We are the name behind the high performance ingredients and technologies in some of the biggest, most successful brands in the world; creating, making and selling speciality chemicals that are relied on by industries and consumers everywhere. 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.
To maximise opportunities for growth, we use the global mega trends to shape our strategy and business model, which ensures we can deliver innovations that satisfy the unmet needs of our customers:
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 growth, driving innovation and sustainable solutions.
For further details on our economic performance see our 2019 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 2019, turnover from continuing operations was £1377.7 (2018: £1,386.9m) and operating profit was £339.7 (2018: £342.5m), a return on sales of 24.7% (2018: 24.7%).
Adjusted pre-tax profit from continuing operations decreased by 2.83% to £322.1m (2018: £331.5m). Earnings per share increased by 6.3% to 190.2p (2017: 179.0p).
|Bought-in Materials and Services||711.3|
|To providers of capital||284.5|
|Retained in the business||23.3|
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 94-140, with our five-year record on page 150.
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 are 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 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 38-43 of the 2019 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 on pages 20-35 of the 2019 Croda Sustainability Report. Further details on how we are tackling the issue of water quality and supply can be found in GRI Specific Disclosures GRI 303-1 and GRI 303-2 and on pages 32 & 35 of the Croda 2019 Sustainability Report.
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||1,824*|
|Expressed as a percentage of Group||39.8%|
*Please note that this figure only includes employees in active pension schemes, and 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 2019 Annual Report.
During the year, no significant financial assistance was received from governments and we have no governmental shareholders.
Basis for materiality
Industrial development has powered humanity’s journey towards a climate emergency. Now, smart science and collaboration are our most effective tools to start reducing our impact on the planet, society and our businesses and markets.
The need to address society’s impact on climate change through a global reduction in GHG emissions is a hugely important aspect of our strategy and ‘The Croda Difference’. Our work in this area is driven by our own operational emissions reduction targets, alongside an understanding that our impact on emissions also encompasses our upstream and downstream supply chain, which includes our high usage of bio-based raw materials. This is in addition to the emissions avoided through the performance benefits our ingredients offer when in use by our customers and their consumers.
Business stakeholders are increasingly focused on this issue: customers and end users are insisting on low-carbon alternatives to GHG intensive products. Financial actors are demonstrating a greater appetite for companies who demonstrate resilience to climate-related risks and opportunities over short, medium & long-term.
Our Purpose, Smart Science to Improve LivesTM, sets out our ambitious goals to be Climate Positive, Land Positive and People Positive. We have a long history as a supplier of sustainable innovative ingredients. As we enter the new decade, we must further accelerate our positive impact by creating and delivering solutions to tackle some of the biggest challenges the world is facing.
Contribution to value creation
As well as reducing our own carbon emissions through the optimisation of its operations, we also contribute to avoided greenhouse gas emissions with our numerous sustainable products that deliver ‘in use’ benefits to our customers. Inclusion of our products in customer formulations can offer many kinds of benefits in use: social, economic and environmental, for both our customers and their consumers. All new products launched during 2019, have a known sustainability benefit in use. Last year, we began to quantify the avoidance or reduction of GHG emissions associated with the use of our products by our customers or consumers in the end application.
Decreasing materials and energy consumption reduces cost and further increases the company’s competitiveness.
Read more: page 2019 Croda Sustainability Report
Climate change is relevant for our own operations, our global supply chains, our customers and the entire life cycle of our products.
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 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 38-43 of our 2019 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, 318 people were trained.
In 2018 1,101 people were trained: 110 in North America, 76 in Latin America, 643 in Western Europe, 36 in the Middle East and Africa and 236 Asia Pacific.
In 2019, 517 people were trained: 52 in Latin America, 149 in Asia Pacific, 232 in Western Europe, 26 in Eastern Europe, Middle East and Africa and 58 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 our approach to countering bribery and corruption can be found on the company website www.croda.com under company policies.
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