3 unchanged sentences
Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated balance sheet of Innospec Inc.
+Added: We have audited the accompanying consolidated balance sheets of Innospec Inc.
and its subsidiaries
−Removed: (the “Company”) as of December 31, 2019,
+Added: (the “Company”) as of December 31, 2020 and 2019,
and the related consolidated statements of income, comprehensive income, equity
−Removed: and cash flows for the year then ended, including the related notes (collectively referred to as the “consolidated financial statements”).
+Added: and cash flows for each of the two years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).
We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework
1 unchanged sentence
In our opinion, the consolidated
−Removed: financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 ,
−Removed: and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
+Added: financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 ,
+Added: and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework
5 unchanged sentences
Our responsibility is to express opinions on the Company’s consolidated
−Removed: financial statements and on the Company’s internal control over financial reporting based on our audit.
+Added: financial statements and on the Company’s internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audit also included performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinions.
+Added: Our audits also included performing such other procedures as we considered necessary in the circumstances.
+Added: We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
7 unchanged sentences
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: The communication of critical audit matters does not alter
+Added: in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Plant Closure Provision
20 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of Innospec Inc.
−Removed: Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Innospec, Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2018, the related consolidated statements of income, comprehensive income, accumulated other comprehensive loss, cash flows and equity for the year then ended, and the related notes (collectively, the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.
−Removed: generally accepted accounting principles.
−Removed: Basis for Opinion
−Removed: These consolidated financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Manchester, United Kingdom
−Removed: February 20, 2019
−Removed: We served as the Company’s auditor from 2011 to 2019.
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of Innospec Inc.
+Added: To the Board of Directors and Shareholders of Innospec Inc.
Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated statements of income, comprehensive income, accumulated other comprehensive loss, cash flows and equity of Innospec, Inc.
+Added: We have audited the accompanying consolidated statements of income, comprehensive income, cash flows and equity of Innospec, Inc.
and subsidiaries (the Company) for the year ended December 31, 2018, and the related notes (collectively, the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the operations of the Company and its cash flows for the year ended December 31, 2017, in conformity with U.S.
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2018, in conformity with U.S.
generally accepted accounting principles.
10 unchanged sentences
We believe that our audit provides a reasonable basis for our opinion.
−Removed: KPMG Audit Plc
+Added: We served as the Company’s auditor from 2011 to 2019.
Manchester, United Kingdom
February 20, 2019
−Removed: We served as the Company’s auditor from 2011 to 2018
CONSOLIDATED STATEMENTS OF INCOME
6 unchanged sentences
Restructuring charge
−Removed: Loss on disposal of subsidiary
−Removed: Foreign exchange loss on liquidation of subsidiary
+Added: Impairment of intangible assets
Total operating expenses
11 unchanged sentences
Changes in cumulative translation adjustment, net of tax of $ 3.9
−Removed: million, $ 2.7 million and $( 3.3 ) million, respectively
−Removed: ealized (losses)
−Removed: /gains on derivative instruments, net of tax of $ 0.4 million, $( 0.1 ) million and $( 0.2 ) million, respectively
−Removed: Amortization of prior service credit, net of tax of $ 0.2 million, $
+Added: million, $( 0.3
) million and $ 2.7 million, respectively
+Added: Changes in derivative instruments, net of tax of $ 0.0 million, $( 0.4 ) million and $( 0.1 ) million, respectively
+Added: Amortization of prior service credit, net of tax of $ 0.1 million, $ 0.2 million and $ 0.2 million, respectively
Amortization of actuarial net losses, net of tax of $( 0.2 ) million, $ 0.0 million and $( 0.3 ) million, respectively
−Removed: Actuarial net gains/(losses) arising during the year, net of tax of $ (
−Removed: million, $ 3.3 million and $( 8.8 ) million, respectively
+Added: Actuarial net (losses)/gains arising during the year, net of tax of $ 1.9 million, $( 2.2 ) million and $ 3.3 million, respectively
Total comprehensive income
28 unchanged sentences
Accrued liabilities
−Removed: Current portion of long-term debt
Current portion of finance leases
12 unchanged sentences
Other non-current
−Removed: Common stock, $ 0.01
−Removed: par value, authorized 40,000,000
−Removed: shares, issued 29,554,500
+Added: Common stock, $ 0.01 par value, authorized 40,000,000 shares, issued 29,554,500
Additional paid-in
−Removed: Treasury stock ( 5,047,278
−Removed: and 5,120,799
−Removed: shares at cost, respectively)
+Added: Treasury stock ( 4,958,599 and 5,047,278 shares at cost, respectively)
Retained earnings
8 unchanged sentences
Cash Flows from Operating Activities
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Adjustments to reconcile net income to net cash provided by
+Added: operating activities:
Depreciation and amortization
−Removed: Loss on disposal of subsidiary
−Removed: Foreign exchange loss on liquidation of subsidiary
+Added: Impairment of intangible assets
+Added: Impairment of tangible assets
Deferred tax (benefit)/expense
14 unchanged sentences
Business combinations, net of cash acquired
−Removed: Acquisition of intangible asset
Internally developed software
1 unchanged sentence
Cash Flows from Financing Activities
+Added: Non-controlling
Proceeds from revolving credit facility
1 unchanged sentence
Repayment of term loans
−Removed: Repayment of finance leases and term loans
+Added: Repayment of finance leases
Refinancing costs
7 unchanged sentences
Cash and cash equivalents at end of year
−Removed: Amortization of deferred finance costs of $ 1.0
−Removed: million (2018 – $ 0.7
−Removed: million, 2017 – $ 0.6
−Removed: million) for the year are included in depreciation and amortization in the cash flow statement but in interest expense in the income statement.
−Removed: Cash payments/receipts in respect of income taxes and interest are disclosed in Note 10 and Note 11, respectively, of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these statements.
3 unchanged sentences
Balance at December 31, 2017
−Removed: Dividend paid ($ 0.77 per share)
+Added: Dividend paid ($ 0.89
Changes in cumulative translation adjustment, net of tax
Share of net income
−Removed: Unrealized gains on derivative instruments, net of tax
+Added: Change in derivative instruments, net of tax
Treasury stock re-issued
3 unchanged sentences
Amortization of actuarial net losses, net of tax
−Removed: Actuarial net gains arising during the year, net of tax
+Added: Actuarial net losses arising during the year, net of tax
Balance at December 31, 2018
−Removed: Dividend paid ($ 0.89 per share)
+Added: Dividend paid ($ 1.02
Changes in cumulative translation adjustment, net of tax
Share of net income
−Removed: Unrealized gains on derivative instruments, net of tax
+Added: Changes in derivative instruments, net of tax
Treasury stock re-issued
2 unchanged sentences
Amortization of prior service credit, net of tax
−Removed: Amortization of actuarial net losses, net of tax
−Removed: Actuarial net losses arising during the year, net of tax
+Added: Actuarial net gains arising during the year, net of tax
Balance at December 31, 2019
−Removed: Dividend paid ($ 1.02 per share)
+Added: Dividend paid ($ 1.04
Changes in cumulative translation adjustment, net of tax
Share of net income
−Removed: Realized losses on derivative instruments, net of tax
Treasury stock re-issued
2 unchanged sentences
Amortization of prior service credit, net of tax
+Added: Amortization of actuarial net losses, net of tax
Actuarial net gains arising during the year, net of tax
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Nature of Operations
+Added: Nature of Operation s
Innospec develops, manufactures, blends, markets and supplies fuel additives, oilfield chemicals, personal care products and other specialty chemicals.
−Removed: Our products are sold primarily to oil and gas exploration and production companies, oil refineries, personal care and home care companies, formulators of agrochemical and metal extraction preparations and other chemical and industrial companies throughout the world.
+Added: Our products are sold primarily to oil and gas exploration and production companies, oil refiners, personal care and home care companies, formulators of agrochemical and metal extraction preparations 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 business provides effective technology-based solutions for our customers’ processes or products focused in the Personal Care, Home Care, Agrochemical and Metal Extraction markets.
−Removed: Our Oilfield Services business supplies drilling and production chemicals which make exploration and production more cost-efficient, and more environmentally friendly.
+Added: Our Oilfield Services business supplies drilling and production chemicals which make exploration and production more cost-efficient,
+Added: and more environmentally friendly.
Our Octane Additives business manufactures a fuel additive for use in automotive gasoline and provides services in respect of environmental remediation.
−Removed: Our principal reportable segments are Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives.
+Added: Our principal reportable segments are Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives (ceased trading June 30, 2020).
Accounting Policies
36 unchanged sentences
Provision of management’s best estimate of legal and settlement costs for litigation in which the Company is involved is accounted for in the administrative expense line item.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Research and development expenses:
Research, development and testing costs are expensed to the income statement as incurred.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Earnings per share:
23 unchanged sentences
Trade and other accounts receivable:
−Removed: The Company records trade and other accounts receivable at net realizable value and maintains allowances for customers not making required payments.
−Removed: The Company determines the adequacy of allowances by periodically evaluating each customer receivable considering our customer’s financial condition, credit history and current economic conditions.
+Added: The Company records trade and other accounts receivable at net realizable value and maintains allowances for customers not making required
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: The Company determines the adequacy of allowances by periodically evaluating each customer receivable considering our customer’s financial condition, credit history and current economic conditions.
+Added: Credit losses:
+Added: With an effective date of January 1, 2020, we have applied Accounting Standards Update (ASU) No.
+Added: Financial Instruments – Credit Losses (ASC Topic 326).
+Added: This replaces the incurred loss impairment methodology under previous GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
+Added: The standard was adopted using prospective application and principally impacts the allowance for trade and other accounts receivables.
+Added: Upon adoption, there was no adjustment made to opening retained earnings as at January 1, 2020.
+Added: As a result of implementing the standard, the Company did not recognize any material change to the allowance within trade and other accounts receivable as at January 1, 2020.
+Added: Trade and other accounts receivable are shown net of a $ 4.5 million allowance at December 31
+Added: The allowance remains immaterial to the financial statements.
+Added: The Company is exposed to credit losses primarily through sales of products.
+Added: The Company’s expected loss allowance methodology for trade and other accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ receivables.
+Added: Due to the short-term nature of such receivables, the estimate of accounts receivable amounts that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers.
+Added: Additionally, a further allowance is included to account for the Company’s historic track record of credit losses, for balances which are not aged sufficiently to be considered under the aging based approach.
+Added: The Company considered the current and expected future economic and market conditions surrounding the COVID-19
+Added: pandemic and determined that the estimate of credit losses was not significantly impacted.
Inventories are stated at the lower of cost (FIFO method) or market value.
−Removed: Cost includes materials, labor and an appropriate proportion of plant overheads.
+Added: includes materials, labor and an appropriate proportion of plant overheads.
The Company accrues volume discounts where it is probable that the required volume will be attained and the amount can be reasonably estimated.
3 unchanged sentences
Property, plant and equipment are stated at cost less accumulated depreciation.
−Removed: Depreciation is provided over the estimated useful lives of the assets using the straight-line method and is allocated between cost of goods sold and operating expenses.
+Added: Depreciation is provided over the estimated useful lives of the assets using the straight-line method and is allocated between cost of goods sold and operating
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The cost of additions and improvements are capitalized.
2 unchanged sentences
The estimated useful lives of the major classes of depreciable assets are as follows:
−Removed: 7 to 25 years
−Removed: 3 to 10 years
Goodwill is deemed to have an indefinite life and is subject to at least annual impairment assessments at the reporting unit level.
8 unchanged sentences
We would develop these assumptions by considering recent financial performance and industry growth estimates.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: Other intangible assets:
+Added: O ther intangible assets:
Other intangible assets are deemed to have finite lives and are amortized using the straight-line method over their estimated useful lives.
3 unchanged sentences
Undiscounted future cash flows expected to result from the asset groups are compared with the carrying value of the assets and, if such cash flows are lower, an impairment loss may be recognized.
−Removed: The amount of the impairment loss is the difference between the fair value and the carrying value of the assets.
+Added: The amount of the impairment loss is the difference between the fair value and the carrying value
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: of the assets.
Fair values are determined using post-tax
4 unchanged sentences
The estimated useful lives of the major classes of assets are as follows:
−Removed: 10 to 17 years
Customer lists
−Removed: 10 to 15 years
−Removed: 5 to 10 years
Product rights
−Removed: 9 to 10 years
Internally developed software
10 unchanged sentences
Operating lease liabilities recognized under the new standard are not considered to be debt.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
We determine if an arrangement is a lease at inception.
4 unchanged sentences
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of future lease payments over the remaining lease term.
−Removed: Very few of our leases have renewal options or early termination break clauses, but where they do we have assessed the term of the lease based on any options being exercised only if they are reasonably certain.
+Added: Very few of our leases have renewal options or early termination break clauses, but where they do we have assessed the
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: term of the lease based on any options being exercised only if they are reasonably certain.
As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at point of recognition in determining the present value of future payments.
6 unchanged sentences
Deferred finance costs:
−Removed: The costs relating to debt financing are capitalized, offset against long-term debt in the consolidated balance sheets and amortized using the effective interest method over the expected life of the debt financing facility.
+Added: The costs relating to debt financing are capitalized are amortized using the effective interest method over the expected life of the debt financing facility.
The amortization charge is included in interest expense in the income statement.
−Removed: See Note 11 of the Notes to the Consolidated Financial Statements.
Impairment of long-lived assets:
5 unchanged sentences
cash flows discounted at the Company’s weighted average cost of capital.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Derivative instruments:
8 unchanged sentences
The effective portion is recognized in other comprehensive income until the hedged item is recognized in earnings.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Environmental compliance and remediation:
14 unchanged sentences
Income taxes:
−Removed: The Company provides for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: financial statement carrying amounts and the relevant tax bases of the assets and liabilities.
−Removed: Then the Company evaluates the need for a valuation allowance to reduce deferred tax assets to the amount more likely than not to be realized.
+Added: The Company provides for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the relevant tax bases of the assets and liabilities.
+Added: The Company then evaluates the need for a valuation allowance to reduce deferred tax assets to the amount more likely than not to be realized.
The effect on deferred taxes of a change in tax rates is recognized in the period that includes the enactment date.
3 unchanged sentences
The Company recognizes accrued interest and penalties associated with unrecognized tax benefits as part of income taxes in our consolidated statements of income.
+Added: TO THE CONSOLIDATED
+Added: FINANCIAL STATEMENTS—( Continued
Segment Reporting and Geographical Area Data
The Fuel Specialties, Performance Chemicals and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different.
−Removed: The Octane Additives segment revenues may conclude in the early part of 2020 as our one remaining refinery customer transitions to unleaded fuel.
+Added: The Octane Additives segment ceased trading and is no longer a reporting segment from July 1, 2020, as reported
+Added: in our Quarterly Report on Form 10-Q
+Added: for the quarter ended June 30, 2020.
Our Fuel Specialties segment develops, manufactures, blends, markets and supplies a range of specialty chemicals products used as additives to a wide range of fuels.
−Removed: Our Performance Chemicals segment provides effective technology-based solutions for our customers’ processes or products focused in the Personal Care, Home Care, Agrochemical and Metal Extraction markets.
−Removed: Our Oilfield Services segment develops and markets products to prevent loss of mud in drilling operations, chemical solutions for fracturing and stimulation operations and products for oil and gas production which aid flow assurance and asset integrity.
−Removed: 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.
+Added: Our Performance Chemicals
+Added: segment provides effective technology-based solutions for our customers’ processes or products focused in the Personal Care, Home Care, Agrochemical and Metal Extraction
+Added: Our Oilfield Services segment develops and markets chemical solutions for fracturing, stimulation and stimulation 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.
+Added: The Octane Additives business has ceased trading and is no longer a reporting segment from July 1, 2020 as the production of TEL for use in motor gasoline has finished.
+Added: Legacy costs related to these operations are now being recorded as operating expenses within corporate costs.
There are no significant customers with sales greater than 10% of our net group sales in the last three financial years.
22 unchanged sentences
Restructuring charge
−Removed: Loss on disposal of subsidiary
−Removed: Foreign exchange loss on liquidation of subsidiary
+Added: Impairment of intangible assets
Total operating income
4 unchanged sentences
Octane Additives
−Removed: Identifiable assets relating to the TEL operations are included within our Octane Additives segment in the table above, as they cannot be separately reported for the periods shown.
−Removed: Our TEL operations produce TEL for automotive gasoline, which is reported in our Octane Additives segment, and produce TEL for our AvTel product line, which is reported in our Fuel Specialties segment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: Identifiable assets relating to our tetra ethyl lead (“TEL”) operations are included within our Fuel Specialties segment in 2020 and in our Octane Additives segment in 2019 and 2018, as shown in the table above.
+Added: Octane Additives ceased trading on June 30, 2020 and is no longer a reporting segment after that date.
+Added: As a result, it is now appropriate to report the identifiable assets relating to the remaining TEL production within Fuel Specialties from July 1, 2020.
+Added: Our TEL operations historically produced TEL for automotive gasoline, which is reported in our Octane Additives segment for the years presented above, and for our AvTel product line, which is reported in our Fuel Specialties segment.
The Company includes within the corporate costs line item the costs of:
3 unchanged sentences
the corporate development function since they do not relate to the current trading activities of our other reporting segments;
−Removed: the corporate share of the information technology, production technology, safety, health, environment, accounting and human resources departments.
+Added: the corporate share of the information technology, product technology, safety, health, environment, accounting and human resources departments.
The following tables analyze sales and other financial information by location:
16 unchanged sentences
Rest of World
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: (in millions)
Identifiable assets at year end:
3 unchanged sentences
Rest of World
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Sales by geographical area are reported by source, being where the transactions originated.
14 unchanged sentences
Net income per share, diluted:
−Removed: In 2019, 2018 and 2017 the average number of anti-dilutive options excluded from the calculation of diluted earnings per share were 6,270 , 0 and 9,422 respectively.
+Added: In 2020, 2019 and 2018 the average number
+Added: of anti-dilutive options excluded from the calculation of diluted earnings per share were
+Added: 17,980 , 6,270 and
+Added: 0 respectively.
+Added: Restructuring
+Added: During 2020, the Company recorded a charge
+Added: of $ 21.3 million for the restructuring of its Octane Additives segment in line with the end of the manufacturing and sale of TEL for use in
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: motor gasoline.
+Added: As a result, the Octane Additives segment ceased trading and is no longer a reporting segment from July 1, 2020.
+Added: Production of TEL will continue for sales to the aviation market (“AvTel”), as reported within our Fuel Specialties segment.
+Added: The restructuring charge
+Added: the future committed costs of environmental monitoring of $ 2.0 million, remediation of facilities of $ 7.5 million, contract termination costs o f
+Added: $ 7.2 million, impairment of tangible assets of $ 2.0 million and costs of redundancy due to the down-sizing
+Added: of the TEL operations of $ 2.6 million.
+Added: During the year
+Added: ended December 31
+Added: , 2020 the utilization and the unwinding of the discounting was not material.
Property, Plant and Equipment
2 unchanged sentences
Work in progress
−Removed: Less accumulated depreciation
+Added: Less accumulated depreciation and impairment
Of the total net book value of equipment at December 31, 2020 $ 1.0 million (2019 – $ 1.8 million) are in respect of assets held under finance leases.
Depreciation charges were $ 24.7 million, $ 23.6 million and $ 22.6 million in 2020, 2019 and 2018, respectively.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: An impairment charge of $ 2.0 million was incurred in 2020
+Added: as a result of the Octane Additives segment ceasing to trade on June 30, 2020.
We have operating and finance leases for toll manufacturing facilities, warehouse storage, land, buildings, plant and equipment.
Our leases have remaining lease terms of up to 10 years , some of which include options to terminate the leases within 1 year .
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The components of lease expense were as follows:
2 unchanged sentences
Ended December 31
+Added: Twelve Months
+Added: Ended December 31
Finance lease cost:
10 unchanged sentences
Ended December 31
+Added: Twelve Months
+Added: Ended December 31
Cash paid for amounts included in the measurement of lease liabilities:
16 unchanged sentences
Accumulated depreciation
−Removed: Net property, plant and equipment, net
+Added: Net property, plant and equipment
Current portion of finance leases
12 unchanged sentences
Less imputed interest
−Removed: As of December 31, 2019, additional operating and finance leases that have not yet commenced are $0.0 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: Future lease payment for all non -
−Removed: able operating and finance leases as of December 31, 2018 were
−Removed: as follows, as accounted for under the previous lease standard, ASC 840.
−Removed: As such the amounts are not directly comparable to those included above.
+Added: As of December 31, 2020, additional operating and finance leases that have not yet commenced are $
+Added: Future lease payment for all non-cancellable
+Added: operating and finance leases as of December 31, 2019 were as follows:
(in millions)
1 unchanged sentence
Total lease payments
+Added: Less imputed interest
+Added: As of December 31, 2019, additional operating and finance leases that have not yet commenced are $ 0.0
The following table analyzes goodwill movement for 2020 and 2019.
6 unchanged sentences
At December 31, 2019
−Removed: Gross cost (1)
Accumulated impairment losses
2 unchanged sentences
At December 31, 2020
−Removed: Gross cost (1)
Accumulated impairment losses
Net book amount
−Removed: Gross cost is net of $ 8.7 million, $ 0.3
−Removed: million and $ 289.5
−Removed: million of historical accumulated amortization in respect of the Fuel Specialties, Performance Chemicals and Octane Additives reporting segments, respectively
+Added: TO THE CONSOLIDATED FINANCIAL STATEMENTS—( Continued
+Added: Gross cost is net of $ 8.7 million, $ 0.3 million and $ 289.5 million of historical accumulated amortization in respect of the Fuel Specialties, Performance Chemicals and Octane Additives reporting segments, respectively.
The Company’s reporting units, the level at which goodwill is tested for impairment, are consistent with the reportable segments:
−Removed: Fuel Specialties, Performance Chemicals, Oilfield
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: Services and Octane Additives.
+Added: Fuel Specialties, Performance Chemicals and Oilfield Services.
+Added: 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.
+Added: As a result the gross cost and the accumulated impairment losses have been written down to nil .
The components in each segment (including products, markets and competitors) have similar economic characteristics and the segments, therefore, reflect the lowest level at which operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Company.
2 unchanged sentences
The Company performed its annual impairment assessment in respect of goodwill as at December 31, 2020, 2019 and 2018.
−Removed: Our impairment assessment concluded that there had been no
+Added: Our impairment assessment concluded that there had been
impairment of goodwill in respect of those reporting units.
+Added: Due to the triggering events of the COVID-19 pandemic and the reduction in oil prices and their impact on our business, we performed a step one impairment review at June 30, 2020.
+Added: The impairment assessment indicated the fair values substantially exceeded the carrying values for all operating segments.
We believe that where appropriate the assumptions used in our impairment assessments are reasonable, but that they are judgmental, and variations in any of the assumptions may result in materially different calculations of any potential impairment charges.
3 unchanged sentences
(in millions)
−Removed: – Product rights
−Removed: – Brand names
−Removed: – Customer and distributor relationships
−Removed: – Non-compete
−Removed: – Marketing related
−Removed: – Internally developed software
−Removed: Accumulated amortization:
+Added: Gross cost at January 1
+Added: Exchange effect
+Added: Gross cost at December 31
+Added: Accumulated amortization at January 1
+Added: Amortization expense
+Added: Exchange effect
+Added: Accumulated amortization at December 31
+Added: Net book amount at December 31
+Added: Amortization expense
+Added: The amortization expense was $ 20.9 million, $ 23.0 million and $ 26.3 million in 2020, 2019 and 2018, respectively.
+Added: Excluding the impact of foreign exchange translation on the balance sheet, $ 2.9 million, $ 3.4 million and $ 3.4 million of amortization, respectively, was recognized in cost of goods sold, and the remainder was recognized in selling, general and administrative expenses.
+Added: During the quarter ended June 30, 2020, the Company performed an impairment review over the assets of each operating segment.
+Added: This indicated the fair values substantially exceeded the carrying values for all operating segments.
+Added: Further, the Company also performed an impairment review over each of the businesses within the Oilfield Services segment, as a result of reduction in demand for drilling related products.
+Added: A discounted cash flow analysis was performed to determine the fair value of the assets.
+Added: This indicated that the intangible assets arising from the acquisition of Strata Control Services Inc.
+Added: were impaired.
+Added: The impaired assets relate to technology ($ 10.0 million) and customer relationships ($ 9.8 million).
+Added: There was no impairment indicated on the other businesses within the Oilfield Services operating segment.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: The net book amount by category of other intangible assets is shown in the following table:
+Added: (in millions)
Product rights
−Removed: – Brand names
−Removed: – Customer and distributor relationships
−Removed: – Non-compete
−Removed: – Marketing related
+Added: Customer relationships
Internally developed software
−Removed: Amortization expense
−Removed: The aggregate of other intangible asset amortization expense was $ 23.0 million (excluding the impact of foreign exchange translation on the balance sheet), $ 26.3 million and $ 28.3 million in 2019, 2018 and 2017, respectively, of which $ 3.4 million, $ 3.4 million and $ 4.3 million, respectively, was recognized in cost of goods sold, and the remainder was recognized in selling, general and administrative expenses.
Future amortization expense is estimated to be as follows for the next five years:
(in millions)
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pension and Post-Employment Benefits
24 unchanged sentences
Plan asset allocation by category (%):
−Removed: securities and insura nce contracts
−Removed: securities and real estate
+Added: Debt securities and insurance contracts
+Added: Equity securities and real estate
The discount rate used represents the annualized yield based on a cash flow matched methodology with reference to an AA corporate bond spot curve and having regard to the duration of the Plan’s liabilities.
+Added: The model used to develop the discount rate for the year ending December 31, 2019 has been updated for the year ending December 31, 2020.
+Added: Management’s experts have used the same data source as the prior year for the bond rate used to determine the discount rate, however this data source now uses inputs from a different range of categories of bonds.
+Added: The impact of this change has resulted in an increase of 0.13 % in the discount rate assumption, which has resulted in a reduction to the Pension Benefit Obligation of around $ 14 million.
The inflation rate is derived using a similar cash flow matched methodology as used for the discount rate but having regard to the difference between yields on fixed interest and index linked United Kingdom government gilts.
−Removed: A 0.25 % change in the discount rate assumption would change the PBO by approximately $ 24 million and the net pension credit for 2019 would change by approximately $ 0.1 million.
−Removed: A 0.25 % change in the level of price inflation assumption would change the PBO by approximately $ 18 million and the net pension credit for 2019
−Removed: by approximately $ 1.1
+Added: A 0.25 % change in the discount rate assumption would change the PBO at December 31, 2020 by approximately
+Added: and the net pension credit for 2021 would change by approximately
+Added: $ 0.4 million.
+Added: A 0.25 % change in the level of price inflation assumption would change the PBO at December 31, 2020 by approximately
+Added: $ 19 million and the net pension credit for 2021 by approximately
+Added: $ 1.2 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5 unchanged sentences
Benefits paid
−Removed: Actuarial losses/(
Plan amendments
+Added: Actuarial losses
Exchange effect
2 unchanged sentences
Opening balance
+Added: Benefits paid
Actual contributions by employer
2 unchanged sentences
Closing balance
−Removed: The current investment strategy of the Plan is to obtain an asset allocation of approximately 85% debt securities and insurance contracts and
−Removed: 15% equity securities a nd real estate
−Removed: in order to achieve a more predictable return on assets.
−Removed: Due to the change in the Plan’s investment strategy in 2018 the Plan’s assets no longer include index-tracking funds (December 31, 2018 – nil ).
+Added: The current investment
+Added: strategy of the Plan
+Added: is to obtain an asset allocation of approximately 85% debt securities and insurance contracts and 15% equity securities and real estate in order to achieve a more predictable return on assets.
The Plan holds approximately 11 % (December 31, 2019 – 12 %) of the Plan’s assets in debt securities issued by non-US
2 unchanged sentences
For the vast majority of assets, a market approach is adopted to assess the fair value of the assets, with the inputs being the quoted market prices for the actual securities held in the relevant fund.
+Added: Debt securities
Fixed income securities are valued based on quotations received from independent pricing services or from dealers who make markets in such securities and are classified as Level 1.
1 unchanged sentence
Equity backed securities
−Removed: Common and preferred stock for which market prices are readily available at the measurement date are valued at the last reported sale price or official closing price on the primary market or exchange on which they are actively traded.
−Removed: Other financial derivatives are classified as level 2 and certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been categorized with a hierarchy
+Added: Common and preferred stock for which market prices are readily available at the measurement date are valued at the last reported sale price or official closing price on the primary market or
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: exchange on which they are actively traded.
+Added: Other financial derivatives are classified as level 2 and certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been categorized with a hierarchy.
Other asset backed securities
9 unchanged sentences
At December 31, 2020
+Added: Debt securities
Debt securities issued by non-U.S.
3 unchanged sentences
Other financial derivatives
−Removed: Investments measured at net asset value (1)
+Added: Investments measured at net asset
Other asset backed securities:
2 unchanged sentences
Total plan assets
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: (in millions)
+Added: Quoted Prices
+Added: Identical Assets
At December 31, 2019
+Added: Debt securities:
Debt securities issued by non-U.S.
8 unchanged sentences
Total plan assets
−Removed: Certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been categorized in the fair value tab le with a
+Added: Certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been categorized in the fair value table with a hierarchy.
The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The reconciliation of the fair value of the Plan assets measured using significant unobservable inputs was as follows:
11 unchanged sentences
Balance at December 31, 2020
−Removed: The projected net service cost for the year ending December 31, 2020 is $ 1.2
−Removed: million and will be recognized in selling, general and administrative expenses.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: The projected net service cost for the year ending December 31, 2021 is $ 1.6 million and will be recognized in selling, general and administrative expenses.
The following net pension credit will be recognized in other income and expense:
4 unchanged sentences
Amortization of actuarial net losses
−Removed: In total, there will be a net pension credit of $ 5.6
−Removed: million to the Innospec’s net income for the year ending December 31, 2020.
+Added: In total, there will be a net pension credit of $ 4.4 million to the Innospec’s net income for the year ending December 31, 2021.
The following benefit payments are expected to be made:
(in millions)
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company also maintains an unfunded defined benefit pension plan covering a number of its current and former employees in Germany (the “German plan”).
The German plan is closed to new entrants and has no assets.
−Removed: The net service cost for the German plan for the twelve months ended December 31, 2019 was $ 0.1
−Removed: million (twelve months ended December 31, 2018 – $ 0.2
−Removed: million and twelve months ended December 31, 2017 – $ 0.2
+Added: The net service cost for the German plan for the twelve months ended December 31, 2020 was $ 0.1 million (twelve months ended December 31, 2019 – $ 0.1 million and twelve months ended December 31, 2018 – $ 0.2 million).
The following table shows the income statement effect recognized within other income and expense:
3 unchanged sentences
Amortization of actuarial net loss
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Plan assumptions at December 31, (%):
11 unchanged sentences
Closing balance
−Removed: As at December 31, 2019, we have post-employment obligations in our European businesses with a liability of $ 4.5
−Removed: million (December 31, 2018 – $ 4.4
+Added: As at December 31, 2020, we have post-employment obligations in our European businesses with a liability of $ 5.3 million (December 31, 2019 – $ 4.5 million).
For the year ended December 31, 2020 we have recognized an actuarial loss of $ 0.2 million in other comprehensive loss in relation to the Performance Chemicals pension in France.
4 unchanged sentences
Opening balance at January 1, 2018
−Removed: for tax positions of prior periods
+Added: Additions for tax positions of prior periods
Reductions due to lapsed statute of limitations
Closing balance at 31 December, 2018
−Removed: Ope ning balance at January 1, 2018
−Removed: Addition s for tax positions of p rior periods
−Removed: Reductions due to lapsed statute of limitations
+Added: Opening balance at January 1, 2019
+Added: Additions for tax positions of prior periods
Closing balance at 31 December, 2019
Opening balance at January 1, 2020
+Added: Reductions for tax positions of prior periods
Additions for tax positions of prior periods
1 unchanged sentence
All of the $ 16.0 million of unrecognised tax benefits would impact our effective tax rate if recognised.
−Removed: ax audits have been opened by the Italian tax authorities in respect of
−Removed: Innospec Performance Chemicals Italia Srl, acquired as part of the Huntsman business, in relation to the period
−Removed: 2013 inclusive.
−Removed: uring the third quarter of 2019, the Italian tax authorities opened a tax au dit into 2014 .
−Removed: The Company believes that additional tax of approximately $
−Removed: 0.5 million, together with associated interest of $
−Removed: 0.2 million, may arise as a result of the
−Removed: This amount was recorded at December
−Removed: 2018 , the Company determined that additional tax of approximately $
−Removed: 0.9 million, together with associated interest of $
−Removed: 0.3 million, may arise as a result of the
−Removed: 2013 audits collectively.
−Removed: Duri ng 2019, the company recor ded additi onal tax of $ 1.0 million in relation to 2014, together with additional interest of $ 0.5 million relating to all years.
−Removed: As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an unre co gnized t a x bene fit of $ 3.4 million is recorded, together with an
+Added: As previously disclosed, a non-US
+Added: subsidiary, Innospec Performance Chemicals Italia Srl , is subject to an ongoing tax audit in relation to the period 2011 to 2014 inclusive.
+Added: The Company has determined that additional tax, interest and penalties totaling $ 3.4 million may arise as a consequence of the tax audit.
+Added: This includes a reduction in interest accrued of $ 0.2 million and an increase for foreign exchange movements of $ 0.2 million recorded during 2020.
+Added: As any additional tax arising as a consequence of the tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount is recorded in the financial statements to reflect this arrangement.
+Added: As previously disclosed, in 2018 the Company recorded an unrecognized tax benefit in relation to a potential adjustment that could arise as a consequence of the Tax Act, but for
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: indemnification asset of the same amount to reflect the fact that the final liability would be reimbursed by the previous owner.
−Removed: n the fourth quarter of 2018, the Company recorded an uncertain tax position of $ 10.8
−Removed: This portion primarily related to a potential adjustment that could arise as a consequence of the Tax Act, but for which retrospective adjustment to the filed 2017 U.S.
+Added: which retrospective adjustment to the filed 2017 U.S.
federal income tax returns was not permissible.
−Removed: Additional interest
−Removed: of $ 0.9 million has bee n re corded during the period e nding December 31, 2019
−Removed: Innospec Performance Chemicals France SAS and Innospec Saint-Mihiel SAS are currently subject to a corporate income tax audit in France in respect of 2016 to 2018 .
−Removed: The Company currently anticipates that adjustments, if any, arising out of this tax audit would not result in a material change to the Company’s financial position as at December 31, 2019.
−Removed: Any additional tax arising as a consequence of the 2016 tax audit would be reimbursed by the previous owner under the terms of the sale and purchase agreement.
+Added: The Company has determined that additional tax, interest and penalties totaling $ 12.4 million may arise in relation to this item.
+Added: This includes an increase in interest accrued of $ 0.7 million during 2020.
+Added: As previously disclosed, in 2015 the Company recorded an unrecognized tax benefit of $ 1.2 million in relation to additional tax that could have arisen if a historical impairment in value of certain of the Company’s non-U.S.
+Added: subsidiaries was reversed upon challenge by the tax authorities.
+Added: During 2020, the Company released the provision of $ 1.2 million in full, together with accrued interest of $ 0.2 million thereon, following a review of the value of the Company’s investments that confirmed the historical impairment in value undertaken in 2005 was appropriate.
+Added: Other non-significant
+Added: items, inclusive of interest and penalties, total $ 0.2 million.
The Company and its U.S.
−Removed: subsidiaries remain open to examination by the IRS for years 2016 onwards.
−Removed: The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Spain (2015 onwards), France (2016 onwards), Germany (2016 onwards), Switzerland (2017 onwards) and the United Kingdom (2018 onwards).
+Added: subsidiaries remain open to examination by the IRS for years 2017 onwards under the statute of limitations.
+Added: The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Spain (2016 onwards), France (2017 onwards), Germany (2018 onwards), Switzerland (2018 onwards) and the U.K.
+Added: (2018 onwards).
The sources of income before income taxes were as follows:
11 unchanged sentences
Foreign tax rate differential
−Removed: Tax charge from previous years
−Removed: Net charge/(credit) from unrecognized tax benefits
+Added: Tax charge/(credit) from previous
+Added: Net charge/(credit) from
+Added: unrecognized tax benefits
Foreign currency transactions
1 unchanged sentence
tax law change
−Removed: Tax on unremitted earning s
+Added: Tax on unremitted earnings
Non-deductible
foreign interest
−Removed: Other items and adjustments, ne t
−Removed: The 2019 effective tax rate was negatively impacted by the change in tax estimates for 2018 compared to actual filed returns, including the impact of the final U.S.
−Removed: FDII regulations which were released during the first quarter of 2019.
−Removed: During 2019, the Company recorded additional tax and interest arising as a consequence of the tax audit into Innospec Performance Chemicals Italia Srl.
−Removed: This has had a negative impact on the tax rate in 2019, although any finally determined tax liabilities would be reimbursed by the previous owner under the terms of the sale and purchase agreement.
−Removed: Additional interest arising on the uncertain tax position relating to a potential adjustment that could arise as a consequence of the Tax Act has had a negative impact on the effective tax rate in 2019.
−Removed: In the United Kingdom, tax legislation prohibits a tax deduction in relation to certain intercompany interest expense arising.
−Removed: This has also had a negative impact on the effective tax rate in 201 9
−Removed: Other items do not have a material impact on the effective tax rate.
+Added: Change in UK statutory tax rate
+Added: State and local taxes
+Added: US incentive for foreign derived intangible income
+Added: Innovation incentives – current year
+Added: Innovation incentives – prior years
+Added: Non-deductible
+Added: officer compensation
+Added: Other items and adjustments, net
+Added: The mix of taxable profits generated in the different geographical jurisdictions in which the Group operates continues to have a significant impact on the effective tax rate.
+Added: In 2020, a significant proportion of the Group’s profits were generated by non-U.S.
+Added: subsidiaries located in higher tax jurisdictions, which negatively impacted on the tax rate.
+Added: Foreign income inclusions arise each year from certain types of income earned overseas being taxable under U.S.
+Added: tax regulations.
+Added: Foreign tax credits can fully or partially offset these incremental U.S.
+Added: taxes from foreign income inclusions.
+Added: The utilization of foreign tax credits varies year on year as this is dependent on a number of variable factors which are difficult to predict and may prevent offset.
+Added: The effective tax rate is negatively impacted by the net impact of foreign inclusions post foreign tax credit usage in 2020.
+Added: The 2020 effective tax rate was negatively impacted by the change in tax estimates for 2019 when compared to finalized positions as determined for the purpose of filing tax returns.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: Details of deferred tax assets and liabilities are analyzed as follows:
+Added: An increase in the enacted income tax rate in the UK on the Company’s deferred tax liabilities, which increased the 2020 tax charge by $ 2.7 million, had a negative impact on the effective tax rate.
+Added: The effective tax was also positively impacted by increased claims for innovation reliefs in the UK and the US.
+Added: This reduced the tax charge in 2020 by $ 4.0 million.
+Added: As a consequence of the Company having operations
+Added: outside of the U.S., it is exposed to foreign currency fluctuations.
+Added: These have a positive effect on the effective tax rate in 2020.
+Added: Other items do not have a material impact on the effective tax rate.
+Added: Details of deferred tax assets and liabilities are analyzed
(in millions)
5 unchanged sentences
Restructuring provision
−Removed: Foreign t ax credits
+Added: Foreign tax credits
+Added: Operating lease liabilities
Less valuation allowance
7 unchanged sentences
Unremitted overseas earnings
+Added: Right-of-use assets
Total deferred tax liabilities
2 unchanged sentences
Deferred tax liabilities
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.
3 unchanged sentences
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carry forward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: Gross net operating loss carry forwards of $ 33.7 million result in a deferred tax asset of $ 7.3 million , ne t of valuation allowances
+Added: Gross net operating loss carry forwards of $ 67.1 million result in a deferred tax asset of $ 8.7 million, net of valuation allowances.
The net operating loss carry forwards arose in the U.S.
−Removed: of the Company’s foreign subsidiaries.
−Removed: Net operating loss carry forwards of $ 3.9 million arose from state tax losses in prior periods in certain of the Company’s U.S.
−Removed: subsidiaries.
+Added: and in five of the Company’s foreign subsidiaries.
+Added: Net operating loss carry forwards of $ 36.5 million arose in the U.S.
It is expected that sufficient taxable profits will be generated in the U.S.
−Removed: against which the state net operating loss carry forwards of $ 3.8 million can be relieved before their expiration in the period
−Removed: 2031 to 2038.
−Removed: The remaining $ 0.1 million of the U.S.
−Removed: net operating losses can be carried forward indefinitely without expiration.
−Removed: Net operating loss carry forwards of $ 29.8 million arose in five of the Company’s foreign subsidiaries.
−Removed: It is expected that sufficient taxable profits will be generated against which $ 26.4 million of these net operating loss carry forwards can be relieved.
+Added: against which $ 10.7 million of State net operating loss carry forwards can be relieved before their expiration in the period 2031 to 2040.
+Added: The remaining U.S.
+Added: State net operating losses and all U.S.
+Added: Federal net operating losses can be carried forward indefinitely without expiration.
+Added: Net operating loss carry forwards of $ 30.6 million arose in five of the Company’s foreign
+Added: subsidiaries, of which $ 1.3 million were generated in 2020
+Added: It is expected that sufficient taxable profits will be generated against which $ 24.4
+Added: million of these net operating loss carry forwards can be relieved.
These losses can be carried forward indefinitely without expiration.
5 unchanged sentences
Less current portion
−Removed: On September 26, 2019, Innospec and certain of its subsidiaries entered into a new agreement for a $ 250.0 million revolving credit facility until September 25, 2023
−Removed: with an option to request an extension to the facility for a further year.
−Removed: The facility also contains an accordion feature whereby the Company may elect to increase the total available borrowings by an aggregate amount of up to $ 125.0 million.
+Added: As at December 31, 2020, the Company had repaid all of its borrowings under the revolving credit facility and as a result, the related deferred finance costs of $ 1.3 million are now included within other current and
+Added: assets at the balance sheet date.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: On September 16, 2020, Innospec and certain of its subsidiaries agreed to extend the term of its revolving credit facility, as described below, until September 25, 2024 .
+Added: The costs of $ 0.3 million for extending the term have been capitalized on the balance sheet, which are being amortized over the expected life of the facility.
On September 30, 2019 the Company repaid its pre-existing
−Removed: term loan and revolving credit facility that had been amended and restated on December 14, 2016, and replaced this borrowing with the new credit facility.
+Added: term loan and revolving credit facility that had been amended and restated on December 14, 2016, and replaced this borrowing with the current credit facility, as described below.
As a result, refinancing costs of $ 1.5 million were capitalized which are being amortized over the expected life of the facility.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: On September 26, 2019, Innospec and certain of its subsidiaries entered into a new agreement for a $ 250.0 million revolving credit facility until September 25, 2023 with an option to request an extension to the facility for a further year.
+Added: The facility also contains an accordion feature whereby the Company may elect to increase the total available borrowings by an aggregate amount of up to $ 125.0 million.
(in millions)
11 unchanged sentences
dollars, Euros, British pounds and other freely convertible currencies.
−Removed: The Company’s credit facility contain s
−Removed: restrictive clauses which may constrain our activities and limit our operational and financial flexibility.
+Added: The Company’s credit facility contains restrictive clauses which may constrain our activities and limit our operational and financial flexibility.
The facility obliges the lenders to comply with a request for utilization of finance unless there is an event of default outstanding.
−Removed: Events of default
−Removed: are defined in the credit facility and include a material adverse change to our assets, operations or financial condition.
−Removed: The facility contains a number of restrictions that limit our ability,
−Removed: amongst other things, and subject to certain limited exceptions, to incur additional indebtedness, pledge our assets as security, guarantee obligations of third parties, make investments, undergo a merger or consolidation, dispose of assets, or materially change our line of business.
+Added: Events of default are defined in the credit facility and include a material adverse change to our assets, operations or financial condition.
+Added: The facility contains a number of restrictions that limit our
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: ability, amongst other things, and subject to certain limited exceptions, to incur additional indebtedness, pledge our assets as security, guarantee obligations of third parties, make investments, undergo a merger or consolidation, dispose of assets, or materially change our line of business.
In addition, the credit facility contains terms which, if breached, would result in it becoming repayable on demand.
4 unchanged sentences
Payments of interest on long-term debt were $ 0.8 million, $ 4.8 million and $ 6.5 million in 2020, 2019 and 2018, respectively.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The net cash outflows in respect of refinancing costs were $ 0.3 million, $ 1.5 million and $ 0.0 million in 2020, 2019 and 2018, respectively.
1 unchanged sentence
The Company has continuing plans to close some of its manufacturing facilities at sites around the world as and when those operations are expected to be decommissioned.
−Removed: The liability for estimated closure costs of lnnospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”).
+Added: The liability for estimated closure costs of Innospec’s manufacturing facilities includes costs for decontamination and environmental remediation activities (“remediation”).
As a result, the principal site giving rise to remediation liabilities is the manufacturing site at Ellesmere Port in the United Kingdom, which management believes is the last ongoing manufacturer of TEL.
3 unchanged sentences
Total at January 1
−Removed: Charge for the period
−Removed: Measurement period adjustment on acquisition
+Added: Charge for the period excluding restructuring
+Added: Restructuring (see Note 5)
Utilized in the period
3 unchanged sentences
Due after one year
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.
2 unchanged sentences
The charge for the period in 2020 represents the accretion expense recognized of $ 3.7 million and a further $ 1.4 million primarily in respect of changes in the expected cost and scope of future remediation activities.
−Removed: In 2017, we recognized $ 2.8 million of asset retirement obligations, in relation to the acquisition of our European Performance Chemicals business, as an increase in the value of the tangible assets acquired.
−Removed: This is being depreciated over the remaining useful economic life of those assets.
+Added: The Octane Additives segment ceased trading and is no longer a reporting segment from July 1, 2020.
+Added: As a result, there has been a one-off
+Added: charge of $ 7.5 million for the restructuring activities related to the legacy production of TEL for use in motor gasoline.
We recognize environmental liabilities when they are probable and costs can be reasonably estimated, and asset retirement obligations when there is a legal obligation and costs can be reasonably estimated.
−Removed: The Company has to anticipate the program of work required and the
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: associated future expected costs, and comply with environmental legislation in the countries in which it operates or has operated in.
−Removed: Remediation expenditure utilized provisions of $ 4.4 million, $ 3.1 million and $ 2.4 million in 2019, 2018
−Removed: and 2017, respectively.
+Added: 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.
+Added: Remediation expenditure utilized provisions of $ 4.1 million, $ 4.4 million and $ 3.1 million in 2020, 2019 and 2018, respectively.
Fair Value Measurements
21 unchanged sentences
Foreign currency forward exchange contracts
−Removed: Interest rate swaps
Non-derivatives:
2 unchanged sentences
Derivatives (Level 1 measurement):
−Removed: Other non-current
Foreign currency forward exchange contracts
2 unchanged sentences
Stock equivalent units
−Removed: The following methods and assumptions were used to estimate the fair values of financial instruments:
+Added: The following methods and assumptions were used to estimate the fair values:
Cash and cash equivalents:
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The fair value of derivatives relating to foreign currency forward exchange contracts and interest rate swaps are derived from current settlement prices and comparable contracts using current assumptions.
−Removed: Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: cash positions.
+Added: Foreign currency forward exchange contracts primarily relate to contracts entered into to hedge future known transactions or hedge balance sheet net cash positions.
The movements in the carrying amounts and fair values of these contracts are largely due to changes in exchange rates against the U.S.
Interest rate swaps in the prior year related to contracts taken out to hedge interest rate risk on a portion of our long-term debt.
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock equivalent units:
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The Company does use derivatives to manage certain interest rate, foreign currency exchange rate and raw material cost exposures, as the need arises.
−Removed: The Company pre viously
−Removed: into interest rate swap contracts to reduce interest rate risk on its core debt.
−Removed: As at December 31, 2019, there were no interest rate swaps in pl a ce with all sw aps having bee n settled during the year .
−Removed: 31, 2018, ther e were
−Removed: interest rate swaps with a notional value of $ 132.5 million in place
−Removed: Interest rate swaps were
−Removed: in place to hedge interest rate risk on the term loan for a notional value that matche d
−Removed: the repayment profile of the term loan.
−Removed: These interest rate swaps we re
−Removed: designated as hedging instruments, and their impact on other comprehensive loss for 2019 was a loss
−Removed: of $ 1.9 million (2018 – gain $ 0.4 million).
+Added: The Company previously entered into interest rate swap contracts to reduce interest rate risk on its core debt.
+Added: As at December 31, 2020 and at December 31, 2019, there were no interest rate swaps in place with all swaps having been settled during 2019.
+Added: Interest rate swaps were previously in place to hedge interest rate risk on the term loan for a notional value that matched the repayment profile of the term loan.
+Added: The interest rate swaps in the prior years were designated as hedging instruments, and their impact on other comprehensive loss for 2019 was a loss of $ 1.9 million.
The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows.
−Removed: As at December 31, 2019, foreign currency forward exchange contracts with a notional value of $ 108.9 million were in place (December 31, 2018 $ 108.7 million), with maturity dates of up to one year
−Removed: from the date of inception.
−Removed: These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for 2019 was a gain
−Removed: of $ 1.5 million (2018 – loss $ 1.8 million).
+Added: As at December 31, 2020, foreign currency forward exchange contracts with a notional value of $ 127.2 million were in place (December 31, 2019 $ 108.9 million), with maturity dates of up to one year from the date of inception.
+Added: These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for 2020 was a loss of $ 1.5 million (2019 – gain $ 1.5 million).
As at December 31, 2020 and December 31, 2019 the Company did not hold any raw material derivatives.
−Removed: The Company sells a range of specialty chemicals to major oil refineries and chemical companies throughout the world.
+Added: The Company sells a range of specialty chemicals to major oil refiners and chemical companies throughout the world.
Credit limits, ongoing credit evaluation and account monitoring procedures are intended to minimize bad debt risk.
2 unchanged sentences
Environmental remediation obligations
−Removed: Commitments in respect of environmental remediation obligations are disclosed in Note 12 of the Notes to the Consolidated Financial Statements.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: Commitments in respect of environmental remediation obligations are disclosed in Note 13
+Added: of the Notes to the Consolidated Financial Statements.
Capital commitments
The estimated additional cost to complete work in progress at December 31, 2020 is $ 14.7 million (2019 – $ 4.0 million).
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Contingencies
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
−Removed: At December 31, 2019, the Company had authorized common stock of 40,000,000
+Added: At December 31, 2020, the Company had authorized common stock of 40,000,000 shares (2019 – 40,000,000 ).
Stock-Based Compensation Plans
Stock option plans
−Removed: The Company has two
−Removed: stock option plans, the Omnibus Long-Term Incentive Plan and the Share S
−Removed: ave Plan 2008 under which it currently grants awards.
−Removed: The stock options have vesting periods ranging from 24 months to 5 years and in all cases stock options granted expire within 10 years of the date of grant.
+Added: The Company has two stock option plans, the Omnibus Long-Term Incentive Plan and the ShareSave Plan 2008 under which it currently grants awards.
+Added: The stock options have vesting periods ranging from 2 to 5 years and in all cases stock options granted expire within 10 years of the date of grant.
All grants are at the sole discretion of the Compensation Committee of the Board of Directors.
1 unchanged sentence
The aggregate number of shares of common stock reserved for issuance which can be granted under the plans is 2,550,000 .
+Added: In the fourth quarter of 2020, a number of stock options that were granted to 14 employees in February 2018 were modified to extend the vesting period by two years .
+Added: The incremental compensation cost resulting from the modifications was $ 2.4 million, resulting from the performance targets that were not achieved in 2020 being extended to a future period.
The fair value of stock options is measured on the grant date using either the Black-Scholes model, or in cases where performance criteria are dependent upon external factors such as the Company’s stock price, using a Monte Carlo model.
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Outstanding at December 31, 2020
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
At December 31, 2020, there were 42,657 stock options that were exercisable, 15,611 had performance conditions attached.
The Company’s policy is to issue shares from treasury stock to holders of stock options who exercise those options, but if sufficient treasury stock is not available, the Company will issue previously unissued shares of stock to holders of stock options who exercise options.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The stock option compensation cost for 2020, 2019 and 2018 was $ 5.8 million, $ 6.6 million and $ 4.9 million, respectively.
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stock options not yet recognized at December 31, 2020 was $ 6.8 million and this cost is expected to be recognized over the weighted-average period of 1.59 years.
−Removed: 2019 , the Company recorded a current tax benefit of $
−Removed: 1.5 million in respect of stock option compensation
−Removed: 1.2 million).
+Added: In 2020, the Company recorded a current tax benefit of $ 1.6 million in respect of stock option compensation (2019 – $ 1.5 million).
This amount is inclusive of excess tax benefits.
3 unchanged sentences
SEUs are cash settled equity instruments conditional on certain performance criteria and linked to the Innospec Inc.
−Removed: SEUs have vesting periods ranging from 11 months to 4 years and in all cases SEUs granted expire within 10 years of the date of grant.
+Added: SEUs have vesting periods ranging from 2 to 5 years and in all cases SEUs granted expire within 10 years of the date of grant.
Grants may be priced at market value or at a premium or discount.
There is no limit to the number of SEUs that can be granted.
−Removed: As at December 31, 2019 the liability for SEUs of $ 24.6 million is in clu ded
−Removed: in accrued liabilities in the consolidated balance sheets until they are cash settled.
+Added: As at December 31, 2020 the liability for SEUs of $ 17.2 million is included in accrued liabilities in the consolidated balance sheets until they are cash settled.
+Added: In the fourth quarter of 2020, a number of SEUs that were granted to 61 employees in February 2018 were modified to extend the vesting period by two years .
+Added: The adjusted compensation cost resulting from the modifications has been recognised by the fair valuation at the balance sheet date based on the extended vesting period.
The fair value of SEUs is measured at the balance sheet date using either the Black-Scholes model, or in cases where performance criteria are dependent upon external factors such as the Company’s stock price, using a Monte Carlo model.
1 unchanged sentence
Dividend yield
−Removed: Ex pected life
+Added: Expected life
Risk free interest rate
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
+Added: TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the transactions of the Company’s SEUs for the year ended December 31, 2020:
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Statement where
−Removed: Net Income is Presented
+Added: Income is Presented
Details about AOCL Components
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Total reclassifications
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
These items are included in the computation of net periodic pension cost.
See Note 9 of the Notes to the Consolidated Financial Statements for additional information.
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Changes in accumulated other comprehensive loss for 2020, net of tax, were:
7 unchanged sentences
Recently Issued Accounting Pronouncements
−Removed: In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.
−Removed: Financial Instruments – Credit Losses (ASC Topic 326).
−Removed: This replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects
−Removed: expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
−Removed: We will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments.
−Removed: Credit losses relating to available-for-sale
−Removed: debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
−Removed: The standard will be effective for the Company beginning January 1, 2020.
−Removed: Adoption of the standard will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard.
−Removed: the impact of this standard on our consolidated financial statements, including accounting policies, processes and systems.
−Removed: t the impact on the financial statements of ad opting this standard to be minimal.
+Added: In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.
+Added: Simplifying the Accounting for Income Taxes (Topic 740).
+Added: This removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance.
+Added: This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted.
+Added: The Company will be applying this ASU from January 1, 2021.
+Added: We are currently evaluating the impact of adopting this new accounting guidance on our consolidated financial statements, including accounting policies, processes and systems, but we do not expect adoption will have a material impact on the Company’s disclosures.
Related Party Transactions
+Added: Williams has been an executive director of the Company since April 2009 and has been a non-executive
+Added: director of AdvanSix, a chemicals manufacturer, since February 2020.
+Added: In 2020 the Company purchased product from AdvanSix for $ 0.3
+Added: As at December 31, 2020, the Company owed $ 0.0
+Added: million to AdvanSix.
Paller has been a non-executive
2 unchanged sentences
Paller holds a position.
−Removed: In 2019, 2018 and 2017 the Company incurred fees payable to SGR of $ 0.5 million, $ 0.3 million and $ 0.4 million, respectively.
−Removed: As at December 31, 2019 and at December 31, 2018, the Company did no
−Removed: t have any amounts outstanding due to SGR.
+Added: In 2020, 2019 and 2018 the Company incurred fees payable to SGR of $ 0.8
+Added: million, $ 0.5
+Added: million and $ 0.3
+Added: million, respectively.
+Added: As at December 31, 2020 the Company owed $ 0.1
+Added: million to SGR
+Added: (December 31, 2019 – $ 0.0 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
1 unchanged sentence
director of the Company since January 1, 2016 and is a non-executive
−Removed: director of Ausurus Group Limited which owns European
−Removed: Recycling Limited (“EMR”).
−Removed: The Company has sold scrap metal to EMR in
−Removed: 2019 for a value of $
−Removed: – $ 0.3 million ;
+Added: director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”).
+Added: The Company has sold scrap metal to EMR in 2020 for a value of $ 0.2
million (2019 – $ 0.4
A tendering process is operated periodically to select the best buyer for the sale of scrap metal by the Company.
−Removed: As at December
−Removed: 2019 EMR owed $
+Added: As at December 31, 2020 EMR owed $ 0.0
million (December 31, 2019 – $ 0.0
−Removed: 0.1 million).
Subsequent Events
2 unchanged sentences
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.