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Scott BaderAnnual Report 2017

12

There are no outsides

and the extent to which we all participated

F

e

Background

Scott Bader Company Limited is wholly owned as a financial and social investment by The Scott Bader Commonwealth Limited, a Company limited by guarantee and a registered charity. Scott Bader was formed by Ernest Bader in the 1920s as a merchant in chemicals. In 1951 he and others gave over ownership of the Company to The Scott Bader Commonwealth.

Everyone working for Scott Bader may become a member of The Commonwealth and, by this means, become a trustee holding, in common with other members, the shares of Scott Bader Company Limited. There are no outside shareholders. Godric Bader, Ernest’s son, is Life President of the holding company

Scott Bader must be profitable; the way we do business is driven by the guiding principles in our constitution. Today they are given practical expression by: the way we relate to the wider community; the service we offer our customers; the ethical standards by which we trade; our concern for the environmental impact of our manufacturing activities and products; the effectiveness with which we work together; and the extent to which we all participate democratically in the Company’s affairs. More information about Scott Bader is on our website at: http://www.scottbader.com/global.html

A substantial proportion of Scott Bader’s profits each year are devoted to charitable and community work, administered by The Scott Bader Commonwealth. Out of the 2012 results a donation of £176,000 was allocated by the Company to The Commonwealth with an additional £16,000 of donations paid direct to various charities during the year.

Scott Bader was formed by Ernest Bader in the1

Background

Scott Bader Company Limited is wholly owned as a financial and social investment by The Scott Bader Commonwealth

Limited, a Company limited by guarantee and a registered charity. Scott Bader was formed by Ernest Bader in the

1920s as a merchant in chemicals.

In 1951 he and others gave over ownership of the Company to The Scott Bader Commonwealth.

Everyone working for Scott Bader may become a member of The Commonwealth and, by this means, become a trustee

holding, in common with other members, the shares of Scott Bader Company Limited. There are no outside shareholders.

Godric Bader, Ernest's son, is Life President of the holding company.

Scott Bader must be profitable; the way we do business is driven by the guiding principles in our constitution. Today

they are given practical expression by: the way we relate to the wider community; the service we offer our customers;

the ethical standards by which we trade; our concern for the environmental impact of our manufacturing activities and

products; the effectiveness with which we work together; and the extent to which we all participate democratically in

the Company's affairs. More information about Scott Bader is on our website at: http://www.scottbader.com/global.html

A substantial proportion of Scott Bader’s profits each year are devoted to charitable and community work, administered

by The Scott Bader Commonwealth. Out of the 2014 results a donation of £198,000 (2013: £178,000) was allocated

by the Company to The Commonwealth with an additional £20,000 (2014: £24,000) of donations paid direct to various

charities during the year.

1

Background

Scott Bader Company Limited is wholly owned as a financial and social investment by The Scott Bader Commonwealth Limited, a Company limited by guarantee and a registered charity. Scott Bader was formed by Ernest Bader in the 1920s as a merchant in chemicals. In 1951 he and others gave over ownership of the Company to The Scott Bader Commonwealth.

Everyone working for Scott Bader may become a member of The Commonwealth and, by this means, become a trustee holding, in common with other members, the shares of Scott Bader Company Limited. There are no outside shareholders. Godric Bader, Ernest’s son, is Life President of the holding company.

Scott Bader must be profitable; the way we do business is driven by the guiding principles in our Constitution. Today they are given practical expression by: the way we relate to the wider community; the service we offer our customers; the ethical standards by which we trade; our concern for the environmental impact of our manufacturing activities and products; the effectiveness with which we work together; and the extent to which we all participate democratically in the Company’s affairs. More information about Scott Bader is on our website at: www.scottbader.com

A substantial proportion of Scott Bader’s profits each year is devoted to charitable and community work, administered by The Scott Bader Commonwealth. Out of the 2017 results a donation of £257k (2016: £538k) was allocated by the Company to The Commonwealth. In addition to this, £31k (2016: £30k) of donations were paid by Group companies direct to various charities during the year.

2

12

There are no outsides

and the extent to which we all participated

F

e

Background

Scott Bader Company Limited is wholly owned as a financial and social investment by The Scott Bader Commonwealth Limited, a Company limited by guarantee and a registered charity. Scott Bader was formed by Ernest Bader in the 1920s as a merchant in chemicals. In 1951 he and others gave over ownership of the Company to The Scott Bader Commonwealth.

Everyone working for Scott Bader may become a member of The Commonwealth and, by this means, become a trustee holding, in common with other members, the shares of Scott Bader Company Limited. There are no outside shareholders. Godric Bader, Ernest’s son, is Life President of the holding company

Scott Bader must be profitable; the way we do business is driven by the guiding principles in our constitution. Today they are given practical expression by: the way we relate to the wider community; the service we offer our customers; the ethical standards by which we trade; our concern for the environmental impact of our manufacturing activities and products; the effectiveness with which we work together; and the extent to which we all participate democratically in the Company’s affairs. More information about Scott Bader is on our website at: http://www.scottbader.com/global.html

A substantial proportion of Scott Bader’s profits each year are devoted to charitable and community work, administered by The Scott Bader Commonwealth. Out of the 2012 results a donation of £176,000 was allocated by the Company to The Commonwealth with an additional £16,000 of donations paid direct to various charities during the year.

Scott Bader was formed by Ernest Bader in the1

Background

Scott Bader Company Limited is wholly owned as a financial and social investment by The Scott Bader Commonwealth

Limited, a Company limited by guarantee and a registered charity. Scott Bader was formed by Ernest Bader in the

1920s as a merchant in chemicals.

In 1951 he and others gave over ownership of the Company to The Scott Bader Commonwealth.

Everyone working for Scott Bader may become a member of The Commonwealth and, by this means, become a trustee

holding, in common with other members, the shares of Scott Bader Company Limited. There are no outside shareholders.

Godric Bader, Ernest's son, is Life President of the holding company.

Scott Bader must be profitable; the way we do business is driven by the guiding principles in our constitution. Today

they are given practical expression by: the way we relate to the wider community; the service we offer our customers;

the ethical standards by which we trade; our concern for the environmental impact of our manufacturing activities and

products; the effectiveness with which we work together; and the extent to which we all participate democratically in

the Company's affairs. More information about Scott Bader is on our website at: http://www.scottbader.com/global.html

A substantial proportion of Scott Bader’s profits each year are devoted to charitable and community work, administered

by The Scott Bader Commonwealth. Out of the 2014 results a donation of £198,000 (2013: £178,000) was allocated

by the Company to The Commonwealth with an additional £20,000 (2014: £24,000) of donations paid direct to various

charities during the year.

1 3

Chairman’s Statement

2017 has, once again, been a year of mixed results. Our focus on HSE has borne fruit and we have been able to improve our health and safety statistics.

It is worth recognising that, although we managed to reverse the negative HSE trend, we still have plenty of scope to improve further.

Our financial performance suffered under very unfavourable market conditions. Unforeseen raw material price increases, which were not related to oil price fluctuations but rather resulted from capacity shortages, substantially eroded our margins. We managed to only partially, and with delay, pass the price increases on to our customers. Consequently, our profit fell short of expectations and our cash position was also reduced due

to higher financing requirements of working capital.

We expect the competitiveness and cost/price pressures of our core markets to stay and we also see the regulatory requirements in the chemical industry increasing further due to safety and environmental concerns. Our way of countering these developments is by playing to Scott Bader’s strengths of product innovation and technical service, both of which are deeply rooted in our value system. Our strategy going forward is to build on Scott Bader’s presence in market niches which highly value our strengths. We have introduced the Scott Bader sustainability project and a vision 2036 which is built around the Three Pillars: Humanity – Ecology – Business. Becoming a sustainable company in the chemical industry is in line with our company ethos and with our Founder’s vision for Scott Bader.

The Scott Bader sustainability project was developed in cooperation with The Natural Step; a consulting group specialising in helping companies to act in a more environmentally and socially responsible way. It has received widespread support not only from

the Group Board and the Executive but also from all other governing bodies and from our colleagues worldwide. This project also served as a great example for the way Scott Bader as a group and its leadership in particular has achieved alignment over the course of the past two years.

This growing alignment has also been demonstrated in the discussions around another significant project and emotive subject, Rewards & Appraisal. In order to increase our competitiveness in the market for talent and qualified people and furthermore in order to improve our people development efforts, in 2016 we started to overhaul our colleagues’ payments and also our appraisal systems. Despite the emotive nature of this topic, the discussions were held in a very constructive, albeit challenging, manner and the piloting of the first phase has just been started.

Karl H. Funke

4

Chairman’s Statement (Continued)

The main focus for this coming year 2018 will continue to be improving our Operational Excellence. Making significant improvements on this front is the biggest challenge we have set for ourselves and sustainable results can only be achieved through continuous investments in training our people and by everybody enhancing his/her own level of accountability and responsibility across the whole Group.

I would like to thank all our colleagues, customers and business partners for their trust and support. It is through them that we continuously move towards our vision and make our mission a reality: Making a positive difference to every life we touch.

Karl H. Funke

5

Left to right:Didier Mathon, Elected Director; David Rossouw, Elected Director; Steven Brown, Elected Director; Karl H Funke, Chairman; Jean-Claude Pierre, Group Chief Executive; Calvin O’Connor, Non-Executive Director; Malcolm Forsyth,

Executive Director; Peter Hartill, Non-Executive Director; Andy Forrester, Executive Director

6

Chief Executive Officers StatementHealth, Safety & Environment (HSE)

We have seen substantial progress in 2017 in regard to Health and Safety. Our Lost Time Incident Frequency Ratio (LTIFR) reduced 34%, being now better than industry standard, while the number of lost work days reduced by 79%. Yet our journey towards world class performance will require further step changes. In 2018 our Process Safety Management will continue to develop across all the sites and there will be a greater focus on behavioural safety. The regulatory landscape is changing at an accelerating pace. We are gearing up our capabilities to not only meet new demands but go beyond compliance.

General Business Performance

2017 has been a very challenging year as we faced the worst raw material situation for more than 20 years. Not only did prices of our main raw materials reach their peak but availability also impacted our ability to produce. With 50 raw material “force majeure” incidents in 2017 versus 7 in 2016 and prices totally disconnected from the oil price, we seem to have entered into a new era where our suppliers, through years of consolidation, are able to take the best advantage of their dominating market positions.

We faced further headwinds in the Middle East where lower governmental budgets slowed down a number of regional projects and where the Qatari economy was hit by the regional geo-political situation, and in South Africa which technically fell into recession in mid-2017. As a result our global volume shrank by 1.3%.

The Brexit vote had very little effect, if at all, on our UK demand, a situation which may be different in 2018.

65% of our sales are now generated in Europe (62% in 2016). The UK, our largest market, represents 22% of our Global sales as in 2016.

Profit and Cash

In 2017, though sales grew by 13.8% at £202m, the Group operating profit was well below expectations at only £5.5m (2016: £9.4m). The main reason for this poorer performance versus 2016 was the raw material price situation we faced. There was also a £1.3m year on year negative impact due to foreign exchange losses in 2017 compared to gains in 2016. Net cash at year end was negatively impacted by the need for an additional £4.3m of working capital financing, with cash reducing from £13.0m (2016) to £9.0m. We continued to invest above our depreciation rate: capital expenditure in the year was £6.6m.

Sustainability

After defining a new 2020 strategic intent and the related organisation mid-2016, which we continued to roll out in 2017, we developed during 2017 a sustainability journey to set the long term objective of Scott Bader. This extensive work based on “The Natural Step” framework allowed us to define our 2036 Vision and the 7 strategic goals which will help us reach this vision.

Jean-Claude Pierre

7

STRIVING FOR EXCELLENCEWe are purpose-driven, fully meeting the expectations of our customers by continuously improving all our processes and products to deliver world-class business performance.

OUR 7 STRATEGIC GOALS

We envision a world where humanity thrives, without compromising the natural systems it depends on. Scott Bader provides essential technologies that address the challenges of our changing society and in doing so is a renowned, trustworthy partner that is globally admired for harnessing the power of chemistry as a force for good.

ACTING BEYOND COMPLIANCEWe are a trusted leader, proactively driving a safe, transparent and ethical chemical industry, promoting exemplary conduct to deliver products and processes that safeguard people and planet.

PIONEERING THE CIRCULAR ECONOMYWe are a recognised circular economy practitioner, collaborating with our partners to optimise our combined resources for a waste and harm-free, closed-loop value chain.

DELIVERING VALUE TO SOCIETYWe are advocating sustainability, sharing our know-how, profi t and Commonwealth vision, and supplying products and services that provide real value to society.

UNLEASHING COLLEAGUES’ POTENTIALWe are driven by the diversity and creativity of our people who are empowered and motivated to make a difference through initiative and innovation at every level of the organisation.

PARTNERING FOR SUCCESSWe are at the heart of a global network of mutually-benefi cial partnerships with suppliers, customers and world-leading allies who are engaged with our mission and share our vision.

PROTECTING OUR ENVIRONMENTWe are a strong ambassador for the transition to a sustainable planet through our responsible use of our natural resources, our stewardship of clean energy and fresh water, and our commitment to zero emissions.

STRIVING FOR EXCELLENCEWe are purpose-driven, fully meeting the expectations of our customers by continuously improving all our processes and products to deliver world-class business performance.

OUR 7 STRATEGIC GOALS

We envision a world where humanity thrives, without compromising the natural systems it depends on. Scott Bader provides essential technologies that address the challenges of our changing society and in doing so is a renowned, trustworthy partner that is globally admired for harnessing the power of chemistry as a force for good.

ACTING BEYOND COMPLIANCEWe are a trusted leader, proactively driving a safe, transparent and ethical chemical industry, promoting exemplary conduct to deliver products and processes that safeguard people and planet.

PIONEERING THE CIRCULAR ECONOMYWe are a recognised circular economy practitioner, collaborating with our partners to optimise our combined resources for a waste and harm-free, closed-loop value chain.

DELIVERING VALUE TO SOCIETYWe are advocating sustainability, sharing our know-how, profi t and Commonwealth vision, and supplying products and services that provide real value to society.

UNLEASHING COLLEAGUES’ POTENTIALWe are driven by the diversity and creativity of our people who are empowered and motivated to make a difference through initiative and innovation at every level of the organisation.

PARTNERING FOR SUCCESSWe are at the heart of a global network of mutually-benefi cial partnerships with suppliers, customers and world-leading allies who are engaged with our mission and share our vision.

PROTECTING OUR ENVIRONMENTWe are a strong ambassador for the transition to a sustainable planet through our responsible use of our natural resources, our stewardship of clean energy and fresh water, and our commitment to zero emissions.

Chief Executive Officers Statement (Continued)

We will deliver against these goals through waves of initiatives. Wave 1 will be deployed over 2018 and 2019, with a particular focus on getting our own house in order through “striving for excellence”.

Key Highlights of 2017

Humanity/People

• Coaching Training was deployed across the Group. Approximately 110 colleagues were trained to develop a more enquiry-led style of management to increase empowerment and push decisions to the right levels in the organisation, improving trust and a sense of autonomy.

• Each of our manufacturing sites had a Company Employee Ownership Day, bringing colleagues together in the spirit of Scott Bader. A lot of team work, learning and fun!

• Scott Bader UK, our largest site, was recognized with the Investors In People (IIP) Gold Award. About 2% of the 10,000 companies accredited IIP are granted a Gold Award. It reflects companies’ effective management and development of their people. As IIP stated to us: “Your success not only reflects your own commitment but is also an acknowledgement of the effort of everyone who works for your organisation.” As IIP becomes more and more known internationally, we will explore if this accreditation can be deployed beyond our Wollaston site.

• Our Values in Action program was made global this year. It recognizes teams or individuals who role modelled, though their actions, our values of commitment, fairness, team working and responsibility.

• As our Amiens site general manager moved to a new global role, we did not replace him and setup a collegial management structure instead. This is an example of our initiative towards more self-management.

• At our Dubai site, we further improved the working conditions by improving the airflow in our production area, vital in such hot weather conditions.

Ecology

On the environmental side, we continued our yearly initiatives to reduce our environmental impact. We, for instance:

• Reduced by 4.7% our Group energy consumption per tonne manufactured. UK was a 9.5% reduction, Dubai a 7.5% energy reduction and ATC an 8% reduction.

• Switched to 100% of our electricity from renewable sources in Croatia with the UK switching over in April 2018. • Continued LED lighting upgrades at each site.• Replaced aging equipment to address emissions and waste.• Reduced waste and emissions with new style sample valves being installed around the Group.• Reduced at our South African site our general waste for a 2nd year running by 50% and by 80% our semi-solid

waste.• Installed natural light systems on the roof of our Dubai plant buildings to reduce our energy consumption while

enhancing working conditions.• Reduced our waste disposal cost by 15% at our Croatian plant.• Progressed our plans to install photovoltaic panels in 2018 at our South African and Dubai sites.• Introduced recyclable and bio-based packaging systems in America for despatching product samples.

We also had our first bio-derived resin approved for a major application. It will allow us in 2018 to source at cost competitive price a new bio-derived raw material that we will be in position to use in an array of applications.

Business

Business Areas Performance• Composites Europe volumes were up 4.5% versus 2016, driven by a strong market demand across regions

and despite the aggressive pursuit of market share by the largest market players. Our margin per ton shrank significantly as we have not been able to pass the full raw material price increase we faced.

• Specialty Polymer business faced a very challenging year. Volumes were down 4.9% and after two years of improvement margin per ton decreased. The price elasticity in this market is very slim, highlighting the difficulty of our market positioning. We have engaged several initiatives to address this challenge as we remain fully committed to that business.

• The Adhesives business continued to be a strong growth area for Scott Bader across the entire product range and across regions. Volumes were up 9.5% and we were able to maintain our margin level thanks to a better product mix.

8

Chief Executive Officers Statement (Continued)

• Our FST (Fire Smoke and Toxicity) sales volumes were strong (+10%) but with mixed results across the globe. We have an extensive product development in progress to ensure we have all necessary products and certifications to compete in all markets we have targeted.

• Gelcoat sales were up 4.4% with strong performance across the globe but here also our margins dropped. Our colour on demand system, Geltint, continued to be deployed according to our plans. Our styrene-free gelcoat entered full production.

Besides these established businesses, we continued exploring a number of new opportunities as defined during our 2020 strategic intent and now guided by our 2036 vision. This field is dynamic and the established process allows us to continue to the next stage or stop projects promptly.

Site Performance

• Croatia had a good year with growing volumes and sales even if profit was below the record of 2016. Croatia has now fully integrated the Group Alkyd production.

• North America volume grew 4.3%, slightly below our objective. We strengthened our team to support our business development and the pipeline of projects we have. Our Canadian plant achieved a record output.

• France had another strong year but despite record volumes profitability has been negatively impacted by the raw material situation and cost of quality. A new management structure was put in place as a result of our strategic intent. Our new investment in a state of the art mixing technology provided a needed capacity boost but further debottlenecking of the site is required. This is a top priority for 2018.

• The UK site margin was below our expectations (-6%), negatively impacted by our difficulty to pass on price increases at some large customers and the cost of quality.

• South Africa was negatively impacted by the raw material situation and the economic recession. Our volumes were 4.8% below prior year and margins down 14%.

• Scott Bader Middle East faced a double challenge with raw material price volatility and the regional geo-political situation (Qatar). Though volumes were 8% below our objectives, margin budget was achieved through better product mix, very tight cost control and regional synergies between Scott Bader sites. We continue to strategically strengthen our South East Asia business.

• In China, we continue growing selectively. We strengthened our team to deliver the business pipeline we have.

Operational excellence remained a key focus but we had a mixed performance. Though our number of quality incidents further decreased (-23%) and was the best in 7 years at our main site (UK), our cost of quality increased. In Amiens we invested £1.2m in a state of the art mixing technology which will help bring our quality performance well above the current levels. The transfer of our alkyd production from UK to Croatia was on time and on budget. We also introduced a global CRM system to help us improve a number of sales related processes.

Joint Ventures

In Brazil we put new capacity in place to meet demand and further improve quality. Net profit stayed at a satisfactory level. In India, we further improved our profitability and strengthened our technical capabilities to sustain growth. In Saudi Arabia, Scott Bader and Abahsain decided that the most efficient way forward was to dissolve the existing JV and replace it by a supplier / distributor relationship.

Looking forward to 2018

The year has started with a strong order flow but raw material availability and price remain major concerns across the globe, although Brexit is perhaps the biggest uncertainty we face. It is too early to say what the net outcome will be for Scott Bader but it may have a major impact. We expect a solid demand in Continental Europe, a still challenging situation in the Middle East and South Africa, and a game changing year in North America and China. With the number of business and product developments we have in the pipeline we remain confident that 2018 profitability will improve versus 2017. Striving for Excellence is the priority topic of our wave 1 initiatives towards our Vision 2036, and should contribute strongly to our 2018 profits.

Jean-Claude PierreGroup CEO

9

10

OUR CHARITABLE ACTIVITIESThe income of the Charity is used to support charitable organisations around the world, whose purposes are in empathy with the Charity’s objects. Being established for 67 years, the Charity has a good reputation for supporting charities locally, nationally and internationally. The chart shows how approximately £204,000 was distributed during 2017.

HOW THE GLOBAL CHARITY FUND IS ALLOCATED:

Local Funds

Funds are made available to all the companies in the Scott Bader Group (proportionate to the number of people employed at each location). Usually this will be to support the work of charities situated near to or associated with each company. Explanations of some of projects supported during 2017, are below:

Life President’s Fund - £7,500 is made available for distribution to charities chosen by our Life President, Mr Godric Bader and 9 charities were supported from his fund in 2017.

Small International Fund - £20,000This fund provides small grants of £500-£2,000 to support international projects that do not fit the criteria of the local or central fund. In 2017 - 17 charities received funding for educational, environmental, sustainable livelihood and care related projects.

38.7%

33.2%

10.0%

2.1%

16.0%

DisabilitiesSustainable Livelihoods

HealthCommunity General

Education/Training

There are several ways that charities become aware that they can apply to the Charity (i) via repeat applications; (ii) networking; (iii) word of mouth from previous recipients of funding and (iv) via the information posted on the company website.

The Charity’s income is described as a Global Charity Fund because (a) the income is achieved through the work of the people employed by Scott Bader Group around the world and (b) it is used to support charitable work in various locations globally.

The Rainbow Centre, Sri Lanka -Scott Bader funded the cost for employing six additional teachers at the Centre.

SOS Children’s Villages, Philippines -Scott Bader funded their Job Readiness Project.

SOS Children’s Village, Zagreb -Scott Bader supported the SpecialistIntervention Programme.

11

CENTRAL FUNDWe support two to four large projects annually to the value of £25,000. To involve our colleagues, Commonwealth Members worldwide vote at the AGM to determine from the six projects proposed which four are to be supported. The four successful charities in 2017 were:

African’s Initiatives - £25,000 to complete the final year of their ‘School AIDS Free Generation Project’ in Kilimanjaro, Tanzania, which works with 1,792 Primary school children, parents, teachers and community members in areas with high levels of AIDS orphans. The project increases awareness and understanding of HIV, dispels harmful myths and provides early intervention, testing, treatment, care and counselling.

EDUKAID - £25,000 to build 3 pre-primary classes in rural Mtwara, Southern Tanzania and to fund a teacher and teaching assistant for each of these, thereby providing a learning environment and the chance of a better life for up to 400 children.

PUMP AID - £25,000 to build water pumps and sanitation facilities at two Community Based Childcare Centres (pre-schools) in Malawi, improving life chances for young children and their communities. The project will give 1,400 people access to safe water, teach safe hygiene and sanitation practices and boost nutrition through kitchen gardens, dramatically reducing child illness and mortality rates and improving attendance and achievement in early years.

Self Help Africa - £25,000 to provide employment opportunities for 600 vulnerable young people in a rural and poverty stricken region of Northern Uganda. To achieve this, young people will receive the education, resources and support they need to build profitable livelihoods in the agriculture sector.

Disaster Relief FundThe Charity supported the victims affected by Knysna Fire Disaster in South Africa by donating £2,500 to Youth of Christ – in support of their relief work.

In addition to the donation to the Charity the Company also provided£20,000 under the Group Matched Funding Scheme. 48 charities, locally, nationally and international received double what they would have received due to the company matching £1 for £1 the amounts raised by individuals.

Scott Bader Group Volunteering Policy - everyone in the SB Group has an additional day’s paid leave each year for voluntary work. Colleagues used their day in a variety of ways - reading with children; working at foodbanks and homeless charities; working at a nature reserve and local parks; Circa 100 people across the group used their volunteering day in 2017 compared to (85 in 2016).

12

Sustainability Manifesto

When Ernest Bader gave his company to his employees in 1951, he already then laid the foundation for a more sustainable company model, paving the way to what is now often referred to as industrial democracy.At the time, the company had also sensed that the products it produced were posing challenges to the environment, but the available knowledge and tools were basically non-existent to develop a bold environmental vision.Since then Scott Bader has always been mindful of minimizing its environmental footprint beyond strict compliance, but has lacked a systemic and structured approach across the globe.

With the current knowledge and new technologies available, the overall awareness about the state of the natural and societal systems is rapidly growing within society and amongst our clients. In that context Scott Bader now feels confident to develop a more ambitious and robust roadmap to further contribute to a more sustainable society. Not only do we feel the responsibility to do so but we also see sustainability thinking as a great opportunity to foster innovation to create value for the entire system: the environment, the society and Scott Bader.

Sustainability, or rather sustainable development, can be defined in many ways. We use the definition from the Brundtland Commission (1987) in the Scott Bader constitution and will continue to work with this: Sustainable development is “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

To help us develop a bolder and meaningful sustainable vision as well as a robust roadmap, we decided to partner with The Natural Step®, which has one of the most systemic and robust frameworks available today. We will therefore develop our vision and roadmap by applying the principled definition of sustainability from The Natural Step®:

In a sustainable society…

…nature is not subject to systematically increasing concentrations of substances from the earth’s crust;…nature is not subject to systematically increasing concentrations of substances, produced by society;…nature is not subject to systematically increasing degradation by physical means;…people are not subject to structural obstacles to health, influence, competence, impartiality or meaning-making.

Our 2018 objective is to develop our long term vision and roadmap as well as to define the action plan for the first wave of activities.

ECONOMY

SOCIETYENVIROMENT

Cannot function if the enviroment is critically “ill”

Cannot function if the society does not function

13

Introducing our new Commonwealth Board Chairman –Adrian Pryce DL

Adrian Pryce DL was appointed Commonwealth Board Chairman with effect from 1st January 2018. With an MBA from IESE in Barcelona and a career spanning academia, banking, travel & tourism and the food industry, Adrian brings to Scott Bader over 25 years of international experience, working and undertaking projects at senior level in Europe, Asia, the Caribbean and Latin America, including one year with the World Bank. He is now a senior academic at the University of Northampton.

Outside of academic life Adrian has an active involvement in the regional food industry, and he is Chairman of a homelessness charity. In July 2016, Adrian was appointed a Deputy Lieutenant of Northamptonshire. Led by the Lord-Lieutenant, the Lieutenancy represents and upholds the dignity of the Crown. It also helps to promote Northamptonshire and its communities, culture, heritage, business and charitable activities. Deputy Lieutenants are appointed in recognition of their work and influence in the county and beyond.

It is a great pleasure to serve on the Commonwealth Board at this exciting time and a real honour to be appointed Chairman of the Commonwealth Board. I see great potential for Scott Bader to become a global leader in a better, fairer way of doing business, with great society impact. I look forward to building on the excellent work of my predecessor as Chair, Anne Atkinson-Clark.

The Commonwealth Board has a key role and clear responsibilities as the holding company and guardian of the Constitution, to ensure that:

• Scott Bader is governed effectively and in accordance with the Guiding Principles • Members are actively involved and that the SB community is strong and healthy • Scott Bader fulfils its charitable objectives

Underpinning Scott Bader is the vision of the founder Ernest Bader, and his wish for ‘better business’ based on Scott Bader’s Three Pillars of Humanity, Ecology and Business:

• Social responsibility for Members, their community and the wider Society, whilst engaging in fair and ethical trading and partnerships • Sustainability and responsibility for the environment • Our commercial responsibilities and innovation for international impact

It should be recognised that Scott Bader is no longer alone in its focus on the Three Pillars. Whilst Scott Bader has a distinctive shareholding and governance structure it is not unique in its pursuit of an effective ‘industrial democracy’. In Scott Bader this can be referred to as Member Engagement, and this includes having an active and effective Member Voice.

Active and effective Member Engagement should be based on trust, openness and the communication channels to deliver:

• Happy and contented Members with real voice • A positive solution-driven work culture harnessing the values and creativity of all our Members in support of operational efficiency and commercial success • Improved Member wellbeing and income growth

Adrian Pryce DL

14

Introducing our new Commonwealth Board Chairman –Adrian Pryce DL (Continued)

Member Engagement should be the key driver of Scott Bader’s Three Pillars. In today’s uncertain and volatile world, speed, agility and an innovative culture are essential for success. This relies on aligning and harnessing the values, creativity and passion of all associated with Scott Bader behind the 2036 Vision, which the Commonwealth Board fully endorses and supports, seeing it as:

• A major Catalyst for Change • Communicating shared values throughout the organisation • Creating a new Scott Bader company culture whilst respecting the past • Identifying the Member training and development needed for Scott Bader’s

sustainability and success

The 2036 Vision strategic goals that the Commonwealth Board has been specifically asked to support are:

• Delivering value to society • Unleashing colleagues’ potential

In support of these goals, the Commonwealth Board charitable objectives, philanthropic disbursements and volunteering policy will become more strategic, focusing on the communities in which Scott Bader is based, across three main areas:

• Education & Legacy – investing in youth education, training and development • Social & Environmental Impact – responding to the most pressing social and environmental needs within the local areas we operate in • Foundation & Incubation – leveraging our skills, resources and networks to assist other socially-driven organisations supporting the above.

Adrian Pryce DLChairmanThe Commonwealth Board

STRIVING FOR EXCELLENCEWe are purpose-driven, fully meeting the expectations of our customers by continuously improving all our processes and products to deliver world-class business performance.

OUR 7 STRATEGIC GOALS

We envision a world where humanity thrives, without compromising the natural systems it depends on. Scott Bader provides essential technologies that address the challenges of our changing society and in doing so is a renowned, trustworthy partner that is globally admired for harnessing the power of chemistry as a force for good.

ACTING BEYOND COMPLIANCEWe are a trusted leader, proactively driving a safe, transparent and ethical chemical industry, promoting exemplary conduct to deliver products and processes that safeguard people and planet.

PIONEERING THE CIRCULAR ECONOMYWe are a recognised circular economy practitioner, collaborating with our partners to optimise our combined resources for a waste and harm-free, closed-loop value chain.

DELIVERING VALUE TO SOCIETYWe are advocating sustainability, sharing our know-how, profi t and Commonwealth vision, and supplying products and services that provide real value to society.

UNLEASHING COLLEAGUES’ POTENTIALWe are driven by the diversity and creativity of our people who are empowered and motivated to make a difference through initiative and innovation at every level of the organisation.

PARTNERING FOR SUCCESSWe are at the heart of a global network of mutually-benefi cial partnerships with suppliers, customers and world-leading allies who are engaged with our mission and share our vision.

PROTECTING OUR ENVIRONMENTWe are a strong ambassador for the transition to a sustainable planet through our responsible use of our natural resources, our stewardship of clean energy and fresh water, and our commitment to zero emissions.

Report of the Directors

This statement does not comprise the statutory accounts of the Group, as defined in section 434 of the Companies Act 2006. The financial information for the year ended 31 December 2017 has been extracted from statutory accounts on which an unqualified audit report has been issued which does not include reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report and does not contain a statement under section 498(2) or (3) of the Companies Act 2006. Those financial statements have been delivered to the Registrar of Companies.

The summary financial information does not contain sufficient information to allow as full an understanding of the results of the Group and state of affairs of the Company or of the Group as would be provided by the full financial statements. The report does derive additional information from the Report of the Directors, but does not contain the full text of that report.

A copy of the full statutory accounts, together with the Directors’ and Auditors’ Reports therein, can be obtained free of charge from the Registered Office.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Signed on behalf of the Directors by

Jean-Claude PierreGroup Chief Executive11 April 2018

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Group Profit and Loss accountFor the year ended 31 December 2017

Group Turnover

Change in stocks of finished goods and goods for resaleOther operating income

Raw materials and consumablesOther external chargesStaff costsDepreciation and amortisationOther operating charges

Operating profitShare of profit in joint ventures

Profit on ordinary activities before interest and taxation

Interest payable and similar chargesInterest receivable and similar income

Profit on ordinary activities before taxation

Taxation on profit on ordinary activities

Profit for the financial year

2017£’000

202,000

1,312256

203,568

132,02120,75530,6394,343

10,279

198,037

5,531236

5,767

(107)110

5,770

(1,000)

4,770

2016£’000

177,531

(485)465

177,511

105,66519,41230,545

4,2928,173

168,087

9,42460

9,484

(166)140

9,458

(1,927)

7,531

58338,233

586

39,402

16,035

34,793

34,793

17,221

68,049

32,896

35,153

74,555

3,3933,337

67,825

(367)

67,458

50270

67,138

67,458

Group Balance SheetFor the year ended 31 December 2017

Fixed assetsIntangible assetsTangible assetsInvestments

Current assetsStocksDebtors: Amounts falling due within one year

Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one yearProvisions for liabilities

Net assets excluding pension liability

Pension asset/(liability)

Net assets including pension liability

Capital and reservesCalled up share capitalRevaluation reserveProfit and loss account

Total shareholders’ funds

2017£’000

47840,846

729

42,053

18,484

39,443

39,443

14,218

72,145

37,129

35,016

77,069

2,8195,190

69,060

12,331

81,391

50206

81,135

81,391

Group2016£’000

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Group Cash Flow StatementFor the year ended 31 December 2017

2017£’000

2016£’000

£’000

£’000

4,198

(1,632)

2,566

(6,447)

(730)

(4,611)100

16,948

12,437

14,218(1,781)

12,437

(4,611)623

(3,988)13,020

9,032

15,234

(1,571)

13,663

(6,096)

(5,162)

2,405939

13,604

16,948

17,221(273)

16,948

2,4054,966

7,3715,649

13,020

(6,644)29

11058

-(623)(107)

(6,186)6

6123

(29)(4,966)

(167)

Net cash inflow from operating activities

Taxation paid

Net cash generated from operating activities

Cash flow from investing activitiesPurchase of tangible assetsProceeds from disposals of tangible assetsInterest receivedDividends received from joint ventures

Net cash used in investing activities

Cash flow from financing activitiesRepayment of obligations under finance leasesRepayment of bank loansInterest paid

Net cash (used in) / from financing activities

Net (decrease)/increase in cash and cash equivalentsEffect of exchange rates on cash and cash equivalentsCash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Cash and cash equivalents consists of:Cash at bank and in handBank overdrafts

Cash and cash equivalents at the end of the year

Net cash movement:(Decrease)/Increase in cash and cash equivalentsNet loan repayments

Change in net cashNet cash at start of year

Net cash at end of year

How we Manage and Govern the Business The business is an organisation with no external shareholders and with a special organisation and governance structure. Scott Bader is managed as follows:

THE GROUP BOARD (the Board of Scott Bader Company Limited). This is the business Board and as such makes similar decisions to those of a Board within a standard company i.e. financial; legal; policy and strategic, but with the additional requirements for the Board, through the business, to help promote the Charitable Objects; adhere to Commonwealth Principles and to ensure that the business is run in accordance with the Guiding Principles. The Group Board is made up of both external and internal Directors.There are up to 9 Directors on this Board:

� 3 internally appointed Executive Directors � 3 External Non Executive Directors – including the Chairman � 3 internally elected Community Directors – who are elected from three constituencies – the UK and

Eire, Continental Europe and the Rest of the World.

To allow for the work of the Board to be conducted efficiently and effectively an Audit Subcommittee operates.

The Board receives a monthly report on trading and key issues from the Group Chief Executive Officer.

THE COMMONWEALTH BOARD – (the Board of The Scott Bader Commonwealth Limited). This is the holding company and is a registered Charity. All Members of this Board are Directors and Charity Trustees and as such have to ensure that the Charity is run in accordance with Charity Law. This Board will not get involved in the day to day running of the business, but it does have the responsibility for ensuring that the Company continues to adhere to Commonwealth Principles. The Board will be consulted about such things as the future direction of the business (i.e. strategy), major acquisitions or disposals, and profit distribution, and will monitor the development of industrial democracy within Scott Bader.

There are 9 members of this Board who will be Charity Trustees and Directors of The Scott Bader Commonwealth Ltd:

� 5 Nominated Guardian Trustees (from outside Scott Bader) � 3 internally elected Directors � The SBCL Chairman

THE MEMBERS’ ASSEMBLY. This is the democratic forum for the Scott Bader group of companies to whom the Group Board can be held accountable for the exercise of their responsibilities and for the health and success of the Scott Bader businesses. The Assembly monitors adherence to the principles of the Commonwealth. It represents Commonwealth Members and may discuss any issue but it cannot displace the overriding authority of Commonwealth Members in General Meeting, to whom it is ultimately subordinate.

During 2017 the three governing bodies met in a joint forum, entitled The G3, to improve the alignment between the respective bodies and to reduce any duplication of information.

Local Councils operate in the 5 largest sites and represent members in discussions of local issues. The Councils of Scott Bader are known as:

� UK – Community Council � South Africa – SIMUNEYE Council � Dubai – AMAL Council � Croatia – Council � France – Comité d’Entreprise

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Leading composites innovation for over 60 years

Visit us at:

HEAD OFFICEScott Bader Company LimitedWollastonEnglandTel: +44 1933 663100Fax: +44 1933 666139email: enquiries@scottbader.com

Scott Bader FranceAmiensFranceTel: +33 3 22 66 27 66Fax: +33 3 22 66 27 80email: info_distribution@scottbader.fr

Scott Bader SpainBarcelonaSpainTel: +34 93 553 1162 Fax: +34 93 553 1163 email: diazs@scottbader.es

Scott Bader GermanyWeidenGermanyTel: +49 961 401 84474 Fax: +49 961 401 84476email: composites@scottbader.de

Scott Bader IrelandDublinIreland Tel: +353 1801 5656Fax: +353 1801 5657 email: composites@scottbader.ie

Scott Bader Scandinavia ABFalkenbergSweden Tel: +46 346 10100Fax: +46 346 59226 email: composites@scottbader.se

Scott Bader Eastern EuropeLiberecCzech RepublicTel: +420 485 228 344Fax: +420 485 228 345email: composites@scottbader.cz

Scott Bader CroatiaZagrebCroatiaTel: +385 1 240 6440Fax: +385 1 240 4573email: info@scottbader.hr

Scott Bader USAStow, OHUSATel: +1 330 920 4410Fax: +1 330 920 4415email: info@scottbaderinc.com

ATC Formulated PolymersBurlingtonCanadaTel: +1 905 681 8112 Fax: +1 905 681 1535email: sales@atc-fp.com

Scott Bader Group Companies

Scott Bader South AfricaHammarsdaleSouth AfricaTel: +27 31 736 8500Fax: +27 31 736 8511email: composites@scottbader.co.za

Scott Bader Middle East LimitedDubaiUnited Arab EmiratesTel: +971 481 50222Fax: +971 488 35319email: info@scottbader.ae

Scott Bader India Private LimitedMumbai - 400 030IndiaTel: + 91 22 6146 5999email: sbindia@scottbader.ae

Scott Bader Asia PacificShanghaiChinaTel: +86 (21) 5298 7776Fax: +86 (21) 5298 8889email: info@scottbader.cn

Scott Bader/ Satyen Polymers LtdMumbai - 400 013IndiaTel: + 91 22 4220 1555 Fax: + 91 22 2491 1262email: info@satyenpolymers.com

Scott BaderAnnual Report 2012

Scott Bader UKScott Bader FranceScott Bader SpainScott Bader GermanyScott Bader IrelandScott Bader ScandinaviaScott Bader Eastern Europe

Scott Bader CroatiaScott Bader USAScott Bader - ATC CanadaScott Bader South AfricaScott Bader Middle EastScott Bader Asia PacificScott Bader IndiaScott Bader/Satyen JV

GLOBAL LOCATIONS

Annual Report 2012Scott BaderAnnual Report 2012Scott Bader

HEAD OFFICEScott Bader Company LimitedWollastonEnglandTel: +44 1933 663100Email: enquiries@scottbader.com

Scott Bader FranceAmiensFranceTel: +33 3 22 66 27 66EmaiI: info_distribution@scottbader.fr

Scott Bader SpainBarcelonaSpainTel: +34 93 553 1162Email: diazs@scottbader.es

Scott Bader GermanyWeidenGermanyTel: +49 961 401 84474Email: composites@scottbader.de

Scott Bader IrelandDublinIrelandTel: +353 1801 5656Email: composites@scottbader.ie

Scott Bader Scandinavia ABFalkenbergSwedenTel: +46 346 10100Email: composites@scottbader.se

Scott Bader Eastern EuropeLiberecCzech RepublicTel: +420 485 111 253Email: composites@scottbader.cz

Scott Bader CroatiaZagrebCroatiaTel: +385 1 240 6440Email: info@scottbader.hr

Scott Bader USAStow, OHUSATel: +1 330 920 4410Email: info@scottbaderinc.com

Scott Bader-ATCDrummondvilleCanadaTel: +1 819 477 1752Email: enquiries@scottbader-atc.com

Scott Bader South AfricaHammarsdaleSouth AfricaTel: +27 31 736 8500Email: composites@scottbader.co.za

Scott Bader Middle East LimitedDubaiUnited Arab EmiratesTel: +971 481 50222Email: info@scottbader.ae

Scott Bader Asia PacificShanghaiChinaTel: +86 (21) 5298 7778Email: info@scottbader.cn

Scott Bader I Satyen Polymers LtdMumbai - 400 013IndiaTel: + 91 22 4220 1555Email: info@satyenpolymers.com

NovaScott Especialidades QuimicasLimitada (NovaScott)SerraBrazilTel: +55 273 298-1100Email: info@novascott.com.br

Scott Bader Group