annualreport 05 - 1

7/31/2019 AnnualReport 05 - 1

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Around the worldin 80 years

ANNUALREPORT &ACCOUNTS2005



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Contents

1 Financial highlights2 Chairman’s statement4 Operating review10 Financial review14 Safety,Health and the Environment (SHE)18 Board of directors20 Directors’report23 Directors’remuneration report31 Corporate governance37 Group independent auditor’s report38 Group income statement38 Group statement of recognised income and expense39 Group balance sheet40 Group cash flow statement41 Group cash flow notes

42 Group accounting policies48 Notes to the Group accounts70 Company independent auditor’s report71 Company balance sheet72 Company accounting policies73 Notes to the Company accounts77 Principal subsidiary companies78 Shareholder information80 Five year record

This timeline illustrates the extent of Croda’s global reach.Each flag is positionedalongside the year in which the Group established a presence i n that country.A key to the flags can be found on the inside back cover.



External appointmentsExecutive directors are permitted to accept external non-executive appointments with the prior approval of the Board.It is normal practice for executive directors to retain fees provided for non-executive appointments.Throughout 2005Barbara Richmond was a non-executive director of Carclo Plc for which she received fees of £22,000 (2004: £20,000).She was appointed a non-executive director of the Scarborough Building Society in April 2005 and received fees of£18,000 during the year.

Apart from service agreements and share schemes,no director has had any material interest in any contract withthe Company or its subsidiaries requiring disclosure under the Companies Act 1985.

Policy on non-executive directors’remuneration

The Board is responsible for determining the policy on,and level of,the remuneration of non-executive directors.The aimis to attract non-executive directors who through their experience can further the interests of the Company through theirstewardship and contribution to strategic development.The Board’s policy is to provide cash fees at a level commensuratewith companies of Croda’s size,not to grant share options to non-executive directors,and to encourage non-executivedirectors to establish a holding of Croda shares.

Components of non-executive directors’remuneration

Non-executives’pay comprises cash fees, paid monthly.All non-executive directors are reimbursed for travel and relatedbusiness expenses reasonably incurred in performing their duties.

The Chairman’s and non-executive directors’fees are determined on the basis of current fee levels in similar businesses.Fees are reviewed by the Board every two years.The fee for the Chairman of £110,000 per annum was negotiated on hisappointment as Chairman designate on 16 May 2005.Fees for the non-executivedirectors were increased to £30,000with effect from 1 January 2005 following a review of current practice. Supplementary fees are paid for committeechairmanship and for special duties beyond the norm expected of a non-executive director to give total annual feeswith effect from 1 January 2006 of £37,500 for David Dunn and £34,500 for Michael Ward.

Terms of appointment

The Chairman and non-executivedirectors have letters of appointment for a fixed term as shown below, subject toearlier termination byeither party on written notice.They have no entitlement to contractual termination payments.

Unexpired at

Appointment date 31 December 2005

M C Flower 16 May 2005 2 years 5 months

M C Buzzacott 2 August 2004 1 year 7 months

D M Dunn 26 April 2000† 2months

MAWard 24 April 2001†† 1 year 4 months

†appointmen t extended for a third three year term to 24 February 2009

†† appointment extended for a further three year term to 24 April 2007

Directors’ remuneration report

26 Directors’ remuneration report

Performance graph

In the opinion of the directors the FTSE 250 is tCroda International Plc should be measured be

Audited information

Directors’remuneration

Basic

MHumphrey† 39B M Richmond 27MC Flower (appointed 16 May 2005)

M C BuzzacottD M DunnMAWardAR Beevor(resigned 28 September 2005)

66†highest paid director

Notes

1 Benefits incorporate all assessable tax benefto the provision of a company car.

2 The bonuses shown relate to the year ended

Pension rightsMike Humphrey’s pension benefits are fundedentitled on retirement at age 60 to a pension eof final remuneration (known as the “earnings Group.If directors retire before age 60 a reduceof death a pension equal to two-thirds of the din payment are guaranteed to increase in line w

During the year,Barbara Richmond was paid £independent provision for her retirement.BarbatheIn land Revenue earnings cap with the balanthat fund.

Total shar



Shareholder information



78 Shareholder information

Sector headsD E Barraclough – Oleochemicals EuropeK R Gregersen – Oleochemicals AmericasK Layden – Enterprise TechnologiesK M Nutbrown – Global Manufacturing & Oleochemicals Asia PacificB M Richmond – Active Ingredients & Industrial Chemicals

% ofAnalysis of ordinary shareholders as at 17 February 2006 No. of h old ers N o. of s hare s is su ed c ap ita l

By size of holding1 – 1,000 2,207 927,297 0.681,001 – 5,000 1,624 3,720,175 2.735,001 – 10,000 222 1,600,662 1.1810,001 – 50,000 182 4,290,385 3.1550,001 – 100,000 49 3,562,536 2.61100,001 – 500,000 92 22,513,926 16.52500,001 – upwards 54 99,653,863 73.13

4,430 136,268,844 100.00

By type of holderPrivate holders 3,523 8,320,003 6.11Institutional and corporate holders 903 116,241,308 85.30Treasury shares 1 8,122,589 5.96Shares held in Croda trusts 3 3,584,944 2.63

4,430 136,268,844 100.00

Investor relations

Shareholderscan now get up to date information on Stock Exchange announcements,the corporate calendar,the Crodashare price and brokers’estimates by visiting our corporate web site at www.croda.com and clicking on the investor centre.

Shareholderscan receive shareholder communications electronically in future by registering on our corporate websitewww.croda.com.To register click on Company,Investor centre followed by “Investor alerts by email”.Receiving corporatecommunications by email has a number of benefits including being more environmentally friendly, reducing unnecessarywaste,faster notification of information to shareholders and eventually leading to a reduction in Company costs.

Shareholders can check their shareholdings on the registrars’website,www.capitaregistrars.com.Please note to gainaccess to this information shareholderswill require their investor reference.This is an 11 digit number starting with eitherfive or six zeros and is printed on each dividend warrant.

Share dealingA share dealing service is available for UK shareholders from Capita Share Dealing Services to either sell or buy Crodaordinary shares.For further information on this service,please contact:www.capitadeal.com (on-line dealing)0870 458 4577 (telephone dealing)

Shareprice information

As well as being available on our website,for the latest ordinary share price, available on the Financial Times Citylineservice,call 0906 003 2278 or access the BBC’s broadcast teletext service.

The middle market values of the listed share capital at 30 December 2005, or last date traded*,were as follows

Ordinary shares 461p5.9% preference 99p*6.6% preference 108p*

Capital gains taxThe market value of the listed share capital at 3

Ordinary sharesDeferred ordinary shares5.9% preference shares6.6% preference shares7.5% preference shares (estimated)

Corporate calendar2006 Annual General Meeting 2006 Half year results announcement 2006 Full year results announcement2005 Final ordinary dividend payment2006 Interim ordinary dividend payment 2006 Preference dividend payments

Secretary and registered office

A L Scott (Secretary)A M McIntyre (Assistant secretary)CowickHall, Snaith,Goole DN14 9AATel:01405 860551 Fax: 01405 861767 WebsiRegistered in England number 206132

RegistrarsCapita RegistrarsThe Registry,34 Beckenham Road,Beckenham,Kent BR3 4TU

Tel:0870 162 3100 (from UK)00 44 208 639 2157 (from overseas)Fax:0208 639 2342 (from UK)00 44 208 639 2342 (from overseas)Website:www.capitaregistrars.comE-mail:[email protected]

Auditors:PricewaterhouseCoopers LLP

Merchant bankers: UBS Warburg

Solicitors:Slaughter and May,Heptonstalls

Stockbrokers:Merrill Lynch International, UBS

Pension fund managers:

UBS Global Asset Management (UK) LimitedSchroder Investment Management Limited

Legal & General Investment Management Lim

Consulting actuaries: Watson Wyatt Partners



Five year record

80 Five year record

In 2005 the Group has adopted IFRS and in accordance with the requirements of IFRS, 2004 figures have been restated.Restatement of earlier years is not required under IFRS and accordingly the information presented below for 2003 andearlier years is as prepared under UK GAAP.The main adjustment that would be required to comply with IFRS would be

with regard to the recognition of pension fund liabilities on the balance sheet.The pension fund prepayment shown on thesummarised balance sheet up to and including 2003 would have been replaced with a net liability as measured under IAS 19.

Earnings 2005 2004 2003 2002 2001£m £m £m £m £m

Revenue 305.6 280.9 303.4 313.6 312.4Operating profit 51.1 45.0 41.6 40.5 37.0Profit before tax 49.2 43.1 38.7 36.5 31.7Profit after tax 31.6 27.9 25.0 23.5 19.0Profit attributable to ordinary shareholders* 32.6 30.5 25.0 23.4 18.9

% % % % %

Operating profit as a % of turnover 16.7 16.0 13.7 12.9 11.8Return on capital employed* 25.6 22.7 19.6 18.4 14.8Effective tax rate 35.8 35.3 35.4 35.6 40.1

pence pence pence pence pence

Earnings per share 25.6 22.8 19.2 17.8 14.4Dividends per share 13.35 12.5 11.85 11.5 11.3

* Total Group figures, all other IFRS figures are continuing operations only.Earnings exclude exceptional items in order to present a clearer year on year comparison.

Summarised balance sheet 2005 2004 2003 2002 2001£m £m £m £m £m

Fixed assets 130.3 144.8 150.3 159.0 180.6Stock 53.4 52.0 51.8 51.5 60.5Debtors 55.7 54.9 57.3 57.1 55.9Creditors (47.6) (41.9) (47.0) (47.2) (46.4)Assets classified as held for sale 15.4 - - - -

Capital employed 207.2 209.8 212.4 220.4 250.6Dividends, tax and provisions 4.7 (0.9) (52.9) (52.0) (54.4)Pension fund liability (107.1) (104.1) 33.1 32.2 28.7

104.8 104.8 192.6 200.6 224.9

Shareholders funds 79.7 88.8 162.4 147.4 160.1Minority interests 0.9 0.8 1.2 1.1 1.2

80.6 89.6 163.6 148.5 161.3Net debt 24.2 15.2 29.0 52.1 63.6

104.8 104.8 192.6 200.6 224.9

Gearing (%) 30.0 17.0 17.7 35.1 39.4

IFRS UK GAAP



Croda International PlcCowick Hall, SnaithGoole, East YorkshireDN14 9AA, EnglandTel:+44 (0)1405 860 551Fax:+44 (0)1405 861 767www.croda.com

D e s i g n e d a n d pr o d u c e d b yT h e R o un d h o u s e N e w c a s t l e u p onT yn e

annualreport 05 - 1

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