Pz Cussons Stock

Good morning or good afternoon all, and welcome to today's PZ Cussons Full Year Results Call. My name is Adam, and I'll be your operator for today. [Operator Instructions]

I will now hand the floor to Jonathan Myers to begin.

Thank you, Adam, and good morning, and thank you to all of you for calling in to our results presentation for PZ Cussons financial year ended 31st of May 2026.

For those of you viewing the slides, as we're presenting this morning, you can see straight away an example of how we built stronger brands last year. Here's us making a splash on Marble Arch about Original Source's tie-up with HYROX. The London leg of this global indoor fitness competition was a perfect opportunity to promote our latest innovation, the men's workout recovery range. Not only were we able to distribute tens of thousands of product samples at the event, we were also able to generate more than 16 million views online.

Turning to the agenda for this morning. I'll start with a brief introduction before handing over to Jan. Some of you will have met Jan already since she joined 4 months ago, and she'll share some reflections from her fresh eyes before getting into an update on our financial performance. I'll then provide a broader update on strategic progress before a chance for you to ask any questions.

So without further ado, let's get started. And there's no better place to start than a reminder of the investment case we set out at our Capital Markets event back in February. We have winning portfolios of locally loved brands. They play in our 3 core categories and our 4 lead markets. These brands are supported by 2 other attributes, which we also see as a source of competitive advantage: our go-to-market capabilities and our manufacturing scale and agility.

Our portfolio is well balanced with each lead market playing its own role in delivering for the group overall. As Jan will cover, our balance sheet has been significantly strengthened, and we have set out a clear capital allocation policy. Overall, this gives us confidence in our growth ambition and target of double-digit total shareholder return through the cycle.

Put all of this together, along with the actions taken following our strategic review, and we are now a more focused and more resilient business.

So what of FY '26 then as we look through the lenses of this investment case and our refreshed strategy? Well, overall, we've seen some early signs of delivery. Performance was broad-based with growth across all 4 lead markets and our top 10 brands. Our ability to step up investments in brand-building activity to the highest level in recent years is paying off, supporting growth across the portfolio and enabling us to invest in the development of future innovation and activation plans as we build multiyear growth plans.

We have seen a continued reduction in FX risk in Nigeria as our actions have materially reduced sensitivity to future currency fluctuations, along with the ongoing implementation of guardrails that we set out in February. And we have a significantly strengthened balance sheet, not least thanks to growth of GBP 12 million in free cash flow. As a result, the Board is proposing the resumption of dividend growth, the first increase in 4 years.

Like all companies in our sector, we are, of course, mindful of the macroeconomic environment in which we're operating. However, we have started the year in line with our expectations and are pleased to confirm that the outlook for FY '27 is in line with market expectations. We remain confident that we are well placed to continue delivering sustainable growth over the long term.

Now with that, I'll hand over to Jan.

Thanks, Jonathan. Good morning, everyone. It's great to be here presenting my first set of results at PZ Cussons, and I look forward to seeing some of you in person in the roadshow over the coming weeks.

For those I haven't met yet, I joined PZ in late March from Severfield, where I was the Interim Chief Finance Officer. Before that, I was the CFO at Manchester Airports Group for more than 5 years. During this period, I oversaw the delivery of major investments and transformation projects, such as Manchester's GBP 1.3 billion investment in Terminal 2 as well as operational efficiencies, technology advancements and finance transformation.

I also led the refinancing and operational response as we navigated through the COVID pandemic as passengers fell from 60 million down to 0 and then back up to 60 million. Prior to that, I held a number of senior commercial finance roles in global businesses across Europe and the U.S., having started my career qualifying with PwC, where I worked in corporate finance and M&A lead advisory.

Before we get into the numbers, I thought it would be helpful to share some observations from my first few months in the role. Firstly, PZ Cussons is a brilliant company with a fantastic portfolio of locally loved brands, a number of which have long featured in my own household. I've loved meeting so many colleagues in my first few months, and it's clear that the business is full of brilliant people who are committed to the success of PZ and work hard every day to make it a reality.

My first trip to Nigeria with Jonathan was in June, and it was brilliant to get under the skin of how the business and the market there works. Understanding the recent financial history of the business and how this was impacted by the devaluation has been top of my list since joining. I'm pleased to say that the guardrails that Jonathan and the team have been embedding have greatly reduced potential risk in the future.

As I've learned about the business, I see 3 areas where I want to focus and I feel I can make a difference. Firstly, in supporting the business as we increasingly focus not only on investing in current year brands, campaigns and innovation, but also planning out over several years. This is largely about shifts in mindset and some of the principles of the longer-term planning that the infrastructure companies have worked at.

Secondly, and related is improving returns. We have been clear with our shareholders what to expect in terms of the financial algorithm. To really drive this, I now want each and every one of our teams to understand the role they play in delivering on our commitments and what it means as they think about investment and required returns, whether that's money spent on TV commercial, a new line in a factory or an IT systems upgrade. We also need an eye on how that criteria needs to vary depending on the developed or the emerging markets, given the underlying differences in risk characteristics.

Third, there are further opportunities for finance simplification. I'm a big user of AI myself, and I want the finance team to be embedding these tools into our everyday work in order to free up time to support with value-added decision-making.

Now let's move on to the numbers where we've had a strong year financially. Starting with the summary financials. Group revenue increased by 5.4% to GBP 541 million, with like-for-like revenue growth of 5.8%. That growth was broad-based with growth across each of our 4 lead markets and across our top 10 brands in their respective largest markets.

Adjusted operating profit increased to GBP 59.5 million with the margin improving to 11%. On the more relevant comparison basis, which excludes the contribution from the PZ Wilmar joint venture in both years, adjusted operating profit increased by 24.5% and margin improved by 170 basis points.

Moving further down the P&L, net finance expense reduced significantly, reflecting the strengthening of the balance sheet. Adjusted profit before tax increased to just over GBP 50 million, while adjusted earnings per share decreased to 7.14p. This decrease is driven by 2 factors.

Firstly, a high effective tax rate, which as explained at the half year is due to the post-tax income from PZ Wilmar joint venture no longer being recorded in our operating profit. And secondly, the mix of growth with Africa's strong performance driving a proportionally higher minority interest charge and in particular, as we saw strong growth in electricals in which we have a lower net ownership than elsewhere.

Critically, free cash flow improved strongly to GBP 54.7 million compared with GBP 42.3 million last year, reflecting higher adjusted operating profit and lower cash exceptionals, partly offset by a working capital outflow.

Net debt reduced significantly from GBP 112 million to GBP 25 million, driven by the improved free cash flow, proceeds from the sale of our 50% stake in PZ Wilmar and the disposal of surplus nonoperating assets.

As a result of the performance in FY '26 and our confidence in the future, the Board has proposed a dividend increase of 2.8%, consistent with our progressive dividend policy.

Turning now to revenue. The revenue bridge shows growth across each of the 3 reporting regions, each of the 4 lead markets and in both the developed and the emerging parts of the portfolio.

The single largest contribution has again been from growth in Nigeria. Pleasingly, although this was largely inflation-driven, we have seen a much more stable economic environment in Nigeria. In fact, the movement in the naira has been favorable with the red down bar for FX driven by the strengthening of sterling against other currencies.

So turning to operating profit. And with the 24.5% growth, I'm pleased with the quality of this delivery. We saw growth in both gross profit and reduction in overheads, thanks in part to GBP 8.5 million structural cost savings, allowing us to increase marketing investment by GBP 3.5 million. The GBP 59.5 million operating profit we reported includes GBP 5.4 million of FX gains as the revaluation of U.S. dollar-denominated liabilities in Nigeria reduced, thanks to the appreciation of the naira. This is a one-off gain in FY '26. And so I would encourage you to think of our normalized operating profit from which we will grow in FY '27 as being closer to GBP 54 million.

This slide links the FY '26 performance back to the financial framework we set out at the Capital Markets event. Over the cycle, we are targeting mid-single-digit like-for-like revenue growth with increased marketing investment funded by gross margin expansion and overhead growth limited to be below that of revenue.

I'm pleased to say that in FY '26, we delivered against this framework. The result is improved quality of earnings, revenue growth supported by investment, productivity gains funding that investment and a stronger, more resilient profit base.

Looking now at the segments, starting with Europe and Americas. Revenue increased to GBP 200 million with like-for-like revenue growth of 0.9%.

In the U.K., our lead market, revenue grew 0.5% to GBP 175 million. We delivered growth across the key washing and bathing brands, Carex, Imperial Leather, Original Source and Sanctuary Spa, with Sanctuary Spa, the biggest contributor driven by strong Christmas gifting.

Outside of the U.K., revenue grew 3.8%. Most notably, St. Tropez returned to growth in North America, growing 6.9%, supported by the new operating model and partnership with Emerson. This was offset by some softness in Continental Europe.

Operating profit was broadly flat as improved gross margins and good cost containment offset increases in marketing investment.

Turning to APAC. Revenue was GBP 173 million, up 3.9% on a like-for-like basis, but flat on a reported basis, reflecting movements in the Indonesian rupiah and Australian dollar.

In ANZ, revenue grew 4% to GBP 91 million, with growth across Morning Fresh, Radiant and Rafferty's Garden. Morning Fresh benefited from strong performance in Auto Dish. Rafferty's Garden grew strongly with early success from its relaunch into New Zealand and the 1-liter Original Source launch provided significant uplift to revenue.

Indonesia grew 10.2% to GBP 61 million, driven by Cussons Baby with improvements in both price mix and volume. The growth was driven by the completion of the phased restaging of the overall brand and e-commerce remains a major growth driver with strong growth across TikTok Shop and Shopee.

The reduction in adjusted operating profit reflected increased marketing investment behind Auto Dish and the Cussons Baby restaging, together with the depreciation of the Australian dollar and Indonesian rupee.

Moving to Africa. Revenue increased to GBP 168 million, with like-for-like revenue growth of 14.7%. Revenue in our Nigerian lead market grew 22% to GBP 133 million, with growth in both price mix and volume. We delivered double-digit growth across the majority of our largest brands with Stella particularly strong, supported by increased exports and work to extend the purchase period beyond the seasonal peak of the Harmattan dry season.

Route-to-market improvements also continued to support performance as we again grew both the quantity and the quality of stores served. Our electricals business grew revenue by over 20%, driven primarily by refrigeration products and continuing to capitalize on the strength of our exclusive showroom network.

Adjusted operating profit growth included GBP 4.6 million benefit from the revaluation of U.S. dollar-denominated liabilities in Nigeria following the appreciation of the naira, partly offset by significantly increased marketing investment, including support for the Carex launch.

Turning now to cash flow and net debt. Net debt reduced by GBP 87 million to GBP 25 million. The big drivers here being the increase in free cash flow and disposal proceeds. Free cash flow was GBP 54.7 million, up GBP 12 million, supported by higher operating profit and less cash exceptionals. The Wilmar disposal proceeds were GBP 47.8 million with a further GBP 27.6 million associated with surplus asset sales.

You'll remember that in calculating leverage, we exclude the benefit of the cash held within Nigeria of GBP 24.5 million. So this results in an adjusted net debt to EBITDA of 0.7x, below the 1 to 1.5x range set out as part of the capital allocation policy. Taking a step back, the balance sheet has been transformed over recent years with gross debt GBP 174 million lower than 3 years ago.

Related to the reduction in group debt is how our exposure to movements in the naira has materially reduced. A major source of the impact on operating profit has been the intercompany liabilities within Nigeria entity-denominated currency other than the naira. As the naira devalued, these liabilities increased in value, reducing our operating profit. The reduction in these liabilities has left us in a much stronger position.

Historically, NGN 100 move would have driven more than GBP 7 million impact on operating profit. Today, that sensitivity on underlying operating profit is around GBP 1.5 million, and we continue to work to decrease these liabilities and therefore, the P&L sensitivity even further.

Our capital allocation framework as set out at the Capital Markets event is clear. First, we are targeting adjusted net debt that is excluding cash held in Nigeria to the adjusted EBITDA in the range of 1 to 1.5x. Second, we have adopted a progressive dividend policy. Third, we will consider bolt-on M&A, and Jonathan will talk shortly about how Childs Farm represents something of a blueprint for what we're looking at. And fourth, cash returns to shareholders will be considered relative to those M&A opportunities.

Given year-end adjusted net debt to EBITDA of 0.7x, we now have substantial flexibility within that framework. So the key message is not that leverage has reduced; it is that stronger cash generation, portfolio simplification and disciplined capital allocation have put the group in a much better position to invest behind growth, support a progressive dividend and evaluate additional shareholder returns or M&A where it creates value.

Finally, turning to current trading and FY '27 guidance. As we said in the release this morning, the year has started in line with expectations. Like everyone else in the sector, we are mindful of the impact of the conflict in the Middle East. While there is still a number of unknowns, we have since the start -- at the start of the crisis, acted swiftly to understand and react to the impact and believe that the large majority of the cost inflation can be offset by mitigating actions already in place.

As a result, we are comfortable confirming current market expectations for operating profit, which range from GBP 58 million to GBP 61.2 million. The H1-H2 split is expected to be more balanced than it was in FY '26, where operating profit was skewed more towards H1, given the majority of the FX gains fell in the first half of the year and the majority of the marketing spend came in the second half.

Based on spot rates, we don't currently foresee a material FX impact year-on-year. And we'd expect net debt to be lower again, reflecting continued strong underlying cash generation.

Overall, we enter FY '27 with good underlying momentum, a stronger balance sheet, reduced exposure to the Nigerian FX volatility and a better funded innovation pipeline. While there are external uncertainties to manage, the business is in a stronger position to continue delivering against the strategy and financial framework we have set out.

And with that, I will hand back to Jonathan.

Thanks, Jan. Let me now come on to provide a broader update on progress and performance. Our strategy is focused and disciplined, centered around 3 core categories: Personal, Home and Baby Care in 4 lead markets: the U.K., Australia and New Zealand, Nigeria and Indonesia. We have a balanced geographic footprint with around 60% of revenue from developed markets and 40% from emerging markets.

In our lead markets, our competitive advantage comes from our locally loved brands, our go-to-market capabilities and manufacturing scale and agility. Our strategy is built on these competitive advantages, which actually we sum up in just 10 words as 5 priorities: build brands, serve consumers, reduce complexity, develop people and grow sustainably.

Finally, as Jan has discussed, we are clear on how we will allocate capital to maximize shareholder returns. So a clear framework of sharper portfolio choices, stronger execution and disciplined use of cash to drive sustainable long-term value.

Now let's take a look at progress we have made against these 5 priorities, starting with some examples of how we are building brands and serving consumers.

Gifting in the U.K. has been a clear success, where we've been learning and optimizing our plans each year. Take Sanctuary Spa gifting, where revenue is up more than 70% over the past 2 years. This has been achieved through improved product offering, optimizing the pricing architecture of the range, including playing at higher price points and through bigger, better in-store displays and activation.

We broadened retailer participation in the program last Christmas, adding 7 new customers and pushed for stronger execution in those retailers already involved. Take Boots, for example. They sold a PZ gift set every 15 seconds in the run-up to Christmas last year. And it may surprise some of you, as you listen to this, with your mind secretly wandering off to the sun lounges you're hoping to secure around the pool in the next couple of weeks, we've actually already started making deliveries of our 2026 Christmas gift sets to retailers' warehouses, and we're well on track to delivering our first 1 million units of the season. Watch this space for more to come as we expand our offering to more brands at more price points and at other gifting occasions through the year. I hope I've given you all some inspiration for your own last-minute shopping when it comes to Christmas 2026.

Moving from one season to another, let's move to our other highly seasonal business, St. Tropez. In June last year, we announced the decision to retain the brand and embark on a new strategic direction. It's reassuring, therefore, to be able to report that after 2 years of double-digit decline on St. Tropez in North America, our partnership with the Emerson Group is already bearing fruit with a return to growth of 7% in FY '26.

Emerson's scale and expertise in the U.S. stretches across customer management, logistics and brand activation. When it's coupled with our dedicated multifunctional St. Tropez team of experts in the category, we have confidence that better brand building and stronger execution will unlock the potential we saw in the brand when we made the call to retain it.

Take Amazon, for example, which was the first channel Emerson turned their attention to as part of the phased transition of the business from our own operation last year. It was already a growing channel for us, but Emerson brought their experience to bear, starting with getting the basics right, improving and optimizing product pages, increasing media efficiency and aligning promotional activity to Amazon events.

As a result, our growth rate more than doubled, and Amazon is now St. Tropez's #1 customer in the U.S., not unlike many other premium beauty brands. However, there is no room for complacency. We have more to do in North America and elsewhere. We did not grow in the U.K. and have been working hard to improve performance here, especially in the run-up to the peak season.

Though not yet reflected in the reported revenue numbers, we have seen sequential improvement in retail sales in the U.K. as we came into the summer 2026 season, accelerating to reach double-digit growth in the peak season and a return to market share growth.

Looking to next year and beyond, we have stronger and bigger innovation for summer 2027. In fact, 4x the number of new products, including one patent-pending potential blockbuster launch. We'll also have innovation targeted at younger consumers as we seek to rejuvenate the brand and revitalize what it stands for. This includes where consumers see and interact with the brand.

Hence, the U.K. launch on TikTok Shop just last month. It's clearly early days, and we're in the phase of testing out what works and what doesn't, but this is an example of how we are pushing the brand into new channels to reach new consumers.

With our ANZ business returning to full year revenue growth, it's important to call out the role innovation played alongside expansion beyond the grocery channel and a renewed focus on New Zealand. We're making steady, sustained progress with our entry into the Auto Dish category, taking 160 basis points of share growth in the year, peaking at a 10% share when on promotion, where it stopped.

As you may know, we're up against some formidable and well-established competition here, but we continue to see significant opportunity, given the strength of the Morning Fresh brand in the washing up liquid market, not least fueled by disruptive packaging innovation in that category, too.

We've also seen a step change in the success of Original Source, getting the basics right to win in Australia, which is a market dominated by larger packs often with a pump. Hence, the launch of our new 1-liter pump pack has hit the ground running rather than our previous overreliance on the U.K. preferred 250 ml pack size, often dismissed as a travel size or one for the gym bag by the average Aldi shopper.

In Indonesia, we completed the phased restage of our leading Cussons Baby brand, driving sustained market share growth through the year as well as double-digit revenue growth. We have activated the relaunched brand across all channels, including fast-growing e-commerce and quick commerce. In fact, from our Jakarta factory, enabling us to run at all hours, we are now live streaming from our own studios across TikTok Shop and other social media shopping platforms to reach our busy consumers wherever they are, at work, at home or stuck in typical Jakarta commuter traffic.

Moving to Nigeria now. We've obviously talked at length about the opportunities we see for our business there and our strategy to unlock them. As Oghale set out at the Capital Markets event in February, we have 3 main priorities.

It starts with growing our core. We're doing this by driving distribution and building stronger brands. Take Morning Fresh, the #1 washing up liquid in Nigeria. The Care We Share campaign has challenged household norms with the question, who should wash the dishes, positioning the brand as an advocate for shared responsibility in the modern Nigerian home and reinforcing the brand's benefit that cleaning the dishes is easier and faster with a product that really performs.

Our own campaign was amplified by social media influencers, turning a simple question about household chores into a national conversation, reaching nearly 50 million people and helping elevate the brand beyond just the functional benefits on offer.

We're also expanding the categories in which we play. The launch of Carex, increasingly a trusted authority in family hygiene, saw us deliver incremental revenue and win Brand of the Year in the Nigerian Marketing Awards.

Finally, we continue to make progress delivering growth through exporting to new countries. In FY '26, we accelerated growth to West and Central African markets, contributing to growth in our Nigerian revenue and in hard currency, too.

Jan talked about the opportunity for bolt-on M&A in the context of our capital allocation policy. And we see Childs Farm as a potential blueprint for this type of M&A, taking a growing founder-led brand on the next leg of this journey.

Since our acquisition in 2022, we have created value through leveraging our competitive advantages. We've used innovation and a restage of the brand to strengthen its equity. We've leveraged our go-to-market capabilities to drive distribution and form exciting partnerships. And then we've in-sourced production where it makes sense and otherwise maintained effective arrangements with our third-party manufacturing partners.

Alongside the competitive advantage that we can bring, we can also add scale advantage. In fact, the combined savings from organizational and manufacturing integration completed last year are in excess of GBP 4 million.

It's also exciting to let you know today that, thanks to strong collaboration with the Emerson Group in the U.S., we have recently launched Childs Farm into Walmart. We secured online distribution earlier in the year and have now opened up in-store distribution over the past few weeks. In fact, such is the support from Walmart in their latest range review, Childs Farm is now on the shelves of every single one of Walmart's 4,600 stores in the U.S.

While it's still very early days, and we are quite sanguine that the U.S. will be a challenging market to crack, our partnership with Emerson gives us a strong platform for growth on a brand that we have already proven in the U.K. Early signs from U.S. shoppers and the Walmart buying team are positive, but we recognize the hard work has only just begun.

Stepping back then, how have we done with the overall acquisition? Well, the brand is now firmly profitable as well as growing and is on track for a post-return on capital employed in excess of our weighted average cost of capital in FY '27. This, combined with the opportunity in the U.S., reassures us that we made the right call to add Childs Farm to the PZ portfolio back in 2022.

Meanwhile, we've also continued to reduce complexity across the business. Firstly, through portfolio simplification. Most significant was the GBP 50 million plus disposal of our stake in the noncore PZ Wilmar business, but we also exceeded the GBP 20 million to GBP 25 million guidance we communicated for other noncore surplus asset sales, achieving more than GBP 27 million from disposals in Asia and Africa.

Secondly, through operational simplification, consolidating U.K. and European operating models into one set of systems and processes, building a central data warehouse to enhance reporting and analytics capabilities as well as the consolidations and integrations of 33 (sic) [ 30 ] brand websites, improving the shop window for our brands to consumers around the world as well as stepping up our cybersecurity measures.

In summary, good progress made, but we are not yet done, making our business simpler and more focused.

We've also made good progress strengthening the organization as we continue to invest in attracting and retaining the best people across the business to drive performance. In FY '26, our global engagement survey secured a 97% participation rate, itself an indication of an engaged organization. Overall, the survey generated an 83% global engagement score, well ahead of all industry and specific consumer sector benchmarks.

To consolidate on this strong foundation, we've launched a renewed employee value proposition, Dare. Discover. Do., as we strive to attract great talent and create a stronger performance culture in the business.

And of course, sustainability remains critical as we grow our brands, whether that's for our employees, our consumers or other stakeholders. We're making tangible progress on reducing our carbon footprint with a 73% reduction in Scope 1 and 2 emissions versus 2021 and securing an A- in the well-established and industry-recognized Carbon Disclosure Project scoring system in 2025.

We are also reducing plastic intensity, for example, through bigger pack formats, continuing to improve the consumer experience and value on offer. And we know some challenges require more coordinated, broader intervention. So we are working through cross-industry collaborations to help transform the infrastructure around us. We were proud to join forces with our industry peers as a founding signatory of the U.K. Packaging Pact, an initiative to transform packaging and promote circularity, reuse and sustainability. For us, sustainability is central to our growth and remains critical to our long-term success.

So now let me sum up. Our renewed strategy is starting to translate into delivery. We have so much more to do, but we take reassurance from the early signs of progress. FY '26 was a strong year in terms of performance with growth across all lead markets and our top 10 brands. Increased brand investment supported our growth in FY '26 and planted seeds for sustained growth in future years.

In Nigeria, we have navigated significant external challenges and are now implementing effective guardrails to reduce FX risk and sensitivity, leading us to focus on driving well-established brands in a market with significant opportunity.

Our balance sheet is in good shape, allowing us to invest in the business, renew dividend growth and give us the option for bolt-on M&A in the future. And we have started FY '27 in line with our expectations despite the obvious macroeconomic uncertainties that we are all well aware of.

So as I pause for a moment to assess the bigger picture, reassured by our renewed momentum and informed by our refreshed strategy, I am confident that PZ Cussons is well placed to deliver sustainable growth over the coming years.

With that, we'd be delighted to take your questions. So I'll pass over to Adam.

[Operator Instructions] We'll take our first question today from Matthew Webb at Investec.

Can I just start off by asking about St. Tropez and Childs Farm in the U.S. Clearly, very encouraging to see St. Tropez back into growth in the U.S. and the Childs Farm opportunity with Amazon sounds very encouraging as well. Can you just remind us of what the economics of your relationship with Emerson look like? And I suppose what I'm getting at really is, presumably, you effectively share the economics of the brand with them. And if this does turn out to be a significant success and revenue growth driver, what -- is that going to be dilutive to the margin? How does that work? That's my first question, please.

Thanks for the question. You're absolutely right. We're really pleased with the progress we've seen in North America as we've transitioned our St. Tropez and now Childs Farm activation and distribution to Emerson. The good news is they have worked really quickly to get St. Tropez back to growth as we saw Amazon doubling the growth rate but also as we look to expand and potentially broaden our distribution footprint beyond the historic footprint where we have concentrated.

And that move is informed by really us working with Emerson to understand where the shopper for St. Tropez is now shopping. And the reality is they are broadening the channels in which they're shopping, not just to Amazon, but other places where historically we may not have been distributed. So we still see good runway for future growth combined with innovation.

And now, of course, with Childs Farm in Walmart -- it was already on Amazon, with Childs Farm in Walmart, we have high hopes for long-term sustained growth, but it's really early days. Literally, we've been on the shelf for weeks.

So at the moment, we work with Emerson, both as a highly effective logistics distribution company, a very effective customer management operation, but also in brand activation. And that could be social media activation, that could be media planning, that could be other PR activity that we choose to do.

And without going into all the details, because I'm sure you [ wouldn't ] expect me to, we ensure that they are suitably incentivized to absolutely hit it out of the park, as the Americans might say, but ensure that we also protect our gross margins. And I can assure you that we are quite comfortable with the value creation that we have for ourselves as well as the opportunity for Emerson. So actually, we're in a position where all they want to do and all we want to do is drive really accelerated growth for a sustained period to come.

Excellent. That's great to hear. Second question on Nigeria, where I think that the -- clearly, the overall economic environment has improved and inflation is moderating, but I see it's still at quite a high rate. So I just wonder what your pricing strategy is in Nigeria at the moment. Should we continue to expect fairly regular price increases? What sort of average price increase do you think that you might be looking to take in that market over the, I don't know, next 12 months, say?

Very good question. So obviously, we are reassured by the more benign environment that we have experienced in terms of FX in Nigeria. And we've navigated obviously quite a lot of volatility over the last 2 or 3 years as well as put in place some guardrails to protect us against ongoing FX devaluation if that rears its head again. But inflation obviously is more of a common reality in emerging markets. So current inflation is running at about 15%.

We had said, as we set out back in February, that we intend to grow our revenues low single digit above inflation. And obviously, from the numbers that Jan took you through just now, you can see that we were able to do that in FY '26. We are absolutely looking carefully, though, at maintaining our volume performance as well as protecting our margin integrity. And that is an important balance that we want to get right as we look at FY '27.

So we were already anniversarying, if you'll excuse the ugly word, a lot of pricing in the first half of last year. So we are being very judicious and forensic in our analysis of how we unlock future price so that we make sure that we don't price ourselves out of our competitive set. So we're very clear what we want to achieve in the long term, and we have our hands very firmly on the tiller in the short term to ensure that the pricing we need to take, we do, but that we don't price ourselves beyond the position of competitiveness versus some of the other players in the market.

Got it. And then, sorry, final question. On Indonesia, it sounds like the sort of multistage relaunch or repositioning or refreshing or whatever you want to call it, Cussons Baby, is now pretty much done. I just wonder what's next? Are there plans for whether it's expanding that brand into adjacent categories, whether it's thinking about other possible brands in that market? What's the plan going to look like over the next year or so?

A great question, Matthew, because that is exactly the question that we have been working to answer for the last 18 to 24 months, right? And to some degree, it's all of the above, but I don't want you to think that's a lack of prioritization. So there's no doubt, job one is strengthening our core. And indeed, we have finished that phased restage, and that was literally changing packaging on the very significant number of SKUs that we have in the market that takes quite some time to get through particularly given some of the long supply chain to East Indonesia and some of the more distant islands.

And the good news is, as that started hitting the shelves through the last 12 months, we saw a return to share growth that we have sustained through the full year, and that's what's underpinning the double-digit revenue growth from Cussons Baby. But we need to carry on investing in that brand and ensuring it's turning up in a way in which we can win in all channels: traditional trade, modern trade or very importantly now, particularly in the cities in e-commerce. And we've given you a few facts to prove that we are making some progress there.

But we now need to get on with activating, continually recruiting new parents. That is the nature of the category. So to some extent, the job is never done on the core. But absolutely, our job is then to push up in terms of some of our price tiers in which we operate on Cussons Baby and the launch of SlumberTime and Cuddle Calm, where we took SlumberTime from Childs Farm to put on as Cuddle Calm technology for Cussons Baby, that was an example of how we started to nudge up pricing as we moved up the tiers, if you like, from good to better.

But we also know that we want to play with a second and possibly third brand in Indonesia. And we have activation already in place where Original Source is beginning to get expanded into more distribution points in the modern trade. And we're looking at another brand that we will have relaunched and repositioned by the end of FY '27. So watch this space.

Next question comes from Damian McNeela from Deutsche Bank.

Jonathan, thank you for the reminder or heads up about Christmas shopping already, so always welcome in August. A couple for me, please. Jan, in your opening remarks, you talked about you want to bring a focus on improving returns. I was just wondering, can you provide us sort of a bit of a sense of how you look at returns? Are you talking about operating margins? Or are you talking sort of ROCE-type ROIC focus is my first question.

Second question is on auto dishwash in Australia. Now you've clearly made some good progress in market share gains. I'm just wondering, though, how competitive is that category? And what are the sort of the medium-term outlooks for Morning Fresh auto dishwash? Will you continue to need to invest at that level to keep the brand growing?

And then the last one is on Childs Farm in the U.S. Can you just give us some context to what the competitive backdrop for the brand looks like, whether they're sort of similar products or doing something like we would see in the U.K.? Or are there sort of brands like Childs Farm available out there?

Jan, do you want to first answer the first one? I'll go to the second after you.

Perfect. So I think to answer your question about whether I'm thinking ROCE or operating margins, actually both. So the business has been focused on prioritizing investment and looking at the benefits across each of the regions. And really, it's just improving on that. So whether it's those capital investments and really building some discipline around hurdle rates, understanding the risk and reward in those areas or whether it's our marketing investments and where we're looking at new product development or product activation and really thinking about the returns and the risk and where we will make best use of our investments.

Let me pick up on your other couple of questions...

No, I was just going to ask a follow-up for Jan. I just wondered, do we think, in time, PZ will provide a sort of a ROCE target for the business?

Maybe in time. It's a bit early days, but I will certainly be looking at it.

So Damian, just to reassure you, Internet searches for Christmas gift sets starts in September. So we're not that early mentioning it now in the beginning of August. But anyway, put that to one side, right?

Auto Dish, wow, what a competitive category in Australia. It has -- the #1 brand is a -- has a larger share in Australia than the #1 brand in the U.K., to give you an idea why I mentioned that it's a well-established and formidable competitor, right? But they don't have the Morning Fresh equity in manual that we have and nor do they necessarily have the depth of household penetration that we have with our very strong market share. Obviously, Morning Fresh is broadly half the washing up liquid market.

So we absolutely are proving that we have a right to play and a right to win, but we're also brutally realistic that it will take time. And we have taken our time, but we are glad that we have because we are now seeing the growth that we've reported this morning in terms of share performance and particularly when we get strong in-store support behind it. But we're in it for the long term. It's not going to be a sprint, but we absolutely see a value in us driving our exposure to the business.

And the biggest opportunity for us is going to be adding additional SKUs to the range. We have quite a tight SKU today. So over the last few months, we've been looking at what's the right pack size, what's the right number of capsules to have in the pack to win at a certain price point, and then growing the number of distribution points. In a sense, the good news is that we're not yet in full distribution in Australia, and therefore, we have quite a lot of runway still to go as we start ticking off more of the major retailers, which still represent white space for us.

And that's important because the reality is that in value terms over the last 5 years, the Auto Dish category has been growing faster than the manual category. So we still want to grow our manual share. There's no reason that we shouldn't be striving to get a 60% or a 65% share, but actually also driving exposure to Auto Dish and accepting it's going to be a long-term investment game, but with acceptable gross margins, I can reassure you of that. We are totally in it for the long term, and we see lots of upside still to go forward. So that's the answer on Auto Dish in Australia.

Let me just touch on the baby and kids categories in the U.S. So I was over about 3 weeks ago actually walking the stores, and we walked many stores with the executives of the Emerson Group to really see how they're doing with St. Tropez and Childs Farm and to make sure I could kind of kick the tires on what they were doing for us and also see what the market is doing.

And the reality is even though the category is reasonably well developed, in the U.S., it is not well developed in the underserved or overlooked niche of real sensitive-need skin care but delivered in a fun and enjoyable, colorful, maybe even quirky way rather than overly clinical or very much the boring white packaging that you would predict in a kind of a pharmacy channel.

So actually, we think that the funbelievably-kind positioning, excuse the cheesy word there, right, but the funbelievably-kind positioning of Childs Farm has lots of potential in the U.S. And that's one of the reasons why the Walmart buyer has got behind it. Now as I said, we're very sanguine about the challenge. It will be a bit like Auto Dish in Australia. We will have to earn our distribution. We will have to defend that distribution and then, over time, potentially expand it. But our job right now is to get out recruiting new parents in the U.S. who are concerned about their kids having sensitive skin, but also want to have some fun at bath time. And that's really what we're setting about doing right now.

[Operator Instructions] The next question comes from Sahill Shan from Singer Capital Markets.

I've got a few questions. I'm going to sort of do these one by one, if that's okay. So Jan, for you. Very interesting slide on Nigerian liabilities. For a simpleton like me, could you just explain these intercompany liabilities and the drop from $140 million to $30 million. What's -- where is that drop coming from? And how should we be looking at this going forward?

Yes. Okay. So there are a number of different things within those dollar liabilities from intercompany recharges to the actual liabilities within the company from its cost of sales, quasi equity loans and a number of different elements. And what we've been doing over the past 2 and made significant progress over the last year is reducing those dollar liabilities that are held in the Nigerian business.

So if there were to be a devaluation in those dollar liabilities, then effectively, that increases the cost of sales in the local business, which hits our operating profit. So roughly speaking now, if there were NGN 100 movement on that $30 million liability, that would give us a GBP 1.5 million hit to our P&L. So it's a number of different elements as well as kind of settling loans and all of those things to remove those liabilities.

Second question is around marketing spend. I think I read or heard it's up 10% year-on-year. I noticed U.K. growth was still soft, and the main driver seems to be a couple of brands in there. So what gives you confidence that incremental spend is converting into U.K. growth next year rather than just defending market share?

Sahill, why don't I take that up? You're absolutely right. We grew marketing spend double digits. We have invested at record levels for recent years. I think it is worth absolutely noting not only was that trying to ensure that where we were confident of a return on investment that we were investing at sufficient levels to be competitive, and that varies by given categories and countries. We were also investing what we call incubator funds into planting seeds for future growth as we were developing maybe new campaigns that we're activating this year or even more importantly, new innovation that we're qualifying to bring as we look out -- we've got 1 year, 2 years or even 3 years.

So our marketing money needs to work for us in more than just being able to deliver in-year. So if I just look at the European numbers and within that, in the U.K., but allow me just to concentrate a little bit on Europe, including the U.K., we absolutely saw growth in our washing and bathing. We absolutely saw growth overall. However, there were 2 areas where we didn't see growth. Some of that was intentional and some of that was faster than anticipated, requiring us to take some interventions.

So where it was intentional is where we have pulled back on some smaller markets in Europe, as we have done, by the way, in Southeast Asia as well, where the business was either unprofitable or not very profitable. And equally, we have also pulled back on some of our smaller brands where we -- which is the opposite of focusing on the lead markets and the top 10 brands. Obviously, that can lead to a conscious deprioritization in other places.

And what that has meant is that, in some places, we've seen either some trimmed distribution or we may have seen very strong shipments in year 1 where we got new distribution and we obviously didn't have that pipeline effect in year 2. But what it does mean is that we need to sharpen our pencil on some of our tail brands and make sure we're all over protecting but if they are going to decline and we're okay with that, then we do that in a forecast and managed way or if we're not okay with it, and there are some where we're not okay, right, guys, what are we going to do to get motoring again? And that's very much what we're working on.

But we don't want that work to distract from absolutely growing the core, which is the biggest brands in our lead markets. And that's why it's a quid pro quo of growth in 4 lead markets and top 10 brands that there will be some casualties. We just need to make sure they're not unintended casualties, and that's where we are, as I say, doing some work.

Yes. Can I just follow up on that, Jonathan, if that's okay. So is there any way you can disaggregate how the top 10 brands performed in the U.K.? Because I see that 0.5% growth in the U.K., and I'm just thinking that's a soft number. And then you talked about market share gains. I'm just trying to reconcile that.

I'm very happy to do some disaggregation with you after the event, Sahill, when we get to catch up. But essentially, what we've got is very competitive markets where we are growing revenue, but we also need to try and make sure we're maintaining healthy volumes as well. And the reality is we're up against some very significant competitors in washing and bathing in the U.K., some of whom may have either more price-led strategies or more volume-led strategies.

So we're making sure that our plans are sufficient to win against them whilst delivering our financial ambitions. But what really matters is are we growing our biggest brands in our biggest markets? The answer is yes. And we're very happy to follow up with you afterwards on maybe some of the moving parts.

Okay. So my next question is slightly related to this. Again, marketing spend has increased. I understand the rationale for that. There's been a bit of FX headwind in Asia Pacific as well. But when I look at margins, both in U.K., Europe and Americas and out in Asia Pacific, they're either flat or they sort of came down. How should we be thinking about margins going forward? Is the U.K. likely to sort of drift even further as you invest more? And as far as Asia Pacific is concerned, what's the guide and what's the thinking? Is there any chance of them inflecting in 2027?

There are a few ways to tackle that one, Sahill. But if I take a step back, one of the really important deliverables from last year that we set out to achieve was a significant reduction in our cost base. And as you see, we have reported an GBP 8.5 million savings number. Most of that fell in the center. There were other savings elsewhere in the regions, but much of that was reinvested in other ways, sometimes in sharpening our capabilities as well.

And what the savings in the center enabled us to do was to then spend the marketing investment in the regional P&Ls. And that's why you see some of the pressure on the regional P&L, the operating margins that you're referring to, whereas at the group level, we were able to grow overall operating margin. So there's a slight dynamic there going on between intentional and very rigorous savings discipline and cost discipline in the center, enabling us to get on the front foot in the market.

So that's one where I'd ask you to see the numbers in the aggregate rather than necessarily across the region-by-region P&L. But having said that, our absolute intention is that, over time, our regions are going to grow their margins because they are ultimately driving volume and improving their gross margin. And if we get both of those right, we'll have enough oxygen in the P&L to invest in marketing and still flow to operating margin. And we'll always keep a careful eye on cost discipline in the center as well.

I'll pick it up with you later as well. The next question is around the write-downs in Charles Worthington and Fudge, underperforming categories by the sounds of it. Are they now both subscale distractions that you'd consider exiting or divesting?

So I think, as you say, we've had to actually impair both brands because the growth isn't what we needed it to be. As Jonathan actually said, we need to now look, should we be investing in those brands? Or is that acceptable for them to be relatively flat where we focus on our top 10 brands or our top key brands in those markets? So obviously, we didn't want to kind of see that performance. But yes, we're looking at some of those areas.

Go on, Sahill. We're right at the limit of time. If you got one last quick one...

Yes, final one. Just being a bit anal here, there's a significant working capital swing outflow. Just a bit color on that would be helpful.

Yes. So it's a combination of 2 things. One is actually the debt in Australia last year, we had some cash inflows on some financing of the debt. But a lot of it is just getting ahead on purchases because of the impact of Iran. So really trying to protect the inventory there. So that was the other main element of the GBP 9 million outflow that you'll be referring to.

Very well said, Jan. So perhaps if I can wrap it up. We're just over the hour. I want to thank you all for joining today. I know we'll have some conversations with some of you in the coming days, and we look forward to those. We will update you on progress as we see appropriate through the year. So we look forward to doing that.

Meanwhile, I'm sure many of you are off on summer holiday. I wish you a lovely holiday. And as you dash to the airport, please pick up Childs Farm sun care for you and the kids and help our revenues. So thank you very much.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Good morning or good afternoon all, and welcome to the PZ Cussons Half Year Results Call. My name is Adam, and I'll be your operator today. [Operator Instructions]

I will now hand the floor to CEO, Jonathan Myers, to begin. So Jonathan, please go ahead when you're ready.

Thanks, Adam, and good morning, everyone, and thank you for dialing in to our first half results presentation of PZ Cussons financial year 2026. I'll start off with an overview of our performance and provide color on some of the drivers behind it and how we are moving to be a more focused and more resilient business. I'll then hand over to Sarah to take us through a review of the financials before we finish with some time for your questions.

As many of you will be aware and hopefully are joining, we are hosting a capital markets event this afternoon in London, which is intended to address many of the questions that may be on your mind about the future of PZ Cussons. So this morning, we'd like to focus on questions relating to today's results and this financial year, leaving the topics of strategy and future plans to this afternoon.

So let's get going with the results we announced this morning then. Overall, we delivered a strong financial performance in the first half of the year with broad-based growth and a healthy balance of price/mix and volume. I'll come on to more on this in just a moment.

In December, we announced the conclusion of the strategic review of our Africa operation following our announcements earlier in the year regarding the renewed strategy for St.Tropez as part of our portfolio for the future. I'll provide an update on St.Tropez in the coming minutes.

But the consequent sale of our share in the PZ Wilmar joint venture to Wilmar, along with the ongoing disposal of other noncore assets in Africa and Asia, has resulted in a significantly strengthened balance sheet and in PZ becoming a more focused and more resilient business.

While all of this was in play, we have also worked hard to reduce our cost base and expect to deliver GBP 5 million to GBP 10 million of savings in FY '26, in line with previous guidance. Combined with the overall business performance to date and our outlook for the remainder of FY '26, we are increasing our operating profit guidance for the full year.

Let me say a little bit more now about our overall business performance. We have delivered broad-based growth across our 3 reporting regions, each of our 4 lead markets of the U.K., Australia, Indonesia and Nigeria, and each of our top 10 brands in those markets. Obviously, we're pleased with this momentum, but we know we still have much more to do, especially translating our increasingly exciting multiyear growth plans into sustained in-market performance year in, year out.

Coming back to our first half performance though, it's worth calling out that our revenue growth of 9.5% is balanced between price and volume, including in Nigeria where volume has returned to growth after several rounds of pricing that has initially knocked volume into decline. You'll hear a lot more about our African business later today. So let me give you a couple of examples outside Africa of what has been driving the momentum elsewhere.

In the U.K., Sanctuary Spa grew double digits through the half, driven by a record Christmas gifting period, during which revenue was up more than 30%. We've been learning and optimizing our plans each year. This year, we shipped 98% of our Christmas packs before December and have more than doubled Christmas gifting as a revenue building block in our annual plan versus just 2 years ago. For example, it was one of the leading gifting brands in the Golden Gifting Quarter in Sainsbury's this year, beating Lynx, Nivea and Dove, and nearly doubling sales versus last year.

We've gone beyond with just Sanctuary Spa this year and successfully expanded gifting to Original Source, Imperial Leather and Cussons Creations as well, playing at more price points, pushing higher and lower, and driving more displays in store. As you can imagine, we're already well on with finalizing plans with retailers for Christmas 2026. And all I'll say is look out for the GBP 100 Sanctuary Spa gift pack.

Moving to Australia now, whether it's the new and improved auto dish format for Morning Fresh or a new flavor for Rafferty's Garden, innovation has played an important part in driving revenue growth on our top 3 brands, with each brand growing market share over the last 12 months. And the good news is we're growing share in categories that are also finally back in value growth in the latest quarter after a prolonged period of the Aussie shopper feeling the pinch.

Beyond our top 3 brands, we have also used pack format and variant innovation on Original Source to launch a 1-liter pump pack onto shelves. In Australia, the U.K.'s market-leading 250 ml size that is common in our bathrooms is regarded as a travel size or something thrown into the gym bag. Instead, the market is in larger packs often with pumps.

So rather than shipping sizes shoppers don't always want halfway around the world from our U.K. factory, we're now manufacturing a consumer-preferred pack size in a format with a pump from our Indonesian factory alongside Morning Fresh for the Australian market. Add all of this progress together, the ANZ business delivered its third consecutive quarter of revenue growth.

Let me come back to action to strengthen our balance sheet and focus our business. We've made good progress over the past 5 years in reshaping the portfolio with the exit from noncore businesses along with the sale of surplus nonoperating assets. Most notably in this reporting period, we announced the sale of our 50% stake in PZ Wilmar, our noncore Nigerian joint venture.

To date, we've received GBP 48.5 million of cash proceeds with a small additional amount from ancillary land assets expected shortly. This has delivered a material improvement in our credit metrics. Sarah will talk you through.

In June, we confirmed our decision to retain St.Tropez and set a new strategic direction for the business. You didn't see St.Tropez amongst the top 10 brands on the chart just now. And that's because the seasonality of the sunless tanning category dragged the absolute revenue down and St.Tropez falls just outside our top 10 when looking at our first half in isolation.

It didn't grow overall revenue in the half, very much highlighting the work in progress to turn the brand around. But we did grow plus 12% in the U.S. as the transition to The Emerson Group went smoothly, and we started to see some renewed traction with our retail partners. We clearly have more to do elsewhere where revenue is down over 30%. This was in part due to high levels of inventory coming into the year. We're already reducing that inventory as we move through this year, and then the need was to win back retail support for the brand.

Still too early to call the season yet, but we're seeing strong support plans agreed for the new innovation this summer and the special packs and activation plans to support the 30th anniversary of the brand. For example, the latest shelf reset of merchandising material in boots has seen a return to retail sales growth since the change was made just a few weeks ago. Suffice to say, there will be much more to come on St.Tropez as we move through the season.

And with that, I'll hand over to Sarah to take us through the financials.

Thanks, Jonathan, and good morning, everyone. I'm going to take you through the PZ financial performance for the first half of FY '26, starting with a summary of the key group metrics, then moving on to the detail in each geographic region before covering cash flow and net debt and finally, our guidance for the full year. Unless otherwise stated, the numbers I will refer to are on an adjusted basis.

So turning first to the headlines. Group revenue increased to GBP 269 million, up from GBP 249 million in the prior year period. On a like-for-like basis, revenue grew 9.5%, reflecting broad-based growth across each of our 3 reporting segments, each of our 4 lead markets and each of our top 10 brands. Adjusted operating profit increased to GBP 36 million, up from GBP 27 million last year, a 240 basis point improvement in margin.

There is no profit contribution from the disposed PZ Wilmar edible oils joint venture in this half numbers. So if we also exclude it from the comparative period, operating profit increased from GBP 22 million to GBP 36 million. Of this GBP 14 million improvement, around GBP 6 million is the result of FX revaluation gains on U.S. dollar-denominated balance sheet liabilities in Nigeria, resulting from the appreciation of the naira in this first half as compared to the currency's sharp decline in the first 6 months of FY '25.

On a statutory basis, operating profit was GBP 40 million as well as gains recognized on surplus nonoperating asset sales and a book loss in half one on the Wilmar proceeds received in that period. This figure also includes FX gains on the group's historical equity-like capital loans to its Nigerian subsidiaries, previously accounted for in the balance sheet.

Consistent with the change in accounting treatment for FY '25, during the strategic review of our African businesses when the naira was depreciating in value, they are now shown on the face of the income statement, but to date adjusted out by virtue of them being deemed to be short term in nature.

Adjusted profit before tax increased to GBP 30 million, up from GBP 20 million last year due to a reduction in the interest charge as well as the improvement in operating profit. Adjusted earnings per share was 4.37p compared to

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percent lower than the growth in profit before tax due to a higher group tax charge and minority interest leakage in Nigeria. The higher tax is due to 2 factors and is now more representative of the rates going forward.

Firstly, the geographic mix of profits with more coming from Nigeria where the tax rate has normalized now that we have moved past the statutory losses experienced since the 2023 currency devaluation when only a nominal amount of tax was payable.

It's also explained by the disposal of PZ Wilmar, which has always been equity accounted, meaning we reported our 50% share of the joint venture's post-tax profit into operating profit rather than the associated tax charge being recorded separately in the group's tax line.

A dividend per share of 1.5p is unchanged from last year. Free cash flow was GBP 23 million, which when combined with cash proceeds from disposals during the period, resulted in a significant reduction in net debt down to GBP 84 million.

The group revenue bridge shows an adverse foreign exchange impact of GBP 4 million relating to the depreciation of the Australian dollar and the Indonesian rupiah. The Nigerian naira appreciated in the period. As usual, these FX movements and the corresponding impact on revenue are shown in the appendix to this presentation. We delivered like-for-like revenue growth in each of the 3 reporting segments, which I will come on to in a moment.

On a continuing operations basis, excluding PZ Wilmar from the base period, adjusted operating profit margin increased 430 basis points. Gross margin declined due to geographic mix as Nigeria with a structurally lower margin grew revenue faster than other parts of the group.

The majority of the overall operating margin improvement was from a reduction in overhead. This was a combination of the FX revaluation gains on balance sheet liabilities in Africa plus group-wide cost savings. And in addition, marketing investment was, as we had planned, lower as a percentage of revenue, but this will reverse in the second half of the year.

So turning now to the regions. Revenue in Europe and Americas increased to GBP 102.5 million with like-for-like growth of 1.7%. We saw growth across most of our brands, including 30% growth in Sanctuary Spa from a successful Christmas gifting range. This was despite challenging trading generally as the U.K. market remains highly competitive, something showing no immediate signs of impact.

St.Tropez revenue declined 11% overall. And excluding this brand, overall growth in the region would have been 3%. Adjusted operating profit increased by GBP 2 million, reflecting the integration of the Childs Farm business as well as marketing investments weighted to half 2.

In APAC, revenue was GBP 88 million, a growth of 5.2% on a like-for-like basis, but flat in reported currency with the Australian dollar and Indonesian rupiah depreciating against sterling. As Jonathan mentioned, we're encouraged by the Australian share gains in categories which are back in growth and with the 9% like-for-like revenue growth in Indonesia. Adjusted operating profit, however, declined GBP 1 million, including some legacy VAT charges in our smaller Asian businesses.

African revenues increased to GBP 79 million. Like-for-like growth was 28% from both the annualization of pricing taken in FY '25 and the return to volume growth. We saw growth of 30% in reported currency as the naira has moved from a period of stability to now appreciating in value.

This afternoon, Awie will take you through the team's plans to grow the business over and above the passing on of inflation, which in Nigeria continues to moderate to now around 15%. Removing the PZ Wilmar JV contribution from the FY '25 base, operating profit grew by GBP 7.6 million. Of this, as I mentioned, GBP 6 million was due to FX revaluation gains on balance sheet liabilities denominated in U.S. dollars as a result of the naira strength versus its depreciation in the prior year period.

And whilst the first half margin of 14% does also include the carryover benefits of prior year pricing whereas half 2 will not, assuming the naira rates remains unchanged from current levels and assuming no change in underlying business performance, low to mid-teen margins should be sustainable going forward.

Our current treatment of these FX revaluation impact is consistent with prior periods when the naira was depreciating. You'll recall we took a significant exceptional charge in FY '24 due to Forex losses related to legacy liabilities built up over many, many years prior to the devaluation when it was not possible for U.K. corporates to legitimately access the U.S. dollars required to settle such liabilities and repatriate the cash.

The headline gains I'm describing today relate to liabilities incurred as part of recent trading, exactly as we got the FX losses from in-year operational liabilities in the prior FY '24 and FY '25 financial years where we executed multiple rounds of price increases to protect local profitability.

Finally, turning to what we call the central reporting segment, essentially an internal cost center. The first half of FY '26 has seen a GBP 4.6 million reduction in the adjusted loss we report here, partly due to favorable intercompany FX movements from the naira and partly due to people cost savings and process efficiencies, reducing the external audit fees.

We plan to review our presentation of these central costs in future reporting periods to better isolate the true corporate overhead from costs directly attributable to other parts of the business. The higher statutory loss represents the disposal of the PZ Wilmar JV, reflecting the receipt of only some of the total cash proceeds in the first half of the year.

Turning now to the balance sheet. Leverage has reduced further from both free cash flow generation and disposal proceeds. Free cash flow was GBP 23 million after the seasonal working capital cash outflow from our half 1 reporting date falling immediately before peak trading periods in both Nigeria and the U.K. Christmas gifting. Both the high inventory and debtor positions typically unwind during our third quarter.

CapEx was low at GBP 1 million due to the phasing of a number of projects, but we anticipate full year investments to be more in line with normal levels. The half 1 cash flow includes GBP 3.6 million of cash adjusting items, primarily relating to costs associated with the concluded strategic review. Beyond these drivers was a GBP 2.6 million cash add-back representing share-based executive compensation schemes and noncash pension charges.

We received a total of GBP 27.6 million of cash proceeds from asset sales in the period. This comprised GBP 15.8 million gross proceeds from the sale of surplus nonoperating assets in Africa and Asia, and GBP 11.8 million from the initial completion steps of the PZ Wilmar disposal. This resulted in reported net debt down GBP 84 million with net leverage of 1.1x.

As one of our new guardrails to better protect the business from future adverse currency impacts, the capital allocation policy we are announcing today now defines our leverage metric as net debt, excluding any cash balances held in Nigeria. And on this more conservative basis, would have been 1.4x at the end of the first half.

The timing of the receipt of the Wilmar cash proceeds has been split across a number of individual components with consideration received for our equity holding, the repayment of loans and also some additional assets in the transaction perimeter. Since the end of November 2025, we have since received a further GBP 37 million from Wilmar, giving a pro forma half 1 net debt position of GBP 48 million and leverage below 1x.

As we noted in this morning's release, trading to the end of January has continued in line with our expectations. And this slide provides updated guidance on some key items, including an overall increase in full year operating profit up to a range of between GBP 53 million and GBP 57 million compared to GBP 50 million to GBP 55 million previously. This guidance does imply a year-on-year decline in profit in half 2, a phasing profile that we signaled in our AGM trading update in November, largely attributable to the timing of marketing investments with a significant step-up in spend in the second half. We've also provided firm full year guidance on leverage given the progress to date, and we expect to end the year at the lower end of our new capital allocation policy range.

Today will be the last time I present the PZ Cussons results. And so I would like to thank colleagues for their unwavering support, our advisers for their wise counsel and during some challenging times, and to wish external stakeholders all the very best for the future. I'm pleased and proud to be leaving the business in better financial shape and with a more encouraging outlook.

And with that, I'll hand back to Jonathan.

Thanks, Sarah. So we can turn the microphone over to you now. And as I mentioned at the beginning, ideally, let's keep the questions focused to this set of results, and we'll happily answer questions on the broader strategy and future plans at our event this afternoon.

So Adam, I think it's over to you.

[Operator Instructions] And our first question comes from Matthew Webb from Investec.

I've got a few questions. Maybe I'll do them one by one. The first is on Indonesia where I see there's been both some social unrest and economic instability. And I think Moody's has downgraded the outlook for the country recently. I just wondered whether you're seeing any impact of that on trading and also whether that's changing how you think about how you run that business, how you invest in that country? That's my first question.

Matthew, it's a good question. Maybe if I talk to some of the financial aspects, and then I'll hand over to Jonathan on some of the commercial trading points. So Matthew, you're referring, of course, to the Moody's downgrade in terms of the nation's overall outlook. Indonesia, of course, is an emerging market, markets which bring some inherent volatility.

I think what I would do though in terms of financial perspective is to maybe talk a little bit about Indonesia and our business there, which is, first and foremost, to say, for us, it's a structurally advantaged business. We are in the baby toiletries business where there are still 4 million to 5 million newborn babies born every year. It's a high-margin business for us, and Jonathan will elaborate on some of the characteristics of our business there.

But the reason I say that is it's highly cash generative for us. We don't have local borrowings. Whilst the currency is coming under some pressure, the ForEx markets work relatively rational so we can both better hedge against any local exposures, but also repatriate cash in an efficient way.

So I think as distinct from some of the challenges we've had in Nigeria, we would describe it as a lower risk profile for PZ Cussons. We are ever vigilant to make sure we can generate the hard currency returns that our shareholders demand.

Jonathan, do you want to talk a little bit more about that one.

Let me take that a couple of things. So the first is just in terms of social unrest, Matthew, we have not seen disruption as a result of that. We have seen a little bit of disruption in Indonesia in the recent months, but actually much more of it related to flooding, particularly in the north of the country where some of our distributors, some of our retail partners, in fact, 1 or 2 of our employees were impacted. But we haven't seen anything impacting our business as a result of social unrest.

Now if I come a little bit to where you were poking in the latter part of the question about how do we think about our risk appetite in the business, well actually, one of the first things that we are working on is how do we reduce our reliance on one brand. We're very exposed to Cussons Baby. We're very pleased with the progress of Cussons Baby. But we're working hard in the background on which will be the #2 or #3 brand, and in the coming months, we will update you on that. But actually, the risk mitigation and appetite assessment goes a bit beyond that because as we'll talk this afternoon, we have a significant manufacturing facility in Tangerang, which is the suburb of Jakarta, not only manufactures all our products for Indonesia and Southeast Asia, but it also produces all of our Morning Fresh for Australia.

So in a sense, the good news that we'll talk about this afternoon is that we refer to a blended supply chain where we intentionally invest for scale in our own facilities, but we also have a good network of third-party manufacturers who give us not only agility, but in this case, also give us alternatives for business continuity such that if we were to encounter challenges, we would have alternative routes.

And really, I know you hear a bit more about this afternoon about how we're thinking about our risk appetite in Nigeria and how we're putting in place together with the team in Lagos some guardrails to help us manage and mitigate that risk. We're going to be adopting that kind of framework to our business in Indonesia as well, which is we regard as a very positive and healthy way to address and manage our risk appetite as it translates into future projects and future investments. So it's on our radar screens. We are not overly concerned, but we are far from complacent. So happily, we'll talk more maybe late this afternoon about that as well.

Excellent. Thank you. And my second question is sort of slightly technical one. The GBP 6 million FX benefit in Nigeria, am I right in thinking that that's sort of a swing rather than a GBP 6 million benefit all in this year as it were? And if so, whether it's possible to sort of break out to what extent that's a credit this year versus a debit last year, if I've understood that correctly.

Matthew, let me try on obviously one of my favorite topics. So is the GBP 6 million, if you like, what does it relate to? And what can we expect going forward? So it's real to the extent any income statement is a change between 2 balance sheet dates, and the accounting is entirely consistent with that, which we followed previously. It does, as you say, reflect a base year impact in terms of the steep naira depreciation of the first half of last year versus the relative stability of this half year.

So that GBP 6 million year-on-year swing is a GBP 2 million credit this year versus a GBP 4 million debit last year. I think what I would have you think about is 2 things. One is it's a proxy for the overall economic environment, i.e., the naira stabilizing signifies an environment in which our brands can generate meaningful and sustainable value for us.

But what you probably shouldn't do is expect another GBP 2 million or GBP 6 million necessarily in the second half of the year because, of course, those liabilities on the balance sheet are something that we have already and are looking to continue to extinguish because it's volatility either on the up or the down, but it's not helping. So we are going through a very determined program to recapitalize our local Nigerian subsidiaries and extinguish those liabilities. Matthew, if that helps.

Our next question comes from Damian McNeela from Deutsche Bank.

Just on the guidance, sort of following up from Matthew's question. What is -- or what is included in terms of FX gains, if any, in the second half to get to your increased guidance, is the first question.

Good question. Let me try and characterize the guidance more broadly and then laser in on the specific question. So we sit here with a little over 3 months of the financial year left to go. So I would say we have a good line of sight into the year-end. But of course, still some things left to navigate, most notably some volatility in the naira, but also, as Jonathan talked to in terms of St.Tropez, we have our first big U.S. season since deciding to keep the brand, which, of course, has a range of outcomes. We're expecting positive outcomes, but there is a range of outcomes on what is a relatively very profitable brand for us.

The overall guidance includes FX as we see it today, is how I'd answer the question in the broadest terms, that it doesn't include another GBP 2 million credit relating to those first half balance sheet liabilities, mainly because I can't be certain the rates will hold, but actually because we are going through the process of extinguishing those balance sheet liabilities, which have in the past been a hurt, have in the first half been a help, neither of which is particularly helpful.

So we are going with our local Nigerian Board colleagues through a series of steps to extinguish those liabilities, be they write-offs, be they debt to equity, be they rights issues, various capitalization steps to effectively reduce the sensitivity in our P&L to movement in the naira, which if you remember maybe 18 months ago was something like every 100 moves between the naira and the U.S. dollar was giving us something like GBP 8 million of P&L sensitivity. That number today is closer to only GBP 4 million. So in any 1-year period, probably about GBP 2 million of a translation impact and GBP 2 million from that balance sheet effect. The latter, we are trying to extinguish for us all. So it doesn't assume another GBP 2 million help in the second half of the year.

Okay. That's pretty clear, I think. And just carrying on with the Africa theme, I don't know whether you will touch on it later this afternoon, but is there an updated position on how you view the minorities of PZ's Nigeria?

We'll talk a lot about Africa this afternoon, Damian. We are not spending a lot of time on the -- if you like, the ownership structure of our operations in Nigeria. We're talking a little bit more about the resilience and underlying performance of the business. We have what we have, which is a listed entity of which we are very clearly the majority shareholder. We have an awful lot of retail minority shareholders, and at the moment, we are making that work for us.

And Damian, you might be referring to 2, 2.5 years ago where we contemplated buying out our minorities and delisting. We may contemplate something similar again and consider it as we would any allocation of surplus capital to any acquisition of an earnings stream. We consider, as we do, that Nigeria brings with it a bright future. We may choose to put some capital down to acquire 100% of those future earnings because as you rightly, I think, are pointing out, our operating profit down to earnings per share experiences some leakage as a result.

Yes. Yes. Okay. That's very clear. And then if I may, one last one. U.K. performance in core washing and bathing looks to be pretty solid. Can you give an update or sort of some background color on the competitive environment and what your market share gains have been across the period, please?

Yes. So let me do that, Damian. I think the word you use there is the perfect articulation. We have a solid performance. We're really pleased with the financial delivery of our U.K. business, at least as we have benefited from some real structural P&L improvements as we -- you remember, we combined it with our previous beauty business. We have integrated it with our European setup. And we have also integrated into it more fully our Childs Farm business, which for the first 2 or 3 years of our ownership, we kind of kept at arm's length.

So we now have a very strong financial structure, which will give us the ability to invest sufficient marketing money to ensure that we are nourishing and nurturing our brand for the future, which is a good thing because we're going to need it, right, because the market is not getting any less competitive. In general, without overdoing the hackneyed phrase, we continue to see the bifurcation of the U.K. shopper.

We have an awful lot of people hunting for value and looking for cheap lookalikes or private label or going down to the discounters. Equally, we have people who are willing to splurge on small luxuries. You only have to look at some of our Christmas gift sets from the price points that were considered just on our business but alone more broadly. And you continue to see that very, you like, dynamic but value-focused shopper environment.

Within washing and bathing, we see 2 things. We continue to see scale players, most notably Unilever, really fighting to try and make their brands justify the price they're asking. So they do have a higher value share than us and they charge a higher price per mill. So that's something we need to make sure if we want to, our brands can do. And I'm sure you would have seen the Unilever-Dove sponsorship of Bridgerton recently as an example of we can never rest on our laurels the big multinationals.

But actually, as recently as our Board meeting just yesterday, we were reviewing exactly the competitive nature of the U.K. modern bathing market. And the real change in the last 12 to 24 months has been the growth and acceleration of the explosion of Gen Z or Gen Alpha start-up brands, which are getting on to the shelf maybe 3, 6, 12 months disrupting and either surviving or dying quickly or being replaced.

So it is really competitive. We have grown share in some subcategories of washing and bathing. We have not yet really nailed shower, which is why this afternoon you will hear a little bit more about what we're doing on the shower category, in particular to try and make sure that both Imperial Leather and Original Source are firing on all cylinders. So we are not complacent.

The next question comes from Sahill Shan from Singer Capital Markets.

Good set of numbers, good share price reaction. Three questions from me. Can I just start with the dividend? So optically improved balance sheet, EBIT guidance raised. Just help me understand the rationale for holding the dividend flat. And does that sort of reflect some prudence ahead of investment in H2? Or does it signal a more cautious stance on cash generation?

Sahill, let me take that question. Thank you for your interest in PZ Cussons. So you may also have seen this morning, we put out a short RNS ahead of our Capital Markets Day this afternoon where we set out a new capital allocation policy, essentially inking in what we consider to be a prudent leverage range. We're then going on to say use of surplus capital will first and foremost be focused on a progressive ordinary dividend policy, then with any bolt-on M&A opportunities and more one-off returns to shareholders being considered alongside each other.

So in the first half of this year, we have reported 12% increase in earnings -- as we look ahead to the full year, a little bit as I touched on in terms of the structural dynamics of our Nigerian growth that acts as a slight tether to our overall earnings per share outlook for the full year. And therefore, we felt it was prudent to not increase the dividend on the first half of the year. But through the cycle, you will hear us talking about this afternoon a very clear and confident commitment to a progressive dividend policy by which we define it as an absolute increase over time. So I think more to come, Sahill, is how I would answer your question.

Good answer. Clear. Second question, Africa earnings. So I think I heard this correctly, but strip out the GBP 6 million FX, how should I be thinking about the underlying run rate margin in Nigeria? Are we looking at around mid-teens sustainable on a normalized basis, absent currency headwinds going forward over the short to medium term?

Sahill, another good question. Let me see if I can give another good answer. So I think you should be thinking about the 14% as being coming together of a number of positive factors, some beyond our control, many, many within our control. So we are very, very proud of having over the last 5 years, moved that business from a position of local currency loss to local currency profitability.

So we are benefiting from the carryover of pricing that was necessary and successful through the significant inflation that we saw during the devaluation whilst also continuing to invest behind their brands so they remain relevant to consumers and therefore, a very pleasing return to volume growth in the first half of this year. So I think the 14.7% is a little on the upside of what I would suggest is a sustainable range going forward. Low to mid-teens through the cycle is probably a better proxy.

Got it. Clear. Final one for me. So a central piece. So in the U.S., you saw, I think I read 12% growth under The Emerson partnership. Rest of the world remains weak. Looking forward then, what does success look like over the next 12, 18 months? Is it revenue stabilization, margin improvement or both?

Great question. So you're absolutely right. So as part of the U.S. transition where we changed our operating model, partly the simplification of our business, which was part of what we set out at a very macro level of the company to do, so we closed up our own shop and we moved to a really credible go-to-market operator called The Emerson Group. And thanks to a lot of hard internal work, we managed a smooth transition from setup A to setup B. But more importantly, Emerson has fantastic access to retailers in the U.S. from ULTA and Sephora towards the top end of beauty right through to Target, Walmart, CVS and Walgreens. So we have not only seen a -- we haven't dropped the ball in the transition, we have also begun to see good traction as we have reengaged with some of the retailers that I mentioned just now.

So in effect, the double-digit declines that we saw in the previous year in the U.S., we have now reverted to double-digit gains. The issues more broadly in the short term, and I'll come to your question on what does the success look like. The short-term issues elsewhere has been more a question of burning through some quite high inventories, most notably actually with Amazon in the U.K. where we saw at their behest some very strong demand as we ended last year. And the good news is our revenue performance is worse than their EPOS or retail sales performance, which is a clear indication that we are burning through the inventory. In fact, we're seeing quarterly sequential improvements in our numbers outside the U.S.

So when it comes to what is successful, the first thing is we want to see progress in the coming season. It's a really seasonal business, right? After 7 months of our financial year, we would normally only expect to have shipped 1/3 of our St.Tropez revenue. So it's a little bit like an ice cream company waiting for the good weather, right?

So we are very confident that we've got good plans for this year. We have new product innovation. We have special packs to celebrate 30th anniversary of St.Tropez. And we're also seeing some good traction, as I mentioned, with some of the retailers where we are re-engaging with more positive intent, most notably goods in the U.K. where we've seen a return to their retail sales or EPOS growth.

So we will have an indication of this year of have we seen good revenue and are we tracking through the year on a quarterly basis back to the revenue growth. More broadly though, we want to see next season, which will be the season when a lot of the work on this year's innovation behind the scenes will then hit the ground that we've been working very collaboratively with retailers so that we then see really what is the first full year of both Emerson in action, our innovation in action and our activation in action. And we will constantly be looking forward to absolutely revenue growth and over time, also profitability improvement as we step up our investments to ensure we get a good return on the marketing required in a brand at that time.

So we have some very clear internal milestones that as a Board we are holding ourselves to, and we are working very hard to deliver them.

Our final question today is a follow-up from Matthew Webb at Investec.

I've just got 2 more, please. First, just going back to Nigeria. Obviously, price/mix was a big driver in the first half, although obviously volume is strong as well. But you've cautioned that price/mix is going to be less of a factor in the second half, but inflation is still quite high in Nigeria. I just wondered, first, whether there is still some annualization of previous price increases that will help you in H2? And also probably more importantly, what your -- what sort of price increases you're going to be taking going forward? Presumably, you will still be taking some price. That's my first question.

And then the second is just on the guidance you've given on marketing being H2 weighted. Can I just be clear on that? Is that in more H2 weighted than normal? And if you could put any rough numbers on that, that would be helpful, just in terms of how we think about that very strong H1 performance and the full year guidance on operating profit.

Yes. So let me pick that, Matthew. I'm so interested you came back for more. I thought we were off the hook, but there's no relaxing here yet, right. Let me now demonstrate we're absolutely ready for it, right?

So in terms of Nigeria, so just a little bit on last year. So we took a lot of pricing. We've talked before about 20-plus rounds of pricing through the year where we saw some volume impact in the initial phases for sure we're getting elasticity when you take that much pricing. But over time, the consumer gets used to it, they're seeing a lot of inflationary pricing in the stores, right? And therefore, we have now seen in the last 2 quarters, our volume come back. As we annualize that degree of pricing, obviously, the rollover begins to work through and wear out.

Our very clear intent is always to be driving revenue in line with or slightly ahead of inflation. Now how much will depend on how much we want to push pricing versus volume. But if our ambition is to drive and our intent is to drive real growth, we need to be able to demonstrate that using all levers of revenue growth management that we are nudging up not only our pricing such that we're getting in line with or ahead of inflation, but ideally also mitigating any gross margin challenges.

The one thing that is important for us to stay really close to is as more benign exchange rates, particularly when it comes to sort of raw commodities, affect the ability of our competition to drop prices, what do we do.

So we are working very hard on where is it right for us to spend more on marketing money in Nigeria to justify the hard won price increases that we have landed. And we're very judiciously, we're seeing our improving volume trends then coming under pressure because obviously brands are underpricing us, what would we do smartly to make sure that we're not ceding ground in terms of volume and household penetration.

But we are clear that even though the pricing machine momentum will run out a little bit in terms of cycling through that historic base, our goal is to make sure that we're pricing one way or another in line with or slightly ahead of inflation.

In terms of your marketing question, right? So we are very -- we've been very explicit that we will be H2 weighted, not just today, but previously. And a lot of that has to do with exactly how we expected our brand plans to fall and some of our innovations to fall.

I will give you an example. Last year, we invested some St.Tropez money off season in the pursuit of trying to improve momentum. We didn't see a good return on it. So we didn't repeat it and we have intentionally back weighted our St.Tropez money, a little bit like the ice cream analogy, to make sure we're investing in the run-up to enduring the season. So that's one big driver of the H1, H2.

But actually, we have also been looking at how do we step up our investment so that we are investing at competitive levels where we can be confident either of a really good rate of return because it's activity that we've invested behind before or actually where are we putting some seed money out there so that we can test and learn. And if we see something work, we can then reinvest more aggressively. Or if we see something fail, not having spent too much money on it, we can then move on to the next thing that we want to invest behind.

So actually, in our second half, you'll be seeing not only more investments in our base business and here in the U.K., you'll be seeing in Imperial Leather, you'll be seeing Original Source, you'll be St.Tropez, but we are also stepping up. So for example, for the first time in many years, we'll be investing above the lines in New Zealand, not just in Australia where we've had a change of distributor, and we have seen real traction with retailers where we're building new distribution points. So we want to invest behind our brands in New Zealand.

But equally, we'll be doing some of that tests and learn that I mentioned. So look out, for example, the St.Tropez on TikTok Shop in the U.K., trying to re-apply some of the phenomenal success we've seen with online marketplaces such as TikTok Shop in Indonesia, which I would say in the first half, they were -- revenues with TikTok Shop were up 60%. So what can we do in the U.K. with that?

So actually, what you're going to see in the second half is our highest level of M&C in the last 4 or 5 years because we are absolutely trying to walk the talk on we're building brands and we're ready to invest behind them.

Look forward to seeing you all this afternoon.

Great. Well, you stole my [indiscernible] actually, Matthew. I'm looking forward to seeing everyone who is coming this afternoon. So thanks to all of you for dialing in this morning.

Listen, we are obviously feeling upbeat about the performance we have reported, but we're not getting carried away. Our feet are firmly on the ground. We can never give up and there's always more to do. And there are -- a little bit as we discussed with Damian, there are always new competitors coming to take our share. So there is a very healthy degree of paranoia in the business. But we are confident in our ability to drive performance and to deliver over the long term.

So for those of you joining us this afternoon, we look forward to seeing you. We will be setting out a renewed strategy. We'll be updating you on our innovations and brand building, and we'll be giving you a very deep dive into our African business. So I look forward to seeing you all there. Thank you very much.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Good morning all, and thank you for joining us on today's PZ Cussons full year results. My name is Drew, and I'll be the operator on the call today. [Operator Instructions]

With that, it's my pleasure to hand over to Jonathan Myers to begin. Please go ahead when you're ready.

Thank you very much, Drew, and good morning, everyone, and thank you for dialing into our results presentation for the year ended 31st of May 2025. For those of you that can see the slides we're presenting this morning, it's worth calling out a successful example of our brand-building activities in the last year on the slide in front of you. Original Source advertising on a London bus as part of our Nature Hits Different campaign. I'll have some more detail on this later, but suffice to say for now that the activity helped deliver another year of growth for the brand in FY '25.

Turning to the agenda then for this morning. I will start with a brief introduction before handing over to Sarah to take us through a review of the financials. I'll then provide a broader update on strategic progress and performance before moving to a summary and a chance for you to ask any questions.

Note on this slide too, an example of how we've been building brands over the past year. This one, driving trial of Cussons Baby, specifically the Telon oil launched last year as shoppers browse a specialist baby store in Jakarta. Our Telon oil has now reached 10% household penetration in urban Indonesia and is growing market share.

So moving to our main messages for this morning. We are making progress against our strategy. Our 4 priority markets delivered a strong performance. We have good momentum in the core of our business. The U.K. delivered a strong improvement in profitability, fueled by revenue growth and gross margin expansion. Indonesia ended the year with its fifth consecutive quarter of revenue growth with a healthy mix of high single-digit revenue and volume growth for the year. We continue to gain market share in Australia on each of our top 3 brands and grew operating profit overall, but we were still battling against the softer consumer backdrop holding back our revenue.

Finally, our Nigerian business demonstrated its resilience, continuing to perform well in a high inflation environment. Meanwhile, we have also made progress pushing change through the business, strengthening our brand building capabilities, driving better integration of our marketing and R&D teams and extending our planning horizons to enable greater focus on sufficiency and quality of our multiyear innovation plans. Since the close of our financial year, we announced the sale of 50% stake in PZ Wilmar to our joint venture partner, Wilmar International, in line with the objectives of the strategic review we announced in April 2024 to streamline and simplify our portfolio.

It was also after careful consideration of alternative value creation options that we announced the decision to retain St. Tropez, setting a new strategic direction with a new partner in the U.S. and a dedicated operating model within PZ to delivery. While I appreciate you will naturally have questions on our wider African business, all I'm able to say today is that we are continuing to progress our strategic review and will, of course, provide an update when we do have something to say.

Finally, we are working hard on reducing costs and unlocking value in the business, whether that's through reducing discretionary spend, tacking our structural cost base or the sale of surplus nonoperating assets. I'll cover more on this later. So overall, we know there is more work to be done and that we have not yet delivered all that we set out to achieve, but there has been good progress to date, particularly the underlying momentum in the core of the business. And we are focused on delivering our strategic actions and operational improvements to evolve PZ Cussons into a business with a more focused portfolio and stronger brands, delivering sustainable, profitable growth.

And with that, I'll hand over to Sarah to take us through the financials.

Thanks, Jonathan, and good morning, everyone. I'm going to share a summary of our FY '25 full year results, walk you through the key movements at the group level, then by segment and finish with current trading and guidance for the year ahead. As Jonathan mentioned, we've seen momentum across most of our portfolio, with a particularly strong performance in the U.K. and Indonesia. Group revenue declined by GBP 14 million to GBP 514 million, with a GBP 47 million reduction attributable to the naira, which while more stable in FY '25, was nearly 40% weaker on average versus sterling than in FY '24.

Like-for-like revenue growth calculated on a constant currency basis was 8%, driven by pricing in Nigeria. Excluding Africa, like-for-like revenue growth was flat. Adjusted operating profit was GBP 55 million, down 6%, with adjusted operating profit margin lower by 30 basis points at 10.7%. However, as you can see from the bottom of the slide, excluding from each year's figures, the contribution of PZ Wilmar, the sale of which we announced in June, group adjusted operating profit margin would have increased by 30 basis points.

On a statutory basis, operating profit was GBP 21 million compared to a loss of GBP 84 million in FY '24, which was primarily attributable to ForEx translation and U.S. dollar-denominated liability losses in our Nigerian subsidiaries following the currency devaluation of June 2023. And we have since significantly reduced our exposure to any future naira shocks as we have made good progress in extinguishing historical liabilities and repatriating surplus cash.

We maintained a flat net interest charge in the year. With a higher adjusted effective tax rate more indicative of the higher rate going forward, adjusted FY '25 earnings per share declined ahead of operating profit, down 8.5%. The Board is proposing a final dividend of 2.1p per share, taking the total for the year to 3.6p, the same level as the prior year. Free cash flow was GBP 42 million, up slightly due to an improvement in working capital, partially offset by the reduction in operating profit.

Net debt improved slightly to GBP 112 million with a net debt-to-EBITDA ratio of 1.7x. However, taking into account the proceeds from the sale of our Wilmar joint venture, which is expected to complete in the final quarter of calendar 2025, our pro forma ratio would have been 1.1x.

Turning now to the financial performance details and firstly, revenue. To aid comparability, the first bar shows the impact of adjusting for FX translation, presenting FY '24 revenues at FY '25 exchange rates. The breakdown of the adverse GBP 55 million impact is, as usual, provided in the appendix. On this like-for-like currency basis, revenue increased 8% in the U.K. and Indonesia. And Jonathan will come on to the brand drivers of that revenue growth later. We again took pricing in Africa with multiple increases throughout the year to offset double-digit inflation in Nigeria. Jonathan will also outline the steps we're taking to turn around St. Tropez brand.

Now to operating profit. As I mentioned, our overall adjusted operating profit margin decreased by 30 basis points to 10.7%. We've shown this chart excluding Wilmar, given this represents the more accurate basis for future profitability, lower in absolute sterling terms, but more cash-light and sustainable in nature versus an equity accounted share in a noncore, lower-margin joint venture. On a constant currency basis, group gross profit margin was lower in the year, reflecting the adverse mix impact of strong revenue growth in Nigeria, where gross margins are structurally lower.

This was more than offset by a 220 basis point reduction in overheads. Around half of this represents structural cash savings relevant to our go-forward business. Also included within this number is a reduction in amortization to reflect the business decision to extend the useful economic life of our SAP software now that the manufacturer support period will run for longer, allowing us to extract a higher return from that IT asset. Marketing investment was broadly unchanged as a percentage of revenue, while the impact of ForEx translation had an overall adverse 70 basis point impact on margins.

So let me now provide some more detail on the performance in each of our regional reporting segments. Looking first in Europe and Americas, where we saw growth in both like-for-like revenue and operating profit. Revenue grew 0.6%, driven by price/mix growth and with a very small overall volume decline. Growth in our main U.K. brands was offset by a challenging St. Tropez performance, without which Europe and Americas revenue growth would have been 2.4%.

Adjusted operating profit was up GBP 4 million, with a margin increase of 230 basis points, driven by tight cost control and the full year impact of the integration of the U.K. Personal Care and Beauty businesses as well as ongoing revenue growth management and product margin improvement initiatives. This more than offset the GBP 3 million impact from the introduction in the U.K. of extended producer responsibility plans and new costs, which we will seek to mitigate over time through, among other things, a review of our entire packaging portfolio.

Turning now to Asia Pac, where like-for-like revenue was flat. Continued momentum in Indonesia was offset by a decline in ANZ. All our core Cussons Baby segments drove volume-led growth in Indonesia, and ANZ saw market share gains in all 3 major brands despite the softer macro environment there. Both markets improved their profitability with higher gross margins and lower overheads. This, though, was offset by a reduction in profitability in some small Asian markets and lower profits in our business manufacturing non-branded [indiscernible]. Overall, adjusted operating profit reduced by GBP 3 million with a margin decline of 150 basis points.

Revenue in Africa declined by 7% due to the depreciation of the naira. The 35% like-for-like revenue growth reflects 20 rounds of price increases as inflation in Nigeria remained elevated at over 30% for much of the year. Whilst volumes declined 12% as a result of those price increases, this was mitigated somewhat by further route-to-market improvements that Jonathan will describe later. We've seen our Nigerian business return to volume as well as price-led revenue growth so far this FY '26 financial year.

Electricals revenue was GBP 47 million, up over 30% on a like-for-like basis. Adjusted Africa operating profit margin improved by 250 basis points or excluding PZ Wilmar, it improved by 450 basis points. The operating profit numbers shown here are excluding a GBP 9 million benefit that the Africa region reported in FY '24 related to intragroup debt forgiveness, the cost of which was shown in last year's central cost line and which had a net 0 impact to overall group operating profit. And I noted to explain that the Africa segmental results presented here are both comparable year-on-year and representative of underlying operations.

So finally then, our central cost line, which equated to GBP 30.5 million in FY '25 and which was, on a reported basis, down slightly versus FY '24. However, we have also made the corresponding Nigerian debt forgiveness adjustment here to ensure comparability. And as such, central costs increased GBP 6.8 million in FY '25. This was split between underlying cost increases and investments in group-wide capabilities attributable to the performance of business units, but best housed at the corporate center for maximum return and so reported them. For example, the shifting of some marketing and some R&D roles to sit central. As we'll come on to, we see this number falling considerably over the next 12 months given the cost savings we're announcing today.

So moving now to cash flow and net debt. Total free cash flow was GBP 42.3 million compared to GBP 41.6 million in the prior year, reflecting an improvement in working capital, offset by lower profits. Net debt was GBP 112 million compared to GBP 115.3 million last year, representing a net debt-to-EBITDA ratio of 1.7x, which, as mentioned earlier, will then see a significant reduction following the completion of the Wilmar sale. The group also continues to have no surplus cash held in Nigeria following our successful repatriation efforts.

As we said in the statement this morning, trading year-to-date has been in line with our expectations. Group like-for-like revenue to the end of September is expected to be up around 10%. Strong revenue growth in Asia Pac is made up of Indonesia posting its sixth consecutive quarter of growth, plus ANZ also being up. Africa is showing encouraging volume momentum. Europe and Americas is down 2% or up 2%, excluding St. Tropez. We expect Europe and Americas to continue to strengthen across October and November, which would see us back to overall revenue growth there in half 1.

In terms of profit guidance, we expect group adjusted operating profit to be between GBP 48 million and GBP 53 million. And this figure strips out any contribution from Wilmar, which is now treated as an asset held for sale in accounting terms. And so its profit contribution in FY '26 will be reported as part of the disposal calculations. Captured within the guidance are cost savings of between GBP 5 million and GBP 10 million, some of which will be reinvested in the business, subject to clear return criteria.

Finally, net debt will fall significantly in FY '26 to less than 1x EBITDA. We expect cash proceeds of between GBP 15 million and GBP 20 million from the ongoing program to sell surplus nonoperating assets, of which we have received GBP 8 million so far this current financial year. We're expecting to receive proceeds of approximately GBP 47 million before the end of the calendar year from the sale of our Wilmar joint venture. Jonathan will talk a little more about the cost savings and noncore asset sale proceeds in a little detail.

And so with that, I'll now hand back to him.

Thanks, Sarah. So let me give a broader update on progress and performance framed around the highlights and messages I covered at the beginning of the presentation. And let's start with the U.K. and what was behind the strong operating profit that I mentioned earlier. Beyond the cost savings Sarah talked about, a key driver of the revenue performance has been better commercial and brand building activities.

Taking Original Source as an example, we delivered a bold marketing campaign from February through to May, firmly targeting younger consumers with an optimized mix of social media, out-of-home and TV, leveraging our partnership with social media influencer and personality, Jamie Laing. This is a good example of how we are enabling more competitive brand activation with the GBP 2 million media campaign reaching more than 15 million people.

Pickup in brand awareness meant Original Source not only achieved its highest household penetration in almost 5 years, but thanks to considered price and promotional optimization as well, the brand also grew gross margin. Based on the success of the first wave of Nature Hits Different campaign, look out for the next wave of activity on Original Source over the next couple of months, a good example of us prioritizing brand support against activities with proven return on investment.

Another way of driving revenue on our brands is to work in partnership with the owners of other brands to engage common target consumers and drive in-store activation. Six months ago, we highlighted the success of Carex and its Gruffalo partnership, which we have since expanded to Zog and Room on the Broom. Notably, Carex grew revenue and gross margin in FY '25, consolidating its #1 position in the hand wash market. We've also extended this type of brand partnership to Childs Farm to include a tie-up with Bluey and BBC Studios. Now if you don't have young kids or don't know Bluey, it's one of the most popular TV shows in the world for children and is enabling us to secure disproportionate levels of support across retail outlets.

Just take a look at this tie-up with Bluey and Kellogg's at Sainsbury's as evidence. So we've seen encouraging FY '25 performance in the U.K., and we look forward to more to come, not least our plans for Christmas gifting, which is starting to hit the shelves this very month.

Turning to Indonesia and Cussons Baby. You may remember the Childs Farm SlumberTime product range launch, addressing the importance of reassuring parents that their washing and baby products are giving their babies the best possible chance of a good night sleep for the wellbeing of both the baby and their parents. The CuddleCalm range takes the consumer insights and product formulation learnings from Childs Farm and applies them to Cussons Baby, albeit in a very different context. It's a good example of us leveraging shared baby insights across geographies and brands as we have sought to create a more integrated marketing and R&D organization.

Elsewhere in our Indonesian business, we continue to see phenomenal growth in e-commerce, whether that's through established platforms such as Shopee or the ongoing success of our own live streaming capability.

Turning to our business in Australia and New Zealand, where we continue to see softness in category values through the year, though reassuringly, we've seen the first signs of amelioration in the latest quarter. Against that backdrop, we continue to make market share gains on our top 3 brands, thanks to renewed efforts to drive better in-store presence, competitive pricing and promotion and broader distribution across retail channels. The Morning Fresh photo on the right-hand side is an example of those efforts. We are already the clear market leader in washing up liquid, and we are leveraging this strong position and our brand equity for winning performance and great value to help grow market share in the auto dish category.

We've been using net hangers on bottles of Morning Fresh liquid to drive awareness and then offering hundreds of thousands of samples of auto dish tablets to drive trial. While auto dish is a highly competitive category, our position of strength in the washing up liquid market gives us a clear competitive advantage to leverage as we seek to build trial, distribution and market share.

Turning to Nigeria. Perhaps the best example of brand activation was the recent relaunch of Carex. Carex has been available in Nigeria for some time, but has always been subscale as the product positioning has largely been taken from the U.K. Thanks to good work with Nigerian consumers, our campaign Win the War Against Germs means the brand now looks and feels new and relevant with clear antibacterial positioning, distinct brand assets, bold disruptive messaging and benefiting from professional endorsement. Just like the Original Source example I gave earlier, the execution was a multifaceted campaign: Digital, TV, out-of-home advertising and a series of in-person launch events. In fact, we estimate the campaign reached 125 million people. It's early days, but signs so far are promising. Carex will absolutely be one of the drivers of Nigeria's performance in FY '26.

Beyond the excellent work on Carex, we have continued to strengthen our go-to-market presence. A key part of this, as we've mentioned before, has been the number of stores served directly by us as opposed to via wholesalers. Simply put, covering the stores directly leads to better retailer relationships and in-store presence as we can directly influence which products turn up in which types of outfit. From covering just under 70,000 stores directly 3 years ago, we exceeded our target of reaching 200,000 in FY '25, and we're now striving for even more stores in direct coverage in FY '26.

A driving force in how we are seeking to serve consumers better in our core categories is the strengthened brand building operating model we have adopted over the past year as the next phase in the journey to raise the bar on how effectively and consistently we build stronger brands. Many of you will remember where we started, strong brands with good tactical plans, but more of a trading mindset and limited cohesion across the portfolio. We moved on from that in recent years, creating better alignment across the group and strengthening in-year plans. But we know there's more to do.

So we now have put in place a brand-building setup, which balances staying close to consumers in our priority markets, whilst leveraging more effective integration and collaboration across both markets, meaning improved visibility of multiyear innovation and revenue growth plans in our priority market. Ultimately, we are building on our strength of in-year activation to add excellent multiyear innovation. Not only is this good for our consumers, it's also good for our marketing teams. We've seen a 7 percentage point improvement in engagement scores for the marketing function across the group. Ultimately, though, success will be measured in sustained progress on market share, revenue and profitability.

Moving to portfolio transformation. In June, we announced the sale of our 50% stake in PZ Wilmar, our Nigerian cooking oils business to Wilmar International, our joint venture partner, for cash consideration of $70 million. This will simplify our portfolio and as Sarah said, significantly strengthen our balance sheet. It sees us exit a noncore category and reduce group reliance on Nigeria as part of our overall efforts to rebalance the portfolio and concentrate on our core categories of hygiene, beauty and baby. The sale also benefits a number of our wider sustainability metrics as PZ Wilmar represents around 10% of our Scope 3 inventory.

Turning now to St. Tropez. As we explained back in June, although our intention was to sell the brand, after running a comprehensive process to do so, our firm belief is that the better course of action for our shareholders is to retain it and maximize value in the coming years. There are 3 reasons which give us the confidence. First, it's important to remember that whilst it's had a challenging performance recently, St. Tropez is regarded as an iconic brand. It established the self-tan category and has for many years been the driving force behind the market. It still has great brand equity and awareness with more than 30% share of the [indiscernible] self-tan beauty market in the U.S. and envy positions on the shelves of key U.S. beauty retailers such as Ulta and Sephora.

Second, the key tenet of the new direction is the partnership we have formed with the Emerson Group, a leading U.S.-based partner to many brand owners, including some of the world's largest personal care and beauty businesses. They will provide customer management, logistics services and brand activation in the U.S. St. Tropez will be integrated into Emerson's dedicated selling teams to key U.S. retailers with initial meetings having already taken place. Not only does this partnership give us access to a strong go-to-market operator in the U.S. with significant scale and expertise, it also dramatically simplifies our own operating model. We no longer have a need for our own team on the ground nor the expense of a dedicated office in Manhattan. Next, for the U.S., our St. Tropez model is better, simpler and more cost effective.

Finally, we have also appointed a new executive with significant experience of the beauty category, not least from many years spent at L'Oréal to lead the St. Tropez business with a single-minded focus on value creation and a dedicated team coming together beneath him. Looking ahead, therefore, we're busy with the innovation plans for the 2026 season and working on celebrating the 30th anniversary of the launch of St. Tropez next year. So lots more to come on St. Tropez.

Moving now to the final slide before summing up. As Sarah touched on earlier, we have made progress driving cost efficiencies and identifying opportunities to unlock further pockets of value, all of which will help to fund future growth. To that end, we have announced this morning that we expect to generate GBP 5 million to GBP 10 million of cost savings in FY '26. It's a big number at the top end of the range, but we're hard at work to deliver it.

We've already developed a track record and a playbook to do this with a GBP 3 million savings in the U.K. business as Sarah mentioned, removing duplicated structures and operating expense. But more importantly, the organization is increasingly building a mindset of ongoing cost optimization, sometimes through significant structural interventions driven by changes in operating model, but also through the relentless and rigorous pursuit of grinding out the inefficiencies that consumers do not value and should not be expected to pay for. Whether that's saving on the retendering of label production in the U.K., the shifting of surfactant suppliers for our Nigerian business or sourcing a different enzyme for our Radiant laundry brand in Australia. We're also unlocking value from noncore or nonoperating assets, mostly in Asia and Africa. These range from high-end residential property in Ghana and undeveloped land in Indonesia to empty warehouses in Nigeria that are no longer required by the business and pretty much everything in between. The market value of these assets is significant, and we estimate that after fees and taxes, we should generate net cash proceeds of around GBP 30 million from those disposals, the majority of which will complete during this financial year.

Common across all the activities shown on this slide is a single-minded pursuit of simplification, whether processes, operations or portfolio and as a result, unlocking value. In summary, while there's a lot going on at PZ and still much more to do to deliver, I want to be really clear that our day-to-day focus is on continuing to drive the underlying business across our priority markets. We're building stronger brands in our core categories, and we're driving more competitive go-to-market execution in our largest markets. The combination of which means we can get more PZ products into the homes and hands of more consumers.

So with that, enough of us and a chance for you to let us know what are your questions.

[Operator Instructions] Our first question today comes from Sahill Shan from Singer Capital Markets.

Forgive me, I'm fairly new to the story, but I've got a couple of questions, if that's okay. Firstly, just on the St. Tropez brand. You've retained it and outlined a new U.S.-focused strategy with Emerson. I suppose my question is what internal KPIs or milestones are you using to evaluate success? And how quickly should investors expect signs of recovery in the brand's P&L contribution? So that's my first question.

And the second one is around capital allocation. I think with the Wilmar proceeds and asset disposals, it looks like expected to significantly reduce net debt this year. How are you thinking about capital deployment priorities going forward around reinvestment, M&A or maybe returning capital back to shareholders?

So why don't I take the first of those questions relating to St. Tropez and I'll pass over to Sarah on capital allocation. So you're absolutely right. After a very considered process, we took the call to retain the brand because we saw more potential to create future value in doing so than in selling it. We're very clear as we did that, what are the strengths and what are the challenges that we need to address. And the most broken, if I can use that phrase, part of the business was in North America where we had seen double-digit declines.

And it's for that reason, we have taken the most dramatic action of any part of the business model in North America effectively to adopt a new route-to-market partner and one who is very, very qualified because they're already operating with the likes of Ulta and Sephora as well as more mainstream retailers in driving both personal care but also high-end beauty care. So that's a sign of confidence for us that we are putting our business in the hands of a proven partner, one who we've known previously, by the way, through work together on Childs Farm. So as we look to the future, ultimately, the most important measure will be value creation. And that is indeed how we have structured our thinking and also our incentivization as we look at the team that will be leading that business.

But obviously, what really matters will be driving growth in market share, growth in in-store distribution because ultimately it is a brand that wins in-store and online, but with sufficient social media activation and influencer support. And as that goes through perhaps 1 or 2 seasons, so coming to your question on how long, it's a very seasonal business. The summer is all important or late spring into summer is all important. So we are working hard for summer of '26, but we're also trying to make sure we get ahead of the game for the summer of '27. So I would be expecting to report to you improved momentum as we exit next season, but more importantly, the season after once we have a longer lead time to really address some of the more fundamental opportunities and challenges we see with the brand. But we're very hopeful and confident that we will see that improvement in value creation. Over to you, Sarah?

Thanks, Jonathan. Let me touch on the capital allocation point. So you're absolutely right to say we were very clear that the first use of any cash proceeds from the portfolio transformation would be to reduce our level of debt. It takes us for FY '25 to a pro forma leverage ratio of 1.1x and then with further surplus asset disposals and ongoing cash generation in FY '26, south of 1x. And that we see very much within our target range and a level of leverage we feel comfortable with.

Then in terms of our broader use of capital, it's first and foremost to drive the organic growth of the business. And of course, as a brand-building organization, that is behind R&D investments, behind marketing campaigns to drive our brands and also CapEx, both to give us more capacity to grow volume, also automation to make sure our product margins remain very competitive. So first and foremost, we see the highest return on our capital being in driving the organic growth of the business. We also are retaining sufficient capital to support a sustainable level of dividend. We don't have a stated policy, but internally, we think a little bit around a targeted cover of 2x and that growing in line with earnings going forward.

And then in the surplus capital, I think you can see us putting towards bolt-on M&A if we see opportunities that both sit very neatly within our core markets and our core categories or indeed the opportunity to acquire some additional capabilities, be that digital, and Childs Farm is our last such example in March 2022. And you should think about Childs Farm as being an example of something we might do again when the time is right. And I think we would say all of those things we consider to take precedence over surplus returns because we can do it. We believe we can deliver more return by deploying the capital internally.

Super. That's really helpful. Just one final one for me. It would be really appreciated. Post these results, it would be good to catch up. Could you get the relevant IR person on your side to reach out to me, and we can take it from there.

Our next question comes from Matthew Webb from Investec.

I appreciate you've touched on this already, but I wonder if you could just provide a bit more detail on where the GBP 5 million to GBP 10 million of targeted savings are coming from. Jonathan, I think you sort of mentioned that GBP 10 million is quite a big number at the top end, and I would agree with that. So anything that could bring that to life would be very helpful. And then maybe also where your priorities are in terms of reinvesting a portion of those savings? That's the first question.

Second question on the EPR. I mean, I infer from the way that you've talked about that, that you've really absorbed that GBP 3 million. I just wondered whether that's correct, whether there were any sort of discussions with your customers about passing that on, at least in part. And then also, I know you mentioned that this had prompted a review of your approach to packaging. And without sort of prejudging that review, I just wonder whether you could give any examples of some of the things you might consider there.

And then the third question is just on Indonesia, where obviously, I appreciate your trading has been very strong. So probably the answer is no. But I just wondered whether you'd seen any impact from the recent political unrest in that country.

Right. So three good questions, Matthew. Sarah is going to be number one, and I'll come in with the EPR and the Indonesia response for you.

So Matthew, let me try and unpack that GBP 5 million to GBP 10 million a little bit. And as Jonathan mentioned, we're establishing a better understanding of where -- if you like, there might be opportunity in our overhead cost base as well as the muscle that we think we very definitely built in terms of optimizing product costs, having in FY '25 integrated our legacy U.K. Personal Care and Beauty businesses. So I think in terms of where we sit today on top of that historical overhead work is recognizing that we inherited a business that needed to unashamedly invest behind capabilities. And they were both commercial to drive the business, but they were also, if I use the word corporate, to meet the PLC bar to make sure we are doing things in the right way. And we have shown both good hard and soft benefits from those investments over the last 3 to 4 years. And we recognize we're in a position now where we can afford to maybe unpick some of those capabilities. So we have quite a strong corporate cost base.

And in some of the enabling functions, most notably very close to home and finance, perhaps in HR and IT, we've now reached a level of capability that we think is sufficient. So we have been looking at some of the capabilities we can take away there. That GBP 5 million or GBP 10 million, we've got a good line of sight to the GBP 5 million. We're working on the additional GBP 5 million.

It's probably split 2/3 people from increasing spans of control from internal promotions rather than external hires and yes, the net reduction in overall headcount. And then 1/3 is more, if you like, a little bit more tactial, be it the use of consultants, managing travel and expenses and just good continuous improvement and being very cost conscious. So some central capabilities on which we think we now no longer generate a level of return, 2/3 people, 1/3 on [indiscernible].

So if I pick up on the EPR question, then I'll come on to Indonesia, Matthew. So first of all, on EPR, I would say we, along with other manufacturers, have been getting our heads around the implications of this tax. And we're one of the first to report just as the nature of our financial year-end, and we'll be all keenly looking to see what other people are saying as they report in the coming months as well. But I would say exactly as you've identified, really, there are 2 levers that we can pull as we try to deal with what is effectively a new cost in our cost structure.

The first is absolutely as part of a broader revenue growth management effort, always looking at our ongoing optimization of pricing and promotion. And sometimes that is tweaking our promotional activity where you nudge up the price per liter or the price per pack. And other times, that can be literally straightforward price increases that we are communicating to retailers and working with them as they choose how much or little of those increases they want to reflect on [indiscernible]. And so that has clearly been one lever that we have been pulling, and we will continue to look at that over time. But also over time, particularly as we learn more about the exact drivers of the EPR tax and how it is applied is how we can optimize our packaging across our portfolio, be that primary packaging or secondary packaging to literally reduce the weight or volume that we are using.

And so for example, over time, lightweighting of bottles or lightweighting of caps and also looking at our secondary packaging can be very important and very helpful as we learn how to more effectively optimize the EPR impact, but also continue to provide packaging that consumers find useful and usable. But obviously, then what it's also doing is helping us on our journey of delivering against our sustainability KPIs as well. So we're embracing the challenge, but obviously, we're also learning exactly how the tax works along those manufacturers.

As for Indonesia, so just in case anyone else on the line didn't pick it up, there was some social unrest in Indonesia at the very tail end of August and the beginning of September. It was related to housing allowances for MPs and it rather snowballed from there. We obviously triggered our business continuity plan, put it into action. There was minimal disruption to our business. We did actually have our people working from home. So we closed our offices for a period of about 4 working days. Our factories continue to run and our distributors continue to operate. The interesting insight is rather as we have seen with previous events in Indonesia, what it leads to is the shopper actually going to their local open market, I think a wet market rather than a modern supermarket. And so we see a channel switch. And the good news is our distributors are very well placed to be able to support that switch.

Our distributors will carry around 7.5 weeks of inventory. So even if we were unable to get some deliveries through, they still have sufficient product in their warehouses to deliver in their localities. So there's minimal disruption. I think in Q1, there's a little bit maybe in our P4 numbers, but all of that will come back in Q2.

Our next question comes from Damian McNeela from Deutsche Numis.

Two from me, please, this morning. Firstly, U.K. washing and bathing seems to be growing at around about 2%. Can you provide a little bit of insight into both the consumer experience of the category and also the competitive dynamics that you're managing at the minute, please?

And then the sort of the last question is around marketing spend. And I think it was held broadly flat this year. What are your sort of expectations for the current year? And also to what extent is AI being used to try and optimize your marketing spend as well, please?

Damian, so I'll pick up a little bit on the washing and bathing category dynamics. Sarah can talk a little bit about M&C spend expectations, and I'll then come back with AI and how that can help us optimize and drive higher return on investment.

First of all, I think probably in keeping with other consumer categories in the U.K. retail environment, we are seeing an increasingly competitive category of washing and bathing. There's growth to be had. There's still some growth in the market. So it's still an exciting and interesting segment of the market to be playing in, absolutely, particularly if you've got strong brands and strong relationships with the retailers and good go-to-market capabilities. But there is no doubt there is a significant tranche of shoppers, not all, so I don't want to generalize, but a significant tranche that is seeking value.

And that's where it collides a little bit with where you're asking about competitive dynamics because we're also seeing some of our competitors, and you will be able to work out from their own comments, which ones I'm talking about, who are trying to rebalance for themselves a focus on value versus volume and perhaps they've been chasing value too much rather than volume. So how is that manifesting itself? There's no doubt there's still an awful lot of people that are interested in shower gels that sell at GBP 1 or less. So we need to make sure that we have pack sizes and promotional price points are absolutely delivered for that. But what we're also seeing is an increasing intensity in the competitive environment on larger pack sizes, and in particular, 500 and 600-milliliter bottles.

So whereas in the past, they may have been relatively unpromoted versus the smaller circa GBP 1 price point bottle, you're now beginning increasingly to see quite a lot of price promotion on 500 mL and up [indiscernible]. So we are absolutely sharpening our pencil. We're absolutely trying to respond. It's always a little bit of a lag, as you know, in planning promotions based on the retailers' promotional calendars. But as we move through this year, we will be trying to make sure that we are responding to not just competitive pressures, but also how shoppers are evolving too. So as I say, very interesting subcategory to play in, but very competitive too.

Damian, let me address the M&C -- sorry, Damian, you come back.

No, I'm just saying thank you, Sarah. So yes, brilliant.

Thank you, Damian. Let me talk to M&C then. So you're right in terms of the FY '25 margin bridge that we shared this morning. Effectively, what we're saying is that there was no positive contribution to our margin performance in FY '25 from M&C. Or the other way of putting that is we grew our marketing spend in line with our revenue growth, which is actually a good thing. So we probably shouldn't in reality, color code it red. What we've not done and what we won't do is either set internally or guide externally to a set of prescriptive marketing spend targets, either in absolute terms or with reference to our overall revenue because our brand portfolio is so diverse. So Cussons Baby, as Jonathan referenced being sold in wet markets through distributors in Indonesia has a very different support model in terms of the levers of profitable growth than will a St. Tropez being sold in the U.S.

So what we do, do on a case-by-case basis is work out a level of sufficiency for each of our brands. And then with increasing scrutiny and data capability, and maybe Jonathan will touch on that as part of the AI topic, really understanding whether that M&C delivered incremental return or not, and if it doesn't move it or optimizing it. But I think what you should be very certain of is the overall direction of travel to underpin our brand building ambition will be a net increase in marketing investments. And if I think about the GBP 5 million to GBP 10 million of overhead cost savings that we're committing to in FY '26, where we talk about reinvesting a portion, marketing investment will absolutely be the #1 candidate on that list for investment, Damian. So hopefully, that answers the question.

I'll pick up on the AI part. My flip in response to you, Damian, having known you for a few years, I can say [indiscernible]. So what I mean by lemons is if you look at that Nature Hits Different campaign on the side of the bus I talked about earlier, those very first graphics were actually AI generated. So we are trying to embrace artificial intelligence and how it can help us. I'll come on to some other ways in which [indiscernible] actually AI can help us in the core elements of brand building and as fundamental as generating the graphics, which in that particular campaign, we were able to test and modify and then ultimately bring to market, whether that was on boring old traditional TV or much more interesting and exciting social media.

So that's a good example of where we have been developing campaigns using artificial intelligence. But somewhat more fundamentally, as a company, we are also spearheading the use of data analytics and artificial intelligence in how we can improve revenue but also optimize processes and save some of the cost involved with that. So as part of forming a partnership with Microsoft on the Microsoft Fabric platform, we have been exploring, for example, how we can more effectively use our market share data to drive market and consumer insights to help us unlock opportunities for the future, but also how we can optimize our pricing and promotion planning a little bit in that whole area of revenue growth management, but also tackling some of our processes to optimize some of those, not least some of our financial forecasting process internally.

So we'll have more to say on that in the future. I don't want to say we're just scratching the surface. It's not that we're doing nothing, but we do see that AI has an opportunity and a part to play for us in the future.

Thank you. With that, that concludes the Q&A portion of today's call, and I'll hand back over to Jonathan Myers for some closing remarks.

Thank you, Drew. Thank you to everyone who's called in today and those who asked questions. Hopefully, you've got a sense of we are hard at work. There's plenty done, but we are firmly on the ground. We have plenty more to do, and we have a lot to get on with. So that is what we are going to go and do and ask for all of you in the U.K. as you go shopping in the next few weeks and you see our Christmas gift sets on the shelves, make sure you pick one up and put it in the stocking for someone in your family. And we'll thank you next time we talk. Bye-bye.

Thank you all for joining. That concludes today's call. You may now disconnect your lines.