TEL-related extracts from Innospec Quarterly Report

for the Quarter ended June 30, 2020 & Annual

Report 2020

These Tetra-Ethyl Lead (TEL) related extracts were collated by Elizabeth O’Brien, The LEAD Group Inc. TEL is the octane

enhancer that is added to fuel (motor fuel, avia'on fuel) to turn it into leaded fuel.

Annual Report [URL: SEARCH BY FILING DATE AT: hps://innospec.com/investors/sec-$lings/ ; AT:

hps://innospec.ir.edgar-online.com/efxapi/EFX_dll/EDGARpro.dll?FetchFilingCONVPDF1?

SessionID=PoCwkLyvC1opYHU&ID=14718040 ]

General

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OurOctaneAdditivesbusinesspreviouslymanufacturedafueladditiveforuseinautomotivegasolineuntil

itceasedtradingonJune30,2020.

…

Segment Information

TheCompanyreportsitsfinancialperformancebasedonthefourreportablesegmentsdescribedas

follows:



• FuelSpecialties

TheFuelSpecialties,PerformanceChemicalsandOilfieldServicessegmentsoperateinmarketswherewe

activelyseekgrowthopportunitiesalthoughtheirultimatecustomersaredifferent.TheOctaneAdditives

segmenthasceasedtradingandisnolongerareportingsegmentfromJuly1,2020,asreportedinour

QuarterlyReportonForm10-QforthequarterendedJune30,2020.[URL:SEARCHBYFILINGDATE

AT:https://innospec.com/investors/sec-filings/;AT:

https://innospec.ir.edgar-online.com/efxapi/EFX_dll/EDGARpro.dll?FetchFilingCONVPDF1?

SessionID=NoCwkdgtvwRCo6U&ID=14311304]

…

Fuel Specialties

OurFuelSpecialtiessegmentdevelops,manufactures,blends,marketsandsuppliesarangeofspecialty

resourcestowardsthedevelopmentofnewandimprovedproductsthatmaybeusedtoimprove

combustionefficiency.

Ourcustomersinthissegmentincludenationaloilcompanies,multinationaloilcompaniesandfuel

retailers.

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Octane Additives

TheOctaneAdditivessegmenthasceasedtradingandisnolongerareportingsegmentfromJuly1,2020.

PreviouslyourOctaneAdditivessegmentproducedtetraethyllead(“TEL”)foruseinautomotivegasoline

andprovidedservicesinrespectofenvironmentalremediationtomanagethecleanupofredundantTEL

facilitiesasrefineriescompletedthetransitiontounleadedgasoline.Theexpectedactivitiestocleanup

Fuel Specialties: FuelSpecialtiesisgenerallycharacterizedbyasmallnumberofcompetitors,noneof

whichholdadominantposition.Weconsiderourcompetitiveedgetobeourproventechnicaldevelopment

capacity,independencefrommajoroilcompaniesandstronglong-termcustomerrelationships.Webelieve

weremaintheworld’sonlyproducerofTELforuseinaviationgasoline,whichwemarketasourAvTel

productline.

Octane Additives: ProductionandsalesofTELforuseinautomotivegasolinehaveceasedandtherefore

OctaneAdditivesisnolongerareportingsegmentfromJuly1,2020.

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Item 1A Risk Factors

ThecontinuedsalesofTELforuseinaviationfuel(“AvTel”)arerecordedwithinourFuelSpecialties

processiscurrentlysuspendedandanticipatedtorestartin2021.Thetimescalebeyondthisstageis

unclear,butthefulltestingprogramwill,ofnecessity,belongandcomprehensive.

totheindustry,thereisnocurrentlyavailablealternative.Inaddition,thereisnocleartimescaleonthe

legislationofareplacementproduct.Ifasuitableproductisidentifiedandtheuseofleadedfuelis

prohibitedinpistonaviationtheCompany’sfutureoperatingincomeandcashflowsfromoperating

activitieswouldbeadverselyimpacted.

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Item 2 Properties

AsummaryoftheCompany’sprincipalpropertiesisshowninthefollowingtableextract.Eachofthese

propertiesisownedbytheCompanyexceptwhereotherwisenoted:



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Item 7 Management’s Discussion and Analysis of Financial Condition and Results of

Operations

Thisdiscussionshouldbereadinconjunctionwithourconsolidatedfinancialstatementsandthenotes

thereto.

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Environmental Liabilities

Wearesubjecttoenvironmentallawsinthecountriesinwhichweconductbusiness.EllesmerePortinthe

UnitedKingdomisourprincipalsitegivingrisetoenvironmentalremediationliabilitiesassociatedwith

theproductionofTEL.Therearealsoenvironmentalremediationliabilitiesonamuchsmallerscalein

obligationswhenthereisalegalobligationandcostscanbereasonablyestimated.TheCompanyhasto

anticipatetheprogramofworkrequiredandtheassociatedfutureexpectedcosts,andcomplywith

environmentallegislationinthecountriesinwhichitoperatesorhasoperatedin.Wedevelopthese

assumptionsutilizingthelatestinformationavailabletogetherwithrecentcosts.Whilewebelieveour

assumptionsforenvironmentalliabilitiesarereasonable,theyaresubjectivejudgementsanditispossible

thatvariationsinanyoftheassumptionswillresultinmateriallydifferentcalculationstotheliabilitieswe

havereported.

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RESULTS OF OPERATIONS

Thefollowingtableprovidesoperatingincomebyreportingsegment:

PerformanceChemicals

OilfieldServices

OctaneAdditives

Gross profit:

FuelSpecialties

Operating income:

FuelSpecialties

PerformanceChemicals

OilfieldServices

OctaneAdditives

Corporatecosts

Incometaxes

Results of Operations – Fiscal 2020 compared to Fiscal 2019:



Note 5. Restructuring

operationsof$2.6million.DuringtheyearendedDecember31,2020theutilizationandtheunwindingof

thediscountingwasnotmaterial.