We are a global speciality chemical company selling high performance ingredients that go into thousands of everyday products. Consumers may not know our name, but we create the innovations that help our customers build million and billion-pound brands.
Like our customers, we are driven by the desires of the consumer and our aim is to identify, anticipate and satisfy their unmet needs. We do this by working intimately with our customers and by focusing on constant, sustainable innovation.
We have identified three megatrends in the chemical industry, borne from global drives of change, which will provide the catalyst for our future growth:
1. Ingredient Sustainability
2. Beauty & Ageing
3. Health & Wellbeing
These megatrends will impact right across our four business sectors, and continued innovation coupled with our ongoing focus on naturally sourced raw materials will leave us well placed to take advantage of them.
The delivery of our ambitious goals will be enabled by our three key strategic objectives: delivering consistent top and bottom line growth, increasing the proportion of New and Protected Product sales and Investing in a sustainable future.
For further details on our economic performance see the Annual Report.
Renewable, naturally sourced raw materials are at the heart of Croda. Our very first product in 1925 was Lanolin, which is created as a result of washing sheep fleece for the wool industry, making it a very natural and sustainable ingredient. 90 years later, we are still working closely with wool producers to improve the efficiency of Lanolin extraction.
Our global procurement team harbour strong, long lasting relationships with our suppliers through a culture of open communication. Our Supplier Code of Conduct is actively managed during face-to-face meetings with our suppliers and often has its own place on the agenda to be discussed.
We utilise a system called SAP to track and monitor all raw material purchasing. All of our sites globally are in charge of their purchasing budgets and it is their policy to source locally where possible.
In 2016, turnover from continuing operations was £1,243.6m (2015: £1,081.7m) and operating profit was £298.2m (2015: £264.2m), a return on sales of 24.0% (2015: 24.4%).
Record profit was delivered in 2016, with profit growth in all core business sectors. Adjusted pre-tax profit from continuing operations increased by 13.2% to £288.3m (2015: £254.7m). Earnings per share on the same basis increased by 11.2% to 148.2p (2015: 133.3p).
|Bought-in Materials and Services||£588.4m|
|To providers of capital||£240.1m|
|Retained in the business||£16.6m|
Further details on our economic value can be found throughout the Annual Report. An overview can be found on page 1, whilst the group’s financial statements can be found on pages 86-133, with our five year record on page 139.
As an organisation we are aware that climate change is affecting the way that we think about business and the decisions that we make. Within our risk management framework, Group wide impacts and trends including external and emerging risks are identified, including those relating to climate change. Although no specific risks relating to climate change emerged as one our key organisational risks, the consequences of climate change on our business have been identified within the market sector, regional and manufacturing site risk registers.
As the link between emissions of combustion products such as CO2 and climate change is now well established, it is essential that as a socially responsible company we reduce the impact of our emissions to a sustainable level. The expectation of all of our stakeholders is that we continue to make progress in reducing discharges of climate change gases.
We are in a strong position to exploit emerging trends related to climate change, with a significant proportion of our raw materials coming from renewable sources and our new product development having a strong focus on products that can help reduce the energy that people and industry consume during manufacture and end use.
Further details of the Groups risk management processes can be found on pages 29-33 of the 2016 Annual Report.
Further details on how we are tackling the issue of air quality and climate change can be found in GRI Specific Disclosures GRI 302-1 and GRI 302-2 and in our Sustainability Report on pages 14-18. Further details on how we are tackling the issue of water quality and supply can be found in GRI Specific Disclosures GRI 301-1 and GRI 303-2 and in our Sustainability Report on pages 16 and 17.
Pension provision forms part of our total employment package, which is aligned to the needs of our employees and the markets in which we operate. We actively encourage employees to join our company pension schemes where available, but we realise that this is a personal choice.
|Defined benefits plan coverage|
|Number of employees covered by defined benefit Schemes||2,660*|
|Expressed as a percentage of Group||62%|
*Please note that this figure does not include Incotec employees or locations that have a private pension plan
Further details regarding our retirement benefit liabilities, including our defined benefit schemes can be found in the 2016 Annual Report.
During the year, no significant financial assistance was received from governments and we have no governmental shareholders. In particular circumstances we do pursue grants from local governments in order to assist our sustainable development plans.
For example, in 2014 our Gouda manufacturing site in The Netherlands received funding from EU Life +, the funding body for the environment and climate action, which recognises projects that will make a vital contribution to the preservation, conservation and enhancement of Europe’s natural resources.
The project, which attracted a total grant of 1,996,000 euro over three years, will see the manufacturing site become the first oleochemical site in Europe to generate fuel from glycerine water to create 100% renewable biogas. This is part of a wider energy reduction programme that will reduce the site’s CO2 emissions by a quarter.
Where goods and services of the right cost and quality can be purchased by manufacturing plants in their own country from local suppliers operating in the same country, then the sites will preferentially do this. The extent to which local sourcing is practiced across all of the manufacturing sites is not currently measured.
Identification of organisational risks relating to corruption was undertaken by overlaying the territorial analysis of turnover with the risk corruption index map from a recognised provider (Transparency International). Territories identified as being at higher risk of corruption and which generated material turnover were discussed in more detail with locally knowledgeable management to identify any specific areas of concern.
Further details on Croda’s risk management can be found on pages 29-33 of the 2016 Annual Report.
Following implementation of the Bribery Act 2010 in 2011, and as part of a wide ranging compliance review, we instituted a Group wide training programme incorporating issues raised by this legislation.
Employees who are most likely to be exposed to bribery related issues due to their function or location are required to complete online training. The course involves employees being taken through numerous scenarios relevant to our business and it cannot be completed successfully without passing a test.
In 2011, training was completed by all managers and non-managers who were identified, which was a total of 1,405 employees including 420 managers. A further 597 employees completed the course in 2012 and another 208 during 2013. In 2014, 194 people were trained and all relevant new employees will be required to take and pass the test in the future. In 2015, 1056 people were trained, including those who have had to complete refresher training.
In 2016, a further 318 people were trained: 51 in Latin America, 98 in Asia Pacific, 149 in Europe, Middle East and Africa and 20 in North America.
In addition to the online training, senior management received further guidance in respect of the Act, detailing how the Company’s policies and procedures work to ensure compliance.
Further information on Croda’s approach to countering bribery and corruption can be found on the company website under Company Policies.