Annual Financial Report

RNS Number : 0588A

Croda International PLC

26 March 2012

 



Croda International Plc - Annual Financial Report

Croda International Plc (the "Company") confirms that its Annual General Meeting will be held at 12 noon on 26 April 2012 at Carlton Towers, Carlton, Goole, East Yorkshire, DN14 9LZ.

In accordance with Listing Rule 9.6.1, the Company has submitted to the National Storage Mechanism copies of the following documents which will shortly be available for inspection at www.Hemscott.com/nsm.do:

- Annual Report for the year ended 31 December 2011

- Notice of Annual General Meeting

- Form of Proxy

- Letter advising shareholders of publication of documents on Company's website

- Sustainability Report

The Annual Report and Accounts for the year ended 31 December 2011 are available on the Company's website at:

www.croda.com

_______________________________________________________________

IMPORTANT: EXPLANATORY NOTE AND WARNING

The primary purpose of this announcement is to inform the market about the publication of the Company's Annual Report for the year ended 31 December 2011 (the "2011 Annual Report").

The information below, which is extracted from the 2011 Annual Report, is included solely for the purpose of complying with DTR 6.3.5 and the requirements it imposes on issuers as to how to make public annual financial reports.  It should be read in conjunction with the Company's Preliminary Announcement issued on 21 February 2012.  Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service.  This material is not a substitute for reading the full 2011 Annual Report.  Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the 2011 Annual Report.

ADDITIONAL INFORMATION REQUIRED BY DISCLOSURE AND TRANSPARENCY RULE 6.3.5

Statement of Directors' Responsibilities for Preparing the Financial Statements

The following statement which was prepared for the purposes of the 2011 Annual Report is set out on page 43 of that document.  As set out above, this statement is repeated here solely for the purpose of complying with DTR 6.3.5. This statement relates to and is extracted from the 2011 Annual Report. It is not connected to the extracted and summarised information presented in this announcement and in the Company's Preliminary Announcement that was published on 21 February 2012.

"Each of the directors, whose details are set out on pages 22 to 23 confirms that, to the best of their knowledge:

i        the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

i        the Business review contained in this report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

By order of the Board

Louise Scott

Secretary

29 February 2012"

Related Party Transactions

There are no related party transactions disclosed in the 2011 Annual Report.

Principal Risks and Uncertainties

The following description of principal risks and uncertainties is set out on pages 10 and 11 of the 2011 Annual Report.  As set out above, this description is repeated here solely for the purpose of complying with DTR 6.3.5.

"Risk Management

Effective management of risks and opportunities is essential to the delivery of the Group's financial and non-financial objectives, thereby ensuring the Group delivers value to the shareholders, protects its reputation and meets the requirements of good corporate governance.  Croda is committed to the effective management of all key risks identified.

The Group coordinates its global approach through the Risk Management Committee which meets quarterly and reports directly to the Board.  This Committee is chaired by the Group Finance Director and comprises the regional Presidents, the Group Financial Controller and the Company Secretary with the Group Risk and Control Manager in attendance.

A structured risk management system is implemented across the Group which is defined in the Group's risk management framework. The framework comprises a standard set of risk categories and definitions, together with the process and risk register format to be used in analysing and managing risk.  Risks are ranked by combining the economic, operational or environmental impact (rated by value) and the likelihood of occurrence, both before and after identification of mitigating controls, and any actions required to address weaknesses.  The responsibility for risk identification, analysis, evaluation and mitigation rests with management at regional and site level.  All regions and key functional groups are required to undertake a full review of risks and their mitigating strategies at least half yearly, with sites required to undertake the same review at least annually.  Each risk is allocated an owner who has the responsibility for monitoring and managing it. 

The output from the risk reviews are consolidated and reported to the Risk Management Committee to identify Group wide impacts and trends including external and emerging risks.  In addition, a top down review is performed to identify Group level risks that will not have been identified at regional or site level.  The most significant risks are collated into the Group risk register using the same risk management framework, which is reviewed at each meeting.  The Committee evaluates the controls and procedures which are in place to mitigate these risks, and a nominated member of the Committee is responsible for ensuring that best practice is followed in tackling each area and that continuous progress is made in managing the risks. The key risks identified by the Group are summarised below.

Risk	Description and impact	Mitigation
Strategic
Product and technology innovation	Croda operates in competitive markets in which product and technology innovation are key to success.  Innovation failing to deliver could result in a lack of competitive products and erosion of margins and/or loss of market share.	We have 18 R&D laboratories around the world.  We have unrivalled customer contact, ensuring that our innovation is market led and relevant to their needs.  We have just appointed our Chief Technology Officer to the Board.
Merger and acquisition strategy	The Group has experienced growth through acquisitions and continues to pursue acquisitions to meet its strategic objectives.  Whether the Group realises the anticipated benefits from these acquisitions depends on the integration of the acquired businesses and their performance in relation to the Group's acquisition expectations.	The Group has established policies and processes in place to manage the acquisition process, integrate acquired businesses and monitor performance.
External environment
Product liability	Croda sells into a number of highly regulated markets.  Non-compliance with quality regulations could expose the Group to liability and reputational damage.	Quality management procedures are in place for each site, and all manufacturing sites hold ISO9001 standards. Major sites have also been audited against GMP (Good Manufacturing Practice) standards.
Regulatory compliance	As a global chemical producer and supplier, Croda operates in a highly regulated environment.  Violation of these regulations could limit the markets into which we can sell, or subject the Group to fines or penalties.	The most significant chemical legislation currently facing the Group is the implementation of REACh (Registration, Evaluation, Authorisation and restriction of Chemicals) in Europe.  We have introduced a range of procedures in order to maintain compliance with this regulation and have successfully completed the necessary registrations to date.
People and process
Major site event involving the loss of a site	Significant operational problems could have an adverse effect on Croda's financial position.  We are reliant on the continued operation of our manufacturing sites.	We maintain strictly audited internal safety and maintenance programmes and have business continuity plans in place.
Major environmental incident	Violations of safety, health and environmental regulations could limit operations and expose the Group to liability, cost and reputational impact.	In addition to maintaining compliance with national and international safety standards, we maintain strictly audited internal safety, health and environmental programmes.
Interruption of raw material supply	Interruption in the supply of key raw materials would significantly impact operations and our financial position. Interruption of supply could arise from the implementation of new, more rigorous legislation or from market shortage.	Wherever possible, we try to multi source our key raw materials and/or we purchase them under medium to long term contracts.  We manage our raw material stock levels taking these considerations into account.
Loss of key personnel	We rely on employees such as divisional board members and technical experts whose vision and knowledge is critical to maintaining the Group's success.	We have global procedures in place to identify and retain key employees and to develop succession plans for key positions.
Business systems
IT systems and security failure	Croda relies heavily on IT systems to operate effectively and efficiently and to facilitate communication globally.  Failure of these systems for a prolonged period of time would have an impact on operations and ultimately our financial position.	We have a global IT group who are very experienced.  During 2011 we moved to a high availability mirrored system to further strengthen the IT infrastructure.
Financial
Management of pension fund assets	Croda has legal commitments relating to the provision of pensions and the operation of our pension schemes.  In current market conditions, increased future funding requirements may have an adverse effect on Croda's financial position.	The Group's pension schemes are overseen by the Trustees of the funds who take professional actuarial and investment advice as necessary.  Trustees have the required skills as a result of experience and training, and where appropriate the Group will appoint professional trustees to its schemes.
Working capital management	Cash flow generation from the effective management of working capital is required to support the cash outflows arising from capital investment programmes, servicing of debt, taxation, and pension fund requirements.	The Group operates a well embedded working capital programme which is managed on an individual business basis with central monitoring.
Currency exchange rate movements	The global nature of the Group's business exposes it to volatility in currency exchange rates which could have an adverse impact on Croda's financial position.	We maintain a strategic spread of manufacturing and selling locations globally which itself limits currency exposures.  The Group hedges its currency exposure on trade debtors and creditors where appropriate.

Sean Christie

Group Finance Director"

Enquiries:

Louise Scott

Company Secretary & Legal Counsel

26 March 2012

 

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