Croda International : half year 2021 results presentation

Croda International Plc:

Half year 2021 results

27 July 2021

Cautionary statement and definitions

Cautionary statement

This review is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the review is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for those strategies to succeed. It should not be relied upon by any other party or for any other purpose. Forward looking statements are made in good faith, based on a number of assumptions concerning future events and information available to the Directors at the time of their approval of this report. These forward looking statements should be treated with caution due to the inherent uncertainties underlying such forward looking information. The user of this review should not rely unduly on these forward looking statements, which are not a guarantee of performance and which are subject to a number of uncertainties and other facts, many of which are outside the Company's control and could cause actual events to differ materially from those in these statements. No guarantee can be given of future results, levels of activity, performance or achievements.

Adjusted results

Unless otherwise stated, all performance data refers to adjusted results. These are stated before exceptional items and amortisation of intangible assets arising on acquisition, and tax thereon. The Board believes that the adjusted presentation (and the columnar format adopted for the Group income statement) assists shareholders by providing a meaningful basis upon which to analyse underlying business performance and make year-on-year comparisons. The same measures are used by management for planning, budgeting and reporting purposes and for the internal assessment of operating performance across the Group. The adjusted presentation is adopted on a consistent basis for each half year and full year results.

Sector restatement

Sector results for half year 2020 have been restated to reflect the Group's new reporting structure.

Constant currency results

All data is at reported currency rates unless otherwise stated. Reported currency results reflect current year performance translated at reported rates (actual average exchange rates). Constant currency results: these reflect current year performance for existing business translated at the prior year's average exchange rates and include the impact of acquisitions. For constant currency profit, translation is performed using the entity reporting currency. For constant currency sales, local currency sales are translated into the most relevant functional currency of the destination country of sale (for example, sales in Latin America are primarily made in US dollars, which is therefore used as the functional currency). Sales in functional currency are then translated into Sterling using the prior year's average rates for the corresponding period. Constant currency results are reconciled to reported results in the Finance Review.

Underlying sales

Underlying sales reflect constant currency values adjusted to exclude the impact of acquisitions. They are reconciled to reported sales in the Finance Review.

Other definitions .

• Return on sales is adjusted operating profit divided by sales, at reported currency.
• Net debt comprises cash and cash equivalents (including bank overdrafts), current and non- current borrowings and lease liabilities.
• The leverage ratio is the ratio of net debt to Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) adjusted to include EBITDA from acquisitions is the last 12 month period. EBITDA is adjusted operating profit plus depreciation and amortisation.
• Free cash flow is EBITDA less movements in working capital, net capital expenditure, payment of lease liabilities, non-cash pension expense, and interest and tax payments.

Alternative performance measures (APMs)

We use a number of APMs to assist in presenting information in this presentation in an easily analysable and comparable form. We use such measures consistently at the half year and full year and reconcile them in the Finance Review accompanying these results.

Front cover images: Top: two thirds of Avanti employees work in scientific roles. Bottom: one third of Iberchem employees are in R&D roles.

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Agenda

• Record performance
• Excellent first half financial results
• Moving to faster growth markets
• Q&A

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Record performance

Steve Foots - Chief Executive Officer

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Record performance driven by accelerated strategic implementation

Record performance

• Reported sales up 39% on H1/20
• Underlying sales up 27% on H1/20; up over 10% on H1/19
• Record adjusted profit before tax, up over 50% on H1/20
• Return on sales 25.9% (2020: 24.0%)
• Interim ordinary dividend up 10% to 43.5p (2020: 39.5p)

Accelerated strategic implementation

• Strong underlying growth across all sectors
• • Benefitting from significant capital investment over last 12 months, together with increased innovation
• Successful delivery from recent acquisitions
• • Iberchem and Avanti performing well
  • Integration and synergy delivery on track
• Continued success in building the Life Sciences platform
• • Over £40m invested in Health Care capacity expansion in H1/21

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