At Croda our Purpose is to use Smart science to improve lives™, enabled by our distinctive values-led culture that governs how we work with one another and guides our relationships with all our partners.
We combine our knowledge, passion, and entrepreneurial spirit to create, make and sell speciality ingredients that are relied on by industries and consumers everywhere.
Our corporate strategy sets out the high-level themes that will help us to deliver our Purpose. A focus on growth, innovation and sustainability means that our smart science can help our customers to deliver both their consumer and sustainability commitments, while we achieve our own, creating sustainable value for our shareholders.
Our market focus targets Consumer Care, Life Sciences and Performance Technologies as we look to extend the reach of our smart science to consumers everywhere. From sun protection to pharmaceuticals, crop and battery technologies, these markets touch our lives every day.
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 2020 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 2020, turnover from continuing operations was £1390.3m (2019: £1,377.7m) and operating profit was £319.6 (2019: £339.7m), a return on sales of 23% (2019: 24.7%).
Adjusted pre-tax profit from continuing operations decreased by 6.67% to £300.6m (2019: £322.1m). Earnings per share decreased by 5.1% to 175.5p (2019: 185.0p).
|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 2020 Annual Report. An overview can be found on page 1, whilst the group’s financial statements can be found on pages 116-155, 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-related risks and opportunities on our business have been identified within the market sector, regional and manufacturing site risk registers.
Our Board is responsible for dealing with risks and opportunities associated with climate change, but all management positions share the responsibility of assessing and managing relevant climate-related risks and opportunities. We have identified a range of short, medium, and long-term climate-related risks
and opportunities which have been considered within our business strategy, and financial planning and integrated into our overall risk management framework, reviewed by the Board, and monitored regularly through our SHEQ committee. We are committed to a 1.5°C scenario and have bold emissions reduction targets relating to our scope 1, scope 2 and scope 3 GHG emissions.
During 2020 we have moved towards alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and have reported against the disclosures within this year’s Annual Report in advance of the mandatory requirements.
Read more: pages 38-42 of the 2020 Annual Report.
Read more: GRI Specific Disclosures GRI 302-1, GRI 302-2, GRI303-1 and pages 12-17 of the 2020 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||1,788*|
|Expressed as a percentage of Group||44%|
*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.
Read more: 2020 Annual Report.
During the year, no significant financial assistance was received from governments and we have no governmental shareholders.
Basis for materiality
Renewable, naturally sourced raw materials are at the heart of Croda. Our very first product in 1925 was lanolin, which is created by washing sheep fleece for the wool industry, making it a very natural and sustainable ingredient. 94 years later, we are still working closely with wool producers to improve the efficiency of lanolin extraction and in 2020 67% of our organic origin raw materials were bio-based in 2020, coming from renewable crops and biotechnology.
Our global procurement team harbour strong, long lasting relationships with our suppliers through a culture of open communication and we have partnered with EcoVadis as our framework for sustainability monitoring, using their universal scorecard, benchmarks, and performance improvement tools.
We have a publicly stated target to ensure all our key suppliers are responding to EcoVadis and engaging with us to improve practices and by the end of 2020 199 of our suppliers, representing 50% of our spend, had been evaluated.
We reviewed, updated, and issued our Supplier Code of Conduct during 2020, which clearly states our sustainability objectives and fundamental requirements of doing business. It requires acknowledgement
and acceptance from all suppliers and is an important tool to develop dialogue with like-minded suppliers who are also making commitments to science-based targets and the SDGs. We are also partnered with CDP Supply Chain to capture environmental reporting from suppliers to measure, monitor and reduce our scope 3 GHG emissions embedded in the raw materials we use. In 2020 we requested emissions data from 103 suppliers, with a 44% response rate.
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.
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.
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