2019 Croda Annual Report

Smart
Science Annual Report
to Improve
and Accounts
2019
Lives
TM
Smart Science
At Croda, we have made it our Croda was built upon a foundation
Purpose to use our Smart Science of using smart science to turn
to Improve Lives™. We combine renewable raw materials into
our knowledge, passion and innovative ingredients. This
entrepreneurial spirit to create, sustainability focus still sits at
make and sell speciality ingredients the core of what we do, driving
to Improve Lives
that are relied upon by industries innovation to create market-leading
and consumers everywhere. products and ensuring that we have
a positive effect on the environment
and society.
In line with our Purpose, our ambition From sustainable processes

is to become the most sustainable and innovative ingredients helping
supplier of innovative ingredients. to protect skin, reduce carbon
Aligning our smart science with emissions and grow more food,
the United Nations Sustainable to improving wellbeing and the
Development Goals (SDGs) will efficacy of life-saving drugs,
ensure that we help to tackle some we are using our Smart Science
of the biggest challenges the world to Improve Lives™ every day.
is facing. By 2030 we will be Climate,
Land and People Positive.
Rapeseed flower: over 61% of our organic raw materials are

bio-based, including rapeseed oil The impact of our smart science at a micro level creates
sustainable benefits to improve lives at a macro level
Croda International Plc

Annual Report and Accounts 2019 1
North America Latin America Western Europe EEMEA Asia Pacific
operations operations operations operations operations
10 9 25 7 23
Employees Employees Employees Employees Employees
Contents Sales
Strategic Report
Strategy and Operations £1,377.7m 614 311 2,478 105 1,072

Chair’s Statement 10 2018: £1,386.9m
Business Model 12
Our Stakeholders 14
Core business sales growth (constant currency)
Chief Executive’s Review 16
Our Strategy
Performance and Financials

20
-2.3%
2018: +3.8%
Sector Review 22
Sustainability 29
Key Performance Indicators 32 IFRS profit before tax (PBT)
£302.3m
Finance Review 34
Risk Management 38
Directors’ Report 2018: £317.8m
Corporate Governance 44
Remuneration Report 71 Adjusted PBT growth (constant currency)
-3.7%
Directors’ Report 98
Financial Statements
2018: +6.2%
Independent Auditors’ Report 102
Group Consolidated Statements 110
Group Accounting Policies 115 Ordinary dividend (proposed full year)
+3.4%
Notes to the Group Accounts 122
Company Financial Statements 149
Notes to the Company Financial 151
Statements 2018:+7.4%
Other Information NPP % Group sales (constant currency)
28.1%
Related Undertakings 156
Shareholder Information 159
Five Year Record 161
Glossary 162 2018: 28.2%
Sales by Sales by
region sector
Energy from non-fossil fuels
22.7%
2018: 21.1%
Safety (Total Recordable Injury Rate) ¢ Europe, Middle East & Africa £558.9m Personal Care £485.2m
0.55
North America £367.4m Life Sciences £350.5m
Latin America £143.8m Performance Technologies £430.2m
2018: 0.72 Asia £307.6m Industrial Chemicals £111.8m
Personal Care
to Improve Lives
Sustainably improving wellbeing

We provide speciality There are clear wellbeing and sustainability impacts from our
speciality Personal Care ingredients. They provide a positive impact
ingredients that care on personal wellbeing while their manufacture involves innovative
for all types of skin sustainable production processes with benefits including reduced
and hair, improving water consumption.
wellbeing while being Our Green Caviar ingredient is a great example of the way our practices
kinder to our world align with the SDGs. In the Philippines we support local people through
a win-win collaboration to ethically and sustainably source a sea algae
which produces a naturally hydrating skin care ingredient.
Many millions of people with every skin type are already protected by
our inorganic sun protection ingredients. We continue to investigate
ways we can do more to sustainably improve the lives of all living
creatures, for example, our vegan-suitable ingredients help customers
to meet the demand for non-animal derived and cruelty-free products.
Personal wellbeing is undeniably an important outcome from the

use of our ingredients. With this in mind, we are developing a deeper
understanding of Emotional Cosmetics to discover the sensory impact
Smart Science of a formulation on wellbeing and any positive psychological effects.
This data-driven research will help us to extend the reach of our
smart science and prove its impact on the lives of people
Advanced personal care science everywhere, every day.
We are responding to For our customers and our Personal Care team, ingredient integrity
and sustainable, cutting-edge science are a priority. We develop and
the exacting demands evolve technologies using the 12 Principles of Green Chemistry* to
of consumers with offer sustainable benefits in use and respond to worldwide consumer
our range of speciality demand for safe, effective and clean, bio-based products.
sustainable skin care, Our scientists are a leading force in the development of safe and
hair care and solar sustainable inorganic solar protection ingredients. Unlike organics,
our mineral ingredients have been classified as GRASE (generally
protection ingredients recognised as safe and effective) in a recent proposed rule by the
and working with Food and Drug Administration. Perfectly aligned with the ‘clean beauty’
respected independent movement, our range also provides options for reef-safe sun care
products. Optimising skin protection is the focus of our work with an
scientists independent scientist researching the effects of infra-red light (IR) on
skin. This new research is helping us to realise the importance of solar
protection beyond UV and to expand our offer to sunscreens with IR as
well as pollution protection.
With sustainable production in mind, our hi-tech method of growing

plant cells in labs allows us to optimise the production of naturally
occurring molecules of interest while we reduce water and land use
and help to protect botanical biodiversity. Our waterless formulation
prototypes and our bio-degradable and sustainable sugar-based
surfactants are industry leaders, helping us to keep improving lives.
** Green Chemistry: Principles and Practices, Dr Paul Anstas
Sea algae: we use this sustainably harvested algae in our ingredients

to naturally improve skin hydration
2 Croda International Plc

Annual Report and Accounts 2019
Life Sciences
to Improve Lives
Improving health and food security

We are helping to The positive global impact we have through our Health Care and Crop
Care solutions is clear: improved health and more food without the
prevent and cure need to use more land. Our Health Care excipients and drug-delivery
diseases, feed technologies help to improve the delivery of complex, life-critical drug
more people and formulations to ensure maximum effect for patients, while our vaccine
adjuvant technologies are being used to combat challenging diseases
cut food waste like HIV and malaria. We partner with our customers to target new
diseases and protect people against contagious diseases worldwide.
To help reduce world hunger, our specialist ingredients provide a

variety of solutions to help growers, retailers and consumers. Our
targeted agricultural delivery technologies and next generation soil
health innovations contribute to creating more food today without
compromising tomorrow. The seed enhancement technologies we
offer effectively and sustainably improve the yield of the world’s most
important crops. Formulation solutions help to reduce pesticide use
and run-off by improving the effectiveness of plant protection products.
To further build on our sustainable approach, our biostimulants help
farmers to grow more, higher quality crops. This means that they receive
better incomes and retailers and consumers can cut the quantity of
Smart Science spoiled fruit and vegetables they throw away. All of this combines to
help sustainably reduce world hunger.
Sustainable health care and agriculture

Our innovations in a We are taking important strides in Health Care and Crop Care
science, positioned at the smart end of the markets in which we
broad range of Crop operate, as we deliver niche ingredients to our diverse customer base.
Care and Health Care We are broadening our range of speciality pharmaceutical excipients,
speciality ingredients developing and acquiring new technologies, creating a world-leading
position in vaccine adjuvants and establishing new drug-delivery
are helping our platforms. This will include the commercialisation of our partner, SiSaf’s,
customers and their Prosilic technology to optimise drug delivery. We will also work together
consumers to meet with our Research and Development team at Enza Biotech, to gather
further data demonstrating the performance benefits of our new,
their sustainability goals biodegradable, sugar-based surfactant technology.
Our contribution to improving global food security begins with a deep

understanding of plant science. We are enhancing seed performance
and helping plants mitigate the effects of climate variability to improve
crop quality and yield. Our sophisticated seed solutions, for example,
can even target local markets to improve results in different climatic
conditions. Our focus is on sustainable agriculture. We offer drift
reduction technologies to target spraying of crops and limit
environmental impact, our formulation solutions improve the
effectiveness of plant protection products and our advanced
biostimulants work with natural plant responses to stresses
such as heat and drought to improve both quality and yield.
Sunflower stem. Our ingredients help to sustainably grow more crops and improve health

Performance Technologies
to Improve Lives
Helping to reduce, reuse and recycle

We are supporting the In our fast-changing world, technology and consumer preferences
evolve at pace. Such changes drive the creation of new consumer
circular economy and products, but these can have a short life-span and cause a negative
durable material design, environmental impact if they are difficult to recycle.
enabling the growth Our Performance Technology ingredients help to make materials
of clean energy and more durable, longer lasting and efficient, improving the sustainability
helping to further of our customers’ products. Our polymeric materials are key examples
of the way we can prolong product life and even reduce defect wastage
reduce negative during production. These align with the global move to a circular plastic
environmental impact economy with our ingredients making production processes more
efficient, reducing energy use, increasing the proportion of reusable
products and allowing for more recycling.
Our RewitecTM products improve durability in a market where

sustainability is vital. In wind energy applications, where our
ingredients extend turbine life and reduce maintenance costs,
they deliver significant energy savings and greater carbon benefits.
On an individual level, our sustainability focus extends to products
helping to reduce the heavy environmental impact of the fashion and
Smart Science textile industry. Our technologies reduce carbon emissions and save
water by extending the life of clothing significantly, protecting the fibres
The science of durable materials

of a garment from the fading, greying or pilling that can lead to items
being thrown away and replaced, rather than reused or recycled.
Safe and sustainable Advances in our specialist ingredients are keeping pace with, and
enabling innovation in, a fast-changing world where consumers
solutions to meet increasingly focus on the need to reduce, reuse and recycle the
demand for the latest products they purchase. This is driving our customers to innovate
fashions and extend the with sustainability in mind.
reach of clean energy We enable more sustainable customer innovations through our
while minimising bio-based additives which help to produce high quality performance
polymers with a negative or low-carbon footprint. Our anti-scratch
negative environmental additives offer durable product design solutions for cutting-edge
impact electronic, automotive and sports products, reducing the need for
future repair and replacement. Our smart science is also delivered
in our additives, ensuring durability to extend the life of wind turbine
gearboxes. This focus on sustainability and durability even applies
to the specialist biopolymers we have developed for use in fabric
and laundry care, protecting garment fibres to extend the life of
modern fabrics.
Rapeseed pollen. Rapeseed oil is a key raw material within our advanced bio-based polymers

Sustainability
to Improve Lives
Playing our part in fighting climate change

We are proud of The link between climate change and human industrial activity is
now well understood and is increasingly visible in our lives and in news
our Commitment to reports every day. From more frequent local extreme weather events to
becoming Climate, increasing global temperatures and melting ice caps, greenhouse gases
Land and People including carbon dioxide (CO2) are widely accepted as key drivers of
these climate changes.
Positive as it will
have an impact The use of our bio-based ingredients is already saving CO2 emissions
and helping to fight climate change, but we can do more. We can help
on lives worldwide our customers to play their part in reducing the amount of CO2 in the
atmosphere. Combining this with a drive to ensure our own production
processes are as sustainable as possible can make a real difference in
helping to reduce negative climate impacts.
Our speciality ingredients are helping our customers to improve food

security, reducing world hunger while cutting costly food waste. Our
smart science ingredients within vaccines, sun care and skin care are
already targeting devastating diseases, protecting and improving the
lives of adults and children worldwide. From reducing carbon and
growing more food, to increasing the profile of Science, Technology,
Smart Science Engineering and Maths (STEM) in schools and improving the gender
balance at work, we are committed to doing the right thing.
Clear and measurable impacts on SDGs Find out more in our 2019 Sustainability Report.
Our sustainability At Croda we have been building sustainability into our business since
we were founded back in 1925. Now, our new purpose-led focus and
strategy aligns with sustainability strategy aligned with the SDGs, have driven us to define
the SDGs as well as challenging commitments to deliver even more sustainable ingredients.
with our new Purpose, We have designed these commitments with Science-Based Targets in
mind, to stretch us all to work together for the benefit of our climate, the
Smart Science to land and our people.
Improve LivesTM
Our new Commitment will help us deliver our ambition to be the most
sustainable supplier of innovative speciality ingredients, leading the way
globally. We will be making real changes and, with the agreement and
active support of our worldwide team, we will become Climate, Land
and People Positive by 2030.
Our Commitment includes an ambition to significantly reduce our water use

Chair’s Statement
Delivering returns for Case study:
Strategic Report
our stakeholders
Advancing immunoregulating vaccine technology
Our acquisition of Biosector took us into the high value
and fast growing vaccine adjuvant market for the first time.
A leading specialist in this field, our adjuvant technologies
are advancing the efficacy and impact of a pipeline of
vaccines targeting diseases in both well known vaccines,
Personal Care, our largest business, experienced slower In Personal Care our focus is to ‘Strengthen to grow’,
such as conjugate pneumococcal vaccines, and new
demand as trade headwinds impacted two of its biggest scaling the business to respond to a market driven by an
developments in difficult areas, like AIDS, malaria,
markets, in North America and North Asia, but nevertheless ageing population, increasing disposable incomes and, of
hepatitis B and tuberculosis. Our adjuvant pipeline
maintained its profit and innovation pipeline. Encouragingly, course, a keen eye for sustainable products. Our Life Sciences
supports vaccines in diseases highlighted by
it experienced a return to sales growth in the fourth quarter. strategy is to ‘Expand to grow’, enhancing our existing market-
the World Health Organisation (WHO) as key to
leading products and looking to acquire adjacent businesses
I am optimistic for continued growth in our high value Beauty achievement of SDG 3: Good Health and Wellbeing.
and technologies, to deliver improved health and food security.
Actives and Beauty Effects businesses, increased differentiation Performance Technologies will ‘Refine to grow’, focusing Vaccine adjuvants have developed rapidly in recent years to
in Beauty Formulation and the opportunities offered through our its existing product portfolio on fast growth markets and become an even more critical part of vaccines, as ever more
deep understanding of our customers’ sustainability needs. developing a broader geographic footprint.
“A year that proved the complex active ingredients are developed. Our adjuvants
feature innovative immunoregulating properties, moving the
robustness of our strategy In Life Sciences, the rate of development of new, more complex
Governance to underpin our Purpose industry forward and enabling more complex and effective
drugs and sustainable agricultural products is creating exciting
and business model, the opportunities for Croda. 2019 saw record sales accompanied and sustainability Commitment vaccines. This is an exciting area of future growth for us in
a new adjacency for our Health Care business.
talent of our people and the by an improved margin. Growth in speciality excipient delivery The Croda culture and our Purpose are all about doing the
systems for Health Care and in differentiated adjuvants in Crop right thing. This is built on a foundation of strong, transparent
importance of our Purpose.” Protection provide an excellent platform on which to build governance, delivered to the highest standards. Through its
further and match the scale and profitability of our Personal programme of individual and group visits and meetings, the
Anita Frew
Care business in due course. Board met with a number of our key stakeholders during the
Chair
year, including shareholders, customers and colleagues, in
Industrial markets globally saw a marked slow down and line with good corporate governance see p54.
Performance Technologies experienced a disappointing fall in
Overview sales and profitability. This was a reflection of poor automotive Our 2019 safety performance was particularly pleasing, with a
In this my fifth year as Chair introducing a Croda Annual Report, demand and general economic uncertainty across broader continued improvement in process safety indicators and delivery
I can report that we have delivered a resilient performance industrial markets in Europe and North America but, despite of our personal injury target one year early. This is testament to
despite the most subdued market conditions that our industry this short-term weakness, the fundamentals for this sector the relentless focus we have on the safety of our colleagues,
has seen for a decade. This was a year that proved the remain attractive. their vigilance and care for each other. We are also making
robustness of our strategy and business model, the talent of progress in diversity across the business; gender balance is
our people and the importance of our Purpose, Smart Science A new Purpose – taking our commitment included in our new sustainability targets and, with over one
to Improve LivesTM. third of our Board already female, we are cascading our
to sustainability further
commitment to other management and employee levels.
After over 10 years leading our industry in sustainability
I am pleased with our performance in four key areas. We saw
reporting, the Board has developed, in conjunction with our The Board continues to develop and, at the 2020 AGM, we will
no reduction in our industry-leading profit margin, we delivered
stronger cash generation, we maintained a healthy innovation
Executive and our employees, an ambition for the next 10 years, say farewell and thank you to Alan Ferguson, who retires after Dividend
through to 2030. We have rolled out our new Purpose, Smart nine years of consistently wise and constructive contribution. We have a prudent capital allocation policy, supported by strong
pipeline and we invested in new capacity to drive future growth,
Science to Improve LivesTM. Our ambition is to become the most In his place we have welcomed John Ramsay, who joins us with cash generation and low debt. This allows us to invest in projects
most notably bringing the North American biosurfactant plant
sustainable supplier of innovative ingredients. Working with an impressive depth of experience in international finance and to deliver growth, with over £100m spent in capital expenditure in
into operation for 2020. We also returned £266.9m to our
the Cambridge Institute for Sustainability Leadership, we have the life sciences market. Following the AGM, John will take 2019, as well as pay a regular and increasing ordinary dividend,
shareholders, combining growth in ordinary dividend with
developed a plan to harness our smart science, our people and on the role of Chair of the Audit Committee and Helena covered at least two times by adjusted earnings. The Board has
a special return of excess capital. Although we experienced
entrepreneurial culture to provide solutions that better benefit Ganczakowski will become Senior Independent Director. recommended an increase in the full year declared ordinary
lower sales, we responded well, continuing to invest in future
our customers and meaningfully impact the wider world through dividend of 3.4% to 90 pence per share (2018: 87p).
opportunities whilst keeping our cost base lean and fit for
the United Nations Sustainable Development Goals (SDGs).
the future. Evolving the team
We have committed that, by 2030, we will be Climate, Land Future
Our people, as always, have delivered outstanding work and
and People Positive, so that we have a net positive benefit to
A strategy to stand the test of difficult markets commitment this year. When I meet these colleagues, I am The resilience of our strategy and business model has stood the
the planet. We are excited about this ambition because, not only
Sales and profit were slightly lower than 2018, reflecting always impressed by their insight and ‘can do’ attitude. I am test of time, tough markets and a changing world. As we look
is it the right thing to do, it is fully aligned with delivering superior
difficult market conditions in Personal Care and Performance proud to work alongside them and want to share my and the forward, this foundation, a wealth of innovative ideas which
performance for stakeholders through Croda’s innovative and
Technologies. Core Business sales declined by 0.2% in Board’s thanks for all that they do. 2019 was a challenging can improve lives for us all, and our focus on Purpose give
increasingly sustainable ingredients.
reported currency to £1,265.9m (2018: £1,268.7m) and by 2.3% year for markets and we took action to keep our cost base lean, us confidence.
in constant currency. We broadly protected profit, with Group to ensure that Croda stays in a position of strength and can
Aligning sector strategies with our Purpose keep responding to changing markets through our relentless
adjusted operating profit 0.8% lower in reported currency at
We will only be able to deliver our stretching commitments and innovation. These savings will support performance if markets
£339.7m (2018: £342.5m), 1.8% lower in constant currency.
Purpose if we have clearly aligned strategies for our sectors. remain subdued and allow us to invest in new opportunities,
Profit before tax on an IFRS basis decreased by 4.9% to
During 2019, the Board and Executive Committee reviewed including in Asian growth markets, Personal Care and
£302.3m (2018: £317.8m), reflecting higher interest costs and
these sector objectives. As well as a strong alignment with the Life Sciences.
an exceptional charge for our programme to reduce costs.
megatrends which influence our markets and drive our growth, Anita Frew
each of our sectors has a strategy with a line of sight to our Chair
shared Purpose and the SDGs.

Business Model
Creating value with Purpose
Strategic Report
We generate long-term value by engaging with customers, creating, making and selling
sustainable and innovative speciality ingredients in line with our Purpose. What makes us different Tangible value Intangible value
We use Smart Science to Improve LivesTM.

Purpose-led culture • Deliver against our • Exciting and inclusive place to work
ALL
Smart Science to Improve LivesTM and our people shared Purpose together • Engaged and innovative teams

• Attract and retain talent with a shared Purpose
Consumer demand
Changing demographics, our fragile planet and innovations in
digital technologies continually influence consumer demands.
Ambitious commitment • Can respond to increasing • Ambitious Commitment helps to
ALL
to be Climate, Land and customer demand across focus team and individual efforts
Our value People Positive by 2030 sectors for sustainably • Prioritising sustainability with our
created ingredients providing Purpose supports our values
chain sustainable benefits in use and culture
Customer needs
Our customers seek innovative and sustainable ingredients
that meet consumer demands. Extensive Open • Building our stream of • Collaborative relationships can
E
Innovation and sustainable, innovative accelerate and enhance product
Smart Partnering new products development. We gain new insight

Engage
Working closely with our customers and supply chain,
Valuable protected • Our new and protected products • Recognition as industry leader
E C
we identify consumer needs around the world. intellectual property grow valuable revenue streams
know-how and
innovation pipeline

Create Exceptional product • Reliable, high quality and high • Build and maintain customer
C
We create sustainable and innovative ingredients C performance, value ingredients trust and loyalty
that meet consumer needs. claims validation
Our
and quality testing
sustainable
business
Best in class regulatory
model Make C
• Identification of regulatory • Build and maintain customer
insight and support issues and opportunities trust and loyalty
Our manufacturing sites all run flexible operations to M
during product development • Create two-way dialogue
consistently high standards and our suppliers share our ethical approach.
with regulators

Selective acquisitions • Our Purpose helps us to • Clear Purpose helps
M
Sell and capital investments, identify the right expertise newly acquired teams
We have a direct selling model with sales, technical and S guided by our Purpose and technologies to acquire integrate effectively
warehousing local to our customers. to drive our strategic growth
• Excellence in manufacturing and
engineering practice

Customer product
M
Supply chain • Reassurance that our supply • Build and maintain customer
Customers use our innovative and sustainable ingredients to
enhance their products to meet their consumers’ needs. transparency chain is as ethical, responsible trust and loyalty
and traceability and sustainable as possible

Intimate customer • Consumer insight helps to • Customer loyalty
S
Consumer benefit relationships improve product innovation supporting growth in core
Through our customers’ products, our ingredients improve consumers’ and positioning and emerging markets
lives by addressing their needs in sustainable ways.

S
Agile local sales • High service levels locally to • Local market insight and ability
and R&D teams develop and deliver for our to respond quickly to changing
customers every time customer needs

Our Stakeholders
Our Purpose and business model Key considerations Why we engage How we engage
succeed on the strength of our stakeholder
64%
Strategic Report
Shareholders • Quality and effectiveness of governance • Open and regular dialogue is • We attend investor events worldwide and invite groups of
relationships. We prioritise engagement • Growth potential and profitability critical to ensure that our shareholders to visit us
strategy is understood • We keep shareholders up to date via our website,
with these individuals and groups, striving proportion of share capital held
• Share price appreciation
• We allow assessment of our press activities, Annual Reports and Annual General
• Dividends
to understand their key considerations and by the 347 investors we met in 2019
• Sustainability of ingredient creation and
Environmental, Social and Meetings (AGM)
goals so that we can achieve these together. benefits in use
Governance Performance (ESG) • All Directors attend AGMs
• We conduct one-to-one meetings with investors
3,500
Our People • Our Smart Science to Improve LivesTM • We need the best teams to be • We run informal networks, local newsletters, cascade
Purpose directs and engages the knowhow, engaged and to collaborate every meetings, works councils and consultation committees
creativity and entrepreneurial spirit of day if we are to achieve our • We issue global email news notifications, intranet news and a
responses to Purpose our people Purpose together regular global newsletter as well as webinars, culture surveys,
Pulse Surveys • First class new and existing talent is Pulse Surveys, town halls and listening groups
Oct – Dec 2019 attracted and retained by organisations that • We use the Yammer internal social network to share insight
share insight, develop skills, collaborate and • We give employees the opportunity to become
innovate within a truly inclusive culture Croda shareholders
Engaging Customers
25,000
• There are exacting and changing demands
from our diverse consumer base
• By sharing market insight with
customers, we identify future
• Our market sectors have research, sales and marketing teams
working closely with our customers’ R&D, purchasing,
with our
• For our customers, innovative ingredients, opportunities together regulatory and sustainability departments
face-to-face meetings with created sustainably and with sustainable • Our insight helps to inform R&D, • We have face-to-face meetings, attend industry events,
our customers in 2019 benefits in use are a priority if they are to provide sustainable solutions and speak at conferences and invite customers to our seminars,
stakeholders
meet their own SDG commitments improve product performance workshops and application laboratories
1 of 125
Suppliers • Supply chains in our industry can be long • Supply chain integrity is critical to • We are trusted industry leaders on traceability and
and complex. We need to secure our deliver a sustainable business sustainability; in part this is due to our characterisation
every day
materials at the right time and price • We must source from suppliers of key physical supply chains
companies globally to join the • Complexity increases the risk of association who share our standards of • We have strong global, regional and local partnerships
CDP Supply Chain, engaging with with companies that do not share our ethics, values, transparency, with suppliers
suppliers on environmental issues ethics and values quality and reliability • We work with our suppliers through initiatives such as CDP
(formerly Carbon Disclosure Project), Sedex and EcoVadis,
and oversee compliance through our Group Ethics Committee
5,883
Local • Communities rightly expect local employers • Strong local relationships help us • We invite local people to join our site committees
to operate safely, effectively and sustainably to maintain trust and our social • We maintain open dialogue with Government officials and
Communities
and to give back to society licence to operate emergency services
hours of 1% Club time recorded • Our education activities support • We support education programmes to raise the profile of
in 2019, with 31% of this used local schools, give our people Science, Technology, Engineering and Maths (STEM)
for STEM activities new skills, help us recruit new • Our 1% Club volunteers give 1% of their employed time
talent in the future and create to support local community needs
a positive societal impact
500
Innovation • Potential and existing Open Innovation • A collaborative approach to • We seek Open Innovation and Smart Partnering opportunities
partners seek opportunities to collaborate innovation can accelerate time with our customers, academics, university start-ups and
Partners
with companies leading advances in to market, reduce costs and technology providers
Open Innovation partner speciality ingredients, to benefit from differentiate products • We encourage partners worldwide to approach us
collaborations since 2010 shared insight and find new ways to • Universities and SMEs give with innovations
develop ingredients that improve us access to extended R&D
lives together capability and public funding
to enhance our product
development
220
Regulators & • Regulatory complexity is a necessary part • We are committed to • Our people chair and are members of national and
of our industry transparency, trust and meeting international industry associations, where our voice is
Trade Associations
• Consumers and policy makers have an the needs of our customers highly respected
active memberships increasing influence on regulators and and consumers • We attend meetings with local Government officials and
of industry associations trade associations regarding issues such • Keeping informed, leading emergency services to support community needs
Section 172 statement
as climate change and microplastics and supporting legislative and
Section 172 of the Companies Act 2006 requires the regulatory change help us to
Directors to take into consideration the interests of the direct, anticipate and prepare
stakeholders in their decision making. The Directors have for changes that will impact
regard to the interests of the Company’s employees and our business
other stakeholders, including its impact on the community,
99%
the environment and its reputation, when making their Non-Governmental • The consumer voice is powerful • Engagement on the ingredients • We regularly collaborate with NGOs and work with our
• NGOs representing consumers are we make and how we make customers, trade associations and regulators
decisions. The Directors consider what is likely to promote Organisations
rightly pressurising businesses to them is increasingly important • Since 2009 we have been a lead voice in driving industry
the success of the Company for its members in the long (NGOs) of our manufacturing sites who take responsibility for their impacts • Understanding the NGO transformation to certified sustainable palm oil (RSPO)
term in all their decision making. use palm oil are RSPO certified
• Our customers receive the majority of NGO perspective helps us to achieve • A founder member of Action for Sustainable Derivatives,
interest, but we have a responsibility to our Purpose and protect we have encouraged wider membership to harmonise
This statement should be read in conjunction with the
support them our reputation requirements on transparency and risk monitoring as part
Corporate governance report on pages 44 to 70 and the
of our commitment to deforestation-free and responsible
stakeholder section above. sourcing (see our 2019 Sustainability Report)

Chief Executive’s Review
Delivering the Croda difference
Strategic Report
at £339.7m (2018: £342.5m), 1.8% lower in constant currency. IFRS reported profit lower including increased
This limited impact on profit reflects the strength of the Croda exceptional charge Case study:
model, which delivered a richer quality of sales, with Core Group sales decreased by 0.7% to £1,377.7m (2018:
Business price/mix three percentage points better, and lower Cambridge Institute for Sustainability Leadership
£1,386.9m). Profit before tax on an IFRS basis decreased by
operating costs, which together offset much of the impact of The corporate purpose and sustainability commitment
4.9% to £302.3m (2018: £317.8m). This reflected lower sales
lower volumes in Personal Care and Performance Technologies. we share in this report really began to take shape in 2018
and a higher interest charge, including the impact of increased
We continued to invest in additional sales and innovation when we started a project with the Cambridge Institute
debt from the special dividend and acquisition of Biosector,
resource to target future growth, in line with our strategy for Sustainability Leadership (CISL). This Institute draws
together with a higher exceptional charge of £10.7m
and Purpose. on world-leading research and networks to work with
(2018: £4.9m), which in 2019 reflected the delivery of
business leaders, helping to address critical global
“The strength of the We have a strong business model in Personal Care. Despite
cost savings actions.
challenges. CISL challenged us to articulate our corporate
Croda business model was weaker sales in the first nine months of the year, as trade purpose and our commitment to sustainability, aligning
headwinds impacted its two largest markets of North America Sector performance led by record year these with the SDGs upon which we could have the
demonstrated in subdued and North Asia and customers destocked, the sector delivered in Life Sciences greatest impact. They guided us towards good practice
market conditions in 2019.” margin growth and maintained adjusted operating profit. In line The standout performance in 2019 was in Life Sciences, with and helped ‘stress test’ our 2030 ambition that is now
with our expectations, the fourth quarter saw a return to modest record sales accompanied by an improved margin. Sales grew embedded in our Climate, Land and People Positive
Steve Foots sales growth as headwinds reduced and key markets in North by 5.9% and adjusted operating profit increased 11.6% both in Commitment (see page 29 in this report).
Group Chief Executive America and North Asia saw some recovery. constant currency. With return on sales at 30.6% (2018: 29.5%),
this demonstrates the opportunity for Life Sciences to achieve
Strong business model delivers Life Sciences delivered a record sales performance, driven by similar returns and at a similar scale to Personal Care. After
the strength of the Health Care and Crop Protection platforms. excellent first half sales growth, demand in the second half year
resilient performance
Sector sales rose by almost 6% in constant currency, supported was weaker, partly due to slower demand in Seed Enhancement,
The strength of the Croda business model was
by new opportunities in speciality excipients, and margin but margins continued to expand. We expect to deliver mid to
demonstrated in subdued market conditions in 2019.
expanded, delivering record profitability. high single digit percentage sales growth across the medium
Our robust profit margin was maintained, with return
on sales unchanged at 24.7%. We delivered strong term, driven by our leading technology positions in speciality
In contrast, after several years of strong profit growth,
cash conversion, with free cash flow up by over 30%. health care excipients and crop protection delivery systems.
Performance Technologies delivered a disappointing
Our relentless focus on innovation continues to performance amid economic uncertainty and weak demand, Personal Care demand slowed, against a strong comparator
differentiate Croda and, as we enter 2020, our as lower sales volume impacted margin, reducing profitability. in 2018, as trade headwinds impacted the US and North Asia
innovation pipeline remains healthy. This will be Regional performance weaker across all regions
markets, with sales 3.0% lower in constant currency. US
reinforced by new capacity coming on stream to As we exited the year, a somewhat improved outlook for the The weakness in sales was reflected across all regions. In
consumer spending in the Personal Care and Beauty category
support organic growth, notably the biosurfactant consumer business contrasted with challenges in industrial Europe sales were 2% lower in constant currency as good
was broadly flat on the prior year and we saw a marked
plant in North America which is now operational. markets. We continue to invest in growth opportunities whilst Personal Care demand was more than offset by weak industrial
reduction in customer inventories around the middle of the year
Our recent technology acquisitions made good keeping our existing cost base lean and fit for the future. We markets. Market conditions in North America were noticeably
which adversely impacted our sales. In North Asia, restrictions
progress during the year and offer exciting future are reinvesting the benefits of cost savings in over 100 new tougher through the first nine months, with full year constant
on Daigou sales into China hit sales to our customers in Japan
opportunities through their sustainable platforms. roles to drive future growth, increasing our presence in China, currency sales down 6%, reflecting the US/China trade dispute
and Korea, whilst local Chinese customers were under pressure
expanding our digital programme, and investing in more sales and lower automotive and consumer product demand. Asia was
from trade uncertainties and new legislation. Encouragingly, the
Subdued market conditions in Personal and innovation resource in Personal Care and Life Sciences. also unusually weak, with constant currency sales 1% lower
fourth quarter saw Personal Care sales in North Asia and North
Care and Performance Technologies These actions will protect Croda and help us grow. than prior year, reflecting uncertainties over macroeconomic
America return to modest growth, with local demand in China
Group sales and profit were slightly lower, reflecting recovering well and sales to Japan/Korea back into positive growth and changes to selling legislation in China. Latin
difficult market conditions in Personal Care and Strong cash generation supporting dividend territory. The strength of the Personal Care model was America constant currency sales were down 2%, with strong
Performance Technologies. Core Business sales and investment demonstrated through an improvement in return on sales crop demand offset by weak Personal Care sales. In the
declined by 0.2% in reported currency to £1,265.9m Cash generation increased in 2019, with free cash flow of to 33.4%. fourth quarter, although European markets slowed, both
(2018: £1,268.7m) and by 2.3% in constant currency. £201.7m (2018: £154.9m), benefitting from better working North America and Asia saw an encouraging return to
We broadly protected profit, with Group adjusted capital management. We continued to invest in projects to After three successive years of double digit percentage profit growth, both up 3% in constant currency on 2018, driven
operating profit 0.8% lower in reported currency deliver future growth, including finalisation of the North America growth, 2019 marked a disappointing year for Performance by better consumer demand.
biosurfactants plant, as well as doubling capacity of our US Technologies amid sustained economic uncertainty and weak
speciality excipients plant for Life Sciences, due on stream demand. Poor global automotive sales in the first half were
The Strategic Report was approved by the Board on 24 later in 2020, growing our industry-leading Beauty Actives followed by a general slowing in broader industrial markets in
February 2020 and signed on its behalf by Steve Foots. platform in Personal Care and shifting Performance Technologies Europe and North America in the second half year. Sales were
towards higher technology markets and products. We have 7.3% lower in constant currency and return on sales reduced to
a clear approach to capital allocation and paid £266.9m 16.1%. Despite this shorter term weakness, the fundamentals
(2018: £110.5m) in dividends to shareholders, including a for Performance Technologies remain attractive, with a
special return of excess capital in May 2019. We have proposed progressive shift in the business towards renewable technologies,
an increase in the full year ordinary dividend declared to 90.0p greater innovation and providing sustainable solutions.
Steve Foots
Group Chief Executive (2018: 87.0p) on adjusted basic earnings per share (EPS) of
185.0p (2018: 190.2p).
Adjusted results are stated before exceptional items, acquisition costs and amortisation of intangible assets arising on acquisition, and tax thereon. Constant
currency results reflect current year performance for existing business translated at the prior year’s average exchange rates. Alternative performance measures
are defined in the Finance Review.

Chief Executive’s Review continued
Strategic Report
Smart Science to Improve LivesTM – our Purpose Strategy delivery and we continued to invest to accelerate innovation in the artificial intelligence (AI) to help seed customers screen out
and ambitious sustainability commitment Building on our Purpose, the Board reviewed our strategy future. We have 35 customer innovation centres, acquiring a unhealthy seeds. In Make, we are improving global supply
At Croda, we have made it our Purpose to use our Smart through to 2030. We have expanded our long term view, new application lab in Rewitec with upgraded centres planned chain management to deliver better customer service and
Science to Improve LivesTM. Croda was built upon a foundation sharpened our sector priorities and increased our focus in Shanghai and the US in 2020. These facilities enable us to lower inventories, while introducing new tools to enhance
of using smart science to turn renewable raw materials into on higher growth geographies. Our strategy is to deliver: work more closely with both global and local customers. This manufacturing efficiency. In Sell, we are driving more traffic
innovative ingredients to give sustainable benefits in use. This was supplemented by more than 100 active research projects to our websites, with more literature downloads, samples
focus still sits at the core of Croda, driving innovation and • Growth – consistent top and bottom line growth, with with our network of over 500 Open Innovation partners, in supplied and new customers engaged via ‘live chat’.
sustainability to create market-leading products and ensure profit growing ahead of sales, ahead of volume; universities and SMEs, with over a quarter of projects directly
• Innovation – the lifeblood of our business, we seek to linked to delivering our sustainability objectives. In addition, our Whilst we focus on driving competitive advantage through our
that we have a positive effect on the environment and society.
increase the proportion of NPP that we sell; and recent technology acquisitions and investments are delivering relentless innovation machine and unique customer intimacy,
In line with this Purpose, our ambition is to become the most
product development opportunities which could generate we are also managing our costs. Delivering cost savings helps
sustainable supplier of innovative ingredients. By aligning our • Sustainability – aligning our business with our Purpose
meaningful sales over the next five to ten years. Enza is offset cost inflation whilst demand remains weak and funds
smart science with the United Nations Sustainable Development and accelerating our customers’ transition to
developing novel patented chemistries to enhance existing reinvestment in growth opportunities. These include additional
Goals (SDGs), we will ensure that we are helping to tackle some sustainable ingredients.
products and is utilising Croda’s investment in high throughput resources for sales and innovation in Asia growth markets and
of the biggest challenges the world is facing. We commit that by
Our ability to connect to faster growth markets through faster screening at the Materials Innovation Factory at the University in Health Care. We continue to invest to deliver exciting sales
2030 we will be Climate, Land and People Positive; in other
growth technologies, faster growth geographies and faster of Liverpool. Nautilus is using its library of marine organisms and profit opportunities across our business, aligned with our
words, the impact that Croda has in these three key areas of
growth market niches will enable us to deliver this strategy. to develop sustainable applications in haircare and crop Purpose of using Smart Science to Improve LivesTM.
sustainability will be net positive for the planet.
applications. Encapsulation technology from SiSaf is showing
In becoming Climate Positive, we will support the transition to a We are fully aligned with the megatrends which shape our promise in Personal Care and Life Sciences and Cutitronics is Covid-19
low carbon economy. We will work closely with our customers, markets and which will drive growth. Life Sciences delivers developing a prototype skin assessment and delivery device. As the Covid-19 virus has developed over recent weeks, we
developing ingredients that deliver carbon savings in use. better health and well being, through its focus on disease Plant Impact has been restructured, to focus on generating data have been assessing the impact on our employees and our
By 2030, we will make significant progress towards net zero prevention and cure, and improved crop yields, through packages for its innovative range of biostimulants, which should business to ensure that both are effectively supported and
carbon emissions associated with our activities, we will further better delivery systems to feed a growing population from lead to new sales by 2021. managed. At this time, to the best of our knowledge, no Croda
increase the bio content of our raw materials and the use of our the same land with less environmental impact. Personal employees have been infected by the virus. Our sales offices
ingredients will save significantly more carbon emissions than Care is meeting the expectations of consumers with growing Recent acquisitions are demonstrating exciting growth have reopened, as have our two production units, albeit with
required in their manufacture. In becoming Land Positive, we incomes seeking clean and natural beauty, whilst protecting the opportunities in new niche markets, driven by sustainability more limited operations than usual. China represents 6% of
will save more land than we use. We will increase agricultural health of consumers through more effective solar protection. needs. IRB by Sederma continues to grow, using plant stem Croda’s Core Business sales, 2% of Group production and a
land use efficiency, protect biodiversity and support food supply Performance Technologies is focusing on renewable cells to deliver sustainable beauty active ingredients. IonPhasE limited component of our raw material supply chain. However,
by sourcing sustainably and inspiring innovation in our crop technologies, delivering affordable and clean energy, is extending its range of electrostatic dissipative polymers and there is potential for some disruption to customer and consumer
business. By 2030, the land area saved through improved and helping customers meet their climate action goals. its geographic sales footprint through the Croda salesforce, and demand. We will continue to monitor the impact.
yields and crop resilience of our agricultural ingredients and delivered its first profit in 2019. Rewitec was acquired during the
Our sector strategic priorities are to: year, creating a new range of lubricant additives to extend the
technologies will exceed that used to grow all our raw materials. Outlook
life of wind turbines. Biosector, a leader in vaccine adjuvancy,
• Strengthen to grow in Personal Care. As the leading was integrated into Croda’s in-house sales network, replacing In 2019, we delivered a resilient performance with a strong
In becoming People Positive, we will promote healthy lives
innovator in a market driven by an ageing population, rising former distributors with direct access to more customers. We margin maintained and increased cash flow, despite subdued
and wellbeing through the development and application of
disposable incomes and a demand for sustainable products, expect increasing demand for both human and animal vaccines market conditions. This is testament to Croda’s focused
our ingredients and technologies. By 2030, we will have used
Personal Care will continue to scale its industry-leading to drive future growth. strategy and strong business model.
our smart science to improve millions of extra lives.
Beauty Actives business, broaden the product portfolio
in Beauty Effects and continue to reinvent the Beauty We are pleased by the recommissioning of the North American In the year ahead, subject to trading conditions remaining
We are launching a full range of these sustainability ambitions
Formulation category. This should deliver good top line biosurfactant plant, which became fully operational at the similar, we expect to make further progress in our consumer
and 2030 targets. We believe that Croda is strongly positioned
growth and maintain the current excellent margin over start of 2020, following a leak in late 2018 which caused the markets, whilst demand in industrial markets is expected to
to deliver both superior financial performance and help to create
the medium term; operation of the plant to be extensively reviewed to ensure safe remain weak but stable. Growth will be second half weighted.
a sustainable planet.
• Expand to grow in Life Sciences. With its growing operation. We have begun replacing traditional petrochemical
With our new Purpose, Smart Science to Improve LivesTM,
Protecting our people and the communities in which we margin and exciting technologies aligned to global health surfactants with our ECO range of bio-based products offering
we will continue to increase the positive impact our products
operate is critical to Croda. In 2019 our process safety and food sustainability trends, we will continue to build our identical performance from sustainable ingredients for the first
deliver for our customers and their consumers. We will also
performance continued to improve, with no serious incidents Life Sciences brand as a high value add solution provider time, particularly for personal and home care applications. 2020
reduce the negative impact our activities have on our fragile
or any with major accident potential, achieving an almost to our pharmaceutical and crop customers, enhance our should see additional margin captured, with volume growth
world. The combination of a healthy innovation pipeline, recent
threefold reduction in incidents. Our personal injury performance product range and look to acquire adjacent businesses following as customers launch new and replacement
investments, cost saving benefits and a robust business model
was another success story. For the first time in our history, we and technologies. This should grow the top line and bio-based products.
is expected to underpin performance.
achieved two consecutive months free of any recordable injuries increase the current margin over the medium term; and
and we met our target of achieving a Total Recordable Injury Further capacity expansion is following from 2020 for
• Refine to grow in Performance Technologies. Able to meet
Rate (TRIR) of 0.6 a year ahead of schedule. We were also speciality excipients, new polymer additive products and
demands for sustainable solutions in advanced technologies,
pleased to be recognised as Company of the Year by the UK botanical ingredients.
Performance Technologies will continue to refine its existing
Chemical Industry Association and as one of Britain’s Most product portfolio, focus on fast growth markets and develop
Admired Companies and the most admired British chemical We are continuing to invest in our digital programme, focused
its geographic footprint. This should deliver modest sales on digital solutions across our Engage, Create, Make and Sell
company by Management Today, for the third year running. growth at an improved margin over the medium term. business model. In Engage, we are developing a knowledge Steve Foots
We were voted Best Product Innovation in the Global ICIS
platform to store and share IP across our R&D teams. In Create, Group Chief Executive
Innovation Awards for a novel patented polymer molecule In 2019, despite the challenging markets, we made progress in
which serves as a building block for the development of we are using in-silico modelling to develop new products and
delivering this strategy. Group NPP was broadly unchanged at
more stable and effective products. 28.1% (2018: 28.2%) of total sales on a constant currency basis

Our Strategy
Focused on Purpose
Strategic Report
and innovation
Our corporate strategy and our sector priorities are clearly linked to our Smart Science
to Improve LivesTM Purpose. We use this approach to work with our customers to help
them deliver their consumer and sustainability commitments, while we achieve our own
objectives and create value for our shareholders.
See page 32 See page 38
Group strategic We achieve What we have Our priorities

objective this through done in 2019 in 2020 KPIs Risks Sector strategic priorities
Growth • Our unrivalled local direct

selling capability
• Despite subdued market conditions,
we delivered a resilient performance
• Strengthen to grow
Personal Care
• Return on sales
• Core Business
• Revenue generation
in established and Strengthen
with a robust profit margin emerging markets
to grow
• A balanced global footprint • Expand to grow sales growth
• Accelerating sales in our • Delivered cost savings to enhance Life Sciences • Talent development
Personal Care
core markets efficiency and reinvested in new • Refine to grow and retention
• A disciplined approach to roles to drive future growth Performance
capital allocation • Delivered strong cash conversion Technologies
Consistent top and bottom line • Returned capital to shareholders • Further capacity
• Investing in high return Scale Beauty Actives, broaden
growth, with profit growing ahead opportunities • Continued to invest in projects to deliver expansion for Beauty Effects portfolio and continue
of sales, ahead of volume future growth including the biosurfactant speciality excipients, to reinvent Beauty Formulation to
plant and speciality excipients plants in new polymer additive deliver top line growth and maintain
North America products and current margin
botanical ingredients
See page 22
Innovation • Investing in our own R&D

• Expanding the number of
• Innovation pipeline remained healthy with
recent technology acquisitions made good
• Upgrade innovation
centres in Shanghai
• NPP sales %
• Relative NPP
• Product and
technology innovation
Expand to grow
regional innovation centres progress during the year offering exciting and USA enabling us sales growth and protection
• Working closely with customers
to better understand their
future opportunities, with IonPhasE moving
into profit
to work more closely
with local and global
• Digital technology
innovation Life Sciences
specific needs • Acquired Rewitec, creating a new range customers • Talent development
• Identifying disruptive of lubricant additives to extend the life of • Replace traditional and retention Build the Life Sciences brand as a high
The lifeblood of our business, we technologies wind turbines petrochemical value add solution for pharmaceutical
seek to increase the proportion • Working with external, • Expanded our digital programme across surfactants with and crop customers, enhance product
of NPP that we sell our business model, developing knowledge our ECO range of range and seek acquisitions of adjacent
Open Innovation partners
sharing, engaging customers through bio-based products businesses and technologies to grow
and universities
‘live chat’ and using in-silico modelling particularly for top line and increase current margin
to develop new products personal and home
• Working with external Open care applications
Innovation partners • Continue to invest in See page 24
our digital programme
Refine to grow
Sustainability • Creating ingredients that • Developed our Purpose, Smart Science • Continue to increase • Non-fossil fuel energy • Climate change-
provide a benefit in use with
reduced environmental impact
to Improve LivesTM and a Commitment
that by 2030 we will be Climate, Land
the positive impact
of our actions and
• Total Recordable
Injury Rate
delivering sustainable
solutions Performance
Technologies
• Aligning our business with the and People Positive deliver benefits for • Product quality/liability
United Nations Sustainable • Developed stretching 2030 KPIs, aligned our customers and claims
Development Goals (SDGs) with the SDGs consumers • Major safety or
• Created an Executive position of President • Reduce the negative environmental incident Refine existing product portfolio, focus
Aligning our business with our of Sustainability to deliver our Commitment impacts of our actions • Suppliers and raw on fast growth markets and develop
Purpose and accelerating our to become the most sustainable supplier of on our fragile world material sourcing geographic footprint to deliver modest
customers’ transition to innovative ingredients • Chemical regulatory sales growth at an improved margin
sustainable ingredients • For the first time in our history we achieved compliance and
two consecutive months free of any product stewardship
recordable injuries and met our 2020 • Ethics and compliance See page 26
target a year early

Sector Review
With return on sales up 50 basis points at Sales in Beauty Formulation declined by

33.4% (2018: 32.9%), this demonstrates mid single digit percentage, most notably
Strategic Report
the resilience of the Personal Care in multinationals and regional customers.
business model, despite the weaker By contrast, demand in smaller
growth environment. IFRS operating customers and Indie brands was
profit was £158.2m (2018: £156.6m). strongest, benefitting from Croda’s
ability to help customers formulate new
The trade war between the US and products. The drive to meet consumer
Personal Care
China significantly impacted demand demands for more sustainable products
for Croda products. US consumer continues. With the North American
spending in the Personal Care and biosurfactant plant now operational, this
Beauty category remained constrained, will enable new ‘white space’ growth
Sandra Breene with our customers’ sales broadly flat. to be delivered by substituting for
President, Personal Care In addition, Croda sales were adversely petrochemical ingredients. This is being
Strengthen
impacted by significant ingredient supported by our digital programme,
destocking in the summer months as from developing application of new
Sales customers adjusted inventory to the digital devices through our investment
£485.2m
lower than expected demand. However, in Cutitronics to the roll out of a digital
to grow
by the end of the year, Personal Care selling channel and ‘live chat’ to
sales in the US were back in line with customers across most of the world,
2018: £487.8m end market demand. In North Asia, increasing our access to new customers.
new legislation restricted Daigou sales
into China from the key manufacturing With a strong margin and active
Adjusted operating profit markets of Japan and Korea, whilst innovation pipeline, Personal Care has
£162.1m
local Chinese customers were adversely weathered the tougher sales environment
impacted by a combination of trade in 2019 and has a strategy to deliver
uncertainty and tariffs, internet selling growth – ‘Strengthen to grow’. This
“With a strong margin Sustainable sugar-based 2018: £160.3m regulation and multinational competition.
The fourth quarter saw a return to strong
recognises Croda’s strength through
nearly one hundred years in Personal
surfactants
and active innovation 2019 saw the full integration of Enza Return on sales
sales growth in China and modest
growth in Japan/Korea, driving improved
Care, operating in all major markets
globally and recognised as the leading
pipeline, Personal Biotech into the Croda family following innovator in the sector. Growth drivers
33.4%
demand in Asian markets. Meanwhile,
its acquisition in 2018. The Enza team is demand in Western Europe remained include an ageing population, the
Care has weathered collaborating with other Croda innovation robust whilst Latin America was weaker. continued rise in disposable income,
teams globally with the aim of bringing Personal Care sales globally returned especially in Asia, use of digitalisation,
the tougher sales their novel surfactant technology to market.
2018: 32.9%
to modest growth in the fourth quarter. market fragmentation amongst our
environment in 2019 These collaborations include projects with

the University of Liverpool’s Materials Strong business model The overall driver to performance in
customers, and tackling climate change,
with a focus on sustainable consumer
in Personal Care
and has a strategy Innovation Factory, our Process Innovation
Team and our global manufacturing sites. Demand in Personal Care slowed in
2019 was lower demand. Innovation
was maintained, with NPP at 43% of
products. Aiming to deliver low to mid
single digit percentage sales growth,
to deliver growth – These surfactants are sustainable, fully
bio-based, sugar-derived and, most
the first nine months of 2019, following
strong sales in 2018, as trade headwinds
total sector sales (2018: 43%). Beauty
Actives, which creates the most valuable
our strategic priorities are:
‘Strengthen to grow’.” importantly, offer high performance in use.

Such excellent ’green’ credentials mean
impacted the two largest markets and
customers destocked. The fourth quarter
claims-based skincare ingredients,
saw modest growth in sales, with
• to continue to scale our Beauty
Actives business, where we are market
Sandra Breene that we can offer new performance and saw a return to modest growth as the strongest demand in the prestige leader, through industry-leading
President, Personal Care functional claims for our customers and headwinds reduced and key markets cosmetic market. A new generation of innovation and expanding in biotech,
their end-product formulations, meeting recovered in North America and Asia. peptides supported a major customer’s delivering above average growth;
the growing demand from consumers for For the year as a whole, sales declined anti-ageing product. There is significant • with similar characteristics to Actives,
eco-friendly products that really work. by 3.0% and adjusted operating profit market interest in biotech ingredients, with nearly 80% of sales in NPP and
was unchanged in constant currency. sustainable anti-ageing technology strong margins, Beauty Effects is the
Sales price/mix grew by four percentage created from plant cell culture, new smallest of the three businesses; our
points, reflecting a stronger product botanicals, such as Banana Flower EC, strategy here is to broaden the
portfolio and innovation in Beauty Actives and, in the future, marine extracts, such product range to meet sustainable
and Beauty Effects, while volume was as a novel haircare ingredient from and lifestyle needs through organic
seven percentage points lower, as Nautilus. The number of new customer innovation and partnerships; and
demand reduced, particularly in the projects has increased with the recently • in Beauty Formulation, with its heritage
Beauty Formulation business. In reported expanded R&D facility at Sederma. ingredient portfolio but lower NPP,
currency, sales were broadly flat at we will continue to reinvent this
£485.2m (2018: £487.8m) with adjusted Sales in Beauty Effects, which offers
business, developing new points of
operating profit 1.1% better at similar growth and NPP potential as
differentiation, such as introducing
£162.1m (2018: £160.3m). Beauty Actives, showed good growth,
sustainable bio-based surfactants
with innovation in Moonshine pigments,
and providing unmatched formulation
with over 50 customers launching
expertise to our customers.
products using this innovative colour
cosmetics range. Crodabond CSA
was launched, delivering on-trend
claims and reducing colour fade
in haircare applications.

Sector Review continued
In Health Care, growth remained strong Seed Enhancement sales declined

in speciality excipients but destocking 10% in constant currency due to
Strategic Report
in consumer health impacted, as did weaker market conditions, albeit with
reduced veterinary sales due to the a favourable product mix supporting
outbreak of African Swine Fever (ASF). margins. Demand was disappointing in
The Crop Protection business remained North America, due to similar conditions
robust but Seed Enhancement had a as Crop Protection, and China suffered
disappointing fourth quarter, normally from high customer inventory and lower
Life Sciences
the busiest of the year. We continue seed prices. Whilst our strength in Latin
to expect mid to high single digit America again provided some sales
percentage organic sales growth for recovery, this was not sufficient to fully
the sector across the medium term. offset the shortfall. A recovery plan is in
Nick Challoner place for 2020, building on our latest
President, Life Sciences Full year sales in Health Care grew innovations, such as X-ray NeXt, which
Expand
double digit percentage, continuing to uses artificial intelligence to automate
build on its leading market position in seed sorting, cutting nursery growing
Sales speciality excipients. The more complex time. We launched our new seed
£350.5m
demands of the latest biologic drug treatment, PaddyRiseTM, to help
to grow
actives are supporting growth of these rice crops be more resilient against
pharmaceutical delivery systems, with diseases and pests such as snails.
2018: £324.5m seven new excipients launched in 2019.
Growth in Asia continued, with new We continue to improve the sustainability
excipient registrations secured for the of our product portfolio in Life Sciences.
Adjusted operating profit Chinese pharmaceutical market. We are In line with our Purpose, 2020 will see
£107.1m
investing in significant new capacity, due our voluntary withdrawal from a range of
on stream later in 2020, are developing Crop products which can have negative
new purification technologies and have environmental impacts; this is expected
“With its growing PaddyRise™ is sustainably 2018: £95.8m produced our first trial excipient from the
acquired Enza technology. Following its
to reduce sector sales by two percentage
points. We are responding to customer
improving food security
profitability and exciting in Malaysia Return on sales
acquisition in 2018, we have integrated
Biosector into the Health Care innovation
needs and changing regulations by
developing new patented technology
product portfolio, Life
30.6%
Rice is an important staple food for and sales teams. Although its vaccine to create coatings for seeds that are
Malaysia and in 2019 we opened a adjuvant sales were lower in 2019 due free of microplastics and have also
Sciences is increasing new specialist facility there to treat rice to customer destocking following the commissioned a new production line
acquisition, as well as lower animal for treating organic seeds.
sales and margin. with an innovative new seed treatment,
PaddyRise™. Treated seeds grow stronger
2018: 29.5%
vaccine demand due to ASF, the
With its growing profitability and
Our strategy for Life and more resilient young plants, enabling
rice to be grown applying less and using
Excellent performance in Life
year ended with record demand, the
successful exit of distributors to transfer exciting product portfolio, Life Sciences
Sciences, driven by strength
Sciences is ‘Expand fewer plant protection products. This new
seed treatment offers farmers reliable and
of Health Care and Crop
sales to Croda’s captive distribution
model and several new project
is increasing sales and margin. Our
strategy for Life Sciences is ‘Expand to
to grow’.” responsible food production and nutrition, Protection platforms
2019 marked the most successful
approvals, including for NanoQuil®, a
next generation nanoparticle adjuvant
grow’. This recognises the opportunities
to grow both organically and through
as well as the opportunity to increase their
Nick Challoner incomes whilst improving food security year ever for Life Sciences. Growth solving customers’ issues of stability acquisition. Growth drivers include the
President, Life Sciences in Malaysia. in speciality excipients in Health Care and production. global need to address environmental
and in differentiated adjuvants in Crop and social targets through the SDGs,
Protection provide an excellent platform Crop Protection grew by mid single digit the increasing technology demands of
to build further. Sales grew by 5.9% percentage, once again ahead of the complex drug and crop actives, and the
in constant currency, margin improved market. North American demand was need to increase crop yields with more
and adjusted operating profit increased impacted earlier in the year by the trade effective and sustainable treatments.
11.6% in constant currency. Sales price/ dispute with China and poor weather Aiming to deliver mid to high single digit
mix added four percentage points, conditions, but this was fully mitigated as percentage organic sales growth, our
reflecting the ability to capture more demand switched to Latin America and strategic priorities are:
value from our innovative products, by an encouraging recovery in sales in
the US towards the end of the year. • To build the Croda brand in Life
while volume was two percentage points
Globally, sales increased with tier 1 Sciences, becoming a key solution
better. In reported currency, sales were
multinational crop science companies provider to global pharma and crop
up 8.0% at £350.5m (2018: £324.5m)
and with tier 2 customers in Europe and markets, expanding geographically
with adjusted operating profit 11.8%
Asia, as we invested in local capability. to support new market development
better at £107.1m (2018: £95.8m) and
We integrated our biostimulants in China, India and Brazil;
return on sales up 110 basis points at
30.6% (2018: 29.5%). NPP decreased to business, Plant Impact, into the Crop • To enhance our product portfolio
27% of sales (2018: 29%), primarily due Protection team, allowing costs to be organically and create more value
to lower sales in Seed Enhancement. reduced. With resources focused on by extending our speciality excipient
IFRS operating profit was £97.7m delivering innovation across a broader and crop adjuvant ranges
(2018: £89.7m). range of high value crops, supported by and technologies; and
field trials, new sales are expected to be • To acquire adjacent businesses
After excellent first half year sales delayed into 2021. We remain confident and technologies in health and crop
growth, demand in the second half in the opportunity for biostimulants in care with strong growth prospects.
year was weaker but margins continued combination with our wider crop and
to increase. seed business.

Smart Materials sales declined by 7% Aiming to deliver low to mid single digit
in constant currency, with the exit sales percentage organic sales growth, our
Strategic Report
rate improving after the business was strategic priorities are:
adversely impacted earlier in the year
by the sharp slowdown in new build • to refine the portfolio through further
automotive demand, to which the demarketing of low value add business;
business is significantly exposed in • to focus on fast growing markets
polymer and adhesives additives. The where we have technical competence
Performance
German car market saw a 23-year low and digital capability;
production rate in 2019, down 10% • to develop our geographic footprint,
on 2018 and 17% on 2017. Energy especially in Asia; and
Technologies constant currency sales • to leverage the sector’s strong
Maarten Heybroek
Technologies
declined by 5% in the full year; in sustainability credentials to
President, Performance Technologies contrast, this reflected a flat first half meet customers’ product
performance followed by a broader development needs.
slowing in industrial markets to which
Sales
the business is exposed in lubricant In 2019 investment to develop Smart
£430.2m
additives, reflecting trade uncertainty and Materials into new technology areas in
Refine to grow
recessionary conditions in both Europe high value polymers included a £25m
and the US. Other business sales were capital project in the UK which should
2018: £456.4m down in double digit percentage terms, come on stream in 2021. We secured
due to a weak oil and gas market, promising inroads into new niches, but
particularly in North and Latin America. these are not yet big enough to offset
Adjusted operating profit volatility in more traditional market areas
£69.4m
Action was taken to reduce short-term and we are accelerating development.
costs, while maintaining investment for This includes additive applications
future growth. We are shifting sales and for the circular plastics economy,
“The innovation pipeline Ionphase acquisition 2018: £85.2m innovation resources towards higher
growth areas and new geographies,
creating biodegradable and recyclable
packaging, and moving away from single
With our acquisition of Ionphase, we have
is growing as the enhanced our position within the rapidly Return on sales
with encouraging sales progress in Asia
and EEMEA in 2019, as Performance
use plastics.
sector progressively growing permanent anti-static additives
16.1%
Technologies looks to reduce its In Energy Technologies we acquired
market for polymers. There is a rapid
dependence on its traditional Western Rewitec, whose lubricant additives
invests in moving to increase in microelectronic components
used in consumer devices attributed to the
European market. Our new China extend the life of wind turbines, a fast
application lab will open in Shanghai in growing market in renewable energy.
technology-driven Internet of Things (IoT) and these delicate
components are sensitive to damage
2018: 18.7%
2020. We have launched digital selling 2019 also saw Ionphase move into
markets and reduces from static electricity built up on polymer Disappointing performance in
in North America, which is targeted
to double the customer base over
profit – a 2017 technology acquisition,
this market-leading technology in
surfaces. Protecting them from static Performance Technologies due
its cyclical exposure to makes products more durable, increases to slower industrial markets
five years through ease of search,
dialogue and sampling.
electrostatically dissipative polymers
offers exciting opportunities in
more industrial markets. process efficiency and reduces component
rejects, all leading to a reduction in
After three successive years of double
digit percentage profit growth, 2019 Although adversely impacted by
electronics and packaging applications,
with over fifty new customer-product
We call this strategy plastic waste. marked a disappointing year for short-term weakness, the fundamentals
for Performance Technologies are
applications added in 2019. In the home
Performance Technologies amid economic care market, the commissioning of the
‘Refine to grow’.” uncertainty and weak demand. This was good with changes to our end markets North American bio-based plant is
driven by poor global automotive sales in creating significant opportunities. The creating significant customer interest in
Maarten Heybroek the first half year, followed by a general innovation pipeline is growing, with NPP moving away from petrochemical-based
President, Performance Technologies slowing of broader industrial markets in at 19% of sales (2018: 18%), as the surfactants. Coltide, a protein platform to
Europe and North America in the second sector progressively invests in moving extend the life of fabrics, is becoming a
half year. Consequently, sales declined to technology-driven markets and key sustainability driver. Our Purpose
by 7.3% in constant currency, while reduces its cyclical exposure to more plays to the strengths of Performance
margin was adversely impacted by 7% industrial markets. We call this strategy Technologies, from bio-based raw
lower volume in this higher operating ‘Refine to grow’. materials sequestering carbon from
leverage sector, reducing adjusted the atmosphere to increased engine
operating profit by 19.1% in constant This recognises the opportunities to grow efficiency through our lubricant additives.
currency. Sales price/mix was in higher growth markets, organically and
unchanged, with return on sales 260 through small technology acquisitions,
basis points lower at 16.1% (2018: increasing ‘knowledge’ intensity and
18.7%). In reported currency, sales were reducing ‘capital’ intensity and
down 5.7% at £430.2m (2018: £456.4m) operating leverage.
with adjusted operating profit 18.5%
lower at £69.4m (2018: £85.2m).
IFRS operating profit was £63.8m
(2018: £81.7m).

Industrial Maarten Heybroek
Chemicals
President, Industrial Chemicals
Sales
£111.8m
“We continue to refine 2018: £118.2m
the product portfolio in Adjusted operating profit

Industrial Chemicals.”
Maarten Heybroek
President, Industrial Chemicals
£1.1m
2018: £1.2m
Return on sales
1.0%
2018: 1.0%
Continued portfolio
development in
Industrial Chemicals
We continue to refine the product
portfolio in Industrial Chemicals, reducing
volume of low value co-product and
tolling business. In constant currency,
sales declined by 6.6%. Our China
manufacturing operation, Sipo, saw
an encouraging improvement in sales
Crodaboost 200 and the commissioning of a new plant
Through our biosurfactant plant at to improve future profitability. Sipo
Atlas Point in North America, we can was reviewed for potential goodwill
offer our customers bio-based, sustainable impairment but the future value remains
alternatives to traditional petrochemical above the carrying value, albeit with
derived ingredients, without loss of limited headroom. In reported currency
functionality. Crodaboost 200 is a patented in 2019, Industrial Chemicals sales
product that helps corn ethanol producers reduced to £111.8m (2018: £118.2m)
to maximise revenues while cutting waste. and adjusted operating profit
It enables the separation of stillage, a corn was broadly unchanged at £1.1m
ethanol by-product, effectively extracting (2018: £1.2m). IFRS operating profit
the valuable corn oil. When made with was £0.2m (2018: £0.8m).
bio-based feedstock, Crodaboost 200
offers multiple sustainability benefits,
including the ability to optimise by-
products as well as replacing
petrochemical ingredients.

Sustainability:
Strategic Report
our path to
2030
La
By 2030 we will be
Climate, Land and itive n
s
People Positive
d
Po
Po
Cli m ate
s iti v
As part of this
Commitment, we
will become the most Smart Science
e
sustainable supplier of to Improve LivesTM
innovative ingredients
Pe
op l e Pos i t i ve
Fund
ame n t a l s
Climate Positive
We will help our customers to avoid carbon emissions through the benefits our innovative ingredients deliver, whilst continually
reducing our carbon footprint. We will increase our use of bio-based raw materials, which take carbon from the atmosphere to
grow. Combining these benefits, we will enable more carbon to be saved than we emit, throughout our operations and supply
chain. By 2030, we will be Climate Positive.
Land Positive
The use of our crop protection ingredients helps farmers to increase yields and crop resilience. Our continual innovation will
help customers to mitigate the impact of climate change and land degradation, increasing the availability of land suitable for
growing crops. The use of our products will enable more land to be saved than is used to grow our bio-based raw materials.
By 2030, we will be Land Positive.
People Positive
We will use our smart science to improve the lives of our own employees and people all around the world. We will contribute to
SDG 3, developing ingredients to improve health and wellbeing, provide access to our smart science through our Foundation,
and encourage and promote diversity within our organisation. We will apply our innovation to increase our positive impact on
society. By 2030, we will be People Positive.
Fundamentals
We will protect the health and safety of all of our people, contractors and communities in which we operate, giving priority to the
areas of our business that give us our social licence to operate.

Sustainability continued
Climate Positive Land Positive People Positive Fundamentals Diversity and inclusion
Strategic Report
We embrace the differences of a
Carbon Land Health & Health, Safety Supplier multi-ethnic, multi-geographic and
Cover Use Wellbeing and Wellbeing Partnership multi-skillset company. In 2019, we
We will enable the transition to a low-carbon We will save more land than we use. We We will use our smart science to promote Targets Target achieved our objective of women
economy. We will be Climate Positive, working will increase agricultural land use efficiency, healthy lives and wellbeing through the • By 2030, we will achieve an OSHA Total • By 2030, we will ensure that all key suppliers making up at least a third of the
closely with our customers to develop products protect biodiversity and improve food security development and application of our Recordable Injury Rate in the top 10% for are responding to EcoVadis and engaging
that offer carbon saving benefits in use. by sourcing sustainably and inspiring ingredients and technologies. Board. However, we need to
the chemical industry with us to improve practices
innovation in our agrochemical businesses. replicate this across the business,
Target Targets • By 2030, we will achieve a 30% increase in
Knowledge which is part of our ongoing
• By 2030, use of our products will avoid four Target • By 2030, we will contribute to the successful positive responses to the wellbeing areas in
Diversity and Inclusion Programme.
times the carbon emissions associated with • By 2030, the land area saved through the development and commercialisation of 25% our Global Employee Culture Survey Management
our business, our 4:1 carbon cover ratio improved yields and crop resilience as a of WHO listed pipeline vaccines Target
result of the use of our crop protection Process • By 2025, 100% of our employees will receive Across the Group
• By 2030, we will protect at least 60 million
Reducing ingredients and seed treatment technologies
people annually from potentially developing
Safety a minimum of one week’s training per year
Emissions will exceed that used to grow our Target Female 1,530
skin cancer from harmful UV rays, through
We will achieve our Science Based Targets
raw materials
the use of our sun care ingredients • By 2030 we will have zero significant process Quality
Male 3,050
(SBTs) by reducing our emissions in line with safety incidents per year. We will continue to Assurance
limiting the global temperature rise to 1.5ºC Crop Gender investigate and apply learnings from minor Target Split: 33.4% female, 66.6% male
above pre-industrial levels, maximising the Science Balance
incidents and near misses • By 2030, we will achieve a 99.5% Right First
use of renewable energy in our operations. Board of Directors
Innovation We will achieve gender balance in our business • By 2030 we will conduct an independent Time (RFT) rate
Targets We will invest in innovation projects and by focusing on recruitment and development peer review of our Process Risk Reviews Female 3
• By 2030, we will have achieved our SBTs, partnerships to support crop and seed opportunities to increase the number of women (PRRs) for high hazard processes Product
in line with limiting global warming to enhancement in mitigating the impact of in decision-making positions. Stewardship Male 6
1.5°C above pre-industrial levels a changing climate and land degradation. Environmental Target
Target Split: 33.3% female, 66.7% male
• Thereafter, by 2050 we will achieve net Targets • By 2030, we will achieve gender balance Stewardship • By 2030, we will have conducted full
zero scope 1 and 2 GHG emissions • Through to 2030 we will bring an average Targets life cycle assessments for our top Executive Committee Members
across the leadership roles in our organisation
of two crop technological breakthroughs • By 2025, we will eliminate process waste to 100 ingredients
Sustainable to market each year that are in alignment Improving landfill across our operations Female 2
Innovation with our SBTs and which help our customers • By 2030, we will reduce our water use Responsible
mitigate the impact of climate change and
More Lives Business Male 7
We will accelerate the transition to bio- impact by 50% from 2018 level
based products, moving away from land degradation Targets Split: 22.2% female, 77.8% male
fossil/petrochemical feedstocks. • By 2030, we will have established three new Fair • By 2023, we will achieve an EcoVadis score
partnerships to contribute to the recovery of We will promote our smart science and help Income of at least 85
Regional and Business
Target improve lives using our technologies within
compromised farmland. We will work with Target • By 2030, we will achieve ‘outstanding’ CSR
• By 2030, over 75% of our organic raw our local communities, where our science can Board Members and
customers, universities and business • By 2030, everyone working at Croda performance ratings across all themes within
materials by weight will be bio-based, make a positive difference. We aim to create Senior Functional Heads
councils to achieve this locations, including temporary and the EcoVadis assessment
sequestering carbon from the atmosphere STEM educational opportunities and provide permanent employees, and all contractors,
as they grow basic necessities through the use Female 25
will receive a living wage that is monitored
and application of our ingredients.
and reviewed annually
Male 85
Target
• We will establish and fund a Croda Foundation Split: 22.7% female, 77.3% male
to help improve more lives in our local
communities, supported by our technologies
Non-financial information statement
GHG emissions Please see page 60 to find out where all non-financial matters are located within
our Annual Report as required under the Non-Financial Reporting Directive.
Since 2015, our baseline year, total scope 1 and 2 GHG Our chosen measure of GHG emission intensity divides our
emissions have significantly reduced by 14.2%. Within this, GHG emissions (market-based scope 2 emissions) by value
our scope 1 emissions have increased by 7.5%, whilst we added: a measure of our business activity. Our 2015 baseline
have seen a greater than 50% reduction in scope 2 emissions. year was calculated using location based scope 2 emissions Taskforce on Climate Related Financial Disclosures (TCFD)
as a proxy. Since 2015, our GHG emissions intensity has
Governance Our Board are responsible for dealing with risks and opportunities associated with climate change. See page 38
We have been reporting market-based scope 2 emissions fallen by 28.5%, illustrating how we are decoupling growth
since 2017, which better reflect our efforts in purchasing All management positions share the responsibility of assessing and managing relevant climate related
from our environmental impact.
renewable electricity at greater levels than the national risks and opportunities.
averages in the countries in which we operate. We have seen Our scope 1, 2 and 3 GHG emissions are verified by Strategy We have identified a range of short, medium and long-term climate related risks and opportunities. See page 30
a 67% increase in the absolute amount of non-fossil based Carbon Smart. Their formal Independent Verification Climate related risks and opportunities are taken into account within our business, strategy and
scope 2 energy purchased between 2015 and 2019, now Statement is available at www.croda.com/carbonverification. financial planning.
representing >70% of our indirect energy consumption. For more information see our 2019 Sustainability Report. We look at a 1.5°C scenario alongside our business strategy and are committed to bold emissions
reduction targets.
GHG emissions (TeCO2e) 1
GHG emissions intensity (TeCO2e/£m) Risk Climate related risks are integrated into our risk assessment process and are assessed using our See page 40
Management risk framework.
2019 140,303 33,280 2019 292
Climate related risks are reviewed by the board and monitored regularly through our SHEQ committee.
2018 153,211 45,974 2018 333 We have thorough processes in place for assessing and managing climate related risks, which are
integrated into our overall risk management framework.
2017 134,562 48,055 2017 319 Metrics and We have several climate related targets in line with a 1.5°C scenario, which have a range of metrics to See page 30
Targets ensure we are meeting our targets.
2016 128,550 67,350 2016 356
We monitor our scope 1, scope 2 and scope 3 GHG emissions, and the related risks.
2015 130,492 71,727 2015 408 We have a range of stretching KPIs to help us manage climate-related risks and opportunities and
performance against targets.
Scope 1 Scope 2 Intensity

Key Performance Indicators
KPIs update
How we performed
Strategic objectives key
Growth: consistent top and bottom line growth During 2020 our key sustainability KPIs will change
Strategic Report
to reflect our 2030 commitments to be Climate, Land
Innovation: increase the proportion of NPP that we sell
and People Positive. The sustainability KPIs below will
Sustainability: align our business with our Purpose and continue to be reported in our Sustainability Report.
accelerate our customers’ transition to sustainable ingredients
KPI Comment Target Our performance KPI Comment Target Our performance
On target Group ROS was unchanged at 24.7% Personal Care (PC) Return on sales % Behind target This was a challenging target for us. 27% by 2020. Non-fossil fuel energy %
despite subdued market conditions, maintain 2018 level. In 2019, 22.7% of our energy was from
Return on sales reflecting the strength of our business 40 Non-fossil non-fossil sources. For the first time in
(ROS) % model. Life Sciences was the standout Life Sciences (LS) 35 fuel energy % 2019 we had this number externally verified 2019 22.7%
performer in the year, with strong sales grow to equal by Carbon Smart. As we move to our 2030
KPI definition: Adjusted Personal Care in 30 KPI definition: The proportion 2018 21.1%
growth accompanied by record ROS. Emissions reduction target we expect this
operating profit as a Personal Care demand slowed but the medium term. 25 of our energy that comes from number to increase significantly as sites
percentage of sales. 20 non-fossil fuel sources. 2017 24.1%
excellent ROS saw profit broadly Performance look to source renewable energy
unchanged in constant currency. After a Technologies (PT) 15 and decarbonise. 2016 21.3%
record performance in 2018, Performance grow to 20% in 10
Technologies had a disappointing year the medium term. 5 2015 20.5%
amid weak demand in automotive and
0
wider industrial markets. Lower sales 2015 2016 2017 2018 2019
adversely impacted ROS in this more PC 33.4% LS 30.6% PT 16.1%
On target We met this target a full year ahead of Achieve a sustained Total Recordable Injury
volume sensitive business, although its schedule. The TRIR was 0.55, including OSHA TRIR in the Rate (TRIR)
Group Total 24.7% Total Recordable two consecutive months free of any top quartile of
fundamentals remain attractive for the
medium term. Injury Rate (TRIR) recordable injuries for the first time manufacturing 1.2
in our history. The injury rate for companies with more
KPI definition: The number 1.0
contractors under direct supervision than 1,000 employees
Behind target Core Business sales declined in 2019, Low-to-mid single Core Business sales of incidents per 200,000 hours saw a major reduction. by 2020 (0.60).
despite strong sales growth in Life digit % growth
Core Business Sciences, reflecting difficult market (excluding raw
growth % worked where a person has 0.8
sales growth % conditions in Personal Care and material price sustained an injury. This includes
0.6
Performance Technologies. Key recovery). -2.3% 2019 all lost time, restricted work and
KPI definition: Total sales
markets for Personal Care recovered medical treatment cases. 0.4
growth in the Core Business as we exited the year, but industrial 2018 3.8%
measured at constant currency. markets remained subdued. 0.2
2017 5.6%
0.0
2015 2016 2017 2018 2019
2016 4.6% Employee Contractor Combined
2015 4.2%

On target We focus technically and commercially on NPP sales to be 30% NPP sales % Creating shareholder value
increasing the proportion of Group sales of Group sales in the
New and Protected from NPP. The percentage was broadly medium term.
2019 28.1%
Products (NPP) sales % unchanged in 2019, adversely affected
KPI definition: Proportion of by a slowdown in Seed Enhancement,
2018 28.2% On target The subdued market conditions in the year 5-11% EPS growth Adjusted basic earnings
but our innovation pipeline remains healthy. had an adverse impact on adjusted basic per annum over the
sales from NPP (in constant We continue to accelerate innovation Adjusted basic earnings EPS which fell to 185.0p, a decrease of last three years.
per share (EPS)
currency). NPP products are 2017 27.6%
by investing in resources, projects and per share (EPS) 2.7% on last year. Over the last 3 years we
2019 185.0p
where sales are protected by technology acquisitions that enable us 2016 27.4% KPI definition: Adjusted profit have increased EPS by an average of just
virtue of being either newly to work more closely with customers over 6% pa.
after tax divided by the average 2018 190.2p
launched, protected by and create sustainable solutions that 2015 26.1%
meet their needs. number of issued shares.
intellectual property or 2017 179.0p
by unique characteristics.
2016 155.8p
Behind target NPP and non-NPP sales both declined in 2x non-NPP sales Relative NPP sales 2015 135.0p
2019, reflecting difficult trading conditions growth over the
Relative NPP across many of our markets. Over a three last three years.
growth
sales growth year period, NPP sales growth has been Non-
Behind target Our KPI definition has been amended in Achieving ROIC of Return on invested
2019 to more closely align with common around 20% on the
KPI definition: NPP sales 1.8x non-NPP growth, slightly below NPP NPP Return on Invested market practice. ROIC fell to 17.0% in underlying business
capital %
our target. growth growth
growth; targeted to be at least % % Ratio Capital (ROIC) % 2019, below our medium-term target. in the medium term
twice the ratio of non-NPP sales. This reflects our recent programme of (i.e. excluding short 2019 17.0%
2019 -3.5% -2.3% <2x KPI definition: Adjusted
increased capital expenditure, including term dilution from
operating profit after tax the construction of our North America acquisitions). 2018 19.2%
2018 +4.8% +2.2% 2.2x divided by the average adjusted biosurfactant plant, and increased
invested capital for the year for acquisition spend. This is expected to 2017 21.2%
2017 +5.3% +4.4% 1.2x
the Group. Adjusted invested improve (subject to the impact of any
further acquisitions) as the profit benefits 2016 22.1%
2016 +6.9% +1.7% 4.0x capital represents net assets
of recent investments develop over the
adjusted for net debt, earlier 2015 23.2%
2015 +15.5% +0.7% 22.2x coming years.
goodwill written off to reserves
and accumulated amortisation
of acquired intangible assets.

Finance Review
Driving profit and cash flow
Strategic Report
Currency 2019 2018 The effective tax rate increased to 25.6% (2018: 24.6%),
Currency translation benefitted reported sales and profit in Income statement £m £m reflecting reduced profit in lower tax jurisdictions. There were
the first half year as Sterling weakened against the dollar, Revenue 1,377.7 1,386.9 no significant adjustments between the Group’s expected
before recovering later in the year. Sterling averaged Cost of sales (865.5) (864.6) and reported tax charge based on its accounting profit.
US$1.278 (2018: US$1.334) and €1.141 (2018: €1.130). Gross profit 512.2 522.3 Adjusted profit after tax in reported currency was £239.7m
“A key strength of the Croda Adjusted operating costs (172.5) (179.8)
(2018: £249.9m). Adjusted basic earnings per share (EPS)
decreased to 185.0p (2018: 190.2p).
model is its cash generation. Sales Adjusted operating profit 339.7 342.5
In 2019, free cash flow Sales in reported currency reduced by 0.7% to £1,377.7m Net interest charge (17.6) (11.0)
IFRS profit
(2018: £1,386.9m). Constant currency sales fell by 2.6%, Adjusted profit before tax 322.1 331.5
increased by 30%.” including a £11.0m benefit from acquisitions. IFRS profit is measured after exceptional items, acquisition
costs and amortisation of intangible assets arising on
Jez Maiden Sales £m % Adjusted operating profit declined by 1.8% in constant currency
acquisition. The charge for these before tax was £19.8m (2018:
Group Finance Director 2018 reported 1,386.9 due to lower sales and the impact of acquisitions. Reflecting the
£13.7m). Exceptional items in the current year were £10.7m
strong business model, return on sales remained unchanged at
Underlying growth (47.4) (3.4) related to delivery of cost saving actions (the exceptional cost
24.7% (2018: 24.7%) in reported currency.
Impact of acquisitions 11.0 0.8 in the prior year was £4.9m, relating to a past service cost on
2019 constant currency 1,350.5 (2.6) Adjusted operating profit £m % the UK defined benefit pension scheme). Acquisition costs
Impact of currency translation 27.2 1.9 2018 reported 342.5 were £0.3m (2018: £2.7m) and the charge for amortisation of
Underlying growth (5.3) (1.6) intangible assets was £8.8m (2018: £6.1m). Profit before tax
2019 reported 1,377.7 (0.7)
on an IFRS basis was £302.3m (2018: £317.8m), the profit after
Impact of acquisitions (0.7) (0.2)
tax was £223.8m (2018: £238.3m) and basic EPS were 172.8p
In the Core Business, constant currency sales reduced by 2.3%. 2019 constant currency 336.5 (1.8)
(2018: 181.4p).
Sales value Sales volume was 5% lower, partly offset by price/mix adding Impact of currency translation 3.2 1.0
3%, driven by innovation and an improved product portfolio.
£1,377.7m
2019 reported 339.7 (0.8) 2019 2018
Sales in Life Sciences grew by nearly 6%, whilst Personal Care Income statement £m £m
sales were 3% lower and Performance Technologies declined Adjusted profit before tax 322.1 331.5
The margin improvement saw adjusted operating profit increase
2018: £1,386.9m over 7% due to weakness across industrial markets. modestly in Personal Care in reported currency, broadly flat in Exceptional items, acquisition costs
constant currency. Life Sciences grew profit strongly, whilst & intangibles (19.8) (13.7)
First Half Second Half Full Year
Sales at constant currency % % % profit in Performance Technologies was sharply lower, as Profit before tax (IFRS) 302.3 317.8
Adjusted profit before tax Personal Care (3.6) (2.3) (3.0) reduced volume impacted fixed cost recovery in this more Tax (78.5) (79.5)
£322.1m
Life Sciences 13.0 (0.9) 5.9 volume sensitive business. Profit after tax (IFRS) 223.8 238.3
Performance Technologies (6.0) (8.6) (7.3) 2019
Core Business (0.4) (4.2) (2.3) 2019 Constant 2018 Cash management
2018: £331.5m Reported currency Reported
Industrial Chemicals (7.4) (5.7) (6.6) Adjusted operating profit £m £m £m A key strength of the Croda model is its cash generation.
Group (1.0) (4.3) (2.6) Personal Care 162.1 159.9 160.3 In 2019, free cash flow increased by 30.2% to £201.7m
Free cash flow Life Sciences 107.1 106.9 95.8 (2018: £154.9m) in reported currency, after funding net
capital expenditure of over £100m, which will see new capacity
£201.7m
Adjusted profit Performance Technologies 69.4 68.9 85.2
become available during 2020. Working capital management
Adjusted operating profit decreased by 0.8% in reported Core Business 338.6 335.7 341.3 improved during the year after a disappointing 2018. The
currency to £339.7m (2018: £342.5m). Operating costs reduced, Industrial Chemicals 1.1 0.8 1.2 strong cash flow helped support almost £267m in dividends
2018: £154.9m with the benefit of actions to reduce costs and no annual bonus Group 339.7 336.5 342.5 to shareholders, including a special dividend of 115 pence per
charge due to profit being slightly below the previous year. share paid in May 2019. There were no material acquisitions in
No depreciation charge was incurred in 2019 on the North The net interest charge increased to £17.6m (2018: £11.0m) the year.
American biosurfactant plant, as this did not come into in reported currency and £17.1m in constant currency. 2019
operation until early in 2020. The impact of its increased saw higher debt from the payment of a special dividend and
capital cost and delayed commissioning has been reviewed the acquisition of Biosector at the end of 2018. In addition,
but it was not considered to be at risk of impairment, with the the prior year benefitted from capitalisation of interest on the
plant forming part of the profitable North American business. North American biosurfactant plant, construction of which was
materially completed in 2018 when capitalisation of interest to
the project therefore stopped. However, as noted above, delays
in commissioning the plant, together with a small leak after first
start up, prevented the plant becoming operational until early
in 2020. Adjusted profit before tax reduced to £322.1m
(2018: £331.5m).

Finance Review continued
Strategic Report
2019 2018 Capital allocation Brexit update Retirement benefits
Cash flow £m £m Croda seeks to deliver high quality profits, measured through a In 2019 we undertook contingency planning for the UK leaving The post-tax deficit on retirement benefit plans,
Adjusted operating profit 339.7 342.5 superior return on invested capital (ROIC), earnings growth and the European Union (EU) without a transition arrangement. In measured on an accounting valuation basis under IAS19,
Depreciation and amortisation 57.6 50.1 strong cash returns. Following a recent programme of increased the event, this was not required. We are now planning for the increased to £60.1m (2018: £12.4m), largely due to lower
EBITDA 397.3 392.6 capital expenditure, including the construction of our North UK leaving the EU at the end of 2020 (‘Brexit’). With 96% of corporate bond yields. This is expected to result in an
Working capital 1.6 (69.3) America biosurfactant plant, our organic investment is now sales and 84% of production outside the UK, the overall impact increase in the Income Statement charge in 2020 of
Net capital expenditure (106.8) (103.1) returning to our normal, more ‘capital light’ model. In addition, is expected to be limited. Our focus remains on ensuring our around £3m. Cash funding of the various plans is driven
Payment of lease liabilities (8.8) (0.5) we have seen increased technology acquisition spend in recent ability to offer continuity of service and supply to our customers, by the schemes’ ongoing actuarial valuations. No deficit
years, whereby new exciting technologies are acquired but where through our Brexit-ready trading model, customer service and funding payments are currently required to the largest
Non-cash pension expense 2.8 3.8
it is likely to take several years to reach commercialisation. supply chains, and in compliance with regulatory frameworks pension plan, the UK Croda Pension Scheme, with
Interest & tax (84.4) (68.6) As a result, capital employed has nearly doubled since 2014. under a number of different Brexit scenarios. the next valuation due at 30 September 2020.
Free cash flow 201.7 154.9 Consequently, ROIC has reduced to 17.0% (2018: (restated
Dividends (266.9) (110.5) definition): 19.2%). This is expected to improve as the profit
Acquisitions (5.0) (82.5) benefits of recent investments develop over the coming years,
Other cash movements (17.9) 4.4 although we will continue to seek new opportunities to invest
Net cash flow (88.1) (33.7) capital as set out below.
Jez Maiden
The Group has also introduced a measure of Economic Value Group Finance Director
Net movement in borrowings 115.4 15.2 Added (EVA) as an underpin to its Remuneration Policy (p72).
Net movement in cash This reinforces the importance of delivering superior returns
and cash equivalents 27.3 (18.5) on invested capital.
Alternative performance measures
After currency translation, and including leases under the newly The Group’s capital allocation policy is to: We use a number of alternative performance measures to • Return on sales: this is adjusted operating profit divided by
adopted accounting standard IFRS16 (which brought £46.0m assist in presenting information in this statement in an easily sales, at reported currency;
of additional lease debt onto the balance sheet on transition), 1. Reinvest for growth – Croda seeks to invest in analysable and comprehensible form. We use such measures • Return on Invested Capital (ROIC): this is adjusted operating
net debt increased to £547.7m (2018: £425.5m), a leverage organic capital expenditure to drive shareholder value consistently at the half year and full year and reconcile them profit after tax divided by the average adjusted invested
ratio of 1.4 times (31 December 2018: 1.1x). During the year, the creation through new capacity, product innovation and as appropriate. The measures used in this statement include: capital for the year. Adjusted invested capital represents
Group refinanced its principal bank debt and issued US private expansion in attractive geographic markets to drive net assets adjusted for net debt, earlier goodwill written
placement bonds at attractive pricing, and at 31 December sales and profit growth; • Constant currency results: these reflect current year off to reserves and accumulated amortisation of acquired
2019 had £1,058.6m of committed debt facilities available with 2. Provide regular returns to shareholders – we pay a performance for existing business translated at the prior intangible assets. This definition has been amended in
principal maturities between 2023 and 2029, providing undrawn regular dividend to shareholders, representing 40 to 50% year’s average exchange rates and include the impact of 2019 to more closely align with common market practice
committed facility headroom of £463.8m (2018: £358.4m). of adjusted earnings over the business cycle. The Board acquisitions. For constant currency profit, translation is (no longer adjusting invested capital for pensions, deferred
has proposed an increase of 3.4% in the full year performed using the entity reporting currency. For constant tax or provisions). The amended definition has been applied
dividend to 90.0 pence (2018: 87.0p), representing currency sales, local currency sales are translated into the consistently to all comparatives in the 2019 Annual Report
49% of adjusted EPS; most relevant functional currency of the destination country and Accounts;
of sale (for example, sales in Latin America are primarily
Case study: 3. Acquire disruptive technologies – we have identified
made in US dollars, which is therefore used as the
• Net debt: comprises cash and cash equivalents (including
a number of exciting technologies to supplement organic bank overdrafts), current and non-current borrowings and
‘Green’ banking growth in existing and adjacent markets. Some of these functional currency). Sales in functional currency are then lease liabilities;
Reflecting our new Purpose, Smart Science to Improve will be acquired, either as nascent opportunities for future translated into Sterling using the prior year’s average rates
• Leverage ratio: this is the ratio of net debt to Earnings
LivesTM, Croda worked with a core group of nine banks to scale-up or as larger complementary acquisitions. During for the corresponding period. Constant currency results
Before Interest, Tax, Depreciation and Amortisation
promote delivery of our sustainability objectives within the 2019, we increased our associate investment in the personal are reconciled to reported results in this Finance Review;
(EBITDA). EBITDA is adjusted operating profit plus
Group’s principal committed bank facilities. Aligned with care device company, Cutitronics, and acquired Rewitec in • Adjusted results: these are stated before exceptional items, depreciation and amortisation; and
Croda’s commitment to be Climate Positive by 2030, Performance Technologies; and acquisition costs and amortisation of intangible assets
• Free cash flow: comprises EBITDA less movements in
the new funding agreement requires Croda to reduce its 4. Maintain an appropriate balance sheet and return arising on acquisition, and tax thereon. The Board believes
working capital, net capital expenditure, payment of lease
carbon use every year by a specified amount. Provided excess capital – we maintain an appropriate balance that the adjusted presentation (and the columnar format
liabilities, non-cash pension expense, and interest and
Croda achieves this challenging target, the banking group sheet to meet future investment and trading requirements. adopted for the Group income statement) assists
tax payments.
will reduce the interest margin which Croda pays, and We target leverage of 1.0 to 1.5x (excluding retirement shareholders by providing a meaningful basis upon which
• Economic Value Added (EVA): this is adjusted operating
Croda will reinvest this saving in sustainability projects. benefit schemes), although we are prepared to move above to analyse underlying business performance and make
profit after tax less the charge for invested capital (‘CIC’) in
If Croda does not achieve the target in any year, Croda this range if circumstances warrant. We consider returning year-on-year comparisons. The same measures are used
that year. CIC is the average adjusted invested capital for
will pay a higher interest margin and our banking group excess capital to shareholders when leverage falls below by management for planning, budgeting and reporting
the year for the Group multiplied by the Group’s post-tax
will reinvest this in sustainability projects. As a result, our our target range and sufficient capital is available to meet purposes and for the internal assessment of operating
cost of capital.
‘green’ banking facility achieves alignment between Croda our investment opportunities. In 2019, we paid a special performance across the Group. The adjusted presentation
and its core banking partners in delivering sustainability for dividend of 115p per share (£151.5m). is adopted on a consistent basis for each half year and full
our fragile world. year results;

Risk Management
Protecting value
Strategic Report
Our Risk Framework enables the business to protect value, Each of our more than 50 strategic and operational risks are challenge and monitor current and emerging risks using a Risk Heat Map
enhancing the realisation of opportunities and minimising the owned by an Executive member, and are categorised into bottom-up and top-down approach. Our global reporting
threats to the delivery of our strategic and operational objectives. 17 subcategories enabling transparent reporting at all levels. dashboard enables transparent comparison of risks across
Our principal risks are reported gross
The Risk Framework, embedded in the Digital Hive (see case regions, operations and sectors. The third line of defence is
study), is used to drive an integrated, three lines of defence assurance. This is provided through internal control audits
(before mitigating controls)
How we manage risk
Our risk management programme is owned and overseen by management approach through the culture of the organisation, and deep dive risk assurance audits, in addition to reports from Strategic risk
the Board, which has overall responsibility for ensuring that our across sectors, operations, regions and functions. external assurance providers, the results of which are reviewed 1 Revenue generation in established and emerging
risks are aligned with our goals and strategic objectives (p64). by three Executive Committees and monitored and challenged markets
Our first line of defence, our employees, have a responsibility to by the Audit Committee and the Board.
The Audit Committee assists the Board in monitoring the 2 Product and technology innovation and protection
manage day-to-day risk in their own areas guided by Group
effectiveness of the risk management and internal control 3 Digital technology innovation
policies, procedures and control frameworks. It is the role of
policies, procedures and systems (p65). Risk appetite 4 Climate change – delivering sustainable solutions
local management and ultimately the Executive to ensure
In July 2019 a cross functional team reviewed and refreshed People and culture risk
that risks are managed, maintained, reviewed and actioned
our statements of risk appetite. The team developed risk 5 Talent development and retention
according to the framework. The second line of defence, the
appetite statements at subcategory level with a view to making
Risk Management Committee, meets quarterly to review, Process risk
risk appetite more transparent to risk managers and owners
and to provide guidance when considering risk incidents. 6 Product quality/liability claims
Risk Framework: what we monitor The statements were reviewed by the Board and the Risk 7 Major safety or environmental incident
Management Committee and have been embedded into 8 Suppliers and raw material sourcing
Our risk landscape Six categories, What we assess our risk reporting dashboard. External environment risk
Current risks 17 subcategories, • Risk ownership: each risk has 9 Chemical regulatory compliance and product
over 50 generic risks, a named owner Our key risks stewardship
Risks we are managing now that
one system • Likelihood and impact: globally Our Risk Heat Map identifies the key pre-mitigation risks 10 Ethics and compliance
could stop us achieving our
strategic goals • Strategic applied 6x6 scoring scale (a subset of all the risks in the Risk Framework) that we consider Business systems risk
• Gross risk: before mitigating controls may threaten the delivery of our long-term strategic goals, and 11 Security of business information and networks
• People and culture
• Mitigating controls: subject to these are explained in further detail in the table on pages 39 to Financial risk
Emerging risks • Process
internal audit review and monitoring 42, together with their link to our business strategy and business
Risks with a future impact from • External environment 12 Ineffective management of pension fund
model. The Board has carried out a robust assessment of these
external or internal opportunities • Net risk: after mitigating controls
• Business systems and security key risks and has taken them into consideration when assessing
are applied
High
or threats; slow moving as well • Financial the long-term viability of the Company on page 43.
as rapid velocity • Risk appetite: defined
2 1 7
• Actions: for further 11
Changes to our gross risk environment in 2019
mitigation if required 10
Geopolitical risks relating to the revenue impact of the US/China 6
relationship, increased political and economic uncertainty
globally and Brexit on business growth were prominent
Likelihood
Executive Risk Register Our bottom-up registers once again, as was the risk of major safety and environmental 9
Summary of the key risks facing us prepared by combining The core of our Risk Framework. Owned by market sectors, regions, incident following the ECO incident. Climate change, both its 4 8
key risks identified through the local bottom-up registers with manufacturing sites and functions, they identify local risks and impact on our customers and our business, has always been 5
Group level risks identified by the Executive Committee mitigating controls arising from day-to-day operations in over 25 risk 3
a risk but has been assessed as more likely and therefore
registers globally
has moved into the key risks list for the first time. We have
combined Innovation and Intellectual Property (IP) risks in 2019 12
as they are closely linked; effective IP protects our innovations.
How we monitor
Medium
Board Audit Committee Risk Management SHEQ Steering Ethics Committee*
Responsible for the Risk Reviews the effectiveness Committee* Committee* Meets quarterly to
Risk management in action Medium Impact High
Framework and definition of the Group risk review ethics and
of risk appetite. management process.
Meets quarterly to monitor risks other Meets quarterly to
compliance risks. The Digital Hive
than SHEQ and Ethics. Standing agenda review Safety, Health, Gross risk increase
item to monitor business IT systems and Environmental and In August 2019 a team completed the project to migrate
Reviews key risks with an Reviews assurance Monitors against
opportunity for in-depth over mitigating controls, cyber risks and currently Brexit risk. Quality (SHEQ) risks. agreed KPIs. our Risk Framework from Excel to a new online system. Gross risk no change
discussion of specific directing internal audit Agenda covers proactive risk Monitors against Developed in partnership with PwC (our internal audit
key risks and mitigating to undertake assurance Considers the results of
management, risk monitoring stretching targets assurance audits over co-source partner) the Digital Hive is our global risk, Gross risk decrease
controls annually (p64). reviews for selected key and mitigation and consideration of and agreed KPIs.
risks (p65). Ethics controls. control and action system. It provides transparent, real
Approves the viability internal and external emerging risks.
Considers the results time visibility of all the Group’s risks identified through
statement. Reviews viability
scenario assessments.
Receives an in-depth presentation of of assurance audits the risk management framework process. This reinforces
specific key risks and mitigating controls over SHEQ controls.
from Executive owners at each meeting.
individual ownership of both the risks and the mitigating
controls and supports direct links between our risk and
Considers the results of internal audit control frameworks.
work for all risks.
** Executive Committee (p70)

Risk Management continued
Strategic People and culture Process fundamentals
Strategic Report
2. Product and 3. Digital technology 4. Climate change –
Key risk
Key risk
1. Revenue generation 5. Talent development 6. Product quality/liability 7. Major safety 8. Suppliers and raw
in established and technology innovation innovation delivering sustainable and retention claims or environmental material sourcing
emerging markets and protection Jez Maiden solutions Tracy Sheedy Tom Brophy incident Stuart Arnott
Sector Presidents Nick Challoner Executive owner Stuart Arnott Executive owner Executive owner Stuart Arnott Executive owner
Executive owner Executive owner Executive owner Executive owner
V = V = V V = = V V
E S E C E C M S C M E C M S M S M M

Why this matters to us Why this matters to us

To grow, we need to both keep Innovation plays a critical role across Disruptive digital technology has an Using smart science to turn bio- The vision and experience of We sell into a number of highly We rely on the continued sustainable An interruption in the supply of key
pace with our customers as they our operations; it differentiates us from increasing impact, changing both based raw materials into innovative our knowledgeable and specialist regulated applications. Non- operation of our manufacturing sites raw materials would significantly affect
follow consumers into emerging the competition, protects sales and our customer base and the way we ingredients with sustainable benefits employees is critical to maintaining our compliance both with our customers’ around the world. our operations and financial position.
markets and maintain revenue from improves our margins. Failure to drive interact with all external partners. in use has always been at the core success. Inability to recruit and retain stringent product quality requirements Such a disruption could arise from
our established markets, protecting New and Protected Products (NPP) Customers expect an even higher of our strategy. However, increasing appropriately skilled employees with and local regulation could expose A major event causing loss of market shortages or from restrictive
these from mainstream and other through innovation will impact level of online service, from global concerns over climate change diverse backgrounds could adversely us to liability claims and reputation production, or violating safety, health legislation, for example relating to
chemical companies looking to move on growth. researching ingredients to buying. and land use have heightened both our impact our ability to deliver our current damage, especially in light of our or environmental regulations, could the transport of hazardous goods.
into our established markets. Failure Digital also touches operations and customers’ and our own focus. Failing and future business requirements and commitment to sustainability. limit our operations and expose the Sourcing from suppliers with a
to manage these challenges amid Failure to protect the intellectual research and development (R&D), to remain ahead in this key area of strategic priorities. Group to liability, cost and reputation different ethical stance from our
growing geopolitical tensions including property in these products in both enabling knowledge sharing and differentiation for us will damage our damage, especially in light of our own could lead to reputation
China/USA trade and Brexit will existing and new markets could driving efficient process. reputation and compromise growth. If these individuals were to leave, it commitment to sustainability and damage, especially in the light of
adversely impact delivery of our undermine our competitive advantage. would take time to replace them if customer service. our commitment to sustainability.
strategic objective to deliver consistent no succession plans were in place.
top and bottom line growth.
How we respond How we respond
Through our global sector sales, Our outstanding technical research Dedicated centres of excellence In line with our purpose, Smart A clear Purpose, strong development Monitored by our Group SHEQ Monitored by our Group SHEQ Professional purchasing teams
marketing and technology teams, and development (R&D) teams based provide global leadership to take Science to Improve LivesTM our culture, excellent learning Steering Committee (p70), our Steering Committee (p70), our global based in our regions develop good
we identify consumer trends and in our customer innovation centres advantage of the fast evolving digital ambition is to become the most opportunities and competitive reward sites and products are certified to network of safety specialists located at relationships with our suppliers.
respond swiftly to satisfy customer and application laboratories globally, world and deliver an integrated market sustainable supplier of ingredients. programmes support the retention, demanding external quality standards each site enforce compliance with the They monitor supply to identify and
needs through key technologies and are fully integrated into our sectors facing environment that encompasses By aligning our smart science engagement and career development highly valued by our customers policies and procedures defined in the manage potential future shortages.
our direct selling model enables us and focus innovation on customer everything from product development with United Nations Sustainable of the high-quality teams we need. (including ISO 9001, GMP and Group SHE manual. Assurance over To protect supply, we agree long-term
to get closer to our customers. Our requirements. Guided by our key to artificial intelligence enabled Development Goals (SDGs) we will Global graduate and management Excipact). Our global network mitigating controls is provided by the contracts where appropriate, source
strong business model (p12) and focus technology platforms, we invest in: manufacture to customer service. help to tackle some of the biggest development programmes include of quality professionals manage dedicated Group SHE internal audit from multiple suppliers, or where
on growing the bottom line faster than R&D, Open Innovation and Smart E-cells embedded in the organisation challenges the world is facing. stretching and high profile compliance, assured through internal team, whilst external auditors certify this is not possible build up our
the top line mitigates profit impact in Partnership programmes with support agile, local trials of innovative assignments and provide a pipeline audits delivered by our specialist our compliance with international own inventories. We ask higher
difficult trading conditions. universities, specialist research ideas, which can grow into of internal talent. Group Quality audit team and safety standards. risk suppliers to complete an
laboratories and SMEs, seeking global initiatives. external certification audits. EcoVadis self- assessment
out premium niches and disruptive The annual global talent review We work proactively with relevant We have business continuity plans in and follow up results with them.
technology acquisitions. Our specialist process supports review of resources trade associations to shape place for each site and a Group Crisis
IP team protect new products and and succession plans for critical future regulation. Management Plan that is tested at
technologies, defending our IP roles, with actions monitored by the least annually.
and challenging third party IP Executive Committee and the Board.
where appropriate.
What we have done in 2019 What we have done in 2019
• Despite increased trade headwinds, • Rewitec acquisition and • Continued to invest in our digital • Developed and communicated our • Shared our Croda culture and vision, • Continued to monitor and proactively • Increased risk likelihood as we • Risk assessed and ranked our
regulatory change in China, USA/ integration (p19) programme, focused on digital Purpose – Smart Science to captured in our Purpose statement, address underlying causes of Not brought major new capacity suppliers globally in terms of
China tensions and customer • Acquired a new application solutions across our business Improve LivesTM supported throughout the year by Right First Time (NRFT) and on stream in North America geography and industry. Key
de-stocking, Personal Care delivered laboratory and expanded the model (p19): • Aligned our smart science with listening events, pulse surveys and customer complaints (biosurfactant and speciality suppliers requested to complete
excellent margin growth and R&D facility at Sederma (p23) • Create: in silico modelling and AI SDGs (p18) town hall meetings • Aligned our quality targets with excipients plants), mitigated by the EcoVadis questionnaires
maintained adjusted operating profit • Launched new products in all • Make: improving global supply chain • Developed stretching sustainability • Developed stretching targets, SDGs and set stretching new targets close involvement of both our SHEQ covering four sustainability pillars:
(p23) and Life Sciences delivered sectors (p22 to p28) including management and new tools to targets; by 2030 we will be Climate aligned with SDGs, to be People for 2030 (p31). See our Sustainability and external specialists to provide Environment, Labour and Human
record sales performance (p25) a new generation of peptides enhance manufacturing efficiency and Land and People Positive. Positive by 2030 (p30). See our Report for more details review and oversight Rights, Ethics and Sustainable
• Performance Technologies, most to support a major customer’s • Sell: roll out of a digital selling Read more on page 18 and Sustainability Report for more details • Reduced process safety incidents Procurement
impacted by economic uncertainties anti-ageing product and new channel via our enhanced website in our Sustainability Report by almost 3x, with none classified • Aligned our supply chain targets
and weak demand, took action to seed treatments (p24) supporting customers with literature • Sector strategies focus on as serious or with major accident with SDGs, and set stretching new
reduce short-term costs whilst • Recent technology acquisitions/ downloads, online sample supply sustainable solution delivery potential (p33) targets for 2030 to engage with our
shifting sales and innovation investments (Enza, Nautilus, SiSaf and ‘live chat’ (p22 to p28) • Refreshed Croda Behavioural Safety suppliers on ethical issues as well as
resources (p27) to reduce dependence programme which helped us to meet to ensure security of supply (p31).
on traditional Western Europe markets
and Cutitronics) delivered exciting • Planned voluntary withdrawal
See our Sustainability Report for
product development opportunities from products with negative our personal injury target a year
• Our Brexit team continued to plan for (p19) environmental impacts (p25) ahead of schedule more details
leaving the EU without a transition • Aligned our SHE targets with SDGs
agreement (p37). This was a standing and set stretching new targets for
item on the Risk Committee agenda 2030 (p31). See our Sustainability
• Planned to reinvest in over 100 Report for more details
new roles to support growing
markets (p16)
Link to our strategy (p20) Risk movement Link to our business model (p12)
Growth: consistent top and bottom line growth Risk increase E Engage
Innovation: increase the proportion of NPP that we sell = No change C Create
Sustainability: align our business with our Purpose and Risk decrease M Make
accelerate our customers’ transition to sustainable ingredients
V Included in viability statement S Sell

Risk Management continued
Business systems Long-term viability statement

External environment and security Financial
Strategic Report
Viability statement • the business model (p12) and the Company’s diversified
Key risk
9. Chemical regulatory 10. Ethics and 11. Security 12. Ineffective portfolio of products, operations and customers, which
Based on their assessment of prospects and viability,
compliance and product compliance of business information management reduce exposure to specific geographies and markets,
the Directors confirm that they have an expectation that
stewardship Tom Brophy and networks of pension fund as well as large customer/product combinations;
the Company will be able to continue in operation and meet
Stuart Arnott Executive owner Jez Maiden Jez Maiden its liabilities as they fall due over the next three years to • the Company’s strong cash generation and its ability to renew
Executive owner Executive owner Executive owner 31 December 2022 in line with the Company’s financial and raise debt facilities in most market conditions (p35); and
and strategic time planning horizons. • the strong innovation pipeline (p22 to p27), which supports
= = V V = the Company’s business through development of new
C M S E C M S E C M S Assessment of prospects sales growth opportunities, protects sales and margins,
In assessing the prospects of the Company and determining the differentiates the Company from competitors and provides
appropriate viability period, the Board has taken account of: barriers to entry. The Board reviews this over a period of
longer than three years in line with longer development cycles
Why this matters to us • the financial and strategic planning cycle, which covers a for new products. However, the Board considers that, in
As a global chemical manufacturer, We are subject to UK legislation which We rely heavily on the availability of IT We maintain an open defined benefit three-year period. The strategic planning process is led by assessing the viability of the Company, its investment and
we operate in highly regulated markets, is far-reaching in terms of global scopenetworks and systems; an extended pension scheme in the UK, which the Group Chief Executive and fully reviewed by the Board; planning horizon of three years, supported by detailed
which are subject to regular change. and often more rigorous than local interruption of these services may result faces similar risks to other defined financial modelling, is the appropriate period.
Violation, incomplete knowledge or legislation (for example the Bribery Act).
in an inability to operate. Society and benefit schemes such as future • the investment planning cycle, which covers three years. The
change of the appropriate regulations business are subject to more numerous investment returns, longer life Executive Committee considers, and the Board reviews, likely
could limit the markets into which we Our increased presence in emerging and increasingly sophisticated threats expectancy and regulatory
economies and the increasingly customer demand and manufacturing capacity for each of its
can sell or expose the Business to to security, including hackers, viruses changes that could result in
fines or penalties. In addition, product frequent introduction of new regulation and ransomware attacks that could pension schemes becoming key technologies. The three-year period reflects the typical
stewardship principles are increasingly give rise to an elevated compliance and compromise access. In addition, more of a financial burden. maximum lead time involved in developing new capacity;
becoming enshrined within both reputational risk. regulatory responsibilities relating
chemical and end use legislation. to data privacy and protection
are becoming more stringent Assessment of viability
globally, including General
Data Protection Regulation (GDPR). Viability has been assessed by considering the ‘top-down headroom’ available in terms of the overall funding capacity to withstand
events, together with the ‘bottom-up headroom’ assessing the potential financial impact of events reflecting the Company’s principal
How we respond risks, both individually and in combination. Top-down headroom is considered to be more than adequate, and the results of the
Global regulatory expertise is provided Our Group Ethics Committee (p70) We run our key applications in The Group maintains close dialogue
bottom-up scenario modelling showed that no individual event or plausible combination of events would have a financial impact
by our in-house team of specialists meets quarterly to consider new distributed computing environments with the UK Pension Trustee,
(PSRA), who have in-depth knowledge legislator requirements and to promote with regular failover testing. In line with and the move to a career average sufficient to endanger the viability of the Company in the period assessed. It would, therefore, be likely that the Company would
of the regional and market regulatory the importance of ethics and our established global policies, our capped salary basis of calculation be able to withstand the impact of such scenarios occurring over the assessment period.
frameworks within which we operate. compliance across our business information security specialists monitor in 2016 mitigated some of the risks.
They work proactively to influence and those third parties we choose to our IT services and networks, oversee The pension fund investment
regulation and they are an integral work with. Compliance training and computer and mobile device protection strategy (including a triennial
part of our new product development education programmes are rolled out and provide cyber awareness valuation review) is delivered with Top-down headroom Bottom-up headroom
process. We use the SAP EHS module globally, with results monitored by education globally. Regular penetration the support of professional advisers,
to ensure that regulatory changes are the Committee. testing is undertaken and we have and trained pension fund Trustee Bank leverage The ratio of net debt to Each of the key risks identified on pages 40 to 42 has been assessed for its
applied to existing products. externally audited ISO 27001 Directors take professional advice covenant EBITDA at the end of 2019 potential financial impact as part of the viability assessment. Of these, the
certification for key systems and and monitor and review
Our global product advisory teams locations, whilst internal and external arrangements quarterly. of 1.4x remains substantially most severe but plausible scenarios (or combinations thereof) were identified
(PAD) work closely with customers to auditors review and report on below the maximum as follows:
identify the most appropriate product the operation of all cyber and
selection for their needs.
covenant level under the
system controls annually.
Group’s lending facilities of Scenario modelled Link to key risks
What we have done in 2019 3.5x, providing significant
Business loss due to regional geopolitical 1. Revenue generation
headroom. EBIT would need
• Influenced discussion regarding the • Successfully rolled out Phase 2 of • Internal audit risk assurance • Monitored continued fully funded or economic events – adverse Brexit impact. in established and
impact of Brexit on the UK chemical our data privacy programme, which review of cyber risks status of the largest pension plan to fall by more than 72%
emerging markets (p40)
regulatory environment extended the scope of data privacy • Trained Audit Committee in (the UK Croda Pension Scheme). before triggering an event
• Set stretching new 2030 targets to reporting requirements globally cyber risks (p67) No deficit funding payments were of default. Action could also New entrants or enhanced competition 1. Revenue generation
conduct full life cycle assessments (based on GDPR) • Internal audit review of site resilience required (p37)
for our top 100 ingredients (p31). • Completed 2 year roll out of
be taken to conserve cash. in our market space. in established and
preparedness in the event of
See our Sustainability Report for our Ethics refresh programme, prolonged SAP downtime emerging markets (p40)
more details monitored by the Ethics Committee • Completed regular external
Debt The current level of
• Completed a post implementation penetration testing programme headroom committed debt facilities of Disruptive technology – the impact of substitute 2. Product and
internal audit of the adoption of new £1,059m would support a chemical or process technologies affecting current technology innovation
ethics compliance processes into
gross leverage of circa 2x sales as modelled, together with the impact of new and protection (p40)
business as usual, sharing the report
with the Audit Committee and significant additional digital technology affecting our historical routes
• Established monitoring KPIs for credit is likely to be available to market. 3. Digital technology
the Ethics programme to the Group up to circa 3x innovation (p40)
leverage. Refinancing of the
Uninsured catastrophic loss of a manufacturing 7. Major safety or
Group’s credit facilities in
site – the impact of losing the contribution from environmental
2019 (p138) means renewal
the single largest site was considered assuming incident (p41)
will fall at the earliest in
no insurance cover. However, for most loss events,
2024, outside the
we carry insurance cover.
viability period.
Significant compliance breach – the financial impact 10. Ethics and
of regulatory fines was considered along with the compliance (p42)
associated reputational damage.
Significant cyber-attack results in loss of IT systems 11. Security of business

(particularly SAP) for a prolonged period. information and
networks (p42)

Corporate Governance
Chair’s letter
Building on our Purpose, the Board reviewed and developed In December 2019 we announced that John Ramsay would
our long-term strategy through to 2030, and you can read join the Board as a Non-Executive Director with effect from Case study:
Directors’ Report
more about how the Board approached this on page 45. I am 1 January 2020. This allows a good period to complete key
confident that the 2030 strategy will enable the business to induction activities and spend time with Alan Ferguson before Bringing our Purpose to life
continue to deliver value for our shareholders. Our strong his retirement in April 2020, at which point John Ramsay will The Board and Executive Committee worked together
commitment to sustainability is embedded into this strategy become Audit Committee Chair. John brings with him a wealth to define and develop three core elements of who we are,
and our Purpose, Smart Science to Improve LivesTM. of financial, international and sector experience and we are how we operate and our future ambition, each one centred
delighted to welcome him to the Board. on a different aspect of what makes our business special.
Culture and values
On the recommendation of the Nomination Committee, the • Our Purpose sets the tone and direction for the
The Board has a vital role to play in promoting and nurturing a business, offering the opportunity to unite ideas,
Board agreed to extend Helena Ganczakowski’s appointment
culture and behaviours that are consistent with delivering our behaviours and practices.
for a further year. This annual extension is in line with our policy
strategy and ensuring the success of Croda in the long term.
to review appointments annually once six years’ tenure has • Our Commitment is setting the stretching, long-term
Following on from the in-depth work on creating ‘Our Purpose’
been completed. Helena has made a significant contribution to goals to ensure we are leading positive change for the
in 2018, we have begun to implement and embed it across the
the Board as Remuneration Committee Chair and she will take environment and society and addressing the challenges
Group. Further detail on how the Board have engaged in this
over from Alan as Senior Independent Director on his retirement. facing the world today.
work is outlined on page 45.
• Our Difference is aligning our culture and behaviours to
A vital focus for us as a Board is ensuring the health and safety Diversity and succession planning truly reflect our Purpose in everything we do.
“I am confident that the of all our employees, suppliers, communities and visitors and it Diversity has continued to be a key item on our agenda during
Our Purpose was shaped directly in partnership with our
2030 strategy will enable the is the first operational matter discussed at each Board meeting. 2019. We consider that diversity on the Board and throughout
employees, with support from the Executive Committee
the Company has a positive effect on the quality of decision
business to continue to deliver Our culture is a key strength of our business and we see the making and is a key factor in the Company’s strategic and and guidance from the Board. We launched a global
value for our stakeholders.” benefits of this in our employee engagement and retention. financial success. I am pleased to confirm we have in excess of competition amongst our employees to create a statement
that described the reason for the organisation’s being. The
One way that the Board monitors and assesses the culture 30% of women on the Board and in November we appointed
Anita Frew of the Group is by spending a considerable amount of time another woman, Tracy Sheedy, Group HR Director, to our winner of the competition was “Smart Science to Improve
Chair meeting with employees and visiting our offices and Executive Committee. Lives™”. The Board and the Executive Committee
manufacturing sites around the world. considered that this encapsulated how we have always
We have continued our focus on succession planning to combined our knowledge, passion and entrepreneurial
The Board actively seeks opportunities outside the boardroom ensure that we have a healthy talent pipeline for future Executive spirit to create a positive difference to the environment and
Dear fellow shareholder
to understand what is happening across the organisation and Committee and Board roles. We have a range of activities aimed to society. The Board worked closely with the Executive
Good governance is at the heart of everything we do. Our
this engagement, particularly by the Non-Executive Directors, at improving diversity in leadership including a mentoring Committee to use our Purpose to set our Commitment –
governance framework and our strong focus on ethics underpins
provides our Board with deeper insights into particular areas programme with Board and Executive Committee members an ambition that builds on our heritage of sustainability,
the Board’s commitment to the highest standards of corporate
as well as supporting the Executive management. On pages for high potential candidates. This work is described in more to become Climate, Land and People Positive by 2030.
governance and sets the tone for the rest of the organisation.
53 and 55 we set out details of the Board’s programme of detail in the on page 63. Part of this process involved working closely with the
The Board is accountable to Croda’s shareholders for activities outside the boardroom and our engagement Cambridge Institute for Sustainability Leadership to review
good governance and this report, together with the Directors’ with our employees. We have made good progress, but there remains more work the SDGs and identify the impact Croda has on those
Remuneration Report, set out on pages 71 to 97, describe how to be done to improve diversity and develop our management goals. Our Difference shaped our culture and behaviours
As a Board we reviewed our engagement with key population. We are committed to this and to continuing to bringing them to life by three guiding values of Together,
the 2018 UK Corporate Governance Code (the Code) principles
stakeholders to ensure we have appropriate mechanisms in develop our talent at all levels to create our leaders of the future. Responsible and Innovative.
have been applied by the Company. I am pleased to report that
place to understand their views and take them into account in
the Company has complied with the Code for the period under
our discussions and decision making. The Directors’ duties Throughout 2019 the Board has overseen internal
review. Effectiveness
under s172 of the Companies Act 2006 underpin the good engagement and motivation around our Purpose. A cross-
It is an important requirement of good governance that an
governance which is at the centre of our decision making. functional team of employees was formed to engage all
annual evaluation is carried out to ensure we continue to
Page 55 describes how the Board engages with each of our employees and facilitate the embedding of our Purpose,
operate and perform effectively. The Board and Committee
key stakeholders and gives some examples of how we have our Commitment and our Difference.
review for 2019 was conducted using an online questionnaire,
The Company’s disclosures on its application of the considered them in some of the Board’s decisions made
designed by Lintstock, with input from me and the Company The Board approved an implementation plan focused on
main principles of the Code can be found as follows. during the year.
Secretary. The next evaluation toward the end of 2020 will be engaging, empowering and exciting all employees. This
Board leadership and Company Purpose An extensive consultation with shareholders was undertaken externally facilitated. The evaluation was very positive and good started with engaging senior leaders to align and focus our
to revise our Remuneration Policy and details of our new Policy progress had been made with implementing the outcomes from activities, but also thinking about the longer-term change
Chair’s letter 44
are in the Remuneration Report. Details of how we have the 2018 evaluation in relation to the focus on allowing more management required to ensure that our Purpose truly
Our leadership team 46 time for strategic discussions and the continuing focus on
complied with the provisions of the Code are in the Corporate guides and shapes our decisions. The plan used a
At a glance 48 succession planning. Further details on the evaluation
Governance Report on pages 44 to 97. multi-channel communications approach, ensuring that
Board activities 52 is on page 60. messages are shared with the organisation, whilst building
Engagement with stakeholders 54 in mechanisms for employees to get involved directly.
Leadership
Division of responsibilities
We regularly assess the skills and experiences of the Board Annual General Meeting This included an internal social media initiative, using
Board roles 58 There is the opportunity for all shareholders to attend the crowd-sourced videos, where employees were
to ensure that we have the right balance and composition.
Governance structure 59 Annual General Meeting on 23 April 2020 and meet the Board, encouraged to put into their own words what
Composition, succession and evaluation Steve Williams retired at the 2019 Annual General Meeting Chairs of the Board Committees and members of senior Smart Science to Improve LivesTM means to them.
Board performance 60 having made an outstanding contribution to Croda. Alan management. I would be delighted to answer any questions
Ferguson has announced his intention to retire at the Annual that shareholders may have. The Board has been consulted at each stage of the
Nomination Committee Report 61 Purpose journey, reviewing and contributing to the plan
Audit, risk and internal control 64 General Meeting in April 2020 having served nine years as a
Director. This is in line with the Board’s succession plan and and associated activities. The Board has ensured that
Audit Committee 65 the plan is being delivered, alongside reviewing the
we commenced a search for a suitable replacement and
Other Committees 70 consideration of his successor as Audit Committee Chair organisation’s receptivity to change.
Remuneration 71 early in the year. Full details of the process that the Board
Directors report 98 undertook is outlined in the report of the Nomination Anita Frew
Committee on page 62. Chair

Corporate Governance
Key
Our leadership team Chair of the Committee

Member of the Committee

Risk Management Committee
Group Executive Committee
R
E
Directors’ Report
Secretary of the Committee Group Ethics Committee ET
Nomination Committee N Group Finance Committee F
Remuneration Committee RM Group SHEQ Committee SHEQ
Audit Committee A
N E F SHEQ R E F A RM N RM A N A RM N A RM N N A RM N ET A RM N R E
Anita Frew, 62 Steve Foots, 51 Jez Maiden, 58 Alan Ferguson, 62 Helena Roberto Cirillo, 48 Jacqui Ferguson, 49 Keith Layden, 60 John Ramsay, 62 Tom Brophy, 46
Chair Group Chief Executive Group Finance Director Non-Executive Director Ganczakowski, 57 Non-Executive Non-Executive Non-Executive Non-Executive Group General Counsel,
(Senior Independent Non-Executive Director Director Director Director Director Company Secretary
Appointment: March Appointment: July Appointment: January Director) and MD Western
2015 and Chair since 2010 and Group Chief 2015 as Group Finance Appointment: February Appointment: Appointment: Appointment: Appointment: Europe
September 2015 Executive since the Director Appointment: July 2014 April 2018 September 2018 February 2012 and January 2020
beginning of 2012 2011 Non-Executive Director Appointment:
“I have served on Plc “I am an experienced “With 23 years of “With ten years’ “I am an experienced since May 2017 “I am extremely pleased December 2012 as
boards in the chemical, “Joining Croda as a Group Finance Director, “As a CFO, Non- experience in marketing experience as Country CEO from the to have been invited to Board Secretary
resources, engineering, graduate trainee in having served in this Executive and Audit and corporate strategy and Group CEO in the technology industry “I bring to the Board join the Board. I have
water and financial 1990, I bring to the role on five UK listed Committee Chair, I have at Unilever and a further Service and Health with general 33 years’ experience over 30 years’ broad “I am an experienced
services industries Board a business, company Boards. As a worked for a number eight as a strategic Care industries, and management and of working at Croda in based international corporate lawyer,
for over 20 years. Prior strategic and chartered management of large international consultant for other many years spent as a M&A experience in a variety of positions, finance background having worked at City
to joining Croda I was operational background accountant, my businesses including multinational strategy practitioner in international and most recently leading with Life Science law firm Hogan Lovells
Chair of Victrex Plc and gained from a number expertise in all aspects Inchcape, BOC, businesses, I aim to Europe and Asia, I bring emerging markets. the Global Research, businesses of ICI, and FTSE 100 company
Senior Independent of senior leadership of finance management, Johnson Matthey and bring marketing skill to the boardroom I have first-hand insight Development and AstraZeneca and Ferguson. My expertise
Director of Aberdeen roles across the Group. gained in speciality The Weir Group. This and an end-consumer my knowledge and of transformational/ Innovation function and Syngenta. A large part of public and private
Asset Management Plc Having spent several chemical, FMCG and breadth of experience perspective to the passion in growth and disruptive digital, cyber President of the Global of this experience was acquisitions supports
and IMI plc. During years leading many other manufacturing has given me exposure boardroom, as well as operations. I also share security, technology Life Sciences business. gained while working in Croda’s inorganic
my time as a director different Croda environments, allows to diverse end markets, challenge and support lessons-learned from and business process I also have an interest Latin American and growth plans and
I chaired main Boards, businesses, I also have me to support the many of which Croda to the CEO in strategy large transformations solutions. I spent three and background in Asian countries. I am my professional
Remuneration, great insight into the Board and Executive serves, and deep development. My and M&A. My years in Silicon Valley organisational culture, looking forward to using background and
Responsible Business markets we serve, the of Croda in managing international financial academic roots in engineering background as Chief of Staff at which is a key this experience to help breadth of experience
and Risk Committees. importance of customer the performance of experience. I have also engineering, with a enables me to link Hewlett Packard, consideration in the Croda develop and in insurance, risk and
Currently, I am also focus and the power of the business, risk seen what good looks PhD from Cambridge Croda’s R&D and focused on a new decision making of the execute its business compliance enable
Deputy Chair of Lloyds our innovative culture. management and like in areas such as University, drive my production company strategy Board. In my roles of strategy. I have a strong me to Chair the Ethics
Banking Group plc Outside of Croda, control, and in capital leadership, compliance passion and curiosity competences with the and turnaround. I also Honorary Professor of interest in the impact Committee. I provide
and a Non-Executive my role as Industry allocation and and health and safety. for both product and evolving demands of its chaired the public Chemistry and Industry of leadership and corporate governance
Director of BHP Plc and co-Chair of the UK investment evaluation. I share Croda’s passion process innovation. multinational markets. services strategy board at the University of company culture and knowhow to the Board
BHP Limited. I therefore Chemistry Council I act as business for sustainability and I am also a Non- Next to my role as for the CBI. Away from Nottingham, member am particularly keen to and Croda. Having
bring to the Croda enables me to work partner to the Group working hard whilst Executive Director Non-Executive Director Croda, I am a Non- of Council at the help Croda leverage its spent many years
Board extensive alongside government Chief Executive and having fun. I feel a deep of Greggs Plc.” for Croda, from April Executive Director of University of Sheffield strong culture to deliver leading global teams,
experience as Chair and ministers and industry lead the finance team responsibility to serve 2019 I became CEO John Wood Group Plc and a Fellow of the superior business I am proud to lead the
leadership in strategic peers to bring wider globally. Outside of Croda’s shareholders of Swiss Post. I was and Tesco Bank, a Royal Society of performance. In taking Legal and Company
management, mergers industry knowledge Croda I am a Non- well.” previously the Group fellow of the IET, a Chemistry, I widen my over, later this year, Secretary team. More
and acquisitions and into our business.” Executive Director CEO at Optegra Eye Trustee of Engineering network of emerging the Chair of the Audit recently I have also
risk experience from and Audit and Risk Health Care Ltd, France UK, a member of the technology companies Committee, I hope taken on a commercial
working internationally Committee Chair of CEO and Group COO Scottish First Ministers and research institutes to maintain the high role with Croda as
across many sectors.” PZ Cussons Plc.” at Sodexo SA and Advisory Board and a and spot new talent that standards and Managing Director
Associate Partner at member of the Advisory will aid Croda’s future respected style set by of our Western
McKinsey & Co.” Board of Engie UK.” success.” my predecessor Alan European Region.”
Ferguson. I am also
a Director and Audit
Committee Chair at
Board and Committee Changes Koninklijke DSM NV,
Steve Williams stood down on 24 April 2019. His biography is set out in the 2018 Annual Report and Accounts. RHI Magnesita NV
John Ramsay was appointed to the Board and Committees on 1 January 2020. and G4S PLC.”

Corporate Governance: At a glance
Board diversity, composition and activity
Directors’ Report
Gender of the Board Tenure of Directors Board activity in 2019
2 Financial, risk
and performance
>6 years management
Female 25% Progress on focus areas for 2019
33% 4
0-3 years
Strategy Key actions What we did Status
Governnce 50%
Male and reporting Focus on safety leadership • Safety leadership considerations were integral to the development of the Completed
67% 10% 2030 strategy
3 • Received updates on developments in safety leadership across the business
3-6 years People • Undertook training on process safety principles
15%
Nurture and promote • Worked with the Executive Committee to set the tone and direction for the next Completed
the Croda values stage of the work on the Group’s Purpose
• Considered how to build internal engagement and motivation around our
Board changes during the year Purpose. See case study on page 45
Steve Williams retired on 24 April 2019. John Ramsay was appointed on 1 January 2020. • Supported the development of the three guiding values of ‘Together’,
‘Responsible’ and ‘Innovative’
Consider insights and • Received detailed reports on markets and trends as part of the development of Completed
Board skills and experience (p46 and 47) longer-term trends from the 2030 strategy
our customers and • Received regular reports from the CEO on customer trends and external
Areas of opportunity for future external markets markets and quarterly reports on each market sector from the Sector Presidents
Current skills Board appointments • Visited sites in US, UK, Europe and Asia
Ensure sustainability and • These factors were considered in depth as part of the 2030 strategy Completed
digital become integral development work
Sector Operational Financial Strategy Emerging markets components of our • Sustainability is our key commitment and at the core of our 2030 strategy
long-term strategy • Developed non-financial KPIs for sustainability
development • Building digital competence is a core enabler to the 2030 strategy
Risk Innovation Technical Marketing Sustainability
Looking ahead to 2020

General Health Digital marketing Meetings
Digital International
management & safety Membership of the Board and attendance (eligibility) at Board meetings held
Ensure safety leadership continues to be
prioritised and performance monitored during the year ended 31 December 2019.
Oversee the embedding of our Anita Frew (Chair) 6 (6)

Professional backgrounds: sales, banking, legal, accountancy,
sustainability commitment to be Climate, Roberto Cirillo 6 (6)
marketing, general management, digital, R&D.
Land and People Positive by 2030 Alan Ferguson 6 (6)
Nationalities: British and Swiss Jacqui Ferguson 6 (6)
Focus on the balance between organic/ Steve Foots 6 (6)
inorganic growth and the short
Helena Ganczakowski 6 (6)
term/2030 strategic plans
Key stakeholders (p54) Keith Layden 6 (6)
Continue to support and challenge Jez Maiden 6 (6)
Employees Shareholders Customers Local Communities Suppliers management in the delivery of the 2030 Steve Williams* 2 (2)
strategy, with a focus on organisational
structure and capability ** Steve Williams retired from the Board on 24 April 2019.

Corporate Governance continued
Board leadership and company Purpose

Board leadership With support from the Company Secretary, the Chair sets the 2030 – The next chapter
Directors’ Report
of growth
At the date of this report, the Board comprises nine Directors: annual Board agenda programme and Board meeting agendas
the Chair; the Group Chief Executive; the Group Finance and determines the number of meetings to be held during the
Director; five independent Non-Executive Directors and year. She ensures enough time is devoted, during meetings and
one non-independent Non-Executive Director, who was the throughout the year, to discuss all material matters, including
Company’s Chief Technology Officer until his retirement in 2017. strategic, financial, operational, business, risk, human resources
The size of our Board allows time for full discussion and debate and governance issues.
of items and enables all Directors’ views to be heard. The
Non-Executive Directors have a broad range of business, All members of the Board have clearly defined roles and further
financial and international skills and experience, which provide information on Board roles and responsibilities is on page 58.
appropriate balance and diversity. The composition of the Board At the start of the year, the Board and the executive team
The Board agenda is structured to ensure a balance is
is subject to ongoing review and a key consideration for any
new Board appointment will be the additional breadth a new
maintained between reporting, approvals and governance completed the engagement with our employees to define 2019 Calendar
matters, whilst also ensuring a significant proportion of each the Purpose of Croda. Smart Science to Improve LivesTM
Director could bring, including in terms of skills, knowledge, encapsulates how we combine our knowledge passion and March
meeting is devoted to strategic topics. Presentations from
experience, gender and ethnicity. entrepreneurial spirit to create a positive difference to the
non-Board members and more informal opportunities to The Board and Executive signed off on the questions
meet a wider range of employees are also incorporated. environment and to society. Further information on this is and challenges.
Information on the process undertaken to appoint John Ramsay
included on page 45.
to the Board is outlined in the Nomination Committee report on
page 62. Having defined our Purpose, the Board, working with the
March to May
executive team, agreed a number of strategic questions to The Executive management developed their findings
Directors’ biographical notes appear on pages 46 and 47 and and challenged the thinking.
set the foundation for the creation of a new strategic ambition
at www.croda.com.
and strategic priorities. This exercise considered amongst other
things the macro trends that would shape the markets and June
Role and operation of the Board the megatrends in each of the sectors. Trends in consumer Strategy Day: Board and Executive management
behaviour and how we could further leverage our strengths were discussed and debated findings.
The Board has ultimate responsibility for the overall leadership agreed goals and objectives and challenges the executive
analysed, as well as to identify new opportunities. Our people
of the Group. In this role, it oversees the development and team. The Board ensures that appropriate controls and
and their development were a key focus throughout, recognising September/October
delivery of a clear Group strategy ensuring the long-term systems exist to manage risk and that there are the necessary
the importance of ensuring that our culture remained aligned Draft 2030 plan including next 3 year financial
sustainable success of the Company for all stakeholders. financial resources and people with the necessary skills to
with the core strategic ambitions. Sustainability and innovation forecast developed.
It monitors operational and financial performance against achieve the strategic goals the Board has set.
were the two core platforms that underpinned all the
discussions on shaping the future.
Matters reserved for the Board November
The matters reserved for the Board fall into four broad areas Throughout 2019 this work was designed to shape our long lens Strategy update: further challenge and sign off by
strategy for the next decade of growth and beyond. The Board the Board.
1 Matters required by law to be reserved for the Board’s decision, such as approving the Annual Report and Accounts,
appointing new Directors and declaring dividends.
challenged the outcomes throughout the process at separate
strategy sessions and in the Board meetings. The final strategy
was approved by the Board and has shaped the programme
2 The requirements of the UK Listing, Prospectus and Disclosure and Transparency Rules, such as approving circulars
to shareholders and other significant communications.
of business for the Board for 2020.
3 UK Corporate Governance Code recommendations, such as ensuring the Group has a sound system of internal
control and risk management, and approving the Board and Committees’ terms of reference.
Smart Science to Improve LivesTM Our purpose
4 Other matters, such as approval of the Group’s strategy and budget, material corporate transactions and
capital expenditure.
For full schedule of matters reserved for the Board visit www.croda.com.
Beauty and Health and Feeding world
Sustainability Our megatrends
ageing wellbeing population
Conflicts of interest
The Board has an established process for declaring and Directors ranges between a year and a half and almost nine years
monitoring actual and potential conflicts. The Articles of at the year end. Keith Layden served just over five years as an
Association of the Company allow the non-conflicted members Executive Director, prior to his appointment as a Non-Executive
of the Board to authorise a conflict or potential conflict situation. Director on 1 May 2017. Details of changes to the Board since the
Performance
Jez Maiden has a Non-Executive Director role on the board of year end are outlined on page 61. Personal Care Life Sciences
PZ Cussons Plc, a customer of Croda. The Board does not
Technologies Our strategy
consider that this role would affect Jez’s judgement in The terms and conditions of appointment of Non-Executive Strengthen to grow Expand to grow
Refine to grow
relation to Croda and its business. Directors can be viewed at www.croda.com. They can be
inspected during normal business hours at the Company’s
Details of the professional commitments of the Chair and the registered office by contacting the Company Secretary and
Non-Executive Directors are included in their biographies on will also be available for inspection at the AGM.
pages 46 and 47. The Board is satisfied that these do not Deliver world
Become Build strong More Increased
interfere or conflict with the performance of their duties External consultants class
employer of digital responsive dynamic Our enablers
for the Company.
In the period Deloitte have provided remuneration consultancy
customer
choice competence operations innovation
to the Remuneration Committee. experience
During 2019, Steve Williams retired from the Board having served
nine years. Tenure of the remaining independent Non-Executive

Board activity in 2019
Directors’ Report
There were six meetings of the Board during the year in line with the agreed programme of business. The Board agenda programme
ensures strategic, operational, financial, human resources and corporate governance items are discussed at the appropriate time
at Board meetings. The Board agenda has strong links to the strategic objectives for the Business and is set via a collaborative
process between the Chair, Group Chief Executive and Company Secretary. This ensures adequate time is allocated to allow
effective discussion. An additional strategy day, attended by members of the Executive Committee, is held during the year.
The strategy day is held in the first half of the year, followed by the consideration of the three-year plan in the autumn and
then the approval of the budget towards the end of the year.
Key highlights of the Board’s 2019 activities and priorities are set out below, along with an estimate of the proportion of the time that
the Board spent discussing each area.
Strategy (50%) Governance and reporting (10%)

• Group strategic ambition and priorities • Review of Annual Report and Accounts and other
• Sustainability strategy and targets financial statements
• Safety, health, environment and quality – including • Review of revised Remuneration Policy
behavioural safety, safety leadership and process safety • Board and Committee effectiveness evaluation
• Market opportunities for growth • Capital markets update
• Product innovation programmes and technology platforms • Investor relations review
• Consideration of various acquisition opportunities • Stakeholders and review of engagement mechanisms
• Digital strategy – including projects for digital marketing • Ethical compliance programme
and e-commerce platforms • Group litigation report
• Product manufacturing strategies • Group insurance programme
• Capital expenditure approvals
• Business presentations from all sector Presidents Financial, risk and performance
• New and Protected Products pipeline management (25%) Board Visit
• Innovation and Research and Development metrics • Trading performance The Board undertook a number of site visits in September 2019 between them across the North American business.
• Review of Sustainability Report • Review of key risks, internal and external assurance of These included Salinas, Mill Hall and Atlas Point as well as undertaking discussions with customers. Sectors covered
• Senior management succession each risk as well as risk appetite included Personal Care, Performance Technologies and Life Sciences. The Board received briefings on Health and Safety
• Responsible business activities • Preparations for Brexit, including the key risks and and key risks at each site before the visit and received presentations from the local management as well as meeting a wide
mitigating actions range of employees.
People (15%) • Dividend policy and dividend approvals
• Croda’s purpose and developing a purpose led culture • Long term viability statement
• Succession planning • The Group’s budget, forecasts and key performance Outside the boardroom The Non-Executive Directors have direct access at any time
• Female talent review and mentoring scheme targets and indicators to the Executive Directors, senior management teams and
In addition to formal Board meetings, in September the Board
employees across the Group. This provides the opportunity to
• Leadership training and development • Changes to tax legislation and a review of the Company’s visited a number of sites across the North American business.
develop a deeper understanding of the Company’s operations
• Approval of the appointment of John Ramsay as a Director tax and treasury policies Several of the Directors met with customers, both large
or to request information about specific areas. These
• Extension of the term of office of Alan Ferguson • A post-implementation capital expenditure review multinational and smaller customers, giving them a good
relationships strengthen the ability of the Non-Executive
• Diversity – Board diversity policy, diversity and inclusion understanding of how we can help create value for them
Directors to constructively challenge at the Board meetings.
of our workforce and the gender pay gap reporting Standing Agenda Items and for Croda. Further details are on page 55.
• Health and safety of our employees and contractors • A Health and Safety and environmental update is the The Chair spends time interacting with the Chief Executive,
The Directors also undertook one or more additional site visits.
• All employee sharesave grants first operational matter considered by the Board at Group Finance Director, Company Secretary and the senior
These included UK sites and others in China, Italy, Brazil and
each meeting management team between Board meetings. This ensures that
• The Board’s engagement with employees and the the Netherlands. They included interaction with a wide range
• The Group Chief Executive and Group Finance she is kept appraised of significant developments and emerging
employee voice of employees across many functions including sales, finance,
Director present reports on trading matters and issues and opportunities. Before most meetings the Board
marketing, R&D and HR. The Directors also received business
financial performance spend time together, which allows views to be shared and
update presentations and met with customers where possible.
• The Group General Counsel and Company Secretary helps build relationships on a personal level. This contributes
These visits offer an additional opportunity to discuss areas
updates the Board on changes to relevant laws, to more effective meetings and decision making.
relevant to the Board and meet a wide range of managers
regulations and governance matters and employees. The Chair and Non-Executive Directors met without the
Executive Directors present to allow an additional opportunity
The Directors attended two off-site meetings to review the
to discuss areas relevant to the operation of the Board.
Group’s strategy, one focusing on the long-term strategy
The Non-Executive Directors also met on their own,
and the other the three-year financial forecast.
without the Chair.

Engagement with our
Directors’ Report
stakeholders How does the Board hear the stakeholder voice?
Throughout this Annual Report, we provide examples of how we engage with our stakeholders.
Stakeholder engagement
The Directors understand their responsibility to The Board has undertaken a key stakeholder review.
promote the success of the business in accordance The Board considers that its key stakeholders are
Employees The Board recognises that the engagement of our people underpins the Work is underway to enhance these further by improving the flow
delivery of the Company’s strategy. The Board has direct engagement of information up from site level to the Board and vice versa. To aid
with section 172 of the Companies Act 2006 our employees, customers, shareholders, suppliers during site visits, Board presentations, Board dinners and informal this we will be increasing the number of global pulse surveys (these
(Section 172). and local communities. The Board reviewed how the lunches; these events allow the Board to meet a broad spectrum of are translated into 16 different languages) and also formalising the
Directors and the Company engaged with these key employees from differing departments including sales & marketing, R&D, opportunities for elected employee representatives to give and receive
Effective engagement with stakeholders at Board stakeholders and refined its engagement strategy in SHEQ, HR, finance, operations and customer services. Engagement with direct feedback to and from the Board. In addition, we will be creating
level and throughout the business is essential to employees also takes place through works councils, consultation dedicated email addresses that colleagues can use to ask direct
certain areas to ensure it continued to have a good committees, listening groups, pulse surveys and town halls. questions to the Board or Executive Committee about any item of
enable us to meet our Purpose, and the Board is understanding of their views and interests. In interest or concern resulting from the annual report, for example
aware that actions and decisions taken by the undertaking this review, the Board agreed which The Board receives a quarterly update of the ‘People Dashboard’ which strategy or remuneration.
Company can impact our stakeholders and the stakeholders they need to engage with directly includes information about training and development, diversity and the
communities in which we operate. results of exit interviews and pulse surveys conducted in the quarter. Information on these mechanisms in relation to remuneration is on
and where they could rely on information from The Board also supports the opportunity for all employees to join the page 83 of the Remuneration Committee report.
management. The majority of our engagement with Sharesave scheme and become shareholders.
In January the Company Secretary presented key stakeholders is carried out by our commercial Information on the Board interaction with employees outside the
refresher training on the scope and application of and functional business teams. The Board engages The Board continued to enhance its methods of engagement with the Boardroom is given on page 53. The informal interaction with
the obligations under Section 172. Training was also workforce during the year. Following assessment by the Board of the employees provides useful insight into employee views.
directly with shareholders, employees and guidance in the 2018 UK Corporate Governance Code in relation to
provided for those responsible for drafting Board customers but not directly with suppliers or workforce engagement, it was decided to leverage the existing and
papers and giving presentations to ensure they local communities. Overall the Board has comprehensive mechanisms that are in place to engage with our employees.
understood stakeholder considerations and that they good mechanisms in place for engaging
were identified where appropriate in Board papers. with all key stakeholders. Shareholders Board engagement with shareholders is primarily through the Group During the course of 2019, the Remuneration Committee spent time
The Chair and Company Secretary provide support Chief Executive and Group Finance Director. They meet regularly with consulting with shareholders on the revised Remuneration Policy.
and guidance at Board meetings to ensure sufficient On pages 14 and 15 of our Strategic Report, the Company’s institutional shareholders to discuss strategic issues
and present the Company’s results. Shareholder feedback is discussed The Chair, Chair of the Audit Committee and Senior Independent Director
consideration is given in Board discussions to the we set out our principal stakeholders and how and Chair of the Remuneration Committee attended a governance lunch
impact of Board decisions on stakeholder groups with the brokers and a programme of institutional visits is undertaken.
we engage with them. All the Directors attend the AGM. with a number of shareholders in June 2019.
and these are documented where appropriate. The
relevance of each stakeholder group may change To read about how the Board engages with shareholders, see pages
14 and 15 of the strategic report and page 56 of the governance report.
depending on the issue under discussion, so the
Board seeks to understand the needs and priorities
of the relevant stakeholders throughout the
decision process. Customers The Board engages with customers through the Group Chief Executive The Board met customers whenever possible when undertaking site visits.
and receives regular information about customers in the Group Chief A number of customer visits were incorporated into the Board’s US visit
Executive’s Board report, in other business Board reports and at the in September 2019.
Strategy days. An exercise to map the mechanisms we have in place
for customer engagement was undertaken to gain a more in depth See pages 14 and 15 of the strategic report for information about
understanding of customer views and satisfaction. The Board our stakeholders.
Case study: receives information through Board reports.
Examples of how the Board considered the interest of its key stakeholders
when making decisions
Local Engagement takes place locally through our local offices and sites, See pages 14 and 15 of the strategic report for information about
including via the STEM and 1% Club programmes and community our stakeholders.
Communities consultation committees. The Board appreciates that nurturing links
with these communities contributes to the long-term success of those
businesses boosting local employment and business opportunities.
The Board approved the payment of a special In advance of the work commencing on the
dividend along with a share consolidation. As revised Remuneration Policy, the Board spent a
well as the interests of our shareholders, the day considering different models of remuneration
Board considered other stakeholders, including and how the Policy would incentivise the
employees, suppliers, customers and debt appropriate behaviours from employees and
providers and concluded that the payment of delivery of our business strategy. Compliance Suppliers We engage with our suppliers via our site and purchasing teams as well See pages 14 and 15 of the strategic report for information about
as through other functions such as SHEQ and legal. The Board receives our stakeholders.
the dividend did not have a detrimental effect on with governance and the shareholder environment information through Board reports. The Board recognises that these
these stakeholders. The interests of our pension were key factors that were taken into account. relationships can provide valuable insights and that they have a
trustees were also considered as the payment As the strategy developed the Board were kept responsibility in relation to the influence they can have on the
of a special dividend could have impacted the appraised, via the Remuneration Committee, wider supply chain.
financial covenant relied on by the trustees to of the views and outcomes of the extensive
support the continued funding position of the shareholder consultation that was undertaken.
pension schemes. Taking all factors into account,
the Board concluded that the payment would be
in the best interests of the Company to return
excess capital to the shareholders.

Communication with During the year, we met with almost

Common investor questions Our investor calendar
350 investors in the UK, North America, Governance lunch
shareholders Set out below is a calendar of our investor events attended by senior
Directors’ Report
1
Europe and Asia, including face-to-face In June the Company’s largest How does the Company manage its
The Chair, Executive Directors and other management in 2019.
and telephone meetings and hosted site shareholders were invited to attend
senior managers maintain regular contact
allocation of capital?
visits in several regions. We also held a lunch with the Chair, Anita Frew, With its strong return on invested capital, the Company
with existing and potential shareholders a capital markets seminar in London to Alan Ferguson (the Chair of the January • Close Period
seeks opportunities to expand capacity for existing
to ensure that our strategy and trading explain opportunities in the Life Sciences Audit Committee and Senior products and create capacity for new innovative products
trends are clearly understood. business which was attended by over Independent Director) and through its organic capital investment programme. It February • Full year results announced
80 investors and analysts. Helena Ganczakowski (Chair of also prioritises a regular ordinary dividend in line with • Roadshows in London
Our investor relations activity is led the Remuneration Committee). its dividend policy. Surplus capital is either invested in
by the Group Finance Director, with The Board receives updates on the inorganic expansion through acquisitions or returned to
other Directors involved as required. economic and investment environment, The lunch was attended by
shareholders, if that capital is seen to be surplus to our March • Roadshows in New York
medium-term requirements. Our Capital Allocation Policy
This includes managing the day-to-day Croda’s performance (generally and in representatives from eight • Conferences in London and New York
is set out on p36.
contact with the investment community, comparison, with its sector peers) and shareholders who between
2
including investors and analysts, as well investor reactions at Board meetings. them held 12.3% of the total Has the weaker sales performance in April • Annual General Meeting in Harrogate
as co-ordinating site visits, presentations issued shares in Croda at the time. 2019 changed the Company’s view of • Roadshows in Boston and Toronto
at investor conferences and roadshows. The Company’s results presentations are Discussions focused on a range
webcast live, so all shareholders have
its medium-term growth opportunities? • Investor site visits in the UK
of topics, including governance, Market conditions have been challenging in 2019 for sales
The Board engages in active dialogue access to them, and are also available remuneration, sustainability and growth in Personal Care and Performance Technologies.
with shareholders through the Group to download. We answer all investor succession planning. The Chair However, we do not see a change in our medium-term May • Roadshows in Chicago, Frankfurt and Edinburgh
Chief Executive, Group Finance questions sent to our website. reported back to the next Board expectations. We are well aligned to the megatrends that • Conferences in London and New York
Director, the Chair and the Chair of meeting, where it was agreed by will drive growth in our key markets, such as an ageing • Investor site visits in UK
the Remuneration Committee/Senior Set out on page 57 are answers to population, increasing wealth and sustainability. Our
the Board to host a similar event
Independent Director, who regularly the most commonly asked shareholder expectations are to organically grow Personal Care at low
in 2020. to mid single digit percentage, Life Sciences by mid to high June • Roadshows in London, Paris, Hong Kong
meet with shareholders. These meetings questions and a calendar of our investor
provide an appropriate means of events attended by senior management
single digit percentage and Performance Technologies at and Singapore
low single digit percentage. In addition, we are looking for
capturing shareholders’ opinions and the throughout the year. Substantial shareholders opportunities to invest through acquisition in all three
• Conferences in London and Paris
Chair ensures that the Board is regularly As at the date of this Annual Report and Core sectors. • Investor field trips in France
appraised of shareholders’ views and key
3
Accounts the Company had received
issues. All Non-Executive Directors are notification of the following material Do you see the Company’s industry July • Half-year results announced in London
available to attend meetings if requested shareholdings pursuant to the Disclosure leading margins as under threat? • Roadshow in London
by shareholders and the Senior and Transparency Rules of the UK We do not expect to see margin erosion. We are seeking
Independent Director is available to to maintain Personal Care at its industry-leading margins
Listing Authority:
discuss matters concerning the Chair whilst growing margin in Life Sciences to match this August – • Conferences in London
if the need arises; no such meetings Number of % of issued and improving in Performance Technologies to at September
shares capital least a 20% return on sales. This is helped by greater
were requested by shareholders innovation, bringing new products to customers, and the
during the year. Massachusetts October • Life Sciences Capital Markets Day
fragmentation of many of our markets – for example, in
Financial Personal Care there is growth in smaller, local and ‘Indie’ • Roadshows in US Mid-West, Oslo and Copenhagen
Services brand companies who need a broader service from Croda,
Company 13,056,804 10.14% • Investor site visit in Shanghai
giving them help to formulate their products and comply
Black Rock Inc 8,136,800 6.31% with regulations, in addition to wanting exciting
innovative ingredients. November • Conferences in London,
4
• Roadshows in Toronto and Singapore
What are the Company’s priorities in
Investor concentration respect of acquisition activity?
The Company looks to three areas of acquisition: nascent December • Conferences in London
3.35 2.71 3.55 technologies which bring advanced research pipelines • Investor site visits in UK
Private Other Asia to Croda to support our in-house innovation machine;
mid-scale/‘bolt on’ acquisitions, either in our existing or in
holders holders
adjacent markets with strong IP; large scale acquisitions,
which bring opportunities to deliver cost and innovation
Percentage of Geographical synergies. There are a very limited number of large-scale
Annual General Meeting Deadlines for exercising
issued capital breakdown opportunities, so our focus is primarily in technologies (AGM) voting rights
and mid-scale acquisitions. The AGM provides an opportunity Votes are exercisable at a General
by type of holder of shareholder 18.79 for private shareholders to raise Meeting of the Company in respect
5
base Continental How important is innovation to Croda
31.35 questions with Board members. of which the business being voted
Europe and why does R&D spend only account The Directors are also available to upon is being heard. Votes may be
North
America for around 3% of sales? answer questions afterwards, in an exercised in person, by proxy or,
Innovation is the lifeblood of the Company. We have a informal setting. The Annual Report in relation to corporate members,
relentless innovation machine, where about 80% of the and Accounts, including the notice by corporate representatives. The
effort is focused on customer-driven requests and 20% is of AGM, are sent to shareholders Company’s Articles of Association
trend-based, focusing on developing the next new ranges
of products where customer or consumer needs are not
at least 20 working days before provide a deadline for submission
yet being met. We supplement this with advanced research the meeting. There is a separate of proxy forms of not less than 48
93.94 46.31 acquisitions of nascent technologies which we can develop investor relations section on www. hours before the time appointed
Institutional UK and scale up. We also have a very successful Open croda.com that includes, amongst for the holding of a meeting or
holders Innovation programme, giving us access to over 500 other items, presentations made to adjourned meeting.
universities and SMEs. One of our key measures of analysts. This year, the AGM will be
successful innovation is NPP and our aim is to grow
NPP at twice the non-NPP sales growth rate (p32)
held at the Pavilions of Harrogate
on 23 April 2020 at 12 noon.

Division of Responsibilities
Board roles
Directors’ Report
Chair Group Chief Group Finance Senior Independent Governance structure
The Chair leads the Board and sets Executive Director Director The Board has three main Committees: the Audit Committee, Executive Committee; the Group Finance Committee; the
the tone from the top promoting a The Group Chief The role of Group Finance The Senior Independent the Remuneration Committee and the Nomination Committee. Risk Management Committee; the Group Safety, Health,
culture of openness and debate and Executive has day-to-day Director is to bring a Director provides a The terms of reference for each Board Committee can be found Environment and Quality (SHEQ) Steering Committee; the
effective communication between responsibility for the commercial and financial sounding board for the at www.croda.com. Group Ethics Committee, and the Routine Business Committee.
the Executive and Non-Executive effective management perspective to the Chair and acts as an
Directors. She creates an environment of the Group’s business Boardroom. Working intermediary for the The day-to-day operational management of the Business is Information on the Committees as at the year end is below.
at Board meetings in which all and for ensuring that with the Chief Executive, Non-Executive Directors, delegated by the Board to the Group Chief Executive, who Further information on each of the Committees and the
Directors are able to contribute to Board decisions are he is responsible for where necessary. He is uses several Committees to assist him in this task: the Group membership as at the date of this report is shown on page 70.
discussions and feel comfortable implemented. He plays a the leadership and available to shareholders
in engaging in healthy debate and key role in devising and management of the where communication
constructive challenge. She maintains reviewing Group strategies Company according to through the Chair or
high standards of corporate for discussion and the strategic direction set Executive Directors has
governance and is responsible with approval by the Board. by the Board. He leads the not been successful or Group Board
the Board for understanding the views The Group Chief Executive global finance function and where it may not seem
of all key stakeholders and ensuring Chaired by Anita Frew
is tasked with providing oversees the relationship appropriate. The Senior
they are considered in decision regular reports to the with the investment Independent Director is
making. The Chair leads the annual Board on all matters of community and ensures responsible for leading
Board effectiveness review process significance relating to effective reporting the Non-Executive
and ensures that new Directors the Group’s business, or procedures and Directors in appraising Principal Board Committees
have an appropriately tailored reputation, to ensure that controls are in place. the performance of
induction process. the Board has accurate, the Chair and in their
timely and clear information discussions of her term Audit Committee Remuneration Committee Nomination Committee
on all matters. of appointment and fees.
Chaired by Alan Ferguson Chaired by Helena Ganczakowski Chaired by Anita Frew
Monitors the integrity of the Recommends the Company’s Reviews the structure, size and
Group’s financial statements and remuneration policy and framework composition of the Board and
announcements, the effectiveness and determines the remuneration its Committees, identifies and
of internal controls and risk packages for members of senior nominates suitable candidates
management as well as managing management. For more information for appointment to the Board and
the external auditor relationship. see pages 71 to 97. has responsibility for Board and
For more information see pages Executive Committee succession
65 to 69. planning. For more information
see pages 61 to 63.
Group Chief Executive
Group Group Risk Group SHEQ Group Routine

Non-Independent Independent Group General Counsel and Executive Finance Management Steering Ethics Business
Non-Executive Director Non-Executive Directors Company Secretary Committee Committee Committee Committee Committee Committee
Having served Croda for 33 years, the The role of independent Non-Executive The Group General Counsel and
latter five of which were as a member Director is central to an effective and Company Secretary is secretary to the Chaired by Chaired by Chaired by Chaired by Chaired by Chaired by
of the Board, Keith Layden is not accountable Board structure as they Board and its Committees. He ensures Steve Foots Steve Foots Jez Maiden Mark Tom Brophy Steve Foots
considered independent. However, provide strategic and specialist guidance that Board procedures are complied with Robinson or Jez Maiden
because of that experience, Keith together with effective governance. They and advises on regulatory compliance
contributes strongly to the Board’s constructively challenge the Executive and corporate governance. This role is to
culture and personality, and adds unique Directors and scrutinise the performance support the Chair and the Non-Executive
and valuable insight and constructive of management in meeting agreed goals Directors. In addition, he develops Board
challenge. With appropriate management and objectives and ensure all stakeholder and Committee agendas and collates
of conflicts, Keith can constructively views are considered. They help develop and distributes meeting papers. He
challenge the Executive Directors and monitor the delivery of the strategy facilitates induction programmes for
and scrutinise the performance of within the risk and control framework new Directors and provides briefings on
management in meeting agreed goals set by the Board. They determine governance, legal and regulatory matters.
and objectives which adds an extra layer appropriate levels of remuneration for
of challenge to that of the independent Executive Directors and have a prime
Non-Executive Directors. role in succession planning and the
appointment and, where necessary,
the removal of Executive Directors.

Board support The Board’s composition was considered appropriate and

Each Director has access to the advice and services of the their knowledge of investors and customers was highly rated.
Company Secretary. Where necessary, the Directors may take Engagement and challenge in the boardroom was strong and
independent professional advice at the Company’s expense. the Board meetings are well led by the Chair who facilitated
equal contribution and candid discussion. The agendas were
Training and briefings are available to all Directors taking into balanced and in line with the strategic priorities. Consideration
account their existing experience, qualifications and skills. of culture was embedded in the Board discussions. Areas for
In order to build and increase the Non-Executive Directors’ focus and opportunities for 2020 were agreed by the Board,
familiarity with, and understanding of, the Group’s people, see page 49.
businesses and markets, senior managers regularly make
presentations at Board meetings. As well as planned training Board re-election
on governance, legal and regulatory matters, the programme The Board has a broad range of skills and experience from
is sufficiently flexible to capture new and emerging regulation, different industries, advisory roles and from international markets.
development stemming from evaluation and specific training
requests from Directors. Each Director’s training programme These skills support the strategic aims of the Company.
includes the same online training on competition law and Following individual performance assessments, the Board is
anti-bribery and corruption as taken by managers and satisfied that each Director continues to perform effectively,
selected employees across the Business. allocates sufficient time for his/her duties and remains fully
committed to his/her role. With the exception of Alan Ferguson,
Before each Board meeting, the Company Secretary makes all Directors will stand for re-election/election at the 2020 AGM.
sure that the meeting papers are made available electronically Full biographies for the Directors are on pages 46 and 47.
one week in advance, which ensures that each Director has the
time and resources to fulfil his/her duties. Directors have the
opportunity to raise questions stemming from the papers prior
Time commitment
to the meeting, should they wish to do so. A resource centre Each Director is aware of the need to allocate sufficient time to
within the web portal provides access to useful information the Company to discharge his/her responsibilities effectively.
about the Group, including corporate governance materials, This is reviewed annually by the Nomination Committee.
finance and strategy information, Group policies and In addition to time spent at Board and Committee meetings,
procedures, and information on topics such as risk the Directors participate in several Company related events;
and insurance. details are set out on page 54 and 55.
Directors’ induction Independence of Non-Executive Directors

Upon joining Croda, Directors receive a tailored induction Croda complies with the Financial Reporting Council’s
programme. This includes site visits, meetings with key advisers Reporting Code (the Code) in having experienced Non-
and the opportunity to engage with a wide variety of employees Executive Directors who represent a source of strong advice,
across all functions and seniorities. John Ramsay is undergoing judgement and challenge to the Executive Directors. At present
his induction following his appointment to the Board on there are seven such Directors, including the Chair and the
1 January 2020. Our tailored inductions offer a swift and Senior Independent Director, each of whom has significant
thorough way to help Directors understand our business, commercial experience. Their understanding of the Group’s
markets, culture and relationships and to establish a link operations is enhanced by regular business presentations
with employees. and site visits.
The independence of the Non-Executive Directors is kept

Board performance under review. The Chair was independent upon her appointment
The Board undertakes a formal review of its performance in 2015 but, as Chair, is not classified as independent. With
and that of its Committees each year. The 2017 review was the exception of Keith Layden, the Board considers that all
conducted by EgonZehnder, an external board review specialist. Non-Executive Directors who served during the year are
This year we conducted the review using an online questionnaire independent in character and judgement, with no relationships
tailored to Croda’s activities and current concerns. Separate or circumstances that are likely to affect, or could appear
questionnaires were also used for the Audit, Remuneration and to affect, their judgement. Keith Layden is not considered
Nomination Committees. A report was prepared based on the independent, having served as the Company’s Chief
completed questionnaires, which facilitated an evaluation of the Technology Officer prior to retirement from the Company
effectiveness of the Board and its Committees and the support and appointment as a Non-Executive Director in May 2017.
and information received from management and advisers. The
results were discussed in detail by the Board, with facilitation
by the Chair and the Company Secretary.

Nomination Committee
Directors’ Report
Report of the
Nomination Committee
for the year ended
31 December 2019
Dear fellow shareholder
I am pleased to present the Nomination Committee report for
the year ended December 2019.
Main activities and priorities in 2019

“The Committee continued
Board changes and succession planning
to maintain its focus on
During the year the Committee continued to maintain its focus
succession planning, to on succession planning and talent development across all levels
ensure we have the strongest of leadership, to ensure we have the strongest leadership to
deliver the Company’s strategy.
leadership to deliver the
Company’s strategy.” The Committee carried out a review of the size and composition
of the Board and the collective skills and experiences of the
Anita Frew Directors, aided by the results of the Board evaluation.
Chair of the Nomination Committee
The results of this review recognised the need for a new Audit
Committee Chair given that Alan Ferguson is due to step down
Members and attendance (eligibility) from the Board in April 2020 having served nine years as a
at meetings held during the year ended Director. The review also highlighted that strengthening the
31 December 2019 Board’s knowledge of digital technology and experience in
Anita Frew emerging markets would also be beneficial to the Board in
Chair 4(4) the coming years.
Alan Ferguson
The Committee used the output from the skills review to
Independent Non-Executive 4(4)
provide focus for the recruitment for Alan’s replacement. Further
Helena Ganczakowski details of the recruitment process is detailed below. Following
Independent Non-Executive 4(4) the search, the Committee recommended to the Board that
Keith Layden John Ramsay be appointed as Alan’s successor. John was
Non-Executive 4(4) appointed to the Board on 1 January 2020 and will become
Steve Williams Audit Committee Chairman on 23 April 2020 when Alan
Independent Non-Executive 2(2) steps down and Helena Ganczakowski becomes Senior
Roberto Cirillo Independent Director.
Independent Non-Executive 4(4)
Jacqui Ferguson Following the external assessment of the Executive Committee
Independent Non-Executive 4(4) in 2018, during the year the Committee reviewed the development
plans for each member of the Executive Committee and will
Steve Williams retired from the Board on 24 April 2019. continue to review the progress of these development plans
John Ramsay was appointed to the Board as an over the coming year.
Independent Non-Executive Director on 1 January 2020.

Responsibilities Diversity A key objective continues to be to encourage and monitor the

The Committee considers that diversity on the Board and development of talented employees. We continued to focus
The Committee is responsible for nominating candidates for
Directors’ Report
throughout the Company has a positive effect on the quality on increasing the diversity of our leaders, particularly focusing
appointment to the Board for approval by the Board, and
of decision making. Diversity training has been incorporated on gender and nationality. The Committee received periodic
for succession planning. It evaluates the balance of skills,
into our management development programmes and we have updates from the Group HR Director on the learning and
knowledge, experience and diversity on the Board.
established a global Diversity and Inclusion Committee to development of high potential individuals. Colleagues below
promote and inform improved diversity across our business. Executive Committee level attend and present at Board
Key responsibilities meetings and the Board meets a wide range of employees
• To regularly review the structure, size and composition, Our Board Diversity Policy reflects our commitment to maintain when undertaking site visits. We have established a mentoring
including the skills, knowledge, experience and diversity, the current 33% female membership and our aspiration to move programme for some of our highest potential employees
of the Board and make recommendations for any changes towards a gender balanced Board. We are also setting new who are on Executive Committee succession plans. We have
to the Board targets to double the number of women in leadership positions ensured that there is good balance between males and females.
• To give full consideration to succession planning for by 2025 and to achieve gender balanced shortlists for 80% of The mentees are matched with mentors from the Board and
Directors and other senior Executives, taking into account our roles by 2023. It also reflects our commitment to diversity Executive Committee and training has been provided for all
the challenges and opportunities facing the Company and, in all other forms, including ethnic diversity. This policy will participants. A key objective for the mentoring programme is to
consequently, what skills and expertise the Board will need continue to guide our future appointments. We will do this provide role models and development opportunities for mentees
in the future by ensuring that the specification for any new Director role and to aid in the creation of a more diverse organisation.
• Where a Board vacancy is identified, to evaluate the balance is equally suited to applicants of any gender and that no We continue to promote flexible working and ‘female friendly’
of skills, knowledge, experience and diversity on the Board, discrimination occurs at any stage in the selection process job adverts and gender balanced shortlists in our
and prepare a description of the role and capabilities required on any applicant characteristic. recruitment processes.
for the respective appointment
• To identify and nominate candidates to fill Board vacancies, In November 2019, we appointed Tracy Sheedy, Group HR Routine business
for the approval of the Board, as and when openings arise Director, to our Executive Committee. Annually the Committee reviews the time commitment of
• To keep the organisation’s leadership needs, both Executive the Non-Executive Directors. It was satisfied that all the
and Non-Executive, under review to ensure that the Company A copy of our Board Diversity Policy, which is regularly Non-Executive Directors remain able to commit the required
continues to compete effectively in the marketplace reviewed by the Board, is available at www.croda.com. time for the proper performance of their duties. They also
For more information on our Board diversity see Governance considered and concluded that, except for Keith Layden,
• To review annually the time required from a Non-Executive
at a Glance on page 48. all Non-Executive Directors continue to fulfil the criteria of
Director and the Chair
• To make recommendations on succession planning for independence. As Keith was formerly an Executive Director of
the Board. the Company, he is not currently considered to be independent.
Detailed responsibilities are set out in the Committee’s terms of

reference, which can be found at www.croda.com.
Anita Frew
Chair of the Nomination Committee
Appointment of John Ramsay Looking ahead to 2020

The Committee reviewed the collective skills and experiences In addition to our routine business, during the year the
of the current Directors in January 2019. This was updated to Committee will:
include the information on our new Non-Executive Directors
Roberto Cirillo and Jacqui Ferguson and taking into account • Monitor the progress of the Board mentoring programme
the retirement of Steve Williams (retired April 2019) and Alan • Review the Executive Committee individual
Ferguson (retiring April 2020). development plans
• Continue to consider the effectiveness of diversity
It was agreed that the key area for succession would be the
activities across the Group
Audit Committee Chair.
I will be available at the AGM to respond to any questions
The Chair and Company Secretary prepared a high-level
shareholders may raise on the Committee’s activities.
specification that was agreed by the Committee and
formed part of the candidate brief to the executive search
consultancy firm. A key requirement for the search were for
candidates to have relevant financial experience as a CFO The Chair and Messrs Ferguson, Maiden, Brophy and
in a FTSE 100 or 250 company (or equivalent) and previous Dr Ganczakowski undertook the first stage of the search,
Audit Committee experience. In addition, taking account of with other members of the Committee and the Executive
the skills review undertaken by the Committee, the search Directors meeting with the short list following a review of
firm were asked to identify candidates with experience in the respective skills, experience and fit of each candidate.
emerging markets, the chemical industry, health and safety
References were taken and the Committee
focused businesses and business models subject to fast
made a final recommendation to the Board.
paced change. The Committee also ensured that the
candidate shortlists were balanced in terms of gender John Ramsay was appointed from 1 January 2020.
nationality and ethnic origin. His biography can be found on page 47.

Audit, risk and internal control

Audit
The Board discharged its responsibility for monitoring the
operational effectiveness of the internal control and risk
Directors’ Report
The Audit Committee management systems throughout the financial year and
Committee
The Audit Committee’s report, which describes the membership up to the date of approval of the Annual Report and
of the Audit Committee, its responsibilities, main activities in Accounts. It used a process which involved:
2019 and priorities for 2020, is set out on pages 65 to 69.
• Written confirmations from relevant senior executives
and divisional directors concerning the operation of those breadth and depth to ensure that it can be fully effective, and
Risk management and internal control
elements of the system for which they are responsible that it meets the Code requirements that at least one member has
The Board acknowledges its responsibility for ensuring the • Internal audit work, which reports through the Vice Report of the
maintenance of a sound system of internal controls and risk significant, recent and relevant financial experience and that the
President of Risk and Assurance to the Audit Committee Audit Committee
management. In accordance with the guidance set out in Committee as a whole is competent in the sector in which the
• Reports from the external auditors for the year ended Company operates.
the Financial Reporting Council’s (FRC’s) Guidance on Risk • Presentations of key risks and controls by the Executive 31 December 2019
Management, Internal Control and Related Financial Business owner and other assurance providers The Chair of the Board, Keith Layden (a Non-Executive Director),
Reporting 2014, and in the Corporate Governance Code itself, • Annual report on control weaknesses from the Vice President the Group Chief Executive, the Group Finance Director, the Group
an ongoing process has been established for identifying, of Risk and Assurance. Financial Controller, the Vice President of Risk and Assurance,
evaluating and managing the principal risks faced by the
This system is designed to mitigate, rather than eliminate, who leads the internal audit function, and representatives from
Group (p 38). The Directors have established an organisational
the risk of failure to achieve business objectives and provides the external and internal auditors attend the meetings by invitation.
structure with clear operating procedures, lines of
responsibility and delegated authority.
reasonable, but not absolute, assurance against material “After the AGM I shall retire
The Committee periodically, and I more regularly, meet or speak
misstatement or loss. As appropriate, the Board also ensures
that necessary actions have been, or are being, taken to remedy
from the Committee and separately with the Vice President of Risk and Assurance and the
In particular, there are clear procedures and defined
authorities for: failings or weaknesses identified from the review of internal Board and John Ramsay external auditors without the Executives being present. While these
discussions are invaluable, I also meet with the external auditors, the
controls’ effectiveness and judges their level of significance. will become Chair of the Group Finance Director and the Group Financial Controller at least
• Financial reporting, with clear policies and procedures
governing the financial reporting process and preparation Fair, balanced and understandable
Committee.” twice each year to discuss the detail of the year end and half year
of the financial statements. There is a clear and documented results before the relevant Committee meetings. This helps me to
The process of compiling the Annual Report and Accounts Alan Ferguson better understand the key issues and to make sure enough time is
framework of required controls. Each reporting location starts early enough to give the Board time to assess whether it Chair of the Audit Committee devoted to them at the subsequent meeting.
prepares an annual self assessment of compliance with these is fair, balanced and understandable, as required by the Code.
controls, which is assured during planned internal audit visits The Board considered whether the Annual Report and Accounts Dear fellow shareholder After the AGM on 23 April 2020, I shall retire from the Committee
• Comprehensive monitoring and quantification of business contained the necessary information for shareholders to assess As Chair of the Audit Committee, I am pleased to and the Board having served nine years as a Non-Executive director.
risks, under the direction of the Risk Management Committee. the Company’s position and performance, business model and present the Audit Committee report for the year ended John Ramsay, who joined the Board as a Non-Executive director
The Group’s approach to risk management and the principal strategy. The tone was reviewed to ensure a balanced approach 31 December 2019, which provides detail of the activities on 1 January 2020, will become Chair of the Committee. John has
risks facing the Group are discussed in more detail in the and the Board made sure the narrative at the front end of the carried out by the Committee during the year. a wealth of financial, international and sector experience and he has
Strategic Report on pages 38 to 42 Annual Report was consistent with the financial statements. a strong background as an Audit Committee Chair. His full biography
• Capital investment with detailed appraisal, risk analysis, See page 101 for the statement of Directors’ responsibilities.
Committee membership can be found on page 47.
authorisation and post-investment review procedures
This process has been in place for the full financial year and up The Committee consists of five Non-Executive Directors. I would like to thank the members of the Committee, the executive
to the date on which the financial statements were approved by The experience of each member of the Committee is management team and the external and internal audit teams for
the Directors. summarised on pages 46 and 47. I have held a number their commitment and significant contributions to the work of the
of senior finance director roles and I also Chair the Audit Committee over the past year and during my nine-year tenure as
Committees of another FTSE 100 company and an AIM Chair of the Committee. It has been a privilege to work with them all.
Non-financial information statement listed company. The Board considers each member of
The table below sets out where more information can be found in our Strategic Report that relates to non-financial matters, the Committee is independent within the definition of
as required under the Non-Financial Reporting Directive. the Code, has relevant financial experience, as well as
Responsibilities
a broad and diverse spread of commercial experience, The Committee assists the Board in ensuring that the Group’s
Where to read more financial systems provide accurate and up-to-date information on
Reporting requirement Some of our relevant policies about our impact Page Key risks relating to these matters including competence in operating within the chemical
industry. Such consideration provides the Board with its financial position.
Environmental matters Group SHE policy1 Environmental stewardship 31 Major safety or environmental incident
Risk Management 41 assurance that the Committee has the appropriate skills,
Employees Group Code of Ethics2 Our stakeholders 14 Talent development and retention Key responsibilities:
Group Code of Conduct1 People Positive 30 Major safety or environmental incident • To monitor the integrity of the financial statements and results
Group SHE policy1 Risk Management 41 Members and attendance (eligibility)
announcements of the Group and to review significant financial
Group Policy on Training and at meetings held during the year ended
Development2 reporting issues and judgements.
31 December 2019
Human rights Group Policy on Discrimination2 People Positive 30 Talent Development and Retention • To recommend external auditor appointment and removal,
Living Wage 88 Alan Ferguson assess audit quality, negotiate and approve the audit fee, assess
Social matters Group Policy for Managing Diversity2 People Positive 30 Ethics and compliance Chairman 5 (5) independence, monitor non-audit services and be responsible for
Talent Development and Retention Roberto Cirillo audit tendering.
Anti-bribery and corruption Croda Modern Slavery Statement2 Risk Management 42 Ethics and compliance Independent Non-Executive 5 (5) • To review the adequacy and effectiveness of the Group’s internal
Competition Law Policy1 Responsible Business 31
Croda Fraud Policy1
Jacqui Ferguson controls and risk management systems, and the adequacy,
Whistleblowing Group Policy Procedures2 Independent Non-Executive 5 (5) effectiveness and output of the internal audit function.
Global Risk Framework Policy1 Helena Ganczakowski • To review the adequacy of the Group’s whistleblowing
Business model Global Risk Framework Policy1 Business Model 12 All key risks on pages 38 to 42 link to Independent Non-Executive 5 (5) arrangements and procedures for detecting fraud.
(Engage, create, make and sell our business model
Steve Williams
speciality chemical ingredients)
Independent Non-Executive 3 (3) In addition to its business as usual activities, the Committee selects
Non-financial KPIs Group SHE policy1 Key Performance Indicators 32 Major safety or environmental incident
(Environmental, social and ethical Our Purpose Sustainability 29
certain focus areas each year for detailed review.
relating to our operations and the Steve Williams retired from the Board on 24 April
ingredients we make) Detailed responsibilities are set out in the Committee’s terms of
2019. In addition to the meetings during 2019, there
reference, which can be found at www.croda.com
1. Available to employees via the company intranet (Connect), not published externally were two meetings held subsequent to the year end,
2. Available to employees via the company intranet (Connect) and published on www.croda.com with full attendance at both. John Ramsay attended
both meetings as a member of the Committee.

Key focus areas for 2019 (10%)

Main (business as usual) activities of the Committee since the publication As highlighted above, the Audit Committee has delivered on our ‘business as usual’ work, as set out in our terms of reference.
Directors’ Report
of the 2018 Annual Report and Accounts Last year, we noted three focus areas for 2019, which absorbed the balance of the Committee’s time.
The Committee met three times in 2019 after publication of The Committee’s main business as usual activities, as well
the 2018 Annual Report and Accounts and twice between the as the focus areas, and an estimate of the proportion of time Key focus area Actions during the year Progress
year end and the publication of this Annual Report. The key spent on them, are detailed below: Continue to review the Internal audit attend the Data Privacy steering group which oversees the Completed
issues covered at the Committee meetings were reported at implementation of our continued roll out of the programme globally.
the subsequent Board meeting. Data Privacy policies
and procedures globally The number of data privacy controls in the self-assessment questionnaire
was increased from four to twelve in 2019. All sites globally complete these
questionnaires. These questions served the dual purpose of assessing data
Committee activity in 2019 External audit (25%) privacy status irrespective of local regulatory requirements and of reminding
sites of Croda’s expectations in this area.
Financial reporting (20%) The Committee:
• Discussed and approved the external audit plan, including: All self-assessed data privacy controls were in scope for review and follow up
The Committee: the assessment of significant audit risks; the engagement risk during site audits. The Committee discussed the findings from these reviews.
• Monitored the Group’s financial statements and results profile; the use of data analytics; the scope of the audit; the
announcements, and reviewed significant financial reporting materiality level and the de minimus reporting threshold; the Consider the implications of Cyber security risk over key applications and networks is assessed annually as Ongoing
and accounting issues including alternate performance coordination between internal and external audits; and the the Group’s digital strategy part of the general IT controls assurance work and self-assessment process. As
measures, the going concern assessment and key members of the engagement team. Approved the on cyber security risk applications are added or are identified as more critical when viewed through the
exceptional items. audit fee. digital strategy lens, these fall naturally into the assurance scope. The Committee
• In conjunction with the Board, reviewed the financial • Reviewed compliance with the FRC’s Revised Ethical also discussed a paper presented by the Chief Digital Officer on progress against
modelling and stress testing based on plausible scenarios Standard for auditors and the restrictions on auditors to the digital strategy and data management.
arising from selected key risks, noting the effect they would provide non-audit services and as a result revised the
have during the viability period. The full risk review of the digital strategy (including the implications on cyber
non-audit services policy.
security) has been rescheduled to 2020 when the delivery of the strategy will
• Undertook regular reviews of the Group’s material litigation • Met with the external auditors without management present. be more advanced.
and was satisfied with the approach to provisioning • Discussed the actions taken to date by KPMG to improve
and disclosure. audit quality across the firm in support of the Committee’s All Committee members attended a Board Cyber Security teach in.
• Received updates on the progress of the Global Finance annual assessment of the quality of the external audit.
Standardisation project. • Considered and confirmed the independence of KPMG, With the Committee’s direction, internal audit undertook a detailed review of
as further described on page 69. business resilience in the event of significant SAP downtime.
Governance (20%) • Considered the effectiveness of the external audit process Review in detail the HR As the full implementation of all modules of the new HR system was delayed, with Ongoing
The Committee: and in light of the findings recommended the re-appointment system implementation completion now expected in 2020, the Committee agreed that this risk assurance
• Reviewed a compliance checklist to ensure the Committee of KPMG at the AGM. planned for 2019 review would be postponed.
met its corporate governance and regulatory requirements.
• Reviewed the effectiveness of the Group’s anti-bribery Internal audit and risk management (25%)
and fraud procedures, including those for whistleblowing. The Committee:
The Committee received a report on the independent • Received a report from the Vice President Risk and Assurance
investigations that had been conducted in response to at each meeting and monitored compliance with the Group
concerns raised under the whistleblowing policy and were risk management programme. The Committee reviewed the
satisfied with the outcome, including follow up actions. reliance placed by management on the risk mitigating controls
• Received presentations from senior members of the finance of the Group’s highest risks and analysed the types of
team, including the Finance Directors of Latin America and assurance, both internal and external, that applied to
Personal Care (who is also responsible for North America) these controls.
and the Group Financial Controller (who is also the Finance • Assessed the 2019 risk assurance activity carried out by
Director of Life Sciences). internal audit with reference to the Group’s principal risks,
• Undertook an effectiveness review, which included reviewing which included a review of: the ethics framework, business
the results from a questionnaire, and concluded that the resilience in the event of significant loss of SAP, and
Committee was operating effectively. consideration of employee salaries in China and India
• Responded to the BEIS consultation on the Competition and against living wage criteria.
Markets Authority’s recommendations on the audit market. • Discussed the increased use of data analytics and process
• Reviewed its terms of reference and confirmed that the role mining in 2019, which enabled further comparison between
and responsibilities of the Committee are aligned with the sites to highlight potential opportunities to share best practice
UK Corporate Governance Code. No changes were made. and leverage our SAP investment.
• Completed its annual review of the Group’s tax strategy • Considered the results of the 2019 controls assurance internal
(which can be found on our website) and risks. audits and the IT audits, the self-assessment process, the
adequacy of management’s response to matters raised and
the time taken to resolve such matters.
• Reviewed and approved the 2020 internal audit plan and
supported the continuation of the review on digital strategy
and systems and the global supply chain initiatives.
• Met with the internal auditors without management present.
• Conducted its annual review of the Group’s internal auditor
(see page 68).

This year the Committee requested information from KPMG In 2019, non-audit fees were £0.1m, significantly less than the
Significant financial statement reporting items detailing the work of the Engagement Quality Control Review total audit fees of £1.0m; the non-audit to audit fees ratio stands
Directors’ Report
partner and the other “second line of defence” quality control at 0.1:1.
The Committee, with support from the external auditors, that the assumptions were reasonable, no impairments were processes that sit behind the audit team. The Committee
reviewed those items in the Group’s financial statements necessary, and that the disclosure, which was increased reviewed this information and was pleased with the insight The Committee undertook its annual review of the Group’s
which have the potential to significantly impact reporting. again this year, was appropriate. this gave on audit quality. policies relating to external audit, including the policy that
These are set out below. governs how and when employees and former employees
Provisions: The Committee reviewed whether certain The Committee also reviewed the output from a questionnaire of the Group’s auditors can be employed by the Company.
Pensions: The Committee monitored the Group’s pension environmental, restructuring, litigation and other legal completed by senior members of the finance team to obtain No changes were made. The Committee also reviewed
arrangements, in particular the funding of the defined benefit provisions were sufficient to cover estimated costs of their views on KPMG’s effectiveness in carrying out the 2019 and accepted KPMG’s Independence letter.
plans in the UK, the US and the Netherlands, which are potential and actual claims and decided that they were audit. The questionnaire covered:
sensitive to assumptions made in respect of discount reasonable and appropriate. In conclusion the Committee agreed that KPMG
rates, salary increases and inflation. • Quality of planning, delivery and execution of the audit were independent.
Enquiries were made with lawyers and third-party experts • Quality and knowledge of the audit team
The Group engages external actuarial specialists. The as well as the in-house legal team. The Committee was External auditor reappointment
• Effectiveness of communications between management and
Committee reviewed the actuarial assumptions used, reassured by legal opinions and the insurance coverage
the audit team As noted above, the Committee recommended to the Board
and compared them with those used by other companies. in place. The contingent liability note was also reviewed.
• Robustness of the audit, including the audit team’s ability to that KPMG be offered for re-election at the forthcoming AGM.
The external auditors also challenged the benchmark
Recoverability of parent Company’s intercompany challenge management as well as demonstrate professional
assumptions applied and conducted sensitivity analysis. I will be available at the AGM to respond to any questions
receivables: The Committee considered the recoverability scepticism and independence.
The Committee considered this work and found the shareholders may raise on the Committee’s activities in the year.
assumptions to be reasonable. of parent Company’s intercompany receivables of £1,589.6m
We reviewed the FRC’s 2018/2019 Audit Quality Inspection
(2018: £1,675.4m), which represents 72.3% of the parent
report of KPMG UK. The actions taken to date by KPMG UK
Goodwill: The strategy of the Group includes acquiring new Company’s total assets (2018: 73.6%). The recoverability of
to improve audit quality across the firm, which started to be
technologies and businesses operating in adjacent markets. these balances is not considered judgemental; however, they
implemented in 2017, led to an improvement in performance
Goodwill represents a significant asset value on the balance are the most significant component of the parent Company
for this year. This is a long-term commitment and will be
sheet (£348.5m out of total net assets of £868.6m at balance sheet and therefore require additional consideration
monitored by the Committee on an ongoing basis. The main
31 December 2019). as part of preparing the financial statements. This included
areas identified by the FRC for further improvement were Alan Ferguson
comparing the carrying amount with the respective
The Committee completed its annual impairment review of discussed by the Committee with a focus on the remedial Chair of the Audit Committee
subsidiary’s net asset value or profitability. After review,
the carrying value of goodwill, as prepared by management, actions being taken.
the Committee was satisfied that the recoverability of
including the sensitivity to a number of underlying the intercompany receivables was acceptable, and Following the review, the Committee concluded that the audit
assumptions. After challenge, the Committee was satisfied no impairments were necessary. was effective and overall the Committee was pleased with the
performance of KPMG. Looking ahead to 2020
Internal audit and risk management risk assessment, communication within the business and with In addition to our routine business, the Committee has
I met with the Vice President Risk and Assurance several the Committee and its relationship with the external auditors. External audit tendering three focus areas for 2020. We will:
times during the year outside of the formal meetings to discuss It also examined the progress being made in developing the We are in compliance with the Statutory Audit Services Order
the performance and output of the internal audit function and Digital Hive which pulls together amongst other things, controls 2014. We undertook an audit tender in 2017 and the Board • Maintain our ongoing focus on Cyber Security
aspects of risk management. The Vice President Risk and assessments, assurance outcomes, action management and appointed KPMG as external auditor with Chris Hearld as the • Continue to evaluate the maturity and security of
Assurance attended each Committee meeting and presented reporting into a single system. Senior management feedback Lead Audit Partner. The first year to be audited by KPMG was the approach to digital development (including the
an internal audit report that was fully reviewed and discussed, from sites included in the 2019 audit programme is gathered by the year to 31 December 2018. implementation of global digital transformation projects)
highlighting any major deviations from the annual plan agreed questionnaire to support this process. These did not highlight • Review in detail the HR system implementation
with the Committee. any significant areas for development. The Committee was External auditors’ independence
pleased with progress, with notable benefits being seen around
The Committee and the Board place great emphasis on
At each meeting, the Committee considered the results of data analytics, the Digital Hive and the benefits of internal audit
the objectivity of the Group’s external auditors in reporting
the audits undertaken and the adequacy of management’s sharing best practice across the Group.
to shareholders.
response to matters raised, including the time taken to resolve
such matters. Particular focus was addressed to those areas Details on how the Business implements its risk management
Our Group policy on the provision of non-audit services by
where there was a major divergence between the outcome framework and monitors controls on a Group-wide basis are set
external auditors, which is on our website www.croda.com,
of the internal audit and the scoring of the self-assessment out on pages 38 to 42.
sets out permitted and prohibited non-audit services and the
questionnaire, completed annually by each business unit. controls over assignments awarded to the external auditor to
In these instances, the Committee challenged management External auditors’ effectiveness ensure that audit independence is not compromised. During
as to what actions it was taking to minimise the chances of During the year, the Committee assessed the effectiveness of the year, the Committee undertook a detailed review of the
divergences arising in the future. The Committee looked at KPMG as Group external auditor. To assist in the assessment, provision of non-audit services by KPMG and compliance with
recurring themes where issues were identified across a number the Committee considered the quality of reports from KPMG, the FRC’s Revised Ethical Standard for auditors and as a result
of locations; these will help inform the scope of the work the additional insights provided by the audit team, particularly updated our policy in this regard. KPMG already had a policy
undertaken in the 2020 audit plan. The programme of ‘Croda at partner level, and their reviews on areas such as NPP and which was compliant with the FRC’s Revised Ethical Standard
peer reviews’ continued to be implemented within each region segmental reporting. It took account of the views of the Group for auditors. They have not been required to terminate any
as part of the internal audit plan, under the direction of the Finance Director and Group Financial Controller, who had services that would not be permissible under the Standard.
Vice President Risk and Assurance, reporting back to the discussed subsidiary component audits with local audit
Audit Committee. This approach ensured that the internal partners, to gauge the quality of the team and their knowledge
audit resource added the greatest value to the internal and understanding of the business. The Committee also
control environment by focusing in the right areas. considered how well the auditors assessed key accounting
and audit judgements and the way they applied constructive
In January, the Committee conducted its annual review of the challenge and professional scepticism in dealing
internal auditor, including their approach to audit planning and with management.

Other Committees
The operational management of the Business is delegated by Group SHEQ Steering Committee
the Board to the Group Chief Executive, who uses several The Committee meets quarterly to monitor progress against
Committees to assist him in this task. These Committees the Group safety, health, environment and quality objectives
and their membership at the date of the Annual Report and targets, review safety performance and audits, and
and Accounts are shown in the table below. determine the requirement for new or revised SHEQ policies,
procedures and objectives.
Group Executive Committee
The Committee meets eleven times a year and is responsible Group Ethics Committee
for: developing and implementing strategy, operational plans, The Committee meets quarterly in support of our culture of
policies, procedures and budgets; monitoring operational integrity, honesty and openness, and to promote the importance
and financial performance; assessing and controlling risk; of ethics and compliance across the Group and amongst our
and prioritising and allocating resources. supply chain partners.
Group Finance Committee Routine Business Committee

The Committee meets every month to review monthly operating The Committee comprises the Group Chief Executive and
results and examine capital expenditure projects. Group Finance Director, with the Group General Counsel and
Company Secretary and Group Financial Controller acting as
Risk Management Committee alternates. The Committee attends to business of a routine
The Committee meets quarterly to evaluate and propose nature and to the administration of certain matters, the
policies and monitor processes to control business, operational principles of which have been agreed by the Board
and compliance risks faced by the Group, and to assess or the Group Executive Committee.
emerging risks.
Group Group Risk Group SHEQ Group Routine

Committee membership Executive Finance Management Steering Ethics Business
(as at the date of this report) Committee Committee Committee Committee Committee Committee
Steve Foots Group Chief Executive
Stuart Arnott President Sustainability
Sandra Breene President Personal Care
Tom Brophy Group General Counsel, Company

Secretary and MD Western Europe
Nick Challoner President Life Sciences
Anthony Fitzpatrick President Corporate Development
Maarten Heybroek President Performance

Technologies & Industrial Chemicals
Jez Maiden Group Finance Director
Tracy Sheedy Group HR Director
Ritesh Tanna Group Financial Controller
Mark Robinson Vice President Global

Sustainable Operations
Hazel Whitaker Vice President Risk & Assurance
Chair Member

Remuneration Report
Directors’ Remuneration Report
Directors’ Report
capabilities to enable it to compete ever more effectively on the
world stage. As the business enters its next strategic phase so
Report of the
the ambition level will increase, and more will be demanded
Remuneration from our senior team.
Committee
for the year ended We strongly believe that reward should be aligned to Company
31 December 2019 performance and the delivery of our strategy. The Committee
believes that Croda’s remuneration approach plays a key role
in the achievement of the Group’s strategic ambition and in
the delivery of sustainable, profitable growth. This year’s Policy
review gives us the opportunity to update and ensure alignment
of both the Policy and its application to the delivery of Croda’s
“Going forward, we will continue evolving ambition.
to seek out opportunities to Throughout the review we have also been mindful of
develop and enhance the new governance expectations, and shareholder sentiment,
remuneration approach at Croda. particularly in the area of alignment of executive pensions with
the wider workforce.
We remain committed to ensuring
that our remuneration policies Through the course of 2019 we have spent time consulting with
shareholders and are very grateful for their continued support
reflect the evolving needs and and engagement. As you will see in this Report and our updated
expectations of our shareholders, Policy, we have responded in a number of areas, ensuring that
stakeholders and the societies in our remuneration approach reflects the developing needs of all
of our stakeholders.
which we operate.”
Dr Helena Ganczakowski Alignment to strategic objectives
Chair of the Remuneration Committee Whilst Croda’s strategy is evolving, the focus remains
consistently on driving sustainable, profitable growth by meeting
our customers’ needs through innovation and thus delivering
A. Chair’s letter 71 our Purpose: Smart Science to Improve LivesTM. This sense of
purpose aligns with our business culture which we believe to
B. 2019 Remuneration at a glance – 73
be a strong driver of performance. In updating and operating
including single figure remuneration
our Remuneration Policy we have paid close attention to all
C. Proposed Remuneration Policy 2020 74
these factors.
to 2023
• Overview of the new Delivering sustainable, profitable growth is directly reflected in
Remuneration Policy our performance measures and stretching targets. The Annual
• Remuneration Policy for Bonus is based on a single operating profit metric with no
shareholder approval pay-out unless the previous year’s outcome is exceeded.
D. Report of the Remuneration Committee For the longer-term Performance Share Plan (PSP), we are
for the year ended 31 December 2019 proposing that 35% of the award is based on Earnings per
• How our Remuneration Policy links Share (EPS) growth and 35% is based on relative Total
to strategy and to reward across Shareholder Return (TSR) performance amongst a
our wider workforce 83 bespoke group of our most relevant competitors.
• Remuneration Committee year
ended 31 December 2019 89 Sustainability has always been key for Croda; we are industry
• Executive Directors remuneration for 90 leaders in providing sustainable solutions for our customers and
the year ending 31 December 2020 innovation in sustainable products is central to our long-term
growth. To that end, we have developed a range of ambitious
E. Directors’ remuneration for the year 91
long-term sustainability targets and will be incorporating
ended 31 December 2019
selected elements of these into the PSP metrics each year.
For 2020 10% of the PSP award will be focused on these new
metrics and 20% will continue to be focused on our innovation
A. Chair’s letter metric, New and Protected Products (NPP), i.e. products that
On behalf of the Board and the Remuneration Committee, will sustainably drive our future growth.
I am pleased to present Croda’s updated Remuneration Policy
and the Director’s Remuneration Report for the year ended Performance is always considered holistically; each year the
31 December 2019. Committee applies a Discretion Framework to satisfy itself
that the outcome in terms of primary performance metrics
Over the past eight years, under Steve Foots’ leadership, Croda has not been to the detriment of other measures of corporate
has matured and developed as a global business; putting in performance. Health and safety is a key metric of particular
place a strong foundation of structures, processes and focus in this review.

B. 2019 Remuneration at a glance
Remuneration Report continued
How we performed in 2019
Alignment of Executive reward with the total compensation will still remain in the lower quartile
wider workforce amongst FTSE 100 industrials. Adjusted Operating Profit Adjusted EPS NPP
Directors’ Report
-0.8% to £339.7m -2.7% to 185.0p 28.1% of Group sales
In line with our “One Croda” culture, our senior leaders all share • It is proposed that shareholding guidelines for the CEO and
the same performance metrics for the global Annual Bonus Plan GFD increase in line with the increase in quantum proposed
and PSP. Around 400 employees participate in the Annual above. In addition, we propose the introduction of post-
Bonus Plan and 60 of these also participate in the PSP. We employment shareholding guidelines over two years; set
believe that this focuses our leadership on working together at 100% for the first year after leaving employment and Single figure remuneration
globally to deliver the best overall outcome for our customers tapering to 0% by the end of year two. Salary
and, in turn, our shareholders. Steve Foots (total £1,800,065)
Benefits
We believe that these changes are aligned to strategy and Pension (incl supplement)
Pay for all employees is set in line with the market and closely respond to the needs of all our stakeholders as well as being LTIPs
monitored, and local bonus schemes are available for those aligned to the UK Corporate Governance Code. Jez Maiden (total £1,082,080) Other
below senior leader level in most regions. Around 84% of our
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
UK workforce and 61% globally participate in share plans and Remuneration outturn for 2019
therefore benefit from the rewards enjoyed by all shareholders. Against difficult trading conditions the Group’s profit in 2019 How was our policy implemented in 2019?
was largely flat. This has demonstrated the resilience of the How we implemented in 2019
In addition, we are proud to be one of only two FTSE 100
business to remain profitable with robust margins in subdued Key component Chief Executive Group Finance
companies with a career average defined benefit pension
market conditions. and timeline Feature Metrics and results Officer (CEO) Director (GFD)
scheme that is open to all new and existing employees. Our
pension scheme is a generous and inclusive benefit for our Basic salary Competitive package to Pay rise of 3% awarded to Executive Directors. £662,337 £456,784
As the bonusable profit did not exceed the outcome for 2018, attract and retain high UK workforce was awarded a 3% increase
UK workforce. An important part of the value to employees is the threshold for the Annual Bonus Plan was not reached and and core
calibre executives.
that the level of pension is guaranteed up to the cap, as the no annual bonus is therefore payable. benefits
Company bears all the investment risk. This security for our
workforce is an important part of our ‘One Croda’ culture. Our longer-term performance in profitable growth and total
Annual bonus Incentivise delivery Bonusable Profit – –
shareholder return was more reflective of our long-term growth of strategic plan, (see page 90 for definition of Bonusable Profit)
Remuneration Policy Review trajectory. For PSP, 2019 was the year in which grants made in
targets set in line
We feel that the Remuneration Policy has served us well, but in 2017 concluded their three-year period, and the Committee has with Group KPIs. Threshold 2018 actual
the light of Croda’s evolving strategy and shareholder feedback, reviewed performance for the targets that were set at that time. Maximum 2018 actual plus 10%
we are proposing some updates to the Policy going forward, in Over the performance period, EPS growth was 18.7% resulting Actual 2018 actual minus 3.7%
the areas of pension, PSP metrics and quantum, and in 40.6% of this part of the award vesting. TSR performance
0% of maximum bonus paid
shareholding guidelines. was 84.2%, placing Croda in the top quartile against our
bespoke comparator group resulting in 100% of this part of the Deferred Compulsory deferral of N/A – –
• Effective 1 January 2020 we have implemented a reduction in award vesting. NPP growth was 1.8x non-NPP growth, falling element of one third of bonus into
the pension cash supplement for the CEO and GFD from 25% just short of the target of twice growth, so this part of the PSP shares with three year
bonus
holding period to align
to 20%, aligning all recipients of pension cash supplements at does not vest.
with long term business
20% across the whole UK workforce. performance.
Our defined benefit pension scheme is open to all employees The PSP award is dependent on satisfactory underlying
in the UK up to a salary cap and is highly valued as the level financial performance of the Group. The Committee considered PSP Incentivise execution Vesting of the 2017 PSP award £942,268 £487,382

of pension is guaranteed by the Company. As well as the this, and a range of other broader performance criteria using of the business
Actual
security this provides, we estimate that the value of this the Discretion Framework, and concluded that the awards strategy over long Threshold Maximum over 3 years % payout
benefit comfortably exceeds 20% of salary, based on current were consistent with, and reflective of, the overall business term measuring
profit, shareholder EPS* 5% 11% 6.23% 16.24%
market values for savings and annuities. We are therefore performance over the time period. Therefore, after consideration
value and innovation. TSR Median Upper 84.2% 40.00%
confident that our proposed Executive Director pension of all factors, an overall PSP vesting of 56.2% of the total award
Quartile Above UQ
arrangements are aligned to, or lower than, our wider UK was agreed.
NPP NPP sales growth Not met 0%
workforce arrangements. to be at least twice (1.8x)
Salaries for 2020 non-NPP sales,
• As mentioned earlier, our increased focus on sustainability
in Croda’s evolving strategy has led to the proposed For 2020 the general increase set for the UK workforce was 2%. subject to a
introduction of a set of sustainability metrics into the PSP. The Committee considered the salaries of the Executive Directors minimum average of
Our NPP metric will be incorporated into this set. in the context of positioning against market benchmarks, as 5% growth per year
well as the performance of the Company. The Committee and overall positive
To reinforce the importance of Return on Invested Capital,
determined that the salary increase for Executive Directors Group profit growth.
going forward, we will also be introducing a new Economic
should be in line with that of the UK workforce.
Value Added (EVA) underpin which will apply across the 56.24% total
whole of the PSP award. This underpin would be based ** EPS growth p.a. is calculated on a simple average basis over
on an improvement in EVA over the three-year PSP Looking ahead the three-year period.
performance period. We are confident that our updated Remuneration Policy will
serve us well over the next three years.
• Since the CEO’s appointment in 2012 Croda has consistently
outperformed the FTSE with significant long-term growth Going forward, we will continue to seek out opportunities to Pension Pension benefits are N/A £158,829 £114,196
across all KPIs. Croda is now an established international either a capped career
develop and enhance the remuneration approach at Croda. averaged defined benefit
FTSE 100 company, but executive reward has not kept pace We remain committed to ensuring that our remuneration policies pension plan with a cash
with the increased scope and growth of the business. We reflect the evolving needs and expectations of our shareholders, supplement above
therefore propose increasing maximum potential PSP for stakeholders and the societies in which we operate. the cap, or a cash
the CEO from 200% to 225% and for the GFD from 150% supplement. For 2019,
to 175%. Yours sincerely cash allowance of
In considering this change the Committee was conscious that up to 25% of salary.
any increase in total compensation should be focused on the Shareholding Share ownership CEO 200% of salary >200%of >150% of
delivery of long-term performance. Following the increase, requirements guideline to ensure GFD 150% of salary target target
Dr Helena Ganczakowski material personal
Chair of the Remuneration Committee stake in business.

C. Overview of the new Remuneration Policy strategy to be industry leaders in sustainability and The value to employees is also that the level of pension is long-term targets aimed at Croda becoming Climate, Land and
Our proposed Remuneration Policy will be presented to the introduction of an EVA underpin to further ensure guaranteed. Unlike a money purchase scheme Croda bears People Positive, monitored via a scorecard of progress. To align
Directors’ Report
shareholders at the 2020 AGM and is intended to operate for long-term incentive awards are aligned with overall the investment risk and once the employee has paid their to our commitment and strategy, it makes sense to incorporate
three years until the AGM in 2023. business performance. contribution the rest of the cost is borne by the Company. sustainability measures into our long-term incentive plan.
3. Increasing the level of normal PSP awards for Executive This security for all our UK workforce is an important part Under our proposed approach, each year key elements of
In reviewing the Policy the Committee has considered the Directors from 200%/150% to 225%/175% for the CEO of our ‘One Croda’ culture. this scorecard will be selected for inclusion in our long-term
following principal objectives to: and GFD respectively, reflecting the significant long-term incentive plan.
growth of the business. Within CARE, salaries are currently capped at c.£70k and for
• achieve the closest possible alignment with the Company’s earnings above this cap a cash supplement is paid. Previously Our proposal is to retain the Earning per Share (EPS) and
4. Increasing shareholding guidelines and introducing
evolving strategy; this supplement was 25% for Executive Directors, 20% for relative Total Shareholder Return (TSR) both set at 35% of the
post-employment shareholding requirements to ensure
other members of the Executive Committee and 15% for all award, 70% in total. In addition we will introduce a new set of
• support the Company’s ambition to be a purpose led compliance with the UK Corporate Governance Code.
other employees. The supplement is also paid to employees on sustainability metrics. The sustainability metric set at 30% of the
organisation focused on Smart Science to Improve Lives™;
The remainder of this section provides the context to the whole of their salary who are tax limited and have opted out award will incorporate our existing New and Protected Products
• ensure that business performance is appropriately measured these changes. of the pension scheme. (NPP) metric (20% of target) and also include measures aligned
and rewarded and that the scale of reward is proportionate;
to progress against our ambitious long-term targets in Climate,
• make certain that the Policy properly reflects the various 1. Reduction of the pension cash supplement for Land and People (10% of target).
Implemented Changes
interests of all our stakeholders in its structure and metrics;
the CEO and GFD to align with our UK workforce We believe that the CARE scheme, with its guaranteed
• ensure that the Policy is fair and competitive and that it also For 2020 we propose:
outcome, is a generous and inclusive scheme which remains
considers reward more broadly in the organisation; Background
open to the whole workforce in the UK. We recognise however 35% + 35% + 30%
• disclose the Policy in an open and transparent way. Croda is proud to be one of only two FTSE 100 companies
that there were differences in the percentages of supplements EPS TSR Sustainability
with a defined benefit scheme in the UK that is open to new
paid for those exceeding the CARE salary cap. We have (growth (against relative (including
The Committee’s method of operation will be flexible employees. The current scheme is a career-average pension
therefore levelled the pension supplement at 20% for all over 3 yrs) peer group) NPP at 20%)
and dynamic taking account of external changes and scheme (CARE) which was introduced in 2016.
eligible employees. This will result in a reduction in the cash
business performance.
Within CARE, in return for a 6% contribution, all of our UK supplement for Executive Directors from 25% to 20% effective
Success for our sustainability metrics will be based on meaningful
workforce have the opportunity to earn a guaranteed pension 1st January 2020.
Main changes to the Remuneration Policy progress towards our 2030 targets, measured over three years.
of 1/80th of salary for every year of service. Once this 1/80th The metrics will be subject to minimum performance criteria,
It is proposed to make changes to the Policy and application of As a result, the ongoing pension arrangements for our current
is earned it is ring fenced and linked to CPI up until retirement. but payments will be made for part progress.
the Policy in four key areas: Executive Directors will be fully aligned with (or lower than)
This is a generous benefit for our UK workforce. By way of our workforce rates. This is illustrated in the diagram on the
1. Reduction of the pension cash supplement for the CEO For 2020 awards, the following sustainability metrics are
illustration, our actuaries have estimated that employees would previous page.
and GFD to align with our UK workforce. proposed:
need to save significantly more than 20% of their salary to Sustainability metrics PSP weighting
2. Introduction of sustainability metrics, incorporating NPP, In light of this new proposal, future Executive Directors
provide a guaranteed equivalent benefit based on current Development of Decarbonisation Roadmaps, 5%
into the Performance Share Plan (PSP) to align with our appointments would be aligned at the 20% pension supplement.
market rates for annuity and savings. covering all our Scope 1 and 2 emissions to
Summary of legacy final salary defined define how we will achieve our target of net zero
Summary of pension arrangements greenhouse gas emissions by 2050 across all our
benefit pensions
geographically dispersed and complex footprint.
Arrangements Value In addition to the CARE scheme, employees in the pension Due to the inherent nature of our manufacturing
arrangements at the time CARE was introduced received operations, the development of these roadmaps
All UK based employees can join generous protection of their previous pension benefits; this will require us to find innovative solutions beyond
Croda’s defined benefit plan based protection maintained the link to their final salary going those that have already been identified and
on career average earnings (CARE) forward for pension earned pre-2016. adopted. The achievement of this target in
up to a cap of c.£70k
full where we create innovative roadmaps
Further protection was provided for all members who joined
Level of pension is guaranteed for 100% of our emissions would be a 5%
prior to 2000 as they were also able to retain an accrual rate
and not subject to investment risk
Wider UK Greater than 20% of salary1
of 1/60th in CARE in return for a higher contribution rate of 8%.
pay-out with a 2.5% pay-out for a better
Reflects that security for all our than 95% achievement.
workforce As our CEO was hired in 1990 he also retained an accrual rate
In addition, we also expect to see measurable 5%
UK workforce is an important part of 1/60th in CARE in line with the majority of the UK workforce
of our ‘One Croda’ culture at the time. reductions in our Scope 1 and 2 emissions
over the next three years and have set a target of
When our CEO was appointed in 2012 he agreed to have his 30,000 tonnes against an adjusted 2018 baseline
UK workforce who earn above the salary capped at his lower pre-appointment salary of £187,500 of 232,000 tonnes. The achievement for this
cap also receive a cash supplement (further reduced to £150,000 in 2014) to avoid a significant target in full would be a 5% pay-out with a 2.5%
of 20% of salary additional liability being placed on the pension scheme, pay-out for a better than 75% achievement.
which at that time was a final salary scheme. Subsequently NPP sales to grow at twice the rate of non-NPP, 20%
Opportunity to join CARE subject to his salary cap has been reduced again to £37,500 due to subject to overall positive Group profit growth
Executive tax limits with cash supplement c. 20% of salary annual allowance limits (further details of our CEO’s and a minimum average of 3% NPP growth per
Directors of 20%2 of salary above the cap pension arrangements can be found on page 93). year, with payments being made on a sliding
Existing and new hires OR scale up to 5% growth per year.
Cash supplement of 20% of salary2 20% of salary 2. Introduction of sustainability metrics, and
an EVA underpin to further ensure our long-term Definitions:
Alignment between Thanks to the defined benefit scheme, the wider incentive awards are aligned with overall Decarbonisation A plan for a site, charting emissions reduction through
Overall Executive Directors and UK workforce pension arrangements deliver a business performance Roadmap for example, maximising use of renewable energy, novel
process technologies and energy efficiency measures.
comments UK workforce in terms higher percentage value1 than those for the Sustainability has always been key for Croda. We are industry
2018 baseline 2018 baseline has been independently verified by
of opportunity. Executive Directors leaders in providing sustainable solutions for our customers Carbon Smart, as has the breakdown of emissions per
and innovation in sustainable products is central to our long- site. Adjustments have been made for the commissioning
1. Value is estimated by Lane, Clark and Peacock LLP based on an employee funding an equivalent pension by purchasing an annuity assuming current market term growth. We have therefore developed a range of ambitious of the ECO plant and acquisitions.
rates for annuity and savings
2. Implemented 1 January 2020

EVA Underpin 3. Increasing the level of normal PSP awards Proposed Remuneration Policy in full Extensive shareholder consultation was undertaken during the
Return on Invested Capital has always been an important for Executive Directors from 200%/150% to The next section sets out our Remuneration Policy for 2020 to second half of the year in good time for shareholder input to
Directors’ Report
internal metric for Croda and is already a key element of the 225%/175% for the CEO and GFD respectively 2023 which will be subject to shareholder approval at the 2020 feed into the finalisation of proposals in early 2020.
Remuneration Committee’s Discretion Framework. To reinforce reflecting the significant long-term growth of Annual General Meeting (AGM).
The main changes to the Policy, as detailed on page 74 are:
the importance of Return on Invested Capital going forward,
the business Croda’s proposed Remuneration Policy will be presented to
we will also be introducing a new Economic Value Added (EVA) • Reduction of the pension cash supplement for the CEO and
Since the CEO’s appointment in 2012 Croda has consistently shareholders at the Company’s 2020 AGM on 23 April 2020 and
underpin which will apply across the whole of the PSP award. GFD to 20% aligned to our UK workforce
outperformed the FTSE with significant long-term growth across if approved will take effect from the date of the AGM. It would
This underpin would require an improvement in EVA over the
all KPIs. In this period our Market Capitalisation has increased be intended to operate until its expiration at the Company’s • Introduction of sustainability metrics, incorporating NPP, into
three-year PSP performance period.
from £2.5bn to £6.6bn and our share price from c.£17 to c.£50 2023 AGM. the Performance Share Plan (PSP) and the introduction of an
EVA, as a formal underpin, would use transparent and per share. This expanded scope and growth means that Croda EVA underpin
established methodologies and would be reviewed on an is now an established international FTSE 100 company. The Policy was developed over the course of 2019 and • Increased level of normal PSP awards for Executive
annual basis by the Committee and sit alongside our Discretion early 2020. The Committee undertook a thorough review of Directors from 200%/150% to 225%/175% for the CEO
As we now embark on a new strategic phase we will demand arrangements with a particular focus on alignment to Croda’s and GFD respectively
Framework. In circumstances where the Company did not see
even more from our senior team; our ambition level has forward strategy and aspirations. Input was received from the • Increased shareholding guidelines and introduction of
an improvement in EVA over the three-year performance period,
increased, and this will require bigger and bolder steps Chair and management while ensuring that conflicts of interest post-employment shareholding requirements.
the Committee would reduce or cancel any vesting of awards.
to deliver ever greater value. were suitably mitigated. The Committee also considered
The Committee would retain the right to apply discretion to carefully corporate governance developments, particularly in Other minor changes have been made to improve the operation
In this context, we need to ensure appropriate compensation for and effectiveness of the Policy.
restrict the impact of the underpin in exceptional circumstances, the area of pensions. Input was provided by the Committee’s
Executive Directors. While our proposed approach has not been
for example material increases to tax rates or to the cost of appointed independent advisors throughout the process.
driven by benchmarking, as part of the review the Committee
capital or a major acquisition which had a significant effect
recognised that Croda is now placed below the lower quartile
on the Group’s EVA.
for total compensation compared to its industry and FTSE peers.
Remuneration Policy table
The table below sets out the main components of Croda’s Remuneration Policy for Executive Directors:
EVA Calculation As a result, for 2020 the Committee proposes to increase the Framework used to assess
EVA in the final year Minus EVA in the year prior maximum potential PSP award, under normal circumstances, performance and for the
(‘Year 3’) to the start of the for the Chief Executive from 200% to 225% of salary and the
performance period Operation Maximum opportunity recovery of sums paid
Group Finance Director from 150% to 175% of salary; the
(‘Year 0’) current policy allows for normal maximum awards of up Basic salary – to assist in the recruitment and retention of high-calibre Executives
to 200%. Normally reviewed annually with • Salaries may be increased each year in • The Committee considers
Definitions: increases effective from 1 January. percentage of salary terms. individual salaries taking due
EVA Net operating profit after tax (‘NOPAT’) less the charge for With this proposal the CEO and GFD will still remain in Base salaries will be set by the • The Committee will be guided by account of the relevant factors set
invested capital (‘CIC’) in that year the lower quartile for total compensation against FTSE 100 Committee, considering: the salary increase budget set in out in this Policy, which includes
NOPAT Adjusted operating profit less tax at the effective tax rate industrials and the introduction of the EVA underpin will • The performance and experience of each region and across the individual performance.
charged on adjusted profit in that year’s income statement
further ensure long-term incentive awards are aligned the individual concerned workforce generally.
CIC Average of the opening and closing invested capital (‘IC’) for with overall business performance. • Any change in scope, role and/or • Increases beyond those linked to the
the year, multiplied by the post-tax cost of capital disclosed
in the Annual Accounts for that year responsibilities region of the Executive Director or the
IC Adjusted invested capital represents net assets adjusted for net 4. Increasing shareholding guidelines and • Pay and employment conditions workforce as a whole (in percentage
debt, earlier goodwill written off to reserves and accumulated
introducing post-employment shareholding elsewhere in the Group of salary terms) may be awarded by
amortisation of acquired intangible assets. Calculated on the • Rates of inflation and market-wide the Committee at its discretion. For
same basis as shown in the Annual Report & Accounts. requirements to ensure compliance with
wage increases across international example, where there is a change in
the UK Corporate Governance Code and locations responsibility, experience or a significant
Any awards made under this plan will remain subject to the
Discretion Framework established in 2018; this framework
shareholders’ expectations • The geographical location of the increase in the scale of the role and/or
provides assurance that the outcome of incentive plans are Shareholding guidelines will continue to be set in line with ‘normal’ Executive Director size, value or complexity of the Group.
fair and reasonable in the context of overall company PSP awards; in line with the proposal above, levels for 2020 • Rates of pay in international • The Committee retains the flexibility to
performance and shareholder experience. would increase to 225% for the CEO and 175% for the GFD. manufacturing and pan-sector set the salary of a new hire at a discount
companies of a comparable size to the market level initially, and to
We also propose to introduce post-employment shareholding and complexity. implement a series of planned increases
guidelines, requiring Executive Directors to retain a shareholding in subsequent years, in order to bring
guideline for two years after leaving the Company. They will be the salary to the desired positioning,
required to retain 100% of their shareholding guideline for one subject to individuals performance.
year after leaving employment, tapering down to zero by the end
Benefits – to provide competitive benefits to act as a retention mechanism and reward service
of the second year. This policy will apply only to awards that
vest in 2020 and beyond. The Group typically provides the • The cost of benefits is not pre- None.
following benefits: determined and may vary from year to
During 2019 the rules relating to clawback were widened • Company car (or cash allowance) year based on the cost to the Group.
to include serious reputational damage and material • Private fuel allowance
corporate failure. • Private health insurance and other
insured benefits
• Other ancillary benefits, including
relocation expenses/arrangements
(including tax thereon) as required.
Additional benefits might be provided
from time to time (for example in
circumstances where an Executive
Director is deployed to, or recruited
from overseas).
The Committee will consider whether
the payment of any additional benefits
is appropriate and proportionate when
determining whether they are paid.

Maximum Framework used to assess performance and for the Framework used to assess
Operation opportunity recovery of sums paid performance and for the
Directors’ Report
Performance related annual bonus – to incentivise and reward delivery of the Group’s key annual Operation Maximum opportunity recovery of sums paid
objectives and to contribute to longer term alignment with shareholders All-employee share plans – to encourage retention and long-term shareholding in the Company and to
Normally one third Group Chief • Bonus will typically be based on challenging financial targets set in line provide all employees with the opportunity to become shareholders in the Company on similar terms
of any bonus paid is Executive: 150% with the Group’s KPIs (for example profit growth targets). • Periodic invitations are made to • In relation to HMRC plans (or • There are no post-grant targets
compulsorily deferred of salary. • The Committee has the flexibility to include, for a minority of the participate in the Group’s Sharesave equivalent) the maximum participation currently applicable to the
into shares for three years Other Executive bonus, targets related to other Group measures where this is scheme and Share Incentive Plan. level is as per HMRC limits. For any Group’s Sharesave and
through the Deferred Director: 125% considered appropriate. • Shares acquired through these other all-employee plan the maximum Share Incentive Plan.
Bonus Share Plan (DBSP). of salary. • For a profit measure, bonus normally starts to accrue once the arrangements have significant tax will be equivalent to the maximum
The Committee has the threshold target is met (0% payable) rising on a graduated scale benefits in the UK subject to satisfying applying to all employees.
discretion to permit DBSP to 100% for outperformance. Were an additional KPI metric to certain HMRC requirements.
awards to benefit from be introduced, the threshold would not exceed 25%. • The plans can only operate on an
dividends on shares • The Committee applies a Discretion Framework, which includes health, all-employee basis.
that vest. safety and environmental performance when determining the actual • The plans operate on similar terms but
The balance of the bonus overall level of individual bonus payments and it may adjust the bonus on a non-tax favoured basis outside the
is paid in cash. awards if it considers it appropriate to do so. UK as appropriate.
• Bonuses paid are subject to provisions that enable the Committee • In the event that Croda were to
to recover value overpaid through the withholding of variable pay introduce an all-employee plan similar
previously earned or granted (malus) or through requesting a payment in nature to the current Sharesave and
from an individual (clawback) in the event of a misstatement of results, Share Incentive Plan, the Committee
serious misconduct, serious reputational damage or material corporate retains the discretion to allow Executive
failure. The provisions will operate for a three-year period following the Directors to participate on the same
date on which the bonus is paid. basis as other employees.
Performance Share Plan (PSP) – to incentivise and reward the execution of business strategy over the Pension – to provide competitive long-term retirement benefits and to act as a retention mechanism
longer term and to reward sustained growth in profit and shareholder value and reward service
The PSP provides for Normal maximum • Granted subject to a blend of challenging financial (e.g. EPS), Pension benefits are typically provided • Career average revalued earnings None.
awards of free shares opportunity of: shareholder return (e.g. relative TSR) and strategic targets either through (i) participation in the UK’s scheme (CARE) with a maximum 1/60th
(i.e., either conditional • Group Chief (e.g. sustainability). The performance targets may also include defined benefit pension plan with a cash accrual up to a capped salary plus
shares or nil-cost options) Executive: 225% an additional underpin (e.g. an EVA underpin). supplement provided above any pension cash allowance of 20% of salary
normally made annually of salary • Targets will normally be tested over three years. salary cap or (ii) a cash supplement above the cap or cash allowance
which vest after three • Other Executive • In relation to financial targets (e.g. EPS growth and TSR) 25% of provided in lieu of pension. of 20% of salary.
years subject to Director: 175% awards subject to such targets will vest for threshold performance Only basic salary is pensionable.
continued service and of salary. with a graduated scale operating through to full vesting for equalling, Legacy arrangements
the achievement of In exceptional or exceeding, the maximum performance targets (no awards vest
For the current CEO, and in line with other employees, there is a legacy capped defined benefit pension scheme. While there
challenging performance circumstances (e.g. for performance below threshold). In relation to strategic targets or
are no future accruals, the arrangement remains inflation-linked.
conditions. Shares are recruitment), awards underpin targets, the structure of the target will vary based on the
subject to a two-year may be granted up nature of target set (e.g. for milestone strategic targets it may not
post-vesting holding to 300% of salary always be practicable to set such targets using a graduated scale
period. to compensate for and so vesting may take place in full for strategic targets if the
The Committee has value forfeited from criteria are met in full).
the discretion to permit a previous employer. • Vesting is also dependent on application of the Discretion Framework,
awards to benefit from the including satisfactory underlying financial performance of the Group
dividends paid on shares over the performance period and the Committee may adjust outcomes
that vest. if it considers it appropriate to do so.
• There are also provisions that enable the Committee to recover value
overpaid through the withholding of variable pay previously earned or
granted (malus) or through requesting a payment from an individual
(clawback) in the event of a misstatement of results, serious
misconduct, serious reputational damage or material corporate failure.
The provisions will operate for a three-year period following the date
on which the PSP awards vest.

Annual Bonus Plan and Long-Term Financial and shareholder return targets (e.g. profit growth for Recruitment and Promotion Policy
Incentive Policy the Annual Bonus Plan and EPS growth and relative TSR for For Executive Director recruitment and/or promotion situations, the Committee will follow the guidelines below:
Directors’ Report
The Committee will operate the Annual Bonus Plan, DBSP, PSP the PSP) are set based on sliding scales that take account
of internal planning and external market expectations for the
Remuneration
and all-employee plans according to their respective rules and element Policy
in accordance with the Listing Rules and HMRC rules where Group. In relation to strategic targets or underpin targets, the
structure of the target will vary based on the nature of target set. Base salary Base salary levels will be set in accordance with the Group’s Remuneration Policy, taking into account the
relevant. The Committee retains discretion, consistent with
Targets and underpins may be set which provide for Committee experience and calibre of the individual. The Committee retains the flexibility to set the salary of a new hire at
market practice, in a number of regards to the operation and
judgement in assessing the extent to which they have been met. a discount to the market level initially, and to implement a series of planned increases in subsequent years, in
administration of these plans. These include the following
order to bring the salary to the desired positioning, subject to individuals performance. Above market salaries
(performance targets restricted to the descriptions detailed
In addition, prior to the determination of final outcomes, the may also be offered if the experience and calibre of the candidate is considered to justify such an approach
in the preceding policy table):
Committee will apply its Discretion Framework to enhance the being taken by the Committee.
• Who participates in the plans rigour and consistency of any payments and to ensure they truly Benefits Benefits in accordance with the current policy. In addition, where necessary, the Committee may approve the
align to overall Group performance and the wider stakeholder payment of relocation expenses to facilitate recruitment.
• The timing of grant of award and/or payment
experience. While the Committee anticipates that any such Pension Pension in accordance with the current policy. For an internal promotion, any legacy defined pension
• The size of an award and/or payment discretion would normally result in a reduction, the Committee arrangements would be considered on a case by case basis.
• The determination of vesting reserves the right to make an upwards adjustment if
Annual bonus The annual bonus would operate in accordance with the current policy in terms of the maximum opportunity
• Dealing with a change of control (e.g. the timing of testing considered appropriate. and performance targets, pro-rated for the period of employment as appropriate.
performance targets) or restructuring
Only modest rewards are available for delivering threshold Long-term Share awards will be granted in accordance with the current policy in terms of maximum opportunity and
• Determination of a good/bad leaver for incentive plan
performance levels with maximum rewards requiring substantial incentives performance targets. An award may be made shortly after an appointment (subject to the Company not being
purposes based on the rules of each plan and the appropriate
out-performance of the challenging plans approved at the start in a prohibited period). For an internal hire, existing awards would continue over their original vesting period
treatment chosen
of each year. No payment will be made under the Annual Bonus and remain subject to their terms as at the date of grant.
• Adjustments required in certain circumstances (e.g. rights
Plan nor will any shares vest under the PSP for performance Buy-out awards In the case of an external hire it may be necessary to buy-out incentive pay or benefit arrangements (which
issues, corporate restructuring and special dividends)
below threshold. The Committee may reduce (but not increase) would be forfeited on leaving the previous employer). Any such buy-out would be provided for taking into
• The annual review of performance conditions for the Annual account the form (cash or shares), timing and performance conditions of the remuneration being forfeited.
the levels of vesting for threshold performance set out in the
Bonus Plan and PSP Replacement share awards, if used, will be granted using the Company’s existing share plans within the limits
Remuneration Policy table.
• For DBSP, the extension of the length of the deferral period. detailed in the Remuneration Policy table. Awards may also be granted outside of these schemes if necessary
and as permitted under the Listing Rules.
The Committee retains the ability to adjust the targets and/or set Remuneration scenarios for Executive Directors
different measures and alter weightings for the Annual Bonus
Plan and for the PSP if events occur (e.g. material divestment £4,133 Directors’ service contracts and payments for An Executive Director’s service contract may be terminated
of a Group business or changes to accounting standards) which 4000 18.4%
Share price growth loss of office without notice for certain events such as gross misconduct.
cause it to determine that an adjustment or amendment is £3,373 PSP Executive Directors’ service contracts are terminable by the No payment or compensation beyond sums accrued up to
appropriate so that the conditions achieve their original purpose. 45.1% 36.8%
Annual Bonus
Company on up to one year’s notice and by the Director on the date of termination will be made if such an event occurs.
Fixed
3000
at least six months’ notice.
The Committee may make minor amendments to the £2,384 Payments may be made in respect of the Director’s legal and/or
£2,296
Remuneration Policy to aid its operation or implementation 41.4% £1,977
17.1%
In respect of termination, the Committee’s policy is to deal with professional advice fees in connection with their cessation of
without seeking shareholder approvals (e.g. for regulatory, 2000
30.0% 24.5%
41.3% 34.2%
each case on its merits, in accordance with the law and any office or employment and/or fees for outplacement assistance.
£1,380
exchange control, tax or administrative purposes or to take further policy adopted by the Committee at the time. In the
account of a change in legislation). £839
22.1% 36.9% Other than in the event of a good leaver circumstance, at the
1000
29.5% 24.4% event of early termination, other than for cause, the relevant
£579 21.1% discretion of the Committee, no bonus may be payable unless
100% 36.6% 24.9% 20.3% Director’s current salary and contractual benefits would
100% 42.0% 29.3% 24.3% the individual remains employed and is not under notice at
Choice of performance measures and approach be taken into account in calculating any liability of the Company.
the payment date. In the event that an individual does cease
to target setting 0 Below Target Maximum Maximum Below Target Maximum Maximum
employment as a good leaver, bonuses would become payable
Threshold (including Threshold (including The principal contractual benefits provided in addition to
Under the Annual Bonus Plan, an underlying profit-based share price share price
subject to performance assessment, and pro-rata based on the
growth) growth) salary are the provision of a car or car allowance, private
objective such as profit growth will be used as the primary Group Chief Executive Group Finance Director number of complete calendar months worked in the relevant
fuel allowance, pension, medical insurance and life assurance.
performance metric. Such a measure will be used as it aligns year. A portion of any bonus payable will normally be
Annual bonuses and long-term incentives are non-contractual
to growth in underlying profitability. The current profit-based Assumptions: deferred into shares in line with normal policy. Good leaver
and are dealt with in accordance with the rules of the
measure also incentivises the efficient use of working capital. Below target = fixed pay only (base salary, benefits and pension) circumstances include circumstances such as injury, ill-health
relevant schemes.
Other metrics may be used in the future where it is considered or disability, redundancy, transfer or sale of the employing
that they provide clear alignment with the evolving strategy of On-target = 50% payable of the 2020 annual bonus and 62.5% company, retirement with the Company’s agreement or other
The Committee’s policy is also for contracts to contain
the Group. vesting of the 2020 PSP Awards circumstances at the discretion of the Committee (reflecting
provisions which enable the Company to terminate contracts at
any time with immediate effect. The Executive Director would the circumstances that prevail at the time).
In terms of long-term performance targets, PSP awards vest Maximum = 100% payable of the 2020 annual bonus, 100%
vesting of the 2020 PSP awards be entitled to receive compensation equivalent to up to twelve
subject to: The treatment for DBSP awards previously granted to an
months’ salary plus the value of their pension benefits (currently
valued at 20% of basic salary) and the value of other benefits, Executive Director will be determined based on the plan rules.
• financial targets (e.g. EPS growth) that are informed by the Maximum (including share price growth) = as per maximum but
payable in equal monthly instalments over the full notice period DBSP awards will normally subsist, except in the circumstance
Group’s long-term financial ambitions (e.g. long-term targeted including 50% share price growth of the PSP award
or, if less, the remainder of any notice period not yet completed. where an individual is summarily dismissed. The default
earnings growth) treatment is that deferred shares will be delivered at the
Salary levels (on which elements of the package are calculated) Such payments would normally discontinue or reduce to the
• shareholder return targets (e.g. relative TSR) which normal time, although the Committee may permit the
are based on those applying on 1 January 2020. The value of extent that alternative employment is obtained.
provide clear alignment of interests between shareholders awards to vest earlier.
taxable benefits is based on the cost of supplying those benefits
and Executives
(as disclosed on page 91) for the year ended 31 December
• strategic targets (e.g. New and Protected Products (NPP) 2019. The pension value is based on the assumptions used
and sustainability targets) that align to our long-term strategic to value pensions for the emoluments table (as disclosed on
ambitions (e.g. commitment to being sustainability leaders, page 91) and a salary supplement in lieu of pension at 20% of
and to grow through innovation). salary where relevant. The Executive Directors can participate
in the all-employee share plans on the same basis as other
The Committee retains the discretion to adjust both the
employees. The value that may be received from participating
measures and weightings for each PSP award, subject to the
in these schemes has been excluded from the graph above.
broad framework above.

The treatment for PSP awards previously granted to an Executive Directors will also normally be required to retain a How Executive Directors’ Remuneration Policy arrangement is reserved for those anticipated as having the
Executive Director will be determined based on the plan rules. shareholding for two years after leaving the Company. They will relates to the wider Group greatest potential to influence Group level performance.
Directors’ Report
The default treatment will be for outstanding awards to lapse on be required to retain 100% of their shareholding guideline (or The Executive Directors’ Remuneration Policy provides an
cessation of employment. In relation to awards granted under the actual shareholding of relevant shares on leaving, if lower) However, the Committee believes in wider employee share
overview of the structure that operates for the Group Executive
the PSP, in certain prescribed circumstances, such as injury, for one year after leaving employment, tapering linearly down to ownership and promotes this through the operation of the
Directors and those senior Executives forming the Group
ill-health or disability, redundancy, transfer or sale of the zero by the end of the second year. This policy will apply only to HMRC tax approved all-employee share schemes which are
Executive Committee (noting, however, that there are some
employing company, retirement with the Company’s agreement awards that vest in 2020 and beyond. The Committee has the open to all UK employees. Other similar share schemes are
differences in PSP participation and application of holding
or other circumstances at the discretion of the Committee discretion to waive this requirement in certain circumstances offered in other jurisdictions where local securities laws allow.
periods and shareholding requirement, within this group).
(reflecting the circumstances that prevail at the time) ‘good (e.g. compassionate circumstances).
leaver’ status applies. If treated as a good leaver, awards will be The Committee is made aware of pay structures across the How the views of employees are taken
eligible to vest subject to performance conditions, which will be External Appointments Group when setting the Remuneration Policy for Executive into account
measured over the performance period (unless the Committee Executive Directors may accept external non-executive Directors. The key difference is that, overall, the Remuneration The Group has a diverse workforce operating globally in 34
permits the award to vest at an earlier date), and will be reduced appointments with the prior approval of the Board. It is normal Policy for Executive Directors is more heavily weighted towards different countries, with various local pay practices. The Group
pro-rata (unless the Committee considers it appropriate not to practice for Executive Directors to retain fees provided for variable pay and share ownership, than for other employees. Human Resources Director updates the Committee periodically
do so) to reflect the proportion of the period between grant and non-executive Director appointments. on feedback received on remuneration practices across the
normal vesting date actually served. The alignment of Executive Director pensions with those of the Group. In developing this Remuneration Policy, the Committee
UK workforce was a key consideration for the review of the devoted time at the outset in considering the principles which
Treatment of shares awarded under HMRC all-employee plans Non-Executive Directors’ Letters of Appointment Remuneration Policy. The UK workforce pension scheme is a apply to remuneration across the workforce. This included
will be in line with the share plan rules. The Chair and Non-Executive Directors have letters of generous and inclusive benefit for our UK workforce. With the consideration of the ‘One Croda’ culture, as well as Croda’s
appointment for an initial fixed term of three years subject reduction in the cash supplement for incumbent Executive values and purpose. While the views of the global workforce
Shareholding Guidelines to earlier termination by either party on written notice. In Directors, pension arrangements for Executive Directors were not explicitly sought during the process, alignment
each case, this term can be extended by mutual agreement. are now considered to be aligned with those across the
The Committee operates share ownership guidelines which across the workforce was a key theme of the review.
Non-Executive Directors have no entitlement to contractual UK workforce.
apply to all Executive Directors and the Group Executive
termination payments. The dates of the initial appointments of
Committee. The Group Chief Executive is subject to a share How the views of shareholders are taken
the Non-Executive Directors are set out in the Annual Report Base salaries are operated under the same policy as detailed in
ownership guideline of 225% of salary and the other Executive
Directors to 175% of salary.
on Remuneration. the Remuneration Policy table with any comparator groups used into account
as a reference point, being country and/or industry specific. The In developing this Remuneration Policy, the Committee
It is expected that the guideline will be met within a five-year Committee considers the general basic salary increase for the undertook an extensive shareholder consultation exercise,
time period from its adoption (or date of joining for new broader Group and, in particular, the UK based employees and the Chair of the Committee met with key shareholders to
appointments) through a combination of share purchases and when determining the annual salary review for the Executive discuss the principles for the review and initial proposals. The
the retention of incentive shares. On the exercise of Sharesave Directors. The performance related bonus scheme operates Committee also considered emerging shareholder views in key
options or the vesting of awards from the Company’s long-term on a tiered basis from 150% of salary down to 20% of salary governance areas. Feedback received during the consultation
incentive plans, Executives are required to retain shares across the most senior global grades. Outside of the most period was taken into account when developing the final
awarded representing 50% of the net of tax gain until the senior tiers of Executives, the PSP is not operated as this Remuneration Policy.
ownership target is met or exceeded.
D. Report of the Remuneration Committee for year ended 31 December 2019
How our Remuneration Policy Discretion Framework, which includes for our customers. We reward success
Non-Executive Directors’ fees links to strategy and to reward general financial underpins, enabling in this area directly through this metric
The policy on Non-Executive Directors’ fees is: across our wider workforce the Remuneration Committee to use its in the PSP but we also recognise that
This section of our report provides discretion to reduce payments if success sustained EPS growth can only come
Framework used to the broader context of how our has been achieved at the expense of about through relentless innovation
assess performance Remuneration Policy links to strategy other measures. and the creation of new ingredients
Maximum and for the recovery and to reward across our wider for our customers.
Operations opportunity of sums paid workforce. We hope that it will provide Sustainable solutions
To provide a competitive fee which will attract those high calibre individuals who, through their a useful summary of the context of our ‘One Croda’ culture
Reward Policy and will show how our We are industry leaders in providing
experience, can further the interests of the Group through their stewardship and contribution sustainable solutions for our customers, We are proud of our ‘One Croda’
Reward Policy has and will continue
to strategic development to evolve to meet the needs of the and innovation in sustainable products is culture and believe sustaining this
Fee levels are set by reference to the expected time commitments • Fee levels will be None. business, our workforce and align with central to our long-term growth. Many of culture is key to our ongoing success.
and responsibilities, and are periodically benchmarked against eligible for increases the UK corporate governance standards. our customers are well known brands One of the principal pillars of our culture
relevant market comparators, as appropriate, reflecting the size during the period that with a direct connection to consumers is a strong sense of fairness and
and nature of the role. the Remuneration who increasingly expect branded transparency, therefore we have the
The Chair and Non-Executive Directors are paid an annual fee Policy operates to
How our reward strategy links products to be made using sustainable same simple bonus metric for the top
which is paid monthly in cash and do not participate in any of the ensure they continue to our business strategy ingredients. Sustainability is at the 400 employees within Croda and profit
Company’s incentive arrangements or receive any pension provision. to appropriately centre of Croda’s evolved strategy and must increase over prior year for any
The Non-Executive Directors receive a basic Board fee, with recognise the time therefore we have introduced for 2020 bonus to be paid. Creativity and
additional fees payable for chairmanship of the Company’s key commitment of the Delivering profitable growth a set of sustainability metrics innovation are also key pillars of
Committees and for performing the Senior Independent Director role. role, increases to within the PSP. our culture and are supported by
Additional fees may be payable for other additional responsibilities. fee levels for Non- Delivering sustainable profitable the NPP metric within the PSP.
All Non-Executive Directors are reimbursed for travel and related Executive Directors in growth, both top and bottom line, is Driving innovation
business expenses reasonably incurred in performing their duties general and fee levels central to our business success. The key Long-term shareholder
(and associated tax on these expenses). in companies of a metric of our Annual Bonus Plan is profit The sustainability metrics incorporate return
The Chair’s fee is determined by the Committee (during which the similar size and increase over prior year. Longer term our New and Protected Products (NPP)
Chair has no part in discussions) and recommended by them to the complexity. growth and progress on sustainability measure as we believe that driving We strongly believe that all the various
Board. The Non-Executive Directors’ fees are determined by the are measured and rewarded through the innovation is the key differentiator metrics of our Remuneration Policy
Chair and the Executive Directors. metrics within the PSP. Both the Annual between ourselves and our peers, combine to incentivise long-term
Bonus Plan and PSP are subject to our making us the preferred supplier shareholder return.

Our Discretion Framework

How our remuneration In order to enhance the rigour and consistency in the way in which performance is reviewed the Remuneration Committee has
Directors’ Report
adopted a Discretion Framework which it applies when assessing bonus and long-term incentive plan outcomes:
Delivering Driving Sustainable 'One Croda’ Long-term
practices support growth innovation solutions culture shareholder
our strategy return
What is the formulaic result following consideration of the existing underpins?
Bonus Profit
Long term EPS What is the single figure outcome?

incentive plan TSR Committee to consider year-on-year change and whether this mirrors
Sustainability the trend in performance
Underpins Safety, health and environment
EVA*
General financial & How does the outcome compare with shareholder experience?
Discretion Framework Committee to consider total shareholder return in both relative and absolute
Other features Holding periods terms over a number of different periods
Shareholding requirements
** New for 2020 policy year How does the outcome compare with overall Company performance?
Consider performance against other KPIs, for example
EVA*/ROIC Sales Profit growth Sustainability

How our Remuneration Policy links to the UK Corporate Governance Code
When developing the proposed Remuneration Policy and considering its implementation for 2020, the Committee was mindful
of the UK Corporate Governance Code and considers that the executive remuneration framework appropriately addresses the
following factors:
Factors How these are addressed Culture and conduct
Clarity • Our values of openness and transparency are reflected in our reward principles.
The Committee is committed to providing open and transparent disclosure on Culture Conduct Health and safety Systems and control
executive remuneration for our stakeholders.
• We have spent many months consulting with shareholders on our proposed policy
for 2020.
• We have sought to explain the changes to our proposed Remuneration Policy in
a way that highlights their alignment to both our strategic ambitions as well as Are there any external headwinds or tailwinds which need to be considered?
the provisions of the new UK Corporate Governance Code.
Simplicity • Our executive remuneration arrangements, as well as those throughout the global
organisation, are simple in nature and well understood by both participants
Are there any other events that should be factored in?
and shareholders.
Other events could be reputational/risk related or a change of accounting standards
• Our Annual Bonus Plan, in which around 400 of our global employees participate, is
based on a single profit metric, with a simple key requirement that no bonus can be
paid unless and until the previous year’s profit is exceeded.
Risk • The Committee considers that the structure of incentive arrangements does not As an additional reference point, are the bonus and PSP outcomes consistent?
encourage inappropriate risk-taking. Performance is based on a balance of metrics
which also reflect our broader stakeholders, for example inclusion of sustainability
measures and health and safety underpins. We then take a holistic assessment of Input from others?
performance using our Discretion Framework. A copy of the Discretion Framework Draw on input from other Committees as well as other management teams including HR,
is provided on the next page. Legal, Internal Audit and Risk
• Annual bonus deferral, the PSP holding period and our strengthened shareholding
guidelines provide a clear link to the ongoing performance of the business as well
as alignment with shareholders. Executives will be rewarded for sustainable
long-term shareholder return. Consider shareholder response to results
• Malus and clawback provisions also apply for both the annual bonus and PSP and The Committee may also want to reflect on how the market is
have recently been updated to include serious reputational damage and material likely to respond to the preliminary results
corporate failure.
Predictability • Our Remuneration Policy contains details of maximum opportunity levels for each
component of pay, with actual incentive outcomes varying depending on the level Compare with historical use of discretion
of performance achieved against specific measures.
Proportionality • Our Remuneration Policy directly aligns to our strategy and financial performance
as demonstrated above. The Committee considers performance from a range of
Does the outcome appear reasonable/fair, or should an adjustment be considered?
perspectives. Poor financial performance is not rewarded.
Alignment to culture • Alignment to our ‘One Croda’ culture is clearly established in our Remuneration ** New for 2020 policy year.
Policy; our bonus scheme has the same metric for all participants, our PSP
metrics reflect our commitment to sustainability and pensions are aligned
across the workforce.

Workforce Engagement Employee participation in employee share schemes

The engagement of the workforce to explain how executive remuneration aligns to the wider company pay policy is an area where we Workforce participation in our employee share plans has remained consistently strong and is driven by our culture of
Directors’ Report
continue to develop our approach. By utilising pulse surveys and a dedicated email address for employees to contact the Chair of the employees feeling a strong loyalty to the business. We were proud that this performance was recognised by the Chartered
Committee we hope to understand how best to consult with our geographically dispersed population. The following activities have Governance Institute who highly commended Croda in the ProShare award category of Best Overall Performance in Fostering
been undertaken to date: Employee Share Ownership.

Global Employee Survey During 2019 the Committee developed and approved a set of Reward Principles to guide the way 90%
we recognise and remunerate all our global employees. These principles focused on Total Reward
including intangible rewards and were strongly influenced by our Global Employee Survey results. 80%
84%
83%
83%
83%
81%
Pulse surveys A pulse survey, translated into 16 languages, has been used to draw employee’s attention to
the publication of the Remuneration Report and to help us understand the level of interest in the 70%
report; further pulse surveys will be issued following the publication of the 2019 report to generate 60%
61%
more interest and stimulate questions and debate.
59%
57%
57%
Dedicated email to A dedicated email address has been established for employees to send comments or questions 50%
51%
Chair of Committee to the Chair of the Remuneration Committee.
Overview of pay and Committee members are routinely updated on global employees’ terms and conditions and are 40%
policy decisions made aware of any significant changes to policies and other pay related matters. 30%
Board roadshows Our Executive Directors and Board regularly hold roadshows that allow a cross section of our
global workforce to discuss business issues and provide feedback. 20%
How our Remuneration Policy relates to reward in the wider employee context 10%
When making decisions about executive remuneration the Committee considers the pay and reward structures across the business. 0%
During 2019, the Committee was provided with a review of workforce remuneration and this now forms part of our normal 2015 2016 2017 2018 2019
Remuneration Committee cycle.
UK
One of the principles of Croda’s culture is to drive ‘One Croda’, therefore, many of the remuneration structures that apply to Overseas
Executives also apply further in the global organisation:

Base pay All employees: Pay is set in line with the market and closely monitored, our aim is to pay a CEO Pay Ratio The CEO Pay Ratio is calculated based on the total
‘living wage’ globally. We are already a living wage employer in the UK. Under the Government’s regulations, for financial years remuneration payable to the CEO in respect of 2019, as
beginning on or after 1 January 2019, quoted companies set out on page 91, which includes payments under the
Annual bonus Executive Directors, Executive Committee, Senior leaders and Senior managers:
registered in the UK (with more than 250 UK employees) annual bonus and PSP. The outcomes of these elements are
Consistent global bonus scheme aligned to increase in annual profit.
are required to publish the ratio of their CEO’s ‘single figure’ significantly linked to performance, with the value of the PSP
All other employees: Local schemes apply in many locations.
total remuneration to the 25th, 50th and 75th percentile total also incorporating share price growth. It is therefore expected
Performance Share Plan Executive Directors, Executive Committee and Senior leaders: Consistent PSP based on EPS, that the ratios will fluctuate year-on-year to reflect Croda’s
TSR and sustainability. remuneration of their full-time equivalent UK employees.
The pay ratios are calculated on a group-wide basis by performance. In respect of the 2019 figures in the previous
All employee share plans1 All-employees: Employees can participate in our global Sharesave scheme, subject to qualifying table, the ratios particularly reflect Croda’s continued strong
reference to UK employees only.
service, allowing everyone to save monthly and purchase discounted shares. financial and share price performance.
Pension (UK only)2 All-employees: Defined benefit plan based on career average salary plus 20% cash supplement There are three methodologies that companies can choose
paid for salaries above the cap or to employees who are tax limited and have opted out of the to report their pay ratio, known as Option A, B and C, and for Employee total remuneration
pension scheme. 2019 we have chosen to use the government’s preferred option, Actual base salary 2019 Total remuneration 2019
1. Sharesave or similar schemes are provided where local social security laws allow Option A. Using this methodology, we have determined the 75th percentile £44,972 £46,113
2. Other pension arrangements, aligned to local practice and legislation are available in many of our locations fulltime equivalent total remuneration for all UK employees and 50th percentile £37,916 £38,856
have ranked this data to identify employees whose remuneration
25th percentile £29,512 £29,552
places them at 25th, 50th and 75th percentile. These three
pay ratios are then calculated against our CEO ‘single figure’ We believe that the outcome of our CEO pay ratio calculation is
total remuneration. consistent with our pay, reward and progression policies.
The table below sets out our headline CEO Pay Ratio at the
Comparison to 2018 Pay Ratio
25th, 50th and 75th percentile.
The CEO Pay Ratio for 2018 was calculated using Option C,
which enabled us to calculate, on an indicative basis, the total
25 th
50 th
75 th
Percentile Percentile Percentile remuneration packages of three individual UK employees at the

FY 2019 61:1 46:1 39:1 25th, 50th and 75th percentile.
FY 2018 85:1 67:1 57:1 Option C was used in 2018 because the full administrative
process to enable us to calculate the equivalent total
1. Calculations for the workforce exclude severance pay, notice pay,
SIP repayments, fractional share payments, SAR payments and remuneration for UK employees were not in place. These
relocation expenses. processes were established in January 2019 enabling us to
2. The calculations for the workforce excludes the value of the defined use the preferred Option, Option A for the 2019 calculation.
benefit pension plan due to the difficulty of calculating these figures for
our complex historic pension arrangements.
3. Excludes Non-Executive Directors, contractors and employees who
left during 2019.
4. New starters during 2019, part time employees and employees on
long-term sick and maternity are included; their salary has been grossed up
to reflect a fulltime and full year salary.

Living Wage More than just pay Remuneration Committee year ended • Establish the selection criteria, select, appoint and set the
Our employees and our culture remain central to the continued 31 December 2019 terms of reference for any remuneration consultants who
Directors’ Report
success of Croda and in addition to pay and benefits we also advise the Committee and obtain reliable, up-to-date
Responsibilities information about remuneration in other companies
have a range of other workforce initiatives:
The Committee determines and agrees with the Board the • Oversee any major changes in employee benefits
• In 2019 we began the use of regular pulse surveys on a Company’s Remuneration Policy and framework. It determines structures throughout the Group.
range of topics to gauge employee opinions and morale. the remuneration packages for all Executive Directors, members
of the Executive Committee and the Chair and recommends The Company’s remuneration policies and practices should:
• We further developed our People Dashboard that provides and monitors the level and structure of remuneration for
senior management with data relating to a range of people senior managers. • Support the Company’s strategy and promote long-term
topics including diversity, turnover, balanced shortlists, sustainable success
exit interviews and progress against employee
Key responsibilities of the Committee: • Ensure that the senior management of the Company are
engagement targets.
Detailed responsibilities are set out in the Committee’s terms of provided with appropriate incentives to encourage enhanced
• We implemented a range of wellbeing and diversity reference, which can be found at croda.com/en-gb/investors/ performance and are, in a fair and responsible manner,
initiatives including supporting various diversity days, governance/board-committees/remuneration-committee. rewarded for their individual contributions to the success of
improving flexible working and implementing Mental A summary is provided below: the Company.
Health First Aiders in the UK.
• Determine and agree with the Board the framework or broad
Summary of key decisions for 2019
We were pleased to announce in 2018 that we gained • During 2019 we further progressed the implementation of • Vesting of 2016 PSP awards; the EPS target representing
accreditation in the UK as a Living Wage Employer from the our new Global HR system, including new Performance policy for the remuneration of the Company’s Chair, the
Group Chief Executive, the Executive Directors, the Company 50% of the award was met in full as was the TSR target
Living Wage Foundation. In 2020 we will continue to ensure Management, Learning, Talent, Recruitment and therefore the overall award vesting was at 100%
that all our UK employees and regular contractors are paid at, Onboarding modules; this included the launch of Secretary and other members of senior management
• In determining such policy, take into account factors which • Payment of the 2018 annual bonus in March 2019 at
or above, the rates advised by the Living Wage Foundation. over 250 on-line training programmes.
it deems necessary, including relevant legal and regulatory 36.19% of maximum target
We have set ourselves a goal within the Sustainability KPI • We are proud of the training and development that we requirements, the provisions and recommendations of the • Granting of the 2019 PSP awards based on 40% EPS,
Framework to ensure that at every location globally we pay our provide for employees. In 2019 our employees undertook UK Corporate Governance Code (the Code) and 40% TSR and 20% NPP target
employees at minimum a “living” wage, that goes beyond the 105,579 hours of training. associated guidance • Granting of new Restricted Share Plan awards to a
legal minimums, ensuring that we can provide an appropriate • We are also developing career paths which will provide • Review workforce remuneration and related policies and the small number of selected employees below the
standard of living for all of our employees (see the Sustainability structured career development, for employees in functional alignment of incentives and rewards with culture, taking these Executive Committee
Report for more information). roles, including operations, sales, and R&D. into account when setting remuneration policy for Directors • Establishing the annual bonus target for 2019
• Feedback to the Board on workforce reward, incentives and • The salary of the CEO and Group Finance Director to be
conditions in support of the Board’s monitoring of whether increased by 2% effective 1 January 2020, in line with the
Gender Pay Gap Those actions include: the workforce policies and practices of the Company are UK workforce
The table below shows a summary of the Gender Pay Gap aligned with its purpose, values and strategy • The fee of the Chair to also be increased by 2% effective from
• Ensuring we have a balanced shortlist for all positions
for Croda Europe Ltd: • Review the ongoing appropriateness and relevance of the 1 January 2020.
that we are recruiting for; we have a target of achieving
balanced shortlists for 80% of roles by 2023 Remuneration Policy
2018 2019 • Further improving our talent and succession planning
Mean pay gap 27.68% 27.06% processes to help identify and nurture talent early in Summary of Remuneration Committee Meetings
their career
Median pay gap 23.10% 23.90% • Finding ways to reduce shift work (especially night work) January 2019 • Approved the targets for the 2019 Annual Bonus Plan
Mean bonus gap 63.05% 67.08% and to examine the feasibility of part-time and job share London, UK • Agreed Chair and Executive Committee salary increases
arrangements in our production facilities
February 2019 • Reviewed the draft Director Remuneration Report
Median bonus gap 33.26% 33.36% • Improving family friendly policies including flexible working, York, UK • Approved the calculation for 2018 annual bonus award for payment in March 2019
parental leave and other benefits; in 2019 we introduced a • Approved the vesting outcome for the 2016 PSP awards
We are confident that our gender pay gap is not an equal pay new Global Parental Leave Policy and many of our global • Approved the granting of PSP awards for 2019
issue but is a result of a lack of female representation across locations have introduced flexible working • Approved the granting of the Restricted Share Plan awards
our business at senior levels and particularly in production • Continuing to invest in our STEM activities to encourage a • Reviewed the update on ABI headroom limits as they apply to the business
roles which represent the bulk of the workforce between the wide range of applicants to apply for roles in our business. April 2019 • Gave authority for UK employees to join the UK Sharesave scheme and non-UK employees to join the
25th and 75th percentile. Addressing this issue will require Harrogate, UK International Sharesave scheme
a long-term approach but we have already begun work to More information is available on the Croda website. • Reviewed workforce remuneration
increase the number of females working in production and • Agreed dividend enhancement to the Deferred Bonus Share Plan
in senior positions.
November 2019 • Discussed outline policy changes
York, UK • Considered and reviewed remuneration trends specifically the new UK Corporate Governance Code
• Reviewed shareholder consultation feedback
December 2019 • Agreed proposed policy changes
York, UK • Approved salary increases for Executive Directors
• Reviewed proposed targets for the 2020 annual bonus and PSP award
• Considered the Committee’s effectiveness review
In addition, the Board met in June 2019 for a Remuneration Policy ‘Blue-Sky’ day and considered the following:
• reward policy and strategy alignment
• companywide reward principles
• all stakeholders interest in reward.

Executive Directors Remuneration for the year ending 31 December 2020
E. Directors’ remuneration for the year ended 31 December 2019 –
Key component Implementation in 2020
Audited Information
Directors’ Report
Basic salary Executive Directors’ base salaries were reviewed during the final quarter of the financial year ended 31 December 2019.
Salaries for 2020 are as follows:
Salary at Jan 2020 Salary at Jan 2019 Increase In this section
Steve Foots £675,584 £662,337 2% i. Directors’ remuneration for the year ended 31 December 2019
Jez Maiden £465,920 £456,784 2% ii. Pension
• UK based employees will be awarded an increase of 2% in 2020 iii. Payment for cessation of office
Commentary iv. Payments to past directors
• The Committee considered each individual’s progression in • The Committee also considered the wider pay levels v. Share interests
their role as well as their responsibilities, performance, skills and salary increases being proposed across the Group vi. Performance graph
and experience. as a whole.
Other benefits • Other benefits such as company cars or car allowances, vii. Ten-year remuneration figures for Group Chief Executive
fuel allowance and health benefits are made available to viii. Board Chair and other Non-Executive Directors’ fees 2019 and 2020
Executive Directors.
ix. Non-Executive Directors’ remuneration
Performance Steve Foots 150% of salary Jez Maiden 125% of salary
x. Service contracts and outside interests
related The targets for the awards are set out below
xi. Remuneration Committee attendance and advisers
Annual Level of award *Bonusable Profit % of bonus payable
Bonus Plan xii. Other disclosures
Threshold Equivalent to 2019 actual 0%
xiii. Statement of voting
Maximum 2019 actual plus 10% 100%
** Bonusable Profit is the growth in underlying profitability (defined for bonus purposes as Group EBITDA for continuing operations
before exceptional items and any charges or credits under IFRS2 share based payments) less a notional interest charge on working
capital employed during the year. Target is measured after providing for the cost of bonuses on a constant currency basis. i. Directors’ remuneration for the year ended 31 December 2019
Commentary Elements of remuneration
• No change to maximum awards or performance measures • The Committee remains comfortable that the structure of
from last year. the annual bonus does not encourage inappropriate risk Executive Directors’ remuneration
• When determining bonus outcomes, the Committee taking and that the mandatory deferral of one third of bonus Salaries and Pension3 Long term
applies the Discretion Framework which includes a range into shares provides clear alignment with shareholders and Executive fees1 Benefits2 supplement Pension4 Annual bonus Incentives5A-B Other6 Total
of factors, see page 85. fosters a longer-term link between annual performance Director £ £ £ £ £ £ £ £
• One third of any bonus paid will be deferred into shares for and reward. Steve Foots 2019 662,337 33,476 156,209 2,620 – 942,268 3,155 1,800,065
a three-year period. • The Committee considers the targets set for 2020 to be at
least as demanding as in previous years and were set after 2018 643,046 33,320 151,386 44,000 349,078 2,087,278 3,592 3,311,700
• Malus provisions apply.
• Full retrospective disclosure of targets and actual taking due account of the Company’s commercial Jez Maiden 2019 456,784 19,667 114,196 – – 487,382 4,051 1,082,080
performance against these will be made in next year’s circumstances and inflationary expectations. 2018 443,480 16,055 110,870 – 200,619 1,079,637 4,048 1,854,709
Annual Report on Remuneration.
Total 2019 1,119,121 53,143 270,405 2,620 – 1,429,650 7,206 2,882,145
Performance Steve Foots 225% of salary Jez Maiden 175% of salary
2018 1,086,526 49,375 262,256 44,000 549,697 3,166,915 7,640 5,166,409
share plan The targets for the awards are set out below
Performance measure & weighting Threshold vesting Maximum vesting 1. Steve Foots’ salary before salary sacrifice pension contributions of £3,000.
EPS1 (35%) 5% p.a. 11% p.a. 2. Benefits include benefit-in-kind for company car or cash allowance, benefit-in-kind for private medical insurance and private fuel allowance.
3. Represents the 25% supplement paid to Steve Foots and Jez Maiden in relation to benefits provided above the salary pension cap.
TSR2 (35%) Median Upper quartile 4. For defined benefit pensions the amount included is the additional value accrued during the year, calculated using HMRC’s methodology for the purposes of
NPP (20%) NPP sales to grow at twice the rate of non-NPP, subject to overall positive Group profit growth and a income tax using a multiplier of 20. This methodology can result in year-on-year fluctuations due to underlying inflation inputs.
minimum average of 3% NPP growth per year, with payments being made on a sliding scale up to 5% 5. A. The PSP awards granted in March 2017 reached the end of their performance period on 31 December 2019. The awards will vest at 56.2% (see page 92).
growth per year The values included in the table above are based on the three-month average price to 31 December 2019 of 4807p. Of these values, £240,575 and £124,436 is
attributable to share price growth for Steve Foots and Jez Maiden, respectively. These values will be updated in next year’s Annual Report based on the share
Sustainability • Development of decarbonisation roadmaps3, covering all our Scope 1 and 2 emissions to define
price at vesting which will take place on 9 March 2020.
metrics (10%) how we will achieve our targets across all our geographically dispersed and complex footprint. B. The 2018 PSP award has been updated to reflect the actual share price at vesting of 5055.9p.
The achievement of this target in full would be a 5% pay-out with a 2.5% pay-out for a better than 6. Represents the value received in the year from participation in all-employee share schemes. Steve Foots and Jez Maiden both received 33 matching shares as
95% achievement. part of the Share Incentive Plan (SIP) with a transaction value of £1,811. Both Steve Foots and Jez Maiden also participated in the 2019 Sharesave scheme and
• Measurable reductions in our Scope 1 and 2 emissions over the next three years. We have set a were granted 138 and 230 shares respectively at a discounted rate of 3898p. The share price on the date of grant was 4872p representing a 20% discount.
target of 30,000 tonnes against an adjusted 2018 baseline of 232,000 tonnes4. The achievement for
this target in full would be a 5% pay-out with a 2.5% pay-out for a better than 75% achievement. Annual bonus
See page 75 for further details. The 2019 bonuses for Executive Directors were calculated by reference to the amount by which the profit for the year exceeded
EVA underpin which applies across the whole PSP award. the profit for 2018 (the ‘bonusable profit’). Bonuses for 2019 are payable against a graduated scale once the 2019 Bonusable Profit
1. EPS growth p.a. is calculated on a simple average basis over 3. Decarbonisation Roadmap: A plan for a site, charting exceeds the base profit with bonus targets set, and performance measured, based on constant currency actual exchange rates.
the three-year period and therefore growth of 33% or more emissions reduction through for example, maximising use
over three years is required for maximum vesting. of renewable energy, novel process technologies and energy Bonus outcome
2. TSR peer group constituents: AzkoNobel, Albermarle, efficiency measures. Threshold target Maximum target Actual (% of maximum)
Ashland, BASF, Clariant, Koninklijke DSM, Eastman Chemicals, 4. 2018 baseline has been independently verified by Carbon Smart,
Elementis, Evonik Industries, Givaudan, Johnson Matthey, as has the breakdown of emissions per site. Adjustments have Bonusable Profit £357.2m £392.9m £343.8m 0%
Kemira, Lanxess, Novozymes, Solvay, Symrise, Synthomer, been made for the commissioning of the ECO plant and
Victrex. acquisitions.
The Remuneration Committee has discretion to reduce (including to zero) the amount of any payment under the scheme if it
Commentary considers the safety, health or environment (SHE) performance is in serious non-compliance with the Croda SHE policy statement,
• Changes made to both the maximum awards • An additional two-year holding period will apply for any document of minimum standards. In addition, the Committee can also reduce any payment (including to zero) if it considers the
and performance measures from prior years. shares vesting. underlying business performance of the Company is not sufficient to support the payment of any bonus. In addition, the Committee
• When assessing outcomes, the Committee applies the • Malus and clawback provision apply.
Discretion Framework which considers, for example, the
has developed a rigorous framework for the application of judgement and discretion in reviewing awards (see page 85).
• Performance period 01 January 2020 to 31 December 2022.
management of ROIC, health and safety and sales growth
and may adjust awards if it considers appropriate.
Pension Steve Foots Jez Maiden
• Membership of CARE pension plan up to salary cap and • 20% of salary as pension supplement.
20% of salary as pension supplement above the cap.
Commentary
• The 20% pension supplement aligns to our UK workforce. For full details see the diagram on page 74.

PSP SIP
PSP awards vesting in March 2020 Details of shares purchased and awarded to Executive Directors under the SIP are shown in the table below. A brief description of
Directors’ Report
The PSP awards granted in March 2017 reached the end of their three-year performance period on 31 December 2019. the SIP is set out in note 23 on page 147.
Out-turn (% of max SIP shares that Total

Measure Weighting Threshold Maximum Actual performance element) Partnership became unrestricted SIP
SIP shares held shares acquired Matching shares Total shares unrestricted in shares held at
Relative TSR versus 40% Median Upper quartile 84.2 100% Executive Director 01.01.19 in year awarded in year 31.12.19* the year 31.12.19
bespoke peer group1 (50th percentile) (75th percentile) percentile Steve Foots 5,662 33 33 5,728 104 5,403
Adjusted annual 40% 5% p.a. 11% p.a. 6.23% p.a. 40.6% Jez Maiden* 279 33 33 355 1 1
average EPS growth
over three years2 There have been no changes in the interests of any Director between 31 December 2019 and the date of this report, except for the purchase of six SIP shares and
NPP 20% Target vesting for NPP sales growth to be at 1.8x 0% six matching shares by Steve Foots and Jez Maiden during January and February 2020.
** Jez Maiden also had 10 additional shares acquired through the Dividend Reinvestment Plan
least twice non-NPP sales, subject to a
minimum average of 5% growth per year and Sharesave
overall positive Group profit growth. Details of awards made under the UK Sharesave scheme are set out below:
1. TSR peer group constituents: AkzoNobel, Albemarle, Arkema, Ashland, BASF, Clariant, Koninklijke DSM, Eastman Chemicals, Elementis, Evonik Industries, Number at Number at
Givaudan, Johnson Matthey, Kemira, Lanxess, Novozymes, Solvay, Symrise, Synthomer, Victrex. 01.01.19 31.12.19
2. EPS growth p.a. is calculated on a simple average basis over the three-year period; and therefore growth of 33% or more over three years is required for Earliest Exercise (10.357143p Granted Exercised in (10.609756p
maximum vesting. Date of grant exercise date Expiry date Face value* price shares) in year the year shares)
As well as considering the EPS, TSR and NPP targets under the rules of the PSP, the Remuneration Committee is obliged to consider Steve Foots
the underlying performance of the Company over the performance period, which it did using the Discretion Framework on page 85. 16 September 2016 01 November 2019 30 April 2020 £6,728.94 2639p 204 – 204 –
On review, the Committee considered the outcome of the PSP consistent with overall Company performance over the three-year 13 September 2017 01 November 2020 30 April 2021 £6,725.10 3092p 174 – – 174
performance period. 27 September 2018 01 November 2021 30 April 2022 £8,959.67 4144p 173 – – 173
12 September 2019 01 November 2022 30 April 2023 £6,723.36 3898p – 138 – 138
The forecast vesting value of the awards made in March 2017, subject to the above performance targets, is included in the 2019
single figure table on page 91. Any shares vesting will be subject to a two year holding period. 551 138 204 485
Jez Maiden
Gains made on exercise of share options and PSP 16 September 2016 01 November 2019 30 April 2020 £11,247.89 2639p 341 – 341 –
The gains are calculated according to the market price of Croda International Plc ordinary shares on the date of exercise, although 27 September 2018 01 November 2021 30 April 2022 £11,238.43 2639p 217 – – 217
the shares may have been retained. 12 September 2019 01 November 2022 30 April 2023 £11,205.60 3898p – 230 – 230
558 230 341 447
Executive Director Exercise date Shares exercised Scheme Exercise price Market price Gain (before tax)
Steve Foots 04 March 2019 41,284 PSP 0 5055.9p £2,087,278 During 2019, the highest mid-market price of the Company’s shares was 5377.5p and the lowest was 4545.42p. The year end closing price was 5120p. The year
04 March 2019 6,855 DBSP 0 5055.9p £346,582 end mid-market price was 5150p.
** Face value is calculated using the market value on the day before the date of grant, multiplied by the number of shares awarded.
08 November 2019 204 Sharesave 2639p 4814p £4,437
Jez Maiden 04 March 2019 21,354 PSP 0 5055.9p £1,079,637 ii. Pension
04 March 2019 3,779 DBSP 0 5055.9p £191,062 The pension rights that accrued during the year in line with the policy on such benefits as set out in the Policy Report were as follows:
08 November 2019 341 Sharesave 2639p 4814p £7,417 Normal retirement Accrued Single remuneration Single remuneration Single remuneration figures
Executive Director date under the CPS pension 2019 figure 2019 figure 2018 excluding supplement
PSP awards granted in 2019 Steve Foots 14 September 2033 £125,915 £158,829 £195,386 £2,620
The PSP awards granted on 12 March 2019 were as follows: Jez Maiden N/A – £114,196 £110,870 –
Face/maximum value % of award vesting Note: Members of the CPS have the option to pay voluntary contributions. Neither the contributions nor the resulting benefits are included in this table. During
Number of PSP Basis of award of awards at grant at threshold 2019, Steve Foots was paid £156,209 (2018: £151,386) and Jez Maiden was paid £114,196 (2018: £110,870) in addition to their basic salary to enable them to
Executive Director shares awarded granted (% of salary) date1 (maximum) Performance period make independent provision for their retirement.
Steve Foots 27,494 200% 1,324,660 25% (100%) 01.01.19 – 31.12.21
Jez Maiden 14,221 150% 685,167 25% (100%) 01.01.19 – 31.12.21 Croda has a number of different pension plans in the countries in which we operate. Pension entitlements for Executives are
tailored to local market practice, length of service and the participant’s age. In 2016 a Career Average Revalued Earnings scheme
1. Face value/maximum value is calculated based on a shares price of 4818p, being the average mid-market share price of the three dealing days prior to the was introduced with a cap applied to pension benefits, at this time the cap was set at £65,000, The cap is increased each year in line
date of grant. with inflation and from April 2020 will be £70,420. Employees who earn in excess of the pension cap or who cannot be members of
the plan due to tax limitations receive a pension supplement. For current Executive Directors this supplement is up to 25% of salary.
Any shares vesting will be subject to a two year holding period.
This percentage has reduced to 20% in 2020 for new and existing Executive Directors, which is in line with members of the UK
The 2019 PSP awards are subject to a performance condition which is split into three parts; 40% EPS, 40% TSR, and 20% NPP. workforce. See pages 74 to 75 for further details of our revised pension arrangements.
Vesting will take place on a sliding scale. Targets were consistent with the PSP awards granted in 2017, as stated above.
Steve Foots’ pension provision
All employee share plans Steve Foots accrues pension benefits under the Croda Pension Scheme (CPS) with a CARE accrual rate of 1/60th and an entitlement
Executive Directors are invited to participate in the HMRC tax-approved UK Sharesave scheme and the Croda Share Incentive Plan to retire at age 60. From 6 April 2011 onwards, pension benefits accruing are based on a capped salary. This cap was £187,500
(SIP) in line with, and on the same terms as, the wider UK workforce. until April 2014 at which point it reduced to £150,000, and due to annual allowance regulations and changes to the pension scheme,
reduced to £37,500 in April 2016 (reduced from the scheme cap of £65,650 due to annual allowance regulations) and is frozen at
this amount. If Steve Foots retires before the age of 60, a reduction will be applied to the element of his pension accrued before
6 April 2006, unless he is retiring at the Company’s request. In the event of death, a pension equal to two-thirds of the Director’s
pension would become payable to the surviving spouse. Steve Foots’ pension in payment is guaranteed to increase in line with
the rate of inflation up to a maximum of 10% per annum for benefits accrued before 6 April 2006, and in line with inflation up to
a maximum of 2.5% per annum for benefits accrued from 6 April 2006 onwards.
Steve Foots is entitled to death-in-service benefits from the CPS. He also received a pension supplement at 25% of salary above his
personal pension benefit cap in 2019. This pension supplement has reduced to 20% of salary in 2020.

Jez Maiden’s pension provision viii. Board Chair and other Non-Executive Directors’ fees 2019 and 2020
Jez Maiden has elected not to join CARE and was therefore paid a pension supplement of 25% of salary in 2019. This pension The fees paid to the Non-Executive Directors (including chairing of Committees) and to the Senior Independent Director were
Directors’ Report
supplement has reduced to 20% of salary in 2020. He has an agreement with the Company to provide him with death-in-service reviewed in January 2020 and increased by 2%. These changes will take effect from 1 January 2020. The revised fee structure for
benefits outside of the CPS. the Board Chair and other Non-Executive Directors for 2020 is detailed below.
2019 fee 2020 fee
iii. Payments for cessation of office Non-Executive Director Position £ £
There were no payments for loss of office during the year under review. Anita Frew Board Chair 295,000 300,900
Roberto Cirillo Non-Executive Director 62,000 63,240
iv. Payments to past directors Alan Ferguson1 Audit Committee Chair & Senior Independent Director 87,300 89,046
There were no payments to past directors during the year under review. Jacqui Ferguson Non-Executive Director 62,000 63,240
Helena Ganczakowski1 Remuneration Committee Chair 77,000 78,540
v. Share interests Keith Layden Non-Executive Director 62,000 63,240
The interests of the Directors who held office at 31 December 2019 are set out in the table below: John Ramsay2 Non-Executive Director – 63,240
Legally owned1 SIP % of salary held Steve Williams3 Non-Executive Director 62,000 –
under
PSP DBSP Sharesave Total shareholding 1. Committee Chairs received a supplementary fee of £15,000 in respect of their additional duties in 2019. This will increase in 2020 to £15,300. The Senior
31.12.18 31.12.19 (unvested) (unvested)2,3 (unvested)4 Restricted Unrestricted 31.12.19 guideline4 Independent Director received a supplementary fee of £10,300 in respect of his additional duties in 2019. This will increase in 2020 to £10,506. In addition,
Executive Director in 2020 the Non-Executive Director base fee will increase from £62,000 to £63,240.
2. John Ramsay was appointed to the Board in January 2020.
Steve Foots 159,233 176,760 90,277 15,545 485 325 5,403 288,795 >200% target 3. Steve Williams retired in April 2019. His fees were pro-rated accordingly.
Jez Maiden 16,184 27,167 46,695 8,755 447 354 1 83,419 >150% target
Non-Executive Director
ix. Non-Executive Directors’ remuneration
The remuneration of Non-Executive Directors for the year ended 31 December 2019 payable by Group companies is detailed below,
Roberto Cirillo – – – – – – – – –
this table reflects actual payments in 2019.
Alan Ferguson 2,414 2,357 – – – – – 2,357 –
Jacqui Ferguson – 76 – – – – – 76 – Non-Executive Director
salaries and fees Benefits1 Total
Anita Frew 9,655 9,425 – – – – – 9,425 – £ £ £
Helena Ganczakowski 370 361 – – – – – 361 – Anita Frew 2019 295,000 5,546 300,546
Keith Layden 78,993 80,400 – 3,883 – – – 84,283 – 2018 245,140 8,636 253,776
Steve Williams* 11,983 – – – – – – – – Steve Williams2 2019 20,667 2,787 23,454
2018 59,965 3,468 63,433
** Steve Williams retired in April 2019.
1. Including connected persons. Alan Ferguson 2019 87,300 3,004 90,304
2. Represents DBSP awards and, for Keith Layden in respect of his 2017 bonus, a deferred share award equivalent to a DBSP award. 2018 73,936 6,323 80,259
3. During 2019 Steve Foots and Jez Maiden were granted 2,415 and 1,387 shares respectively under the DBSP. These awards relate to their 2018 bonus and
were granted on 12 March 2019 based on a share price of £48.18 being the 3 day average consecutive share price from 7 March 2019 to 11 March 2019. Helena Ganczakowski 2019 77,000 4,805 81,805
4. For 2020, the shareholding guidelines for the Chief Executive Officer and Group Finance Director will increase to 225% and 175% of salary, respectively. 2018 63,636 5,152 68,788
Jacqui Ferguson3 2019 62,000 2,455 64,455
vi. Performance graph (unaudited information)
2018 18,883 1,623 20,506
1,000
Roberto Cirillo4 2019 62,000 5,845 67,845
Total Shareholder Return
800 2018 38,420 2,599 41,019

Total 2019 603,967 24,442 628,409
(Rebased)
600
2018 499,980 27,801 527,781
400
200 1. The benefits relate to Directors undertaking business travel on behalf of Croda and ensuring the Directors are not out of pocket for related tax.
2. Steve Williams retired 24 April 2019.
0 3. Jacqui Ferguson was appointed to the Board in September 2018.
Dec 2009 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 4. Roberto Cirillo was appointed to the Board in April 2018.
Croda International FTSE 100 FTSE 250 FTSE 350
Executive Director pay Non-Executive Director pay
and benefits and benefits
Pension Annual
vii. Ten-year remuneration figures for Group Chief Executive (unaudited information) Base pay Benefits supplement Other bonus PSP2 Fee Benefits Total
The total remuneration figure includes the annual bonus and long term incentive awards which vested based on performance in those Keith Layden1 £ £ £ £ £ £ £ £ £
years. The annual bonus and long term incentive award percentages show the payout for each year as a percentage of the maximum. 2019 – – – – – – 62,000 861 62,861
2018 – – – – – 322,111 56,650 1,492 380,253
2010* 2011* 2012^ 2013^ 2014^ 2015^ 2016^ 2017^ 2018^1 2019^
Total remuneration 3,224,875 4,142,608 1,364,048 1,427,156 769,414 1,374,046 2,404,441 3,570,251 3,311,700 1,800,065 1. Keith Layden retired as an Executive Director in April 2017. Following his retirement, he was appointed as a Non-Executive Director. The 2018 PSP amounts
(£) shown relate to the 2016 PSP award, which was subject to performance conditions and pro-rating.
2. The 2018 PSP award has been updated to reflect the actual share price at vesting of 5055.9p.
Annual bonus (%) 100% 100% 28% 0% 0% 76.38% 100% 78.36% 36.19% 0%
Long term 100% 100% 100% 81.8% 0% 0% 43% 100% 100% 56.2%
incentives
vesting (%)
** Relates to Mike Humphrey

^^ Relates to Steve Foots
1. The 2018 PSP award has been updated to reflect the actual share price at vesting of 5055.9p.

Non-Executive Directors appointment xii. Other disclosures (unaudited information)

The effective dates of the letters of appointment for the Board Chair and each Non-Executive Director who served during 2019, are Percentage change in remuneration levels
Directors’ Report
shown in the table below: The following chart shows the movement in the salary, benefits and annual bonus for the Group Chief Executive between the current
Non-Executive Director Original appointment date Expiry date of and previous financial year compared with that of the average UK employee. The Committee has chosen this comparator as it feels it
current term provides a more appropriate reflection of the earnings of the average worker than the movement in the Group’s total wage bill, which
Anita Frew 05 March 2015 05 March 2021 is distorted by fluctuations in the number of employees and variations in wage practices in our overseas markets.
Roberto Cirillo 26 April 2018 26 April 2021
Alan Ferguson1 01 July 2011 30 June 2020 UK employees
Jacqui Ferguson 01 September 2018 01 September 2021 4.1% (ex. Executive Directors)
Salary CEO
Helena Ganczakowski 01 February 2014 31 January 2021
3.0%
Keith Layden 01 May 2017 01 May 2020
Steve Williams2 01 July 2010 30 June 2019
6.6%
Benefits
1 Alan Ferguson will retire at the AGM in 2020 0.5%
2 Steve Williams retired 24 April 2019.
x. Service contracts and outside interests -97.9%

Bonus
The Executive Directors have service contracts as follows: -100.0%
Executive Director Contract date Termination provision
-100% 0% 10%
Steve Foots 16 September 2010 by the Company 12 months, by the Director 6 months % change (from 2018 to 2019)
Jez Maiden 09 October 2014 by the Company 12 months, by the Director 6 months
External directorships Relative importance of the spend on pay

Executive Directors are permitted to accept external appointments with the prior approval of the Board. It is normal practice for The chart below shows the movement in spend on staff costs versus that in dividends and adjusted profit after tax.
Executive Directors to retain fees provided for Non-Executive Director roles. Jez Maiden was appointed as a Non-Executive Director
of PZ Cussons on 16 October 2016 and received a fee of £65,990 for 2019. Employee 2019
+4.7% 2018
remuneration
xi. Remuneration Committee attendance and advisers cost1
Members and attendance (eligibility) at meetings held during the year ended 31 December 2019:
-56.8%
Helen Ganczakowski – Chair 5 (5) Dividends2
Alan Ferguson – Senior Independent Non-Executive Director 5 (5)
Steve Williams* – Independent Non-Executive Director 3 (3)
Roberto Cirillo – Independent Non-Executive Director 5 (5) -4.1%
Adjusted profit
Jacqui Ferguson – Independent Non-Executive Director 5 (5) after tax3
** Steve Williams retired 24 April 2019. 0 275
£m
In addition, the Committee invites individuals to attend meetings to ensure that decisions are informed and take account of pay and
conditions in the wider Group. During 2019, invitees included other Directors and employees of the Group and the Committee’s 1. Employee remuneration costs, as stated in the notes to the Group accounts on page 127. These comprise all amounts charged against profit in respect of
advisers (see below), including Steve Foots (Group Chief Executive), Jez Maiden (Group Finance Director), Keith Layden (Non- employee remuneration for the relevant financial year, less redundancy costs and share-based payments, both of which can vary significantly from year to year.
Executive Director), Tracy Sheedy (Group HR Director), Tom Brophy (Group General Counsel and Company Secretary) and 2. Dividends are the amounts payable in respect of the relevant financial year. The dividend amount shown in respect of 2018 includes a special dividend of
115.0p per share.
Caroline Farbridge (Deputy Company Secretary). 3. Adjusted profit after tax is profit for the relevant year adjusted for exceptional items, acquisition costs, amortisation of intangible assets arising on acquisition
and the tax thereon.
Attendees at Committee meetings are excluded from discussions that determine their own remuneration.
xiii. Statement of voting (unaudited information)
Remuneration Committee advisers (unaudited information) Remuneration Policy Annual Report on Remuneration
2016 2018
Deloitte LLP were retained as the appointed adviser to the Committee for the whole of 2019, having been appointed in October 2017. number of votes % of votes number of votes % of votes
As well as providing advice in relation to Executive remuneration and Non-Executive fees Deloitte LLP also provide advice to
Votes cast in favour 77,434,375 86.34% 85,949,463 88.70%
the Group in relation to global employer services, global business tax services and indirect tax. Deloitte LLP is a signatory to the
Votes cast against 12,253,393 13.66% 10,947,479 11.30%
Remuneration Consultants Group Code of Conduct. Deloitte LLP has no connection with any individual director of Croda. The total
fees paid to Deloitte LLP for its services during the year in relation to Executive remuneration and Non-Executive fees were £83,275 Total votes cast 89,687,768 100% 96,896,942 100%
(excluding VAT). The Committee regularly reviews the external adviser’s relationship and is comfortable that the advice it is receiving Withheld 320,236 173,343
remains objective and independent.
I will be available at the AGM to respond to any questions shareholders may raise on the Committee’s activities.
On behalf of the Board
Helena Ganczakowski
Chair of the Remuneration Committee
24 February 2020

Directors’ Report
Other Disclosures
Directors’ Report
Pages 44 to 101 inclusive, together with the sections of Directors’ indemnities Recruitment and progression: It is established policy throughout
the Annual Report and Accounts incorporated by reference, The Company maintains Directors and Officers’ liability the Business that decisions on recruitment, career development,
constitute a Directors’ Report that has been drawn up and insurance that gives appropriate cover for any legal action promotion and other employment related issues are made solely
presented in accordance with applicable English company law; brought against its Directors. The Company has also granted on the grounds of individual ability, achievement, expertise
the liabilities of the Directors in connection with that report are indemnities to each of its Directors and the Company Secretary, and conduct.
subject to the limitations and restrictions provided by that law. which represent ‘qualifying third party indemnity provisions’ (as
We give full and fair consideration to applications for
defined by Section 234 of the Companies Act 2006), in relation
employment from people with disabilities, having regard to their
Research and development to certain losses and liabilities that the Directors or Company
particular aptitudes and abilities. Should an employee become
Research and development activities are undertaken with Secretary may incur to third parties in the course of acting as
disabled during their employment with the Company, they are
the prospect of gaining new scientific or technical knowledge Directors or the Company Secretary or as employees of the
fully supported by our Occupational Health provision. Efforts
and understanding. Company or of any associated company. In addition, such
are made to continue their employment with reasonable
indemnities have been granted to other officers of the Company
adjustments being made to the workplace and role
Dividends who are Directors of subsidiary companies within the Group.
where feasible. Retraining is provided if necessary.
Such indemnities were in place during 2019 and at the date
The Directors are recommending a final dividend of 50.5p per
of approval of the Group financial statements. Development and learning: The Company recognises that
share (2018: 49p). If approved by shareholders, total dividends
for the year will amount to 90p per share (2018: 87p). Details the key to future success lies in the skills and abilities of its
of dividends are shown in note 8 on page 126; details of the Share capital dedicated global workforce.
Company’s Dividend Reinvestment Plan can be found on page At the date of this Report, 131,906,881 Ordinary Shares of
159. The Company has established various Employee Benefit 10.609756p each have been issued and are fully paid up The continuous development of all of our employees is key
Trusts (EBTs) in connection with the obligation to satisfy future and quoted on the London Stock Exchange. At the date of to meeting the future demands of our customers, especially in
Power to issue or buy back shares relation to enhanced creativity, innovation and customer service.
share awards under employee share incentive schemes. this Report, the Company has issued and fully paid up 21,900
7.5% Cumulative Preference Shares, 498,434 6.6% Cumulative At the 2019 AGM, authority was given to the Directors to allot During 2019, 92% of our employees received training, totalling
The trustees of the EBTs have waived their rights to receive
Preference Shares and 615,562 5.9% Cumulative Preference unissued shares in the Company up to a maximum amount over 85,000 hours.
dividends on certain Ordinary Shares of the Company held
Shares, all of £1 each (the Preference Shares). The rights and equivalent to approximately one third of the issued share
in the EBTs. Such waivers represent less than 1% of the total
obligations attached to the Company’s Ordinary Shares and capital, excluding shares held in treasury, for general purposes, Involvement: We are committed to ensuring that employees
dividend payable on the Company’s Ordinary Shares. Further
Preference Shares are set out in the Articles, copies of which plus up to a further one third of the Company’s issued share share in the success of the Group. Owning shares in the
details of the EBTs can be found in note 25 on page 147.
can be obtained from Companies House in the UK or by writing capital, excluding shares held in treasury, but only in the case Company is an important way of strengthening involvement
to the Company Secretary. There are no restrictions on the of a rights issue. 16 shares were allotted during the year and in the development of the Business and bringing together
Directors 2 treasury shares were cancelled. employees and shareholders’ interests. In 2019, 84% of our UK
voting rights attached to the Company’s Ordinary Shares or on
The Company’s Articles of Association (Articles) give the employees and 61.28% of our non-UK employees participated
the transfer of securities in the Company. The 7.5% Cumulative
Directors power to appoint and replace Directors. Under A further special resolution passed at that meeting granted in one of our all-employee share plans, indicating employees’
Preference Shares do not confer on the holders any right to
the terms of reference of the Nomination Committee, any authority to the Directors to allot equity securities in the continued desire to be involved in the Company.
receive notice of or to be present or to vote at any general
appointment must be recommended by the Nomination Company for cash, without regard to the pre-emption provisions
meeting of the Company, unless the cumulative preferential
Committee for approval by the Board of Directors. The present of the Companies Act 2006. Both of these authorities expire Employees are kept informed of matters of interest to them in a
dividend on such shares is more than 12 calendar months in
Directors of the Company are shown on pages 46 and 47. on the date of the 2020 AGM, that is 23 April 2020, and so variety of ways, including the Company magazine, Croda Way;
arrears. The 6.6% and 5.9% Cumulative Preference Shares
In line with the 2018 UK Corporate Governance Code, each the Directors propose to renew them for a further year. quarterly updates; the Company intranet, Connect; team
do not confer on the holders any right to receive notice of or to
Director will be standing for election or re-election at the briefings, podcasts, webinars, Yammer and Croda Now email
be present or to vote at any general meeting of the Company, At last year’s AGM the members renewed the Company’s
AGM, with the exception of Alan Ferguson, who will retire messages. These communications help achieve a common
unless the cumulative preferential dividend on such shares is authority to purchase up to 10% of its Ordinary Shares. No
at the AGM. Details of the Directors’ service contracts are awareness of the financial and economic factors affecting
more than six calendar months in arrears or the business of purchases were made during the year. As a result the Company
given in the Directors’ Remuneration Report on page 91. the performance of Croda and of changes within the Business.
the general meeting includes the consideration of a resolution will be seeking to renew its authority to purchase its own shares We are committed to providing employees with opportunities
Apart from the share option schemes, long term incentive for reducing the share capital of the Company, to sell the at the 2020 AGM. Shares will only be purchased if the Board to share their views and provide feedback on issues that are
schemes and service contracts, no Director had any beneficial undertaking of the Company or to alter the Articles. No person believes that such purchases will improve earnings per share important to them. In 2019 we held listening groups across all
interest in any contract to which the Company or a subsidiary holds securities in the Company that carry special rights with and be in the best general interest of shareholders. It is the levels of our organisation to gain a deeper understanding of
was a party during the year. regard to control of the Company. The Company is not aware Company’s intention that any shares purchased will be held our people’s feelings towards our business and used pulse
of any agreements between holders of securities that may result as treasury shares. At the date of this report the Company surveys to test the temperature of the global organisation
A statement indicating the beneficial and non-beneficial in restrictions on the transfer of securities or on voting rights. holds 3,018,203 shares in treasury. on particular topics.
interests of the Directors in the share capital of the Company,
including share options, is shown in the Directors’ Remuneration Employees
Report on page 94.
Other disclosures
Diversity: We are committed to the principle of equal opportunity Certain information that is required to be included in the
The Directors are responsible for managing the business of in employment and to ensuring that no applicant or employee Directors’ Report can be found elsewhere in this document as
the Company and may exercise all the powers of the Company receives less favourable treatment on the grounds of any referred to below, each of which is incorporated by reference
subject to the provisions of relevant statutes, the Company’s protected characteristic or is disadvantaged by conditions into the Directors’ Report:
Memorandum and Articles and any directions given by or requirements that cannot be shown to be justified. Group
special resolution. human resources policies are clearly communicated to all of Information on greenhouse gas emissions can be found
our employees and are available through the Company intranet. on page 30.

Directors’ Report continued
An indication of likely future developments in the Group’s Articles of Association

business can be found in the Strategic Report, starting Unless expressly specified to the contrary in the Articles, the Statement of Directors’ responsibilities
Directors’ Report
on page 10. Company’s Articles may be amended by a special resolution
of the Company’s shareholders. The Directors are responsible for preparing the Annual Report The Directors are responsible for keeping adequate
An indication of the Company’s overseas branches are and the Group and parent Company financial statements in accounting records that are sufficient to show and explain
on pages 156 to 157. accordance with applicable law and regulations. the parent Company’s transactions and disclose with
Significant contracts and change of control reasonable accuracy at any time the financial position of the
There have been no events affecting the Company since the The Group has borrowing facilities which may require the Company law requires the Directors to prepare Group and parent Company and enable them to ensure that its financial
financial year end to report to shareholders in accordance immediate repayment of all outstanding loans together with parent Company financial statements for each financial year. statements comply with the Companies Act 2006. They are
with the Accounts Regulations and Disclosure and accrued interest in the event of a change of control. The rules of Under that law they are required to prepare the Group responsible for such internal control as they determine is
Transparency Rules. the Company’s employee share plans set out the consequences financial statements in accordance with International necessary to enable the preparation of financial statements
of a change in control of the Company on participants’ rights Financial Reporting Standards as adopted by the European that are free from material misstatement, whether due to
For the purposes of Listing Rule (LR) 9.8.4R, the information under the plans. Generally, such rights will vest and become Union (IFRSs as adopted by the EU) and applicable law fraud or error, and have general responsibility for taking
required to be disclosed by LR 9.8.4R can be found on the exercisable on a change of control subject to the satisfaction and have elected to prepare the parent Company financial such steps as are reasonably open to them to safeguard
following pages of this Annual Report and Accounts as detailed of performance conditions. None of the Executive Directors’ statements in accordance with UK accounting standards, the assets of the Group and to prevent and detect fraud
in the table below. service contracts contains provisions that are affected by a including FRS 101 Reduced Disclosure Framework. and other irregularities.
change of control and there are no other agreements that the
All the information cross referenced above is incorporated by Company is party to that take effect, alter or terminate in the Under company law the Directors must not approve the Under applicable law and regulations, the Directors are
reference into the Directors’ Report. event of a change of control of the Company, which are financial statements unless they are satisfied that they give also responsible for preparing a Strategic Report, Directors’
considered to be significant in terms of their potential a true and fair view of the state of affairs of the Group and Report, Directors’ Remuneration Report and Corporate
References in this document to other documents on the
impact on the Group. parent Company and of their profit or loss for that period. Governance Statement that complies with that law and
Company’s website, such as the Sustainability Report, are
In preparing each of the Group and parent Company those regulations.
included as an aid to their location and are not incorporated by The Company does not have any contractual or other financial statements, the Directors are required to:
reference into any section of the Annual Report and Accounts. arrangements that are essential to the business of the Group. The Directors are responsible for the maintenance and
• select suitable accounting policies and then apply integrity of the corporate and financial information included
Independent auditors Political donations them consistently; on the Company’s website. Legislation in the UK governing
Our auditors, KPMG, have indicated their willingness to continue No donations were made for political purposes during the year • make judgements and estimates that are reasonable, the preparation and dissemination of financial statements
in office and on the recommendation of the Audit Committee, a (2018: £nil). relevant, reliable and prudent; may differ from legislation in other jurisdictions.
resolution regarding their reappointment and remuneration will • for the Group financial statements, state whether they
be submitted to the AGM on 23 April 2020. have been prepared in accordance with IFRSs as adopted Responsibility statement of the Directors in
Financial risk management
by the EU; respect of the annual financial report
The Group’s exposure to and management of capital, liquidity,
Audit Information • for the parent Company financial statements, state whether We confirm that to the best of our knowledge:
credit, interest rate and foreign currency risks are contained in
The Directors confirm that, so far as they are aware, there is no applicable UK accounting standards have been followed,
note 20 on pages 138 to 142.
relevant audit information of which the Company’s auditors are subject to any material departures disclosed and explained • the financial statements, prepared in accordance with the
unaware, and that they have each taken all the steps they ought in the parent Company financial statements; applicable set of accounting standards, give a true and fair
to have taken as a Director in order to make themselves aware
Capitalised interest • assess the Group and parent Company’s ability to continue view of the assets, liabilities, financial position and profit or
of any relevant audit information and to establish that the The Group’s policy for capitalising borrowing costs directly as a going concern, disclosing, as applicable, matters loss of the Company and the undertakings included in the
Company’s auditors are aware of that information. attributable to the purchase or construction of fixed assets is related to going concern; and consolidation taken as a whole; and
set out on page 120.
• use the going concern basis of accounting unless they • the Strategic Report includes a fair review of the
either intend to liquidate the Group or the parent Company development and performance of the business and the
or to cease operations, or have no realistic alternative but position of the issuer and the undertakings included in the
to do so. consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a

whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
Section Topic Page reference The Directors’ Report and the Strategic Report, including the
sections of the Annual Report and Accounts incorporated by
(1) Capitalised interest Page 100 reference, is the ‘management report’ for the purposes of the
Financial Conduct Authority Disclosure and Transparency Rules
(2) Publication of unaudited financial information Not applicable
(DTR 4.1.8R). It was approved by the Board on 24 February
(3) Smaller related party transactions Not applicable 2020 and is signed on its behalf by
(4) Details of long term incentive schemes established specifically to recruit or retain a Director Not applicable
(5) (6) Waiver of emoluments by a Director Not applicable
(7) (8) Allotments of equity securities for cash Page 99 Tom Brophy
(9) Participation in a placing of equity securities Not applicable Group General Counsel and Company Secretary
(10) Contracts of significance Page 100 24 February 2020
(11) (14) Controlling shareholder disclosures Not applicable
(12) (13) Dividend waiver Page 98

Independent Auditor’s Report to the Members of Croda International Plc
1. Our opinion is unmodified Overview 2. Key audit matters: our assessment of risks of material misstatement
We have audited the financial statements of Croda International Materiality: Group financial £15m (2018: £16m) Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements
Plc (“the Company”) for the year ended 31 December 2019 which statements as a whole 4.8% (2018: 5%) of normalised and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those
comprise the Group Income Statement, the Group Statement of Group profit before tax which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
Comprehensive Income, the Group and Company Balance engagement team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinion
Sheets, the Group Statement of Cash Flows, the Group and above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those
Company Statements of Changes in Equity, and the related notes, Coverage 79% (2018: 79%) of normalised procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the
including the accounting policies on pages 115 to 121 and on Group profit before tax purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that
page 151. opinion, and we do not provide a separate opinion on these matters.
In our opinion: Group The risk Our response

• the financial statements give a true and fair view of the state Key audit matters vs 2018
Valuation of defined Subjective valuation: Our procedures included:
of the Group’s and of the parent Company’s affairs as at Recurring risks Valuation of defined benefit benefit pension • The Group has three defined benefit • Benchmarking assumptions: challenged key assumptions
31 December 2019 and of the Group’s profit for the year pension scheme liabilities scheme liabilities pension schemes that are material in applied (discount rate, inflation rate, and mortality rate) with
then ended;
(Gross defined benefit the context of the overall balance sheet the support of our own actuarial specialists, including a
• the Group financial statements have been properly prepared New: Goodwill valuation obligation £1,441.7m; and the results of the Group. comparison of key assumptions against market data.
in accordance with International Financial Reporting Standards 2018: £1,268.7m)
as adopted by the European Union; • Significant estimates, including the • Sensitivity analysis: assessed the sensitivity of the defined
Recoverability of parent
discount rate, the inflation rate and benefit obligation to changes in certain assumptions.
• the parent Company financial statements have been properly company’s intercompany Refer to page 68 (Audit
the mortality rate, are made in valuing
prepared in accordance with UK accounting standards, receivables Committee Report), page • Actuary’s credentials: assessed the competence,
the Group’s defined benefit pension
including FRS 101 Reduced Disclosure Framework; and 118 (accounting policy) independence and integrity of the Group’s actuarial expert.
obligations (before deducting the
and note 11 on pages
• the financial statements have been prepared in accordance with schemes’ assets).The UK scheme • Assessing transparency: considered adequacy of the
128 to 131 (financial
the requirements of the Companies Act 2006 and, as regards is still open to future accrual and new Group’s disclosures in respect of the sensitivity of the net
disclosures).
the Group financial statements, Article 4 of the IAS Regulation. members, and small changes in the deficit to changes in key assumptions.
assumptions and estimates with
Basis for opinion respect to the obligation would have Our results
a significant effect on the financial • We found the valuation of retirement benefit liabilities to be
We conducted our audit in accordance with International
position of the Group. The Group acceptable (2018 result: acceptable).
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
engages external actuarial specialists
Our responsibilities are described below. We believe that the
to assist them in selecting appropriate
audit evidence we have obtained is a sufficient and appropriate
assumptions and calculate the
basis for our opinion. Our audit opinion is consistent with our
obligations.
report to the Audit Committee.
• The effect of these matters is that, as
We were first appointed as auditor by the shareholders on 25 April part of our risk assessment, we
2018. The period of total uninterrupted engagement is for the two determined that the valuation of the
financial years ended 31 December 2019. We have fulfilled our defined benefit obligations has a high
ethical responsibilities under, and we remain independent of the degree of estimation uncertainty, with a
Group in accordance with, UK ethical requirements including the potential range of reasonable outcomes
FRC Ethical Standard as applied to listed public interest entities. greater than our materiality for the
No non-audit services prohibited by that standard were provided. financial statements as a whole, and
possibly many times that amount. The
financial statements (note 11) disclose
the sensitivity estimated by the Group.
102
102
Annual report and Accounts 2019
103
103
Independent Auditor’s Report to the Members of Croda International Plc continued
Group The risk Our response 3. Our application of materiality and an overview of The Group team visited one (2018: 3) component locations in
Goodwill impairment Forecast based valuation: Our procedures included:
the scope of our audit France (2018: Singapore, France and Brazil), to assess the audit
Materiality for the Group financial statements as a whole was risk and strategy. Video and telephone conference meetings were
(Goodwill: £348.5m, • The Group has, over recent years, acquired a • Assessing methodology: obtained the also held with these component auditors and certain others that
set at £15.0m (2018: £16.0m), determined with reference to a
although the risk is only number of companies which has led to a material discounted value in use cash flow models and were not physically visited. At these visits and meetings, the
benchmark of Group profit before tax, normalised to exclude this
associated with the Sipo increase in the goodwill balance. Some of these assessed the methodology, principles and integrity findings reported to the Group team were discussed in more
year’s exceptional redundancy costs and related curtailment gain
(£20.7m) and Biosector acquisitions, and in particular Biosector, are still at of each model; detail, and any further work required by the Group team was then
as disclosed in notes 3 and 11 of £311.5m (2018: profit before tax
(£24.9m) Cash an early stage of their integration into the Group performed by the component auditor.
• Benchmark assumptions: challenged the £317.8m), of which it represents 4.8% (2018: 5.0%).
Generating Units). and are therefore subject to greater levels of
Group’s forecast assumptions for cash flow
estimation uncertainty in respect of the underlying Normalised profit Group Materiality
projections, including the rate of short to Materiality for the parent Company financial statements as a
Refer to page 68 (Audit impairment model assumptions. before tax £15.0m (2018: £16.0m)
medium term growth of EBITDA, the long term whole was set at £8.7m (2018: £10.2m), determined with
Committee Report), page £311.5m (2018 profit before
• In addition, the headroom in respect of the growth rates and the appropriateness of discount reference to a benchmark of company total assets of £2,198.5m
116 (accounting policy) tax: £317.8m) £15.0m
impairment test on Sipo, a historic acquisition and rates, with reference to internally and externally (2018: £2,276.8m), of which it represents 0.4% (2018: 0.4%).
and note 12 on page 132 Whole financial
separate Cash Generating Unit, is relatively small, derived sources;
and 133 (financial statements materiality
and small changes in the assumptions and We agreed to report to the Audit Committee any corrected
disclosures). • Our valuation expertise: involved our own (2018: £16.0m)
estimates applied in the value in use calculations or uncorrected identified misstatements exceeding £0.8m
valuation specialists in respect of the Sipo
could impact on management’s conclusions (2018: £0.8m), or £2.3m for reclassification misstatements,
and Biosector models to assist us in challenging
about the carrying value of goodwill (£20.7m) and in addition to other identified misstatements that warranted £8.7m
the appropriateness of the methodology, key
how this compares to the recoverable amount. reporting on qualitative grounds. Range of materiality
assumptions and cash flow forecasts;
at 16 components
• The effect of these matters is that, as part of our
• Sensitivity analysis: performed breakeven Of the Group’s 81 (2018: 80) reporting components, we subjected (£0.8m-£8.7m)
risk assessment, we determined that impairment
analysis on the key assumptions including the 9 (2018: 8) to full scope audits for Group purposes and 7 (2018: 8) (2018: £0.8m to £11.0m)
assessments in respect of the Sipo and Biosector
discount rate and growth rate; to specified risk-focused audit procedures. One component for
Cash Generating Units have a high degree of
which we performed specified risk-focused procedures was not
estimation uncertainty, with a potential range of
• Historical comparisons: assessed the Group’s individually financially significant enough to require an audit for £0.8m
reasonable outcomes greater than our materiality Normalised profit before tax
historical forecasting accuracy by comparing Group reporting purposes, but did present specific individual risks Misstatements reported
for the financial statements as a whole. The Group materiality
forecasts from prior years with actual results in that needed to be addressed. The other 6 (2018: 7) components to the audit committee
financial statements (note 12) disclose the
those years; and for which we performed work other than audits for Group (2018: £0.8m)
sensitivities estimated by the Group.
• Assessing transparency: considered the reporting purposes were not individually significant but were
adequacy of the Group’s disclosures in respect of included in the scope of our Group reporting work in order to Group revenue Group profit before tax
impairment testing and whether disclosures about provide further coverage over the Group’s results. We subjected
the sensitivity of the outcome of the impairment these 7 (2018: 8) components to specified risk-focused audit
assessment to changes in key assumptions procedures over a combination of revenue (5 components
properly reflect the risks inherent in the valuations. (2018: 6)), property, plant and equipment (1 component (2018: 2))
and defined benefit pension assets and liabilities (1 component
Our results (2018: 1)). The Group team performed procedures on the items
• We found the carrying amounts of the Sipo
and Biosector goodwill, with no impairment,
excluded from normalised Group profit before tax. The
components within the scope of our work accounted for 79% 76% 79%
(2018: 79%) of the total profits and losses that made up Group (2018 76%) (2018 79%)
to be acceptable. 11 18
profit before tax. 58
79
Parent Company The risk Our response 65 79
79
The remaining 24% of total Group revenue, 21% of Group profit
Recoverability of Low risk, high value: Our procedures included: before tax and 15% of total Group assets is represented by 64
parent Company’s • The carrying amount of the parent Company’s • Tests of detail: Assessed the total receivable (2018: 64) reporting components, none of which individually
intercompany intercompany receivables, held at cost less balance to identify, with reference to the relevant represented more than 2% (2018: 3%) of any of total Group
receivables impairment, represents 72.3% of the Company’s subsidiaries’ draft balance sheet, whether they Group total assets
revenue, Group profit before tax or total Group assets. For the
(£1,589.6m; 2018: total assets. have a positive net asset value and therefore residual components, we performed analysis at an aggregated
£1,675.4m) • We do not consider the recoverable amount of coverage of the debt owed, as well as assessing Group level to re-examine our assessment that there were no
these receivables to be at a high risk of significant whether those subsidiaries have historically significant risks of material misstatement within these.
Refer to page 68 (Audit misstatement, or to be subject to a significant been profit-making. 1
Committee Report), page level of judgement. However, due to their The Group team instructed component auditors as to the
Our results
120 (accounting policy) materiality in the context of the Company financial significant areas to be covered, including the relevant risks
and note H on page 153
(financial disclosures).
statements as a whole, this is considered to be
the area which had the greatest effect on our
• We found the Group’s assessment of the
recoverability of the intercompany receivables to
detailed above and the information to be reported back.
The Group team approved the component materialities, which
2
85%
be acceptable (2018: acceptable). (2018 85%)
overall audit strategy and allocation of resources ranged from £0.8m to £8.7m (2018: £0.8m to £11.0m), having
in planning and completing our company audit. regard to the mix of size and risk profile of the Group across 83
the components. The work on 10 of the 16 (2018: 12 of 16) 84
We continue to perform procedures over environmental provisions and taxation. However our risk assessment indicated that the ranges components was performed by component auditors in Germany,
of potential outcomes have narrowed in the year, and so there is a reduction in both the size and complexity of these risks. We have not Italy, France, Singapore, Japan, Brazil, Spain, India and Denmark
assessed these as being the most significant risks in our current year audit and, therefore, they are not separately identified in our report (2018: Germany, Italy, France, Singapore, Japan, Brazil, Spain,
this year. India, China and the Netherlands), and the rest, including the audit Full scope for group audit purposes 2019
of the parent company, was performed by the Group team at Specified risk-focused audit procedures 2019
locations in the UK and the USA. This year the Group team also Full scope for group audit purposes 2018
performed procedures relating to the Chinese component. Specified risk-focused audit procedures 2018
Residual components
104
104
105
105
4. We have nothing to report on going concern Based on this work, we are required to report to you if: 5. We have nothing to report on the other Under the Listing Rules we are required to review the viability
The Directors have prepared the financial statements on the going information in the Annual Report statement. We have nothing to report in this respect.
concern basis as they do not intend to liquidate the Company or • we have anything material to add or draw attention to in relation The Directors are responsible for the other information presented
the Group or to cease their operations, and as they have to the Directors’ statement in the Accounting Policies on pages in the Annual Report together with the financial statements. Our work is limited to assessing these matters in the context of
concluded that the Company’s and the Group’s financial position 115 and 151 on the use of the going concern basis of Our opinion on the financial statements does not cover the other only the knowledge acquired during our financial statements audit.
means that this is realistic. They have also concluded that there accounting with no material uncertainties that may cast information and, accordingly, we do not express an audit opinion As we cannot predict all future events or conditions and as
are no material uncertainties that could have cast significant doubt significant doubt over the Group and Company’s use of that or, except as explicitly stated below, any form of assurance subsequent events may result in outcomes that are inconsistent
over their ability to continue as a going concern for at least a year basis for a period of at least twelve months from the date of conclusion thereon. with judgements that were reasonable at the time they were
from the date of approval of the financial statements (“the going approval of the financial statements; or made, the absence of anything to report on these statements is
concern period”). Our responsibility is to read the other information and, in doing so, not a guarantee as to the Group’s and Company’s longer-term
• the related statement under the Listing Rules set out on page
consider whether, based on our financial statements audit work, viability.
100 is materially inconsistent with our audit knowledge.
Our responsibility is to conclude on the appropriateness of the the information therein is materially misstated or inconsistent with
Directors’ conclusions and, had there been a material uncertainty We have nothing to report in these respects, and we did not the financial statements or our audit knowledge. Based solely on Corporate governance disclosures
related to going concern, to make reference to that in this audit identify going concern as a key audit matter. that work we have not identified material misstatements in the We are required to report to you if:
report. However, as we cannot predict all future events or other information.
conditions and as subsequent events may result in outcomes • we have identified material inconsistencies between the
that are inconsistent with judgements that were reasonable at Strategic Report and Directors’ Report knowledge we acquired during our financial statements audit
the time they were made, the absence of reference to a material Based solely on our work on the other information: and the Directors’ statement that they consider that the
uncertainty in this auditor’s report is not a guarantee that the Annual Report and financial statements taken as a whole is
Group and the Company will continue in operation. • we have not identified material misstatements in the strategic fair, balanced and understandable and provides the information
report and the Directors’ report; necessary for shareholders to assess the Group’s position
In our evaluation of the Directors’ conclusions, we considered and performance, business model and strategy; or
the inherent risks to the Group’s and Company’s business model • in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and • the section of the Annual Report describing the work of the
and analysed how those risks might affect the Group’s and
Audit Committee does not appropriately address matters
Company’s financial resources or ability to continue operations • in our opinion those reports have been prepared in accordance communicated by us to the Audit Committee.
over the going concern period. The risks that we considered most with the Companies Act 2006.
likely to adversely affect the Group’s and Company’s available
We are required to report to you if the Corporate Governance
financial resources over this period were: Directors’ remuneration report Statement does not properly disclose a departure from the
In our opinion the part of the Directors’ Remuneration Report to provisions of the UK Corporate Governance Code specified
• The impact of a significant business continuity issue affecting
be audited has been properly prepared in accordance with the by the Listing Rules for our review.
the Group’s manufacturing facilities or those of its suppliers;
Companies Act 2006.
and
We have nothing to report in these respects.
• A potential significant legal settlement relating to a compliance Disclosures of principal risks and longer-term viability
breach such as an environmental issue. Based on the knowledge we acquired during our financial
As these were risks that could potentially cast significant doubt statements audit, we have nothing material to add or draw
on the Group’s and the Company’s ability to continue as a going attention to in relation to:
concern, we considered sensitivities over the level of available
financial resources indicated by the Group’s financial forecasts • the Directors’ confirmation within the viability statement on
taking account of reasonably possible (but not unrealistic) adverse page 43 that they have carried out a robust assessment of
effects that could arise from these risks individually and the principal risks facing the Group, including those that
collectively and evaluated the achievability of the actions the would threaten its business model, future performance,
Directors consider they would take to improve the position should solvency and liquidity;
the risks materialise. We also considered less predictable but • the Principal Risks disclosures describing these risks and
realistic second order impacts, such as the impact of Brexit and explaining how they are being managed and mitigated; and
the erosion of customer or supplier confidence, which could result
in a rapid reduction of available financial resources. • the Directors’ explanation in the viability statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to
be appropriate, and their statement as to whether they have
a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
106
106
107
107
6. We have nothing to report on the other matters Irregularities – ability to detect Owing to the inherent limitations of an audit, there is an
on which we are required to report by exception We identified areas of laws and regulations that could reasonably unavoidable risk that we may not have detected some material
Under the Companies Act 2006, we are required to report to you be expected to have a material effect on the financial statements misstatements in the financial statements, even though we
if, in our opinion: from our general commercial and sector experience, through have properly planned and performed our audit in accordance
discussion with the directors and other management (as required with auditing standards. For example, the further removed
• adequate accounting records have not been kept by the parent by auditing standards), and from inspection of the Group’s non-compliance with laws and regulations (irregularities) is from
Company, or returns adequate for our audit have not been regulatory and legal correspondence and discussed with the the events and transactions reflected in the financial statements,
received from branches not visited by us; or directors and other management the policies and procedures the less likely the inherently limited procedures required by
regarding compliance with laws and regulations. We auditing standards would identify it. In addition, as with any audit,
• the parent Company financial statements and the part of there remained a higher risk of non-detection of irregularities,
communicated identified laws and regulations throughout our
the Directors’ Remuneration Report to be audited are not as these may involve collusion, forgery, intentional omissions,
team and remained alert to any indications of non-compliance
in agreement with the accounting records and returns; or misrepresentations, or the override of internal controls. We are
throughout the audit. This included communication from the
• certain disclosures of Directors’ remuneration specified by law Group to component audit teams of relevant laws and regulations not responsible for preventing non-compliance and cannot be
are not made; or identified at group level. expected to detect non-compliance with all laws and regulations.
• we have not received all the information and explanations 8. The purpose of our audit work and to whom we
The potential effect of these laws and regulations on the financial
we require for our audit. owe our responsibilities
statements varies considerably.
This report is made solely to the Company’s members, as a body,
We have nothing to report in these respects.
Firstly, the Group is subject to laws and regulations that directly in accordance with Chapter 3 of Part 16 of the Companies Act
affect the financial statements including financial reporting 2006. Our audit work has been undertaken so that we might state
7. Respective responsibilities
legislation (including related companies legislation), distributable to the Company’s members those matters we are required to
Directors’ responsibilities profits legislation, pensions legislation, and taxation legislation, state to them in an auditor’s report and for no other purpose.
As explained more fully in their statement set out on page 101, and we assessed the extent of compliance with these laws and To the fullest extent permitted by law, we do not accept or
the Directors are responsible for: the preparation of the financial regulations as part of our procedures on the related financial assume responsibility to anyone other than the Company
statements including being satisfied that they give a true and fair statement items. and the Company’s members, as a body, for our audit work,
view; such internal control as they determine is necessary to for this report, or for the opinions we have formed.
enable the preparation of financial statements that are free from Secondly, the Group is subject to many other laws and
material misstatement, whether due to fraud or error; assessing regulations where the consequences of non-compliance could
the Group and parent Company’s ability to continue as a going have a material effect on amounts or disclosures in the financial
concern, disclosing, as applicable, matters related to going statements, for instance through the imposition of fines or
concern; and using the going concern basis of accounting unless litigation or the loss of the Group’s licence to operate. We
they either intend to liquidate the Group or the parent Company or identified the following areas as those most likely to have such an
to cease operations, or have no realistic alternative but to do so. effect: GDPR compliance, health and safety and product liability, Chris Hearld (Senior Statutory Auditor)
competition, anti-bribery and corruption, intellectual property, for and on behalf of KPMG LLP, Statutory Auditor
Auditor’s responsibilities employment law, tax, export and environmental legislation, Chartered Accountants
recognising the nature of the Group’s activities. Auditing 1 Sovereign Square
Our objectives are to obtain reasonable assurance about
standards limit the required audit procedures to identify non- Sovereign Street
whether the financial statements as a whole are free from material
compliance with these laws and regulations to enquiry of the Leeds
misstatement, whether due to fraud or other irregularities
Directors and other management and inspection of regulatory LS1 4DA
(see below), or error, and to issue our opinion in an auditor’s
and legal correspondence, if any. These limited procedures did 24 February 2020
report. Reasonable assurance is a high level of assurance, but
does not guarantee that an audit conducted in accordance with not identify actual or suspected non-compliance.
ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud, other irregularities
or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s

website at www.frc.org.uk/auditorsresponsibilities.
108
108
109
109
Group Consolidated Statements
Group Income Statement Group Balance Sheet
for the year ended 31 December 2019 at 31 December 2019
2019 2019 2019 2018 2018 2018
Reported Reported
2019 2018
Adjusted Adjustments Total Adjusted Adjustments Total
Note £m £m
Note £m £m £m £m £m £m
Revenue 1 1,377.7 – 1,377.7 1,386.9 – 1,386.9 Assets
Cost of sales (865.5) – (865.5) (864.6) – (864.6) Non-current assets
Gross profit 512.2 – 512.2 522.3 – 522.3 Intangible assets 12 445.3 454.9
Operating costs 2 (172.5) (19.8) (192.3) (179.8) (13.7) (193.5) Property, plant and equipment 13 805.2 780.3
Operating profit 3 339.7 (19.8) 319.9 342.5 (13.7) 328.8 Right of use assets 14 46.2 –
Financial costs 4 (18.5) – (18.5) (12.1) – (12.1) Investments 16 4.7 4.8
Financial income 4 0.9 – 0.9 1.1 – 1.1 Deferred tax assets 6 11.8 56.2
Retirement benefit assets 11 10.2 24.6
Profit before tax 322.1 (19.8) 302.3 331.5 (13.7) 317.8
Tax 5 (82.4) 3.9 (78.5) (81.6) 2.1 (79.5) 1,323.4 1,320.8
Profit after tax for the year 239.7 (15.9) 223.8 249.9 (11.6) 238.3 Current assets
Inventories 17 268.9 287.2
Attributable to:
Trade and other receivables 18 216.8 233.6
Non-controlling interests (0.1) – (0.1) (0.2) – (0.2)
Cash and cash equivalents 20 81.9 71.2
Owners of the parent 239.8 (15.9) 223.9 250.1 (11.6) 238.5
567.6 592.0
239.7 (15.9) 223.8 249.9 (11.6) 238.3
Liabilities
Adjustments relate to exceptional items, acquisition costs, amortisation of intangible assets arising on acquisition and the tax thereon. Details are disclosed in Note 3.
Current liabilities
Earnings per 10.61p ordinary share Pence Pence Pence Pence Trade and other payables 19 (163.9) (190.5)
Borrowings and other financial liabilities 20 (109.5) (48.8)
Basic 7 185.0 172.8 190.2 181.4 Lease liabilities 14 (7.8) (0.4)
Provisions 21 (10.9) (4.0)
Diluted 7 184.6 172.4 189.2 180.4 Current tax liabilities (44.3) (47.9)
(336.4) (291.6)
Net current assets 231.2 300.4
Group Statement of Comprehensive Income Non-current liabilities
Borrowings and other financial liabilities 20 (476.6) (446.9)
for the year ended 31 December 2019 Lease liabilities 14 (35.7) (0.6)
2019 2018 Other payables (0.8) (0.8)
Note £m £m
Retirement benefit liabilities 11 (85.2) (43.1)
Profit after tax for the year 223.8 238.3
Provisions 21 (5.3) (7.1)
Deferred tax liabilities 6 (82.4) (124.7)
Other comprehensive (expense)/income:
(686.0) (623.2)
Items that will not be reclassified
subsequently to profit or loss: Net assets 868.6 998.0
Remeasurements of post-retirement
benefit obligations 11 (56.5) 22.6 Equity
Tax on items that will not be reclassified 5 8.4 (4.9) Ordinary share capital 22 14.0 14.0
(48.1) 17.7 Preference share capital 24 1.1 1.1
Items that may be reclassified Share capital 15.1 15.1
subsequently to profit or loss: Share premium account 93.3 93.3
Currency translation (34.7) 14.9 Reserves 753.2 882.1
Other comprehensive (expense)/income Equity attributable to owners of the parent 861.6 990.5
for the year (82.8) 32.6 Non-controlling interests in equity 26 7.0 7.5
Total comprehensive income for the year 141.0 270.9 Total equity 868.6 998.0
Attributable to:
Non-controlling interests (0.5) (0.1) The financial statements on pages 110 to 148 were signed on behalf of the Board who approved the accounts on 24 February 2020.
Owners of the parent 141.5 271.0
141.0 270.9
Arising from:
Continuing operations 141.0 270.9
141.0 270.9
Anita Frew Jez Maiden
Chair Group Finance Director
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Croda
Annual International
report Plc
and Accounts 2019
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111
Group Consolidated Statements continued
Group Statement of Cash Flows Group Cash Flow Notes
for the year ended 31 December 2019 for the year ended 31 December 2019
Note
2019
£m
2018
£m
(i) Reconciliation to net debt
2019 2018
Cash generated from operating activities Note £m £m
Cash generated by operations ii 389.2 331.7 Net movement in cash and cash equivalents iii 27.3 (18.5)
Interest paid (17.0) (14.7) Net movement in borrowings and other financial liabilities iii (106.6) (14.7)
Tax paid (68.3) (55.0) Change in net debt from cash flows (79.3) (33.2)
Net cash generated from operating activities 303.9 262.0 Non-cash movement in lease liabilities (52.9) (0.7)
Exchange differences 10.0 (10.1)
Cash flows from investing activities (122.2) (44.0)
Acquisition of subsidiaries 28 (3.7) (79.3) Net debt brought forward (425.5) (381.5)
Acquisition of associates and other investments 16 (1.3) (3.2) Net debt carried forward iii (547.7) (425.5)
Purchase of property, plant and equipment 13 (105.2) (100.2)
Purchase of other intangible assets 12 (5.8) (3.4)
(ii) Cash generated by operations
Proceeds from sale of property, plant and equipment 4.2 0.5
2019 2018
Proceeds from sale of other investments – 0.4 Note £m £m
Cash paid against non-operating provisions 21 (1.1) (1.0) Adjusted operating profit 339.7 342.5
Interest received 0.9 1.1 Exceptional items iv (10.7) (4.9)
Net cash used in investing activities (112.0) (185.1) Acquisition costs and amortisation of intangible assets arising on acquisition (9.1) (8.8)
Operating profit 319.9 328.8
Cash flows from financing activities Adjustments for:
New borrowings 752.5 437.1 Depreciation and amortisation 66.4 56.2
Repayment of borrowings (637.1) (421.9) Impairments 1.4 –
Payment of lease liabilities (2018: Capital element of finance lease repayments) 14 (8.8) (0.5) Profit on disposal of property, plant and equipment (3.8) (0.1)
Net transactions in own shares (4.3) 0.4 Net provisions charged (note 21) 10.5 –
Dividends paid to equity shareholders 8 (266.9) (110.5) Share-based payments (5.2) 8.3
Net cash used in financing activities (164.6) (95.4) Non-cash pension expense 1.6 8.7
Share of loss of associate 0.8 0.2
Net movement in cash and cash equivalents i,iii 27.3 (18.5) Cash paid against operating provisions (note 21) (4.0) (1.1)
Cash and cash equivalents brought forward 40.3 54.9 Movement in inventories 12.2 (22.2)
Exchange differences iii (4.5) 3.9 Movement in receivables 8.3 (26.3)
Cash and cash equivalents carried forward 63.1 40.3 Movement in payables (18.9) (20.8)
Cash generated by continuing operations 389.2 331.7
Cash and cash equivalents carried forward comprise:
Cash at bank and in hand 81.9 71.2 (iii) Analysis of net debt
Bank overdrafts (18.8) (30.9) Cash Exchange Other
63.1 40.3 2019 flow movements non-cash 2018
£m £m £m £m £m
Cash and cash equivalents 81.9 15.2 (4.5) – 71.2
Bank overdrafts (18.8) 12.1 – – (30.9)
Movement in cash and cash equivalents 27.3 (4.5) –
Borrowings repayable within one year (90.7) 2.8 3.2 (78.8) (17.9)
Borrowings repayable after more than one year (476.6) (118.2) 9.7 78.8 (446.9)
Lease liabilities (2018: Finance leases) (43.5) 8.8 1.6 (52.9) (1.0)
Movement in borrowings and other financial liabilities (106.6) 14.5 (52.9)
Total net debt (547.7) (79.3) 10.0 (52.9) (425.5)
Included within other non-cash movements are £46.0m of lease liabilities recognised on initial application of IFRS 16.
(iv) Cash flow on exceptional items

The total cash outflow during the year in respect of exceptional items, including those recognised in prior years’ income statements,
was £4.5m (2018: £2.1m). Details of exceptional items can be found in note 3 on page 123.
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Group Consolidated Statements continued Group Accounting Policies
Group Statement of Changes in Equity The principal accounting policies
adopted in the preparation of these
The critical accounting judgements required
when preparing the Group’s accounts are
(ii) Goodwill and fair value of assets
acquired (note 12) – management are
for the year ended 31 December 2019 financial statements are set out below. as follows: required to undertake an annual test for
These policies have been consistently impairment of indefinite lived assets
Share Non applied to all the years presented, (i) Provisions and contingent liabilities – such as goodwill. Accordingly, the
Share premium Other Retained controlling Total
capital account reserves earnings interests equity unless otherwise stated. the Group has recognised potential Group tests annually whether goodwill
Note £m £m £m £m £m £m environmental liabilities and other has suffered any impairment and the
At 1 January 2018 15.1 93.3 53.9 660.0 7.6 829.9 Basis of preparation provisions. The Group’s assessment Group’s goodwill value has been
The consolidated financial statements of whether a constructive or legal supported by detailed value-in-use
Profit after tax for the year – – – 238.5 (0.2) 238.3 obligation exists at the reporting date calculations relating to the recoverable
Other comprehensive income – – 14.8 17.7 0.1 32.6 have been prepared under the historical
cost convention, in accordance with (and can be measured reliably) is a key amounts of the underlying Cash
Total comprehensive income/(expense) for the year – – 14.8 256.2 (0.1) 270.9 Generating Units (‘CGUs’). These
International Financial Reporting Standards judgement in determining whether to
Transactions with owners:
Interpretations Committee (IFRSIC) and recognise a liability or disclose a calculations require the use of
Dividends on equity shares 8 – – – (110.5) – (110.5)
the Companies Act 2006 applicable contingent liability. A liability is estimates to enable the calculation of
Share-based payments – – – 7.3 – 7.3
to companies reporting under IFRS. recognised only where, based on the the net present value of cash flow
Transactions in own shares – – – 0.4 – 0.4
The standards used are those published Group’s legal views and advice, it is projections of the relevant CGU. The
Total transactions with owners – – – (102.8) – (102.8)
by the International Accounting Standards considered probable that an outflow of critical assumptions are as follows:
Total equity at 31 December 2018 15.1 93.3 68.7 813.4 7.5 998.0 Board (IASB) and endorsed by the EU as at resources will be required to settle a
31 December 2019. A summary of the more present obligation that can be • Terminal value growth in EBITDA
At 1 January 2019 15.1 93.3 68.7 813.4 7.5 998.0 important Group accounting policies is set measured reliably. Disclosure of (calculated as operating profit before
out below. contingent liabilities is made in note 29 depreciation and amortisation) –
Profit after tax for the year – – – 223.9 (0.1) 223.8 unless the possibility of a loss arising is estimated at 3% unless the profile
Other comprehensive expense – – (34.3) (48.1) (0.4) (82.8) Going concern considered remote. of a particular CGU warrants a
Total comprehensive (expense)/income for the year – – (34.3) 175.8 (0.5) 141.0 different treatment.
The financial statements which appear
Transactions with owners: The critical accounting estimates and
on pages 110 to 148 have been prepared • Selection of appropriate discount
Dividends on equity shares 8 – – – (266.9) – (266.9) assumptions required when preparing
on a going concern basis as, after making rates to reflect the risks involved –
Share-based payments – – – 0.8 – 0.8 the Group’s accounts are as follows:
appropriate enquiries, including a review typically the Group’s weighted
Transactions in own shares – – – (4.3) – (4.3)
of forecasts, budgets and banking average cost of capital is used as a
Total transactions with owners – – – (270.4) – (270.4) (i) Post-retirement benefits – as disclosed
facilities, the Directors have a reasonable starting point and then adjusted to
in note 11, the Group’s principal
expectation that the Group has adequate reflect the risk profile of a particular
Total equity at 31 December 2019 15.1 93.3 34.4 718.8 7.0 868.6 retirement benefit schemes are of
resources to continue in operational CGU if warranted.
Other reserves include the Capital Redemption Reserve of £0.9m (2018: £0.9m) and the Translation Reserve of £33.5m (2018: £67.8m). the defined benefit type. Year end
existence.
recognition of the liabilities under these Recoverable amounts currently
schemes and the valuation of assets exceed carrying values including
Critical accounting judgements held to fund these liabilities require a goodwill. Goodwill arising on acquisition
and key sources of estimation number of significant assumptions to is allocated to the CGU that is expected
uncertainty be made, relating to key financial to benefit from the synergies of the
The Group’s significant accounting policies market indicators such as inflation and acquisition. Such goodwill is then
under IFRS have been set by management expectations on future salary growth incorporated into the Group’s
with the approval of the Audit Committee. and asset returns. These assumptions standard impairment review
The application of these policies requires are made by the Group in conjunction process as described above.
estimates and assumptions to be made with the schemes’ actuaries and the
concerning the future and judgements to Directors are of the view that any
be made on the applicability of policies estimation should be appropriate
to particular situations. Estimates and and in line with consensus opinion.
judgements are continually evaluated and
are based on historical experience and
other factors, including expectations of
future events that are believed to be
reasonable under the circumstances.
Under IFRS an estimate or judgement may
be considered critical if it involves matters
that are highly uncertain or where different
estimation methods could reasonably have
been used, or if changes in the estimate
that would have a material impact on the
Group’s results are likely to occur from
period to period.
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115
Group Accounting Policies continued
Changes in accounting policy (ii) New standards and interpretations Transactions with Other intangible assets arising Computer software Interest and dividend income
(i) New and amended standards adopted not yet adopted – a number of new non-controlling interests on acquisition Computer software licences covering a Interest income is recognised on a
by the Group for the first time for standards and amendments to The Group treats transactions with On acquisition, intangible assets other period of greater than a year are capitalised time-proportion basis using the effective
the financial year beginning on standards and interpretations are non-controlling interests as transactions than goodwill are recognised if they can on the basis of the costs incurred to acquire interest method.
1 January 2019: effective for annual periods beginning with the equity owners of the Group. For be identified through being separable from and bring to use the specific software.
on or after 1 January 2020 and have not purchases from non-controlling interests, the acquired entity or arising from specific These costs are amortised over their Dividend income is recognised when the
IFRS 16 ‘Leases’ requires lessees to been applied in preparing these the difference between any consideration contractual or legal rights. estimated useful lives which range from right to receive payment is established.
recognise a lease liability reflecting consolidated financial statements. None paid and the relevant share acquired of 3 to 7 years.
future lease payments and a right of of these are expected to have a the carrying value of net assets of the Once recognised, such intangible assets Segmental reporting
use asset for virtually all lease significant effect on the consolidated subsidiary is recorded as equity. Gains or will be initially valued using either the Revenue recognition An operating segment is a group of
contracts. It replaces IAS 17, under financial statements of the Group. losses on disposals to non-controlling ‘market approach’ (where a well-defined Revenue is measured based on the assets and operations engaged in providing
which lessees were required to make interests are also recorded in equity. external market for the asset exists), the consideration specified in a contract products and services that are subject to
a distinction between a finance lease Group accounts ‘income approach’ (which looks at the with a customer and excludes intra- risks or returns that are different from those
(on balance sheet) and an operating General information Intangible assets future income the asset will generate) or the group sales. The Group recognises of other segments. Operating segments
lease (off balance sheet). IFRS 16 Croda International Plc is a public limited Goodwill ‘cost approach’ (the cost of replacing the revenue on completion of contractual presented in the financial statements are
includes optional exemptions which company, which is listed on the London asset), whichever is most relevant to the performance obligations, generally when consistent with the internal reporting
On acquisition of a business, fair values
can be applied for certain short-term Stock Exchange and incorporated and asset under consideration. Following initial it transfers control over a product or provided to the Group’s Chief Operating
are attributed to the net assets acquired.
and low value leases. domiciled in the United Kingdom. It is recognition, the asset will be written down service to a customer. Decision Maker, which has been identified
Goodwill arises where the fair value of the
registered in England and Wales and on a straight-line basis over its useful life, as the Group Executive Committee.
consideration given for a business exceeds
The net impact of the new standard on the address of its registered office which range from 7 to 14 years for Sale of goods
such net assets. Goodwill arising on
the Group’s profit or financial gearing is can be found on page 160. technology processes and trade secrets
acquisitions is capitalised and carried at The principal activity from which the
not material. Accordingly, the Group and from 6 to 20 years for trade names and
cost less accumulated impairment losses. Group generates revenue is the supply
has adopted the simplified approach Subsidiaries customer relationships. Useful lives
Goodwill is subject to impairment review, of products to customers from its various
permitted under IFRS 16 and has are regularly reviewed to ensure their
Subsidiaries are all entities (including both annually and when there are manufacturing sites and warehouses,
therefore not restated prior year continuing relevance.
structured entities) over which the Parent indications that the carrying value may and in some limited instances from
comparators and no adjustment
Company has control. The Parent controls not be recoverable. For the purpose of consignment inventory held on customer
has been recognised in the opening
an entity when it is exposed to, or has rights impairment testing, assets are grouped
Research and development sites. Products are supplied under a variety
balance of equity at the date of initial Research expenditure, undertaken with the
to, variable returns from its involvement at the lowest levels for which there are of standard terms and conditions, and in
application. Right of use asset values prospect of gaining new scientific or
with the entity and has the ability to affect separately identifiable cash flows, known each case, revenue is recognised when
were set equal to lease liabilities at technical knowledge and understanding, is
those returns through its power over the as CGUs. For goodwill balances where contractual performance obligations
the date of transition. The Group has charged to the income statement in the
entity. Subsidiaries are fully consolidated the relevant group of CGUs exceeds the between the Group and the customer
adopted recognition exemptions for year in which it is incurred. Internal
from the date on which control is size of the Group’s operating segments, are satisfied. This will typically be on
short-term and low value leases and development expenditure, whereby
transferred to the Group. They are impairment testing is performed at the dispatch or delivery. When sales discount
has elected to apply the practical research findings are applied to a plan for
deconsolidated from the date that operating segment level. and rebate arrangements result in net
expedient available for all leases the production of new or substantially
control ceases. variable consideration, appropriate
which end within 12 months of the improved products or processes, is
If the recoverable amount of the CGU is provisions are recognised as a deduction
date of transition (accounting for as charged to the income statement in the
The Group uses the acquisition method less than the carrying value of the goodwill, from revenue at the point of sale.
short-term leases). year in which it is incurred unless it meets
of accounting to account for business an impairment loss is recognised The Group typically uses the expected
combinations. The consideration immediately against the goodwill value. the recognition criteria of IAS 38 ‘Intangible value method for estimating rebates,
On initial application, the Group Assets’. Development uncertainties typically
transferred for the acquisition of a The recoverable amount of the CGU is the reflecting that such contracts have similar
recorded right of use assets and lease mean that such criteria are not met, most
subsidiary is the fair value of the assets higher of fair value less costs to sell and characteristics and a range of possible
liabilities with a value of £46.0m. This commonly because the Group can only
transferred, the liabilities incurred and the value in use. Value in use is estimated with outcomes. The Group recognises revenue
exceeded the £35.6m non-cancellable demonstrate the existence of a market at a
equity interests issued by the Group. reference to estimated future cash flows to the extent that it is highly probable that
lease commitments reported as at late stage in the product development
Acquisition costs are expensed as incurred. discounted to net present value using a a significant reversal in the amount of
31 December 2018 under IAS 17 due cycle, at which point the material element of
discount rate that reflects the risks specific cumulative revenue will not be required.
to extension options reasonably certain project spend has already been incurred
Identifiable assets acquired, and liabilities to the CGU. Typically, the Group’s
to be exercised, partly offset by the and charged to the income statement.
application of short-term and low value
and contingent liabilities assumed, in a weighted average cost of capital is used Royalties and profit
business combination are measured initially as a starting point and then adjusted to Where, however, the recognition criteria are sharing arrangements
exemptions. The weighted average met, intangible assets are capitalised and
at their fair values at the acquisition date, reflect the risk profile of a particular CGU Revenues are recognised when
lessee’s incremental borrowing rate amortised over their useful economic
irrespective of the extent of any minority if warranted. The Group uses growth performance obligations between the
applied to the lease liabilities on lives from product launch.
interest. The excess of the cost of estimates that track below the Group’s Group and the customer are satisfied
1 January 2019 was 2%.
acquisition over the Group’s share of historical growth rates unless the profile in accordance with the substance of
identifiable net assets acquired is recorded of a particular CGU warrants a different Intangible assets relating to products in
IFRIC 23 ‘Uncertainty over Income the underlying contract.
as goodwill. treatment. development are subject to impairment
Tax Treatments’ came into effect from testing at each balance sheet date or
1 January 2019. The Group has earlier upon indication of impairment.
Intra-group transactions, balances and
adopted IFRIC 23 in its financial Any impairment losses are written off
unrealised gains on transactions between
statements for the year ended 31 to the income statement.
Group companies are eliminated.
December 2019. The application of
Unrealised losses are also eliminated.
IFRIC 23 did not affect the recognition
Accounting policies of subsidiaries have
or measurement of uncertain tax
been changed where necessary to ensure
treatments because the Group’s
consistency with the policies adopted by
previous accounting policy was
the Group.
consistent with the guidance
in IFRIC 23.
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report Plc
and Accounts 2019
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117
Employee benefits Termination benefits Group companies Taxation To avoid distorting the underlying trend in Leases
Pension obligations Termination benefits are payable when The results and financial position of all The charge for taxation is based on the profitability, the Group adopts the When entering into a new contract, the
employment is terminated by the Group the Group entities that have a functional profit for the year and takes into account definitions ‘Adjusted operating profit’, Group assesses whether it is, or contains, a
The Group accounts for pensions and
before the normal retirement date, or currency different from the presentation taxation deferred because of temporary ‘Adjusted profit before tax’ and ‘Adjusted lease. A lease conveys a right to control the
similar benefits under IAS 19 ‘Employee
whenever an employee accepts voluntary currency are translated into the differences between the treatment of earnings per share’. In each case use of an identified asset for a period of
Benefits’ (revised). In respect of defined
redundancy in exchange for these benefits. presentation currency as follows: certain items for taxation and for acquisition costs, amortisation of intangible time in exchange for consideration.
benefit plans (pension plans that define an
The Group recognises termination benefits accounting purposes. Temporary assets arising on acquisition and
amount of pension benefit that an
when it is demonstrably committed to either (i) assets and liabilities for each balance differences arise on differences between exceptional items, including the respective The Group recognises a right of use
employee will receive on retirement, usually
(i) terminating the employment of current sheet presented are translated at the carrying value of assets and liabilities in tax effect, are excluded. The Group income asset and a lease liability at the lease
dependent on one or more factors such as
employees according to a detailed formal the closing rate at the date of that the financial statements and their tax base statement has been produced in a commencement date. The right of use
age, years of service and compensation),
plan without possibility of withdrawal or balance sheet; and primarily relate to the difference columnar format to further aid this analysis. asset is initially measured at cost, and
obligations are measured at discounted
present value whilst plan assets are (ii) providing termination benefits as a between tax allowances on tangible fixed subsequently at cost less any accumulated
recorded at fair value. The assets and result of an offer made to encourage (ii) income and expenses for each income assets and the corresponding depreciation Property, plant and equipment depreciation and impairment losses,
liabilities recognised in the balance sheet in voluntary redundancy. statement are translated at average charge, and upon the net pension fund Property, plant and equipment is stated at adjusted for certain remeasurements
respect of defined benefit pension plans are exchange rates (unless this average is deficit. Full provision is made for the tax historical cost less depreciation, with the of the lease liability.
the net of plan obligations and assets. Share-based payments not a reasonable approximation of the effects of these differences. No provision exception of assets acquired as part of a
A scheme surplus is only recognised as The Group operates a number of cash cumulative effect of the rates prevailing is made for unremitted earnings of foreign business combination. Cost includes the The lease liability is initially measured at the
an asset in the balance sheet when the and equity settled, share-based incentive on the transaction dates, in which case subsidiaries where there is no commitment original purchase price of the asset and the present value of the lease payments that
Group has the unconditional right to future schemes. These are accounted for in income and expenses are translated at to remit such earnings. costs attributable to bringing the asset to its are not paid at the commencement date
economic benefits in the form of a refund or accordance with IFRS 2 ‘Share-based the dates of the transactions); and working condition for its intended use. The and discounted using the interest rate
a reduction in future contributions. For Payments’, which requires an expense Similarly, no provision is made for Group’s policy is to write-off the difference implicit in the lease or, more typically,
those schemes where an accounting to be recognised in the income statement (iii) all resulting exchange differences are temporary differences relating to between the cost of all property, plant and the Group’s incremental borrowing rate
surplus is currently recognised, the Group over the vesting period of the options. recognised as a separate component investments in subsidiaries since realisation equipment, except freehold land, and their (when the implicit rate cannot be readily
expects to recover the value through The expense is based on the fair value of of equity. of such differences can be controlled and is residual value on a straight-line basis over determined).
reduced future contributions. No allowance each instrument which is calculated using not probable in the foreseeable future. their estimated useful lives.
is made in the past service liability in the Black Scholes or binomial model as On consolidation, exchange differences Deferred tax assets are recognised, using The lease liability is subsequently increased
respect of either the future expenses of appropriate. Any expense is adjusted to arising from the translation of the net the balance sheet liability method, to the Reviews are made annually of the by the interest cost on the lease liability and
running the schemes or for non-service reflect expected and actual levels of investment in foreign entities, and of extent that it is probable that future taxable estimated remaining lives and residual decreased by lease payments made. It is
related death in service benefits which may options vesting for non-market based borrowings and other currency instruments profit will be available against which the values of individual productive assets, remeasured when there is a change in
arise in the future. The operating costs of performance criteria. designated as hedges of such investments, temporary differences can be utilised. taking account of commercial and future lease payments arising from a
such plans are charged to operating profit are taken to shareholders’ equity. technological obsolescence as well as change in an index or rate, a change in
and the finance costs are recognised Currency translations All taxation is calculated on the basis of the normal wear and tear, and adjustments are the estimate of the amount expected to
as financial income or an expense When a foreign operation is sold, such tax rates and laws enacted or substantively made where appropriate. Under this policy be payable under a residual value
Functional and
as appropriate. exchange differences are recognised in enacted at the balance sheet date. it becomes impractical to calculate average guarantee or changes in the Group’s
presentation currency the income statement as part of the gain asset lives exactly. However, the total lives assessment of whether a purchase,
Items included in the financial statements or loss on sale. Exceptional items range from approximately 15 to 40 years for extension or termination option is
Service costs are spread systematically
of each of the Group’s entities are land and buildings, and 3 to 25 years for reasonably certain to be exercised.
over the lives of employees and financing Exceptional items are those items that in
measured using the currency of the plant and equipment. All individual assets
costs are recognised in the periods in which the Directors’ view are required to be
primary economic environment in which the are reviewed for impairment when there are The Group adopts recognition exemptions
they arise. Remeasurements are recognised separately disclosed by virtue of their size
entity operates (‘the functional currency’). indications that the carrying value may not for short-term (less than 12 months) and
in the statement of comprehensive income. or incidence to enable a full understanding
The consolidated financial statements be recoverable. The Group’s ‘plant and low value leases and elects not to separate
Payments to defined contribution schemes of the Group’s financial performance. In the
are presented in Sterling, which is equipment’ asset class predominantly lease components from any associated
(pension plans under which the Group pays current year exceptional items relate to the
the Company’s functional and relates to the value of plant and equipment fixed non-lease components.
fixed contributions into a separate entity) delivery of cost saving actions, comprising
presentation currency. at the Group’s manufacturing facilities.
are charged as an expense as they fall due. redundancy and other restructuring costs
(including an associated curtailment gain on Consequently, the Group does not seek The Group classifies payments of lease
Transactions and balances to analyse out of this class other items such liabilities (principal and interest portions)
Other post-retirement benefits defined benefit pension schemes and
Monetary assets and liabilities are related impairments). Exceptional items in as motor vehicles and office equipment. as part of financing activities. Payments
Some Group companies provide
translated at the exchange rates ruling at the prior year related to a past service cost of short-term, low value and variable lease
post-retirement healthcare benefits to their
retirees. The entitlement to these benefits
the end of the financial period. Exchange for the UK defined benefit pension scheme Impairment of non-financial components are classified within
is usually conditional on the employee
profits or losses on trading transactions are to equalise benefits for the effects of assets operating activities.
included in the Group income statement unequal Guaranteed Minimum Pensions. The Group assesses at each year end
remaining in service up to retirement age
except when deferred in equity as qualifying Details can be found in note 3 on page 123. whether an asset may be impaired. If any
and the completion of a minimum service
cash flow hedges and qualifying net evidence exists of impairment, the
period. The expected costs of these
investment hedges. Income statement presentation estimated recoverable amount is compared
benefits are accrued over the period of
employment using an accounting The acquisition of Nautilus Biosciences to the carrying value of the asset and an
methodology similar to that for defined Canada Inc, Plant Impact Plc and Brenntag impairment loss is recognised where
benefit pension plans. Remeasurements Biosector A/S in 2018 and Rewitec GmbH appropriate. The recoverable amount is the
are recognised in the statement of in 2019 increased acquisition costs and higher of an asset’s value in use and fair
comprehensive income. These obligations amortisation of acquired intangible assets. value less costs to sell. In addition to this,
are valued annually by independent If the right targets can be found, these goodwill is tested for impairment at least
qualified actuaries. costs are likely to increase in the future. annually. Non-financial assets other than
goodwill which have suffered impairment
are reviewed for possible reversal of the
impairment at each reporting date.
118
118
119
119
Derivative financial instruments When a forecast transaction is no longer Trade and other receivables Share capital
The Group uses derivative financial expected to occur, the cumulative gain Trade and other receivables are recognised Investment in own shares
instruments where deemed appropriate to or loss that was reported in equity is initially at fair value and subsequently (i) Employee share ownership trusts –
hedge its exposure to interest rates and immediately transferred to the measured at amortised cost, using the shares acquired by the trustees of
short term currency rate fluctuations. There income statement. effective interest method, less impairment the employee share ownership trust
were no such transactions recorded in the losses. A provision for impairment of trade (the Trustees), funded by the Company
current or prior year however the Group’s Certain derivative instruments do not qualify receivables is recognised based on lifetime and held for the continuing benefit of
accounting policy is set out below. for hedge accounting. Changes in the fair expected losses, but principally comprises the Company are shown as a reduction
value of any derivative instruments that balances where objective evidence exists in equity attributable to owners of the
Derivative financial instruments are do not qualify for hedge accounting are that the amount will not be collectible. parent. Movements in the year arising
recorded initially at cost. Subsequent recognised immediately in the Such amounts are written down to their from additional purchases by the
measurement depends on the designation income statement. estimated recoverable amounts, with the Trustees of shares or the receipt of
of the instrument as either: (i) a hedge of the charge being made to operating expenses. funds due to the exercise of options
fair value of recognised assets or liabilities Borrowings by employees are accounted for within
or a firm commitment (fair value hedge); Borrowings are recognised initially at fair Cash and cash equivalents reserves and shown as a movement in
or (ii) a hedge of highly probable forecast value, net of transaction costs incurred. Cash and cash equivalents comprise cash equity attributable to owners of the
transactions (cash flow hedge). Any difference between the proceeds balances and short term deposits. Bank parent in the year. Administration
(net of transaction costs) and the overdrafts that are repayable on demand expenses of the trusts are charged
(i) Fair value hedge redemption value is recognised in the and form an integral part of the Group’s to the Company’s income statement
Changes in the fair value of derivatives, income statement over the period of the cash management are included as a as incurred.
for example interest rate swaps and foreign borrowings using the effective interest component of cash and cash equivalents
exchange contracts, that are designated method. Borrowings are classified as for the purpose of the statement of cash (ii) Treasury shares – where any Group
and qualify as fair value hedges are current liabilities unless the Group has an flows. Cash and bank overdrafts are offset company purchases the Company’s
recorded in the income statement, together unconditional right to defer settlement of and the net amount reported in the balance equity share capital as treasury shares,
with any changes in the fair value of the the liability for at least 12 months after the sheet when there is a legally enforceable the consideration paid, including any
hedged asset or liability that are attributable balance sheet date. right to offset the recognised amounts, directly attributable incremental costs
to the hedged risk. there is an intention to settle on a net basis (net of income taxes) is deducted from
Borrowing costs and interest is charged on a net basis. equity attributable to the Company’s
(ii) Cash flow hedge General and specific borrowing costs equity holders until the shares are
The effective portion of changes in the directly attributable to the acquisition, Environmental, restructuring and cancelled, reissued or disposed of.
fair value of derivatives that are designated construction or production of qualifying other provisions Where such shares are subsequently
and qualify as cash flow hedges are assets, which are assets that necessarily The Group is exposed to environmental sold or reissued, any consideration
recognised in equity. The gain or loss take a substantial period of time to get liabilities relating to its operations and received, net of any directly attributable
relating to the ineffective portion is ready for their intended use or sale, are liabilities following the acquisition of incremental transaction costs and the
recognised immediately in the income added to the cost of those assets, until Uniqema. Provisions are made immediately related income tax effects, is included
statement. Amounts accumulated in equity such time as the assets are substantially where a legal obligation is identified, can be in equity attributable to the Company’s
are recycled in the income statement in ready for their intended use or sale. quantified and it is regarded as more likely equity holders.
the periods when the hedged item will than not that an outflow of resources will be
affect profit or loss (for instance when the Trade and other payables required to settle the obligation. The Group Dividends
forecast sale that is hedged takes place). Trade and other payables are recognised does consider the impact of discounting Dividends on ordinary share capital are
However, when the forecast transaction initially at fair value and subsequently when establishing provisions and recognised as a liability when the liability
that is hedged results in the recognition of a measured at amortised cost using the provisions are discounted when the impact is irrevocable. Accordingly, final dividends
non-financial asset (for example inventory) effective interest method. is material and the timing of cash flows can are recognised when approved by
or a liability, the gains and losses previously be estimated with reasonable certainty. shareholders and interim dividends
deferred in equity are transferred Inventories are recognised when paid.
from equity and included in the initial Inventories are stated at the lower of cost
measurement of the cost of the asset and net realisable amount on a first in first Investments
or liability. out basis. Cost comprises all expenditure, Investments in equity securities are
including related production overheads, measured at fair value, with movements
When a hedging instrument expires or incurred in the normal course of business in the fair value being recognised in the
is sold, or when a hedge no longer meets in bringing the inventory to its location and income statement or equity on an
the criteria for hedge accounting, any condition at the balance sheet date. Net instrument by instrument basis.
cumulative gain or loss existing in equity realisable amount is the estimated selling Investments in associates are initially
at that time remains in equity and is price in the ordinary course of business recorded at cost and subsequently
recognised when the forecast transaction less any applicable variable selling costs. adjusted for the Group’s share of results.
is ultimately recognised in the income Provision is made for obsolete, slow Investments are subject to impairment
statement. moving and defective inventory where testing at each balance sheet date or earlier
appropriate. Profits arising on intra-group upon indication of impairment.
sales are eliminated in so far as the product
remains in Group inventory at the year end.
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Notes to the Group Accounts
1. Segmental analysis Capital expenditure and depreciation
The Group’s sales, marketing and research activities are organised into four global market sectors, being Personal Care, Life Sciences, 2019 2018
£m £m
Performance Technologies and Industrial Chemicals. These are the segments for which summary management information is presented Additions to Depreciation Additions to Depreciation
to the Group’s Executive Committee, which is deemed to be the Group’s Chief Operating Decision Maker. A review of each sector can be non-current and non-current and
assets amortisation assets amortisation
found within the Strategic Report on pages 22 to 28.
Personal Care 34.5 18.4 29.9 14.7
Life Sciences 32.2 21.0 26.1 15.5
There is no material trade between segments. Segmental results include items directly attributable to a specific segment as well as those
Performance Technologies 45.1 21.3 41.9 20.5
that can be allocated on a reasonable basis. Segment assets consist primarily of property, plant and equipment, intangible assets,
Industrial Chemicals 10.8 5.7 9.0 5.5
inventories and trade and other receivables. Total Group 122.6 66.4 106.9 56.2
2019 2018
£m £m
Income statement The Group manages its business segments on a global basis. The operations are based in the following geographical areas: Europe, with
Revenue manufacturing sites in the UK, France, the Netherlands, Italy, Spain, Finland and Denmark; North America, with manufacturing sites in the
Personal Care 485.2 487.8 US; Latin America, with manufacturing sites in Brazil and Argentina; Asia, with manufacturing sites in Singapore, Japan, India, China and
Life Sciences 350.5 324.5 Indonesia; and Australia and South Africa.
Performance Technologies 430.2 456.4
Industrial Chemicals 111.8 118.2 The Group’s revenue from external customers in the UK is £58.6m (2018: £55.4m), in Germany is £100.0m (2018: £113.0m), in the US
Total Group revenue 1,377.7 1,386.9 is £332.9m (2018: £343.2m) and the total revenue from external customers from other countries is £886.2m (2018: £875.3m). No single
external customer represents more than 3% of the total revenue of the Group.
Adjusted operating profit The total of non-current assets other than financial instruments, retirement benefit assets and deferred tax assets located in the UK is
Personal Care 162.1 160.3 £137.0m (2018: £119.6m), and the total of the non-current assets located in other countries is £815.9m (2018: £766.4m). Goodwill has not
Life Sciences 107.1 95.8 been split by geography as this asset is not attributable to a geographical area.
Performance Technologies 69.4 85.2
Industrial Chemicals 1.1 1.2 2. Operating costs
Total Group operating profit (before exceptional items, acquisition costs and amortisation of intangible assets 2019 2018
arising on acquisition) 339.7 342.5 £m £m
Exceptional items, acquisition costs and amortisation of intangible assets arising on acquisition1 (19.8) (13.7) Analysis of net operating expenses by function:
Total Group operating profit 319.9 328.8 Distribution costs 65.9 65.8
Administrative expenses 126.4 127.7
1 Relates to Personal Care £3.9m (2018: £3.7m), Life Sciences £9.4m (2018: £6.1m), Performance Technologies £5.6m (2018: £3.5m) and Industrial Chemicals £0.9m (2018: £0.4m)
192.3 193.5
In the following table, revenue has been disaggregated by sector and destination. This is the primary management information that is
presented to the Group’s Executive Committee. Additional information on the nature of operating expenses, including depreciation and employee costs, is provided in note 3.
Europe North America Latin America Asia Total 3. Profit for the year
£m £m £m £m £m 2019 2018
Revenue 2019 £m £m
Personal Care 168.4 143.1 55.1 118.6 485.2 The Group profit for the year is stated after charging/(crediting):
Life Sciences 138.1 98.3 58.6 55.5 350.5 Depreciation and amortisation (note 12, 13 & 14) 66.4 56.2
Performance Technologies 200.4 112.9 27.6 89.3 430.2 Impairments (exceptional) 1.4 –
Industrial Chemicals 52.0 13.1 2.5 44.2 111.8 Staff costs (note 9) 268.9 267.1
Total Group revenue 558.9 367.4 143.8 307.6 1,377.7 Redundancy costs (non-exceptional) 0.8 1.1
Redundancy costs (exceptional) 10.4 –
Revenue 2018 Inventories – cost recognised as expense in cost of sales 746.5 747.5
Personal Care 165.7 143.1 57.8 121.2 487.8 Inventories – provision movement in the year 3.4 (1.7)
Life Sciences 128.6 94.6 50.3 51.0 324.5 Research and development 37.6 37.5
Performance Technologies 217.4 124.3 30.6 84.1 456.4 Net foreign exchange 3.4 0.9
Industrial Chemicals 60.7 10.7 2.3 44.5 118.2 Bad debt charge/(credit) (note 18) 0.2 (1.7)
Total Group revenue 572.4 372.7 141.0 300.8 1,386.9
Adjustments (including exceptional items):
2019 2018
£m £m
Adjustments in the Group income statement of £19.8m (2018: £13.7m) include a £10.7m exceptional cost (2018: £4.9m), acquisition
Balance sheet costs of £0.3m (2018: £2.7m) and amortisation of intangible assets arising on acquisition of £8.8m (2018: £6.1m). The exceptional item in
Total assets the current year relates to the delivery of cost saving actions, comprising £10.4m of redundancy costs and £0.3m of other restructuring
Segment total assets: costs (including an associated curtailment gain on defined benefit pension schemes of £1.2m and related impairments of £1.4m).
Personal Care 560.3 611.3 All items associated with delivering the cost savings have been presented collectively as exceptional by virtue of their size and nature.
Life Sciences 568.2 493.7 The exceptional cost in the prior year related to the UK defined benefit pension scheme, being a past service cost to equalise benefits
Performance Technologies 501.0 480.2 for the effects of unequal Guaranteed Minimum Pensions. The tax impact on all adjustments was £3.9m (2018: £2.1m).
Industrial Chemicals 152.9 170.8
Total segment assets 1,782.4 1,756.0 2019 2018
£m £m
Tax assets 11.8 56.2
Services provided by the Group’s auditors
Retirement benefit assets 10.2 24.6
Audit services
Cash and investments 86.6 76.0
Fees payable to the Group auditors for the audit of Parent Company and consolidated financial statements 0.1 0.1
Total Group assets 1,891.0 1,912.8
Fees payable to the Group auditors and its associates for the audit of the Company’s subsidiaries 0.9 0.8
Other audit services
Tax compliance services – 0.1
Other non-audit services1 0.1 –
1.1 1.0
1 Other non-audit services include fees payable in relation to the Group’s interim review
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4. Net financial costs 6. Deferred tax
2019 2018 2019 2018
£m £m £m £m
Financial costs The deferred tax balances included in these accounts are attributable to the following:
US$100m 5.94% fixed rate 10 year bond 4.6 4.5 Deferred tax assets
2014 Club facility due 2021 0.8 2.5 Retirement benefit liabilities 17.2 10.2
2016 Club facility due 2021 0.2 – Tax losses – 24.4
2019 Club facility due 2024 3.3 – Provisions 21.6 21.6
€30m 1.08% fixed rate 7 year bond 0.3 0.3 Gross deferred tax asset 38.8 56.2
€70m 1.43% fixed rate 10 year bond 0.9 0.9 Offset with deferred tax liabilities (27.0) –
£30m 2.54% fixed rate 7 year bond 0.8 0.8 Net deferred tax asset 11.8 56.2
£70m 2.80% fixed rate 10 year bond 2.0 2.0 Deferred tax liabilities
€50m 1.18% fixed rate 8 year bond 0.3 – Accelerated capital allowances 86.6 98.4
£65m 2.46% fixed rate 8 year bond 0.9 – Revaluation gains 1.9 1.9
US$60m 3.70% fixed rate 10 year bond 0.9 – Acquired intangibles 17.6 19.2
Net interest on retirement benefit liabilities 0.3 0.6 Retirement benefit assets 2.3 4.1
Interest on lease liabilities 1.0 – Other 1.0 1.1
Other bank loans and overdrafts 2.2 3.8 Gross deferred tax liability 109.4 124.7
Capitalised interest – (3.3) Offset with deferred tax assets (27.0) –
18.5 12.1 Net deferred tax liability 82.4 124.7
Financial income
Bank interest receivable and similar income (0.9) (1.1) The movement on deferred tax balances during the year is summarised as follows:
Net financial costs 17.6 11.0 Deferred tax credited/(charged) through the income statement
Continuing operations before adjustments (16.1) (24.5)
5. Tax Adjustments and exceptional items 3.2 2.1
2019 2018 Deferred tax credited/(charged) directly to other comprehensive income or equity (note 5(b)) 9.1 (4.1)
£m £m Acquisitions (1.1) (8.9)
(a) Analysis of tax charge for the year Exchange differences 2.8 (2.8)
UK current corporate tax 15.1 15.0 (2.1) (38.2)
Overseas current corporate taxes 50.5 42.1 Net balance brought forward (68.5) (30.3)
Current tax 65.6 57.1 Net balance carried forward (70.6) (68.5)
Deferred tax (note 6) 12.9 22.4
78.5 79.5 Deferred tax credited/(charged) through the income statement relates to the following:
Retirement benefit obligations 0.8 1.3
(b) Tax on items (credited)/charged to other comprehensive income or equity Accelerated capital allowances 9.1 (48.4)
Deferred tax on remeasurement of post-retirement benefits (OCI) (8.4) 4.9 Tax losses (23.2) 23.2
Deferred tax on share-based payments (equity) (0.7) (0.8) Provisions (1.4) 0.3
(9.1) 4.1 Other 1.8 1.2
(12.9) (22.4)
(c) Factors affecting the tax charge for the year
Profit before tax 302.3 317.8 Deferred tax is calculated in full on temporary differences under the balance sheet liability method at rates appropriate to each subsidiary.
Tax at the standard rate of corporation tax in the UK, 19.0% (2018: 19.0%) 57.4 60.4 Deferred tax expected to reverse in the year to 31 December 2020 and beyond has been measured using the rate due to prevail in the
Effect of: year of reversal.
Deferred tax rate change – (0.9)
Prior year over provisions (2.1) (2.4)
Deferred tax assets have been recognised in all material cases where such assets arise, as it is probable the assets will be recovered.
Tax cost of remitting overseas income to the UK 0.8 0.6
Expenses and write-offs not deductible for tax purposes 1.4 0.6
Deferred tax is only recognised on the unremitted earnings of overseas subsidiaries to the extent that remittance is expected
Net effect of higher overseas tax rates 21.0 21.2
78.5 79.5 in the foreseeable future. If all earnings were remitted, an additional £6.4m (2018: £3.0m) of tax would be payable.
Croda’s 2019 effective adjusted corporate tax rate of 25.6% is significantly higher than the UK’s standard rate of 19%. Croda operates All movements on deferred tax balances have been recognised in the income statement with the exception of the items shown in
note 5(b).
in many tax jurisdictions other than the UK, both as a manufacturer and distributor, with the majority of those jurisdictions having rates
higher than the UK; considerably so in some cases. It is the exposure to these different tax rates that increases the effective tax rate
above the UK standard rate and also makes it difficult to forecast the Group’s future tax rate with any certainty given the unpredictable Of the gross deferred tax assets, £4.7m are expected to reverse within 12 months of the balance sheet date. No material reversal of any
nature of exchange rates, individual economies and tax legislators. Other than the exposure to higher overseas tax rates, there are no of the deferred tax liability is expected within 12 months of the balance sheet date based on the Group’s current capital expenditure
significant adjustments between the Group’s expected and reported tax charge based on its accounting profit. Given the global nature programme.
of the Group, and the number of associated cross-border transactions between connected parties, we are exposed to potential
adjustments to the price charged for those transactions by tax authorities. However, the Group carries appropriate provisions relating In 2019, deferred tax assets and liabilities have been offset if a legally enforceable right to set off current tax balances exists, and the
to the level of risk. deferred tax balances relate to the same tax authority. Following a review of the 2018 balances, £22.9m of deferred tax assets and
liabilities should have been offset to align with the current year’s presentation. In addition, the gross deferred tax balances in respect of
The main rate of UK corporation tax reduced from 20% to 19% from 1 April 2017. Further reductions to the UK tax rate have been the prior year were reassessed following the submission of the 2018 US tax returns, resulting in a reduction of £23.6m in both the tax
announced that will reduce the rate to 17% by 1 April 2020, although for 2019 the rate is 19%. The future changes to rates were losses asset and accelerated capital allowances liability, with no change to the net deferred tax position. Given these changes have no
substantively enacted on 6 September 2016. Overseas tax is calculated at the rates prevailing in the respective jurisdictions. impact on the Group’s net assets, results or cash flows for the prior year, we do not consider this material and so have not restated the
comparative balance sheet.
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7. Earnings per share 9. Employees
2019 2018 2019 2018
£m £m £m £m
Adjusted profit after tax for the year attributable to owners of the parent 239.8 250.1 Group employment costs including Directors
Exceptional items, acquisition costs and amortisation of intangible assets (19.8) (13.7) Wages and salaries 202.1 192.4
Tax impact of exceptional items, acquisition costs and amortisation of intangible assets 3.9 2.1 Share-based payment charges (note 23) 5.1 15.1
Profit after tax for the year attributable to owners of the parent 223.9 238.5 Social security costs 36.2 35.3
Post-retirement benefit costs 25.5 24.3
Number Number Redundancy costs 11.2 1.1
m m
280.1 268.2
Weighted average number of 10.61p (2018: 10.36p) ordinary shares in issue for basic calculation 129.6 131.5
Deemed issue of potentially dilutive shares 0.3 0.7
Average number of 10.61p (2018: 10.36p) ordinary shares for diluted calculation 129.9 132.2 2019 2018
Number Number
Pence Pence Average employee numbers by function
Basic earnings per share 172.8 181.4 Production 2,851 2,755
Adjusted basic earnings per share 185.0 190.2 Selling and distribution 1,134 1,089
Administration 647 619
Diluted earnings per share 172.4 180.4 4,632 4,463
Adjusted diluted earnings per share 184.6 189.2
As required by the Companies Act 2006, the figures disclosed above are weighted averages based on the number of employees at each
Basic earnings per share is calculated by dividing the profit after tax attributable to owners of the parent by the weighted average number quarter end and include Executive Directors. At 31 December 2019, the Group had 4,580 (2018: 4,580) employees in total.
of ordinary shares in issue during the year, excluding those shares held in treasury or employee share trusts (note 25). Shares held in
employee share trusts are treated as cancelled because, except for a nominal amount, dividends have been waived. 10. Directors’ and key management compensation
Detailed information concerning Directors’ remuneration, interests and options is shown in the Directors’ Remuneration Report,
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all
which is subject to audit, on pages 71 to 97 forming part of the Annual Report and Accounts.
potentially dilutive ordinary shares.
Aggregate compensation for key management, being the Directors and members of the Group Executive Committee, was as follows:
Additional earnings per share calculations are included above to give a better indication of the Group’s underlying performance.
2019 2018
8. Dividends £m £m
Pence per 2019 Pence per 2018 Key management compensation including Directors
share £m share £m Short term employee benefits 4.6 5.6
Ordinary Post-retirement benefit costs 0.1 0.1
Interim Share-based payment (credit)/charge (0.3) 3.6
2018 interim, paid October 2018 – – 38.00 50.0 4.4 9.3
2019 interim, paid October 2019 39.50 50.7 – –
Final
2017 final, paid May 2018 – – 46.00 60.4
2018 final, paid May 2019 49.00 64.6 – –
2018 special, paid May 2019 115.00 151.5 – –
203.50 266.8 84.00 110.4
Preference (paid June and December) 0.1 0.1
266.9 110.5
The Directors are recommending a final dividend of 50.5p per share, amounting to a total of £65.0m, in respect of the financial year ended
31 December 2019.
Subject to shareholder approval, the dividend will be paid on 28 May 2020 to shareholders registered on 17 April 2020 and has not
been accrued in these financial statements. The total dividend for the year ended 31 December 2019 will be 90.0p per share amounting
to a total of £115.7m.
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11. Post-retirement benefits The amounts recognised in the balance sheet in respect of these schemes are as follows:
2019 2018
The table below summarises the Group’s net year end post-retirement benefits and activity for the year. £m £m
Present value of funded obligations
2019 2018
£m £m
UK pension scheme (1,104.2) (961.6)
Balance sheet: US pension scheme (132.3) (126.1)
Retirement benefit assets 10.2 24.6 Netherlands pension scheme (188.2) (165.5)
Retirement benefit liabilities (85.2) (43.1) Rest of world (17.0) (15.5)
Net liability in Group balance sheet (75.0) (18.5) (1,441.7) (1,268.7)
Fair value of schemes’ assets
Net balance sheet liabilities for: UK pension scheme 1,063.5 986.0
Defined pension benefits (60.9) (6.0) US pension scheme 141.5 124.1
Post-employment medical benefits (14.1) (12.5) Netherlands pension scheme 171.1 149.7
(75.0) (18.5) Rest of world 14.7 12.9
1,390.8 1,272.7
Income statement charge included in profit before tax for: Net (liability)/asset in respect of funded schemes (50.9) 4.0
Defined pension benefits 18.2 23.9 Present value of unfunded obligations (10.0) (10.0)
Post-employment medical benefits 0.5 0.9 Net liability in Group balance sheet (excluding post-employment medical benefits) (60.9) (6.0)
18.7 24.8
2019 2018
£m £m
Remeasurements included in other comprehensive income for: Movement in present value of retirement benefit obligations in the year:
Defined pension benefits 54.7 (20.3) Opening balance 1,278.7 1,321.9
Post-employment medical benefits 1.8 (2.3) Current service cost 19.6 18.9
56.5 (22.6) Past service cost – plan amendments (0.3) 4.9
Past service cost – curtailments (0.9) –
Defined benefit pension schemes Interest cost 33.9 31.5
The Group operates defined benefit pension schemes in the UK, US, Netherlands and several other territories under broadly similar Remeasurements
regulatory frameworks. All of the Group’s final salary type pension schemes (which provide benefits to members in the form of a Change in demographic assumptions (8.0) 6.3
guaranteed level of pension payable for life based on salary in the final years leading up to retirement) are closed to future service Change in financial assumptions 174.0 (76.0)
Experience gains 11.1 (1.8)
accrual with the exception of a small number of ‘grandfathered’ employees in the US scheme.
Contributions paid in
Employee 2.8 2.8
The UK scheme operated on a final salary basis until 5 April 2016, following which the scheme changed to a Career Average Revalued
Benefits paid (43.6) (40.7)
Earnings (CARE) defined benefit scheme, with annual pensionable earnings capped and pensions in payment indexed based on CPI Exchange differences on overseas schemes (15.6) 10.9
(previously RPI) for service accrued from 6 April 2016. This change is expected to reduce the future comparable cost and risk attached 1,451.7 1,278.7
to the UK scheme. Material defined benefit pension schemes in other territories, including the Netherlands, operate on a similar basis to Movement in fair value of schemes’ assets in the year:
the UK, except in the US, which (other than for ‘grandfathered’ employees) operates a cash balance pension scheme that provides a Opening balance 1,272.7 1,304.8
guaranteed rate of return on pension contributions until retirement. From 1 October 2017 the US scheme was closed to new joiners, Interest income 34.1 31.4
who will receive defined contribution benefits. The US plans also do not generally receive inflationary increases once in payment. With the Remeasurements
exception of this difference in inflationary risk, the Group’s main defined benefit pension schemes continue to face broadly similar risks, Return on scheme assets, excluding amounts included in financial expenses 122.4 (51.2)
as described on page 131. Contributions paid in
Employee 2.8 2.8
The majority of benefit payments are from trustee administered funds; however, there are also a number of unfunded plans where Employer 16.3 15.2
the relevant Group company meets the benefit payment obligation as it falls due. Benefits paid out including settlements (43.6) (40.7)
Exchange differences on overseas schemes (13.9) 10.4
Plan assets held in trusts are governed by local regulations and practice in each country, as is the nature of the relationship between 1,390.8 1,272.7
the Group and the trustees (or equivalent) and their composition. Responsibility for governance of the schemes, including investment
decisions and contribution schedules, predominantly lies with the particular scheme’s board of trustees with appropriate input from the As at the balance sheet date, the present value of retirement benefit obligations comprised approximately £438m in respect of active
relevant Group company. The board of trustees must be composed of representatives in accordance with each scheme’s regulations and employees, £403m in respect of deferred members and £611m in relation to members in retirement.
any relevant legislation.
Total employer contributions to the schemes in 2020 are expected to be £14.8m.
The actuarial assumptions were as follows:
2019 2019 2019 2018 2018 2018

UK US Netherlands UK US Netherlands
Discount rate 1.9% 3.2% 1.2% 2.7% 4.2% 1.9%
Inflation rate – RPI 3.0% 2.5% 1.8% 3.2% 2.5% 1.8%
Inflation rate – CPI 2.2% n/a n/a 2.2% n/a n/a
Rate of increase in salaries 4.2% 3.5% 2.4% 4.2% 4.0% 2.4%
Rate of increase for pensions in payment 2.8% n/a 1.3% 3.0% n/a 1.3%
Duration of liabilities (ie life expectancy) (years) 20.5 11.1 22.4 20.0 10.8 21.8
Remaining working life 14.7 10.1 12.9 12.7 10.9 13.4
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11. Post-retirement benefits continued Pension and medical benefits – risks and volatility
Mortality assumptions are based on country-specific mortality tables and where appropriate allow for future improvements in life Through its defined benefit pension schemes and post-employment medical schemes, the Group is exposed to a number of risks,
expectancy. Where credible data exists, actual plan experience is taken into account. Applying the mortality tables adopted, the expected the most significant of which are detailed below:
future average lifetime of members currently at age 65 and members at age 65 in 20 years’ time is as follows:
Asset volatility
Current age 65 Age 65 in 20 years
UK US Netherlands UK US Netherlands The schemes’ liabilities are calculated using a discount rate set with reference to corporate bond yields; if scheme assets underperform
Male 21.6 21.0 22.2 23.1 22.4 23.8 this yield, a deficit will be created. The schemes hold a significant proportion of equities, which are expected to outperform corporate
Female 24.1 22.9 24.6 25.7 24.3 26.1 bonds in the long term while providing volatility and risk in the short term. As the schemes mature, the Group intends to reduce the level
of investment risk by investing more in assets that better match the liabilities. However, the Group and the pension trustees (Trustees)
The sensitivity of the defined benefit obligation to changes in the significant assumptions is as follows: believe that due to the long term nature of the scheme liabilities and the strength of the supporting Group, a level of continuing equity
investment is an appropriate element of the Group’s long term strategy to manage the schemes efficiently. See below for more details on
Impact on retirement benefit obligation the Group’s asset-liability matching strategy.
Sensitivity Of increase Of decrease
Discount rate 0.5% -9.2% 10.7% Changes in bond yields
Inflation rate 0.5% 6.5% -6.2%
Mortality (assumes a one year change in life expectancy) 1 year 3.0% -3.0% A decrease in corporate bond yields will increase scheme liabilities, although this will be partially offset by an increase in the value
of the schemes’ bond holdings.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined Inflation risk
benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with Some of the Group’s pension obligations are linked to inflation, and higher inflation will lead to higher liabilities. However, the level of
the projected unit credit method at the end of the reporting year) has been applied as when calculating the retirement benefit obligation inflationary increases are usually capped to protect the scheme against extreme inflation. The majority of the schemes’ assets are either
recognised in the Group balance sheet. unaffected by inflation in the case of fixed interest bonds or loosely correlated in the case of equities, meaning that an increase in inflation
will thus increase the deficit. In the US schemes, the pensions in payment are not linked to inflation, so this is a less material risk.
The weighted average duration of the defined benefit obligation is 19.8 years (2018: 19.3 years).
Life expectancy
The assets in the schemes comprised: The majority of the schemes’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
2019 2019 2018 2018
£m % £m %
increase in the schemes’ liabilities. This is particularly significant in the UK scheme, where inflationary increases result in higher sensitivity
Quoted to changes in life expectancy. In the case of the funded schemes, the Group ensures that the investment positions are managed within an
Equities 240.7 17% 232.9 19% asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are cognisant of the obligations
Government bonds 584.2 42% 532.2 42% under the pension schemes. Within this framework, the Group’s ALM objective is to match a portion of assets to the pension obligations
Corporate bonds 77.9 6% 115.0 9% by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate
Other quoted securities 11.3 1% – 0% currency. The Group and Trustees actively monitor how the duration and the expected yield of the investments are matching the
Unquoted expected cash outflows arising from the pension obligations. The Group has not changed the processes used to manage its risks
Cash and cash equivalents 127.3 9% 43.3 3% from previous years.
Real estate 57.5 4% 68.6 5%
Derivatives 1.2 0% 4.3 0% Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of
Other 290.7 21% 276.4 22% assets. A significant portion of assets in 2019 consist of equities and bonds, although the schemes also invest in property, cash and
1,390.8 100% 1,272.7 100% infrastructure funds. The Group believes that equities offer the best returns over the long-term with an acceptable level of risk. Both the
UK and Dutch schemes make use of a portfolio of derivative instruments to mitigate interest rate and inflation risk.
Derivatives presented above represent the scheme’s net position on Government bond repurchase agreements and other swap contracts
(valued on a mark-to-market basis) which form part of the scheme’s liability driven investment (LDI) portfolio. The non-derivative assets in The latest triennial valuation of the UK scheme was completed as at 30 September 2017. As a result, no deficit funding payments to this
the LDI portfolio have been presented in the relevant asset category. This presentation has been amended to be consistent in both years. scheme were required prior to completion of the next triennial valuation (as at 30 September 2020). The funding review of our US scheme
is undertaken annually. As at 1 December 2018 the scheme was 127% funded, with the funding level allowing for contributions to be
Post-employment medical benefits received during 2019. The Group’s Dutch scheme is subject to a rigorous regulatory environment under the supervision of the Dutch
The Group operates an unfunded post-employment medical benefit scheme in the US. The method of accounting, significant National Bank (DNB). As at 31 December 2019 the scheme was 111% funded on an actuarial basis relative to the DNB’s required level of
assumptions and the frequency of valuations are similar to those used for defined benefit pension schemes set out above with the 119% and a minimum funding requirement of 104%.
addition of actuarial assumptions relating to the long-term increase in health care costs of 5.0% a year (2018: 5.0%).
The expected distribution of the timing of benefit payments is as follows:
The amounts recognised in the balance sheet in respect of this scheme are as follows:
2019 2018 Less than Between Between Beyond
£m £m a year 1–2 years 2–5 years 5 years Total
£m £m £m £m £m
Present value of unfunded obligations
Pension benefits 40.0 39.5 131.6 1,240.6 1,451.7
US scheme 14.1 12.5
Post-employment medical benefits 0.6 0.6 1.9 11.0 14.1
2019 2018
40.6 40.1 133.5 1,251.6 1,465.8
£m £m
Movement in present value of retirement benefit obligations in the year: Defined contribution schemes
Opening balance 12.5 13.4 2019 2018
Current service cost 0.3 0.4 £m £m
Past service cost – curtailments (0.3) – Contributions paid charged to operating profit 5.6 5.0
Interest cost 0.5 0.5
Remeasurements – change in demographic assumptions (0.1) 0.1
Remeasurements – change in financial assumptions 1.9 (2.4)
Benefits paid (0.3) (0.3)
Exchange differences on overseas schemes (0.4) 0.8
14.1 12.5
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12. Intangible assets Allocated goodwill primarily relates to £192m (2018: £192m) associated with the 2006 acquisition of Uniqema (with all other balances
Technology Customer Other individually less than £10m). Due to the geographical and operational scale of the Uniqema acquisition, this goodwill balance is tested for
Goodwill Software processes relationships intangibles Total
£m £m £m £m £m £m
impairment at an operating segment level. Standalone CGUs operate independently of the Group’s core regional operating assets, are
Cost capable of generating largely independent cash inflows and are therefore annually tested separately for impairment.
At 1 January 2018 320.2 22.4 30.8 26.3 9.3 409.0
Exchange differences 1.2 0.6 0.4 0.4 0.1 2.7 For impairment testing performed at an operating segment level, cash flow projections are based on the Group’s current year results and
Additions – 2.4 0.1 – 0.9 3.4 a growth rate of 3% (an appropriate view based on past experience), discounted using a weighted average cost of capital, which for
Acquisitions 32.6 – 28.2 10.2 – 71.0 these purposes has been calculated to be approximately 8.3% pre-tax (2018: 6.7%). No reasonably possible changes in key
Reclassification from plant and equipment – 0.3 – – – 0.3 assumptions would cause the recoverable amount of the operating segments to be less than their carrying value. Based on the testing
At 31 December 2018 354.0 25.7 59.5 36.9 10.3 486.4 performed, no impairment has been recognised for the year ended 31 December 2019.
At 1 January 2019 354.0 25.7 59.5 36.9 10.3 486.4 Standalone CGUs
Exchange differences (7.5) (1.1) (3.2) (1.9) (0.4) (14.1) The carrying amount of goodwill is allocated to Standalone CGUs as follows:
Additions – 4.7 – 1.1 – 5.8
Acquisitions 2.1 – 5.4 – – 7.5 2019 2018
Disposals and write-offs – (0.1) – – – (0.1) £m £m
Reclassification (0.1) 0.3 – – (0.2) – Incotec 68.6 72.6
At 31 December 2019 348.5 29.5 61.7 36.1 9.7 485.5 Biosector 24.9 26.6
Sipo 20.7 21.8
Accumulated amortisation and impairment losses Ionphase 6.6 7.0
At 1 January 2018 – 14.5 3.8 2.8 1.6 22.7 Rewitec 2.3 –
Exchange differences – 0.4 0.2 0.1 – 0.7 123.1 128.0
Charge for the year (note 3) – 1.8 4.4 1.4 0.5 8.1
At 31 December 2018 – 16.7 8.4 4.3 2.1 31.5 For impairment testing performed at a Standalone CGU level, cash flow projections have been based on specific estimates for five years,
with the exception of Sipo and Ionphase which use 10 year projections to better reflect the industry and territory in which they operate
At 1 January 2019 – 16.7 8.4 4.3 2.1 31.5 and the period through to when they are expected to reach a steady state of operation. Unless otherwise stated, these cash flow
Exchange differences – (1.0) (0.8) (0.2) – (2.0) projections assume an appropriate view of past experience, specifically that the market share will not change significantly and that gross
Charge for the year (note 3) – 1.9 6.0 2.3 0.6 10.8 and operating margins will remain broadly constant. The terminal value growth rates and discount rates applied in these CGU level
Disposals and write-offs – (0.1) – – – (0.1) calculations are set out below:
At 31 December 2019 – 17.5 13.6 6.4 2.7 40.2
Terminal value Pre-tax
growth rate discount rate
Net carrying amount 2019 2018 2019 2018
At 31 December 2019 348.5 12.0 48.1 29.7 7.0 445.3 Incotec 3.0% 3.0% 8.4% 6.9%
At 31 December 2018 354.0 9.0 51.1 32.6 8.2 454.9 Biosector 3.0% n/a 10.2% n/a
At 1 January 2018 320.2 7.9 27.0 23.5 7.7 386.3 Sipo 4.0% 4.0% 10.8% 8.8%
Ionphase 3.0% 3.0% 10.0% 6.4%
Intangible asset amortisation is recorded in operating costs within the income statement on page 110.
Based on the annual impairment testing performed, no impairment has been recognised for the year ended 31 December 2019, and all
Impairment testing for CGUs containing goodwill Standalone CGUs remain on track to perform to our long term expectations, including recently acquired Biosector which was in the early
The Group’s goodwill balance predominantly relates to the value of commercial and other synergies arising from the combination of stages of its integration into the Group during 2019 but is forecast to perform in line with the Group’s expectations over the long term.
acquired businesses with Croda’s established global sales, marketing and R&D networks. This goodwill is allocated to the Group’s Cash In forming this conclusion the Directors have reviewed sensitivity analysis which considered all reasonably possible downsides on key
Generating Units (CGUs) expected to benefit from that combination based on the smallest identifiable group of assets that generate assumptions, both individually and in combination, and considered whether these would give rise to an impairment. This analysis
independent cash inflows. concluded that no reasonably possible changes in key assumptions would cause the recoverable amount of the Standalone CGUs
to be less than the carrying value, other than for Sipo.
As discussed in the accounting policies note on page 116, goodwill is tested at each year end for impairment with reference to the
relevant CGU’s recoverable amount compared to the unit’s carrying value including goodwill. Assets are grouped at the lowest level for For the Sipo CGU, the assumptions underpinning the cash flow projections used in the value in use calculation reflect an appropriate view
which there are separately identifiable cash flows relevant to the acquisition generating the goodwill. The recoverable amount is based on of past experience, specifically that gross and operating margins will be broadly consistent, adjusted for the commissioning of a new
value in use calculations using discounted cash flow projections with the following key assumptions: plant (which was substantially complete by the year end) to improve future profitability. The estimated recoverable amount of the CGU
exceeded its carrying value by approximately £22m and therefore the Directors concluded that no impairment was required; however the
• Terminal value growth rates – set with reference to the long-term growth rate for the market and territory in which the CGU operates calculations are sensitive to changes in key assumptions. The key assumptions considered by the Directors, where a reasonably possible
change could give rise to an impairment, were the terminal value growth rate and discount rate. If the pre-tax discount rate assumption
• Discount rate – set using a weighted average cost of capital adjusted for the specific risk profile of each CGU. was increased by 2% the CGU’s recoverable amount would be reduced to a level comparable with its carrying value. If this higher
discount rate assumption was combined with a 1% decrease in the terminal value growth rate, which, although not management’s
The carrying amount of goodwill is allocated to CGUs as follows:
current expectation is considered to be reasonably possible, this would lead to an impairment charge of £2m.
2019 2018
Standalone Allocated Standalone Allocated
Goodwill arising in the year will be subject to the same review process commencing the year after initial recognition.
CGUs Goodwill Total CGUs Goodwill Total
£m £m £m £m £m £m
Personal Care – 151.4 151.4 – 151.8 151.8
Life Sciences 93.5 69.5 163.0 99.2 69.7 168.9
Performance Technologies 23.4 4.5 27.9 23.2 4.5 27.7
Industrial Chemicals 6.2 – 6.2 5.6 – 5.6
123.1 225.4 348.5 128.0 226.0 354.0
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13. Property, plant and equipment 14. Leases
Land and Plant and On initial application of IFRS 16 ‘Leases’, the Group recorded right of use assets and lease liabilities with a value of £46.0m.
buildings equipment Total
£m £m £m This exceeded the £35.6m non-cancellable lease commitments reported as at 31 December 2018 under IAS 17 due to extension
Cost options reasonably certain to be exercised, partly offset by the application of short-term and low value exemptions. The weighted
At 1 January 2018 186.6 919.1 1,105.7 average incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 2%. Information about leases for which the
Exchange differences 6.6 38.0 44.6 Group is a lessee is presented below.
Additions 5.5 98.0 103.5
Acquisitions 7.7 7.7 15.4 Right of use assets
Other disposals and write-offs – (2.4) (2.4) Land and Plant and
Reclassifications to intangible assets (0.8) 0.5 (0.3) buildings equipment Total
£m £m £m
At 31 December 2018 205.6 1,060.9 1,266.5
Cost
At 1 January 2019 (on transition) 43.3 2.7 46.0
At 1 January 2019 205.6 1,060.9 1,266.5
Exchange differences (1.7) (0.2) (1.9)
Additions 6.1 5.5 11.6
Additions 7.3 97.9 105.2
Remeasurements (5.1) (0.3) (5.4)
Other disposals and write-offs (0.3) (4.7) (5.0)
Other disposals and write-offs (0.1) (0.1) (0.2)
Reclassifications to right of use assets (4.8) (2.8) (7.6)
Reclassifications 5.9 1.7 7.6
At 31 December 2019 198.6 1,107.8 1,306.4
At 31 December 2019 48.4 9.3 57.7
Accumulated depreciation and impairment losses
Accumulated depreciation and impairment losses
At 1 January 2018 67.1 354.6 421.7
At 1 January 2019 (on transition) – – –
Exchange differences 2.5 15.9 18.4
Exchange differences (0.3) – (0.3)
Charge for the year (note 3) 6.0 42.1 48.1
Other disposals and write-offs – (2.0) (2.0)
Reclassifications 2.0 0.9 2.9
At 31 December 2018 75.6 410.6 486.2
Impairments 0.1 – 0.1
At 31 December 2019 9.1 2.4 11.5
At 1 January 2019 75.6 410.6 486.2
Net book amount
At 31 December 2019 39.3 6.9 46.2
Other disposals and write-offs 0.1 (4.5) (4.4)
Reclassifications to right of use assets (1.9) (1.0) (2.9) At 1 January 2019 (on transition) 43.3 2.7 46.0
Impairments 0.1 0.6 0.7
At 31 December 2019 76.0 425.2 501.2 Lease liabilities
2019 2018
£m £m
Net book amount Lease liabilities included in the Group balance sheet
At 31 December 2019 122.6 682.6 805.2 Current 7.8 0.4
At 31 December 2018 130.0 650.3 780.3 Non-current 35.7 0.6
At 1 January 2018 119.5 564.5 684.0 43.5 1.0
The value of assets under construction not yet subject to depreciation at 31 December was as follows: A maturity analysis of contractual undiscounted cash flows relating to lease liabilities is presented within note 20.
2019 2018
£m £m In addition to the lease liabilities recognised at 31 December 2019 the Group has committed to new lease contracts, commencing in
Assets under construction 2020, with a total discounted value of £43.9m.
Land and buildings 6.9 9.1
Plant and equipment 294.7 309.0 Amounts recognised in the Group income statement
301.6 318.1 2019 2018
£m £m
Interest on lease liabilities 1.0 –
Expenses relating to short-term leases 0.8 –
Expenses relating to low value leases, excluding short-term leases of low value assets 0.1 –
Expenses relating to variable lease components 0.6 –
Depreciation of right of use assets 8.8 –
Impairment of right of use assets 0.1 –
(Profit)/Loss on disposal of right of use assets (0.4) –
Hire of plant and machinery and other operating lease rentals under IAS 17 – 10.0
11.0 10.0
Total cash outflow for leases

2019 2018
£m £m
Payment of lease liabilities 8.8 0.5
Payment of short-term, low value and variable lease components 1.5 –
10.3 0.5
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15. Future commitments 18. Trade and other receivables
2019 2018 2019 2018
£m £m £m £m
Group capital projects Amounts falling due within one year
At 31 December the Directors had authorised the following expenditure on capital projects: Trade receivables 178.1 197.8
Contracted, but not provided for Less: provision for impairment of receivables (2.2) (3.0)
Property, plant and equipment 32.4 28.4 Trade receivables – net 175.9 194.8
Intangible assets 0.6 0.2 Other receivables 31.9 29.4
Authorised, but not contracted for Prepayments 9.0 9.4
Property, plant and equipment 98.6 84.5 216.8 233.6
Intangible assets 3.8 0.7
135.4 113.8 The ageing of the Group’s year end overdue receivables against which no provision has been made is as follows:
16. Investments 2019 2018

£m £m
The amounts recognised in the balance sheet are as follows: Not impaired
Less than three months 24.3 30.6
2019 2018
£m £m
Three to six months 1.0 1.8
Associate 2.8 2.3 Over six months 1.0 0.3
Other investments 1.9 2.5 26.3 32.7
4.7 4.8
The provision for impairment of receivables principally relates to customers in unexpectedly difficult economic circumstances.
On 14 October 2019, the Group increased its minority shareholding in Cutitronics Limited from 38.6% to 48.0% for consideration of The overdue receivables against which no provision has been made relate to a number of customers for whom there is no recent history
£1.3m. This additional investment will enable Cutitronics to continue testing and enhancing its innovative and customisable CutiTron™ of default, nor any other indication that settlement will not be forthcoming. The other classes within trade and other receivables do not
device prior to commercial launch. This investment continues to be recognised as an associate on the Group balance sheet. contain impaired assets and are considered to be fully recoverable.
Other investments of £1.9m (2018: £2.5m) decreased during the year following a review of their carrying value which resulted in an The carrying amounts of the Group’s receivables are denominated in the following currencies:
impairment charge of £0.6m. All remaining assets recognised as other investments on the Group balance sheet are non-quoted equity
2019 2018
securities measured at fair value. £m £m
Sterling 15.7 20.1
The Directors believe the carrying value of the investments is supported by their underlying net assets. US Dollar 63.0 68.5
Euro 65.0 71.1
The amounts recognised in the income statement are as follows: Other 73.1 73.9
216.8 233.6
2019 2018
£m £m
Movements on the Group’s provision for impairment of trade receivables are as follows:
Share of loss of associate 0.8 0.2
Impairment of other investments 0.6 –
2019 2018
1.4 0.2 £m £m
At 1 January 3.0 4.8
17. Inventories Exchange differences (0.1) 0.1
2019 2018 Charged/(released) to income statement 0.2 (1.7)
£m £m Net write-off of uncollectible receivables (0.9) (0.2)
Raw materials 56.7 56.5 At 31 December 2.2 3.0
Work in progress 43.3 49.0
Finished goods 168.9 181.7 Amounts charged to the income statement are included within administrative expenses.
268.9 287.2
The Group consumed £746.5m (2018: £747.5m) of inventories during the year.
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19. Trade and other payables 2019
£m
2018
£m
2019 2018
£m £m Maturity profile of financial liabilities
Trade payables 63.8 68.2 Repayments fall due as follows:
Taxation and social security 8.0 7.9 Within one year
Other payables 29.3 41.7 Bank loans and overdrafts 97.7 35.6
Accruals and deferred income 62.8 72.7 Other loans 11.8 13.2
163.9 190.5 109.5 48.8
Lease liabilities 7.8 0.4
All trade payables are payable within one year. 117.3 49.2
After more than one year
Loans repayable
20. Borrowings, other financial liabilities and other financial assets
Within one to two years 0.2 78.8
This note should be read in conjunction with the further liquidity disclosures in our accounting policies note and the Finance Review Within two to five years 193.0 235.0
on pages 34 to 37. Five years and over 283.4 133.1
476.6 446.9
2019 2018
£m £m
Lease liabilities 35.7 0.6
Current assets 512.3 447.5
Investments 4.7 4.8
Trade and other receivables (excluding prepayments) 207.8 224.2 The minimum lease payments under lease liabilities fall due as follows:
212.5 229.0 Within one year 8.4 0.4
Current liabilities Within one to two years 6.4 0.3
Trade and other payables (excluding taxation, social security, accruals and deferred income) 93.1 109.9 Within two to five years 10.5 0.4
US$100m 5.94% fixed rate 10 year bond 76.4 – Five years and over 26.0 –
Unsecured bank loans and overdrafts due within one year or on demand 21.3 35.6 51.3 1.1
Other loans 11.8 13.2 Future finance charges on lease liabilities (7.8) (0.1)
Lease liabilities 7.8 0.4 Present value of lease liabilities 43.5 1.0
210.4 159.1
2019 2018
Non-current liabilities £m £m
2014 Club facility due 2021 – 131.7 Undiscounted maturity analysis of financial liabilities
2016 Club facility due 2021 – 20.0 Within one year
2019 Club facility due 2024 136.2 – Bank loans and overdrafts 98.5 36.5
US$100m 5.94% fixed rate 10 year bond – 78.8 Other loans 12.4 13.8
€30m 1.08% fixed rate 7 year bond 25.6 27.1 Lease liabilities 8.4 0.4
€70m 1.43% fixed rate 10 year bond 59.7 63.1 119.3 50.7
£30m 2.54% fixed rate 7 year bond 30.0 30.0 After more than one year
£70m 2.80% fixed rate 10 year bond 70.0 70.0 Loans repayable
€50m 1.18% fixed rate 8 year bond 42.6 – Within one to two years 10.5 92.3
£65m 2.46% fixed rate 8 year bond 65.0 – Within two to five years 225.1 254.0
US$60m 3.70% fixed rate 10 year bond 45.8 – Five years and over 308.5 143.3
Other secured bank loans 0.1 0.3 Lease liabilities
Other unsecured bank loans 1.6 25.9 Within one to two years 6.4 0.3
Lease liabilities 35.7 0.6 Within two to five years 10.5 0.4
512.3 447.5 Five years and over 26.0 –
587.0 490.3
During October 2019, the Group’s existing 2014 and 2016 Club facilities were cancelled and replaced with a single new Club facility with
an initial maturity date of 2024. Interest is charged on this agreement at a floating rate based on ICE GBP LIBOR, ICE LIBOR or The analysis above includes estimated interest payable to maturity on the underlying loans. For the loans due after more than one year
EURIBOR, depending upon the drawdown currency, plus a variable margin. The margin the Group pays on its borrowings over and £10.3m (2018: £13.1m) of the interest falls due within one year of the balance sheet date, £10.3m (2018: £8.8m) within one to two years,
above standard rates is determined by the Group’s net debt to EBITDA ratio. £28.5m (2018: £13.3m) within two to five years and £18.4m (2018: £7.3m) beyond five years.
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20. Borrowings, other financial liabilities and other financial assets continued Borrowing facilities
Interest rate and currency profile of Group financial liabilities As at 31 December 2019, the Group had undrawn committed facilities of £463.8m (2018: £358.4m). In addition, the Group had other
Fixed rate undrawn facilities of £65.1m (2018: £38.7m) available. Of the Group’s total committed facilities of £1,058.6m, £982.2m expire after 2020.
weighted average
New and repaid borrowings disclosed in the Group Statement of Cash Flows reflect routine short-term cash management, comprising
Total Fixed Floating Interest rate Fixed period
£m £m £m % Years regular monthly drawdowns and repayments on the Group’s revolving credit facilities.
Sterling 278.0 165.0 113.0 2.62 6.3
US Dollar 175.9 122.2 53.7 5.10 3.6 Financial risk factors
Euro 131.2 127.9 3.3 1.28 6.2 The Group’s activities expose it to a variety of financial risks: currency risk, interest rate risk, liquidity risk, and credit risk. The Group’s
Other 44.5 – 44.5 – – overall risk management strategy is approved by the Board and implemented and reviewed by the Risk Management Committee.
At 31 December 2019 629.6 415.1 214.5 2.94 5.5 Detailed financial risk management is then delegated to the Group Finance department which has a specific policy manual that sets
out guidelines to manage financial risk. Regular reports are received from all sectors and regional operating units to enable prompt
Sterling 163.3 100.0 63.3 2.72 6.6 identification of financial risks so that appropriate action may be taken. In the management definition of capital the Group includes
US Dollar 203.5 78.8 124.7 5.94 1.1 ordinary and preference share capital and net debt.
Euro 106.5 90.2 16.3 1.32 6.6
Other 23.4 – 23.4 – –
Currency risk
At 31 December 2018 496.7 269.0 227.7 3.19 5.0
The Group operates internationally and is exposed to currency risk arising from various currency exposures, primarily with respect to
Fair values the US Dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net
investments in foreign operations. Entities in the Group use foreign currency bank balances to manage their foreign exchange risk arising
Prior to 2016, the Group did not typically utilise complex financial instruments and accordingly the only element of Group borrowings
from future commercial transactions, recognised assets and liabilities. The Group’s risk management policy is to manage transactional
where fair value differed from book value was the US$100m fixed rate ten year bond that was issued in 2010. On 27 June 2016, the
risk up to three months forward. The Group has certain investments in foreign operations, whose net assets are exposed to foreign
Group issued £100m and €100m of fixed rate bonds. On 6 June 2019, the Group issued a further £65m, €50m and US$60m of fixed
currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is not specifically hedged
rate bonds.
but is reduced primarily through borrowings denominated in the relevant foreign currencies where it is efficient to do so.
The table below details a comparison of the book and fair values of the Group’s financial assets and liabilities. Where there are no readily
For 2019, had the Group’s basket of reporting currencies been 10% weaker/stronger than the actual rates experienced, post-tax profit
available market values to determine fair values, cash flows relating to the various instruments have been discounted at prevailing interest
for the year would have been £18.2m (2018: £17.6m) lower/higher than reported, primarily as a result of the translation of the profits of
and exchange rates to give an estimate of fair value.
the Group’s overseas entities, and equity would have been £69.9m (2018: £68.5m) lower/higher.
Book Fair Book Fair
value value value value Interest rate risk
2019 2019 2018 2018
£m £m £m £m The Group has both interest bearing assets and liabilities. In 2016, the Group had a policy of maintaining no more than 60% of its gross
Cash deposits 81.9 81.9 71.2 71.2 borrowings at fixed interest rates in normal circumstances. During 2016, the Group increased its amount of fixed rate debt following
Other investments 4.7 4.7 4.8 4.8 payment of the £136m special dividend and consequent increase in core debt requirements. Bonds were issued in the amounts of
2014 Club facility due 2021 – – (131.7) (131.7) £100m and €100m with an average maturity of 5.6 years and interest rate of 2.08%. The Group also retained its US$100m loan note
2016 Club facility due 2021 – – (20.0) (20.0) repayable in 2020 carrying a fixed rate of 5.94%. During 2017, the policy formally increased the upper limit for fixed rate debt to 75% of
2019 Club facility due 2024 (136.2) (136.2) – – gross borrowings. During 2019, the Group increased its amount of fixed rate debt following payment of the £151.5m special dividend.
US$100m 5.94% fixed rate 10 year bond (76.4) (76.5) (78.8) (76.5) Bonds were issued in the amounts of £65m, €50m and US$60m with an average maturity of 8.1 years and interest rate of 2.47%.
€30m 1.08% fixed rate 7 year bond (25.6) (26.2) (27.1) (27.7) At 31 December 2019, approximately 68% of Group borrowings were at fixed rates.
€70m 1.43% fixed rate 10 year bond (59.7) (63.1) (63.1) (65.3)
£30m 2.54% fixed rate 7 year bond (30.0) (30.6) (30.0) (30.4) At 31 December 2019, aside from the loan notes and bonds referred to above, all Group debt and cash was exposed to repricing within
£70m 2.80% fixed rate 10 year bond (70.0) (73.2) (70.0) (71.4) 12 months of the balance sheet date.
€50m 1.18% fixed rate 8 year bond (42.6) (44.4) – –
£65m 2.46% fixed rate 8 year bond (65.0) (66.4) – –
At 31 December 2019, the Group’s fixed rate debt was at a weighted average rate of 2.94% (2018: 3.19%). The Group’s floating rate
US$60m 3.70% fixed rate 10 year bond (45.8) (47.7) – –
liabilities are predominantly based on LIBOR and its overseas equivalents.
Other bank borrowings (23.0) (23.0) (61.8) (61.8)
Other loans (11.8) (11.8) (13.2) (13.2)
Lease liabilities (43.5) (43.5) (1.0) (1.0) Based on the above, had interest rates moved by 10 basis points in the territories where the Group has substantial borrowings, post-tax
profits would have moved by £0.2m (2018: £0.2m) due to a change in interest expense on the Group’s floating rate borrowings.
For financial instruments with a remaining life of greater than one year, fair values are based on cash flows discounted at prevailing
interest rates. Accordingly, the fair value of cash deposits and short-term borrowings approximates to the book value due to the Liquidity risk
short maturity of these instruments. The same applies to trade and other receivables and payables excluded from the above analysis. The Group actively maintains a mixture of long-term and short-term committed facilities designed to ensure that the Group has sufficient
funds available for operations and planned investments.
Financial instruments
Financial instruments measured at fair value use the following hierarchy: On a regular basis, management monitors forecasts of the Group’s cash flows against both internal targets and those targets imposed by
external lenders. The Group has substantial committed, unused facilities and the Directors are confident this situation will remain the case
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) for the foreseeable future.
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) Credit risk
or indirectly (that is, derived from prices) (level 2)
The Group has no significant concentrations of credit risk. It has policies in place to ensure that sales of products are made to customers
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). with an appropriate credit history. Derivative counterparties and cash transactions are limited to high-credit quality financial institutions.
The Group has policies that limit the amount of credit exposure to any individual financial institution.
All of the Group’s financial instruments are classed as level 2 with the exception of other investments and lease liabilities, which are
classed as level 3.
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20. Borrowings, other financial liabilities and other financial assets continued 22. Ordinary share capital
Capital risk management Ordinary shares of 10.61p (2018: 10.36p)
2019
£m
2018
£m
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
Allotted, called up and fully paid at 1 January and 31 December
provide returns for shareholders and benefits for other stakeholders, as well as maintaining an optimal capital structure to reduce 14.0 14.0
131,906,881 ordinary shares of 10.61p each (2018: 135,124,108 ordinary shares of 10.36p each)
overall cost of capital.
At the Annual General Meeting on 24 April 2019, shareholders approved a share consolidation which was completed on 29 April 2019.
In order to maintain this optimal structure, the Group may adjust the amount of dividends paid, issue new shares, return capital
As a result, shareholders held 41 new Ordinary Shares of 10.609756 pence each in exchange for every 42 Ordinary Shares of 10.357143
to shareholders or dispose of assets to reduce net debt. Given the Group’s strong balance sheet and sustained trading growth, the Group
pence each held immediately prior to the share consolidation, which were cancelled by the Company.
announced a dividend policy in 2011 of paying a dividend of between 40% and 50% of sustainable earnings. Further details can be found
in the Finance Review on pages 34 to 37.
During 2019 options were granted to employees under the Croda International Plc Sharesave Scheme to subscribe for 94,433 ordinary
shares at an option price of 3898p per share and under the Croda International Plc International Sharesave Plan to subscribe for
Underlying growth coupled to Return on Invested Capital (ROIC) is the key perceived driver of shareholder value within the Group.
299,797 ordinary shares at an option price of 3898p per share. Conditional awards over 150,597 ordinary shares were granted under
The Group’s ROIC now stands at 17.0% against a post-tax Weighted Average Cost of Capital (WACC) of 6.2%, thus hitting the Group’s
the Performance Share Plan during the year. Also granted in the year were 8,538 shares under the Deferred Bonus Share Plan and
target of maintaining ROIC at a higher level than the WACC. In addition, the Group employs two widely used ratios to measure its ability
6,134 shares under the Restricted Share Plan.
to service its debt. Both net debt/EBITDA and EBITDA interest cover were well ahead of target in 2019. Further details can be found in
the Finance Review on pages 34 to 37. The Group was in compliance with its covenant requirements throughout the year. Additional
During the year consideration of £2.7m was received on the exercise of options over 104,269 shares. The options were satisfied with
information on progress against Key Performance Indicators can be found on pages 32 and 33.
shares transferred from the Group’s employee share trusts. Since the year end a further 2,482 shares have been transferred from
the trusts.
21. Provisions
Environmental Restructuring Other Total
£m £m £m £m The outstanding options to subscribe for ordinary shares were as follows at the balance sheet date:
At 1 January 2019 9.9 0.6 0.6 11.1
Year
Exchange differences (0.2) – (0.1) (0.3) option Number of
Released to the income statement (1.0) – – (1.0) granted shares Price Options exercisable from
Charged to the income statement 0.5 10.5 0.5 11.5 Croda International Plc Sharesave Scheme 2016 6,067 2639p 1 Nov 2019 to 30 Apr 2020
Cash paid against provisions and utilised (1.1) (3.4) (0.6) (5.1) 2017 75,938 3092p 1 Nov 2020 to 30 Apr 2021
At 31 December 2019 8.1 7.7 0.4 16.2 2018 66,154 4144p 1 Nov 2021 to 30 Apr 2022
2019 93,753 3898p 1 Nov 2022 to 30 Apr 2023
Analysis of total provisions Croda International Plc International Sharesave Plan (2009) 2017 236,267 3092p 1 Nov 2020 to 30 Nov 2020
2019 2018 2018 200,361 4144p 1 Nov 2021 to 30 Nov 2021
£m £m 2019 290,313 3898p 1 Nov 2022 to 30 Nov 2022
Current 10.9 4.0 Croda International Plc Performance Share Plan (2014) 2017 214,961 Nil 9 Mar 2020
Non-current 5.3 7.1 2018 151,952 Nil 13 Mar 2021
16.2 11.1 2019 147,043 Nil 12 Mar 2022
Croda International Plc Deferred Bonus Share Plan 2017 99,883 Nil 9 Mar 2020
Provisions are made where a constructive or legal obligation has arisen from a past event, can be quantified and where the timing of the 2018 19,022 Nil 13 Mar 2021
transfer of economic benefits relating to the provisions cannot be ascertained with any degree of certainty. 2019 8,683 Nil 12 Mar 2022
Croda International Plc Deferred Bonus Discretionary Arrangement 2018 642 Nil 13 Mar 2021
The environmental provision relates to soil and potential groundwater contamination on a number of sites, both currently in use and Croda International Plc Restricted Share Plan 2018 6,751 Nil 20 Mar 2021
previously occupied, in Europe and the Americas. 2019 5,060 Nil 26 Mar 2022
2019 582 Nil 9 Aug 2022
In relation to the environmental provision, the Directors expect that the balance will be utilised within ten years. Provisions for remediation
costs are made when there is a present obligation, it is probable that expenditures for remediation work will be required and the cost can 23. Share-based payments
be estimated within a reasonable range of possible outcomes. The costs are based on currently available facts and prior experience. The impact of share-based payment transactions on the Group’s financial position is as follows:
Environmental liabilities are recorded at the estimated amount at which the liability could be settled at the balance sheet date.
Remediation of environmental damage typically takes a long time to complete due to the substantial amount of planning and regulatory 2019 2018
£m £m
approvals normally required before remediation activities can begin. In addition, increases in or releases of environmental provisions may
Analysis of amounts recognised in the income statement:
be necessary whenever new developments occur or additional information becomes available. Consequently, environmental provisions
Charged in respect of equity settled share-based payment transactions 0.1 6.5
can change significantly and the timing and quantum of costs are inherently uncertain. The level of environmental provision is based on
Charged in respect of cash settled share-based payment transactions 5.0 8.6
management’s best estimate of the most likely outcome for each individual exposure.
5.1 15.1
The restructuring provision primarily relates to the Group’s cost saving actions. This provision is expected to be utilised within one year.
Analysis of amounts recognised in the balance sheet:
Liability in respect of cash settled share-based payment transactions 7.6 13.0
The Group has also considered the impact of discounting on its provisions and has concluded that, as a consequence of the significant
utilisation expected in a relatively short timescale, the impact is not material. The key elements of each scheme along with the assumptions employed to arrive at the charge in the income statement are set out
below. Where appropriate the expected volatility has been based on historical volatility considering daily share price movements over
periods equal to the expected future life of the awards and the risk free rate is based on the Bank of England’s projected nominal yield
curve with appropriate duration.
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23. Share-based payments continued A reconciliation of option movements over the year is as follows:
Croda International Plc Sharesave Scheme (‘Sharesave’)
2019 2018
The Sharesave scheme, established in 1983 and renewed in 2013, grants options annually in September to employees of the Group at a Weighted Weighted
fixed exercise price, being the market price of the Company’s shares at the grant date discounted by up to 20%. Employees then enter average average
Number exercise price Number exercise price
into a savings contract over three to five years and, subject to continued employment, purchase options at the end of the period based
on the amount saved. Options are then exercisable for a six month period following completion of the savings contract. For options Outstanding at 1 January 810,102 3197p 782,416 2723p
Granted 299,797 3898p 225,581 4144p
granted in the year, the fair value per option granted and the assumptions used in the calculation of the value are as follows:
Forfeited (67,852) 3396p (54,328) 2783p
Exercised (315,106) 2653p (143,567) 2254p
2019 2018
Outstanding at 31 December 726,941 3704p 810,102 3197p
12 Sep 27 Sep
Grant date 2019 2018 For options exercised in year, weighted average share price at date of exercise 4841p 4780p
Share price at grant date 4948p 5200p Weighted average remaining life at 31 December (years) 1.9 1.7
Exercise price 3898p 4144p
Number of employees 700 634 Croda International Plc Performance Share Plan 2014 (‘PSP’)
Shares under option 94,433 71,178 The PSP scheme was established in 2014 and replaced the Company’s previous Executive long term incentive plans. The PSP provides
Vesting period Three years Three years for awards of free shares (ie either conditional shares or nil-cost options) normally made annually which vest after three years dependent
Expected volatility 20% 20% upon an EPS performance related sliding scale (non-market condition), an NPP growth measure (non-market condition) and the Group’s
Option life Six months Six months total shareholder return (market condition). The PSP is discussed in detail in the Directors’ Remuneration Report (pages 71 to 97). Shares
Risk free rate 0.5% 1.0% (on an after tax basis) are subject to a one year post vesting holding period for awards granted in 2014 and a two year post vesting
Dividend yield 1.8% 1.6% holding period for awards granted in subsequent years. For options granted in the year, the fair value per option granted and the
Possibility of forfeiture 7.5% p.a. 7.5% p.a. assumptions used in the calculation of the value are as follows:
Fair value per option at grant date 1103.4p 1186.2p
Option pricing model Black Black
2019 2018
Scholes Scholes Market Non-market Market Non-market
condition condition condition condition
12 Mar 12 Mar 13 Mar 13 Mar
A reconciliation of option movements over the year is as follows: 2019 2018 Grant date 2019 2019 2018 2018
Weighted Weighted Share price at grant date 4874p 4874p 4580p 4580p
average average Number of employees 63 63 68 68
Shares under conditional award 60,239 90,358 62,936 94,404
Outstanding at 1 January 263,111 3174p 266,481 2659p
Vesting period Three years Three years Three years Three years
Granted 94,433 3898p 71,178 4144p
Expected volatility 20% 20% 20% 20%
Forfeited (11,363) 3421p (7,859) 2785p
Dividend yield 1.7% 1.7% 1.8% 1.8%
Exercised (104,269) 2627p (66,689) 2201p
Possibility of forfeiture 3.45% p.a. 3.45% p.a. 3.45% p.a. 3.45% p.a.
Outstanding at 31 December 241,912 3681p 263,111 3174p
Fair value per option at grant date 2315p 4623p 2794p 4345p
Exercisable at 31 December 6,067 2639p 5,321 2232p
Option pricing model Closed Closed Closed Closed
For options exercised in year, weighted average share price at date of exercise 4856p 4754p form form form form
Weighted average remaining life at 31 December (years) 2.4 2.2 valuation valuation valuation valuation
Croda International Plc International Sharesave Plan 2009 (‘International’)

The International scheme, established in 1999 and renewed in 2009, has the same option pricing model, savings contract and vesting A reconciliation of option movements over the year is as follows: 2019 2018
period as the Sharesave scheme. At exercise, employees are paid a cash equivalent for each option purchased, being the difference Weighted Weighted
average average
between the exercise price and market price at the exercise date. For options granted in the year, the fair value per option granted Number exercise price Number exercise price
and the assumptions used in the calculation of the value are as follows: Outstanding at 1 January 656,684 – 798,825 –
Granted 150,597 – 157,340 –
2019 2018 Forfeited (36,553) – (26,802) –
Grant date 12 Sep 2019 27 Sep 2018 Exercised (256,772) – (272,679) –
Share price at grant date 4948p 5200p Outstanding at 31 December 513,956 – 656,684 –
Exercise price 3898p 4144p For options exercised in year, weighted average share price at date of exercise 5055p 4459p
Number of employees 2,235 2,082 Weighted average remaining life at 31 December (years) 1.0 1.0
Shares under option 299,797 225,581
Vesting period Three years Three years Croda International Plc Deferred Bonus Share Plan (‘DBSP’)
Expected volatility 20% 20%
Option life One month One month The DBSP scheme was established in 2014. Under the DBSP, one third of any annual bonuses due to certain senior executives are
Risk free rate 0.5% 0.7% deferred. The size of award is determined by the amount of the total bonus divided by one third and converted into a number of Croda
Dividend yield 1.8% 1.8% shares using the market value of shares at the time the award is granted. Awards are increased by the number of shares equating to the
Possibility of forfeiture 7.5% p.a. 7.5% p.a. equivalent value of any dividend paid during the option period. The awards vest on the third anniversary of the date of grant, unless the
Fair value per option at 31 December 1239.0p 791.8p recipient has been dismissed for cause. There are no performance conditions applied to the award. The DBSP is also discussed in the
Option pricing model Black Black Directors’ Remuneration Report (pages 71 to 97).
Scholes Scholes
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23. Share-based payments continued Croda International Plc Share Incentive Plan (‘SIP’)
2019 2018 The SIP was established in 2003 and has similar objectives to the Sharesave scheme in terms of increasing employee retention and share
12 Mar 13 Mar ownership. Under the SIP scheme, employees enter into an agreement to purchase shares in the Company each month. For each share
Grant date 2019 2018 purchased by an employee, the Company awards a matching share which passes to the employee after three years’ service. The
Share price at grant date 4874p 4580p matching shares are allocated each month at market value with this fair value charge being recognised in the income statement in full in
Number of employees 10 10 the year of allocation.
Shares under conditional award 8,538 18,392
Vesting period Three years Three years 24. Preference share capital
2019 2018
£m £m
A reconciliation of option movements over the year is as follows: 2019 2018 The authorised, issued and fully paid preference share capital comprises:
Weighted Weighted 615,562 5.9% preference shares of £1 (2018: 615,562) 0.6 0.6
average average
498,434 6.6% preference shares of £1 (2018: 498,434) 0.5 0.5
Outstanding at 1 January 196,808 – 175,340 – 21,900 7.5% preference shares of £1 (2018: 21,900) – –
Granted 8,538 – 18,392 – 1.1 1.1
Dividend enhancement 2,143 – 3,076 –
Forfeited – – – – The preference shares have no redemption rights and carry no voting rights other than in certain circumstances affecting the rights of the
Exercised (79,901) – – – preference shareholders, details of which are set out in the Company’s Articles of Association. The three classes of preference shares
Outstanding at 31 December 127,588 – 196,808 – rank pari passu with each other but ahead of the ordinary shares on a winding up. Rights on a winding up are limited to repayment of
For options exercised in year, weighted average share price at date of exercise 5050p – capital and any arrears of dividends.
Weighted average remaining life at 31 December (years) 0.5 0.9
25. Shareholders’ equity
Croda International Plc Deferred Bonus Discretionary Share Arrangement Croda International Plc Qualifying Share Ownership Trust (QUEST), Croda International Plc Employee Benefit Trust (CIPEBT) and Croda
In addition to the awards under the DBSP, nil cost options over 642 shares have been awarded to similarly defer bonus entitlement International Plc AESOP Trust (AESOP) each hold shares purchased on the open market or transferred from treasury shares to satisfy the
where the DBSP cannot be used due to employment having ceased before the grant date. These options will be deemed to be future issue of shares under the Group’s share option schemes. As at 31 December 2019 the QUEST had a net amount due from the
exercised automatically on the date falling three years after the date of grant. As of 31 December 2019, the weighted average Company of £11.1m (2018: £8.4m) and held 172,952 (2018: 46,358) shares transferred at a nil cost (2018: nil cost) with a market value of
remaining life was 1.2 years. £8.9m (2018: £2.2m). As at 31 December 2019 the CIPEBT was financed by a repayable on demand loan to the Company of £12.6m
(2018: £5.5m) and held 910 (2018: 43,167) shares transferred at a nil cost (2018: nil cost) with a market value of £0.1m (2018: £2.0m).
Croda International Plc Restricted Share Plan (‘RSP’)
The RSP scheme was established in 2018 and provides for awards of free shares or cash equivalent to a limited number of employees As at 31 December 2019 the AESOP had issued all its previously held shares, as financed by the Company, and thus had no residual loan
not eligible for the PSP scheme, based on a percentage of salary. The awards vest on the third anniversary of the date of grant, subject balance with the Company. All of the shares held by the QUEST and CIPEBT were under option at 31 December 2019 and, except for a
to the condition that the employee remains employed by the Group. There are no performance conditions applied to the award. On the nominal amount, the right to receive dividends has been waived.
vesting date, UK employees will be awarded free shares and non-UK employees will be paid a cash equivalent based on the market
price. As at 31 December 2019 the total number of treasury shares held was 3,018,203 (2018: 3,481,087) with a market value of £154.5m
(2018: £163.1m).
2019 2018
Grant date 9 Aug 2019 26 Mar 2019 20 Mar 2018 26. Non-controlling interests in equity
Share price at grant date 4744p 4946p 4590p 2019 2018
£m £m
Number of employees 2 32 31
At 1 January 7.5 7.6
Shares under conditional award 582 5,552 7,188
Exchange differences (0.4) 0.1
Vesting period Three years Three years Three years
Income allocated to non-controlling interests (0.1) (0.2)
Expected volatility 20% 20% 20%
At 31 December 7.0 7.5
Dividend yield 1.8% 1.8% 1.8%
Possibility of forfeiture 3.45% p.a. 3.45% p.a. 3.45% p.a.
Fair value per option at grant date 4502p 4694p 4356p 27. Related party transactions
Option pricing model Closed form valuation Closed form valuation Closed form valuation The Group has no related party transactions, with the exception of remuneration paid to key management and Directors which is included
in note 10.
A reconciliation of option movements over the year is as follows: 2019 2018

Weighted Weighted
average average
Outstanding at 1 January 6,751 – – –
Granted 6,134 – 7,188 –
Forfeited (492) – (437) –
Exercised – – – –
Outstanding at 31 December 12,393 – 6,751 –
For options exercised in year, weighted average share price at date of exercise – –
Weighted average remaining life at 31 December (years) 1.7 2.2
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Notes to the Group Accounts continued Company Financial Statements
28. Business combinations Company Balance Sheet
2019 Acquisitions
at 31 December 2019
On 16 July 2019, the Group acquired Rewitec® GmbH, a technology based business specialising in improving the efficiency and 2019 2018
longevity of wind turbines and moving machinery through the application of their patented additives. Based in Germany, Rewitec’s Note £m £m
innovations offer sustainability benefits by extending the lifetime and improving the performance of gearboxes, bearings and engines Fixed assets
within wind turbine, automotive and marine industries worldwide. The acquisition will form part of our Energy Technologies business Intangible assets D 0.2 –
(Performance Technologies sector), leveraging our dedicated global sales network to accelerate Rewitec’s growth potential. Tangible assets E 1.7 1.8
Investments
The following table summarises the Directors’ provisional assessment of the consideration paid in respect of the acquisition, and Shares in Group undertakings F 561.1 569.8
the fair value of assets acquired and liabilities assumed. Other investments other than loans G – 0.6
Retirement benefit assets L – 1.2
Rewitec 563.0 573.4
£m
Consideration (inclusive of contingent consideration) 6.8 Current assets
Fair value of assets and liabilities acquired Debtors (including £1,585.1m (2018: £1,674.5m) due after more than one year) H 1,632.5 1,702.6
Intangible assets 5.4 Deferred tax asset I 0.4 –
Trade and other receivables 0.2 Cash and cash equivalents 2.6 0.8
Trade and other payables (0.1) 1,635.5 1,703.4
Taxation (1.1)
Total identifiable net assets 4.4 Current liabilities
Goodwill 2.4 Creditors: Amounts falling due within one year J (52.8) (55.2)
Borrowings K (12.6) (13.3)
Total consideration is inclusive of £2.8m contingent consideration, representing the fair value at the date of acquisition. The additional (65.4) (68.5)
consideration is payable annually over five years based on the financial performance of the acquisition. Net current assets 1,570.1 1,634.9
The goodwill is attributable to the synergies expected to arise from the combination of the acquired technologies and the Group’s global Total assets less current liabilities 2,133.1 2,208.3
sales and marketing network. It will not be deductible for tax purposes.
Non-current liabilities
Acquisition-related costs of £0.3m have been charged to administration expenses in the consolidated income statement for the year Deferred tax liability I – (0.2)
ended 31 December 2019 (2018: £2.7m). Borrowings K (389.0) (243.4)
Retirement benefit liabilities L (2.0) –
2018 Acquisitions (391.0) (243.6)
On 11 January 2018, the Group acquired Nautilus Biosciences Canada Inc, a technology-rich marine biotechnology company based in
Net assets 1,742.1 1,964.7
Charlottetown, Prince Edward Island, Canada for consideration of £5.6m (inclusive of debt). Identifiable net assets of £1.5m were
acquired, with the acquisition generating goodwill of £4.1m. Capital and reserves
Ordinary share capital 14.0 14.0
On 28 March 2018, the Group acquired Plant Impact Plc, an innovative crop enhancement business which researches and develops Preference share capital 1.1 1.1
chemical biostimulants to sustainably improve crop yield and quality for consideration of £9.3m (inclusive of debt). Identifiable net assets Called up share capital 15.1 15.1
of £7.4m were acquired, with the acquisition generating goodwill of £1.9m. Share premium account 93.3 93.3
Reserves1 1,633.7 1,856.3
On 28 December 2018, the Group acquired Brenntag Biosector A/S, a market leading specialist in the manufacture and supply of Total shareholders’ funds 1,742.1 1,964.7
adjuvants for the human and veterinary vaccine markets, based in Frederikssund, Denmark. During 2019 a final purchase price 1 Included within Reserves is profit after tax of £49.6m (2018: £28.1m)
adjustment of £0.3m was received reducing the total consideration to £63.5m (inclusive of debt). Identifiable net assets acquired of
£37.2m were unchanged, with the acquisition generating revised goodwill of £26.3m (at exchanges rates prevailing on the date of
acquisition). The financial statements on pages 149 to 155 were approved by the Board on 24 February 2020 and signed
on its behalf by
During 2019, the Group completed fair value reviews relating to its 2018 acquisitions. This review did not identify any changes to the asset
base or goodwill.
29. Contingent liabilities

The Group is subject to various claims which arise in the course of business. These contingent liabilities are reviewed on a regular basis
and where possible an estimate is made of the potential financial impact on the Group.
Anita Frew Jez Maiden
The Group is also involved in certain environmental legal actions and proceedings. Whilst the Group cannot predict the outcome of any Chair Group Finance Director
current or future actions or proceedings with any certainty, it currently believes the likelihood of any material liabilities to be low, and that
the liabilities, if any, will not have a material adverse effect on its consolidated income, financial position or cash flows. The Group also
considers it has insurance in place in relation to any significant contingent liabilities. The environmental actions and proceedings the
Group is subject to relate to our operations in the USA and are a matter of public record. Registered in England number 206132
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Company Financial Statements continued Notes to the Company Financial Statements
Company Statement of Changes in Equity The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been
applied consistently to all years presented, unless otherwise stated.
for the year ended 31 December 2019
Share
Share
premium
Capital
redemption Revaluation Retained
A. Accounting policies
capital account reserve reserve earnings Total Basis of accounting
Note £m £m £m £m £m £m
At 1 January 2018 15.1 93.3 0.9 2.1 1,928.4 2,039.8 The Company meets the definition of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial
Reporting Council. Accordingly, the Company has adopted FRS 101 ‘Reduced Disclosure Framework’ and has ceased to apply all UK
Profit for the year attributable to equity shareholders – – – – 28.1 28.1 Accounting Standards issued prior to FRS 100. Therefore the recognition and measurement requirements of EU-adopted IFRS have been
Other comprehensive income – – – – 0.4 0.4 applied, with amendments where necessary in order to comply with the requirements of the Companies Act 2006 (‘the Act’). The financial
Transactions with owners: statements have been prepared under the historical cost convention, in compliance with the provisions of the Act and the requirements of
Dividends on equity shares 8 – – – – (110.5) (110.5) the Listing Rules of the Financial Conduct Authority.
Share-based payments – – – – 6.4 6.4
Transactions in own shares – – – – 0.5 0.5 As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under the standard in relation to
Total transactions with owners – – – – (103.6) (103.6) share-based payments, financial instruments, capital management, presentation of comparative information in respect of certain assets,
presentation of a cash flow statement, standards not yet effective, impairment of assets and related party transactions. Where required,
Total equity at 31 December 2018 15.1 93.3 0.9 2.1 1,853.3 1,964.7 equivalent disclosures are provided in the Group financial statements of Croda International Plc.
At 1 January 2019 15.1 93.3 0.9 2.1 1,853.3 1,964.7 Going concern
The financial statements which appear on pages 149 to 155 have been prepared on a going concern basis as, after making appropriate
Profit for the year attributable to equity shareholders – – – – 49.6 49.6
enquiries, including a review of forecasts, budgets and banking facilities, the Directors have a reasonable expectation that the Company
Other comprehensive expense – – – – (0.9) (0.9)
Transactions with owners: has adequate resources to continue in operational existence.
Dividends on equity shares 8 – – – – (266.9) (266.9)
Share-based payments – – – – (0.1) (0.1) Principal accounting policies
Transactions in own shares – – – – (4.3) (4.3) The accounting policies which have been applied by the Company when preparing the financial statements are in accordance with
Total transactions with owners – – – – (271.3) (271.3) FRS 101. FRS 101 is based on the recognition and measurement requirements of EU-adopted IFRS, under which the Group financial
statements have been prepared. As a result, the accounting policies of the Company are consistent with those used by the Group as
Total equity at 31 December 2019 15.1 93.3 0.9 2.1 1,630.7 1,742.1 presented on pages 115 to 121, except for those relating to the recognition and measurement of goodwill and the recognition of revenue,
which are not directly relevant to the Company financial statements.
Of the retained earnings, £659.9m (2018: £860.1m) are realised and £970.8m (2018: £993.2m) are unrealised. Details of investments in
own shares are disclosed in note 25 of the Group financial statements. The Group accounting policy for financial risk factors is also relevant to the preparation of the Company financial statements and is
disclosed on pages 141 and 142.
B. Profit and loss account

Of the Group’s profit for the year, £49.6m (2018: £28.1m) is included in the profit and loss account of the Company which was approved
by the Board on 24 February 2020 but which is not presented as permitted by Section 408 Companies Act 2006.
Included in the Company profit and loss account is a charge of £0.1m (2018: £0.1m) in respect of the Company’s audit fee.
C. Employees
2019 2018
£m £m
Company employment costs including Directors
Wages and salaries 6.6 8.0
Share-based payment charges (note M) 0.9 4.3
Social security costs 1.1 1.2
Post-retirement benefit costs 0.6 0.5
9.2 14.0
2019 2018
Number Number
Average employee numbers by function
Production 18 22
Administration 39 38
57 60
As required by the Companies Act 2006, the figures disclosed above are weighted averages based on the number of employees at each
quarter end and include Executive Directors. At 31 December 2019, the Company had 54 (2018: 62) employees in total.
Detailed information concerning Directors’ remuneration, interests and options is shown in the table within the Directors’ Remuneration
Report which is subject to audit on pages 71 to 97 which forms part of the Annual Report and Accounts.
150
150
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Annual
International
151
151
Notes to the Company Financial Statements continued
D. Intangible assets G. Other investments other than loans
Computer 2019 2018
software £m £m
£m At 1 January 0.6 0.6
Cost Impairment (0.6) –
At 1 January 2019 0.8 At 31 December – 0.6
Additions 0.2
At 31 December 2019 1.0 Other investments decreased during the year following a review of their carrying value which resulted in an impairment charge of £0.6m.
Accumulated amortisation
At 1 January 2019 0.8
H. Debtors
2019 2018
Charge for the year – £m £m
At 31 December 2019 0.8 Amounts owed by Group undertakings 1,589.6 1,675.4
Corporation tax 42.1 26.5
Net carrying amount Other receivables 0.5 0.4
At 31 December 2019 0.2 Prepayments 0.3 0.3
At 31 December 2018 – 1,632.5 1,702.6
E. Tangible assets Although the amounts owed by Group undertakings have no fixed date of repayment, £1,585.1m (2018: £1,674.5m) is expected to be
Land and Plant and collected after one year. Of the amount at 31 December 2019, £1,584.5m will continue to attract interest from 1 January 2020 at a floating
buildings equipment Total
£m £m £m
rate based on the main facility agreement. The remainder will continue to be interest free.
Cost
At 1 January 2019 2.3 1.8 4.1 I. Deferred tax
Additions – 0.1 0.1 The deferred tax balances included in the balance sheet are attributable to the following:
Disposals – (0.1) (0.1)
Reclassification (0.1) – (0.1) 2019 2018
£m £m
At 31 December 2019 2.2 1.8 4.0
Retirement benefit obligations 0.4 (0.2)
Accumulated depreciation
At 1 January 2019 1.4 0.9 2.3 The movement on deferred tax balances during the year is summarised as follows:
Charge for the year 0.1 0.1 0.2 At 1 January (0.2) (0.2)
Disposals – (0.1) (0.1) Deferred tax credited to other comprehensive income 0.6 –
Reclassification (0.1) – (0.1) At 31 December 0.4 (0.2)
At 31 December 2019 1.4 0.9 2.3
Deferred tax assets were recognised in all cases where such assets arose, as it was probable that the assets would be recovered.
Net book amount
At 31 December 2019 0.8 0.9 1.7 J. Creditors: Amounts falling due within one year
At 31 December 2018 0.9 0.9 1.8 2019 2018
£m £m
Amounts falling due within one year
The reclassification above relates to a fully depreciated asset which, following the adoption of IFRS 16 in January 2019, has been
Trade payables – 0.4
reclassified as a right of use asset. Analysis of right of use assets and liabilities have been excluded from these accounts due to Taxation and social security 1.5 1.3
immateriality. Amounts owed to Group undertakings 46.8 46.7
Other payables 3.4 5.8
F. Shares in Group undertakings Accruals and deferred income 1.1 1.0
Shares Loans Total 52.8 55.2
£m £m £m
Cost
At 1 January 2019 344.4 254.5 598.9 The amounts owed to Group undertakings are interest free, unsecured and have no fixed date of repayment.
Exchange differences – (5.5) (5.5)
Additions 0.4 111.1 111.5
Amounts repaid (4.9) (109.6) (114.5)
At 31 December 2019 339.9 250.5 590.4
Impairment
At 1 January 2019 (27.8) (1.3) (29.1)
Impairment in the year – (0.2) (0.2)
At 31 December 2019 (27.8) (1.5) (29.3)
Net book value

At 31 December 2019 312.1 249.0 561.1
At 31 December 2018 316.6 253.2 569.8
The undertakings which affect the financial statements are listed on pages 156 to 158.
The Directors believe that the carrying value of the investments is supported by their underlying net assets or forecast cash generation.
152
152
Croda
Annual
International
153
153
Notes to the Company Financial Statements continued
K. Borrowings M. Share-based payments
The total charge for the year in respect of share-based remuneration schemes was £0.9m (2018: £4.3m). The grant by the Company
The Company’s objectives, policies and strategies in respect of financial instruments are outlined in the accounting policies note on of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution.
page 120 which forms part of the Annual Report and Accounts. Short term receivables and payables have been excluded from all of The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period
the following disclosures. as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
2019 2018
£m £m The key elements of each scheme along with the assumptions employed to arrive at the charge in the profit and loss account are set
Maturity profile of financial liabilities out in note 23 to the Group financial statements.
2014 Club facility due 2021 – 33.3
2016 Club facility due 2021 – 19.9 N. Contingent liabilities
2019 Club facility due 2024 96.1 – The Company has guaranteed loan capital and bank overdrafts of subsidiary undertakings amounting to £162.3m (2018: £104.3m).
€30m 1.08% fixed rate 7 year bond 25.6 27.1
€70m 1.43% fixed rate 10 year bond 59.7 63.1 O. Dividends
£30m 2.54% fixed rate 7 year bond 30.0 30.0
£70m 2.80% fixed rate 10 year bond 70.0 70.0 Details of dividends are disclosed in note 8 of the Group financial statements.
€50m 1.18% fixed rate 8 year bond 42.6 –
£65m 2.46% fixed rate 8 year bond 65.0 – P. Related party transactions
Bank loans and overdrafts repayable on demand 12.6 13.3 The Company has taken advantage of the exemption available under FRS 101 from disclosing transactions with other Group
401.6 256.7 undertakings. There were no other related party transactions during the year. Information on the Group can be found in note 27 on
Repayments fall due as follows: page 147 of the Group financial statements.
Within one year
Bank loans and overdrafts 12.6 13.3
12.6 13.3
After more than one year
Loans repayable
Within one to five years 151.7 110.3
After five years 237.3 133.1
389.0 243.4
L. Post-retirement benefits
In line with the requirements of FRS 101, the Company recognises its share of the UK pension scheme assets and liabilities.
A full reconciliation of the Group retirement benefit obligation can be found in note 11 of the Group financial statements on
pages 128 to 131. The table below shows the movement in the obligation during the year.
2019 2018
£m £m
Opening balance:
Assets 48.7 48.6
Liabilities (47.5) (47.7)
Net opening retirement benefit asset 1.2 0.9
Movements in the year:
Service cost – current (0.6) (0.5)
Service cost – past 0.1 (0.2)
Interest cost 0.1 –
Contributions 0.5 0.6
Remeasurements (3.3) 0.4
Closing balance (2.0) 1.2
154
154
Croda
report Plc2019
and Accounts
Croda
Annual
International
155
155
Other Information
Related Undertakings
Other Information
Related undertakings of Croda International Plc Incorporated in the USA Hong Kong – Room 908, East Ocean Centre, No.9 Science
Museum Road, Tsim Sha Tsui, East Kowloon
All companies listed below are owned by the Group and all interests are in ordinary share capital, except where otherwise indicated. 300-A Columbus Circle, Edison, NJ 08837 Croda Hong Kong Company Ltd (vii)
All subsidiaries have been consolidated. All companies operate principally in their country of incorporation. Unless otherwise indicated, Croda Americas LLC (viii)
all shareholdings represent 100% of the issued share capital of the subsidiary. Hong Kong – Kreston CAC CPA Ltd, Rooms 2702-3, 27th Floor,
Croda Finance Inc (viii) Bank of East Asia Harbour View Centre, 56 Gloucester Road,
Croda Inc (vii) Wan Chai
Wholly owned subsidiaries: Croda Inks Corp (viii) IonPhaseE (H.K.) Limited (vii)
Incorporated in the UK Incorporated in China Croda Investments Inc (ix) Hungary – 1117 Budapest XI, Bölcso utca 6. 1. emelet 4.
Cowick Hall, Snaith, Goole, East Yorkshire, DN14 9AA Unit BCD, 19 Floor, Urban City Center, No.45, Croda Storage Inc (viii) Croda Magyarorszag Kft (i) (vii)
Bio Futures Limited (vii) Nanchang Road, Shanghai Croda Synthetic Chemicals Inc (ix) India – Plot No. 1/1, Part TTC Industrial Area, Thane Belapur Road,
Brookstone Chemicals Limited (viii) Croda China Trading Company Ltd (vii) Mona Industries Inc (viii) Koparkhairne, Navi Mumbai, Thane-400710, Maharashtra
Cowick Hall Trustees Limited (xi) 2nd Floor, No. 21, Eastern of Yonyou Industrial Park, No. 9 Sederma Inc (vii) Croda India Company Private Ltd (i) (v) (vii)
Croda (Goole) Limited (viii) Yongfeng Road, Haidian District, Beijing India – 47, Mahagujarat Industrial Estate, Opp. Pharma Lab,
1293 Harkins Road, Salinas, CA 93901
Croda Application Chemicals Limited (viii) Incotec (Beijing) Agricultural Technology Co. Ltd (vii) Incotec Integrated Coating and Seed Technology, Inc. (vii) Sarkhej-Bavla Highway, At. Moraiya, Ta. Sanand, Ahmedabad-
382213, Gujarat
Croda Bakery Services Limited (viii) No. 2 Plant, No. 1 QuanFeng Road, Wuqing Development Zone,
Wuqing District, Tianjin Integrated Coating and Seed Technology India Pvt. Ltd (vii)
Croda Bowmans Chemicals Limited (v) (viii) Incorporated in other overseas countries
Croda CE Limited (viii) Incotec (Tianjin) Agricultural Technology Co. Ltd (vii)
Indonesia – Kawasan Industri Jababeka, Jl. Jababeka IV Blok V
Argentina – Av. Alicia Moreau de Justo 2030 Piso 1, Oficina 117, Kav 74-75, Cikarang Bekasi 17530
Croda Chemicals Limited (viii) No.3 Plant, No.202, Huashan Road, Modern Industrial Zone, Tianjin
Development Zone, Tianjin Buenos Aires PT Croda Indonesia (iii) (iv) (vii)
Croda Colloids Limited (viii) Croda Argentina SA (vii)
Croda Cosmetics & Toiletries Limited (i) (v) (viii) Incotec (Tianjin) Agricultural Science & Technology Co. Ltd (vii)
Iran – Apt. 305, 3rd Floor, No 14 Golestan Avenue, Alikhani Avenue,
Australia – Suite 2, Level 6, 111 Phillip Street, Parramatta, NSW Southern Shiraz Street, Tehran
Croda Cosmetics (Europe) Limited (iii) (viii) Room 3010, Guangzhou International Trade Center, No. 1, LinHe
Road West, Guangzhou 2150 Croda Pars Trading Co (vii)
Croda Distillates Limited (i) (x) Croda Australia (ii) (vii)
IonPhasE (Guangzhou) Special Polymers Co., Ltd (vii)
Italy – Via P. Grocco 915, 27036 Mortara
Croda Enterprises Limited (viii)
Australia – 7 Gateway Drive, Carrum Downs, Victoria 3201 Croda Italiana S.p.A. (vii)
Croda Europe Limited (i) (vii)
Incorporated in France Kriset Pty. Ltd (vii)
Croda Fire Fighting Chemicals Limited (viii) Japan – 4-3 Hitotsubashi 2-chome, Chiyoda-ku, Tokyo 101-0003
Croda Food Services Limited (viii) Belgium – “Corporate Village”, Da Vincilaan 9/E6 Elsionor, Croda Japan KK (i) (vii)
1, rue de Lapugnoy, 62920 Chocques
1930 Zaventem
Croda Hydrocarbons Limited (viii) Croda Chocques SAS (vii) Malaysia – Unit no. 203, 2nd floor, block C, Damansara Intan no. 1,
Croda Belgium BVBA (vii)
Croda Investments Limited (ix) Jalan SS20/27, Petaling Jaya, Selangor
Route Nationale 10, Immoparc, 78190 Trappes Brazil – Rua Croda, 580, Distrito Industrial, Campinas, São Paulo,
Croda Investments No 2 Limited (ix) Incotec Malaysia Sdn. Bhd (vii)
Croda France SAS (vii) CEP 13.074-710
Croda Investments No 3 Limited (ix) Croda Holdings France SAS (ix) Mexico – Hamburgo 213, Piso 10, Colonia Juárez, Delegacion
Croda do Brasil Ltda (vii)
Croda JDH Limited (viii) Cuauhtémoc, D.F., C.P. 06600
Zone artisanale, 48230 Chanac Canada – 1700 Langstaff Road, Suite 1000, Vaughan, Croda México SA de CV (vii)
Croda Leek Limited (viii)
Crodarom SAS (vii) Ontario, L4K 3S3
Croda Limited (viii) Croda Canada Ltd (vii) Nigeria – Landmark Towers, 5B, Water Corporation Road, Victoria
Croda Overseas Holdings Limited (i) (ix) 29 rue du Chemin Vert, 78610, Le Perray en Yvelines Island, Lagos
Croda Pension Trustees Limited (viii) Sederma SAS (vii) Chile – Santa Beatriz 100, 12th Floor, Office 1205, Croda SI&T Nigeria Limited (vii)
Providencia Santiago
Croda Polymers International Limited (i) (ix) Croda Chile Ltda (vi) (vii) Peru – Av. Juan de Aliaga 425 Of. 401, Magdalena del Mar
Croda Resins Limited (viii) Incorporated in the Netherlands Croda Peruana S.A.C (vii)
Croda Solvents Limited (iii) (iv) (viii) Colombia – Calle 90 # 19-41 Office 601, Bogotá
Buurtje 1, 2802 BE Gouda Croda Colombia (ii) (vii) Poland – ul. Wadowicka 6, 30-415 Kraków
Croda Trustees Limited (viii) AM Coatings BV (v) (viii) Croda Poland Sp. z o.o. (i) (vii)
Croda Universal Limited (viii) Czech Republic – Praha 5, Pekarˇská 603/12, 150 00
Croda EU BV (ix) Republic of Korea – Rm. 1201, 12th Floor, 42, Hwang Sae UI-Ro
Croda World Traders Limited (i) (v) (viii) Croda Spol. s.r.o (vii)
Croda Nederland B.V. (vii) 360 Beon-Gil, Bun Dang-Gu, Seong Nam-Si, Gyeong Gi-Do, 13591
P.I. Bioscience Limited (vii) Unicorn Power BV (viii) Denmark – Elsenbakken 23, 3600 Frederikssund Croda Korea (ii) (vii)
Plant Impact Limited (ix) Croda Denmark A/S (vii)
Westeinde 107, 1601 BL Enkhuizen Russian Federation – Office 1333, 16 Raketnyi bulvar, Moscow,
John L Seaton & Co Limited (viii) Finland – Hepolamminkatu 29, 33720 Tampere 129164
Incotec Europe B.V. (vii)
Southerton Investments Limited (i) (viii) IonPhasE Oy (vii) Croda RUS LLC (vii)
Incotec Group B.V. (i) (ix)
Sowerby & Co Limited (viii)
Incotec Holding B.V. (ix) Germany – Herrenpfad Süd 33, 41334 Nettetal Singapore – 30 Seraya Avenue, Singapore 627884
Technical and Analytical Services Limited (i) (viii)
Croda GmbH (vii) Croda Singapore Pte Ltd (i) (v) (vii)
Uniqema Limited (i) (viii)
Sederma GmbH (vii) South Africa – Clearwater Estate Office Park, Block G, Corner of
Uniqema UK Limited (i) (viii)
Atlas & Park Road, Parkhaven Ext 8, Boksburg 1459
Germany – Dr.-Hans-Wilhelmi-Weg 1, 35633 Lahnau
c/o Thorntons Law LLP, Citypoint, 3rd Floor, Rewitec GmbH (vii) Croda (SA) (Pty) Ltd (vii)
65 Haymarket Terrace, Edinburgh, EH12 5HD Incotec South Africa (Pty.) Ltd (vii)
Guernsey – PO Box 33, Dorey Court, Admiral Park, St Peter Port,
Croda (CPI) Limited (ix) GY1 4AT
Cowick Insurance Services Ltd (i) (xii)
156
156
157
157
Other Information
Related Undertakings continued Shareholder Information
Other Information
Incorporated in other overseas countries continued Non-wholly owned subsidiaries and associates: 2020 Annual General Meeting 23 April 2020 Overseas shareholders – choose
Spain – Plaza. Francesc Macià, 7, 7ºB, 08029 Barcelona Incorporated in the UK 2019 Final ordinary dividend payment 28 May 2020 to receive your next dividend in
Croda Ibérica SA (vii) 2020 Half year results announcement 23 July 2020
your local currency
Torus Building, Rankine Avenue, East Kilbride,
Scotland, G75 0QF If you live outside the UK, Link has
Sweden – Geijersgatan 2B, 216 18 Limhamn 2020 Interim ordinary dividend payment 1 October 2020
Cutitronics Ltd 48.00% partnered with Deutsche Bank to provide
Croda Nordica AB (vii) 2020 Preference dividend payments 30 June 2020 you with a service that will convert Sterling
MX Adjuvac AB (xiii) 3 Huxley Road, Surrey Research Park, Guildford, GU2 7RE 31 December 2020 dividends into your local currency at a
SiSaf Ltd 3.89%
Vietnam – Room # 606A, Floor 6th, Centre Point Building 106 2020 Full year results announcement 23 February 2021 competitive rate.
Nguyen Van Troi Street, Ward 8, Phu Nhuan District,
Ho Chi Minh City Incorporated in other overseas countries You can choose to receive payment directly
The Representative Office of Croda Singapore Pte Ltd in Investor relations Dividend reinvestment plan to your local bank account or alternatively
Ho Chi Minh City (ii) (vii) Brazil – Rua das Sementes nr. 291, Holambra, State of São Paulo (‘DRIP’)
Shareholders can now get up to you can be sent a currency draft. You can
Incotec America do Sul Tecnologia em Sementes Ltda. (vii) 99.99%
Taiwan – 5th, No 134 Chung Shan Road, Chung Li District, Taoyuan date information on Stock Exchange Ordinary shareholders may wish to know sign up to this service on Signal Shares
City, Taiwan 32041 China – No 656 East Tangxun Road Economic and Technological announcements, key dates in the corporate about this plan, which allows you to use
Development Zone Miangyang Sichuan
(www.signalshares.com by clicking on
Croda Hong Kong Company Ltd – calendar, the Croda share price and your dividends to buy further shares in ‘your dividend options’ and following the
Taiwan Representative office (ii) (vii) Croda Sipo (Sichuan) Co., Ltd (vii) 65.00% brokers’ estimates by visiting our corporate Croda. The DRIP is provided by Link Asset on-screen instructions) or by contacting
Thailand – 319 Chamchuri Square Building, 16th Floor, Unit 13-14, Malaysia – Unit no. 203, 2nd floor, block C, Damansara Intan no. 1, website at www.croda.com and clicking on Services, a trading name of Link Market the Customer Support Centre. For further
Payathai Road, Patumwan, Bangkok 10330 Jalan SS20/27, Petaling Jaya, Selangor the section called ‘Investors’. Services Trustees Ltd which is authorised information contact Link:
Croda (Thailand) Co., Ltd (i) (vii) Incotec Kedah (M) Sdn. Bhd (vii) 51.00% and regulated by the Financial Conduct
Sweden – Scheelevägen 22, 22363 Lund Shareholders can receive shareholder Authority. By phone – UK 0371 664 0300, from
Turkey – Nidakule Göztepe Is¸ Merkezi, Merdivenköy Mahallesi,
Bora Sokak, No: 1 Kat:2/5 Kadıköy 34732, Istanbul Enza Biotech AB (xiii) 88.00% communications electronically by overseas +44 (0)371 664 0300. Calls are
Croda Kimya Ticaret Limited Şirketi (vii) registering on the Registrars’ website, For information and an application pack charged at the standard geographic rate
www.signalshares.com and following the please call 0371 664 0381. Calls are and will vary by provider. Calls outside the
United Arab Emirates – P. O. BOX 17916, Office 2112, 2113, 21st
Floor, Jafza One, Jebel Ali Free Zone, Dubai instructions. To register, shareholders will charged at the standard geographic rate United Kingdom will be charged at the
Croda Middle East FZE (vii) require their investor code (IVC): this is an and will vary by provider. Calls outside the applicable international rate. Lines are
11 digit number starting with five or six United Kingdom will be charged at the open 9.00am to 5.30pm, Monday to Friday,
Zimbabwe – 4a Knightsbridge Crescent, Highlands, Harare zeros and can be found on your dividend applicable international rate. Lines are open excluding public holidays in England
Croda Chemicals Zimbabwe Pvt Ltd (viii) tax voucher or your share certificate. 9.00am to 5.30pm, Monday to Friday, and Wales.
Croda Zimbabwe (Pvt) Ltd (viii) Receiving corporate communications by excluding public holidays in England
email has a number of benefits including and Wales. From outside the UK dial By email – ips@linkgroup.co.uk
Classifications Key being more environmentally friendly, +44 (0)208 639 3402). Alternatively you
(i). Companies owned directly by Croda International Plc
(ii). Branch office
reducing unnecessary waste, faster can email shares@linkgroup.co.uk or Share dealing
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(iv). B Ordinary A simple and competitive service to buy
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(v). Preference including cumulative, non-cumulative and redeemable shares and sell shares is provided by Link Asset
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(vii). Manufacture, sales or distribution of speciality chemicals, or of seed treatment
services and products You can arrange to have your dividends and there are no complicated application
(viii). Dormant Shareholders who register on the above paid direct to your bank account.
(ix). Holding company forms to fill in. Visit www.linksharedeal.com
website can also check their shareholding, This means that:
(x). Property holding company to access a wealth of stock market news
(xi). Trustee view their dividend history, elect for the
(xii). Captive insurance company
and information free of charge. For further
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changes of address and dividend on the payment date; sell shares, visit www.linksharedeal.com or
mandate instructions.
• it is more secure – cheques can call 0371 664 0445 (calls are charged at the
sometimes get lost in the post; standard geographic rate and will vary by
Share price information provider). Calls outside the United Kingdom
The latest ordinary share price is available • you don’t have the inconvenience of will be charged at the applicable
on our website at www.croda.com. depositing a cheque; and international rate. Lines are open 9.00am to
• helps reduce cheque fraud. 4.30pm, Monday to Friday, excluding public
The middle market values of the listed holidays in England and Wales.
share capital at 31 December 2019, or last
If you have a UK bank account you can
date traded*, were as follows:
sign up to this service on Signal Shares
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Ordinary shares 5150p
‘your dividend options’ and following the
5.9% preference shares 105p* on-screen instructions) or by contacting
6.6% preference shares 107p* the Customer Support Centre.
158
158
159
159
Other Information
Shareholder Information continued Five Year Record
Other Information
Share dealing continued How to avoid share fraud Secretary and Registered Office Earnings
This is not a recommendation to buy or sell • Keep in mind that firms authorised by the Tom Brophy (Company Secretary) 2019 2018 2017 2016 2015
£m £m £m £m £m
shares and this service may not be suitable FCA are unlikely to contact you out of the Cowick Hall, Snaith, Goole, East Yorkshire
Turnover 1,377.7 1,386.9 1,373.1 1,243.6 1,081.7
for all shareholders. The price of shares can blue with an offer to buy or sell shares. DN14 9AA
Adjusted operating profit1 339.7 342.5 332.2 298.2 264.2
go down as well as up, and you are not Tel: +44 (0)1405 860551
• Do not get into a conversation, note the Adjusted profit before tax1 322.1 331.5 320.3 288.3 254.7
guaranteed to get back the amount that Fax: +44 (0)1405 861767
name of the person and firm contacting Profit after tax 223.8 238.3 236.7 197.6 181.1
you originally invested. Terms, conditions Website: www.croda.com Profit attributable to owners of the parent 223.9 238.5 237.0 196.7 180.7
you and then end the call. Registered in England number 206132
and risks apply. Link Asset Services is a
trading name of Link Market Services • Check the Financial Services Register Return on sales1 (%) 24.7 24.7 24.2 24.0 24.4
Trustees Limited which is authorised and at www.fca.org.uk to see if the person Registrars Effective tax rate1 (%) 25.6 24.6 26.8 28.0 28.0
regulated by the Financial Conduct and firm contacting you is authorised by Link Asset Services
Authority. The service is only available to the FCA. The Registry, 34 Beckenham Road, pence pence pence pence pence
private shareholders resident in the Beckenham, Kent, BR3 4TU Adjusted earnings per share1 185.0 190.2 179.0 155.8 135.0
• Beware of fraudsters claiming to be from
European Economic Area, the Channel Tel: 0371 664 0300 (from UK) Ordinary dividends per share 90.0 87.0 81.0 74.0 69.0
an authorised firm, copying its website or
Islands or the Isle of Man. +44 (0)371 664 0300 (from overseas)
giving you false contact details.
Calls are charged at the standard geographic times times times times times
Link Asset Services is a trading name of • Use the firm’s contact details listed on rate and will vary by provider. Calls outside the Net debt/EBITDA1 1.4 1.1 1.0 1.1 0.9
Link Market Services Limited and Link the Register if you want to call it back. United Kingdom will be charged at the EBITDA interest cover1 2 24.4 28.7 28.7 33.1 43.2
Market Services Trustees Limited. Share • Call the FCA on 0800 111 6768 if the firm applicable international rate; lines are open
registration and associated services are does not have contact details on the 9.00am to 5.30pm, Monday to Friday
provided by Link Market Services Limited Register or you are told they are out excluding public holidays in England and Summarised Balance Sheet
(registered in England and Wales, No. of date. Wales. 2019 2018 2017 2016 2015
2605568). Regulated services are provided £m £m £m £m £m
Fax: + 44 (0)1484 601512
by Link Market Services Trustees Limited • Search the list of unauthorised firms to Website: www.linkassetservices.com Intangible assets, property, plant and equipment and investments 1,301.4 1,240.0 1,072.5 954.4 799.4
(registered in England and Wales, No. avoid at www.fca.org.uk/scams. Inventories 268.9 287.2 258.5 235.7 221.6
Email: enquiries@linkgroup.co.uk
2729260), which is authorised and Trade and other receivables 216.8 233.6 202.2 192.4 156.1
• Consider that if you buy or sell shares Trade and other payables (164.7) (191.3) (202.5) (188.8) (161.7)
regulated by the Financial Conduct from an unauthorised firm you will not Independent Auditors Capital employed 1,622.4 1,569.5 1,330.7 1,193.7 1,015.4
Authority. have access to the Financial KPMG LLP Tax, provisions and other (131.1) (127.5) (88.8) (74.3) (70.0)
Ombudsman Service or Financial 1 Sovereign Street, Sovereign Square, Retirement benefit liabilities (75.0) (18.5) (30.5) (146.5) (78.8)
Relating to beneficial owners of Services Compensation Scheme. Leeds, LS1 4DA 1,416.3 1,423.5 1,211.4 972.9 866.6
shares with ‘information rights’ Shareholders’ funds 861.6 990.5 822.3 600.6 600.8
• Think about getting independent financial
Please note that beneficial owners of shares Principal Financial Advisers Non-controlling interests 7.0 7.5 7.6 8.2 6.5
and professional advice before you hand
who have been nominated by the registered Morgan Stanley & Co. International plc Net assets 868.6 998.0 829.9 608.8 607.3
over any money.
holder of those shares to receive Net debt 547.7 425.5 381.5 364.1 259.3
information rights under section 146 of the • Remember: if it sounds too good to be Principal Solicitors Invested capital 1,416.3 1,423.5 1,211.4 972.9 866.6
Companies Act 2006 are required to direct true, it probably is!
Freshfields Bruckhaus Deringer LLP
all communications to the registered holder
Report a scam
of their shares rather than to the
Stockbrokers Return on capital
Company’s registrar, Link Asset Services, If you are approached by fraudsters please 2019 2018 2017 2016 2015
or to the Company directly. tell the FCA using the share fraud reporting Morgan Stanley & Co. International plc £m £m £m £m £m
form at www.fca.org.uk/scams, where you HSBC Bank plc Adjusted operating profit net of tax 1
252.8 258.2 243.2 214.7 190.2
Share fraud warning can find out more about investment scams.
Financial PR Advisers Invested capital 1,416.3 1,423.5 1,211.4 972.9 866.6
Fraudsters use persuasive and high- Adjustments for:
You can also call the FCA Consumer Teneo
pressure tactics to lure investors into Goodwill previously written off to reserves 50.2 50.2 50.2 50.2 50.2
Helpline on 0800 111 6768.
scams. They may offer to sell shares that Accumulated amortisation of acquired intangible assets 22.7 14.8 8.2 4.2 0.1
turn out to be worthless or non-existent, or Adjusted invested capital 1,489.2 1,488.5 1,269.8 1,027.3 916.9
If you have already paid money to share
to buy shares at an inflated price in return Average adjusted invested capital3 1,488.9 1,343.6 1,148.6 972.1 818.4
fraudsters you should contact Action Fraud
for an upfront payment. While high profits Return on invested capital (ROIC)4 (%) 17.0 19.2 21.2 22.1 23.2
on 0300 123 2040.
are promised, if you buy or sell shares in
this way you will probably lose your money. Post-tax cost of capital (%) 6.2 5.1 4.8 5.3 5.8
Charge for invested capital (92.3) (68.5) (55.1) (51.5) (47.5)
5,000 people contact the Financial Conduct Economic value added1 160.5 189.7 188.1 163.2 142.7
Authority (‘FCA’) about share fraud each 1 Before exceptional items, acquisition costs, amortisation of intangible assets arising on acquisition and the tax thereon where applicable
year, with victims losing an average 2 Interest excludes net interest on retirement benefit liabilities
3 The Group acquired Brenntag Biosector A/S on 28 December 2018. Given the value of the acquisition and its proximity to the balance sheet date, the Group’s measure of average adjusted
of £20,000. invested capital for 2018 has been adjusted for the related impact
4 Revisions to the Group’s definition of ROIC, as set out in the Finance Review, have been applied consistently throughout the 2019 Annual Report and Accounts
The five year record is presented based on the applicable accounting standards at the relevant reporting date.
160
160
Other Information
Glossary
Adjusted Before exceptional items, acquisition costs, IAS International Accounting Standards
amortisation of intangible assets arising IASB International Accounting Standards Board
on acquisition and the tax thereon IC Invested Capital
where applicable
IFRS International Financial Reporting Standards
AGM Annual General Meeting
IP Intellectual Property
AI Artificial Intelligence
ISO International Organization for Standardization
AIM Alternative Investment Market
IT Information Technology
ALM Asset-Liability Matching
KPI Key Performance Indicator
ASF African Swine Fever
M&A Mergers & Acquisitions
Bio-based Carbon containing from renewable and
Market Personal Care, Life Sciences, Performance
organic non-fossil sources
sectors Technologies, Industrial Chemicals
CARE Career Average Revalued Earnings
Net debt Borrowings and other financial liabilities less
CDP Carbon Disclosure Project cash and cash equivalents
CEO Chief Executive Officer NGO Non-governmental Organisation
CGU Cash Generating Unit NOPAT Net Operating Profit After Tax
CIC Charge for Invested Capital NPP New and Protected Products
CIPEBT Croda International Plc Employee Benefit Trust NRFT Not Right First Time
Code Financial Reporting Council’s OSHA Occupational Safety and Health Administration
2018 UK Corporate Governance Code
PSP Performance Share Plan
CO2 Carbon Dioxide
QUEST Croda International Plc Qualifying Share
CO2e Carbon Dioxide Equivalent Ownership Trust
Constant Current year results for existing business R&D Research and Development
Currency translated at the prior year’s average
Return on Adjusted operating profit divided
exchange rates
sales by revenue
Core Personal Care, Life Sciences and
RFT Right First Time
Business Performance Technologies
ROIC Return on Invested Capital
CPI Consumer Price Index
RPI Retail Price Index
CPS Croda Pension Scheme
RSP Restricted Share Plan
CSR Corporate Social Responsibility
RSPO Roundtable on Sustainable Palm Oil
DRIP Dividend Reinvestment Plan
SAP EHS Environment Health & Saftey module in
DBSP Deferred Bonus Share Plan
the SAP reporting system
EBITDA Earnings Before Interest, Taxation,
SBT Science Based Targets
Depreciation and Amortisation
SDGs United Nations Sustainable Development Goals
EBT Employee Benefit Trust
SHE Safety, Health, Environment
EPS Earnings Per Share
SHEQ Safety, Health, Environment, Quality
EU European Union
SIP Share Incentive Plan
EVA Economic Value Added
SMEs Small and Medium Enterprises
FCA Financial Conduct Authority
STEM Science, Technology, Engineering
FRC Financial Reporting Council
and Mathematics
FRS Financial Reporting Standard
TCFD Taskforce on Climate Related
FTSE Financial Times Stock Exchange Financial Disclosure
GDPR General Data Protection Regulation Te Tonnes
GRASE Generally Reconsigned as Safe and Effective TeCO2e Tonnes Carbon Dioxide Equivalent
GHG Greenhouse Gas TRIR Total Recordable Injury Rate
GHG Greenhouse Gas emissions from sources that TSR Total Shareholder Return
emissions we own or control
UK United Kingdom
– scope 1
Underlying Current year results in local currency translated
GHG Greenhouse Gas emissions that are a
to Sterling at the prior year average foreign
emissions consequence of our activities, but occur at
exchange rate excluding acquisitions
– scope 2 sources owned or controlled by another entity
USA United States of America
GMP Good Manufacturing Practice
UV Ultra Violet
HMRC HM Revenue & Customs
WACC Weighted Average Cost of Capital
HR Human Resources
WHO World Health Organisation

Cautionary Statement Designed and produced by
The information in this publication is believed to be accurate Black Sun Plc.
at the date of its publication and is given in good faith but no
representation or warranty as to its completeness or accuracy This Report is printed on
is made. Suggestions in this publication are merely opinions. Some UPM Fine Offset which has
statements and in particular forward-looking statements, by their been independently certified
nature, involve risks and uncertainties because they relate to events according to the rules of the
and depend on circumstances that will or may occur in the future Forest Stewardship Council®
and actual results may differ from those expressed in such (FSC).
statements as they depend on a variety of factors outside the
Printed in the UK by Pureprint,
control of Croda International Plc. No part of this publication
a CarbonNeutral® company.
should be treated as an invitation or inducement to invest in
the shares of Croda International Plc and should not be relied Both manufacturing paper mill
upon when making investment decisions. and the printer are registered to
the Environmental Management
System ISO 14001:2004 and are
Forest Stewardship Council® (FSC)
chain-of-custody certified.
Registered Office
Cowick Hall
Snaith
Goole
East Yorkshire
DN14 9AA
England
T +44 (0)1405 860551
www.croda.com

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Science Annual Report

In line with our Purpose, our ambition From sustainable processes

Rapeseed flower: over 61% of our organic raw materials are

Croda International Plc

Strategy and Operations £1,377.7m 614 311 2,478 105 1,072

Performance and Financials

Directors’ Report 2018: £317.8m

Other Information NPP % Group sales (constant currency)

Sustainably improving wellbeing

Personal wellbeing is undeniably an important outcome from the

With sustainable production in mind, our hi-tech method of growing

Sea algae: we use this sustainably harvested algae in our ingredients

2 Croda International Plc

Improving health and food security

To help reduce world hunger, our specialist ingredients provide a

Sustainable health care and agriculture

Our contribution to improving global food security begins with a deep

4 Croda International Plc

Helping to reduce, reuse and recycle

Our RewitecTM products improve durability in a market where

The science of durable materials

6 Croda International Plc

Playing our part in fighting climate change

Our speciality ingredients are helping our customers to improve food

Our Commitment includes an ambition to significantly reduce our water use

8 Croda International Plc

Delivering returns for Case study:

10 Croda International Plc

Creating value with Purpose

12 Croda International Plc

14 Croda International Plc

Delivering the Croda difference

16 Croda International Plc

18 Croda International Plc

Group strategic We achieve What we have Our priorities

Growth • Our unrivalled local direct

Innovation • Investing in our own R&D

20 Croda International Plc

With return on sales up 50 basis points at Sales in Beauty Formulation declined by

environment in 2019 These collaborations include projects with

‘Strengthen to grow’.” importantly, offer high performance in use.

22 Croda International Plc

In Health Care, growth remained strong Seed Enhancement sales declined

24 Croda International Plc

sector progressively growing permanent anti-static additives

26 Croda International Plc

Industrial Maarten Heybroek

the product portfolio in Adjusted operating profit

28 Croda International Plc

Croda International Plc

30 Croda International Plc

32 Croda International Plc

Driving profit and cash flow

34 Croda International Plc

36 Croda International Plc

** Executive Committee (p70)

38 Croda International Plc

Strategic ​ ​ ​ ​ ​ ​ ​ People and culture Process fundamentals ​ ​

Why this matters to us ​ Why this matters to us

Strategic People and culture Process fundamentals

Why this matters to us Why this matters to us

Long term EPS What is the single figure outcome?