Creating Sustainable Value for All PZ Cussons Is a Dynamic Consumer Products Group and Innovator of Some of the World’S Best Known and Loved Brands
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Governance and Financial Statements 2018 Creating sustainable value for all PZ Cussons is a dynamic consumer products group and innovator of some of the world’s best known and loved brands. For more than 130 years, we have operated in selected developed and emerging markets that present the greatest strategic potential for future growth. Our agile operating model and world-class supply chain and distribution networks enable us to meet consumer needs and deliver quality brands that add value and enhance everyday lives. Contents Our 2018 Report Governance Our Annual Report is split into two distinct reporting sections: a Strategic Report, and 1 Chair’s letter to shareholders Governance and Financial Statements. These documents are to be read in conjunction 2 Board of Directors with each other. 4 Report of the Directors 8 Statement of the Chair of the Strategic Report Remuneration Committee The Strategic Report takes 10 Report on Directors’ Remuneration a strategic look at how the Group operates and provides 10 – Directors’ Remuneration Policy insight into our strategy, 17 – Annual Report on Remuneration business model, people 26 Statement of the Chair of the and vision. Nomination Committee 28 Report of the Audit & Risk Committee Governance and Online 32 Report on Corporate Governance Financial Statements Digital, downloadable copies of the The Governance and Financial two reports are available online at: Financial Statements Statements provides an 38 Independent Auditor’s Report to in-depth analysis of the www.pzcussons.com the Members of PZ Cussons Plc Group’s annual results and 47 Consolidated Income Statement governance processes. 48 Consolidated Statement of Comprehensive Income 49 Consolidated Balance Sheet 50 Consolidated Statement of Changes in Equity 51 Consolidated Cash Flow Statement 52 Notes to the Consolidated Financial Statements 96 Company Balance Sheet 97 Company Statement of Changes in Equity 98 Notes to the Company Financial Statements PZ Cussons Plc Governance and Financial Statements 2018 01 Chair’s letter to shareholders “We are committed to creating sustainable value for all stakeholders. The Board is focused on the principles of good governance and being Good4Business” Dear shareholder Board changes These Governance and Financial Statements are intended We are very pleased to have welcomed to the Board two new to provide you with an in-depth analysis of our financial Non-executive Directors. Tamara Minick-Scokalo and Dariusz performance during the year and an insight into the way Kucz both joined the Board on 1 May 2018 and each brings in which the Board ensures that the principles of good to the Group diverse and relevant geographic and industry governance are observed across all parts of the Group. In experience. particular, the governance section reports on the composition, scope and key focus areas during the year of each of the Dividend and outlook principal standing committees of the Board. The Group’s Balance Sheet remains strong and we will continue to evaluate growth opportunities utilising the Group’s brand Our performance during the year portfolio and distribution capability. Sound corporate governance is especially important in challenging periods. Whilst the Group has delivered good Whilst we expect another challenging year ahead, the business profit growth in Asia and a creditable result in Europe, macro is well placed to return to growth and consequently the Board conditions in Nigeria have resulted in a sharp decline in Africa has maintained the full year dividend. profits for the year and hence a disappointing result for the Group as a whole. Caroline Silver Chair Within Africa, whilst many of our brands have strengthened 24 July 2018 their No.1 or No.2 positions during the last year, a sustained lack of liquidity at both consumer and trade level and a consequent significant contraction in the size of the market has resulted in lower volumes, prices and margins. In response, we are taking steps to optimise further our overall product portfolio and to reduce our cost base. Within Asia, our businesses in Australia and Indonesia have made sound progress in the year, setting good foundations for growth in the years to come. In Europe, good growth in the Group’s Beauty division has helped to partially offset the more challenging trading conditions faced in the UK Washing and Bathing division. In all our markets, we remain focused on our innovation but with a sharpened lens on fewer, bigger, higher margin product launches that will differentiate further our brands, as well as a further reduction in overheads by optimising our operating model. 02 PZ Cussons Plc Governance and Financial Statements 2018 Governance Board of Directors Name and Appointed PZC years Committee Other position to the Board of service memberships Skills & experiences appointments Caroline 2014 4 years Chair of Caroline Silver joined the PZ Cussons Managing Director Silver Nomination Board as a Non-executive Director in Moelis & Company Committee 2014, becoming Senior Independent Non- Non-executive Director in 2016 and Chair in 2017. She has executive Good4Business Director of BUPA Plc worked within the investment banking Chair Committee sector for over 30 years and is Partner and Trustee of the Victoria Managing Director at Moelis & Company. & Albert Museum She is a chartered accountant and has previously held senior corporate finance and M&A positions at Morgan Stanley and Merrill Lynch. She has a wealth of international experience especially within African markets. John 2016 2 years Chair of John Nicolson joined the PZ Cussons Non-executive Nicolson Good4Business Board as Non-executive Director on 1 Chairman of A G Barr Senior Committee May 2016. John has significant experience Plc of global consumer goods businesses for Independent Audit & Risk Non-executive both developed and emerging markets, Director Committee Director of Stocks having held senior positions in the FMCG Spirits Group Plc sector, including being Regional President and Executive Committee member Member of the of Heineken NV and Executive Board Advisory Board at Director for international markets at Edinburgh University Scottish & Newcastle. Business School Jez Maiden 2016 2 years Chair of Audit & Jez Maiden joined the PZ Cussons Group Finance Non- Risk Committee Board as a Non-executive Director on Director of Croda executive 1 November 2016. He currently holds International Plc Remuneration Director the post of Group Finance Director at Committee Croda International Plc, the FTSE 100 global speciality chemicals company. He has previously held similar positions at National Express Group Plc, Northern Foods Plc and British Vita Plc and was, until 2015, Senior Independent Director and Chair of the Audit Committee of Synthomer Plc. Helen 2012 6 years Chair of Helen Owers joined the PZ Cussons Non-executive Owers Remuneration Board as a Non-executive Director in Director of Informa Non- Committee 2012. Prior to this she held senior roles Plc within Thomson Reuters, including Chief executive Nomination Non-executive Development Officer with responsibility Director Committee Director of Eden for the company’s expansion in Project International rapidly developing economies and the implementation of the company’s digital strategy, and President of Global Businesses for Thomson Reuters Legal, responsible for building new businesses in emerging markets. She also has extensive experience working as a consultant for Gemini Consulting, developing and implementing corporate and operational strategies for consumer products clients. PZ Cussons Plc Governance and Financial Statements 2018 03 Name and Appointed PZC years Committee Other position to the Board of service memberships Skills & experiences appointments Dariusz 1 May 2018 2 months Remuneration Dariusz Kucz joined the PZ Cussons Board Chief Top Line Officer Kucz Committee as Non-executive Director on 1 May of Haribo GmbH & 2018. Dariusz is Chief Top Line Officer of Co. KG Non- Nomination Haribo, the international confectionery executive Committee Director company, leading its global commercial operations. He has previously held senior leadership roles at Danone S.A., where he led the baby food business in Asia Pacific, and Wrigley, where he was Regional Vice President, Central and Eastern Europe. Tamara 1 May 2018 2 months Audit & Risk Tamara Minick-Scokalo joined the PZ Non-Executive Director Minick- Committee Cussons Board as Non-executive Director of Amer Sports on 1 May 2018. Tamara has held senior Scokalo Good4Business Non-Executive Director marketing and commercial positions Non- Committee of Date OHorizons executive at consumer businesses including P&G Director Plc, Coca-Cola Company, Cadbury Plc Non-Executive Director and Mondelez. Until 2016, she was of Lets Go Crazy Regional President, Growth Markets for Holdings Ltd Pearson Plc, the FTSE 100 international Member of the publishing and education company, with Advisory Board of responsibility for emerging markets. Mustad HoofCare Alex 2003 25 years Executive Alex Kanellis joined PZ Cussons in 1993. Kanellis Committee He was appointed Managing Director of the Group’s Thailand operations in 1998 Chief Good4Business and Managing Director of Indonesia Executive Committee Officer in 2001. He joined the Board in 2003 as Regional Director of Asia before becoming Chief Executive Officer in June 2006. Alex has a PhD in mechanical engineering. Brandon 2006 21 years Executive Brandon Leigh joined PZ Cussons in 1997 Trustee of the Halle Leigh Committee and