Croda Capital Markets Day

Croda Capital Markets Day
7 November 2012

Welcome to Croda Capital Markets Day 2012
Purpose: Learn more about the many niche opportunities in our business Provide more information about Performance Technologies Hear from and meet the Croda senior management team Provide a greater insight into our innovation culture A marketing and technology company that happens to sell speciality chemicals

Mega trends driving structural growth
Beauty and ageing Health and well-being Sustainability Personal Care Health Care Crop Care Lubricants Coatings & Polymers Polymer Additives Geo Technologies Home Care Innovation Unmet customer needs Differentiated technologies Positioned well in very attractive growth markets

The global leader in natural specialities
Plant sources Innovative benefits Great customer value Marine sources Positioned well to benefit from growing trend towards natural based products

Our philosophy We are a marketing and technology company We create valuable intellectual property We work closely in partnership with our customers to help create multi- million and billion pound brands for them We make high quality speciality chemicals at world class, flexible manufacturing facilities, that allow us to deliver outstanding customer service to our customers

Key themes and agenda for today
Innovation Innovation Innovation New Technologies Niche market growth in Consumer Care Emerging Markets Specialisation of Performance Technologies Enterprise Technology with Keith Layden Personal Care with Kevin Gallagher and Health Care with Sandra Breene Latin America with Nick Challoner Geo Technologies with Graeme Tweddle and Polymer Additives with Maarten Heybroek Capital Investment with Sean Christie Invest Invest Invest

The Senior Team at Croda
Steve Foots Group Chief Executive Keith Layden Chief Technology Officer Sean Christie Chief Financial Officer Kevin Gallagher President North America Nick Challoner President LATAM Sandra Breene President Consumer Care Europe Maarten Heybroek President PTIC Europe David Barraclough President Asia Pacific Stuart Arnott President Global Operations Louise Scott Company Secretary Legal Counsel Graham Myers Group Financial Controller Graeme Tweddle Vice President Geo Technologies Presenting today Experienced and entrepreneurial management team

Enterprise Technology
Keith Layden – Chief Technology Officer

Purpose of the presentation
Explain the importance of Innovation at Croda Outline the role of Enterprise Technology Update on key projects Acrylic Polymers Biotechnology Pharmaceutical Omega-3 Staying ahead of the competition

Innovation – our definition
“Any aspect of the operation of the business that differentiates Croda from the competition and by doing so creates value” Differentiation Added value

Innovation the Croda Way
Market and customer driven Marketing Sales Technical Operational Knowledge Experience Enthusiasm Intuition Driven by the commitment of the individual

The role of Enterprise Technology
Corporate development function Challenge Find opportunities and innovation Delivery Differentiated technologies, products, effects or processes Acceleration of market led innovation is at the heart of our future growth story

Enterprise Technology – organisation
Chief Technology Officer Business Development Director Technology Development Specialist (USA/Canada) Technology Development Specialist (LATAM) Technology Development Specialist (Northern Europe) Technology Development Specialist (Southern Europe) Technology Development Specialist (Singapore) Sourcing new technologies across the globe

Enterprise Technology – acquisition
Our goal is to acquire technology that: Is, or has potential to be, class leading Meets valuable unmet customer needs Has robust IP Can be commercialised globally through the Croda network Acquisition criteria

Enterprise Technology – success to date
Acrylic Polymers at Rawcliffe Bridge Omega-3 technology at Leek Biofermentation at Ditton Acquisition of IRB

Acrylic Polymers update

The plant has been constructed
The Polymers Plant The plant has been constructed We are now producing

Our strategy and how we operate
Phase 1 Establish our presence Meet customer expectation Phase 2 Innovate and differentiate Satisfy customer need Phase 3 Step change Deliver novel effects

What is the opportunity?
33% of top 10 Personal Care brand launches used this technology – 15,700 new formulations out of 56,700 total Widely used in a number of our markets with opportunity present to differentiate further Products from the technology are key for future opportunities in many of our markets Personal Care Crop Care Geo Technologies Coatings & Polymers Home Care

Investment in our capabilities
Experts already recruited in Process, R&D, Applications and Synthesis Experience from industry Understanding of how to build this chemistry Capability to make it and move forward Investment Investment Investment

Acrylic Polymers summary
Plant in operation Relevant global market potential of £500m Plan is to differentiate and satisfy well understood market needs Target markets are Personal Care, Crop Care, Home Care and Coatings & Polymers. Technology will be applied in all market sectors Supporting technology development with a number of academic partnerships Initial offerings will be Liquid Dispersion Polymers (LDP), Emulsion & Solution Polymers Multi-nationals approvals already in place

Biotechnology update

Bio-innovation at Croda
White Green Blue Biotechnology applied to industrial processes Biotechnology applied to plant and/or agricultural processes Biotechnology applied to marine and aquatic processes O.D.A White™ – Kiss Melanin Goodbye Plant cell culture Venuceane™ Biosurfactants - Sophorolipids IRB update Nautilus collaboration

White biotechnology – now
O.D.A. White™ Kiss Melanin Goodbye Yeast fermentation transforms vegetable oleic acid to dioic acid – a conversion that is not easily achievable by synthetic chemical means In skin care, O.D.A. White™ inhibits melanin synthesis by blocking the translation of Tyrosinase mRNA. Oleic acid HOOC CH3 COOH C18:1 Dioic acid / OctadeceneDioic Acid

White biotechnology – next
BIOSURFACTANTS BIOSURFACTANTS

Sophorolipid biosurfactants
Green Industrial and home cleaners Highly surface active SOPHOROLIPIDS Surfactants for cosmetics Anti-microbial Anti-microbial uses Biodegradable Crop Care adjuvant for pesticides Adaptable Other applications e.g. soil remediation

Green biotechnology – now
Plant Cell Culture A New Process for Green Efficacy Use of undifferentiated plant cells to synthesise targeted phytomolecules Unlimited availability - no reliance on crop harvest or seasonality Sustainable approach not taking up valuable farming land No fertilizer, no pesticide, no preservatives Enhanced yields of the phytochemicals of interest compared to whole plants extractions

Green biotechnology – now

IRB update Business integration progressing well
Technical team fully integrated with Sederma, product efficacy testing underway Fantastic response from our customers to the technology and the potential opportunities Growth plans in place Barriers to entry for this technology are very significant – we are way ahead of the competition A number of multi-nationals have coded products since - and as a result of the acquisition

Blue biotechnology – now
Venuceane™ Cosmetic active produced by fermentation of thermus thermophilus Marine extremophile micro-organism from deep sea hydrothermal vents High pressure (200 bars) High temperature (about 75°C) No light Little oxygen Toxic environment rich in free radicals Survives by synthesizing an enzymatic cocktail which also offers beneficial properties for the skin

of marine biodiversity
Blue biotechnology Oceans cover 70% of the earth’s surface yet only 1% of marine biodiversity is known

Nautilus collaboration
4-year project Exclusive products Targeting novel actives & ingredients

New bio-manufacturing unit

Biotechnology summary
Investment in fermentation plant at Ditton and IRB fall within this platform We strongly believe biotechnology is a significant disruptive technology offering step-change opportunities in Personal Care, Health Care, Crop Care and Home Care markets Biosurfactant launch planned for 2013 Technology is aligned with drivers in our markets and is a logical place for Croda to be Global partnerships in green, blue and white biotechnology Strong internal know-how developing

Pharmaceutical Omega-3 update

Co-funded investment in pharmaceutical Omega-3 capacity at Leek Investment supports both pharmaceutical and nutritional businesses Now fully operational

Site successfully inspected by FDA for supply of Active Pharmaceutical Ingredients (APIs) Early stage supply into generic Omacor market in Europe Major North American Market probably inaccessible until 2017 Major project with US partner for non-Lovaza application

Key condition specific areas for Croda Cardiovascular Parenteral nutrition Elevated blood triglycerides Brain development / maintenance Eye health

Barriers to entry Regulatory approval Technology Manufacturing know-how Reputation

Enterprise Technology summary
Now a global function, appropriately resourced Several bolt-on targets identified and being progressed Internal technology developments progressing well Global connectivity with SMEs and Academics Challenging expectations but confident of achieving

Innovation in Personal Care
Kevin Gallagher – President North America

Provide an understanding of our position in the market Learn more about the many niche opportunities Provide a greater insight into our innovation culture Highlight barriers to entry

The Global PC market by region
Value £bn (2011) Growth CAGR (2006 – 2011) World 211.6 5.0% 4.9% Asia Pacific 62.1 5.2% 4.6% China 14.7 12.5% 12.3% India 4.4 20.0% 15.1% Australasia 3.8 2.8% 3.7% Latin America 34.8 10.0% 12.0% Brazil 20.2 8.8% Middle East and Africa 9.3 11.8% 11.7% North America 36.1 1.9% Europe 66.3 2.4% 3.2% Russia 6.6 7.1% 9.6% Source - Euromonitor August 2012, retail prices Note the above information excludes fragrances, OTC Health Care & Oral Care

Our position We sell thousands of products to thousands of customers
Intimate relationship with customers big and small Our ingredients feature in up to 80% of SKUs launched by the top multi-nationals Our market share is 6 – 8% Our ingredients are used at small inclusion levels Provide differentiation Difficult to remove Performance for pennies Formula less than 10% of our customer’s cost Our ingredients are a negligible cost in relation to the cost of product to consumer

Niche is our focus Understand market needs
Anticipate future unmet needs Understand “Structure – Function” Connect needs with function Identify structure Create new product Develop performance data Communicate benefits Re-communicate benefits Get feedback from market Next new product? Align marketing platforms with research and development projects

Innovation of new and cool ideas is the key to customer loyalty
The Niche is our customers’ speciality and provides exactly what they want “Wow, this product sounds like it was made just for me!”

Our Niche Discovery Process™

Skin and hair care innovation
Conditioning Colour Unique performance claims Sun protection Anti-ageing

Rejuvasoft™ Simple conditioning solution Just add water
Conditions and moisturises Softens hair Creates a wide range of product types with a single ingredient Proven performance comparative to leading brands Simplifies product labels Has label appeal “Silicone free” “Sulphate free” 25 panellists Preferred the leading conditioner brand 24 panellists preferred the conditioner with Rejuvasoft™

VibraRiche™ Enrich Your Color Delivers more vibrant hair colour
Improves the shine of hair dye systems Increases the softness of hair Provides excellent conditioning and detangling New test methodology: The Hair Color Vibrance Factor™

Keramimic™ 2.0 Provides targeted, intelligent repair to the most damaged areas of the hair's surface Highly specialized, keratin derived conditioning agent Matches peptide sequence present in human hair Developed using the most recent advances in proteomics

KeraDyn™ HH “You can tell her hair is healthy by the way it moves…”
Restores healthy hair dynamics to damaged hair Reduces inter-fiber friction and enhances fiber alignment for better hair movement No build-up on the hair Cold processable Suitable for clear systems

Solaveil™ SpeXtra range
2011 Cosmetics & Toiletries Best New Technology Winner Globally approved with Ecocert validated options available Physical shield to reduce UV-induced free radicals within the skin Unprecedented broad spectrum protection No compromise on SPF efficacy Silky, talc-like skin feel

Legance™ Anti-aging of the legs Reduces leg discomfort
Refines, firms and beautifies Encourages healthy circulation Reduces appearance of unsightly veins Lessens water retention and swelling of legs and ankles Basal 3 min Legance™ Circulation Dynamism Placebo

Patented products’ sales growth
North American Personal Care Sales

Barriers to entry Marketing memory
Product and ingredient understanding Subject matter experts Innovation in our DNA Marketing mojo We can reach out and touch them Same spirit of innovation in approach “Inform, inspire and entertain” High tech and high touch Direct relationship with customers Large and small Relationships valued

Summary Innovation at record levels
Open innovation with our large multi-national customers increasing all the time Many new niche opportunities Barriers to entry increasing

Innovation in Health Care
Sandra Breene – President Consumer Care Europe

Provide an understanding of our position in the market Make you aware of the new niche opportunities in excipients and nutritional end markets Highlight the main barriers to entry

Health Care Excipients Pharmaceutical Dermatological Animal Health
Nutritional Supplements Functional Foods

Global Health Care macro data
Pharmaceutical Dermatological Supplements Animal Health Accessible retail market £3.4bn £750m £120m £490m Growth rates 7% 6.7% 6.5% Key trends Less APIs Instability Insolubility New respect for excipients Cosmoceuticals Improved patient compliance Novel delivery forms Condition specific lifestyle products Water-resistant Green vaccines Pet Care

Our current position Opportunity to penetrate the vast pharmaceutical and veterinary markets Focus on liquid dosage excipients for high value applications Industry leader in lanolin ingredients and high purity excipients Leader in Omega-3 concentrates Fastest growing segment of supplement industry Delivering performance benefit ingredients Relationships with key players Broadening network of contacts to include Marketing, Brand and Innovation Management

Healthy families, healthy business
On sunny days, Solaveil™ can provide medicated sun protection Soothe spring allergies with high purity esters for nasal sprays Beating headlice with novel formulations Kill dog fleas with Spot-ons containing Super Refined™ ingredients Delivering sparkling smiles for those with sensitive teeth Snapshot of current business applications. Differentiated products going into niche applications and global markets Medicated Sun Care Formulation for sensitive skin – Solaveil XT100, supplied to Stiefel (GSK) Sensodyne Toothpaste formulation – Adinol CT95, £3m account SR Crodamol HR and SR Oleic are used in Mohrus medicated patches in Japan to relieve lower back pain Cithrol GMO HP is used in nasal sprays Incroquat TMS is used in head lice treatments and has generated $1mUS worth of business in 2012 SR DMI is being used in the Frontline spot on treatment for Merial Omega-3 supplements offer a new generation for pet nutrition Children love the new lemon flavoured omega 3mulsion™ Super Refined™ products used in medicated patches to relieve lower back pain

Future growth in excipients

Future growth in excipients
Focus of key platforms Stability Solubility Formulation Focus Strengthening market credibility External relationships Published trials Profile Excipients Customer intimacy Strong project pipeline Formulators friend Commercialisation New products and performance data Innovation

Delivering growth with Crodex™ M
Crodex M is a skin-friendly, SLS-free ingredient Aesthetically pleasing sensorial properties to encourage patient compliance The market need for this product has been driven due to much negative publicity on the damaging effect of SLS

Aqueous cream is heavily prescribed by doctors for the treatment of eczema. However, there has been a number of high profile studies (such as the study performed by Richard Guy and Manda Tsang pictured here bottom right) that the use of Aqueous Cream BP for eczema treatment is actually detrimental to the skins’ natural barrier and is in fact contributing to skin barrier damage and the exacerbation of eczema. The negative effects on the skin barrier caused by the application of Aqueous Cream BP have now been attributed to the presence of SLS in the formulation. This is a relatively inexpensive surfactant used to emulsify the paraffin in to an oil-in-water emulsion. It is frequently used in personal care wash-off applications as it is a high foaming detergent, but it is also a well-known skin irritant, that can increase the permeability of the skin barrier.

This diagram shows the damaging effects of aqueous cream on the skin. The highly regarded Guy and Tsang study showing the detrimental effects of SLS on the skin, was reproduced in-house and very similar results were obtained… Those that used aqueous cream for a 3 week period saw a decrease of the stratum corneum thickness by 12% and a mean increase in baseline TEWL (transepidermal water loss) of 18%. Sensitive skin deserves better > Crodex M is an SLS free alternative. Launched at Health Care conference and at CPHI 2012. The damaging effect of Aqueous Cream containing SLS Sensitive skin deserves better – Crodex™ M is an SLS free alternative

Delivering growth with Super Refining™
Unstable Active Pharmaceutical Ingredients (APIs) for sensitive applications require highly purified excipients Cancer treatment Ophthalmic, optic, nasal Our Super Refining™ process removes polar impurities from standard excipients Colour, odour, taste Peroxides & secondary oxidation products Heavy metals

Delivering growth with Super Refined™ Arlasolve™
High purity, water white liquid with excellent solvent properties Delivery enhancer, ensuring APIs get to where they are most needed in the skin Currently used in a number of projects to deliver ibuprofen through the skin Graph shows that the addition of just 10% SR Arlasolve DMI to a formulation can result in a 15% increase in the amount of active delivered into the epidermis. There is a significant opportunity to supply SR Arlasolve DMI to Dolorgiet in Germany for their “Dolgit Mikrogel” product. New business for This business will be worth £600k in 2013.

Delivering growth with Super Refined™ Oleic Acid
Oleic acid is a known penetration enhancer, Super Refining™ makes the excipient more skin-friendly Medicated patches have many uses and are widely prescribed in Japan to relieve muscular back pain The patch needs to protect and not damage the skin barrier High sales of Super Refined™ Oleic Acid Intercellular leakage % Less Irritation Secondary lipid oxidation products have been shown to cause cellular irritation. By removing these impurities through the Super Refining process, cellular damage, intercellular leakage and irritation potential is reduced. In vitro testing with Super Refined Oleic Acid NF, as compared with a standard, has shown a clear reduction in intercellular leakage1 - an indicator of skin irritation potential - after incubation for 8 weeks at 50°C . This benefit offers the formulator the option of reduced skin damage for an equivalent formulation. The patch needs to protect and not damage the skin barrier so Super Refined ingredients are appealing for these sensitive applications.

Future growth in nutrition

Future growth in nutrition
Continually differentiate Sustainability New products New processes PureMax™ brand Differentiation Drive growth of higher concentrates Move customer up the value chain Value Nutritional Quality as key differentiator 100% batch testing High purity and potency Quality Focus on providing end solutions to brand owners Condition specific and lifestyle Downstream

Delivering growth with Incromega™ 3mulsion
Novel delivery form Great tasting Child-friendly Convenience Quick-to-market New development driven by market demand for easier and better tasting omega 3 delivery systems Concentrated flavoured emulsion ideal for inclusion in dietary supplement stick-shots A tastier omega 3 option, well-suited to children Positioned to meet European Health Claims, one servingdelivering the omega 3 RDI Opportunity to go straight to the brands

Marketing innovations with the PureMax™ Brand
PureMax™ logo now used on 36 branded products

Marketing innovations with the PureMax™ brand
Meet Percy the PureMax™ Puffin End consumer marketing, educating on Omega-3 benefits PureMax.com consumer website Engaging with social marketing networks New ‘Fishing with Percy’ iPad app available from iTunes App store

Barriers to entry Our capabilities Manufacturing expertise
Technology differentiation GMP Understanding legislation Registration

Summary Differentiated product range supported by performance data
Significant opportunities, driven by market needs Industry-leading manufacturing, technology and regulatory know-how provide barriers to entry Continued potential for value creation

Latin America – Capitalising on growth
Nick Challoner – President Latin America

Provide an understanding of our facilities in Latam Highlight emerging trends within the region Highlight the technologies and products transferring from USA and Europe into the region

Croda – a strong commitment to Latin America
Brazil – commercial, laboratory and manufacturing Argentina – commercial Mexico – commercial and laboratory Chile – commercial Colombia – commercial Peru – commercial Additional commercial and technical operations being developed Strengths – Sales, marketing and technical structure cover 90% of the GDP output from the region….we continue to invest in this area bringing increasing levels of customer contact and expertise Focussed on consumer needs…..and our response to them Local manufacturing Extremely broad portfolio covering a large number of segments Sales office Research and development Manufacturing We have invested and will continue to invest in the region

Regional training centres
Ensuring our customers know how, when and where to use our products As well as providing in house training to customers in our regional training centres we also undertake larger educational workshops in areas such as formulation design sensorial performance, texture and green/sustainable concepts. Continued investment in the education of our customers

Expanding in high growth markets – R&D
Formulation support Customer academy development Focused new product development and applications research Responsive technical service Mexico City, Mexico Being able to formulate/collaborate with our customers in their own region is of major benefit in generating customer intimacy and understanding. It also helps us to understand and respond to their needs, as we have done with our latest product launch Filmperform H. Campinas, Brazil Investment to continually move ever closer to our customers and their needs

FilmPerform™ - performance hair care
Volume control Improved detangling and combing Frizz control Softness and silky sensory attributes Through our strong understanding of consumer need generated through high levels of customer contact we developed Filmperform H to capitalize on the high growth combing cream market in Brazil. It is a blend of acetylated fatty alcohols of vegetable origin that imparts high substantivity to the hair fibers. Acts as an emollient additive for hair formulations, improving hair conditioning properties in several cosmetic forms. The blend was specially designed to provide exceptional performance for the hair!!! This product improves the conditioning feel in shampoos and conditioners. Product almost tailor made responding to the Brazilian consumer needs, Excellent Volume control for Brazilian Hair, in addition Offers excellent detangling and Comb ability properties. This product is aligned with Beauty and Ageing Megatrend, also will be Fit the Latin American market needs.

Regional manufacturing
High quality manufacturing environment satisfying local customer needs Capital spend in the region has equated to $XMn over the last five years We fully anticipate an acceleration of this investment in the coming years. Committed to local manufacturing and servicing of our customers

Expanding in high growth markets – capacity
Campinas, Brazil Increased esterification capacity All market sectors to benefit Excellent operations facilities Looking to provide additional infrastructure to capitalize on opportunities responding to key themes such as sustainability Also mention infrastructure projects such as effluent treatment and enhanced finishing lines Investment in capacity to drive exciting growth opportunities

Resourcing – customer contact is paramount
Locations where the number of employees in sales, marketing and technical functions have increased Total increase of over 20 people in the last 12 months Customer facing roles are also planned to be increased during 2012/13

Latin America – ideally positioned for growth
More consumers = increasing demand Economic stability and resilience Latin America is developing its own trends A positive approach to sustainable business practices

More consumers = increasing demand Population increase from 511m in 1999 to >575m in 2011 Increasing numbers of consumers at all levels of the consumer chain. Mass market consumers entering the chain. Middle income consumers becoming more prevalent. In Brazil the number of mid-level C class consumers rose from 44% to 72% of overall population between 2003 and 2009 Population increase from 511M in 1999 to >575M in 2011 Increasing numbers of consumers at all levels of the consumer chain. Mass market consumers entering the chain. Middle income consumers becoming more prevalent. In Brazil the number of Mid-level C class consumers rose from 44% to 72% of overall population between 2003 and 2009

Economic stability and resilience With Brazil and Mexico, two of the BRICM countries, Latin America is expected to yield substantial growth opportunities, and much faster growth rates than the developed western economies Greater stability to the financial crisis compared with other economic areas…….enabled swifter recovery Globally, it is expected that emerging markets will account for 1/3 of GDP by 2030 Currently it is 1/5 With Brazil and Mexico, two of the BRICM countries, Latin America is expected to yield substantial growth opportunities, and much faster growth rates than the developed western economies. Greater stability to the financial crisis compared with other economic areas…….enabled swifter recovery. Globally it is expected that emerging markets will account for 1/3 of GDP by Currently is is 1/5.

Latin America is developing its own trends A positive approach to sustainable business practices The Latin consumer is different enough to have their own needs built upon their own cultures and potentially large enough to be of real commercial interest Brazilian hair straightening Brazilian waxing Sustainability and biodiversity are well recognised as drivers of consumer interest and behaviour The latin consumer is different enough to have their own needs built upon their own cultures and potentially large enough to be of real commercial interest – Brazilian straightening, Brazilian waxing etc.

Consumer Care trends in Latin America
People in latin american countries migrate from Rural Areas to big cities looking for more opportunities, in terms of Income(high) , access to public services (Electricity/Water) , Education for their families(Public School and public Universities). All these create a new Way of Life in the Big Cities, over population, Traffic, Security issues, Overflow of information, Industrial side of the cities merged with neighborhoods. Companies are overflowing the market with advertisement promoting their products. People are looking for solutions to this new environment, Health-Well being (feel of protection for this new way of life), Beauty and Anti-Ageing (look younger and health look against time), Sustainability (People want to leave a world for their childrens) This is why Latam is aligned with the new Megatrends Innovation = Product Collagenesse (Belcorp) Local Account # 22 worldwide , presence in all Latin American Countries. Anti-Age product with 3X Filler (Sederma) Reduces 90% of Wrinkles in 14 days. Linked with Anti-Age and Beauty mega Trend, 3 types of packaging for different audiences for a Masstige Market. Demand for Differentiated Technologies: New way of cultivating crop, intercalate of species Soy – Corn , there is the need of new technologies while combining pesticides, you need products of good quality from Croda to deliver good quality of the products. Satisfaction of Unmet Customer Needs: PureMax is a unique omega 3 purification and concentration technology developed by Croda that assure to omega-3 consumers consistent, high purity standards wherever they see the PureMax quality seal on finished supplement products. Takeomega3 offers the highest concentration of omega-3 currently available in the UK. Our key aim is to provide only the best fish oil capsules, ensuring that our product gives an extensive range of health benefits for everyday living. Product In Brazil that will have the Puremax Logo on it in the next 3 months assuring that it will deliver what it promess. Innovation Satisfaction of unmet customer needs Demand for differentiated technologies Positioned well to capitalise on these trends

Personal Care trends in Latin America
Incroquat™ Matryixl™ Crodafos™ Ideal for hair repair conditioning Non-irritant emulsifier, new technology Good tolerance with antiperspirant agents Emphasise that as the trends in emerging markets develop there are opportunities for us to revisit existing products that are still part of our NPP portfolio. They may not be new to the global market, but they are new to many customers. The breadth of our portfolio means we always have new products….even from within the existing portfolio. Our job is to ensure they are positioned and promoted in a manner relevant to the market. 2 years younger in one month Activity of Matrixyl™ brings important anti-ageing effect on skin Fast rejuvenation for women & men Focus on delivering actives for skin treatment Sun care SPF boosting Moisturizing benefits

Crop Care trends in Latin America
Hybrid Adjuvants Atlox™ Atplus™ Increase crop production from available arable land Sustainability, Health and Well being are drivers that apply to the crop care market in Latam. More specifically: Need of food production from available arable land The increase of crop demand for energy or sustainable raw materials. Use of more eco-friendly raw materials To respond to these drivers, new technologies are needed in the market because new challenges appears such as: Increasing the performance/activity of the pesticides Dealing with more complex types of formulations due to the combination of actives Replacement of non eco-friendly materials but with good technical performance. Our polymeric surfactant technology fits well here. One example of each case below: Hybrid adjuvants – green innovative formulations and surfactant packages that improve the performance of actives reducing dosage requirements by as much as 50%. Internal note - No sales yet but around USD20 M in projects. Atlox 4915 – Polymeric dispersant that allows the combination of water dispersable actives in glyphosate solutions to solve the problem of weeds or crops resistant to glyphosate herbicide. As service, Supply of Atplus S10 in water soluble bags instead of drums, not just replacing NPE but also eliminating the disposal cost that the customer would incur if they would have to deal with empty dirty drums, collaborating at the same with the care of the environment. This is a current biz of around USD 3M Increased crop demand for the creation of energy or sustainable raw materials The use of more “eco-friendly” raw materials

Health Care trends in Latin America
Crodabase™ Incromega™ Super Refined™ Basis for high quality ointment formulations Ideal for use in cold process Increasing yields from livestock I think all 3 mega trends are relevant for Health Care market . Specifically needs for LatAm are Increasing yield from food animals - > Find improved ways to apply drugs/vaccines to animals that do not harm the leather or the meat, and do not leave the animal’s drug treatment in the meat -> Change traditional excipients to esters/alternate systems or find a way to improve permeation - > Croda solutions: Various differentiated esters, Arlasolve DMI PC and/or vegetable oils, for vaccines: Span 80 HP/Tween 80 HP Cithrol DPHS, Cithrol PG32IS Use of less/non-toxic excipients for food animals -> Same as above (esters DMI Veg Oils) Sustainable sources for fish oils -> Incromega range, OmeRx Wellness trend -> Incromega range Improving drug bioavailability -> Better for patient health -> OmeRx, Super Refined, HP products Reducing drug degradation over time -> Better for patient health -> SuperRefined and HP products Improved patient compliance for drug usage -> Patient non-compliance can stem from poorly formulated products, improving skin feel can improve patient compliance -> Croda’s Emulsifiers, Esters, Polymers, Lanolin To summarize key product focus based on these areas: Super Refined, HP technologies, Cithrol DPHS and PG32IS, OmeRx, Incromega, some differentiated esters, DMI and various lanolins. High purity Omega-3 ingredients to help maintain health and wellbeing Superior quality and high purity solvents and surfactants Maintain both the stability of the drug and of the finished formulation

Performance Technologies trends in Latin America
Urbanisation and Infrastructure Demographic development Smart-green Treatment & Sanitation, Automobile, Paints, Coatings. Reducing Bottlenecks for Developments - Water Treatment, Decorative Paints & Coatings, Oil & Gas Convenience, multifunctionality, ethical consumption / Middle class growth changing consumption habits of population => Cleaning products, Packaging, Adhesives, Electronics, Sustainable products, Automobile, Water Treatment, Food Smart Green and smart electricity management as well as on Bioplastics for different application, Biodiesel Lubricants Coatings & Polymers Polymer Additives Geo Technologies Home Care Communication and contact Developing customer needs Differentiated service and technology Intimacy of contact is of paramount importance in responding to these opportunities

Performance Technologies trends in Latin America
Maxemul™ and Priplast™ Priolube™ Natsurf™ Stabilising innovative water based coatings which contain less or no solvents to protect the health of the user and the environment 1 – Performance and Sustainability C&P – Stable emulsions attending Regulatory , solvent replacement drivers – Maxemul for Acrylic and Alkyd system Priplast 3192 for Polyurethane Dispersion - additional benefit of the adhesion on difficult substrate and long life, Lubes - Priolube 1965 to be used in high temperature chain oils – Competitor product could not attend oxidation resistance as P1965 and neither clean burn. Lubes – Crodamide O as friction modifier (consumption and energy) for gasoline – Chevron/Texaco/ Castrol application HI&I - Natsurf 265 as biod, high efficient surfactant Prifer 6813 as high efficient and biodegradable solvent Performance mainly Geotech – Kemelix 3727x for heavy oil demulsification is unique in the industry and is sold at least 50% above other demulsifiers Hypemer 1083 as high efficient inverter for polyacrylamide production (water treatment flocculants) Anfomul 2887 and 2457 as emulsifiers for explosives HI&I – Cirrassol PP823 as one way urine barrier with Aloe Vera for baby comfort High performing, high temperature chain oil additives which exhibit higher oxidative stability and lower environmental emissions Highly efficient and yet biodegradable surfactant for applications in household and institutional cleaning

Summary We are investing with speed in the region Sales and Marketing
Research and Development Manufacturing Increasing intimacy with our customer base Many new niche opportunities

Specialisation in Geo Technologies
Graeme Tweddle - VP Sales & Marketing Geo Technologies

Outline what encompasses Geo Technologies Highlight multiple niche opportunities in Oil and Gas Show how we are adopting Consumer Care approaches to this fast growing segment

What is Geo Technologies?
Oil and Gas Water Treatment Mining and Minerals Strong macro trends Customer, technology and product overlaps Thirst for innovation Focus and growth Positioned for profitable growth in Performance Technologies

Growth drivers - Oil and Gas
Unstoppable demand for energy 30% growth in demand by 2040 80% of growth in oil demand will be in developing markets Unconventional sources will dominate growth Environmental and regulatory pressures will grow further A market that demands innovation and improved environmental performance 2012, The Outlook for Energy: A View to 2040 – Exxon Mobil Schlumberger Oilfield Review, ‘Highlighting Heavy Oil’

Our position in Oil and Gas
Niche application areas We are not a service company The global Oil and Gas majors We don’t compete with our customers Why customers buy from Croda CRODA Integrated & non-integrated service companies Oil & Gas Majors Formulators & Blenders Halliburton Schlumberger Baker Hughes Nupark etc Ecolab Nalco MI Swaco Champion Clariant Technical Relationships Products that provide the solution when others do not

Our niches today – Oil and Gas
Heavy Oil Demulsifiers – Kemelix™ Oil industry produces 2.5 times more water than oil. By 2025 it will be 5 times The highest performance for heavy and difficult crude oils Unique materials, difficult to make, even more difficult to copy Shale Gas & Oil – Kemelix™ & Brij™ Series Huge global potential Kemelix™ act as emulsion preventers with improved environmental profile. Brij™ are bio based emulsifiers for high temperature acid fracturing Drilling Additives – EstaDrill™ Environmental challenges in drilling Water based rather than oil based drilling fluids EstaDril™ to provide lubricity and improved rate of penetration

Future growth dimensions – Oil and Gas
Where will growth come from? Today’s products around the world New customers, extra territories New products for existing applications Innovation focus Diversification into additional space New market areas for Croda as the industry develops Applying our core capabilities to the latest industry challenges

Future growth opportunities – Oil and Gas
Drilling fluid rheology control Deeper wells, higher temperatures, higher pressures Maintaining well integrity Bio-based technology Green and high performance Oil dispersant technology Oil mud thinner and dispersant Greener profile, allowing classification in the North Sea Applying our core capabilities to the latest industry challenges

Future growth – new generation Kemelix™
Next generation demulsifiers Improving on the best Breakthrough performance Higher performing Even greener In-house raw materials Lower cost process Investing circa £10m in USA and France in manufacturing capability Next generation technologies with robust IP

People and resources Resources A global business, a global team
Technical and commercial Established world class expertise already within Croda Latam and Asia A global business, a global team Continued investment planned in a fast growth market

Summary Oil and Gas Strong growth rates Compelling macro trends
Global in nature Thirst for innovation Investing to grow Positioned for profitable growth in Performance Technologies

Specialisation of Polymer Additives
Maarten Heybroek – President Performance Technologies Europe

Outline our niche within Polymer Additives Highlight differentiated opportunities within our niche Show how we are adopting Consumer Care approaches to this segment

Polymer market and growth development
CAGR Global plastic use is 225m MT in 2011 60% are polyolefins Global polymer market is 225 million tonnes Total market growth is estimated at 5.2% per year Polyolefins make up 60% of the total market Polyethylene 35.0% Polypropylene 24.0% PVC 17.0% Polystyrene 8.5% PET 8.0% Engineering polymers 4.0% ABS 3.5% Source: Applied Market Information LTD, 2011 Polyolefins Additives Market Overview

Macro and micro drivers
Population growth Health and well-being Energy and resource Population growth means more houses, cars, towns, cities, infrastructure and cabling Upwards social mobility and disposable income in emerging economies leads to a spend on more luxury goods including cosmetics and food. All require packaging that plastics solve. Traditional materials such as steel and concrete / bricks are often heavy and energy in-efficient. Plastics are replacing traditional materials with better processing and energy efficiencies in processing and in use. Increased food consumption and transportation Increased bottling and product sophistication Recyclability and light-weighting Increased polymer demand Increased performance

Plastics have inherent problems that require solving!
Our niches today Plastics have inherent problems that require solving! Slip Anti-fogging Anti-static Demonstration stations Plastic bags demo Polystyrene ball demo Hot fog demo

Global leader in our niche
The global market leader in Crodamide™ fatty amides for slip additives Back integration into our key raw material, high erucic rape oil Strong Uniqema synergies Atmer™ additives extended the portfolio further increase to our customer base Global sales reach Fragmented customer base Over 1000 customers globally Reputation with customers Innovation Quality

Growth strategy Organic growth
Diversify our portfolio into adjacent segments Strong market growth will help organic sales opportunities Adjacent market exposure with existing technologies New technologies in existing markets Diversify existing products outside polyolefins New product innovation

Organic growth driven by new polyolefin plants
77 new plants coming on stream between 2012 and 2015 49 of these are in Asia Pacific 25 are in China

Diversify into adjacent segments
IncroMax™ Market trend for polycarbonate to replace glass PC has high impact strength Clarity is key How does IncroMax™ help? Reduce surface friction Liquid product with no deposits on surface No effect on clarity

Diversify into adjacent segments
Wood Plastic Composites Driven by sustainability Made from recycled wood and or plastic Growing market particularly in Europe Untapped market High dosage levels

Summary Global leader in our niche A robust and profitable business
Diversified customer base Attractive growth opportunities

Investment and returns in Croda
Sean Christie – Chief Financial Officer

Purpose of presentation
Highlight how we have got to today’s returns Discuss the key measures used of evaluate investments in Croda Discuss different classes of capital investment Give direction for overall returns in Croda going forwards Other forms of investment are equally important to our future but are not considered here R&D Investment in people

Steady increase in ROIC post Uniqema
Uniqema initially depressed returns but steady increase in ROIC since 2006 Disposal of low return assets Steady improvement in business profitability All new, non M&A capital investment has higher return than Croda average

Disposal of low return assets since 2006
Proceeds Op. Profit Assume taxed at 30% Return foregone on disposal Food Service 7.4 0.8 0.6 8.1% Reflubes 62.0 4.0 2.8 4.5% Klang 9.8 0.0 0.0% Baxenden 13.0 1.1 6.2% Chicago 46.7 4.6 3.2 6.9% Emmerich 49.6 -2.1 -1.5 -3.0% Cremona 2.0 Total 190.5 8.4 5.9 3.1% Disposal of low return assets boosts average ROIC

Steady improvement in business profitability
Again, Uniqema initially depressed returns but steady increase in ROS since Exit from unprofitable products Initial re-pricing of Uniqema product portfolio Launch of higher margin and patented new products Significant overhead cost saving in retained business

Measuring investment returns
Key internal measure: DCF analysis Used for M&A, disposals and capital expenditure Our hurdle rates are far higher than our (sub 8%) cost of capital Projects are risky. High returns compensate for this risk Most small projects have returns far in excess of the hurdle rate Key external reporting measure: ROIC Post tax, includes all goodwill

Two ways of getting a high ROIC
Run a brilliant business Run your assets into the ground and never invest OR Be careful what you wish for…

Existing asset base Very well invested
Fixed assets £340m Intangibles £210m Most comes from acquisition of Uniqema in 2006 16 manufacturing operations around the world All the infrastructure is in place Land, building (including offices, canteens, toilets…) Utilities (heat, light, power) Effluent treatment

Investing in the business
2012 – 2014 >70% of spend in capacity expansion, new technology and energy reduction projects More than doubling investment in emerging markets versus 2008 – 2011 Forecast excludes M&A

Different classes of expenditure
Replacement capital expenditure Capex for growth Capex for energy reduction Capex for Group infrastructure Major acquisitions Smaller acquisitions

Replacement capital expenditure
Depreciation £32m Theoretically need to spend this to stand still – equipment does wear out Often some incremental return due to improvements in technology over time This spend does not add to the existing asset base so any incremental return, however small, improves ROIC

Capital expenditure for growth
Small capex can have VERY high returns and fast paybacks Stainless steel tanks, pipes and reaction vessels with computerised controls, just plug into existing infrastructure Major projects on existing sites take a bit longer to come on stream Acrylic polymers Marine bio-fermentation Pharmaceutical grade Omega-3 Green field site build require serious thought – will inevitably lose money initially before generating return but ultimate returns can be very high Singapore (1999)

Capex to reduce energy consumption
Chemical plants are big users of energy Energy costs will continue to increase over time Low commercial risk We are prepared to accept longer payback periods and lower returns on energy saving projects Wind turbine in Hull Landfill gas at Atlas Point

Capex for Group infrastructure
Can be costly and reduce returns initially Requires very careful planning (otherwise disaster is guaranteed) IT / communications in Croda Global single instance SAP system In place for over 10 years Recently upgraded to latest software and hardware versions Global communications network Video conferencing

Major acquisitions Big acquisitions are expensive and require thorough strategic analysis Acquisition premium May need to issue equity Contain infrastructure (land, offices etc) Very risky – multiple themes have to deliver to get a return (disposals, closures, overhead savings and business repositioning) Have profit from day one (hopefully) but tend to dilute ROIC initially before returns build Very visible Suitable candidates hard to find at the right price Anyone can do deals at the wrong price Uniqema – a great deal but immense work involved to deliver

Smaller acquisitions Smaller acquisitions less risky Lower cost
Can be built into existing group infrastructure (e.g. sales force, IT) Less risky – often just one basic idea in the strategic rationale IRB – they have a product development pipeline that our sales network can take to market

Where are investment returns heading?
ROIC and DCF are not directly comparable but over time give similar results Current ROIC is 23.7% and we would not expect internal capital expenditure to dilute this figure in the long term M&A evaluated on a case by case basis

Summary Croda is a well invested, high returning business
This is not going to change in the future

Croda Capital Markets Day

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