperations¹ | | (69. 4) | (1 9. 6) | | Shareofothercomprehensiveexpenseofjointventureaccountedforusingtheequitymethod | 14 | (20.0) | (2 .1) | | Cashflowhedges-fairvaluemovementsnetofamountsreclassified | 19 | (0.6) | 0.4 | | Total items that may be subsequently reclassified to income statement | | (90 .0) | (21 . 3) | | Other comprehensive expense for the year | | (95.1) | (4 6 .7) | | Total comprehensive expense for the year | | (166.9) | (0 . 3) | | Attributable to: | | | | | OwnersoftheParent | | (133.3) | (6. 9) | | Non-controllinginterests | | (33 .6) | 6.6 | | | | (166.9) | (0 . 3) | 1 Includesahyperinflationadjustmentof£4.3million(2023:£nil)inrelationtoGhana,netof£1.3milliondeferredtaxation. #### Consolidated Statement of Comprehensive Income For the year ended 31 May 2024 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 139 ![]() Notes | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | | £m | £m | | Assets | | | | | Non-current assets | | | | | Goodwillandotherintangibleassets | 10 | 279.3 | 312.7 | | Property,plantandequipment | 11 | 42 .8 | 6 7. 9 | | Investmentproperties | 12 | 6.6 | 6.4 | | Right-of-useassets | 13 | 10. 2 | 12.5 | | Netinvestmentinjointventure | 14 | — | 52.0 | | Tradeandotherreceivables | 17 | 32 .1 | — | | Deferredtaxassets | 21 | 2 2 .2 | 7. 5 | | Currenttaxreceivable | | 0.6 | — | | Retirementbenefitsurplus | 23 | 32 .1 | 38.5 | | | | 425.9 | 4 9 7. 5 | | Current assets | | | | | Inventories | 16 | 6 8 .5 | 112.9 | | Tradeandotherreceivables | 17 | 9 9.0 | 1 19.1 | | Derivativefinancialassets | 19 | — | 1.0 | | Currenttaxationreceivable | | 0. 2 | 1.0 | | Currentassetinvestments | 19 | — | 0.5 | | Cashandcashequivalents | 18 | 51 . 3 | 25 6.4 | | | | 219. 0 | 49 0.9 | | Assetsheldforsale | 15 | 4.7 | — | | | | 223.7 | 490.9 | | Total assets | | 6 49.6 | 98 8 .4 | | Equity | | | | | Sharecapital | 24 | 4. 3 | 4.3 | | Treasury shares | 24 | (3 4 . 5) | (36. 9) | | Capitalredemptionreserve | | 0 .7 | 0 .7 | | Hedgingreserve | 19 | (0.4) | 0 .2 | | Currencytranslationreserve | | (159.6) | (89.0) | | Retainedearnings | | 425.3 | 51 1 .7 | | Otherreserves | | 6. 5 | 4.6 | | Attributable to owners of the Parent | | 242.3 | 395.6 | | Non-controllinginterests | | (7. 1) | 26.5 | | Total equity | | 235.2 | 422.1 | #### Consolidated Balance Sheet As at 31 May 2024 TocomplywiththerequirementsofIAS1Presentation of Financial Statements,thefullbalancesofinvestmentpropertieshavebeen restatedtobepresentedseparatelyonthefaceoftheConsolidatedBalanceSheetandinnote12.Previously,thesewereincludedwithin theproperty,plantandequipmentbalance. PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 140 ![]() | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £m | £m | | Liabilities | | | | | Non-current liabilities | | | | | Borrowings | 18,19 | 160. 3 | 2 51 . 2 | | Tradeandotherpayables | 20 | 2. 6 | 4.1 | | Leaseliabilities | 19 | 9.7 | 11.3 | | Deferredtaxationliabilities | 21 | 39. 8 | 76.9 | | Retirementandotherlong-termemployeebenefitobligations | 23 | 12 . 2 | 12.4 | | | | 224.6 | 355.9 | | Current liabilities | | | | | Borrowings | 18,19 | 6 . 3 | — | | Tradeandotherpayables | 20 | 158 .7 | 1 82.2 | | Leaseliabilities | 19 | 2 .4 | 1 .7 | | Derivativefinancialliabilities | 19 | 0 .5 | 0.5 | | Currenttaxationpayable | | 21 .7 | 2 5.6 | | Provisions | 22 | 0 .2 | 0.4 | | | | 18 9. 8 | 210.4 | | Total liabilities | | 414 . 4 | 5 66. 3 | | Total equity and liabilities | | 64 9.6 | 98 8.4 | The Consolidated Financial Statements from pages 138 to 197 were approved by the Board of Directors and authorised for issue on 18 September 2024. They were signed on its behalf by: J Myers S Pollard 18 September 2024 PZ Cussons plc Registered number 00019457 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 141 ![]() | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | Attributable to owners of the Parent | | | | | | | | | | Capital | | Currency | | | Non- | | | | | Share | Treasury | redemption | Hedging | translation | Retained | Other | controlling | | | | | capital | shares | reserve | reserve 1 | reserve 2 | earnings | reserves 3 | interests 4 | Total | | | Notes | £m | £m | £m | £m | £m | £m | £m | £m | £m | | At 1 June 2022 | | 4.3 | (4 0 . 0) | 0 .7 | (0. 2) | (69. 2) | 52 8 .5 | 2. 9 | 21.9 | 4 4 8.9 | | Profitfortheyear | | — | — | — | — | — | 3 6.4 | — | 10.0 | 4 6.4 | | Transferbetweenreserves | | — | — | — | — | (1 . 5) | 1.5 | — | — | — | | Othercomprehensiveincome/ | | | | | | | | | | | | (expense) | | — | — | — | 0.4 | (1 8.3) | (2 5 .4) | — | (3. 4) | (4 6 .7) | | Totalcomprehensiveincome/ | | | | | | | | | | | | (expense)fortheyear | | — | — | — | 0.4 | (1 9. 8) | 12.5 | — | 6. 6 | (0 . 3) | | Transactionswithowners: | | | | | | | | | | | | Ordinarydividends | 8 | — | — | — | — | — | (26. 8) | — | — | (26 . 8) | | Share-basedpayments | | — | — | — | — | — | — | 1 .7 | — | 1.7 | | SharesissuedfromESOT | | — | 3.1 | — | — | — | (2 . 5) | — | — | 0.6 | | Dividendsrelatingtonon- controllinginterests,netof | | | | | | | | | | | | forfeitures | | — | — | — | — | — | — | — | (2.0) | (2.0) | | Totaltransactionswithowners | | | | | | | | | | | | recogniseddirectlyinequity | | — | 3.1 | — | — | — | (2 9. 3) | 1.7 | (2 .0) | (26 . 5) | | At 31 May 2023 | | 4.3 | (36 . 9) | 0 .7 | 0.2 | (8 9.0) | 51 1 .7 | 4.6 | 26 .5 | 4 22.1 | | At 1 June 2023 | | 4. 3 | (36 . 9) | 0.7 | 0. 2 | (89. 0) | 51 1 .7 | 4. 6 | 26.5 | 4 22 .1 | | Lossfortheyear | | — | — | — | — | — | (5 7. 0) | — | (1 4 . 8) | (71. 8) | | Othercomprehensiveexpense | | — | — | — | (0.6) | (70.6) | (5.1) | — | (1 8 . 8) | (95.1) | | Totalcomprehensiveexpensefor | | | | | | | | | | | | the year | | — | — | — | (0.6) | (70.6) | (6 2 .1) | — | (3 3. 6) | (1 66.9) | | Transactionswithowners: | | | | | | | | | | | | Ordinarydividends | 8 | — | — | — | — | — | (21 . 9) | — | — | (21 . 9) | | Share-basedpayments | | — | — | — | — | — | — | 1 .9 | — | 1 .9 | | SharesissuedfromESOT | | — | 2.4 | — | — | — | (2. 4) | — | — | — | | Totaltransactionswithowners | | | | | | | | | | | | recogniseddirectlyinequity | | — | 2. 4 | — | — | — | (2 4 . 3) | 1 .9 | — | (20.0) | | At 31 May 2024 | | 4. 3 | (3 4 . 5) | 0.7 | (0. 4) | (159.6) | 425.3 | 6.5 | (7. 1) | 2 35. 2 | 1 Reserverelatestocontinuinghedges. 2 Includesahyperinflationadjustmentin2024of£4.3millioninrelationtoGhana. 3 OtherreservesrelatetotheGroup’sshare-basedpaymentschemes. 4 Refertonote28formoredetails. #### Consolidated Statement of Changes in Equity For the year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 142 ![]() | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £m | £m | | Cash flows from operating activities | | | | | Cashgeneratedfromoperations | 26 | 4 7. 7 | 76.6 | | Interestpaid | | (2 1 . 5) | (11 . 8) | | Taxationpaid | | (13.3) | (1 5 . 6) | | Net cash generated from operating activities | | 12 .9 | 49.2 | | Cash flows from investing activities | | | | | Interestreceived | | 9.0 | 11. 8 | | Purchaseofproperty,plantandequipmentandsoftware | 10,11 | (6 . 1) | (6 .7) | | Proceedsfromdisposalofplant,propertyandequipment | | 0. 8 | 14.4 | | Loansadvancedtojointventure | | (4.0) | (11 . 2) | | Loanrepaymentsfromjointventure | | 12 .7 | 11. 2 | | Net cash generated from/(used in) investing activities | | 12.4 | 19.5 | | Cash flows from financing activities | | | | | DividendspaidtoCompanyshareholders | 8 | (21 . 9) | (26. 8) | | Dividendspaidtonon-controllinginterests | | — | (2 .6) | | Repaymentofleaseliabilities | | (2. 4) | (2. 5) | | Repaymentofborrowings | | (20 6.0) | (2 05 .0) | | Proceedsfromborrowings | | 12 1.4 | 28 3.0 | | Financingfeespaidoncommittedcreditfacility | | (0. 8) | (2 . 8) | | Net cash (used in)/generated from financing activities | | (109.7) | 43.3 | | Net (decrease)/increase in cash and cash equivalents | | (8 4. 4) | 112.0 | | Effectofforeignexchangerates | | (1 2 0 .7) | (1 9. 3) | | Cashandcashequivalentsatthebeginningoftheyear | | 256.4 | 163.7 | | Cash and cash equivalents at the end of the year | 18 | 51 . 3 | 25 6.4 | #### Consolidated Cash Flow Statement For the year ended 31 May 2024 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 143 ![]() #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 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 office is given on page 211. PZ Cussons plc is the parent company and ultimate parent of the Group. The principal activities of the Group are the manufacturing and distribution of hygiene, baby and beauty products. These Consolidated Financial Statements are presented in Pounds Sterling (GBP) and, unless otherwise indicated, have been presented in £ million to one decimal place. 1. ACCOUNTING POLICIES The Consolidated Financial Statements are prepared in accordance with UK-adopted International Accounting Standards including interpretations issued by the IFRS Interpretations Committee and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The financial statements have been prepared on a historical cost basis, except for the following: • Certain financial assets and liabilities (including derivative instruments) – measured at fair value, • Defined benefit pension plans – plan assets measured at fair value, and • Hyperinflationary accounting in Ghana. The preparation of financial statements, in conformity with IFRSs, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management’s best knowledge of the amounts, events or actions, actual results may ultimately differ from those estimates. Key sources of estimation uncertainty are described on pages 157 to 158. Going concern The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. The financial position of the Group, liquidity position and available borrowing facilities are described within the Financial Review. In addition, note 19 of the Consolidated Financial Statements includes policies in relation to the Group’s financial instruments and risk management and policies for managing credit risk, liquidity risk, market risk, foreign exchange risk, price risk, cash flow and interest rate risk and capital risk. The Group meets its funding requirements through internal cash generation and borrowings. Borrowings are amounts drawn under both committed and uncommitted borrowing facilities. The Group has a £325.0 million committed credit facility which is available for general corporate purposes. As at 31 May 2024, the Group had headroom on the committed facility of £164.0 million and net debt of £115.3 million comprising cash of £51.3 million and borrowings of £166.6 million. In assessing going concern, the Group has prepared both base case and severe but plausible cash flow forecasts for a period of 18 months until the end of November 2026 (the “going concern review period”), which is at least 12 months from the date of approval of the financial statements. The Group’s base case forecasts are based on the Board-approved budget and the first year of the current five- year plan, and indicate forecasted continued compliance with its banking covenants and sufficient liquidity throughout the going concern review period. The Directors have considered a severe but plausible downside scenario (excluding the uncertainty regarding the Nigerian Naira) which models the following assumptions: • 5% reduction in Group revenue; and • Group gross margin decline of 200bps. This downside scenario also shows both continued compliance with its banking covenants and sufficient liquidity throughout the going concern review period. However, over the past year there have been significant fluctuations in the Naira exchange rate which, due to the size of the Group’s operations in Nigeria, needs to be considered as part of our going concern assessment. The Directors have therefore considered an additional severe but plausible downside Naira exchange rate scenario to stress test the Group’s financial forecasts, using a Naira exchange rate decline of greater than 10% from the rate as at the start of September 2024. This unmitigated downside scenario shows a potential breach of the interest cover financial covenant as at 29 November 2024 which if management mitigation actions proved insufficient, would result in the Group needing to negotiate a waiver of its interest cover covenant to ensure the business meets its borrowing facility obligations over the going concern review period as the committed credit facility may become repayable on demand. The Directors are satisfied that this unmitigated downside scenario does not potentially breach any of the Group’s other financial covenants. PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 144 ![]() Management consider there to be significant and feasible mitigations in place. These include both short-term and structural cost reductions, as well as the potential disposal of non-core, non-operating assets. Although management acknowledges that certain of these mitigations are outside their control in the very short term, a number of these mitigating actions are already underway. The Group is currently engaged in a process to sell its St.Tropez brand and is exploring potential transactions that could lead to a partial or full sale of its Africa business, having received a number of expressions of interest. A partial or full sale of the Group’s Africa business could materially reduce the Group’s exposure to fluctuations in the Naira exchange rate. The Board has committed to using any proceeds from these transactions to first reduce gross borrowings, and consequently the level of the Group’s net interest cost. After reviewing the current liquidity position, financial forecasts, stress testing of potential risks and considering the uncertainties described above, and based on the current funding facilities, the Directors expect the Group to have the financial resources to continue to operate the business for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis of accounting in preparing the Group financial statements. However, should management mitigations prove insufficient, the impact of Naira exchange rate volatility on forecast interest cover covenant compliance represents a material uncertainty that may cast significant doubt upon the Group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern. (a) New and amended accounting standards adopted by the Group The following amended standards and interpretations were adopted by the Group during the year ending 31 May 2024: • Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes) • Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2) • Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors) • IFRS 17 Insurance Contracts. These amended standards and interpretations have not had a significant impact on the Consolidated Financial Statements. Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendment to IAS 12 narrows the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences such as leases. The Group previously accounted for deferred taxation on leases where the deferred taxation asset and liability was recognised on a net basis. Following the amendments, the Group has recognised a separate deferred taxation asset in relation to its lease liabilities and a deferred taxation liability in relation to its right-of-use assets. However, there is no impact on the Consolidated Balance Sheet because the balances qualify for offset under paragraph 74 of IAS 12. There was no impact on the opening retained earnings as at 1 June 2023 as a result of the change. The policy for recognising and measuring income taxes is consistent with that applied in the comparative years except for the changes outlined above as a result of the Group’s adoption of the amendments to IAS 12. On 23 May 2023, the International Accounting Standards Board issued International Tax Reform Pillar Two Model Rules - Amendments to IAS 12. The Group has applied the mandatory temporary exception to the accounting for deferred taxation arising from the jurisdictional implementation of the Pillar Two rules set out therein (b) New accounting standards and interpretations in issue but not yet effective The following new and amended standards are effective for annual periods beginning on or after 1 January 2024. The Group has not early adopted the new or amended standards, where applicable, in preparing these Consolidated Financial Statements. • Classification of Liabilities as Current or Non-current (Amendments to IAS 1 Presentation of financial statements) • Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases) • Supplier financing arrangements (Amendments to IAS 7 Statement of cash flows and IFRS 7 Financial instruments) • Lack of exchangeability (Amendments to IAS 21 The effects of changes in foreign exchange rates) • IFRS 18 Presentation and Disclosure in Financial Statements • Amendment to IFRS 9 and IFRS 7 (Classification and Measurement of Financial Instruments). These amendments are not expected to have a material impact on the Group in the current or future reporting periods, except for the amendments of IAS 21 which may have a material impact on the financial position or performance of the Group, but this impact cannot currently be estimated reliably due to the uncertainty linked to the Nigerian Naira. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 145 ![]() #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 1. ACCOUNTING POLICIES CONTINUED (c) Presentation changes The following changes have been made to the presentation of the Group’s Consolidated Financial Statements: • In accordance with IAS 1 Presentation of Financial Statements, investment properties are presented separately on the face of the Consolidated Balance Sheet and in note 12, rather than being presented within property, plant and equipment. The impact on the opening balances of the 2023 comparatives is a reduction of £7.2 million from the cost of property, plant and equipment, representing the investment property balances previously included in property, plant and equipment. • Share of other comprehensive income of joint venture is presented separately on the face of the Statement of Other Comprehensive Income. • Non-mandatory disclosures or disclosures of immaterial balances have been removed (note 4). These presentation changes have no impact on the accounting policies adopted by the Group. (d) Accounting policies Basis of consolidation 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 exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the financial and operational policies of 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. Any resulting gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. The total profits or losses of subsidiaries are included in the Consolidated Income Statement and the interest of 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-controlling interests even if this results in the non-controlling interests recognising a deficit balance. 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 financial statements of subsidiaries are adjusted to conform to the Group’s accounting policies. Intra-group transactions and balances, and any unrealised gains or losses on transactions between Group companies are eliminated on consolidation. PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 146 ![]() Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are, with limited exceptions, recognised at their fair values at the acquisition date. 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 any existing investment 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 the existing investment as well as considering the specific fair values of assets and liabilities transferred to gain control. Any increase or impairment of the Group’s existing investment is credited/charged to the Consolidated Income Statement. Goodwill arising on a business combination represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill arising on the acquisition of a subsidiary is separately presented on the Group’s balance sheet. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in the Consolidated Income Statement. Goodwill is subsequently measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually, or more frequently if there are indicators of impairment. The method used for impairment testing is to allocate goodwill to appropriate cash- generating units (CGUs) based on the smallest identifiable group of assets that generate independent cash inflows, and to estimate the recoverable amounts of the CGUs as the higher of the asset’s fair values less costs of disposal and the value-in-use. For the purposes of goodwill impairment testing, goodwill related to each of the Beauty brands is aggregated together into the Beauty CGU as this is manner in which the core assets are used to generate cash flows and is the lowest level at whch goodwill is monitored by management. An impairment arises if the recoverable amount of the CGU is less than the carrying amount, in which case the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. Impairment losses recognised for goodwill cannot be reversed in a subsequent period. On disposal of a subsidiary or an equity method investment, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 147 ![]() 1. ACCOUNTING POLICIES CONTINUED Investments in joint ventures Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Interests in 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 thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other 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 of impairment as the difference between the recoverable amount of the joint venture and its carrying value, and then recognises the loss within ‘Share of results of joint venture’ in the Consolidated Income Statement. Revenue Revenue comprises sales of goods after the deduction of discounts, trade spend, rebates and sales-related taxes. It does not include intra-group sales. Trade promotions, which consist primarily of customer pricing allowances, placement/listing fees and promotional allowances, are governed by agreements with our trade customers (retailers and distributors). Discounts can either be immediately deducted from the sales value on the invoice or settled later through credit notes. Rebates are generally in the form of credit notes. Amounts provided for discounts payable at the end of a period require estimation; historical data and accumulated experience is used to estimate the provision using the most likely amount method and in most cases the discount can be estimated with a high level of accuracy using known facts. These amounts are reported within Trade and other payables. Any differences between actual amounts settled and the amounts provided are not material and recognised in the subsequent reporting period. Customer contracts generally contain a single performance obligation and revenue is recognised when control of the products has transferred to our customer as there are no longer any unfulfilled obligations to the customer. This is generally on delivery to the customer but depending on specific customer terms, this can be at the time of dispatch, delivery or upon formal customer acceptance. This is considered the appropriate point where the performance obligations in our contracts are satisfied as the Group no longer has control over the inventory. Estimating the amount of variable consideration associated with discounts and assessing whether other consideration payable to customers (e.g. marketing investment payments) represents payment for a distinct good or service require a degree of estimation and judgement applied by management. Trade promotions The Group provides for amounts payable to trade customers for promotional activity. Where a promotional activity spans across the year- end, an accrual is reflected in the Consolidated Financial Statements based on our expectation of customer and consumer uptake during the promotional period and the extent to which temporary promotional activity has occurred. 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. Foreign currencies 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 results and financial position of each entity are presented in Pounds Sterling, which is the functional currency of the Company, and the presentational currency for the Consolidated Financial Statements. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 148 ![]() 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. Foreign exchange gains and losses arising from the settlement of these transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Income Statement except when deferred in equity as qualifying hedges or permanent as equity balances. In preparing the Consolidated Financial Statements, the balances in individual Group companies are translated from their functional currency into the Group reporting currency (Pounds Sterling). Apart from the financial statements of Group companies in hyperinflationary economies (see below), the income statement, the cash flow statement and all other movements in assets and liabilities are translated at average exchange rates for the year as a proxy for the transaction rate, or at the transaction rate itself if more appropriate. Assets and liabilities are translated at year-end exchange rates. Cumulative foreign currency translation differences arising on the translation and consolidation of foreign operations’ income statements and balance sheets denominated in foreign currencies are recorded as a separate component of equity. To determine the existence of hyperinflation, the Group assesses the qualitative and quantitative characteristics of the economic environment of the country, such as the cumulative inflation rate over the previous three years. The financial statements of a Group company whose functional currency is that of a hyperinflationary economy are adjusted for inflation and then translated into Pounds Sterling using the balance sheet exchange rate. See further details below. On disposal of a foreign operation the cumulative translation differences will be transferred to the income statement in the period of the disposal as part of the gain or loss on disposal. Repayments of permanent as equity balances are not considered full or partial disposals, since the parent company continues to own the same percentage of the subsidiary and as a result there is no recycling of exchange differences from other comprehensive income to the Consolidated Income Statement. Hyperinflationary economies Ghana was designated as a hyperinflationary economy from 1 December 2023. As a result, IAS 29 Financial Reporting in Hyperinflationary Economies has been applied from 1 June 2023 to the Group’s Ghanaian subsidiary undertaking. The application of IAS 29 includes: • adjustment to historical cost non-monetary assets and liabilities for the change in purchasing power caused by inflation from the date of initial recognition to the current balance sheet date; • adjustment to the income statement for inflation during the current reporting period; • translation of income statement at the period-end foreign exchange rate instead of an average rate; and • adjustment to the income statement to reflect the impact of inflation and exchange rate movement on holding monetary assets and liabilities in local currency. The Ghanaian Combined Consumer Price Index (CPI) was 220.0% at 31 May 2024 (31 May 2023: 178.7%). The cumulative effect arising from the restatement of the opening non-monetary items is recognised in other comprehensive income. This impact for the year ended 31 May 2024 was £4.3 million (2023: £nil). The application of IAS 29 has resulted in a £3.7 million increase of total assets, a £0.6 million increase in the operating loss and the recognition of a £0.2 million monetary loss for the year ended 31 May 2024. The comparative information in the Consolidated Financial Statements is not restated as it is presented in a stable currency (Pounds Sterling). Finance income Finance income includes interest receivable on cash and cash equivalents, interest receivable on loans to joint venture, net finance income in relation to defined benefit pension schemes, finance income in relation to leases and the change in the fair value of deferred consideration on business combinations. Finance expense Finance expense includes interest expense in relation to financial liabilities (which includes the unwind of the discount rate applied to lease liabilities), finance expense on defined benefit pension schemes, amortisation of fees incurred in arranging financing and the change in the fair value of deferred purchase consideration on business combinations. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 149 ![]() 1. ACCOUNTING POLICIES CONTINUED Adjusting items Adjusting items are material in value or related to significant one-off changes in the structure or value of the business. Certain adjusting items may be recognised across multiple years if, for example, they are deemed to be part of a significant transformation project which would not be expected to recur. Such projects are required to be agreed upfront with a clear scope, timeline and budget. The Directors apply judgement in assessing the presentation of such items as adjusting items. The Directors believe that the separate disclosure of these items is relevant to an understanding of the Group’s financial performance by providing an alternative and meaningful basis upon which to analyse underlying business performance 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. These alternative performance measures should be viewed as supplemental to, but not as a substitute for, measures presented in the consolidated financial information relating to the Group, which are prepared in accordance with IFRS. Further, they may not be comparable with similarly titled measures reported by other companies due to differences in the way they are calculated. Taxation Taxation on the profit or loss for the year comprises current and deferred taxation. Taxation is recognised in the Consolidated Income Statement except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognised within that statement. Current taxation is the expected taxation payable on the taxable income for the year, using taxation rates enacted or substantively enacted at the financial year-end date, and any adjustment to taxation payable in respect of previous years. Deferred taxation is provided on temporary differences between the carrying amounts of assets and liabilities recognised for financial reporting purposes and the amounts used for taxation purposes, on an undiscounted basis. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using taxation rates enacted or substantively enacted at the financial year-end date. Deferred taxation liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In the year ending 31 May 2024, the Group has adopted the amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction amendments, which narrows the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences such as leases. The Group previously accounted for deferred taxation on leases where the deferred taxation asset or liability was recognised on a net basis. Following the amendments, the Group has recognised a separate deferred taxation asset in relation to its lease liabilities and a deferred taxation liability in relation to its right-of-use assets. However, there is no impact on the balance sheet because the balances qualify for offset under paragraph 74 of IAS 12. There was no impact on the opening retained earnings as at 1 June 2023 as a result of the change. On 23 May 2023, the International Accounting Standards Board issued International Tax Reform Pillar Two Model Rules - Amendments to IAS 12. The Group has applied the mandatory temporary exception to the accounting for deferred taxation arising from the jurisdictional implementation of the Pillar Two rules set out therein. Deferred taxation assets and liabilities are offset when there is a legally enforceable right to offset current taxation assets against current taxation liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current taxation liabilities on a net basis. A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available 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 often complex and subject to change. Original estimates are refined as and when additional information becomes known. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 150 ![]() Property, plant and equipment Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment with the exception of freehold land which is shown at cost less accumulated impairment. Except for freehold land and assets in the course of construction, the cost of property, plant and equipment is depreciated on a straight-line basis over the period of the expected useful life of the asset. For this purpose, expected lives are determined within the following limits: Freehold buildings at rates not less than 2% per annum Plant and machinery not less than 8% per annum Fixtures, fittings and vehicles not less than 20% per annum In the case of major projects, depreciation is provided from the date the project is brought into use. An asset is derecognised from the Consolidated Balance Sheet when it is sold or retired and no future economic benefits are expected from that asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Consolidated Income Statement when the asset is derecognised. 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, to the extent 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. Impairment loss or reversal of impairment is recognised in the Consolidated Income Statement as part of administrative expense. Investment properties On acquisition, an investment property is initially recognised at cost. Investment property is subsequently recognised at cost less accumulated impairment and is presented as a separate line on the Consolidated Balance Sheet. Gains or losses on disposal are recognised within administrative expenses in the Consolidated Income Statement. Other intangible assets Other intangible assets comprise brands and software. Brands An acquired brand is only recognised on the Consolidated Balance Sheet where it is supported by a registered trademark, where brand earnings are separately identifiable or the brand could be sold separately from the rest of the business. Brands acquired as part of a business combination are recorded in the Consolidated Balance Sheet at fair value at the date of acquisition. Trademarks, patents and purchased brands are recorded at cost less accumulated impairment. The Directors believe that acquired brands have indefinite lives because, having considered all relevant factors, there is no foreseeable limit to the period over which the brands are expected to generate net cash inflows for the Group. Further, the Directors have the intention and the ability to maintain the brands. In forming this conclusion the Directors have not taken into consideration planned future expenditure in excess of that required to maintain the asset at that standard of performance. In accordance with IAS 36 Impairment of Assets, as the brands have indefinite lives they are tested for impairment annually, and more frequently where there is an indication that the asset may be impaired. The method used for impairment testing is similar to that used for goodwill whereby the brand is allocated to a CGU based on the smallest identifiable group of assets that generate independent cash inflows. The recoverable amount of the CGU is determined as the higher of the asset’s fair value less costs of disposal and the value- in-use. An impairment arises if the recoverable amount of the CGU is less than the carrying amount. Any impairment is recognised immediately in the Consolidated Income Statement. 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 an impairment loss is recognised immediately in the Consolidated Income Statement. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 151 ![]() 1. ACCOUNTING POLICIES CONTINUED Software Expenditure on research activities is recognised in the Consolidated Income Statement as an expense as incurred. Expenditure on development activities directly attributable to the design and testing of identifiable software products and systems are capitalised if the product or systems meet the following criteria: • The completion of the development is technically and commercially feasible to complete, • Adequate technical resources are sufficiently available to complete development, • It can be demonstrated that future economic benefits are probable, and • 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 costs 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 at which they come into use. Leases Lessee accounting 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, except for short-term leases and leases of low-value assets where the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. The use of these exemptions does not have a material impact. Right-of-use assets At commencement date, right-of-use assets are measured at cost, which comprises the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. After initial recognition right-of-use assets are depreciated on a straight-line basis over the shorter period of lease term and useful life of the underlying asset. They are also assessed for impairment where indicators of impairment exist. Lease liabilities Lease liabilities are initially measured at the present value of the lease payments, excluding those paid at the commencement date, discounted at the rate implicit in the lease, or if that cannot be readily determined, at the Group’s incremental borrowing rate specific to the term, country, currency and start date of the lease. Lease payments included in the measurement of the lease liability comprise: • Fixed lease payments (including in substance fixed payments), less any lease incentives receivable, • Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date, • The exercise price of a purchase option if the Group is reasonably certain to exercise that option, and • Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. Variable lease payments that do not depend on an index or rate are recognised as an expense in the period in which the event or condition that triggers those payments occurs. The carrying value of the lease liability is subsequently increased to reflect interest on the lease liability and reduced by the lease payment made. The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. Lease liabilities are presented as a separate line in the Consolidated Balance Sheet, within current and non-current liabilities. As a practical expedient, IFRS 16 Leases 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. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 152 ![]() Lessor accounting When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. If this is the case the lease is a classified as a finance lease, otherwise as an operating lease. Operating leases If a lease is classified as an operating lease, the Group does not derecognise the underlying asset from its balance sheet and continues to recognise depreciation and impairment losses on the asset. Rental income arising from operating leases is accounted for on a straight-line basis over the lease term and is included in administrative expense in the Consolidated Income Statement. Finance Leases If a lease is classified as a finance lease, the Group derecognises the underlying asset from its balance sheet and recognises a lease receivable at an amount equal to the net investment in the lease. The net investment in the lease is the present value of the lease payments and any unguaranteed residual value of the underlying asset, discounted at the interest rate implicit in the lease. The Group recognises finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Group presents the lease receivable in Trade and other receivables on the Consolidated Balance Sheet. Inventories 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 their present location and condition. Cost is calculated based on standard costs based on normal operating conditions 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 the Consolidated Income Statement. Assets held for sale Non-current assets and groups of assets and liabilities which comprise disposal groups are classified as ‘held for sale’ when their carrying amount will be recoverable principally through a sale transaction rather than through continuing use. To be classified as a ‘held for sale’ asset or disposal group, the sale must be highly probable and the assets must 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 the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn; and • A sale has been agreed or is expected to be concluded within 12 months of the balance sheet date. Immediately prior to classification as held for sale, the value of the assets or groups of assets is remeasured in accordance with the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Items. Subsequently, assets and disposal groups classified as held for sale are measured at the lower of book value or fair value less disposal costs. Assets held for sale are neither depreciated nor amortised. Cash, cash equivalents and bank overdrafts 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 into known amounts of cash and insignificant risk of changes in value. Bank overdrafts are repayable on demand and form part of the Group’s cash management arrangements. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 153 ![]() 1. ACCOUNTING POLICIES CONTINUED Financial instruments Financial assets and financial liabilities are recognised on the Consolidated Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. Derivative financial instruments The Group uses derivative financial instruments such as forward foreign exchange contracts and interest rate caps to manage its exposures to risks associated with foreign currency and interest rate fluctuations. These instruments are measured at fair value. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the Consolidated Income Statement. Derivatives designated as cash flow hedges Derivatives designated as the hedging instruments are classified at inception of hedge relationship as cash flow hedges. There are no fair value hedges or net investment hedges in the Group. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in the hedging reserve. Ineffective portions are recognised in profit or loss immediately. When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item when it is recognised. For all other transactions, the amounts accumulated in the hedging reserve are recycled to the Consolidated Income Statement in the period (or periods) when the hedged item affects the Consolidated Income Statement. Financial assets At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. The Group classifies its financial assets in the following measurement categories: • those to be measured subsequently at fair value (either through other comprehensive income or profit or loss); and • those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. The Group’s financial assets subsequently measured at either amortised cost or fair value through profit or loss, depending on their classification. Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantiall y all the risks and rewards of the ownership of the asset are transferred to another party, or (c) control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions . (a) Trade receivables Trade and other receivables are initially measured at transaction price, and subsequently at amortised cost. The amortised cost for trade and other receivables is generally equivalent to the invoiced amount less allowance for expected credit losses (ECL). The ECL is based on the difference between the contractual cash flows due in accordance with the contract and the present value of all the cash flows that the Group expects to receive. The Group has elected to use the simplified approach in calculating ECL and recognises a loss allowance based on lifetime ECLs at each reporting date (i.e. the expected credit losses that will result from all possible default events over the expected life of the financial instrument). The Group has applied the practical expedient to calculate ECLs using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date. Trade receivables are fully impaired and subsequently written off when all possible routes through which amounts can be recovered have been exhausted. The Group recognises any impairment gain or loss in the Consolidated Income Statement with a corresponding adjustment to the financial asset’s carrying amount through a loss allowance account. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 154 ![]() (b) Loans to joint ventures The Group’s loans to the joint venture (presented in the Consolidated Balance Sheet as part of the ‘net investment in joint ventures’) are measured initially at fair value and is subsequently held at amortised cost less an ECL allowance. The loans are assessed for an ECL allowance as follows: • Where there has been a significant increase in credit risk since initial recognition – the Group measures ECL based 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. • Where there has not been a significant increase in credit risk since initial recognition – the Group measures the 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. In assessing whether the credit risk has increased significantly on the loan to the joint venture since initial 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, in particular, the financial and operational performance of a joint venture, changes to the financial forecasts or increases in credit risk on other receivables. Any associated loss allowance related to loans to joint ventures is recorded in administration expense in the Consolidated Income Statement. Financial liabilities and equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements 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. (a) Interest bearing loans and borrowings Interest-bearing bank loans, borrowings and overdrafts are initially recorded at fair value, net of directly related fees, and are subsequently measured at amortised cost using the effective interest rate method. Gains and losses arising on the repurchase, settlement or other cancellation of interest-bearing loans and borrowings are recognised in finance income and finance costs, respectively. (b) Trade payables Trade payables are initially recognised at fair value, normally being the invoiced amounts, and subsequently measured at amortised cost, using the effective interest rate method. (c) Trade payables under vendor financing arrangements The Group may from time to time enter into arrangements with a bank or banking partners under which the bank offers vendors the option to receive early settlement of its trade receivables. Vendors using such arrangement pay a fee to the bank. The Group does not pay any fees and does not provide any additional collateral or guarantee to the bank. Based on the Group’s assessment the liabilities under the vendor advance arrangement are closely related to operating purchase activities with no significant change in the nature or function of the liabilities. These liabilities are therefore classified as trade payables with separate disclosures in the notes to the Consolidated Financial Statements. The credit period does not exceed 12 months and are not discounted. As at the reporting date, trade payables under vendor financing arrangements were £nil (2023: £nil), see note 20. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 155 ![]() 1. ACCOUNTING POLICIES CONTINUED Share capital and reserves (a) Treasury shares When shares recognised as equity are repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a charge to equity. Repurchased shares are classified as treasury shares and are presented as a deduction from equity attributable to Company’s equity holders. When Treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity attributable to Company’s equity holders. (b) Reserves The types of reserves presented in the consolidated statement of changes in equity are: • Capital redemption reserve: Includes amounts in respect of the redemption of certain of the Company’s ordinary shares. • Hedging reserve: Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised in the hedging reserve through other comprehensive income. • Currency translation reserve: The currency translation reserve recognises the cumulative effect of foreign exchange differences arising on translation of the Group’s overseas operations from their local functional currency to the Group’s presentational currency. Retirement benefit and similar obligations The Group operates retirement benefit schemes in the UK and for certain overseas operations. In the UK, these comprise defined benefit schemes, each of which was closed to future accrual on 31 May 2008, and defined contribution schemes. Overseas schemes are predominantly defined contribution schemes, with the exception of PZ Cussons Indonesia, which operates a defined benefit scheme. The Group accounts for its defined benefit schemes under IAS 19 Employee Benefits. The deficit/surplus of the defined benefit pension schemes is recognised in the Consolidated Balance Sheet (with surpluses only recognised to the extent that the Group has an unconditional right to a refund) and represents the difference between the fair value of the plan assets and the present value of the defined benefit obligation at the balance sheet date. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. Pension charges/ income recognised in the Consolidated Income Statement consists of administration charges for the scheme, past service costs and a cost/income based on the net interest expense/income on net pension scheme liabilities/surpluses. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset. Past service cost is recognised in profit or loss when the plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Remeasurements comprising actuarial gains and losses, the effect of the asset ceiling and the return on plan assets (excluding interest) are included directly in other comprehensive income. Payments to defined contribution retirement benefit schemes are charged as an expense when employees have rendered service entitling them to the contributions. Share-based payments The Group operates a number of long-term incentive schemes which provide share awards to Executive Directors and certain senior employees. The Group also operates a Share Incentive Plan (SIP) scheme which is open to UK employees. The awards under these plans 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, where they apply, and service conditions. At each balance sheet date, the estimate of the number of awards that are expected to vest is assessed, and the impact of the revision, if any, is recognised in the Consolidated Income Statement, with a corresponding adjustment to equity. Dividend distributions Dividend distributions which are subject to shareholder approval are recognised as a liability in the period in which the approval is given. Interim dividends, which do not require shareholder approval, are recognised when paid. Consideration of climate change In preparing the Consolidated Financial Statements, management have considered the impact of climate change, particularly in the context of the risks identified in the TCFD disclosures on pages 38 to 41. There has been no material impact identified on the financial reporting judgements and estimates. In particular, management considered the impact of climate change in respect of the following areas: • Assessment of impairment of goodwill, other intangibles and tangible assets • Assessment of impairment of financial assets • Going concern and viability disclosures • Impact on useful economic lives of assets • Preparation of budgets and cash flow forecasts. Given the low value of short to medium-term risk to these areas assessed in the TCFD report, no climate change related impact was identified. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 156 ![]() The viability assessment on pages 51 to 53 includes an assessment of severe but plausible scenarios, including climate change risks, with the potential to impact future performance but none of these are considered likely to give rise to a trading deterioration of the magnitude indicated by the stress testing or to threaten the viability of the business over the five-year assessment period. Management are, however, aware of the changing nature of risks associated with climate change and will regularly assess these risks against judgements and estimates made in preparation of the Consolidated Financial Statements. Accounting estimates and judgements The Group’s material accounting policies under IFRS have been set by management with the approval of the Audit and Risk Committee. The application of these policies requires management to make assumptions and estimates about future events. The resulting accounting estimates will, by definition, differ from the actual results. Estimates and 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. Key sources of estimation uncertainty Pensions The cost of defined benefit pension schemes and the present value of the pension obligation are determined using actuarial assumptions in those valuations. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Significant differences in actual experience or significant changes in key assumptions could affect the retirement benefit surplus/obligations and the net interest expense. In determining the discount rate, management considers the interest rates of corporate bonds with at least an ‘AA’ rating or above and having terms to maturity approximating to the terms of the related pension obligation to be appropriate. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and pension increases are based on expected future inflation rates for the respective countries. See note 23 for details of key estimates and assumptions applied in valuing the pension schemes. Current taxation Current taxation liabilities/assets relate to the expected amount of taxation to be paid/received as a result of the operating performance of the Group’s entities. In calculating the appropriate taxation 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 otherwise remain to be agreed with relevant tax authorities, an estimate of any resulting financial impact may be recorded in the Consolidated Financial Statements. Any such management estimates are made in accordance with IFRS requirements, including IAS 12 Income Taxes and IFRIC 23 Uncertainty over Income Tax Treatments when considering income tax and IAS 37 Provisions, Contingent Liabilities and Contingent Assets 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 a future date, the final outcome may differ significantly from the original amounts recorded. Where the eventual taxation paid or reclaimed is different to the amounts originally estimated, the difference will be charged or credited to the income statement in the period in which it is determined. Included within the current taxation liability of the Group are current taxation estimates with net carrying values as at 31 May 2024 of £24.7 million (2023: £25.2 million), of which £23.2 million (2023: £20.1 million) relates to a single estimate arising due to a difference in technical standpoint between PZ Cussons plc and a tax authority on a subjective and complex piece of legislation. Due to the known difference in technical standpoint, this potential taxation liability has been provided for in full as the range of possible outcomes could be a liability up to the full value of the provided amount, however the potential future settlement remains a cash risk. In addition to the provision items indicated above, as at 31 May 2024 the Group had further contingent taxation liabilities of £14.4 million (2023: £7.8 million) and contingent assets of £1.2 million (2023: £2.2 million). The in-year increase in contingent liabilities is primarily related to a recent overseas court verdict that found against the Group, which is expected to be appealed, and the possible cross-over risk into later years. Other primary risks include the historical impact of licencing arrangements and more speculative claims made by overseas tax authorities, with external third-party opinions supporting the recognition of such items as having less than a probable risk of crystallisation. Although having a lower probability of a material financial impact. Such positions have been disclosed as contingent assets/liabilities in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Deferred taxation assets Deferred taxation is provided on temporary differences between the carrying amounts of assets and liabilities recognised for financial reporting purposes and the amounts used for taxation purposes, on an undiscounted basis. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates enacted or substantively enacted at the financial year-end date. A deferred taxation asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred taxation assets are recognised for unused tax losses to the extent that it is probable that future taxable profits will be available against which they can be used. At 31 May 2024, the Group recorded a deferred taxation asset of £36.8 million (2023: £3.6 million) on recognised but unused tax losses; the increase being largely due to FX losses arising as a result of the Nigerian Naira devaluation. The Group has concluded that the deferred taxation assets will be recoverable as it is probable that the related taxation benefit will be realised in the foreseeable future. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 157 ![]() 1. ACCOUNTING POLICIES CONTINUED Assessment of impairment of goodwill and other indefinite life assets Goodwill and brands have all arisen from business combinations and all have indefinite useful lives and, in accordance with IAS 36 Impairment of Assets, are subject to annual impairment testing (which the Group carries out at the year-end date), or more frequently if there are indicators of impairment. The method used for impairment testing is to allocate assets (including goodwill and brands) to appropriate CGUs based on the smallest identifiable group of assets that generate independent cash inflows, and to estimate the recoverable amounts of the CGUs as the higher of the asset’s fair values less costs of disposal and the value-in-use. For the purposes of goodwill impairment testing, goodwill related to each of the Beauty brands is aggregated together into the Beauty CGU as this is manner in which the core assets are used to generate cash flows and is the lowest level at whch goodwill is monitored by management. Value- in-use is determined using cash flow projections from approved budgets and plans which are then extrapolated based on estimated long-term growth rates applicable to the markets and geographies in which the CGUs operate. The cash flow projections are discounted based on a pre-tax weighted average cost of capital for comparable companies operating in similar markets and geographies as the Group adjusted for risks specific to the particular CGU. The assumptions used in the cash flow projections, and associated sensitivities, are described and set out in note 10. Assessment of useful lives of acquired brands The Directors are required to assess whether the useful lives of acquired brands are finite or indefinite. Under IAS 38 Intangible Assets, an intangible asset should be regarded as having an indefinite useful life when, based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. In determining that the acquired brands have indefinite lives, the Directors give consideration to such 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. The carrying value of brands within intangible assets as at 31 May 2024 was £206.3 million (2023: £230.8 million), and if, for example, the useful lives of brands were estimated to be 50 years based on their strength and durability, this would give rise to an annual amortisation charge of £4.1 million (2023: £4.6 million). Critical areas of judgement Permanent as equity balances Common with many groups, subsidiaries within the Group enter into transactions with fellow subsidiaries. These transactions give rise to intragroup receivable/payable balances which, given the different functional currencies of subsidiaries, can mean certain of these receivable/payable balances will be denominated in foreign currency for one of the counterparties or, in some instances, both counterparties. The retranslation of these intragroup foreign currency balances gives rise to foreign currency exchange differences, and IAS 21 The Effects of Changes in Foreign Exchange Rates provides guidance on the classification of these differences. More specifically, in relation to Consolidated Financial Statements, IAS 21 provides guidance when settlement of these balances is neither planned nor likely to occur in the foreseeable future in which case such balances can be considered permanent as equity. Under these circumstances, which also extends to amounts lent to equity method investments, exchange differences on consolidation are classified as other comprehensive income within the currency translation reserve. Judgement is required when assessing when the permanent as equity criteria are met. During the year, the Group de-designated the loans to its joint venture, PZ Wilmar Limited, and with fellow subsidiary undertakings from permanent as equity when, reflecting upon developments in the current year, it was determined that it could no longer be demonstrated that there was no intent or expectation to demand repayment. The determination of the date of de-designation involved some judgement. Management consider the repayments made during the year and the announced plan to undertake a strategic review of the Group's Africa operations to be the two specific dates that triggered de-designation, for the loans to the joint venture undertaking and with subsidiary undertakings respectively. From the date of de-designation, the foreign currency exchange differences on these loans were included in the Consolidated Income Statement. A net credit of £1.0 million was included in the 2024 Consolidated Income Statement in relation to the foreign currency exchange differences arising on loans to the joint venture and a net charge of £1.4 million was included in the 2024 Consolidated Income Statement in relation to the foreign currency exchange differences on loans with fellow subsidiary undertakings. 2. SEGMENTAL ANALYSIS The segmental information presented in this note is consistent with management reporting provided to the Executive Committee (ExCo) (formerly 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. The CODM considers the business from a geographic perspective, with Europe & the Americas, Asia Pacific and Africa being the operating segments. In accordance with IFRS 8 Operating Segments, the ExCo has identified these as the reportable segments. The CODM assesses the performance based on operating profit before adjusting items. Revenue and operating profit of the Europe & the Americas and Asia Pacific segments arise from the sale of Hygiene, Beauty and Baby products. Revenue and operating profit from the Africa segment also arise from the sale of Hygiene, Beauty and Baby products as well as Electrical products. The prices between Group companies for intra-group sales of materials, manufactured goods, and charges for franchise fees and royalties are on an arm’s length basis. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 158 ![]() Central includes expenditure associated with the global headquarters and above market functions net of recharges to our regions and our in- house fragrance revenue. Reporting used by the CODM to assess performance does contain information about brand specific performance, however global segmentation between the portfolio of brands is not part of the regular internally reported financial information. (a) Reportable segments | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Europe & the | | | | | | | | Americas | Asia Pacific | Africa | Central | Eliminations | Total | | 2024 | £m | £m | £m | £m | £m | £m | | Gross segment revenue | 204.1 | 179.2 | 151.7 | 34.2 | (41.3) | 527.9 | | Inter-segment revenue | (3.4) | (4.0) | — | (33.9) | 41.3 | — | | Revenue | 200.7 | 175.2 | 151.7 | 0.3 | — | 527.9 | | Segmental operating profit/(loss)before | | | | | | | | adjusting items and share of results of joint | | | | | | | | venture | 32.6 | 28.0 | 19.6 | (32.6) | — | 47.6 | | Share of results of joint venture | — | — | 10.7 | — | — | 10.7 | | Segmental operating profit/(loss)before | | | | | | | | adjusting items | 32.6 | 28.0 | 30.3 | (32.6) | — | 58.3 | | Adjusting items | (31.9) | (1.0) | (81.0) | (28.1) | — | (142.0) | | Segmental operating profit/(loss) | 0.7 | 27.0 | (50.7) | (60.7) | — | (83.7) | | Finance income | | | | | | 12.2 | | Finance expense | | | | | | (24.2) | | Net monetary loss arising from hyperinflationary | | | | | | | | economies | | | | | | (0.2) | | Loss before taxation | | | | | | (95.9) | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Europe & the | | | | | | | | Americas | Asia Pacific | Africa | Central | Eliminations | Total | | 2023 | £m | £m | £m | £m | £m | £m | | Gross segment revenue | 210.2 | 197.8 | 256.3 | 74.0 | (82.0) | 656.3 | | Inter-segment revenue | (4.4) | (7.1) | — | (70.5) | 82.0 | — | | Revenue | 205.8 | 190.7 | 256.3 | 3.5 | — | 656.3 | | Segmental operating profit/(loss)before | | | | | | | | adjusting items and share of results of joint | | | | | | | | venture | 29.3 | 27.5 | 29.7 | (20.7) | — | 65.8 | | Share of results of joint venture | — | — | 7.5 | — | — | 7.5 | | Segmental operating profit/(loss)before | | | | | | | | adjusting items | 29.3 | 27.5 | 37.2 | (20.7) | — | 73.3 | | Adjusting items | (28.9) | 2.1 | 11.1 | 2.1 | — | (13.6) | | Segmental operating profit/(loss) | 0.4 | 29.6 | 48.3 | (18.6) | — | 59.7 | | Finance income | | | | | | 15.4 | | Finance expense | | | | | | (13.3) | | Profit before taxation | | | | | | 61.8 | Segment assets and liabilities are not disclosed because they are not reported to nor reviewed by the CODM. UK revenue for 2024 was £179.6 million (2023: £177.9 million) and Nigeria revenue for 2024 was £126.0 million (2023: £227.9 million). UK non-current assets at 31 May 2024 were £274.4 million (2023: £307.8 million) and Nigeria non-current assets at 31 May 2024 were £10.0 million (2023: £85.8 million). STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 159 ![]() 2. SEGMENTAL ANALYSIS CONTINUED The Group analyses its revenue by the following categories: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Hygiene | 289.1 | 334.8 | | Baby | 106.9 | 123.1 | | Beauty | 68.3 | 85.3 | | Electricals | 56.6 | 105.4 | | Other | 7.0 | 7.7 | | | 527.9 | 656.3 | No single customer generates revenue greater than 10% of the consolidated revenue. 3. ADJUSTING ITEMS Adjusting item expense/(income) comprised: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Simplification and transformation¹ | 10.1 | 2.9 | | Acquisition and disposal-related items² | (1.4) | (0.7) | | Impairment charge (netofimpairmentreversal)¹ | 24.4 | 10.1 | | Foreign exchange losses on Nigerian Naira devaluation³ | 104.1 | — | | Foreign exchange losses on Nigerian Naira devaluation on joint venture⁴ | 3.4 | — | | Adjusting items before taxation | 140.6 | 12.3 | | Taxation | (30.6) | (4.7) | | Adjusting items after taxation | 110.0 | 7.6 | 1 Included in administrative expense in the Consolidated Income Statement. 2 Included in finance income in the Consolidated Income Statement. 3 £79.0 million is included in cost of sales and £25.1 million is included in administrative expense in the Consolidated Income Statement. The amount in administrative expense includes charges of £0.2 million and £1.4 million relating to the de-designation of permanent as equity loans to a joint venture and fellow subsidiary undertakings respectively (note 1). 4 Included in share of results of joint venture in the Consolidated Income Statement. This amount includes a credit of £1.2 million relating to the de-designation of permanent as equity loans payable by a joint venture undertaking to the Group (note 1). Simplification and transformation For the year ended 31 May 2024, these costs primarily relate to the following projects which commenced in 2022: three-year finance transformation project, HR simplification project and supply chain transformation project which are due to complete in 2025. In 2023, the profit on disposal of properties in Nigeria was partially offset by costs relating to the three-year finance transformation project, the HR simplification project and supply chain transformation project. Acquisition and disposal-related items For the years ended 31 May 2024 and 31 May 2023, the income relates to the remeasurement of the deferred consideration for the Childs Farm acquisition. Impairment charge (net of impairment reversal) The current year charge relates to the impairment of the Sanctuary Spa brand (note 10). In the prior year, the impairment charge, net of reversal, comprises a £16.5 million impairment of the Sanctuary Spa brand, a £4.2 million reversal of a prior period impairment of the Rafferty’s Garden brand and a reversal of a £2.2 million previously recognised impairment in the Group’s investment in joint venture Wilmar PZ International Pte. Limited, which was dissolved in May 2023 (note 14). Foreign exchange losses arising on Nigerian Naira devaluation (including on joint venture) For the year ended 31 May 2024, this primarily relates to realised and unrealised foreign exchange losses resulting from the Nigerian Naira devaluation during the financial year on USD denominated liabilities which existed at 31 May 2023. As outlined in footnotes 3 and 4 above, this also includes a net charge of £0.4 million relating to the de-designation of permanent as equity loans to a joint venture undertaking and with susidiary undertakings (note 1). The closing NGN/GBP rate at reporting date was 1,893 (2023: 577), and the average NGN/GBP for the current year was 1,257 (2023: 536). #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 160 ![]() 4. (LOSS)/PROFIT FOR THE YEAR (Loss)/profit for the year has been arrived at after charging/(crediting): | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Net foreign exchange losses | (124.6) | 5.1 | | Research and development costs | 0.5 | 0.5 | | Depreciation of property, plant and equipment | 7.0 | 8.2 | | Depreciation of right-of-use assets | 3.2 | 3.9 | | Profit on disposal of property, plant and equipment | (1.8) | (11.1 ) | | Amortisation of intangible assets | 7.1 | 7.0 | | Impairment of intangible assets, net of impairment reversal (note10) | 24.4 | 12.3 | Auditor remuneration An analysis of auditor remuneration is provided below: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Fees payable to the Company’s Auditor for the audit of the Company’s annual financial statements and consolidation | 2.3 | 2.2 | | Fees payable to the Company’s Auditor and their associates for other services to the Group: | | | | –auditoftheCompany’s subsidiaries | 1.7 | 0.8 | | Fees payable to the Company’s previous Auditor and their associates for other services to the Group: | | | | –auditoftheCompany’s subsidiaries | 0.4 | — | | Total audit fees | 4.4 | 3.0 | | Fees payable to the Company’s Auditor and its associates for other services: | | | | –Otherassuranceservices 1 | 0.3 | — | | Total fees for non-audit services | 0.3 | — | | Total auditor's remuneration | 4.7 | 3.0 | 1 Fees for permitted non-audit services paid to the Company’s auditor included £300,000 (2023: £40,000) for the review of the Group’s interim statement released in February 2024. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 161 ![]() 5. EMPLOYEES The average monthly number of employees (including Executive Directors) was as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | number | number | | Production | 1,621 | 1,647 | | Selling and distribution | 599 | 613 | | Administration | 347 | 412 | | | 2,567 | 2,672 | Costs incurred in respect of the above were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Wages and salaries1 | 69.2 | 76.9 | | Social security costs1 | 5.1 | 4.5 | | Pension costs | 3.5 | 4.1 | | Share-based payments | 1.9 | 1.7 | | | 79.7 | 87.2 | 1 The 2023 wages and salaries cost and social security costs have been amended from £74.7 million and £4.2 million respectively to £76.9 million and £4.5 million respectively. These amendments have no impact on the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Cash Flow Statement and Consolidated Statement of Changes in Equity for any period presented. Pension costs (note 23) consist of: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Defined benefit schemes | 1.3 | 1.5 | | Defined contribution schemes | 1.9 | 2.4 | | Nigerian gratuity scheme | 0.3 | 0.6 | | Other post-employment benefits | — | (0.4) | | | 3.5 | 4.1 | 6. NET FINANCE EXPENSE/(INCOME) | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Interest receivable on cash and cash equivalents held | (8.9) | (11.1) | | Interest receivable on loans to joint venture | — | (0.7) | | Finance income on defined benefit pension schemes | (1.9) | (2.3) | | Change in fair value of deferred consideration | (1.4) | (1.3) | | Finance income | (12.2) | (15.4) | | Interest payable on borrowings | 22.2 | 11.3 | | Finance expense on defined benefit pension schemes | 0.6 | 0.6 | | Interest expense on lease liabilities | 0.5 | 0.5 | | Amortisation of financing fees | 0.9 | 0.9 | | Finance expense | 24.2 | 13.3 | | Net finance expense/(income) | 12.0 | (2.1) | #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 162 ![]() 7. TAXATION | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Current taxation | | | | UK corporation tax | | | | –currentyear | 5.2 | (2.2) | | –adjustmentsinrespect of prior years | 3.5 | (0.3) | | –doubletaxation relief | — | (0.5) | | | 8.7 | (3.0) | | Overseas corporation tax | | | | –currentyear | 11.6 | 26.3 | | –adjustmentsinrespect of prior years | (0.8) | 0.8 | | | 10.8 | 27.1 | | Total current taxation charge | 19.5 | 24.1 | | Deferred taxation | | | | Origination and reversal of temporary timing differences | (38.0) | (6.2) | | Adjustments in respect of prior years | (6.4) | (2.3) | | Effect of rate change adjustments | 0.8 | (0.2) | | Total deferred taxation credit | (43.6) | (8.7) | | Total taxation (credit)/charge | (24.1) | 15.4 | | Analysed as: | | | | Taxation on profit before adjusting items | 6.5 | 20.1 | | Taxation on adjusting items | (30.6) | (4.7) | | | (24.1) | 15.4 | The effective tax rate in relation to continuing operations for the year is 25.1% (2023: 24.9%). Before adjusting items, the effective tax rate was 14.5% (2023: 27.1%), primarily due to the impact of the minimum tax regime in Nigeria as a result of the recognised statutory operating losses, and the tax deductibility of realised foreign exchange impacts arising as a result of the cash repatriation from Nigeria to the UK. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 163 ![]() 7. TAXATION CONTINUED UK corporation tax is calculated at 25.0% (2023: 20.0%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The Group has chosen to use the UK corporation tax rate for the reconciliation of the tax charge for the year to the profit before taxation as this is the seat for the central management and control of the Group. | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | (Loss)/profit before taxation | (95.9) | 61.8 | | Taxation at the UK corporation tax rate of 25% (2023:20%) | (24.0) | 12.4 | | Adjusted for: | | | | Effect of non-deductible expenses | 6.4 | 2.2 | | Effect of non-taxable income | (3.7) | (4.9) | | Effect of rate changes on deferred taxation (allterritories) | 0.8 | (0.5) | | Taxation effect of share of results of joint venture | (2.4) | (2.2) | | Other taxes suffered outside of the UK | 2.1 | 3.2 | | Net adjustment to amount carried in respect of uncertain tax positions | 2.4 | (0.8) | | Movements in deferred taxation assets not recognised | 1.7 | (0.6) | | Adjustments in respect of prior years | (3.7) | (1.5) | | Differences in overseas rates | (3.7) | 8.1 | | Taxation (credit)/charge for the year | (24.1) | 15.4 | Primary reconciling differences between taxation at UK corporation tax rate and the actual taxation charge for the year include the following: • Net increase to the amount carried in respect of uncertain tax positions £2.4 million (2023: £0.8 million decrease) • Effect of non-deductible expenses of £6.4 million (2023: £2.2 million) include items considered non-deductible across the Group’s various operating entities, including disallowances in respect of related party transactions • Effect of non-taxable income of £3.7 million (2023: £4.9 million) include items considered non-taxable across the Group's various operating entities including non-taxable income in respect of related party transactions • Other taxes suffered outside the UK increased the annual taxation charge by £2.1 million (2023: £3.2 million) and included unrelievable withholding taxes incurred on dividends received in the UK. It also includes the minimum rate of tax payable in Nigeria as a proportion of revenue, as a result of there being no taxable profits on which corporation tax would be assessable due to the material realised and unrealised FX losses during the period • Differences in foreign tax rates during the year of £3.7 million (2023: £8.1 million) reflecting the Group profitability profile in overseas jurisdictions. Taxation on items taken directly to equity and other comprehensive expense was a credit of £14.9 million (2023: £8.9 million charge) and related to deferred taxation on the remeasurement of retirement and other long-term benefit obligations, on share-based payments expense and on exchange differences on intercompany balances determined to be permanent as equity. 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 whose tax treatment cannot be finally determined until resolution. Included within the current taxation liability of the Group are current taxation estimates with net carrying values as at 31 May 2024 of £24.7 million (2023: £25.2 million), of which £23.2 million (2023: £20.1 million) relates to a single estimate arising due to a difference in technical standpoint between PZ Cussons plc and a tax authority on a subjective and complex piece of legislation. Due to the known difference in technical standpoint, this potential taxation liability has been provided for in full as the range of possible outcomes could be a liability up to the full value of the provided amount, however the potential future settlement remains a cash risk. In addition to the provision items indicated above, as at 31 May 2024 the Group had further contingent taxation liabilities of £14.4 million (2023: £7.8 million) and contingent assets of £1.2 million (2023: £2.2 million). The in-year increase in contingent liabilities is primarily related to a recent overseas court verdict that found against the Group, which is expected to be appealed, and the possible cross-over risk into later years. Other primary risks include the historical impact of licencing arrangements and more speculative claims made by overseas tax authorities, with external third-party opinions supporting the recognition of such items as having less than a probable risk of crystallisation. Although having a lower probability of a material financial impact. Such positions have been disclosed as contingent assets/liabilities in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 164 ![]() On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multi-national top-up tax effective for accounting periods on or after 31 December 2023. The Group is assessing the impact of the new legislation which will be effective for the Group from 1 June 2024. The Group has applied the exception allowed by an amendment to IAS 12 Income Taxes to recognising and disclosing information about deferred tax assets and liabilities relating to top-up income taxes. 8. DIVIDENDS | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Amounts recognised as distributions to ordinary shareholders in the year comprise: | | | | Final dividend for the year ended 31 May 2023 of 3.73p (2022:3.73p)perordinaryshare | 15.6 | 15.6 | | Interim dividend for the year ended 31 May 2024 of 1.50p (2023:2.67p)perordinaryshare | 6.3 | 11.2 | | | 21.9 | 26.8 | After the balance sheet date, the Board announced its intention to declare an interim dividend of 2.10p per share, down 44% compared to last year's final dividend of 3.73p. This represents a full year dividend of 3.60p which is also down 44%, reflecting the impact of the Naira devaluation on earnings per share while maintaining an earnings cover of approximately two times. This results in a total dividend of £8.8 million (2023: £15.6 million). The dividend will be paid on 4 December 2024 to the shareholders on the register on 1 November 2024. The proposed dividend has not been included as a liability in the consolidated financial statements as at 31 May 2024. 9. (LOSS)/EARNINGS PER SHARE Earnings per share (EPS) represents the amount of earnings attributable to each ordinary share in issue. Basic EPS is calculated by dividing the (loss)/profit after taxation attributable to owners of the Parent by the weighted average number of ordinary shares in issue during the year, excluding treasury shares owned by employee trusts. For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group’s dilutive potential ordinary shares relate to awards granted under the Group’s share incentive schemes which are described in the share-based payments note (note 25). For the year ended 31 May 2024, the basic and diluted EPS are equal as a result of the Group incurring a loss for the year. The average number of shares is reconciled to the basic weighted average and diluted weighted average number of shares as set out below: | | | | | | --- | --- | --- | --- | | | 2024 | | 2023 | | | number | | number | | | 000 | | 000 | | Average number of ordinary shares in issue during the year | 428,725 | | 428,725 | | Less: weighted average number of treasury shares | (9,693) | | (10,180) | | Basic weighted average shares in issue during the year | 419,032 | 418, | 545 | | Dilutive effect of share incentive schemes | 1,064 | | 1,530 | | Diluted weighted average shares in issue during the year | 420,096 | | 420,075 | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 165 ![]() 10. GOODWILL AND OTHER INTANGIBLE ASSETS | | | | | | | --- | --- | --- | --- | --- | | | Goodwill | Software | Brands | Total | | | £m | £m | £m | £m | | Cost | | | | | | At 1 June 2022 | 68.2 | 65.6 | 270.3 | 404.1 | | Additions | — | 2.0 | — | 2.0 | | Disposals | — | (0.5) | — | (0.5) | | Transfer to property, plant and equipment | — | (0.4) | — | (0.4) | | Exchange differences | (1.6) | (0.1) | (3.1) | (4.8) | | At 31 May 2023 | 66.6 | 66.6 | 267.2 | 400.4 | | Additions | — | 0.4 | — | 0.4 | | Exchange differences | — | (1.5) | — | (1.5) | | At 31 May 2024 | 66.6 | 65.5 | 267.2 | 399.3 | | Accumulated amortisation and impairment | | | | | | At 1 June 2022 | 11.1 | 34.6 | 24.5 | 70.2 | | Amortisation charge | — | 7.0 | — | 7.0 | | Disposals | — | (0.5) | — | (0.5) | | Impairment charge | — | — | 16.5 | 16.5 | | Impairment reversal | — | — | (4.2) | (4.2) | | Exchange differences | (0.9) | — | (0.4) | (1.3) | | At 31 May 2023 | 10.2 | 41.1 | 36.4 | 87.7 | | Amortisation charge | — | 7.1 | — | 7.1 | | Impairment charge | — | — | 24.4 | 24.4 | | Exchange differences | 1.7 | (1.0) | 0.1 | 0.8 | | At 31 May 2024 | 11.9 | 47. 2 | 60.9 | 120.0 | | Net book value | | | | | | At 31 May 2024 | 54.7 | 18.3 | 206.3 | 279.3 | | At 31 May 2023 | 56.4 | 25.5 | 230.8 | 312.7 | Amortisation and impairment are charged to administrative expense in the Consolidated Income Statement. Cumulative impairment of goodwill as at 31 May 2024 was £10.2 million (2023: £10.2 million) and cumulative impairment of brands as at 31 May 2024 was £60.8 million (2023: £36.4 million). Software includes the Group’s enterprise resource planning system (SAP), which is internally developed, and the carrying value of this asset as at 31 May 2024 is £13.7 million (2023: £20.6 million), with three years of amortisation remaining. Other than software, intangible assets comprise goodwill and brands. Goodwill and brands have all arisen from previous business combinations and all have indefinite useful lives and, in accordance with IAS 36 Impairment of Assets, are subject to annual impairment testing (which the Group carries out at the year-end date), or more frequently if there are indicators of impairment. The method used for impairment testing is to allocate assets to appropriate cash-generating units (CGUs) based on the smallest identifiable group of assets that generate independent cash inflows, and to estimate the recoverable amounts of the CGUs as the higher of the assets’ fair values less costs of disposal and the value-in-use. Impairment testing is a two-step approach commencing with the testing of brands with an indefinite useful life. Each brand is considered its own CGU for this purpose. The second step is to test goodwill for impairment. For the purposes of this test, goodwill acquired is allocated to the CGUs or groups of CGU expected to benefit from the synergies of the business combination. For this purpose goodwill related to each of the beauty brands is aggregated together into the Beauty CGU as this is manner in which the core assets are used to generate cash flows and is the lowest level at which goodwill is monitored by management. Value-in-use is determined using cash flow projections from approved budgets and plans which are then extrapolated based on estimated long-term growth rates applicable to the markets and geographies in which the CGUs operate. The cash flow projections are discounted based on a pre-tax weighted average cost of capital for comparable companies operating in similar markets and geographies as the Group adjusted for risks specific to the particular CGU. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 166 ![]() Goodwill of £54.7 million (2023: £56.4 million) comprises £40.4 million (2023: £40.4 million) in relation to the acquisitions of the Group’s Beauty brands (Charles Worthington, Fudge, Sanctuary Spa and St.Tropez), £13.5 million (2023: £13.5 million) in relation to the acquisition of Childs Farm and £0.8 million (2023: £2.5 million) in relation to other acquisitions. The movement in other goodwill in the current year relates to exchange differences. Goodwill for the Beauty brands is assessed at the Group of CGUs comprising these brands (see table below) as this represents the lowest level at which goodwill is monitored by management. The carrying value of goodwill and each brand is set out in the table below. For the impairment testing of brands, each brand is allocated to a single CGU. For the impairment testing of goodwill, Childs Farm goodwill is allocated to the same CGU as the brand and, as noted above, Beauty goodwill is allocated to the Group of CGUs comprising the Beauty brands: | | | | | | | --- | --- | --- | --- | --- | | | Goodwill | Brands | Goodwill | Brands | | | 2024 | 2024 | 2023 | 2023 | | | £m | £m | £m | £m | | Charles Worthington | | 9.6 | | 9.6 | | Fudge | | 24.6 | | 24.6 | | Sanctuary Spa | | 34.5 | | 58.9 | | St.Tropez | | 58.4 | | 58.4 | | Beauty | 40.4 | 127.1 | 40.4 | 151.5 | | Original Source | — | 9.8 | — | 9.8 | | Rafferty's Garden | — | 33.9 | — | 34.0 | | Childs Farm | 13.5 | 35.5 | 13.5 | 35.5 | | Other | 0.8 | — | 2.5 | — | | | 54.7 | 206.3 | 56.4 | 230.8 | In performing the impairment testing, the Group used the five-year plan ending 31 May 2029. Assumptions in the budgets and plans used for the value in use cash flow projections include future revenue volume and price growth rates, associated future levels of marketing support, the cost base of manufacture and supply and directly associated overheads. These assumptions are based on historical trends and future market expectations specific to each CGU and the markets and geographies in which each CGU operates. The key assumptions applied in determining value-in-use are the long-term growth rate and the discount rate, both of which are determined with reference to the markets and geographies in which the CGU (or group of CGUs) operates, and revenue growth and gross margin. The compound annual growth rates, long-term growth rates and discount rates applied in the value in use calculations used in impairment tests were: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | | Long-term | Long-term | Pre-tax | Pre-tax | | | CAGR 1 | CAGR 1 | growth rate | growth rate | discount rate | discount rate | | | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | | Charles Worthington | 6.1% | 3.4% | 2.0% | 2.0% | 11.5% | 10.1% | | Fudge | 2.3% | 6.8% | 2.0% | 2.0% | 11.7% | 10.7% | | Sanctuary Spa | 2.8% | 3.0% | 2.0% | 2.0% | 11.5% | 10.2% | | St.Tropez | 3.3% | 3.5% | 2.0% | 2.0% | 12.0% | 10.4% | | Beauty group of CGUs (goodwillassessment) | 3.2% | 3.9% | 2.0% | 2.0% | 11.6% | 10.4% | | Original Source | 9.9% | 3.2% | 2.0% | 2.0% | 11.6% | 10.5% | | Rafferty's Garden | 4.5% | 4.1% | 2.5% | 2.5% | 11.8% | 10.6% | | Childs Farm (brand and goodwill assessment) | 19.6% | 27.5% | 2.0% | 2.0% | 11.7% | 12.2% | 1 CAGR refers to the compound annual revenue growth rate over the five-year plan period. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 167 ![]() 10. GOODWILL AND OTHER INTANGIBLE ASSETS CONTINUED The results of the brand impairment tests as at 31 May 2024 were as follows: Sanctuary Spa In the year ended 31 May 2024, there was an impairment charge of £24.4 million (2023: £16.5 million) relating to the Sanctuary Spa brand, charged to administrative expense in the Consolidated Income Statement and included in the Europe & the Americas segment. The recoverable amount reflected the cost-of-living pressures and their impact on price sensitive beauty products. The recoverable amount of the CGU was determined to be £40.4 million based on a value-in-use calculation, which when compared to a carrying value of £64.8 million (of which the brand represented £58.9 million) resulted in an impairment charge of £24.4 million. The long-term growth rate and discount rate used in the value in use calculations were 2.0% and 11.5% respectively. Management has determined gross margin and compound annual revenue growth rate to be the key assumptions in the forecasts for Sanctuary Spa. Sensitivity analysis has been carried out in the year ended 31 May 2024 and a reasonably possible change of 250bps decline in gross margin within the five-year forecast period would increase the impairment charge by £7.6 million, a 200bps decline in the annual revenue growth rate over the five-year plan period, which results in a five-year compound annual revenue growth rate of 0.8%, would increase the impairment charge by £8.4 million and a 100bps increase in the discount rate would increase the impairment charge by £4.9 million. A reduction of 0.1% in compound annual revenue growth rate over the five-year plan would result in zero headroom. The same impact would be caused by a decline of 0.1% in gross margin or an increase of 0.1% in discount rate. Charles Worthington For the Charles Worthington brand, the recoverable amount of the applicable CGU which was based on a value in use calculation was determined to be £11.8 million which is in excess of the carrying value of £10.9 million (of which the brand represented £9.6 million). Management have determined gross margin and compound annual revenue growth rate to be the key assumptions in the forecasts for Charles Worthington. Sensitivity analysis has been carried out in the year ended 31 May 2024 and a reasonably possible change of 250bps decline in gross margin within the five-year forecast period would result in an impairment charge of £1.1million, a 200bps decline in annual revenue growth rate within the five-year forecast period, which results in a five-year compound annual revenue growth rate of 4.1%, would result in an impairment charge of £1.5 million and a 100bps increase in the discount rate would result in an impairment charge of £0.7 million. A reduction of 0.7% in compound annual revenue growth rate over the five-year plan would result in zero headroom. The same impact would be caused by a decline of 1.2% in gross margin or an increase of 0.6% in discount rate. Rafferty’s Garden For the Rafferty’s Garden brand, the recoverable amount of the applicable CGU based on a value-in-use calculation was determined to be £38.4 million, exceeding the carrying value of £34.9 million (of which the brand represented £33.9 million). The recoverable amount reflected expected growth from new product development and recovery in gross margin arising from cost savings in raw materials. Historical impairment charges were fully reversed in the prior year. Management has determined gross margin and compound annual revenue growth rate to be the key assumptions in the forecasts for Rafferty's Garden. Sensitivity analysis has been carried out in the year ended 31 May 2024 and a a reasonably possible change of 250bps decline in gross margin within the five-year forecast period would result in an impairment charge of £7.2 million, a 200bps decline in annual revenue growth rate within the five-year forecast period, which results in a five-year compound annual revenue growth rate of 2.5%, would result in an impairment charge of £5.5 million and a 100bps increase in the discount rate would result in an impairment charge of £2.5 million. A reduction of 0.7% in compound annual revenue growth rate over the five-year plan would result in zero headroom. The same impact would be caused by a decline of 0.8% in gross margin or an increase of 0.5% in discount rate. Other CGUs For the remaining CGUs, the recoverable amounts of the respective applicable CGUs, which were determined based on value-in-use calculations, exceeded the carrying values. Sensitivity analysis on the value-in-use calculations did not identify potential impairment in relation to a reasonably possible downside in the assumptions used for the projections. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 168 ![]() 11. PROPERTY, PLANT AND EQUIPMENT | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Fixtures, | Assets in the | | | | Land and | Plant and | fittings and | course of | | | | Buildings | machinery | vehicles | construction | Total | | | £m | £m | £m | £m | £m | | Cost | | | | | | | At 1 June 2022 | 81.3 | 124.6 | 52.1 | 5.5 | 263.5 | | Additions | — | — | 0.1 | 4.6 | 4.7 | | Disposals | (3.6) | (5.3) | (1.5) | (0.1) | (10.5) | | Transfers from intangible assets | 0.9 | 4.8 | 1.2 | (6.6) | 0.3 | | Exchange differences | (3.1) | (4.4) | (0.9) | (0.1) | (8.5) | | At 31 May 2023 | 75.5 | 119.7 | 51.0 | 3.3 | 249.5 | | Additions | — | — | — | 5.7 | 5.7 | | Disposals | (4.6) | (9.6) | (0.6) | — | (14.8) | | Transfers | 0.3 | 4.1 | 1.4 | (5.8) | — | | Hyperinflationary adjustment 1 | 1.2 | — | — | — | 1.2 | | Exchange differences | (22.7) | (34.0) | (4.9) | (0.5) | (62.1) | | At 31 May 2024 | 49.7 | 80.2 | 46.9 | 2.7 | 179.5 | | Accumulated depreciation and impairment | | | | | | | At 1 June 2022 | 36.9 | 103.0 | 48.1 | — | 188.0 | | Depreciation charge | 0.8 | 5.7 | 1.6 | — | 8.1 | | Disposals | (2.7) | (5.3) | (1.5) | — | (9.5) | | Transfers | 0.4 | — | — | — | 0.4 | | Exchange differences | (1.0) | (3.6) | (0.8) | — | (5.4) | | At 31 May 2023 | 34.4 | 99.8 | 47.4 | — | 181.6 | | Depreciation charge | 1.0 | 4.7 | 1.3 | — | 7.0 | | Disposals | (2.6) | (9.5) | (0.7) | — | (12.8) | | Exchange differences | (7.4) | (27.2) | (4.5) | — | (39.1) | | At 31 May 2024 | 25.4 | 67.8 | 43.5 | — | 136.7 | | Net book value | | | | | | | At 31 May 2024 | 24.3 | 12.4 | 3.4 | 2.7 | 42.8 | | At 31 May 2023 | 41.1 | 19.9 | 3.6 | 3.3 | 67.9 | 1 Represents a hyperinflation adjustment in relation to Ghana. Depreciation is charged to administrative expenses except for plant and machinery which is charged to cost of sales in the Consolidated Income Statement. As at 31 May 2024, the Group had entered into commitments for the purchase of property, plant and equipment amounting to £0.4 million (2023: £1.1 million). As at 31 May 2024, the Group’s share in the capital commitments of its joint venture was £nil (2023: £nil). As outlined in note 1(c), investment properties are now presented separately in note 12. The impact on the opening balances of the 2023 comparatives is a reduction of £7.2 million from property, plant and equipment, representing the investment property balances previously included in property, plant and equipment. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 169 ![]() 12. INVESTMENT PROPERTIES The movement in the year in the carrying value of investments properties is set out below: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Cost | | | | At 1 June | 7.2 | 8.5 | | Additions | 0.3 | — | | Transfers¹ | (0.9) | — | | Hyperinflation impact 2 | 3.6 | — | | Exchange differences | (3.0) | (1.3) | | At 31 May | 7.2 | 7. 2 | | Accumulated depreciation and impairment | | | | At 1 June | 0.8 | 1.1 | | Depreciation charge | 0.1 | 0.1 | | Exchange differences | (0.3) | — | | Transfers 3 | — | (0.4) | | At 31 May | 0.6 | 0.8 | | Net book value | | | | At 31 May | 6.6 | 6.4 | 1 Transfers to assets held for sale. 2 Relates to hyperinflation in Ghana. 3 Transfers to property, plant and equipment. As outlined in note 1(c), investment properties are now reported separately rather than included in the property, plant and equipment note. The impact on the opening balances of the 2023 comparatives is a reduction of £7.2 million from the cost of property, plant and equipment, representing the investment property balances previously included in property, plant and equipment. Investment properties, principally office buildings and land, are held for long-term rental yields and are not occupied by the Group. The Group classifies rental inflows as operating cash flows. The Group engages external, independent and qualified valuers to determine the fair value of the Group’s investment properties at the end of every financial year. The fair value of the investment properties at 31 May 2024 is £19.5 million (2023: £42.2 million). The main Level 3 inputs used by the Group are derived and evaluated as follows: discount rates, terminal yields, expected vacancy rates and rental growth rates which are estimated by the external surveyors or management based on comparable transactions and industry data. 13. RIGHT-OF-USE ASSETS The Group has lease contracts for various items of property, motor vehicles and other equipment used in its operations. Leases of property generally have lease terms between 3 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. The maturity analysis of future lease payments is provided in note 19. Information about the Group's right-of-use assets is outlined below: | | | | | | | --- | --- | --- | --- | --- | | | Land and | | Other | | | | Buildings | Motor vehicles | equipment | Total | | | £m | £m | £m | £m | | Additions | 1.7 | — | 0.1 | 1.8 | | Depreciation charge in the year | 2.6 | 0.4 | 0.2 | 3.2 | | Net book value at 31 May 2024 | 9.2 | 0.5 | 0.5 | 10.2 | #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 170 ![]() 14. 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. The Group’s joint venture relates to a 50% interest in PZ Wilmar Limited, a manufacturing business based in Nigeria. In the Group’s Consolidated Financial Statements, the interest in PZ Wilmar Limited is accounted for using the equity method. The movement in the year in the carrying value of the net investments in joint ventures is set out below: | | | | | | | --- | --- | --- | --- | --- | | | | PZ Wilmar Limited | | | | | Long-term | Equity method | Other joint | | | | loans | accounting | venture | Total | | | £m | £m | £m | £m | | At 1 June 2022 | 39.6 | 7.4 | (1.6) | 45.4 | | Share of results of joint venture | — | 7.5 | — | 7.5 | | Impairment reversal | — | — | 2.2 | 2.2 | | Loan waived on dissolution | — | — | (0.6) | (0.6) | | Exchange differences | 0.7 | (3.2) | — | (2.5) | | At 31 May 2023 | 40.3 | 11.7 | — | 52.0 | | Share of results of joint venture | — | 7. 3 | — | 7. 3 | | Loan repayments | (8.7) | — | — | (8.7) | | De-designation of permanent as equity loans | (30.6) | — | — | (30.6) | | Exchange differences | (1.0) | (19.0) | — | (20.0) | | At 31 May 2024 | — | — | — | — | The long-term loans are denominated in US Dollars, interest free and repayable in part or in full on demand. It is not the Group's intention to request repayment of these loans in the next 12 months. During the year, the long-term loans were de-designated from permanent as equity (notes 1 and 3). Exchange differences on the long-term loans were recorded within other comprehensive income when the loans were determined to be permanent as equity. From the date of de-designation, the exchange differences are recorded in the Consolidated Income Statement. Set out below is the summarised financial information for PZ Wilmar Limited: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Assets | | | | Non-current assets | 25.8 | 46.4 | | Current assets | | | | Cash and cash equivalents | 14.5 | 25.4 | | Other current assets | 35.7 | 83.8 | | | 50.2 | 109.2 | | Total assets | 76.0 | 155.6 | | Liabilities | | | | Non-current liabilities | (54.1) | (82.2) | | Current liabilities | (22.9) | (50.0) | | Total liabilities | (77.0) | (132.2) | | Net (liabilities)/assets | (1.0) | 23.4 | | Proportion of Group's ownership interest in the joint venture | 50% | 50% | | Equity method accounted carrying amount of the Group's interest in the joint venture | — | 11.7 | In 2024, the Group’s share of losses in the joint venture exceeded its interests in the joint venture and accordingly, the Group did not recognise further losses. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 171 ![]() 14. NET INVESTMENTS IN JOINT VENTURES CONTINUED | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Revenue | 202.6 | 380.1 | | Profit before taxation | 21.5 | 20.2 | | Profit after taxation | 14.6 | 14.9 | | Proportion of Group's ownership interest in the joint venture | 50% | 50% | | Share of results of joint venture | 7.3 | 7. 5 | The long-term loans issued to PZ Wilmar Limited have been assessed for impairment in accordance with IFRS 9 Financial Instruments and management has concluded that no impairment of these loans is required. The Group’s other joint venture related to a 50% interest in Wilmar PZ International Pte. Limited which ceased trading in October 2020 and was dissolved in May 2023 resulting in the reversal of a £2.2 million impairment recorded in a prior period. On dissolution, the loan advanced by the joint venture was waived. 15. ASSETS HELD FOR SALE Assets held for sale of £4.7 million as at 31 May 2024 (2023: £nil) were measured at book value and related to related to land and buildings which are being disposed of as part of the ongoing supply chain simplification and transformation programme, and are expected to be sold within 12 months. 16. INVENTORIES | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Raw materials and consumables | 11.5 | 21.1 | | Work in progress | 3.4 | 9.9 | | Finished goods and goods for resale | 53.6 | 81.9 | | | 68.5 | 112.9 | During the year, the cost of inventories recognised as an expense, and included in cost of sales, amounted to £287.9 million (2023: £377.5 million) which included £5.7 million (2023: £2.0 million) for the write-down to net realisable value for slow-moving and obsolete inventories. Inventories are stated after provision to write-down to net realisable value of £4.9 million (2023: £6.0 million). 17. TRADE AND OTHER RECEIVABLES | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Trade receivables | 77.5 | 92.6 | | Less: loss allowance | (2.6) | (4.4) | | Net trade receivables | 74.9 | 88.2 | | Lease receivables 1 | 1.3 | — | | Amounts owed by joint venture | 31.7 | 2.2 | | Other receivables | 14.9 | 22.1 | | Prepayments | 8.3 | 6.6 | | | 131.1 | 119.1 | | Classified within: | | | | Current assets | 99.0 | 119.1 | | Non-current assets | 32.1 | — | | | 131.1 | 119.1 | 1 Relates to the a new finance lease arrangement in the current year where the Group is the lessor. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 172 ![]() The Directors consider the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. During the year, the long-term loans of £30.6 million were de-designated from permanent as equity (note 14). From the date of de-designation, the exchange differences are recorded in the Consolidated Income Statement. The long-term loans are denominated i n US Dollars, interest free and repayable in part or in full on demand. It is not the Group’s intention to request repayment of these loans in the next 12 months. Lease receivables on an undiscounted basis comprise £0.2 million receivable in less than one year, £0.2 million receivable in one to two years, £0.7 million receivable in two to five years and £1.4 million receivable in more than five years. The impact of discounting is £1.3 million. Movement in the trade receivables loss allowance was: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | At 1 June | (4.4) | (3.9) | | Increase in loss allowance | (1.9) | (2.0) | | Allowance utilised during the year | 0.6 | 0.1 | | Allowance released during the year | 2.0 | 1.2 | | Exchange differences | 1.1 | 0.2 | | At 31 May | (2.6) | (4.4) | See note 19 for an analysis of the ageing and credit risk profile of trade receivables. Net trade receivables are denominated in the following currencies: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Sterling | 27.0 | 31.9 | | US Dollar | 11.6 | 11.2 | | Nigerian Naira | 4.7 | 10.1 | | Australian Dollar | 12.1 | 17.3 | | Indonesian Rupiah | 14.6 | 13.2 | | Other currencies | 4.9 | 4.5 | | | 74.9 | 88.2 | The relatively high amount of other receivables in 2023 is primarily attributable to the bi-weekly retail auctions operated at the time by the Central Bank of Nigeria (CBN) as the primary method of allocating foreign currency. As part of this process, the CBN required all companies to advance Naira deposits prior to the auction, following which the CBN returned all cash either in Naira or if successful in the auction, foreign currency. These auctions ceased during June 2024 following the policy announcements made by the Central Bank of Nigeria to liberalise the foreign exchange regime, and are therefore not prevalent at 31 May 2024. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 173 ![]() 18. CASH AND CASH EQUIVALENTS AND NET DEBT Cash and cash equivalents include cash at bank and in hand, short-term deposits and other highly liquid investments with original maturities of three months or less which are readily convertible into known amounts of cash with insignificant risk of changes in value. Borrowings comprise bank overdrafts, short-term uncommitted loans and amounts drawn under the Group’s committed credit facility. Bank overdrafts are repayable on demand and form a part of the Group’s cash management activities. Further details on the Group’s committed credit facility are provided in note 19. The Group defines net debt as cash and cash equivalents net of borrowings, and net debt including lease liabilities as cash and cash equivalents net of borrowings and lease liabilities. Group net debt comprises the following: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Foreign | | | | | | | exchange | | | | | 1 June 2023 | Net cash flow | movements | Other¹ | 31 May 2024 | | | £m | £m | £m | £m | £m | | Cash at bank and in hand | 127.4 | (22.7) | (55.3) | — | 49.4 | | Short-term deposits | 129.0 | (61.7) | (65.4) | — | 1.9 | | Cash and cash equivalents | 256.4 | (84.4) | (120.7) | — | 51.3 | | Current asset investment | 0.5 | (0.5) | — | — | — | | Current borrowings | — | (6.4) | 0.1 | — | (6.3) | | Non-current borrowings | (251.2) | 91.0 | — | (0.1) | (160.3) | | Net cash/(debt) | 5.7 | (0.3) | (120.6) | (0.1) | (115.3) | | Lease liabilities | (13.0) | 2.9 | 0.2 | (2.2) | (12.1) | | Net debt including lease liabilities | (7.3) | 2.6 | (120.4) | (2.3) | (127.4) | | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Foreign | | | | | | | exchange | | | | | 1 June 2022 | Net cash flow | movements | Other1 | 31 May 2023 | | | £m | £m | £m | £m | £m | | Cash at bank and in hand | 105.8 | 31.0 | (9.4) | — | 127.4 | | Short-term deposits | 58.0 | 80.9 | (9.9) | — | 129.0 | | Cash and cash equivalents | 163.8 | 111.9 | (19.3) | — | 256.4 | | Current asset investment | 0.5 | — | — | — | 0.5 | | Current borrowings | (0.1) | 0.1 | — | — | — | | Non-current borrowings | (174.0) | (7 7.2) | — | — | (251.2) | | Net (debt)/cash | (9.8) | 34.8 | (19.3) | — | 5.7 | | Lease liabilities | (16.9) | 3.0 | — | 0.9 | (13.0) | | Net debt including lease liabilities | (26.7) | 37. 8 | (19.3) | 0.9 | (7. 3) | 1 Other includes lease additions, the increase in the lease liability arising from the unwinding of interest element and the movement in the unamortised fees on borrowings. At 31 May 2024, the Group had restricted cash of £0.7 million (2023: £0.7 million). At 31 May 2024, £20.0 million (2023: £204.1 million) of the cash and cash equivalents was held by the Group’s Nigerian subsidiaries. At 31 May 2024, the Sterling equivalent of Nigerian Naira cash balances are materially reduced, both as a result of the devaluation of the Nigerian Naira occurring during FY24 and the successful cash repatriation from Nigeria to the UK. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 174 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (a) Financial instruments The carrying amounts of each class of financial instruments were: Financial assets | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Derivatives designated as hedging instruments | | | | Forward foreign exchange contracts | — | 0.8 | | Derivatives not designated as hedging instruments | | | | Forward foreign exchange contracts | — | 0.2 | | Equity instruments at fair value through profit or loss | | | | Current asset investments | — | 0.5 | | Financial assets at amortised cost | | | | Cash and cash equivalents | 51.3 | 256.4 | | Net trade and other receivables | 89.8 | 110.3 | | Lease receivables | 1.3 | — | | Trade receivables owed by joint venture | 1.1 | 2.2 | | Long-term loans owed by joint venture | 30.6 | 40.3 | | | 174.1 | 410.7 | | Classified within: | | | | Current assets | 142.0 | 370.4 | | Non-current assets | 32.1 | 40.3 | | | 174.1 | 410.7 | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 175 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED Financial liabilities | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Current interest-bearing borrowings at amortised cost | | | | Borrowings | 6.3 | — | | Non-current interest-bearing borrowings at amortised cost | | | | Borrowings | 160.3 | 251.2 | | Derivatives designated as hedging instruments | | | | Forward foreign exchange contracts | 0.3 | 0.1 | | Derivatives not designated as hedging instruments | | | | Forward foreign exchange contracts | 0.2 | 0.4 | | Other financial liabilities at fair value through profit or loss | | | | Other payables 1 | 4.5 | 5.9 | | Other financial liabilities at amortised cost | | | | Trade and other payables 2 | 151.9 | 175.5 | | Lease liabilities | 12.1 | 13.0 | | | 335.6 | 446.1 | | Classified within: | | | | Current liabilities | 163.0 | 179.5 | | Non-current liabilities | 172.6 | 266.6 | | | 335.6 | 446.1 | 1 Relates to deferred consideration on the acquisition of Childs Farm (note 20). 2 Excludes other taxation and social security. Borrowings are amounts drawn under both committed and uncommitted borrowing facilities. The Group has a £325.0 million committed credit facility which is available for general corporate purposes. The credit facility incorporates both a term loan, of up to £125.0 million, with the balance as a revolving credit facility (RCF) structure. Entered into in November 2022, the term loan is a two-year facility and the RCF a four-year facility, with both facilities retaining two, one-year extension options, the first of which was executed in October 2023. Drawings under the term loan are permitted in GBP, and under the RCF in GBP, Euros or USD, at interest rates at a margin of 1.30–2.10% above SONIA, EURIBOR or SOFR, dependent on leverage and the attainment of specified sustainability performance targets. Non-current borrowings as at 31 May 2024 are presented net of £0.7 million (2023: £0.8 million) of unamortised financing fees. As at 31 May 2024, this facility was £161.0 million drawn (2023: £252.0 million). Borrowings as at 31 May 2024, which are presented net of £0.7 million (2023: £0.8 million) of unamortised financing fees, comprise £125.0 million (2023: £125.0 million) of term loans which are denominated in GBP at an interest rate of 6.81% (2023: 5.73%), and £36.0 million (2023: £127.0 million) of borrowings under the RCF which are denominated in GBP at interest rates at between 6.78%–6.79% (2023: 5.66%–5.78%). In addition, the Group retains other unsecured and uncommitted facilities that are primarily used for trade-related activities in Nigeria where ordinary trading activities are required to be supported by letters of credit (or similar). As at 31 May 2024, these amounted to £161.6 million (2023: £199.8 million) of which £40.3 million, or 25% were utilised (2023: £93.3 million or 47%). The utilisation amount has decreased during the reporting period as a result of the improvement in access to foreign currency which in turn has facilitated the settlement of USD liabilities. As at the reporting date, there were no bank overdrafts (2023: £nil). #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 176 ![]() Changes in liabilities arising from financing activities were as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Foreign | | | | | | | exchange | | | | | 1 June 2023 | Net cash flow | movements | Other | 31 May 2024 | | | £m | £m | £m | £m | £m | | Non-current borrowings 1 | (251.2) | 91.0 | — | (0.1) | (160.3) | | Current borrowings 2 | — | (6.4) | 0.1 | — | (6.3) | | Lease liabilities | (13.0) | 2.9 | 0.2 | (2.2) | (12.1) | | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Foreign | | | | | | | exchange | | | | | 1 June 2022 | Net cash flow | movements | Other | 31 May 2023 | | | £m | £m | £m | £m | £m | | Non-current borrowings 1 | (174.0) | (78.0) | — | 0.8 | (251.2) | | Current borrowings 2 | (0.1) | 0.1 | — | — | — | | Lease liabilities | (16.9) | 3.0 | — | 0.9 | (13.0) | 1 Relates to committed banking facilities. 2 Relates to uncommitted short-term facilities. (b) Risk management The Group’s activities expose it to a variety of financial risks, including market risk (arising from movements in foreign currency exchange rates, commodity prices and interest rates), credit risk and liquidity risk. Overall risk management is led by senior management and executed according to Group policy with the intention to minimise adverse impacts on the Group’s financial performance through the execution of agreed risk management strategies. Management of these risks, along with the day-to-day management of treasury activities is performed by the Group Treasury function as defined within the Board- approved policy framework. Where appropriate, the Group uses derivative financial instruments to hedge certain risk exposures. The use of financial derivatives and the management of all financial risks is governed by the Group Treasury policy as approved by the Board of Directors. The Group does not enter into any financial derivative contracts for trading or speculative purposes. All hedging activity is carried out by the Group Treasury function that hedges financial risks according to forecasts provided by the Group’s subsidiary undertakings. 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 Group’s normal purchasing activities. A. Market risk The Group’s principal market risks are in relation to foreign currency exchange rates, the prices of certain commodities and interest rates. In managing market risks, the Group aims to minimise the impact of short-term fluctuations on the Group’s financial performance. However over the longer term, permanent changes in market rates will have an impact on consolidated results. (i) Foreign currency risk Foreign currency risk is the risk that the carrying value of Group assets, liabilities or future cash flows will fluctuate due to changes in foreign currency exchange rates. The Group is exposed to foreign currency exchange translation and transaction risks as follows: • Foreign currency exchange translation risks arise due to the translation of monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary into functional currency, with the foreign exchange gain/(loss) recorded in the income statement. Further translation differences arise on the translation of net assets of its non-GBP functional currency subsidiary undertakings into GBP being the Group’s presentation currency, with the foreign exchange gain/(loss) recorded in other comprehensive income • Foreign currency exchange transaction risk occurs due to changes in the value of cash flows in a currency other than the functional currency of the subsidiary undertaking. The most significant foreign exchange transaction risk exposures for the Group are the purchase of inventories (predominantly raw materials) and services denominated in USD and Euros. Group policy is to reduce this risk where possible, mainly in relation to its GBP and AUD functional currency subsidiaries, by using forward foreign exchange derivative contracts as hedging instruments that are typically designated as cash flow hedges. In these cases, the Group negotiates the terms of the derivative to match the critical terms of the hedged item normally including covering the period from initial forecasting of the hedged item purchase commitment to the point of settlement. There remains no effective and functioning market to hedge USD liabilities in Nigeria. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 177 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED Hedge accounting is typically applied in order to remove any timing mismatch between the hedging instrument and hedged item, with the effective portion of the change in fair value of the hedging instrument initially accounted for in the hedging reserve through other comprehensive income. If the firm commitment or forecast transaction that is the subject of a cash flow hedge results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in other comprehensive income and accumulated in the hedging reserve are removed directly from equity and included in the initial measurement of the asset or liability. If the hedged item is transaction-related the foreign currency ‘basis spread’ is reclassified to profit or loss when the hedged item affects profit or loss. Those reclassified amounts are recognised in the Consolidated Income Statement in the same line as the hedged item. Hedge ineffectiveness may arise from items including changes in forecast transactions, misalignment in critical terms, or if credit dominates the relationship between hedged item and hedging instrument. Where there is ineffectiveness and hedge accounting criteria are not met, the change in the fair value of the derivative is accounted for through profit or loss. There was no ineffectiveness during the reporting period in relation to the use of forward foreign exchange contracts. The notional amounts of forward foreign exchange contracts outstanding as at the reporting date, along with the weighted average hedge rates of these contracts and average spot rates for the reporting period are as follows: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Notional | | | | Fair value | | | | | | Weighted | | | | | | | Local currency | | average hedge | GBP equivalent | Average spot | Asset | Liability | | 2024 | million | Currency pair | rate | £m | rate | £m | £m | | Sell USD | (6.9) | GBP:USD | 1.27 | 5.4 | 1.27 | — | — | | Buy EUR | 7.7 | GBP:EUR | 1.16 | (6.6) | 1.16 | — | (0.1) | | Sell AUD | (4.2) | GBP:AUD | 1.92 | 2.1 | 1.92 | — | — | | Buy USD | 23.1 | AUD:USD | 0.66 | (18.3) | 0.66 | — | (0.2) | | Buy IDR | 134,365.4 | GBP:IDR | 20,103 | (6.7) | 19,550 | — | (0.2) | | | | | | | | — | (0.5) | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Notional | | | | Fair value | | | | | | Weighted | | | | | | | Currency | | average hedge | GBP equivalent | Average spot | Asset | Liability | | 2023 | million | Currency pair | rate | £m | rate | £m | £m | | Sell USD | 73.5 | GBP:USD | 1.24 | 59.0 | 1.20 | 0.1 | (0.3) | | Buy EUR | 5.5 | GBP:EUR | 1.13 | 4.9 | 1.15 | — | (0.2) | | Sell AUD | 8.2 | GBP:AUD | 1.86 | 4.4 | 1.78 | 0.1 | — | | Buy USD | 19.9 | AUD:USD | 0.68 | 15.2 | 0.68 | 0.8 | — | | Buy GBP | 0.6 | AUD:GBP | 0.56 | 0.6 | 0.65 | — | — | | Buy SGD | 0.5 | USD:SGD | 1.34 | 0.3 | 1.37 | — | — | | | | | | | | 1.0 | (0.5) | As at 31 May 2024, the aggregate net amount of fair value movements of forward foreign exchange contracts currently deferred in the cash flow hedging reserve was a loss of £0.4 million (2023: £0.2 million gain). It is anticipated that the purchases of the hedged items that these forward exchange contracts were entered into for, will take place during the next financial year and these will be sold within 12 months of purchase. The movement in the hedging reserve during the year was as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | At 1 June | 0.2 | (0.2) | | Fair value gains, net of taxation | (0.6) | 0.4 | | At 31 May | (0.4) | 0.2 | The aggregate amount under forward foreign exchange contracts taken directly to profit or loss was a gain of £0.9 million (2023: £2.2 million gain). #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 178 ![]() The majority of the Group’s monetary assets and liabilities are denominated in the functional currency of the relevant subsidiary. The following sensitivity analysis illustrates the impact of a 10% strengthening of the Group’s transactional currencies against local functional currencies, with all other variables held constant. The impact on the Group’s (loss)/profit before taxation is due to foreign exchange (losses)/gains arising on the revaluation of monetary assets and liabilities denominated in a currency other than the functional currency of the subsidiary. The aggregate net foreign exchange losses recognised in profit or loss were £124.6 million (2023: £5.1 million) and are primarily as a result of the devaluation of the Nigerian Naira and the revaluation of foreign currency (USD) liabilities. The impact on the Group’s other comprehensive income is due to changes in the fair value of forward exchange contracts designated as cash flow hedges and the permanent as equity loans to a joint venture and with fellow subsidiary undertakings prior to their de- designation in the current year (notes 1, 3 and 14). The Group’s exposure to foreign currency changes for all other currencies is not material. A similar but opposite impact would be felt on both profit or loss and other comprehensive income if the Group’s main transactional currencies weakened against local functional currencies by a similar amount: | | | | | | | --- | --- | --- | --- | --- | | | | 2024 | | 2023 | | | Impact on | | Impact on | | | | loss before | Impact on pre- | profit before | Impact on pre- | | £m | tax | tax equity | tax | tax equity | | US Dollar | 2.5 | 1.6 | (6.2) | 5.4 | | Nigerian Naira | 0.6 | — | 3.1 | — | | Chinese Renminbi | (0.2) | — | (2.4) | — | The table above shows the foreign currency risk in relation to non-functional currency financial instruments in subsidiaries’ financial statements at the balance sheet date. The inclusion of Chinese Renminbi is a reflection that historically the Group’s Nigeria subsidiaries held Renminbi liabilities in relation to the purchase of electrical goods and raw materials from China. In addition, the Group is also exposed to foreign currency risk on the translation of overseas subsidiaries’ results into GBP for the Consolidated Financial Statements through the use of the average rate for the income statement and the closing rate for net assets. The impact on the Group’s profit before tax and total equity if the applicable rate used to translate the results of the Group’s principal foreign operations into GBP were adjusted to show a 10% strengthening of Sterling is shown below. A similar but opposite impact would be felt if Sterling weakened against the other currencies by a similar percentage. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2024 | | | 2023 | | | | Impact on | | | | | | | | adjusted | | | Impact on | | | | | operating | Impact on | Impact on | adjusted | Impact on | Impact on | | £m | profit | operating loss | total equity | operating profit | operating loss | total equity | | Nigerian Naira | (2.4) | 4.7 | (5.1) | (3.3) | (4.3) | (27.0) | | Indonesian Rupiah | (1.1) | (1.1) | (0.6) | (1.7) | (1.7) | (0.9) | | Australian Dollar | (1.2) | (1.2) | (2.7) | (0.8) | (1.3) | (5.3) | | Other | (0.6) | (0.3) | (2.3) | (0.9) | (0.7) | (3.0) | In the table above, the most significant balance sheet item impacting total equity for the Nigerian Naira is the cash and cash equivalents held by the Nigerian subsidiaries (note 18). (ii) Commodity pricing risk Commodity risk is the risk that changes in underlying raw material prices have an adverse impact on the Group’s financial performance. The Group’s policy is to minimise the pricing volatility accompanied by unfavourable changes in commodity prices by entering into fixed price supplier contracts in line with its commercial strategy. The Group does not enter into any commodity derivatives. (iii) Interest rate risk Interest rate risk is the risk that a change in interest rates will have an adverse impact on the Group’s financial performance. The Group’s main interest rate risk arises from cash and cash equivalents and borrowings. To manage interest rate risk, the Group manages its proportion of fixed to floating rate borrowings within limits approved by the Board, primarily through issuing fixed and floating rate borrowings, and by utilising interest rate swaps, where appropriate. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 179 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED The following table sets out the sensitivity to reasonably possible changes in the Nigerian interest rates on cash and cash equivalents held by the Group’s Nigerian operations, and reasonably possible changes in SONIA (Sterling Overnight Index Average) interest rates on that portion of loans and borrowings at 31 May 2024 (see note 18). With all other variables held constant, the Group’s (loss)/profit before taxation is affected as follows: | | | | | | --- | --- | --- | --- | | | Increase/ | Effect on (loss)/profit | | | | decrease in | 2024 | 2023 | | | basis points | £m | £m | | Nigerian Naira rates | +50 | 0.1 | 0.6 | | | -50 | (0.1) | (0.6) | | | | | | | --- | --- | --- | --- | | | Increase/ | Effect on (loss)/profit | | | | decrease in | 2024 | 2023 | | | basis points | £m | £m | | GBP rates | +50 | (0.8) | (1.3) | | | -50 | 0.8 | 1.3 | B. Credit risk The Group is exposed to counterparty credit risk from its financing and investing activities with banks and financial institutions, including cash deposits, the use of derivatives and other financial instruments, from its operating activities (primarily trade receivables) and its loans to its joint venture (note 14). The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets. Financing and investing activities The Group maintains a policy on financial counterparty credit risk exposures that limits the maximum exposure on the investment of surplus cash and use of derivative instruments with reference to a minimum credit rating as maintained by Standard & Poor’s (S&P), Moody’s or Fitch, with further limits established for levels of exposure at various ratings levels. The level of exposure and the credit worthiness of the Group’s banking counterparties are regularly reviewed to ensure compliance with this policy. Cash held with lower rated banks reflects the impact of perceived sovereign ceilings operating within those countries. Cash and cash equivalents and net financial derivatives by counterparty credit rating at the end of the reporting period is as follows (ratings per S&P unless unavailable, in which case the Fitch rating is used): | | | | | | | --- | --- | --- | --- | --- | | | | 2024 | 2023 | | | | Cash and cash | Financial | Cash and cash | Financial | | | equivalents | derivatives | equivalents | derivatives | | | £m | £m | £m | £m | | AA- | 6.8 | — | 8.8 | 0.8 | | A+ to A- | 20.8 | — | 38.6 | (0.3) | | BBB+ to BBB- | 0.9 | — | 2.3 | — | | BB+ to BB- | 2.6 | — | 2.3 | — | | B+ to B- | 20.2 | — | 204.3 | — | | not rated | — | — | 0.1 | — | | | 51.3 | — | 256.4 | 0.5 | All financial derivative contracts are held in financial institutions with credit ratings of at least A-. The amounts classified B+ to B- counterparty credit rating relate to cash and cash equivalents held predominantly in Nigeria where the sovereign credit rating is B- thereby limiting the rating of banks incorporated within the country. There are no significant concentrations of credit risk within the Group arising from the use of derivatives or other financial instruments. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 180 ![]() Trade receivables The Group trades only with creditworthy third parties. Under the Group policy, customers are subject to credit verification procedures in order to establish appropriate credit terms and trade receivable balances are monitored on an ongoing basis. An allowance for loss is estimated by management based on the expected credit loss model approach. The creation and release of provisions for receivables is charged/credited to administrative expenses in the Consolidated Income Statement. Receivables are written off when all possible routes through which amounts can be recovered have been exhausted. Trade receivables consist of a broad cross section of the international customer base for which there is no significant history of default. The credit risk of customers is assessed taking into account the local market environment, customers’ financial positions, past experiences and other relevant factors. Individual customer credit limits are imposed based on these factors, and payment terms are generally 30-45 days, with a range from 14 to 120 days which reflects the differing nature of trading in the Group’s geographical segments. No other receivables are deemed to be impaired. The ageing and credit risk profile of trade receivables based on the Group’s provision matrix at the end of the reporting period was: | | | | | | | --- | --- | --- | --- | --- | | | | | Lifetime | | | | Expected credit | Gross trade | expected credit | Net trade | | | loss rate | receivables | loss | receivables | | At 31 May 2024 | % | £m | £m | £m | | Not past due | 0.1% | 67.4 | (0.1) | 67.3 | | Past due 0-30 days | 3.6% | 5.5 | (0.2) | 5.3 | | Past due 31-60 days | 9.1% | 1.1 | (0.1) | 1.0 | | Past due 61-90 days | 30.0% | 1.0 | (0.3) | 0.7 | | Past due 91-180 days | 33.3% | 0.9 | (0.3) | 0.6 | | Past due >180 days | 100.0% | 1.6 | (1.6) | — | | | | 77.5 | (2.6) | 74.9 | | Specific provision | | | | — | | Net trade receivables | | | | 74.9 | | | | | | | | --- | --- | --- | --- | --- | | | | | Lifetime | | | | Expected credit | Gross trade | expected credit | Net trade | | | loss rate | receivables | loss | receivables | | At 31 May 2023 | % | £m | £m | £m | | Not past due | 0.1% | 76.2 | (0.1) | 76.1 | | Past due 0-30 days | 0.2% | 10.0 | — | 10.0 | | Past due 31-60 days | 3.8% | 0.3 | — | 0.3 | | Past due 61-90 days | 3.8% | 0.5 | — | 0.5 | | Past due 91-180 days | 2.9% | 2.2 | (0.1) | 2.1 | | Past due >180 days | 52.8% | 3.4 | (1.8) | 1.6 | | | | 92.6 | (2.0) | 90.6 | | Specific provision | | | | (2.4) | | Net trade receivables | | | | 88.2 | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 181 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED C. Liquidity risk The Group is exposed to the risk that it is unable to meet its financial commitments as they fall due. Under the terms of the £325.0 million committed credit facility, the Group must meet certain financial covenants. The covenants are described in the Capital risk management section below. The Group manages liquidity risk through the Group Treasury function, with cash flow forecasts prepared and reviewed on a monthly basis. In addition, longer-term cash flow forecasts of up to 12 months are prepared as part of the Group’s monthly forecasting and periodic budget cycles, with performance against free cash flow and net working capital targets monitored each month and providing longer-term cash flow and net debt visibility. 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 customers and payments to suppliers, and the timing of any capital and restructuring projects. Set out below is the maturity profile of the Group’s financial liabilities which is based on the contractual undiscounted cash flows prepared using forward interest rates where applicable, showing items at the earliest date on which the liability could be required to be paid (for borrowings under committed facilities, the maturity is based on the maturity of the facility). The table includes both interest and principal cash flows. To the extent that interest flows based on floating rate, the undiscounted amount is derived from interest rates at the reporting date. Derivatives are presented on a notional basis in GBP. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | <3 months | 3-12 months | 1-2 years | 2-5 years | >5 years | Total | | At 31 May 2024 | £m | £m | £m | £m | £m | £m | | Trade and other payables | (158.7) | — | (2.6) | — | — | (161.3) | | Forward foreign exchange contracts | (31.5) | (24.1) | — | — | — | (55.6) | | Borrowings | (8.7) | — | (125.0) | (36.0) | — | (169.7) | | Lease liabilities | (0.8) | (2.0) | (1.6) | (4.4) | (5.1) | (13.9) | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | <3 months | 3-12 months | 1-2 years | 2-5 years | >5 years | Total | | At 31 May 2023 | £m | £m | £m | £m | £m | £m | | Trade and other payables | (177.3) | — | (1.3) | (2.8) | — | (181.4) | | Forward foreign exchange contracts | (71.8) | (12.8) | — | — | — | (84.6) | | Borrowings | (1.7) | — | (125.0) | (127.0) | — | (253.7) | | Lease liabilities | (0.6) | (2.0) | (2.2) | (4.0) | (6.3) | (15.1) | The forward foreign exchange contracts disclosed in the tables above are the gross undiscounted cash outflows. Those amounts may be settled gross or net. The following table shows the corresponding reconciliation of those amounts to their carrying values: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | <3 months | 3-12 months | 1-2 years | 2-5 years | >5 years | Total | | At 31 May 2024 | £m | £m | £m | £m | £m | £m | | Inflows | 31.4 | 23.7 | — | — | — | 55.1 | | Outflows | (31.5) | (24.1) | — | — | — | (55.6) | | Net | (0.1) | (0.4) | — | — | — | (0.5) | | Carrying amounts: | | | | | | | | Asset | — | — | — | — | — | — | | Liability | (0.1) | (0.4) | — | — | — | (0.5) | | | (0.1) | (0.4) | — | — | — | (0.5) | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | <3 months | 3-12 months | 1-2 years | 2-5 years | >5 years | Total | | At 31 May 2023 | £m | £m | £m | £m | £m | £m | | Inflows | 71.9 | 13.2 | — | — | — | 85.1 | | Outflows | (71.8) | (12.8) | — | — | — | (84.6) | | Net | 0.1 | 0.4 | — | — | — | 0.5 | | Carrying amounts: | | | | | | | | Asset | 0.5 | 0.5 | — | — | — | 1.0 | | Liability | (0.4) | (0.1) | — | — | — | (0.5) | | | 0.1 | 0.4 | — | — | — | 0.5 | #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 182 ![]() Capital risk management The objective of the Group when considering total capital is to protect the value of capital investments and to generate returns on shareholder funds. Total capital is defined as including bank borrowings and equity, including, when applicable, derivatives used for the purposes of hedging currency and interest exposure on the borrowings, but excluding the cash flow hedging reserve. In support of its objectives, the Group may undertake actions to adjust its capital structure. Actions may include, but are not limited to, raising or prepaying of borrowings together with related derivative instruments, issuance of additional share capital, payment of dividends or share repurchase programmes. The Group’s £325.0 million credit facility is subject to financial covenants. The principal covenants on the facility are a leverage ratio of ≤3.0x and interest cover of ≥4.0x which are measured on a rolling 12-month basis at half year and year end. The Group considers net debt to be an important performance measure as it forms the basis of the leverage ratio (defined as Total Net Debt to EBITDA) in the facility agreement. As at 31 May 2024, the Group’s net debt including lease liabilities was £127.4 million (2023: £7.3 million), net of £51.3 million (2023: £256.4 million) cash and cash equivalents as described in note 18. Interest cover is defined in the facility agreements as the ratio of Adjusted EBITDA to net finance (expense)/income. The committed credit 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. During the year, and as at the reporting date, the Group was in compliance with all financial and other covenants. Fair values 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 Group uses various methods including market, income and cost approaches. Based on these approaches, the Group 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. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following categories: • 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 observable market data (unobservable inputs). This may include pricing models, discounted cash flow or similar methodologies as well as instruments for which the determination of fair value requires significant management judgement or estimation. There were no transfers between Level 1, 2 and 3 during the current or prior year. At the end of the reporting period, the Group held the following financial assets and liabilities at fair value: | | | | | | | --- | --- | --- | --- | --- | | | Level 1 | Level 2 | Level 3 | Total | | At 31 May 2024 | £m | £m | £m | £m | | Assets held at fair value | | | | | | Current asset investments | — | — | — | — | | Derivative financial assets | — | — | — | — | | Liabilities held at fair value | | | | | | Derivative financial liabilities | — | 0.5 | — | 0.5 | | Other payables | — | — | 4.5 | 4.5 | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 183 ![]() 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT CONTINUED | | | | | | | --- | --- | --- | --- | --- | | | Level 1 | Level 2 | Level 3 | Total | | At 31 May 2023 | £m | £m | £m | £m | | Assets held at fair value | | | | | | Current asset investments | — | — | 0.5 | 0.5 | | Derivative financial assets | — | 1.0 | — | 1.0 | | Liabilities held at fair value | | | | | | Derivative financial liabilities | — | 0.5 | — | 0.5 | | Other payables | — | — | 5.9 | 5.9 | The following is a description of the valuation methodologies and assumptions used for estimating the fair values: • Current asset investments – Current asset investments comprise non-listed equity investments. A discounted cash flow methodology is used to estimate the present value of the expected future economic benefits to be derived from the ownership of these investments. The fair value of current asset investments at 31 May 2024 was £nil (2023: £0.5 million) with the movement in the year relating to an impairment charge included in administration expenses. • Derivative financial instruments – Derivative financial instruments comprise forward foreign exchange contracts. Fair value is calculated using observable market data where it is available, including spot rates and observable forward points, as discounted to reflect the time value of money. Counterparty credit is monitored. No adjustment to the fair value for credit risk is made due to materiality. • Other payables – Other payables held at fair value relate to deferred purchase consideration on the acquisition of Childs Farm (note 20), which was estimated by applying an appropriate discount rate to the expected future payments. The key assumptions take into consideration the probability of meeting each performance target and the discount factor. Should the target not be met, no consideration would be payable, and should the discount rate applied be changed, the fair value of the deferred purchase consideration would change, but the amount of consideration that would ultimately be paid would not necessarily change. For the financial assets and liabilities not held at fair value, there was no material difference between their carrying values and their fair values, except for non-current borrowings which are presented net of unamortised issuance costs of £0.7 million (2023: £0.8 million). 20. TRADE AND OTHER PAYABLES | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Current | | | | Trade payables | 66.8 | 75.9 | | Trade obligations with banks | 12.8 | 8.6 | | Other taxation and social security | 4.9 | 4.9 | | Other payables | 5.6 | 10.8 | | Accruals | 68.6 | 82.0 | | | 158.7 | 182.2 | | Non-current | | | | Other payables | 2.6 | 4.1 | | | 2.6 | 4.1 | Refer to note 19 for further information on financial instruments classified by category/fair value hierarchy level and management of liquidity risk. The Group maintains arrangements under which vendors are offered the option to receive earlier payment of the Group’s trade payables. Vendors utilising the arrangements pay a credit fee to the issuing bank. The Group does not pay any credit fees and does not provide any additional collateral or guarantee to the bank. Current trade payables include £nil (2023: £nil) under such arrangements. Trade obligations with banks relate to common practice in Nigeria whereby the bank undertakes to settle certain trade creditors on the Group’s behalf and receives subsequent settlement from the Group trading entities. The Group does not benefit from payment terms with the bank that are extended beyond those contractually agreed with the supplier, and neither does the supplier benefit from early payment terms. Accordingly, such liabilities continue to be recognised within trade payables and cash flows are presented as operating. Deferred consideration for the acquisition of Childs Farm in 2022 is included within other payables of which £2.0 million (2023: £3.1 million) is classified as current and £2.5 million (2023: £2.8 million) as non-current. The liability was remeasured during the year and a £1.4 million (2023: £1.3 million) reduction was recognised in finance income. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 184 ![]() 21. DEFERRED TAX Deferred tax is provided under the balance sheet liability method using the applicable jurisdiction tax rate at which the balances are expected to unwind. Movements in deferred tax assets and liabilities during the year were: | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | Revaluation | | | | | | | | | Property, | Retirement | of property, | | | | | Other | | | | plant and | benefit | plant and | Unremitted | Business | Accruals and | | timing | | | | equipment | obligations | equipment | earnings | combinations | provisions | Tax losses | differences | Total | | | £m | £m | £m | £m | £m | £m | £m | £m | £m | | At 1 June 2022 | (10.4) | (13.4) | (5.9) | (1.4) | (48.6) | 3.8 | 0.8 | (12.1) | (87.2) | | Credit/(charge) to income | | | | | | | | | | | statement | 0.1 | (0.4) | 0.7 | (0.4) | 2.7 | 0.3 | 3.3 | 2.4 | 8.7 | | Credit to other comprehensive income | — | 7.4 | — | — | — | — | — | 0.9 | 8.3 | | Exchange differences | 0.4 | (0.2) | 0.4 | — | 0.7 | (0.3) | (0.5) | 0.3 | 0.8 | | At 31 May 2023 | (9.9) | (6.6) | (4.8) | (1.8) | (45.2) | 3.8 | 3.6 | (8.5) | (69.4) | | Credit/(charge)toincome | | | | | | | | | | | statement | (2.0) | 0.2 | 4.8 | 1.8 | 6.1 | (1.0) | 29.5 | 4.2 | 43.6 | | Credit to other | | | | | | | | | | | comprehensive income | — | 1.7 | — | — | — | — | 13.6 | (0.5) | 14.8 | | Exchange differences | 4.7 | (0.4) | — | — | (0.1) | (1.3) | (9.9) | 0.4 | (6.6) | | At 31 May 2024 | (7. 2) | (5.1) | — | 0.0 | (39.2) | 1.5 | 36.8 | (4.4) | (17.6) | Deferred taxation assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. At 31 May 2024 the Group recorded a deferred taxation asset of £36.8 million (2023: £3.6 million) on recognised but unused tax losses with the material increase year-on-year relating to the impact of the Naira devaluation and resulting operating losses. Given the one-off nature of the event, and probability of ongoing profitability together with other supporting items, deferred tax assets occurring as a result of such tax losses are recognised in full. A further £8.0 million (2023: £2.7 million) of unrecognised tax losses are not expected to expire or be disposed of, together with £13.8 million (2023: £13.9 million) of unrecognised capital losses relating to the disposal of the five:am business. There is also an additional unrecognised deferred taxation asset of £2.0 million (2023: £13.8 million) relating to timing differences other than unrecognised tax losses. This amount relates to property, plant and equipment differences, unused temporary differences, and accruals and provisions, and it is not probable that these timing differences will reverse in the foreseeable future. Other temporary differences include a liability for brands and goodwill of £6.7 million (2023: £7.1 million), an asset for corporate interest restriction of £4.1 million (2023: £nil) and an asset for share-based payments of £0.5 million (2023: £0.5 million). A deferred tax liability of £0.9 million (2023: £1.8 million) in respect of unremitted earnings in Indonesia has been recognised on the basis that unremitted earnings may be liable to overseas withholding taxes if anticipated to be distributed as dividends. As at 31 May 2024, the aggregate amount of gross temporary differences associated with investments in subsidiaries and joint ventures for which deferred taxation liabilities have not been recognised totals approximately £22.5 million (2023: £161.7 million). Following the amendments to IAS12 Income Taxes in relation to Deferred Tax related to Assets and Liabilities arising from a Single Transaction, the Group has recognised a separate deferred tax asset in relation to its lease liability of £2.7 million (2023: £2.4 million) and a deferred tax liability in relation to its right of use assets of £2.4 million (2023: £2.5 million). There was no impact on the statement of financial position because the balances qualify for offset under paragraph 74 of IAS 12. There was also no impact on the opening retained earnings as at 1 June 2023 as a result of the change. After offsetting deferred taxation assets and liabilities where appropriate within jurisdictions (as permitted by IAS 12 Income Taxes), the net deferred taxation liability comprises: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Deferred tax assets | 22.2 | 7.5 | | Deferred tax liabilities | (39.8) | (76.9) | | | (17.6) | (69.4) | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 185 ![]() 22. PROVISIONS | | | | | | --- | --- | --- | --- | | | Warranty | | | | | provisions | VAT provisions | Total | | | £m | £m | £m | | At 1 June 2022 | 0.7 | 4.9 | 5.6 | | Provided | (0.4) | — | (0.4) | | Utilised | — | (4.9) | (4.9) | | Exchange differences | 0.1 | — | 0.1 | | At 31 May 2023 | 0.4 | — | 0.4 | | Released | — | — | — | | Utilised | — | — | — | | Exchange differences | (0.2) | — | (0.2) | | At 31 May 2024 | 0.2 | — | 0.2 | Warranty provisions relate to the Group’s electricals business in Africa. The VAT provision related to one of the Group’s subsidiaries which had initially incorrectly assessed VAT on sales of certain goods and purchases of certain raw materials over the period 2016–2019. Following a determination on the VAT treatment of these sales and purchases, a liability was provided for which included an estimate of applicable fines and interest, and this was settled during the year. 23. RETIREMENT BENEFITS AND OTHER LONG-TERM EMPLOYEE OBLIGATIONS The Group operates retirement benefit schemes in the UK and overseas as described below. UK retirement benefit schemes The Group operates four defined benefit pension schemes in the UK, each of which were closed to future accrual on 31 May 2008. The schemes are as follows: • PZ Cussons Retirement Benefits Plan (Main plan) – for UK-based employees excluding PZ Cussons plc Executive Directors • PZ Cussons Directors’ Retirement Benefits Plan (Directors’ plan) – for PZ Cussons plc Executive Directors • PZ Cussons Pension Fund and Life Assurance Scheme for Staff Employed Outside the UK (Expatriate plan) – for all eligible expatriate employees based outside the UK • PZ Cussons Employer Financial Retirement Benefits Scheme (Unfunded plan) – an unfunded, unapproved retirement scheme for certain former PZ Cussons plc Directors. The UK Plans operate under trust law and responsibility for their governance lies with a Board of Trustees composed of representatives of the Group, plan participants and an independent trustee, who act on behalf of members in accordance with the terms of the Trust Deed and Rules and relevant legislation. Current and deferred members of these schemes are provided with defined benefits based on service and final salary. The Main plan, Directors’ plan and Expatriate plan are funded schemes and the assets of the schemes are administered by trustees and are held in trust funds independent of the Group. The most recent triennial actuarial valuations of these schemes was as at 31 May 2021, and were performed by an independent professional actuary. Each scheme was determined to be in surplus and therefore there are no company contributions required to be paid before the next valuation. The next triennial actuarial valuation of these schemes will be as at 31 May 2024. In June 2023, in the case of Virgin Media vs NTL Pension Trustees II Limited, the High Court judged that amendments made to the Virgin Media scheme were invalid because they were not accompanied by the correct actuarial confirmation. On 25 July 2024, the Court of Appeal upheld the June 2023 High Court decision. The Court’s decision could have wider ranging implications, affecting other schemes that were contracted-out on a salary-related basis, and made amendments between April 1997 and April 2016. There is still further uncertainty with the potential for overriding government legislation to be introduced. The Group had been awaiting the Court of Appeal’s decision before investigating any possible implications for the Group’s UK pension schemes, accordingly the Group has not had adequate time to begin detailed investigations before the signing of these financial statements. Therefore, the Group considers that the amount of any potential impact on the UK schemes’ defined benefit obligation cannot yet be measured with sufficient reliability and consequently no allowance for this has been made in calculating the defined benefit obligations at the reporting date. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 186 ![]() The UK’s main schemes expose the Group to the following risks: | | | | | --- | --- | --- | | Risk | Description | Mitigation | | Investment risk | The present value of the defined benefit | As part of the financing of the funded schemes, they invest in assets with | | | pension schemes’ liabilities is calculated | higher return expectations than lower risk bonds that are the best match for | | | using a discount rate (investment return) | the schemes’ liabilities. To control the resulting investment risk, the funded | | | determined by direct reference to high- | schemes invest in diversified portfolios of growth assets with the balances | | | quality corporate bond yields (for IAS | invested in liability-matching bond assets designed to control interest rate | | | 19 Employee Benefits purposes) and gilt | risk (seebelow).Thesplitbetweengrowth assets and liability-matching | | | yields (for statutory funding and long-term | bond assets for each funded scheme is regularly monitored to ensure | | | funding purposes). If the return on scheme | investment risk is not excessive given the statutory funding assumptions | | | assets is less than these discount rates, the | and the schemes’ long-term funding objectives. | | | funding position of the schemes will fall. | | | Interest risk | A decrease in the corporate bond yield | The funded schemes make use of liability-driven investment techniques | | | and/or gilt yield will increase the present | to protect them against the majority of the interest rate risk inherent in | | | value of the schemes’ liabilities under the | their liabilities. This is achieved by investing in gilts and investment grade | | | IAS 19 Employee Benefits and statutory/ | corporate bonds such that changes in the schemes’ liabilities due to falling | | | long-term funding bases respectively. | gilt and/or corporate bond yields are offset by similar movements in the | | | | value of the schemes’ overall assets. | | | | Reflecting the funded schemes’ focus on controlling interest risk relative to | | | | their statutory and long-term funding bases, the schemes’ 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 schemes’ IAS 19 Employee Benefits liabilities. | | Inflation risk | A decrease in the corporate bond yield | The schemes’ liability-matching bond assets are also designed to hedge the | | | and/or gilt yield will increase the present | majority of the inflation rate risk inherent in the schemes’ liabilities. This is | | | value of the schemes’ liabilities under the | achieved by investing in index-linked gilts. | | | IAS 19 Employee Benefits and statutory/ | | | | long-term funding bases respectively. | | | Longevity risk | The value of the schemes’ liabilities | To help control longevity risk all the schemes are closed to future | | | is calculated by reference to the best | benefit accrual. | | | estimate of the life expectancy of each | | | | scheme’s participants. An increase in life | The schemes consider additional approaches to mitigating longevity risk, | | | expectancy of the schemes’ participants | for example by buying annuities with an insurance company to cover the | | | will increase the schemes’ liabilities. | schemes’ liabilities. | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 187 ![]() 23. RETIREMENT BENEFITS AND OTHER LONG-TERM EMPLOYEE OBLIGATIONS CONTINUED A summary of the amounts recognised in the Consolidated Balance Sheet for the UK schemes described above is as follows: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2024 | | | 2023 | | | | Assets | Obligations | Total | Assets | Obligations | Total | | | £m | £m | £m | £m | £m | £m | | Main plan | 150.9 | (130.3) | 20.6 | 154.0 | (127.3) | 26.7 | | Directors' plan | 29.0 | (17.5) | 11.5 | 29.2 | (17.4) | 11.8 | | Expatriate plan | 86.3 | (44.1) | 42.2 | 89.2 | (44.7) | 44.5 | | Unfunded plan | | (3.2) | (3.2) | — | (3.1) | (3.1) | | | 266.2 | (195.1) | 71.1 | 272.4 | (192.5) | 79.9 | | Restrictions due to asset ceiling | | | (42.2) | | | (44.5) | | Net asset | | | 28.9 | | | 35.4 | | Classified as/within: | | | | | | | | Retirement benefit surplus | | | 32.1 | | | 38.5 | | Retirement benefit and other long-term | | | | | | | | employee obligations | | | (3.2) | | | (3.1) | | | | | 28.9 | | | 35.4 | The trust deeds for the Main plan and Directors’ plan provide 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 the ordinary course of business the trustee has no rights to unilaterally wind up, or otherwise augment the benefits due to members of the scheme. Based on these rights, any net surpluses 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 plan has not been recognised in the Consolidated Balance Sheet (shown as a restriction due to asset ceiling in the table above). Movements in the fair value of plan assets were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | At 1 June | 272.4 | 368.0 | | Recognised in Consolidated Income Statement: | | | | –administrative expense | (1.3) | (0.4) | | –financeincome | 11.8 | 10.5 | | Recognised in Consolidated Statement of Other Comprehensive Income: | | | | – return on plan assets (excluding finance income) | 0.2 | (77.9) | | Not recognised within comprehensive income due to asset ceiling: | | | | –financeincome | 2.4 | 2.1 | | – return on plan assets (excluding finance income) | (4.7) | (16.3) | | Employer contributions to the Unfunded plan | 0.2 | 0.2 | | Benefits paid | (14.8) | (13.8) | | At 31 May | 266.2 | 272.4 | Employer contributions to the Unfunded plan related to payments during the year to former Directors amounting to £0.2 million (2023: £0.2 million). #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 188 ![]() The assets in the schemes are as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Equities | 3.1 | 5.2 | | Bonds | 247.6 | 259.7 | | Property | — | — | | Cash and cash equivalents | 15.5 | 7.5 | | | 266.2 | 272.4 | Equities and bonds are quoted in active markets with all other assets being unquoted. The UK schemes’ investment strategy is set by the respective trustees after taking appropriate advice from their investment consultant. The trustee’s primary objective is to invest the scheme’s assets in the best interest of the members and beneficiaries. Within this framework the trustee has agreed a number of objectives to help guide them in their strategic management of the assets and control of the various investment risks to which the scheme is exposed. Movements in the present value of the plan defined benefit obligations were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | At 1 June | (192.5) | (243.4) | | Recognised in Consolidated Income Statement: | | | | –financeexpense | (10.0) | (8.3) | | Recognised in Consolidated Statement of Other Comprehensive Income: | | | | –remeasurement gain due to changes in demographic assumptions | 1.1 | 5.4 | | – remeasurement (loss)/gain due to changes in financial assumptions | (8.4) | 49.3 | | –remeasurement loss due to experience adjustments | (0.1) | (9.3) | | Benefits paid | 14.8 | 13.8 | | At 31 May | (195.1) | (192.5) | Amounts recognised in the Consolidated Income Statement comprised: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Administrative expense | (1.3) | (0.4) | | Finance income | 1.8 | 2.2 | | | 0.5 | 1.8 | Amounts recognised within Consolidated Statement of Other Comprehensive Income comprised: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Relating to plan assets: | | | | – return on plan assets (excluding finance income) | 0.2 | (77.9) | | Relating to plan defined benefit obligations: | | | | –remeasurement gain due to changes in demographic assumptions | 1.1 | 5.4 | | – remeasurement (loss)/gain due to changes in financial assumptions | (8.4) | 49.3 | | –remeasurement loss due to experience adjustments | (0.1) | (9.3) | | | (7. 2) | (32.5) | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 189 ![]() 23. RETIREMENT BENEFITS AND OTHER LONG-TERM EMPLOYEE OBLIGATIONS CONTINUED The key financial assumptions used by the actuary to value the scheme obligations were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | Rate of increase in retirement benefits in payment | | | | –pensionsinpayment | 3.1% | 2.9% | | –deferred pensions | 2.7% | 2.4% | | Discount rate | 5.2% | 5.4% | | Inflation (RPI) | 3.3% | 3.1% | The mortality assumptions used were as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | years | years | | Weighted average life expectancy on post-retirement mortality table used to determine benefit obligations | | | | – Member age 65 (current life expectancy) | 22.5 | 22.9 | | – Member age 45 (life expectancy at age 65) | 23.9 | 24.4 | The ages shown above are weighted average across the schemes based on the scheme’s defined benefit obligation as at 31 May 2024, and the prior year ages are presented on the same basis. The sensitivities on the key actuarial assumptions as at the end of the year in relation to the schemes were: | | | | | --- | --- | --- | | | Change in assumption | Change in obligation | | Discount rate | Decrease of 0.25% | Increase of 2.9% | | Inflation (RPI) | Increase of 0.25% | Increase of 2.6% | | Mortality | Increase in life expectancy of 1 year | Increase of 3.4% | The sensitivities shown above are approximate. Each sensitivity considers each change in isolation and is calculated using the same methodology as used for the calculation of the defined benefit obligation at the end of the year. The inflation sensitivity includes the impact of changes to the assumptions for the revaluation and pension increases. In practice it is unlikely that the changes would occur in isolation. During the year ending 31 May 2025, the Group expects to make cash contributions of £nil (2024: £nil) to funded defined benefit schemes, and £0.2 million (2024: £0.2 million) to unfunded schemes. Overseas retirement benefit schemes Outside of the UK, the Group operates a number of defined benefit pension schemes, all of which are unfunded, and the movement in the liability positions of these schemes during the year was as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | At 1 June | (9.3) | (9.6) | | Recognised in Consolidated Income Statement: | | | | –Administrative expenses | (1.1) | 0.2 | | –financeexpenses | (0.6) | (0.6) | | Recognised in consolidated other comprehensive income: | | | | – remeasurement (loss)/gain | 0.4 | (0.3) | | Benefits paid | 0.6 | 0.8 | | Exchange differences | 1.0 | 0.2 | | At 31 May | (9.0) | (9.3) | #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 190 ![]() The most significant overseas defined benefit scheme is operated by the Group’s Indonesian subsidiary. This is a final salary pension plan, defined in the Indonesian law, which provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members’ length of service and their salary in the final years leading up to retirement. The scheme’s obligations have been valued using a discount rate of 7.0% (2023: 6.75%) and a salary inflation rate of 8.0% (2023: 8.0%). The scheme’s obligation included in the above table is £8.4 million (2023: £8.7 million). The sensitivities on the key actuarial assumptions as at the end of the year in relation to the overseas schemes were: | | | | | --- | --- | --- | | | Change in assumption | Change in obligation | | Discount rate | Decrease of 1.0% | Increase of 8.1% | | Salary rate | Increase of 1.0% | Increase of 7.7% | Defined contribution pension schemes and other long-term employee obligations The Group operates a defined contribution pension scheme for current employees in the UK and at a number of overseas subsidiaries. The amount recognised as an expense in the Consolidated Income Statement in relation to these schemes was £1.9 million (2023: £2.4 million). The most significant other long-term employee obligation relates to the gratuity scheme operated by the Group’s Nigerian subsidiary. This scheme operates under an agreement established in 2006 between PZ Cussons Nigeria plc and its employees, and is only eligible for employees who joined the company before 1 January 2007. The scheme is funded directly by the company, and the amount recognised as an expense in the Consolidated Income Statement in relation to this scheme is £0.3 million (2023: £0.6 million). 24. SHARE CAPITAL AND INVESTMENT IN OWN SHARES (a) Share capital | | | | | | | --- | --- | --- | --- | --- | | | 2024 | | 2023 | | | | Number | | Number | | | | 000 | £m | 000 | £m | | Authorised, allotted, issued and fully paid: | | | | | | 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 has one class of ordinary shares which carry no right to fixed income. (b) Treasury shares Treasury shares represent the shares in the Company held by the employee share trusts which comprise the Employee Share Option Trust (ESOT) and the Share Incentive Plan (SIP) trust. The ESOT was established to purchase shares to satisfy awards under the Group’s incentive schemes and the SIP trust was established to purchase and hold shares on behalf of employees participating in the SIP. Further details of these schemes are provided in note 25. Movements in treasury shares were: | | | | | | | --- | --- | --- | --- | --- | | | | | SIP trust | | | | ESOT number | | number | | | At 1 June 2022 | 10,193, | 781 | 34, | 269 | | Issued to satisfy options | | (132,634) | | — | | Transfers | | (64,651) | 6 | 4,651 | | At 31 May 2023 | | 9,996,496 | | 98,920 | | Issued to satisfy options | | (659,230) | | — | | Transfers | | (103,523) | | 103,523 | | At 31 May 2024 | | 9,233,743 | | 202,443 | The transfer of shares between the trusts relate to matching awards provided by the Group under the SIP (see note 25) which are sourced from the ESOT. The cost of shares held in the ESOT and SIP trust as at 31 May 2024 was £34.5 million (2023: £36.9 million), and the market value was £10.4 million (2023: £18.6 million). STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 191 ![]() 25. SHARE-BASED PAYMENTS The Group operates a number of long-term incentive schemes which provide share awards to Executive Directors and certain senior employees. These schemes are designed to align the interests of the participants with those of the Group’s shareholders. The Group also operates a Share Incentive Plan (SIP) scheme which is open to UK employees. The incentive schemes are described below. Long-Term Incentive Plan (LTIP) The PZ Cussons Long-Term Incentive Plan 2020 (LTIP 2020 plan) was approved by shareholders and adopted at the 2020 Annual General Meeting. The LTIP 2020 plan provides for the grant of restricted share unit (RSU) awards for the senior employees, but not Executive Directors, to function like restricted stock. These share awards are nil-cost shares which vest in full subject only to continued employment, with no performance conditions. The fair value of the awards is determined to be the market price of the underlying shares on the date of the grant. There are no cash settlement alternatives. The Group accounts for the restricted share awards as equity-settled awards. In the current year, 2,488,823 restricted share awards (2023: 948,158 awards) were granted equating to a total fair value of £3.6 million (2023: £1.9 million) which will be recognised over the vesting period. Under the LTIP 2020 plan, Executive Directors and certain senior employees are also eligible to participate in the PSP, which provides for the grant of conditional rights to receive nil-cost shares (performance shares) subject to continued employment over a three-year vesting period and the satisfaction of certain performance criteria established by the Remuneration Committee. The fair value of the awards is determined to be the market price of the underlying shares on the date of the grant. There are no cash settlement alternatives. The Group accounts for the performance share awards as equity-settled awards. The last grant of performance share awards took place in February 2023. In the current year, no performance share awards (2023: 1,616,361 awards) were granted equating to a total fair value of £nil (2023: £3.3 million). 18,463 dividend share units were awarded and exercised during the current year, attached to performance share awards granted in previous years. The total expense recognised in the Consolidated Income Statement in the year in respect of both the performance share awards and the restricted share awards was £1.6 million (2023: £1.3 million). Deferred Bonus Share Plan This plan is limited to the Executive Directors and requires a minimum of 25% of any annual bonus earned to be deferred into shares (deferred bonus shares). The deferral period is three years (unless the Remuneration Committee determines otherwise) and the shares vest in full subject only to continued employment, with no performance conditions. The fair value of the deferred bonus share awards is determined to be the market price of the underlying shares on the date of the grant. The Group accounts for the deferred bonus share awards as equity-settled awards. In the current year, 173,836 deferred bonus share awards (2023: 89,222 awards) were granted equating to a total fair value of £0.2 million (2023: £0.2 million) which will be recognised over the vesting period. The amount recognised in the Consolidated Income Statement in the year in respect of deferred bonus share awards was £0.3 million income (2023: £0.1 million expense). SIP The Group launched the SIP in October 2021. Available to UK employees, this plan aligns employees with the business strategy and investors by encouraging equity participation through the wider employee population. Under the plan, employees can opt to make a salary deduction on a monthly basis to subscribe for shares which the Group matches up to a maximum of £100 per employee per month. These matched share awards vest subject to continued employment over a three-year vesting period and a number of conditions associated with withdrawal. The fair value of the matched share awards is determined to be the market price of the shares on the date of matching. There are no cash settlement alternatives. The Group accounts for the matched share awards as equity-settled awards. In the current year, 125,802 matched share awards (2023: 71,160 awards) were granted equating to a total fair value of £0.2 million (2023: £0.1 million) which will be recognised over the vesting period. The expense recognised in the Consolidated Income Statement in the year in respect of matched share awards was £70,000 (2023: £45,000). #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 192 ![]() Set out below are the movements in the options and awards under each of the schemes: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Performance | | Restricted | | Deferred bonus | | | | | | shares number | | shares number | | shares number | | SIP number | Total number | | Options/awards outstanding as at 1 June 2022 | 3,252,913 | 85 | 0,954 | 116,73 | 0 | 3 | 4,180 | 4,254,777 | | Options/awards issued | 1,616,361 | 9 | 48,158 | 8 | 9,222 | 71,16 | 0 | 2,724,901 | | Options/awards exercised | — | | (50,325) | | — | | — | (50,325) | | Options/awards lapsed/forefeited 1 | (1,249,311) | | (160,840) | | — | | (8,880) | (1,419,031) | | Options/awards outstanding as at 31 May 2023 | 3,619,963 | | 1,587,947 | | 205,952 | | 96,460 | 5,510,322 | | Options/awards issued | 18,463 | | 2,488,823 | | 173,836 | | 125,802 | 2,806,924 | | Options/awards exercised | (209,476) | | (449,754) | | — | | (3,278) | (662,508) | | Options/awards lapsed/forfeited | (1,061,785) | | (402,045) | | — | | (19,819) | (1,483,649) | | Options/awards outstanding as at 31 May 2024 | 2,367,165 | | 3,224,971 | | 379,788 | | 199,165 | 6,171,089 | 1 Of the options and awards which lapsed/forfeited in the year ended 31 May 2024 for the performance shares and restricted shares, 1,256,950 (2023: 1,290,407) related to the previous scheme approved in 2014. The vesting dates of the outstanding options and awards as at 31 May 2024 is: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Performance | | Restricted | Deferred bonus | | | | | | | shares number | | shares number | shares number | | SIP number | | Total number | | 31 May 2025 | 1,031,176 | 455,8 | 09 | 116,730 | | 25,195 | | 1,628,910 | | 31 May 2026 | 1,335,989 | 5 | 18,065 | 8 | 9,222 | 5 | 6,197 | 1,999,473 | | 31 May 2027 | — | | 2,251,097 | 173,8 | 36 | 117 | ,773 | 2,542,706 | STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 193 ![]() 26. RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS | | | | | | --- | --- | --- | --- | | | | 2024 | 2023 | | | Notes | £m | £m | | (Loss)/profit before taxation 1 | | (95.9) | 61.8 | | Net finance expense/(income)andnet monetary loss arising from hyperinflationary economies | | 12.2 | (2.1) | | Operating (loss)/profit | | (83.7) | 59.7 | | Depreciation | 11,13 | 10.2 | 12.1 | | Amortisation | 10 | 7.1 | 7.0 | | Impairment of tangible and intangible assets | 10,11 | 24.4 | 16.5 | | Impairment reversal of intangible assets | 10 | — | (4.2) | | Impairment reversal of net investments in joint venture | 14 | — | (2.2) | | Impairment of current asset investment | 19 | 0.5 | — | | Profit on sale of assets | 4 | (1.8) | (11.1) | | Difference between pension charge and cash contributions | | 1.7 | 0.5 | | Share-based payments | | 1.9 | 1.7 | | Share of results of joint venture | | (7. 3) | (7.5) | | Operating cash flows before movements in working capital | | (47.0) | 72.5 | | Movements in working capital: | | | | | Inventories | | 2.3 | (8.4) | | Trade and other receivables | | 15.3 | (13.4) | | Trade and other payables | | 77.5 | 30.3 | | Provisions | | (0.4) | (4.4) | | Cash generated from operations | | 47.7 | 76.6 | 1 Wholly derived from continuing operations. #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 194 ![]() 27. RELATED PARTY TRANSACTIONS Key management personnel The key management personnel of the Group comprise the members of the PZ Cussons plc Board of Directors and their compensation was as follows: | | | | | --- | --- | --- | | | 2024 | 2023 | | | £m | £m | | Short-term employee benefits | 2.2 | 2.5 | | Post-employment benefits | 0.1 | 0.1 | | Share-based payments | 0.7 | 0.5 | | | 3.0 | 3.1 | Transactions with joint ventures Certain Group subsidiary undertakings enter into related party transactions with PZ Wilmar Limited, a joint venture interest which was set up under the terms of a joint venture agreement with Wilmar International Limited. Set out below are details of related party transactions during the year with PZ Wilmar Limited as well as balances as at 31 May 2024: • At 31 May 2024, outstanding long-term loans receivable from PZ Wilmar Limited amounted to £30.6 million (2023: £40.3 million). The loan is matched by another loan of the same amount and terms from the Group’s fellow joint venture partner. During the year, PZ Wilmar Limited made two repayments to the Group totalling £8.7 million (2023: £nil). These long-term loans are denominated in USD, interest free and repayable in part or in full on demand, subject to a 12-month notice period. In the prior year, these loans were presented as part of the Group’s net investment in the joint venture. On the occurence of the second repayment in the current year, management determined that it could no longer be demonstrated that there was no intent or expectation to demand repayment of these loans and accordingly they were de-designated from permanent as equity and are no longer presented as part of the Group’s net investment in the joint venture • Short-term loans are advanced to PZ Wilmar Limited from time to time. These loans are interest bearing, repayable on demand and not secured. During the year, no loans were advanced (2023: £11.2 million advanced) and the amount due as at 31 May 2024 was £nil (2023: £nil). Interest received in the year amounted to £nil (2023: £0.7 million) • At 31 May 2024, the outstanding trade receivable balance due from PZ Wilmar Limited was £1.1 million (2023: £2.2 million). All trading balances are settled in cash, and there were no provisions for doubtful related party receivables at 31 May 2024 (2023: £nil). PZ Foundation The PZ Foundation is not a related party within the definition of IAS 24 Related Party Disclosures or the UK Listing Rules. Neither PZ Cussons plc nor its subsidiaries have effective control or day-to-day management responsibilities for the 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 (2023: £0.2 million). As at 31 May 2024 there were no outstanding balances with the PZ Foundation (2023: £nil). STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 195 ![]() 28. SUBSIDIARIES AND JOINT VENTURES Details of the Company’s subsidiaries as at 31 May 2024 are outlined below. PZ Cussons (Holdings) Limited and PZ Cussons (International) Limited are directly owned by PZ Cussons plc; all other subsidiaries are indirectly held. | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | Parent | Proportion | | | | | Country of | Company’s | of voting | | | Company | Operation | incorporation | interest | interest | Registered Office address | | PZ Cussons (Holdings)PtyLimited | Holding company | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | PZ Cussons Australia Pty Limited | Manufacturing | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | PZ Cussons Beauty Australia (Holdings) | Holding company | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | Pty Limited | | | | | | | Rafferty’s Garden Pty Limited | Dormant | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | United Laboratories Limited | Dormant | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | PZ Cussons (NewZealand)PtyLimited | Distribution | Australia | 100% | 100% | Level 3, 510 Church Street Cremorne Victoria 3121 | | Paterson Services (Shanghai)Limited | Active | 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) | Provision of services | England | 100% | 100% | Manchester Business Park, 3500 Aviator Way, | | Limited | to Group companies | | | | Manchester, M22 5TG | | PZ Cussons (International)Limited | Provision of services | England | 100% | 100% | Manchester Business Park, 3500 Aviator Way, | | | to Group companies | | | | 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 | England | 100% | 100% | 19-20 Berners Street, London, United Kingdom, W1T | | | partnership | | | | 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 | Dormant | England | 100% | 100% | Manchester Business Park, 3500 Aviator Way, | | Limited | | | | | Manchester, M22 5TG | | PZ Cussons Acquisition Co Limited | Holding company | England | 91.87% | 91.87% | Manchester Business Park, 3500 Aviator Way, | | | | | | | Manchester, M22 5TG | | Tadley Holdings Limited | Holding company | England | 100% | 100% | Manchester Business Park, 3500 Aviator Way, | | | | | | | Manchester, M22 5TG | | Childs Farm Limited | Distribution | England | 100% | 100% | Manchester Business Park, 3500 Aviator Way, | | | | | | | Manchester, M22 5TG | | PZ Cussons Ghana PLC | Distribution | Ghana | 95.68% | 95.68% | Plot 27/3-27/7, Sanyo Road, Tema, PO Box 628 | | | | | | | Community 1, Tema | | Parnon (HongKong)Limited | Provision of services | Hong Kong | 100% | 100% | 1/F., Hing Lung Comm. Bldg., 68-74 Bonham Strand, | | | to Group companies | | | | Sheung Wan | | PZ Cussons (HongKong)Limited | Dormant | Hong Kong | 100% | 100% | Level 54, Hopewell Centre, 183 Queen’s Road East | | PZ Cussons India PVT Limited | Provision of services | India | 100% | 100% | 604, ‘C’ Wing Raylon Arcade Ram Mandir Road – | | | to Group companies | | | | 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 | #### Notes to the Consolidated Financial Statements continued Year ended 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 196 ![]() | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | | Parent | Proportion | | | | | | Country of | Company’s | of voting | | | | Company | Operation | incorporation | interest | interest | Registered Office address | | | 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 Limited | Dormant | Ireland | 100% | 100% | 4th Floor, 103/104 O’Connell Street, Limerick V94 AT85, | | | | | | | | Co. Limerick, Ireland | | | PZ Cussons (East Africa)Limited | Manufacturing | Kenya | 99.99% | 99.99% | LR No 1/716, Commodore Office Suites, Kindaruma | | | | | | | | Road off Ngong Road, PO Box 22500-00505 Nairobi | | | Food For Life Nigeria Limited | Dormant | Nigeria | 99.99% | 99.99% | 45/47 Town Planning Way, Ilupeju, Lagos | | | Harefield Industrial Limited | Distribution | Nigeria | 99.99% | 99.99% | 45/47 Town Planning Way, Ilupeju, Lagos | | | HPZ Limited 1 | Manufacturing | Nigeria | 74.99% | 74.99% | 45/47 Town Planning Way, Ilupeju, Lagos | | | Nutricima Limited | Dormant | Nigeria | 99.99% | 99.99% | 45/47 Town Planning Way, Ilupeju, Lagos | | | PZ Cussons Nigeria PLC | Manufacturing | Nigeria | 73.27% | 73.27% | 45/47 Town Planning Way, Ilupeju, Lagos | | | Roberts Pharmaceuticals Limited | Dormant | Nigeria | 100% | 100% | 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 | Singapore | 100% | 100% | 5 Shenton Way, UIC Building #10-01, Singapore 068808 | | | | to Group companies | | | | | | | Guardian Holdings Company Limited | Provision of services | Thailand | 49% | 49% | 35 Moo 4, Tessamphan Road, Ban Chang Sub-District, | | | | to Group companies | | | | 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 | | | PZ Cussons Middle East and South | Dormant | UAE | 100% | 100% | PO Box 17233, Jebel Ali, Dubai | | | Asia FZE | | | | | | | | St. Tropez Inc. | Distribution | USA | 100% | 100% | 101 Gr | eenwich St. Suite #11c New York, NY 10006 | | Childs Farm, Inc. | Distribution | USA | 100% | 100% | 101 Greenwich St. Suite #11c New Y | ork, NY 10006 | 1 The equity interest in HPZ Limited is owned by PZ Cussons Nigeria PLC. In addition, Paterson Zochonis Employee Trust (registered in Jersey) and Share Incentive Plan Trust (constituted under the laws of England and Wales) are deemed to be subsidiaries. The trust was established in 2001 and holds shares in the Company predominantly for the Group’s Long-Term Incentive Plans (note 25). | | | | | | | --- | --- | --- | --- | --- | | | | Country of | | | | Company | Operation | incorporation | Parent Company’s interest | Registered Office address | | PZ Wilmar Limited | Manufacturing | Nigeria | 50% | 45/47 Town Planning Way, Ilupeju, Lagos | With the exception of Paterson Services (Shanghai) Ltd with an accounting reference date of 31 December, all subsidiary entities have an accounting reference date of 31 May. Non-controlling interests The two subsidiaries that have non-controlling interests that are material to the Group are HPZ Limited and PZ Cussons Nigeria Plc. Total net liabilities held in these two material subsidiaries at 31 May 2024 were £(4.7) million and £(8.9) million respectively (2023: £35.0 million and £50.8 million of net assets respectively). 29. EVENTS AFTER THE REPORTING PERIOD There are no material post balance sheet events. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 197 ![]() 2024 2023 Notes £m £m Non-current assets Investmentsinsubsidiaries 4 36.8 63.2 Deferredtaxassets 5 1.6 — 38.4 63.2 Current assets Receivables 5 18.2 7.4 Investments — 0.5 Cashandcashequivalents 1.0 1.2 19.2 9.1 Current liabilities Payables 6 (56.8) (15.9) Net current liabilities (37.6) (6.8) Total assets less current liabilities 0.8 56.4 Net assets 0.8 56.4 Equity Sharecapital 8 4.3 4.3 Treasury shares 8 (34.5) (36.9) Capitalredemptionreserve 0.7 0.7 Otherreserves 5.5 3.7 Retainedearnings 24.8 84.6 Total equity 0.8 56.4 TheattributablelossfortheyearintheaccountsoftheCompanywas£35.5million(2023:£16.1million). Thefinancialstatementsfrompages198to203wereapprovedbytheBoardofDirectorsandauthorisedforissueon18September2024. Theyweresignedonitsbehalfby: J Myers S Pollard PZCussonsplc Registerednumber00019457 #### Company Balance Sheet As at 31 May 2024 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 198 ![]() Share capital Treasury shares Capital redemption reserve Other reserves Retained earnings Total Notes £m £m £m £m £m £m At 1 June 2022 4.3 (37. 3) 0.7 2.0 1 27.9 97.6 Lossfortheyear — — — — (16.1) (16.1) Ordinarydividends 3 — — — — (26.8) (26.8) Share-basedpayment — — — 1.7 — 1.7 SharesissuedfromESOT — 0.4 — — (0.4) — At 31 May 2023 4.3 (36.9) 0.7 3.7 84.6 56.4 Lossfortheyear — — — — (35.5) (35.5) Ordinarydividends 3 — — — — (21.9) (21.9) Share-basedpayment — — — 1.8 — 1.8 SharesissuedfromESOT — 2.4 — — (2.4) — At 31 May 2024 4.3 (34.5) 0.7 5.5 24.8 0.8 #### Company Statement of Changes in Equity For the year ended 31 May 2024 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 199 ![]() #### Notes to the Company Financial Statements Year ended 31 May 2024 1. ACCOUNTING POLICIES (a) Basis of preparation PZCussonsplc(theCompany)isapubliclimitedcompanyincorporatedinEnglandandWales. TheCompanyfinancialstatementsofPZCussonsplcarepresentedasrequiredbytheCompaniesAct2006andhavebeenpreparedin accordancewithFinancialReportingStandard101Reduced Disclosure Framework (FRS101).Thepreparationoffinancialstatementsin conformitywithFRS101requirestheuseofcertaincriticalaccounting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andestimatesaresignificanttothefinancialstatements,aredisclosedwithintheconsolidatedfinancialstatements ofPZCussonsplc.TheDirectorshavedeterminedthatsubjecttothematerialuncertaintynotedinnote1totheConsolidatedFinancial Statements,thepreparationoftheCompanyFinancialStatementsonagoingconcernbasisisappropriateastheCompanyreceives dividendcashreceiptsfromitssubsidiaryundertakingswhichenableittomeetitsliabilitiesastheyfalldue.Forfurtherinformationon goingconcern,refertonote1oftheGroup'sconsolidatedfinancialstatements. TheCompany’sfunctionalcurrencyisPoundsSterling(GBP),andthesefinancialstatementsarepresentedinGBPand,unlessotherwise indicated,havebeenpresentedin£milliontoonedecimalplace.ThefinancialinformationfortheCompanyhasbeenpreparedonthe samebasisastheConsolidatedFinancialStatements,applyingidenticalaccountingpoliciesasoutlinedthroughoutthenotestothe ConsolidatedFinancialStatementsexceptasnotedbelow: Investments in subsidiaries IntheCompanyfinancialstatements,investmentsinsubsidiariesareheldatcostlessanyprovisionforimpairment.Detailsofthe Company’sinvestmentsaresetoutinnote4. Intercompany receivables Allowancelossesonamountsowedbysubsidiaryundertakingswheretherehasnotbeenasignificantincreaseincreditriskare calculatedbyreviewing12-monthexpectedcreditlossesusinghistoricandforward-lookingdataoncreditrisk.Thelossallowance expensefortheyearwasdeminimis(2023:deminimis). Share-based payments Theshareincentiveschemesareaccountedforasequity-settledshare-basedpayments,andfurtherdetailsareprovidedinnote25to theGroupconsolidatedfinancialstatements.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contributionbytheCompanyandtheinvestmentinsubsidiariesisadjusted toreflectthiscapitalcontribution. Fortheyearended31May2024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 BronsonHoldingsLimited 9771991 PZCussonsAcquisitionCoLimited 13977759 PZCussons(InternationalFinance)Limited 8589433 St.TropezHoldingsLimited 5706646 TadleyHoldingsLimited 10438262 ThermocoolEngineeringCompanyLimited 9266188 AspermittedbySection408(3)oftheCompaniesAct2006,theincomestatementoftheparentcompanyisnotpresentedwiththese financialstatements.Thelossfortheyearoftheparentcompanyisshowninthestatementofchangesinequity.Detailsofdividendspaid areincludedinnote3ofthefinancialstatements. TheentitysatisfiesthecriteriaofbeingaqualifyingentityasdefinedinFRS101.ItsfinancialstatementsareconsolidatedintotheGroup FinancialStatementsofPZCussonsplcwhichareincludedwithinthisAnnualReport. ThepreparationoffinancialstatementsinconformitywithFRS101requirestheuseofcertaincriticalaccounting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andestimatesaresignificanttothefinancialstatements,are disclosedwithintheConsolidatedFinancialStatementsof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 PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 200 ![]() • 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Presentation of Financial Statements (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:10(d)(statementofcashflows),16(statementofcompliance withallIFRS),38A(requirementforminimumoftwoprimarystatements,includingcashflowstatements),38B-D(additional comparativeinformation),111(cashflowstatementinformation)and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yeteffective) • 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. Critical accounting policies and key sources of estimation uncertainty 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. ThepreparationoffinancialstatementsunderFRS101requiresmanagementtomakeassumptionsandestimatesaboutfutureevents. Theresultingaccountingestimateswill,bydefinition,differfromtheactualresults. InthecourseofpreparingtheCompany’sfinancialstatements,thecriticaljudgementsandkeysourceofestimationuncertaintyrequired whenpreparingtheCompany’sfinancialstatementsareasfollows: Carrying value of investments in subsidiaries 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andestimationof recoverableamountrequiresmanagementtoapplyjudgementinassessingcurrentandforecasttradingperformanceaswellasassessing theimpactofprincipalrisksanduncertaintiesspecifictotheinvestmentsitholds.DetailsoftheCompany’sinvestmentsaresetoutin note 4. 2. DIRECTORS’ EMOLUMENTS 2024 2023 £m £m AggregateamountofDirectors’emoluments 3.0 3.1 EmolumentsofthehighestpaidDirector 1.6 1.6 Amountsaboveincludeshare-basedpaymentexpenses.Fortheyearended31May2024thehighestpaidDirectorreceivedCompany pensioncontributionsof£0.06million(2023:£0.06million). TheSchedule5requirementsofSI2008/410forDirectors’remuneration,aswellastheirinterestsintheCompany,areincludedinthe ReportonDirectors’Remunerationonpages92to117. 3. DIVIDENDS 2024 2023 £m £m Amountsrecognisedasdistributionstoordinaryshareholdersintheyearcomprise: Finaldividendfortheyearended31May2023of3.73p(2022:3.73p)perordinaryshare 15.6 15.6 Interimdividendfortheyearended31May2024of1.50p(2023:2.67p)perordinaryshare 6.3 11.2 21.9 26.8 Afterthebalancesheetdate,theBoardannounceditsintentiontodeclareaninterimdividendof2.10ppershare,down44%compared tolastyear'sfinaldividendof3.73p.Thisrepresentsafullyeardividendof3.60pwhichisalsodown44%,reflectingtheimpactofthe Nairadevaluationonearningspersharewhilemaintaininganearningscoverofapproximatelytwotimes.Thisresultsinatotaldividend of£8.8million(2023:£15.6million).Thedividendwillbepaidon4December2024totheshareholdersontheregisteron1November 2024.Theproposeddividendhasnotbeenincludedasaliabilityintheconsolidatedfinancialstatementsasat31May2024. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 201 ![]() #### Notes to the Company Financial Statements continued Year ended 31 May 2024 4. INVESTMENTS IN SUBSIDIARIES £m Cost At 1 June 2022 90.7 Additions 1.7 At 31 May 2023 92.4 Additions 1.8 At 31 May 2024 94.2 Accumulated impairment At 1 June 2022 — Impairmentcharge (29.2) At 31 May 2023 (29.2) Impairmentcharge (28.2) At 31 May 2024 (57.4) Carrying value At 31 May 2024 36.8 At 31 May 2023 63.2 Additionsaredeemedcapitalcontributionsinrelationtosharebasedpaymentexpensesincurredbysubsidiaries. 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performanceaswellasassessingtheimpactofprincipalrisksand uncertaintiesspecifictotheinvestmentsitholds. Inthecurrentyear,theDirectorsidentifiedanindicatorofimpairmentintheinvestmentinPZCussons(International)Limited.The subsidiaryisinanetliabilityposition(unaudited)asat31May2024andiscurrentlyloss-makingwithnoreasonableindicationthatit willbecomeprofit-makinginthefuture,andnocurrentplansforanyfuturerestructuring.Managementconsideredtherequirementsof IAS36 Impairment of Assets.Onthebasisthatthesubsidiaryoperatesprincipallytoprovideservicestotherestofthegroupanddoes nothavethird-partyrevenue,thevalue-in-useisdeemedtobe£nil.Whenthesubsidiaryisabletorechargescosts,thereisnocertainty aroundcashinflowsrelatingtotheserecharges.Whenconsideringthefairvaluelesscoststosell,managementhaveconsideredthat thesubsidiaryholdstheGroup’sexternalborrowingsandUKdefinedbenefitpensionschemes,andthereforethefairvaluelesscoststo sellissimilarlynegligible.Onthisbasis,animpairmentof£28.2millionwasrecordedtoreducetheinvestment’scarryingvalueto£nil. Therefore,managementdeemeditnecessarytorecordanimpairmentof£28.2milliontoreducetheinvestmentcarryingvalueto£nil withintheCompanyonlyaccountsofPZCussonsplc.DetailsoftheCompany’sdirectsubsidiariesasat31May2024areshownbelow. Forafulllistingofallsubsidiariesseenote28intheGroupConsolidatedFinancialStatements. Subsidiary companies 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% 5. RECEIVABLES 2024 2023 £m £m Non-current AmountsowedbyGroupcompanies 1.6 — Current AmountsowedbyGroupcompanies 15.8 — Otherreceivables 0.1 — Prepayments 2.3 2.3 Currenttaxationreceivable — 5.1 18.2 7.4 Allowancelossesonamountsowedbysubsidiaryundertakingsarecalculatedbyreviewing12-monthexpectedcreditlossesusinghistoric andforward-lookingdataoncreditrisk.Thelossallowanceexpensefortheyearwasdeminimis(2023:deminimis). PZ Cussons plc / AnnualReportandAccounts2024 / Financial Statements 202 ![]() 6. PAYABLES 2024 2023 £m £m AmountsowedtoGroupcompanies 56.7 15.8 Accruals 0.1 0.1 56.8 15.9 AmountsowedtoGroupcompaniesarenon-interest-bearing,unsecuredandhavenofixeddateofrepayment. 7. BORROWINGS TheCompanyisoneofanumberofGroupcompanieswhoareguarantorstothe£325.0millioncommittedcreditfacilitytakenoutby theGroupintheprioryear.Thecreditfacilityincorporatesbothatermloan,ofupto£125.0million,withthebalanceasarevolving creditfacility(RCF)structure.Thetermloanisatwo-yearfacilitywithoptionstoextendbyoneyearandthenasubsequentyear,and theRCFisafour-yearfacility,againwiththeoptiontoextendbyoneyearandasubsequentyear.Furtherdetailsareprovidedinnote19 totheGroupconsolidatedfinancialstatements.TheamountborrowedbytheGroupunderthisagreementasat31May2024was £160.3million(2023:£251.2million),ofwhichtheCompany’sborrowingwas£nil(2023:£nil). 8. SHARE CAPITAL AND INVESTMENT IN OWN SHARES (a) Share capital 2024 2023 Number 000 £m Number 000 £m Allotted, issued and fully paid: 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hasoneclassofordinaryshareswhichcarrynorighttofixedincome. (b) Investment in own shares InvestmentinownsharesrepresentthesharesintheCompanyheldbytheemployeesharetrustswhichcomprisetheEmployeeShare OptionTrust(ESOT)andtheShareIncentivePlan(SIP)trust.TheESOTwasestablishedtopurchasesharestosatisfyawardsunderthe Group’sincentiveschemesandtheSIPtrustwasestablishedtopurchaseandholdsharesonbehalfofemployeesparticipatingintheSIP. Movementsintheinvestmentinownshareswas: ESOT SIP Trust number number As at 1 June 2022 10,193,781 34,269 Issuedtosatisfyoptions (132,634) — Transfers (64,651) 64,651 As at 31 May 2023 9,996,496 98,920 Issuedtosatisfyoptions (659,230) — Transfers (103,523) 103,523 As at 31 May 2024 9,233,743 202,443 ThetransferofsharesbetweenthetrustsrelatetomatchingawardsprovidedbytheGroupundertheSIPwhicharesourcedfromtheESOT. ThecostofsharesheldintheESOTandSIPtrustasat31May2024was£34.5million(2023:£36.9million),andthemarketvaluewas £10.4million(2023:£18.6million). 9. CONTINGENT LIABILITIES AND GUARANTEES TheCompanyisoneofanumberofGroupcompanieswhoareguarantorstothe£325.0millioncommittedcreditfacilitytakenoutbythe Groupintheprioryear.Thenewfacilitycomprisesatermloan,ofupto£125.0million,withthebalanceasarevolvingcreditfacility(RCF) structure.Furtherdetailsareprovidedinnote19totheGroupconsolidatedfinancialstatements.TheamountborrowedbytheGroup underthisagreementasat31May2024was£160.3million(2023:£251.2million),ofwhichtheCompany’sborrowingwas£nil(2023:£nil). STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION 203 ![]() PZ Cussons plc / AnnualReportandAccounts2024 / Additional Information 204 ![]() # ADDITIONAL # INFORMATION 206 Alternative Performance Measures 210 Greenhouse Gas Emissions (former reporting methodology) 211 Glossary 212 Shareholder information 205 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() #### Alternative Performance Measures TheGroup’sbusinessperformanceisassessedusinganumberofalternativeperformancemeasures(APMs).TheseAPMsinclude adjustedprofitabilitymeasureswhereresultsarepresentedexcludingseparatelydiscloseditems(referredtoasadjustingitems)aswe believethisprovidesbothmanagementandinvestorswithusefuladditionalinformationabouttheGroup’sperformanceandsupports amoreeffectivecomparisonoftheGroup’sfinancialperformancefromoneperiodtothenext. Likeforlike(LFL)revenuegrowthrepresentsthegrowthontheprioryearatconstantcurrency,excludingunbrandedsalesandtheimpact ofdisposalsandacquisitions,andadjustingforthenumberofreportingdaysintheperiod. AdjustedprofitabilitymeasuresarereconciledtoIFRSresultsonthefaceoftheConsolidatedIncomeStatementwithdetailsofadjusting itemsprovidedinnote3totheConsolidatedFinancialStatements.ReconciliationsbetweenAPMsandIFRSreportedresultsareset outbelow: Adjusted Consolidated Income Statement 2024 2023 Business performance excluding adjusting items £m Adjusting items £m Statutory results £m Business performance excluding adjusting items £m Adjusting items £m Statutory results £m Revenue 527.9 — 527.9 656.3 — 656.3 Costofsales (317.8) (79.0) (396.8) (399.0) — (399.0) Gross profit 210.1 (79.0) 131.1 257.3 — 257.3 Sellinganddistributionexpense (82.8) — (82.8) (105.3) — (105.3) Administrativeexpense (79.7) (59.6) (139.3) (86.2) (13.6) (99.8) Shareofresultsofjointventure 10.7 (3.4) 7.3 7. 5 — 7.5 Operating profit/(loss) 58.3 (142.0) (83.7) 73.3 (13.6) 59.7 Financeincome 10.8 1.4 12.2 14.1 1.3 15.4 Financeexpense (24.2) — (24.2) (13.3) — (13.3) Net finance (expense)/income (13.4) 1.4 (12.0) 0.8 1.3 2.1 Netmonetarylossarisingfrom hyperinflationaryeconomies (0.2) — (0.2) — — — Profit/(loss) before taxation 44.7 (140.6) (95.9) 74.1 (12.3) 61.8 Taxation (6.5) 30.6 24.1 (20.1) 4.7 (15.4) Profit/(loss) for the year 38.2 (110.0) (71.8) 54.0 (7.6) 46.4 Attributable to: OwnersoftheParent 33.6 (90.6) (57.0) 47.0 (10.6) 36.4 Non-controllinginterests 4.6 (19.4) (14.8) 7.0 3.0 10.0 38.2 (110.0) (71.8) 54.0 (7.6) 46.4 PZ Cussons plc / AnnualReportandAccounts2024 / Additional Information 206 ![]() Adjusted operating profit and adjusted operating margin 2024 £m 2023 £m Group Operating(loss)/profitfromcontinuingoperations (83.7) 59.7 Exclude:adjustingitems 142.0 13.6 Adjustedoperatingprofit 58.3 73.3 Revenue 527.9 656.3 Operatingmargin -15.9% 9.1% Adjustedoperatingmargin 11.0% 11.2% By Segment Europe & the Americas: Operatingprofitfromcontinuingoperations 0.7 0.4 Exclude:adjustingitems 31.9 28.9 Adjustedoperatingprofit 32.6 29.3 Revenue 200.7 205.8 Operatingmargin 0.3% 0.2% Adjustedoperatingmargin 16.2% 14.2% Asia Pacific: Operatingprofitfromcontinuingoperations 27.0 29.6 Exclude:adjustingitems 1.0 (2.1) Adjustedoperatingprofit 28.0 27.5 Revenue 175.2 190.7 Operatingmargin 15.4% 15.5% Adjustedoperatingmargin 16.0% 14.4% Africa: Operating(loss)/profitfromcontinuingoperations (50.7) 48.3 Exclude:adjustingitems 81.0 (11.1) Adjustedoperatingprofit 30.3 37.2 Revenue 151.7 256.3 Operatingmargin -33.4% 18.8% Adjustedoperatingmargin 20.0% 14.5% Central: Operatinglossfromcontinuingoperations (60.7) (18.6) Exclude:adjustingitems 28.1 (2.1) Adjustedoperatingloss (32.6) (20.7) 207 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Adjusted gross profit and gross margin 2024 £m 2023 £m Grossprofit 131.1 257.3 Exclude:adjustingitems 79.0 – Adjusted gross profit 210.1 257.3 Revenue 527.9 656.3 Grossmargin 24.8% 39.2% Adjusted gross margin 39.8% 39.2% Adjusted share of JV results 2024 £m 2023 £m Shareofresultsofjointventure 7.3 7.5 Exclude:adjustingitems 3.4 – Adjusted share of results of joint venture 10.7 7.5 Adjusted profit before taxation 2024 £m 2023 £m (Loss)/profitbeforetaxationfromcontinuingoperations (95.9) 61.8 Exclude:adjustingitems 140.6 12.3 Adjusted profit before taxation 44.7 74.1 Adjusted Earnings Before Interest Depreciation and Amortisation (Adjusted EBITDA) 2024 £m 2023 £m (Loss)/profitbeforetaxationfromcontinuingoperations (95.9) 61.8 Addback/(deduct):netfinanceexpense/(income) 12.0 (2.1) Addback:depreciation 10.2 12.1 Addback:amortisation 7.1 7.0 Addback:impairmentandimpairmentreversal 24.9 12.3 (41.7) 91.1 Exclude:adjustingitems 1 117.6 1.3 Adjusted EBITDA 75.9 92.4 1 Excludesadjustingitemsrelatingtoimpairmentandfinanceincome. #### Alternative Performance Measures continued PZ Cussons plc / AnnualReportandAccounts2024 / Additional Information 208 ![]() Adjusted earnings per share 2024 pence 2023 pence Basic(loss)/earningspershare (13.60) 8.70 Exclude:adjustingitems 21.62 2.53 Adjustedbasicearningspershare 8.02 11.23 Diluted(loss)/earningspershare 1 (13.60) 8.67 Exclude:adjustingitems 2 21.60 2.52 Adjusted diluted earnings per share 8.00 11.19 1 In2024,thebasicanddilutedlosspershareareequalasaresultoftheGroupincurringalossfortheyear. 2 In2024,thisincludesanadjustmentof0.03pencepersharearisingfrombringingthedilutedlosspershareinlinewiththebasiclosspershareasoutlinedabove. Free cash flow 2024 £m 2023 £m Cashgeneratedfromoperations 47.7 76.6 Deduct:purchaseofproperty,plantandequipmentandsoftware (6.1) (6.7) Free cash flow 41.6 69.9 209 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Reporting methodology aligned to financial facility agreement – Greenhouse Gas Emissions and Energy Consumption\*: FY24 (current reporting year) FY23 FY21 (baseline year) UK Global Total UK Global Total UK Global Total Energyconsumptionusedtocalculate emissions (MWh) 6,361 160,255 166,616 6,518 205,784 212,302 6,209 200,630 206,839 Scope 1¹ Emissions from activities for which the Company owns or controls including combustion fuel & operation of facilities (Scope 1) (tCO 2 e) 507 27,780 28,287 642 39,945 40,587 785 39,998 40,783 Scope 2¹ Emissions from purchase of electricity, heat, steam and cooling purchased for own use (Scope2location-based)(tCO 2 e) 741 9,948 10,689 676 5,574 6,250 833 7, 837 8,670 Emissions from purchase of electricity, heat, steam and cooling purchased for own use (Scope2market-based)(tCO 2 e) — 5,455 5,455 — 5,574 5,574 — 7, 837 7,8 37 Total Scopes 1 and 2¹ TotalgrossScope1and+Scope2location- basedemissions(tCO 2 e) 1,248 37,728 38,976 1,318 45,519 46,837 1,618 47, 835 49,453 TotalgrossScope1andScope2market-based emissions(tCO 2 e) 507 33,235 33,742 642 45,519 46,161 785 47,835 48,620 IntensityratiotCO 2 e(Scope1and2market- based)/£100,000revenue 0.25 10.17 6.39 0.31 10.18 7.03 0.18 26.81 8.06 Totaloutofscopeemissions(tCO 2 e) 5 — 2,028 2,028 — 2,390 2,390 — 2,159 2,159 Scope 3 2,3,4 Cat1Purchasedgoodsandservices 504,712 594,048 521,474 Cat2Capitalgoods 373 332 312 Cat3Fuelandenergyrelatedactivities  7,952 8,486 6,315 Cat4Upstreamtransportanddistribution 89,055 102,670 155,957 Cat5Wastegeneratedinoperations 1,802 1,565 1,950 Cat6Businesstravel 1,200 726 227 Cat7Employeecommuting 1,872 1,915 2,268 Cat8Leasedassets 545 561 608 Cat9Downstreamtransportanddistribution 30,404 30,926 48,390 Cat10Processingofsoldproducts n/a n/a n/a Cat11Useofsoldproducts 5,616,201 6,206,104 6,364,955 Cat12End-of-lifetreatmentofsoldproducts 64,533 61,372 69,634 Cat13Downstreamleasedassets n/a n/a n/a Cat14Franchises n/a n/a n/a \* AllemissionshavebeencalculatedfollowingtotheGreenhouseGasProtocol(GHGProtocol)andusingtheUKGovernmentGHGConversionFactorsforCompanyReporting.Scopes1  and2emissionshavebeencalculatedusingactualdata.Scope3emissionshavebeencalculatedusingspenddataandindustryaverageemissionfactors.EmissionsassociatedwithPZ  WilmarareallocatedinScopes1&2. 1 InformationassuredandverifiedbyVercoAdvisoryServicesLimited,excludingFY23forPZWilmarinventoryonly. 2 InformationassuredandverifiedbyCarbonClearLimitedtradingas‘EcoAct’forFY23andFY21inventories.FY22unverifiedbutadjustedinlinewithverificationrecommendations. 3 InFY24wehaveimprovedthemethodologyofourScope3emissionsfor2021andsubsequentyearsinlinewithverificationrecommendation.Duetochangesinthemethodology  approach,therevisedGHGScope3emissiontotalsforFY21resultedinadecreaseof12%incomparisontotheScope3emissionsinitiallyreportedinFY23AnnualReport.The  decreasewasaresultofimproveddataqualityandreportingprocedures,includinguseofactualactivitydataasbasisofthecalculations,standardisationofdatareportingacrossBUs  andrectificationoferrorsidentifiedintheScope3emissionsinitiallyreportedintheoriginalFY21baseline.Correctionstodataerrorsweremostlyrelatedtodownstream  transportationanddistribution,wastegeneratedinoperationsandbusinesstravel. 4 CalculatingandverifyingScope3dataisacomplexandtime-consumingexercise.ThefigurespresentedforFY24currentreportingyeararefromthelatestavailabledatawhich  forScope3istheFY23inventory.ForFY23disclosurethisistheFY22Scope3inventory.TheGroupwillseektoprogressthetimelinesofourreportingsuchthattheScope3inventory  disclosurealignstothereportingfinancialcycleinthefuture. 5 OutofscopeemissionsrelatetoouruseofbiomassforthegenerationofsteaminourKenyanoperations. #### Greenhouse Gas Emissions (former reporting methodology) PZ Cussons plc / AnnualReportandAccounts2024 / Additional Information 210 ![]() Term Definition APM Alternativeperformancemeasure BESTvalues OurPZCussonsvalues(Bold,Energetic,StrivingandTogether) BrandInvestment Anoperatingcostrelatedtobrandmarketing(previously‘Media&Consumer’) EBITDA Earningsbeforeinterest,taxes,depreciationandamortisation Employeewellbeing %scorebaseduponasetofquestionswithinourannualsurveyofemployees EPS Earningspershare ETR Effectivetaxrate ExCo ExecutiveCommittee FamilyCare ReferstoourHygiene,BabyandBeautybrandsinNigeriaandAfrica Freecashflow Cashgeneratedfromoperationslesscapitalexpenditure Freecashflowconversion Freecashflowasa%ofadjustedEBITDAfromcontinuingoperations Likeforlike(LFL)revenuegrowth Growthontheprioryearatconstantcurrency,excludingunbrandedsalesandtheimpactofdisposals andacquisitions,andadjustingforthenumberofreportingdaysintheperiod MustWinBrands Thebrandsinwhichweplacegreaterinvestmentandfocus.Theycomprise:Carex,ChildsFarm, CussonsBaby,Joy,MorningFresh,OriginalSource,Premier,SanctuarySpaandSt.Tropez Netdebt Cash,short-termdepositsandcurrentassetinvestments,lessbankoverdraftsandborrowings. ExcludesIFRS16leaseliabilities PersonalCare ReferstoourUKbusinessunitoperatingourHygienebrandssuchasCarex,OriginalSourceand ImperialLeather 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 (RGM) Maximisingrevenuethroughensuringoptimisedpricepointsacrosscustomersandchannelsand acrossdifferentproductsizes SKUs Stockkeepingunit Throughtheline Marketingcampaignincorporatingbothmassreachandtargetedactivity #### Glossary 211 STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION ![]() Annual General Meeting TheAnnualGeneralMeetingwillbeheld at10:30amon21November2024at: ManchesterBusinessPark,3500Aviator Way,Manchester,M225TG Financial calendar ThekeydatesforPZCussons’financial calendarareavailableonourwebsite: www.pzcussons.com Registered office PZ Cussons plc Manchester Business Park 3500 Aviator Way Manchester M22 5TG Tel:+44(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 Company Secretary KareemMoustafa CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 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marketsinwhichweoperate.Whilewebelievethatthe expectationsreflectedhereinarereasonablebasedontheinformationwehaveasatthedateofthisreport,actualoutcomesmayvary significantlyowingto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reportorotherannouncementstoreflectchangesinour expectationsorcircumstances.Noreliancemaybeplacedontheforward-lookingstatementscontainedwithinthisreport. #### Shareholder Information PZ Cussons plc / AnnualReportandAccounts2024 / Additional Information 212 ![]() ![]() PZ Cussons plc Manchester Business Park 3500 Aviator Way Manchester M22 5TG www.pzcussons.com