What changed in this filing

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Item 1. Business

2021-02-17 compared with 2020-02-19 · 45 added, 31 removed, 95 unchanged (44% of the section changed)

3 unchanged sentences

Our products are sold primarily to oil and gas exploration and production companies, oil refiners, fuel manufacturers and users, formulators of personal care, home care, agrochemical and metal extraction formulations, and other chemical and industrial companies throughout the world.

Our fuel additives help improve fuel efficiency, boost engine performance and reduce harmful emissions.

Our performance chemicals provide effective technology-based solutions for our customers’ processes or products focused in the Personal Care, Home Care, Agrochemical and Metal Extraction markets.

Our Fuel Specialties business offers fuel additives to help improve fuel efficiency, boost engine performance and reduce harmful emissions.

Our Performance Chemicals business provides effective technology-based solutions for our customers’ processes or products focused in the Personal Care, Home Care, Agrochemical and Metal Extraction markets.

Our Oilfield Services business supplies drilling, completion and production chemicals which make exploration and production more effective, cost-efficient and environmentally friendly.

Our Octane Additives business manufactures a fuel additive for use in automotive gasoline.

Our Octane Additives business previously manufactured a fuel additive for use in automotive gasoline until it ceased trading on June 30, 2020.

Segment Information

3 unchanged sentences

Oilfield Services

Octane Additives

Octane Additives (ceased trading June 30, 2020)

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 revenues may conclude in the early part of 2020 as our one remaining refinery customer transitions to unleaded fuel.

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 Form 10-Q

for the quarter ended June 30, 2020.

For financial information about each of our segments, see Note 3 of the Notes to the Consolidated Financial Statements.

1 unchanged sentence

Our Fuel Specialties segment develops, manufactures, blends, markets and supplies a range of specialty chemical products used as additives to a wide range of fuels.

These fuel additive

products help improve fuel efficiency, boost engine performance and reduce harmful emissions;

These fuel additive products help improve fuel efficiency, boost engine performance and reduce harmful emissions;

and are used in the efficient operation of automotive, marine and aviation engines, power station generators, and heating oil.

9 unchanged sentences

Oilfield Services

Our Oilfield Services segment develops and markets products to prevent loss of mud in drilling operations, chemical solutions for fracturing, stimulation and completion operations and products for oil and gas production which aid flow assurance and maintain asset integrity.

This segment has been growing strongly in recent years, driven by increased customer activity as the industry has been supported by stable oil prices.

Our Oilfield Services segment develops and markets chemical solutions for fracturing, stimulation and completion operations, products for oil and gas production which aid flow assurance and maintain asset integrity and products to prevent loss of mud in drilling operations.

This segment had been growing strongly in recent years until the COVID-19

pandemic adversely impacted customer demand in 2020.

We expect increased customer activity to return as the global demand for fuel increases and oil prices return to the pre-pandemic

Our customers in this segment include multinational public and independent companies operating currently principally in the Americas.

Octane Additives

Our Octane Additives segment, which we believe is the world’s only producer of tetra ethyl lead (“TEL”), comprises sales of TEL for use in automotive gasoline and provides services in respect of environmental remediation.

We are continuing to responsibly manage the decline in the demand for TEL for use in automotive gasoline in line with the transition plans to unleaded gasoline for our one remaining refinery customer.

Cost improvement measures continue to be taken to respond to declining market demand.

We expect the possible conclusion of revenues from our Octane Additives segment in the early part of 2020.

Sales of TEL for use in automotive gasoline are principally made to state-owned refineries located in North Africa.

Our environmental remediation business manages the cleanup of redundant TEL facilities as refineries complete the transition to unleaded gasoline.

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 redundant TEL facilities have been provided for in the second quarter of 2020.

Legacy costs related to these operations are now being recorded as operating expenses within corporate costs.

Our strategy is to develop new and improved products and technologies to continue to strengthen and increase our market positions within our Fuel Specialties, Performance Chemicals and Oilfield Services segments.

8 unchanged sentences

We therefore require corresponding amounts of working capital for normal operations.

We do not believe that this is materially different to what our competitors do, with the exception of cetane number improvers, in which case we maintain high enough levels of inventory, as required, to retain our position as market leader in sales of these products.

We do not believe that this is materially different to our competitors, with the exception of cetane number improvers, in which case we maintain high enough levels of inventory, as required, to retain our position as market leader in sales of these products.

The purchase of large amounts of certain raw materials across all our segments can create some variations in working capital requirements, but these are planned and managed by the business.

4 unchanged sentences

These purchases account for a substantial portion of the Company’s variable manufacturing costs.

These materials are, with the exception of ethylene for our operations in Germany,

readily available from more than one source.

These materials are, with the exception of ethylene for our operations in Germany, readily available from more than one source.

Although ethylene is, in theory, available from several sources, it is not permissible to transport ethylene by road in Germany.

7 unchanged sentences

Intellectual Property

Our intellectual property, including trademarks, patents and licenses, forms a significant part of the Company’s competitive advantage, particularly in the Fuel Specialties, Oilfield Specialties and Performance Chemicals segments.

The Company does not, however, consider its business as a whole to be dependent on any one trademark, patent or license.

11 unchanged sentences

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.

Performance Chemicals:

6 unchanged sentences

Octane Additives:

We believe our Octane Additives segment is the world’s only producer of TEL and accordingly is the only supplier of TEL for use in automotive gasoline.

The segment therefore competes with marketers of products and processes that provide

alternative ways of enhancing octane performance in automotive gasoline.

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.

Research, Development, Testing and Technical Support

4 unchanged sentences

We believe that our proven technical capabilities provide us with a significant competitive advantage.

In the last five years, the Fuel Specialties segment has developed new detergents, cold flow improvers, stabilizers, lubricity and combustion improver products, in addition to the introduction of many new cost effective fuel additive packages and products for dealing with the dangers of low conductivity.

This proven technical capability has also facilitated the development of our leading edge isethionate and taurate product ranges in Performance Chemicals.

Our Performance Chemicals business has launched significant new mild surfactants

based on isethionate and taurate chemistry which are well aligned with developing customer needs.

In addition, the business has developed further formulations in emollients, silicones and surfactants for the personal care, homecare, agrochemical and metal extraction markets.

Fuel Specialties has continued to innovate focused on bringing new technologies to market which reduce pollution and improve fuel economy, including detergents and cold flow improvers.

In Oilfield Services, new technologies have been introduced to improve the hydrocarbon yield from customers’ operations and to protect assets, including friction modifiers, biocide formulations and additives to improve drilling muds.

Health, Safety and Environmental Matters

7 unchanged sentences

We regularly review the future expected costs of remediation and the current estimate is reflected in Note 13 of the Notes to the Consolidated Financial Statements.

The European Union legislation known as the Registration, Evaluation and Authorization of Chemical Substances Regulations (“REACH”) requires most of the Company’s products to be registered with the European Chemicals Agency.

Under this legislation the Company has to demonstrate that its products are appropriate for their intended purposes.

During this registration and continued evaluation process, the Company incurs expense to test and register its products.

The European Union (“E.U.”) legislation known as the Registration, Evaluation and Authorization of Chemical Substances Regulations (“REACH”) requires most of the substances in the Company’s products to be registered with the European Chemicals Agency.

Under this legislation the Company has to demonstrate that the substances it uses in its products are safe for use and appropriate for their intended purposes in the E.U..

During this registration and continual evaluation process, the Company incurs expense to test and register substances it manufactures or imports in the E.U..

Following the end of the Brexit transition process, on January 11, 2021 the United Kingdom (“U.K.”) government introduced U.K.

REACH with the same registration requirements for substances produced in or imported into the U.K..

Furthermore, globally, similar regulatory regimes to the E.U.

REACH are also entering into force or are being proposed in several other countries.

These registration based regulatory regimes will result in increasing test expenses and registration fees to ensure Innospec products remain compliant with the appropriate regulations and can continue to be sold in these markets.

Employees and Human Capital Management

The Company had approximately 1900 employees in 24 countries as at December 31, 2020.

Human capital management is critical to Innospec’s ongoing business success, which requires investing in our people.

Our aim is to create a highly engaged and motivated workforce where employees are inspired by leadership, engaged in purpose-driven, meaningful work and have opportunities for growth and development.

An effective approach to human capital management requires that we invest in talent, development, culture and employee engagement.

We aim to create an environment where our employees are encouraged to make positive contributions and fulfill their potential.

Diversity and Inclusion

Innospec aims to attract and retain the best people by ensuring that employment decisions are based on merit, performance and contribution to the Company.

As part of our Global HR Policy, our diversity and equal opportunities policy ensures that current and prospective employees receive equal opportunities irrespective of gender, sexual orientation, race, color, ethnic or national origin, marital status, age, disability, religion or belief.

Available Information

Our corporate web site is www.innospecinc.com.

Our corporate web site is www.innospec.com

We make available, free of charge, on or through this web site our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the U.S.

Securities and Exchange Commission (“SEC”).

In addition, the SEC maintains an internet site at http://www.sec.gov

In addition, the SEC maintains an internet site at www.sec.gov

that contains reports, proxy and information statements, and other information that we file electronically with the SEC and state the address of that site.

The Company routinely posts important information for investors on its web site (under Investor Relations).

The Company routinely posts important information for investors on its web site (under Investors).

The Company uses this web site as a means of disclosing material, non-public

information and for complying with its disclosure obligations under SEC Regulation FD (“Fair Disclosure”).

Accordingly, investors should monitor the Investor Relations portion of the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

Accordingly, investors should monitor the Investors portion of the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business