What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-18 compared with 2025-02-19 · 183 added, 220 removed, 933 unchanged (30% of the section changed)

6 unchanged sentences

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 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, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

22 unchanged sentences

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.

Plant Closure Provisions

As described in Notes 2 and 13 to the consolidated financial statements, at December 31, 2024, the Company has recognized plant closure provisions of $60.3 million, the majority of which relates to asset retirement obligations.

The Company recognizes asset retirement obligations when there is an obligation based on a legal requirement, including those arising from Company promises, and the costs can be reasonably estimated.

Plant Closure Provisions - Asset Retirement Obligations

As described in Notes 2 and 13 to the consolidated financial statements, at December 31, 2025, the Company recognized plant closure provisions of $65.1 million, the majority of which related to asset retirement obligations.

The Company recognizes asset retirement obligations when there is an obligation based on a legal requirement, including those arising from a Company promise, and the costs can be reasonably estimated.

The Company must comply with environmental legislation in the countries in which it operates or has operated in and annually reassesses the program of work required.

This includes estimating the credit-adjusted risk free rate and the timing and cost of performing the remediation work.

This includes making significant judgments and estimating the credit-adjusted risk free rate and the timing and cost of performing the remediation work.

Management receives input from specialists to develop these estimates and assumptions utilizing the latest information available together with experience of recent costs.

The principal considerations for our determination that performing procedures relating to the plant closure provisions is a critical audit matter are:

(i) the significant judgment made by management when developing the estimate;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions relating to the recognition and measurement of the asset retirement obligations;

(iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The principal considerations for our determination that performing procedures relating to the plant closure provisions - asset retirement obligations is a critical audit matter are:

(i) the significant judgment made by management, including the use of management's specialists, when developing the estimates;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions relating to the timing and cost of performing the remediation work;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the recognition and measurement of the plant closure provisions.

These procedures also included, among others:

(i) testing management’s process to recognize and measure the plant closure provisions;

(ii) evaluating the appropriateness of the discounted cash flows model;

(iii) testing completeness and accuracy of the underlying data used in the calculation of the plant closure provisions;

(iv) evaluating the reasonableness of significant assumptions related to the assessment of the program of work required;

the timing and cost of performing the remediation work;

and the credit-adjusted risk-free rate;

and (iv) evaluating the scope, competency, and objectivity of management’s specialists based on the work they were engaged to perform.

Professionals with specialized skill and knowledge were used to assist in evaluating management’s method and the reasonableness of the significant assumptions in respect of the program of the work required and the timing and cost of performing the remediation work.

These procedures included testing the effectiveness of controls relating to the recognition and measurement of the asset retirement obligations.

These procedures also included, among others (i) testing management’s process for developing the estimates of the asset retirement obligations;

(ii) evaluating the appropriateness of the discounted cash flows model used by management;

(iii) testing completeness and accuracy of the underlying data used in the calculation of the asset retirement obligations;

(iv) evaluating the scope, competency, and objectivity of management’s specialists based on the work they were engaged to perform;

(v) evaluating the reasonableness of significant assumptions related to the timing and cost of performing the remediation work.

Evaluating management’s assumptions related to the timing and cost of performing the remediation work involved evaluating whether the assumptions used by management were reasonable considering management’s historical forecasting accuracy of past remediation work, relevant industry forecasts and macroeconomic conditions, and consistency with external market and industry data.

Professionals with specialized skill and knowledge were used to assist in evaluating management’s method and the reasonableness of the significant assumptions in respect of the timing and cost of performing the remediation work.

/s/ PricewaterhouseCoopers LLP

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Adjustment to fair value of contingent consideration

Profit on disposal

Restructuring charge

Impairment of property, plant and equipment

Impairment of intangible assets

Profit on disposal of property, plant and equipment

Total operating expenses

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Amortization of actuarial net losses/(gains)

Actuarial net losses arising during the year

Actuarial net gains/(losses) arising during the year

Pension scheme settlement

Other comprehensive income, before tax

Income tax income/(expense) related to other comprehensive income

Tax related to cumulative translation adjustment

Tax related to other movements

Total comprehensive income

(1) Amounts are before tax of $ 13.6 million in 2024, $( 2.4 ) million in 2023 and $ 5.5 million in 2022.

The accompanying notes are an integral part of these statements.

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Current portion of plant closure provisions

Current portion of acquisition-related contingent consideration

Current portion of accrued income taxes

Current portion of unrecognized tax benefits

Total current liabilities

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Plant closure provisions, net of current portion

Accrued income taxes, net of current portion

Unrecognized tax benefits, net of current portion

Deferred tax liabilities

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Adjustment to fair value of contingent consideration

Impairment of property, plant and equipment

Impairment of intangible assets

Deferred taxes

Profit on disposal of property, plant and equipment

Non-cash income of defined benefit pension plans

Non-cash movements of defined benefit pension plans

Stock option compensation

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Repayment of term loan

Repayment of finance leases

Refinancing costs

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adjustment, net of tax

Non-controlling interest investment

Share of net income

Treasury stock re-issued

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Amortization of prior service cost,

Amortization of actuarial net losses,

Actuarial net losses during

Amortization of actuarial net gains,

Actuarial net losses arising during

the year, net of tax

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the year, net of tax

Pension scheme settlement

Balance at December 31 2024

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Stock option compensation

Amortization of prior service cost,

Amortization of actuarial net gains,

Actuarial net losses arising during

the year, net of tax

Pension scheme settlement

Balance at December 31 2025

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In accordance with GAAP in the United States of America, the results of operations of an acquired or disposed business are included or excluded from the consolidated financial statements from the date of acquisition or disposal.

During the year, the Company has reclassified prior period amounts to conform to the 2025 presentation relating to research and development expenditure.

The reclassification had no impact on previously reported total net revenue, operating income or net income.

For the year ended December 31, 2025, this has resulted in $ 6.9 million (2024 $ 8.7 million - 2023 $ 7.3 million) of costs that were previously disclosed within selling, general and administrative expenses, being moved to research and development expenses.

Use of estimates:

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Some of our contracts include variable consideration in the form of rebates.

We record rebates at the point of sale as a reduction in sales when we can reasonably estimate the amount of the rebate.

We record rebates at the point of sale as a reduction in sales

when we can reasonably estimate the amount of the rebate.

The estimates are based on our best judgment at the time of sale, which includes anticipated as well as historical performance.

Taxes assessed by a governmental authority which are concurrent with sales to our customers, including sales, use, value-added, and revenue-related excise taxes, are collected by us from the customer and are not included in net sales, but are reflected in accrued liabilities until remitted to the appropriate governmental authority.

When we are responsible for shipping and handling costs after title has transferred, we account for those as fulfilment costs and include them in cost of goods sold.

When we are responsible for shipping and handling costs after title has transferred, we account for those as fulfillment costs and include them in cost of goods sold.

Components of net sales:

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It also comprises commission charges, the costs of sales conferences and trade shows, the cost of advertising and promotions, amortization expense for certain other intangible assets, and the cost of bad and doubtful debts.

General and administrative expenses comprise the cost of support functions including accounting, human resources, information technology and the cost of group functions including corporate management, finance, tax, treasury, investor relations and legal departments.

General and administrative expenses comprise the cost of functions including accounting, human resources, information technology and the cost of group functions including corporate management, finance, tax, treasury, investor relations and legal departments.

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.

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Stock equivalent units are fair valued at each balance sheet date and the fair value is spread over the remaining vesting period of the unit.

The Company operates an employee stock purchase plan, or ESPP, which enables employees to purchase Innospec's stock at a discount.

Business combinations:

The acquisition method of accounting requires that we recognize the assets acquired and liabilities assumed at their acquisition date fair values.

Goodwill is measured as the excess

of consideration transferred over the acquisition date net fair values of the assets acquired and the liabilities assumed.

Goodwill is measured as the excess of consideration transferred over the acquisition date net fair values of the assets acquired and the liabilities assumed.

The determination of the fair values of certain assets and liabilities are usually based on significant estimates provided by management, such as forecast revenue or profit.

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Maintenance and repairs are charged to expenses as incurred.

When assets are sold or retired the associated cost and accumulated depreciation are removed from the consolidated

financial statements and any related gain or loss is included in earnings.

When assets are sold or retired the associated cost and accumulated depreciation are removed from the consolidated financial statements and any related gain or loss is included in earnings.

The estimated useful lives of the major classes of depreciable assets are as follows:

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The Company must comply with environmental legislation in the countries in which it operates or has operated in and annually reassesses the program of work required.

This includes estimating the credit-adjusted risk-free rate and the timing and cost of performing the remediation work.

This includes applying significant judgments and estimating the credit-adjusted risk-free rate and the timing and cost of performing the remediation work.

Management receives input from specialists to develop these estimates and assumptions utilizing the latest information available together with experience of recent costs.

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Movements in the Projected Benefit Obligation (“PBO”) are dependent on our assumptions in respect of the discount rate, annual member mortality rates, future return on assets and future inflation.

The Company previously maintained a defined benefit pension plan covering certain current and former employees in the United Kingdom (the “UK Plan”).

In May 2022, the trustees of the UK Plan entered into an agreement with Legal and General Assurance Society Limited ("L&G") to acquire an insurance policy that operates as an investment asset, with the intent of matching the remaining uninsured part of the UK Plan’s future cash outflow arising from the accrued pension liabilities of members.

Such an arrangement is commonly termed as a “buy-in”.

This followed previous partial buy-ins with Just Retirement Limited ("Just") entered into in 2015.

Since May 2022, the trustees of the UK Plan have been working towards a buy-out, where the company is no longer responsible for the future obligation for retirement benefits due to current and former employees.

This work was completed in the fourth quarter of 2024, with L&G and Just now responsible for the respective members included in the previous buy-ins via issuance of individual insurance policies to members.

Income taxes:

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Segment Reporting and Geographical Area Data

The Performance Chemicals, Fuel Specialties and Oilfield Services segments operate in markets where we actively seek growth opportunities although their ultimate customers are different.

The Company reports its financial performance based on three reportable segments, which are Performance Chemicals, Fuel Specialties and Oilfield Services.

Our Performance Chemicals segment provides innovative technology-based solutions for our customers’ processes or products in personal care, home care, agrochemical, construction, mining and other industrial markets.

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Our Oilfield Services segment develops and markets chemical solutions for drilling, completion, production, DRA and oil and gas applications.

In 2023, the Company had a significant customer in the Oilfield Services segment which accounted for $ 265.2 million and 13.6 % (2022 - $ 222.2 million and 11.3 %) of the group's net sales.

In 2024, the net sales to this customer did not exceed 10 % of the group's net sales.

The Chief Operating Decision Maker (“CODM”) is the President and Chief Executive Officer (the Principal Executive Officer) and is a Director of Innospec Inc..

In 2025 and 2024, the net sales to any single customer did not exceed 10 % of the group's net sales.

In 2023, the Company had a significant customer in the Oilfield Services segment which accounted for $ 265.2 million and 13.6 % of the group's net sales.

The Chief Operating Decision Maker (“CODM”) is the President and Chief Executive Officer (the Principal Executive Officer).

The CODM evaluates the performance of the Company’s segments and makes strategic decisions relating to the Company's allocation of resources, based on the segments' monthly gross profit and operating income.

18 unchanged sentences

Adjustment to fair value of contingent consideration

Profit on disposal

Restructuring charge

Impairment of property, plant and equipment

Impairment of intangible assets

Profit on disposal of property, plant and equipment

Total operating income

3 unchanged sentences

Oilfield Services

The identifiable assets analysis between the Company's reportable segments and Corporate has been updated in 2025, to align with changes made to the information provided to the CODM.

The prior year comparatives have not been adjusted to conform to the current period presentation.

The difference between net sales and gross profit is defined as cost of goods sold.

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Total selling, general and administrative expenses and research and development expenses

The Company includes within the corporate costs line item the costs of:

• managing the group as a company with securities listed on the NASDAQ and registered with the SEC;

• the CEO’s office, group finance, group human resources, group legal and compliance counsel, and investor relations;

• running the corporate offices in the U.S.

• the corporate development function since they do not relate to the current trading activities of our other reporting segments;

• the corporate share of the information technology, product technology, safety, health, environment, accounting and human resources departments.

The Company includes within the Corporate line item the following costs:

• executive offices for the CEO, finance, human resources, legal and compliance counsel, corporate development and investor relations

• centralized functions for product strategy, regulatory, ESG, health and safety, tax, treasury, business assurance and credit control

• group-wide costs related to asset retirement obligations and information technology

The following tables analyze sales and other financial information by location:

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Intercompany sales are priced using an appropriate pricing methodology and are eliminated in the consolidated financial statements.

Long-lived assets are related to property, plant and equipment, other intangibles and operating leases.

Identifiable assets are those directly associated with the operations of the geographical area.

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A portion of the consideration is deferred and payable in cash by December 7, 2026, and contingent on the financial performance of QGP for the 12 months ended June 30, 2026.

In the third quarter of 2025, the Company recorded an $ 18.5 million reduction in the fair value of the expected contingent consideration payable relating to the acquisition of QGP, based on the information available at that time.

The fair value of this deferred, contingent consideration at December 31, 2025 and 2024 was $ 7.0 million and $ 20.1 million, respectively.

This deferred, contingent consideration will be updated at each balance sheet date based on the latest available information.

See Note 14 of the Notes to the Consolidated Financial Statements for additional information relating to the fair value calculation.

Property, Plant and Equipment

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Depreciation charges were $ 32.1 million, $ 31.0 million and $ 27.9 million in 2025, 2024 and 2023, respectively.

We have operating and finance leases for toll manufacturing facilities, warehouse storage, land, buildings, plant and equipment.

During the quarter ended September 30, 2025, the Company impaired property, plant and equipment assets within its Oilfield Services segment.

The impaired assets totaled $ 22.9 million and relate largely to plant and equipment, which are no longer expected to generate sufficient discounted cash flows to support the valuations due to an expected lack of near-term recovery in our oilfield production business in Mexico and our stimulation business in the U.S..

We have operating leases for toll manufacturing facilities, warehouse storage, land, buildings, plant and equipment.

Our leases have remaining lease terms of up to 20 years , some of which include options to terminate the leases within 1 year .

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Short-term lease cost

Variable lease cost

Total lease cost

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Operating cash flows from operating leases

Operating cash flows from finance leases

Right-of-use assets obtained in exchange for new

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Net book amount

Adjustment to the acquired fair values

Exchange effect

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Net book amount

Adjustment to the acquired fair values

Exchange effect

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As a result of these remeasurement period adjustments, there was an increase of $ 3.1 million to the fair value of the net assets acquired, with a corresponding decrease to the acquired goodwill.

On July 31, 2025 the Company completed the acquisition of the trade and net assets of Biotechnology Solutions LLC.

Biotechnology Solutions LLC is a manufacturer and supplier of biology-based solutions for completion, production and stimulation within Oilfield Services and is based in Oklahoma, USA.

The trade and net assets and goodwill has been consolidated into our Oilfield Services business segment.

The consideration includes a deferred portion, contingent on future results.

The fair value of the consideration is immaterial and has initially resulted in recognition of goodwill of $ 2.0 million.

The goodwill recognized is expected to be deductible for income tax purposes.

We have completed our alignment of accounting policies and fair value review on the other net assets acquired.

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.

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Excluding the impact of foreign exchange translation on the balance sheet, $ 1.7 million, $ 2.3 million and $ 2.3 million of amortization, respectively, was recognized in cost of goods sold, and the remainder was recognized in selling, general and administrative expenses.

In 2024, we capitalized $ 20.8 million (2023 - $ 15.1 million) in relation to our internally developed software for a new Enterprise Resource Planning (“ERP”) system covering our all our regions.

The expenses capitalized include the acquisition costs for the software as well as the external and internal costs of the development.

In 2025, we capitalized $ 23.6 million (2024 - $ 20.8 million) in relation to our internal-use developed software for a new Enterprise Resource Planning (“ERP”) system covering all our regions.

The expenses capitalized include the acquisition costs for the software as well as the external consultancy costs and the internal employee costs relating to software development.

The additional completion costs are currently expected to be approximately $ 4.2 million.

Our current plan is to complete the implementation of the new ERP system across all regions by the middle of 2026.

Our current plan is to complete the implementation of the new ERP system by the middle of 2026.

We have determined the useful economic life of the ERP system to be up to 12 years .

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Management also revised the expected useful life of the customer lists from 10 years to 7 years .

In 2023, we capitalized $ 7.3 million in relation to the acquisition of QGP.

During the quarter ended September 30, 2025, the Company impaired the intangible assets arising from the acquisition of QGP, within its Performance Chemicals segment, and Independence Oilfield Chemicals LLC and Bachman Services LLC., within its Oilfield Services segment.

The impaired assets totaled $ 19.1 million and relate to product technology and customer relationships, which are no longer expected to generate sufficient discounted cash flows to support the valuations due to an expected lack of near-term

recovery in QGP, our oilfield production business in Mexico and our stimulation business in the U.S..

Other intangible assets at December 31, 2025 were:

13 unchanged sentences

The Company previously maintained a defined benefit pension plan covering certain current and former employees in the United Kingdom (the “UK Plan”).

Such an arrangement is commonly termed as a “buy-in”.

This followed previous partial buy-ins with Just Retirement Limited ("Just") entered into in 2015.

As a result, the company has recognized a one-off, non-cash settlement charge of $ 155.6 million in the income statement relating to the updated valuations at the time of the buy-out and recycling of historical pension costs previously held in the statement of comprehensive income.

The remaining asset on the balance sheet of $ 2.5 million relates to cash held to cover the remaining expenses of the scheme and a negligible remaining Projected Benefit Obligation ("PBO") of $ 0.1 million, reflecting the UK Plan’s residual liabilities in respect of Guaranteed Minimum Pension equalization top-up payments due to former members of the UK Plan.

In 2024, the Company contributed $ 0.0 million (2023 – $ 0.0 million) in cash to the UK Plan in accordance with an agreement with the trustees.

In September 2024, the Company received $ 8.4 million from the UK Plan as recovery of pension related costs previously incurred, which has been credited against the service cost in 2024, resulting in an associated income tax expense of $ 2.1 million.

In 2024, the Company completed a buy-out of the UK Plan.

The buy-out meant that the Company was no longer responsible for the future obligation for retirement benefits payable to current and former employees.

As a consequence, the Company recognized a one-off, non-cash settlement charge of $ 155.6 million in the income statement relating to the updated valuations at the time of the buy-out and the recycling of historical pension costs previously held in the statement of comprehensive income.

As of December 31, 2024, the remaining asset on the balance sheet was $ 2.5 million, relating to cash held to cover the remaining expenses of the scheme, being partly offset by the remaining Projected Benefit Obligation ("PBO") of $ 0.1 million, reflecting the UK Plan’s residual liabilities in respect of Guaranteed Minimum Pension equalization top-up payments due to former members of the UK Plan.

On July 29, 2025, the UK Plan was fully wound up.

As of December 31, 2025, there were no remaining assets on the balance sheet (December 31, 2024 $ 2.4 million).

Following the UK Plan buy-out, the Company is no longer required to make future cash contributions to the UK Plan.

In 2024, the Company contributed $ 0.0 million in cash to the UK Plan in accordance with an agreement with the trustees.

(in millions)

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Interest cost

Service cost/(credit)

Benefits paid

Plan amendments

Scheme closure expenses

Actuarial losses/(gains)

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Return of funds to cover historic expenses

Scheme closure expenses

Benefits paid

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Total plan assets

At December 31, 2023

Debt securities:

Debt securities issued by non-U.S.

governments and government agencies

Other asset backed securities:

Insurance contracts

Total assets at fair value

Total plan assets

The reconciliation of the fair value of the UK Plan assets measured using significant unobservable inputs was as follows:

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Balance at December 31, 2024

Realized/unrealized gains/(losses):

Relating to assets still held at the reporting date

Purchases, issuances and settlements

Exchange effect

Balance at December 31, 2024

The projected net periodic cost for the year ending December 31, 2025 is as follows:

(in millions)

Interest cost on PBO

Expected return on plan assets

Amortization of prior service credit

Amortization of actuarial net losses

Net periodic cost

The following benefit payments are expected to be made:

(in millions)

The Company also maintains an unfunded defined benefit pension plan covering certain current and former employees in Germany (the “German plan”), which is reported within our Fuel Specialties segment.

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As at December 31, 2025, we have post-employment obligations in our Performance Chemicals European businesses with a liability of $ 3.8 million (December 31, 2024 – $ 4.1 million).

For the year ended December 31, 2024, we have recognized an actuarial gain of $ 0.2 million in other comprehensive loss in relation to the Performance Chemicals pension in France (December 31, 2023 – $ 0.3 million).

For the year ended

December 31, 2025, we have recognized an actuarial gain of $ 0.1 million in other comprehensive loss in relation to the Performance Chemicals pension in France (December 31, 2024 – $ 0.2 million).

Company contributions to defined contribution schemes during 2025 were $ 15.3 million (2024 – $ 13.9 million), across all of our reporting segments.

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:

(in millions)

Opening balance at January 1, 2022

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2022

Opening balance at January 1, 2023

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2023

Opening balance at January 1, 2024

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2024

As at December 31, 2024, the Company has no unrecognized tax benefits.

In 2021 a non-U.S.

subsidiary, Innospec Limited, entered into a review by the U.K.

tax authorities under the U.K.’s Profit Diversion Compliance Facility (“PDCF”) in relation to the period 2017 to 2020 inclusive.

The Company had determined that additional tax and interest totaling $ 1.2 million would arise as a consequence of the review.

During the quarter ended September 30, 2024 the Company and the U.K.

tax authorities reached agreement on this position, and the liability was settled.

The liability which was agreed on ultimate settlement was consistent with the amount recorded as a liability, and this item has been released from unrecognized tax benefits and recognized in income taxes.

subsidiary, Innospec Performance Chemicals Italia Srl, was subject to a tax audit in relation to the period 2011 to 2014 inclusive.

The Company had determined that additional tax, interest and penalties totaling $ 3.4 million would arise as a consequence of the tax audit.

As any additional tax arising as a consequence of the tax audit is to be reimbursed by the previous owner under the terms of the sale and purchase agreement, an indemnification asset of the same amount was recorded in the financial statements to reflect this arrangement.

During the quarter ended June 30, 2024, the Company submitted documentation to the tax authorities confirming its acceptance of the previously disputed position, and due to imminent settlement, this item was released from unrecognized tax benefits and recognized in accrued income taxes in that quarter.

In 2018 the Company recorded an unrecognized tax benefit in relation to a potential adjustment that could arise as a consequence of the Tax Cuts and Jobs Act of 2017 (“Tax Act”), but for which retrospective adjustment to the filed 2017 U.S.

federal income tax returns was not permissible.

The Company determined that additional tax, interest and penalties totaling $ 11.0 million could arise in relation to this item.

This includes an increase in additional interest accrued of $ 0.8 million recorded during 2024.

As the statute of limitations in relation to this item lapsed in the quarter ended December 31, 2024, this item has now been released from unrecognized tax benefits in the final quarter.

The Company and its U.S.

subsidiaries remain open to examination by the IRS for years 2021 onwards under the statute of limitations.

The Company’s subsidiaries in foreign tax jurisdictions are open to examination including Brazil (2020 onwards), Germany (2020 onwards), and the U.K.

(2023 onwards).

The sources of income before income taxes were as follows:

4 unchanged sentences

State and local

Cash payments for income taxes were $ 51.7 million, $ 54.3 million and $ 50.0 million during 2024, 2023 and 2022, respectively.

State and local

The effective tax rate varies from the U.S.

1 unchanged sentence

In considering the items that create variances when compared to the U.S.

federal statutory rate, it is worth

noting that the percentage impact of a given item in the table below would be higher in 2024 because income before income taxes in 2024 is significantly lower than in 2023 and prior years.

Statutory rate

Foreign income inclusions

federal statutory rate, it is worth noting that the percentage impact of a given item in the table below would be higher in 2024 because income before income taxes in 2024 is significantly lower than in 2025 and 2023.

(in millions)

federal statutory tax rate

State and local income taxes, net of federal income tax effect*

Foreign tax effects:

Changes in valuation allowance

Adjustment to contingent consideration

Foreign tax rate differential

Tax charge/(credit) from previous years

Net charge/(credit) from unrecognized tax benefits

Foreign tax rate differential

Foreign currency transactions

Tax on unremitted earnings

State and local taxes

incentive for foreign derived intangible income

Innovation incentives

Non-deductible officer compensation

Adjustment to contingent consideration

Movement in unrecognized deferred taxes

Impact of internal reorganizations

Meals and entertainment

Stock compensation

Other items and adjustments, net

The effective tax rate has been positively impacted by the current year recognition of previously unrecognized tax benefits.

This item arose due to the lapse of the statute of limitations associated with the unrecognized tax benefit in the final quarter of 2024.

This item had a lesser impact in prior years, with a negative impact on the effective tax rate in 2023 and a positive impact in 2022.

Foreign income inclusions arise each year from certain types of income earned overseas being taxable under U.S.

Foreign tax credits can fully or partially offset these incremental U.S.

taxes from foreign income inclusions.

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.

The effective tax rate in 2024 and the disclosed prior years has been negatively impacted by these items.

Other foreign jurisdictions

Effect of cross-border tax laws:

Global intangible low-taxed income, net of foreign tax credit

Subpart F income, net of foreign tax credit

Incentive for foreign derived intangible income

Tax on unremitted foreign earnings

Nontaxable or nondeductible items:

Nondeductible officer compensation

Changes in unrecognized tax benefits

Tax impact of internal reorganizations

* State taxes in Texas, Louisiana and Oklahoma made up the majority (greater than 50 %) of the tax effect in this category in 2025 (2024 and 2023:

Texas, California and Oklahoma).

** The amount of income tax during the year does not meet the required threshold and is included in relevant 'Other' category.

The effective tax rate has been positively impacted in 2025 by the tax impact of internal reorganizations.

This item arose due to the allocation of a partnership basis difference which was recognized in 2025, following the finalization of our estimate of the tax impact of the dissolution of the partnership on December 31, 2024.

While the change in estimate had no impact on pre-tax income, it has resulted in the recognition of a deferred tax asset of $ 9.5 million and a credit to net income of $ 9.5 million for the twelve months ended December 31, 2025.

In addition, the effective tax rate has been positively impacted in 2025 by an adjustment of $ 15.9 million to the fair value of contingent consideration associated with the acquisition of QGP in Brazil.

This adjustment has no impact on the Company’s current or future tax liabilities and therefore impacts on the effective tax rate.

The Company benefits from innovation reliefs in relation to relevant research and development expenditure in certain jurisdictions, notably the U.K.

and the U.S., which have a positive impact on the effective tax rate.

The level of foreign-derived intangible income benefit that the Company is entitled to has had a positive impact on the effective tax rate in 2025 and the disclosed prior years, although the benefit has declined in 2025 due to a decrease in U.S.

export sales.

The Company is subject to state taxes and local taxes primarily in the U.S.

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The effective tax rate in 2025 and the disclosed prior years has been negatively impacted by these taxes.

While the absolute amount of such taxes incurred in 2024 is comparable to prior years, as income before income taxes is substantially lower it has a higher overall impact on the effective tax rate.

The level of foreign-derived intangible income benefit that the Company is entitled to has had a positive impact on the effective tax rate in both 2024 and the disclosed prior years.

The Company benefits from innovation reliefs in relation to relevant research and development expenditure in certain jurisdictions, notably the U.S.

and the U.K., which have a positive impact on the effective tax rate.

While the absolute amount of such reliefs claimed in 2024 is comparable to prior years, as income before income taxes is substantially lower it has a higher overall impact on the effective tax rate.

The Company considers that there is insufficient evidence that sufficient future taxable income will arise in certain territories to allow for the recognition of deferred tax assets.

In such cases, a valuation allowance is applied, which results in a permanent adjustment to the tax charge and therefore impacts on the effective tax rate.

There is an increase in the valuation allowances in 2024 which have a negative impact on the effective tax rate.

The rate was positively impacted by this item in 2023 as an assessment of evidence allowed for the recognition of previously unrecognized deferred taxes.

Cash paid for income taxes (net of refunds) consisted of the following:

(in millions)

State and local

Other Foreign

*The amount of income taxes paid during the year does not meet the required threshold and is included in 'Other Foreign'.

Details of deferred tax assets and liabilities are analyzed as follows:

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Intangible assets including goodwill

Pension asset

Customer relationships

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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.

Available evidence considered in determining the use of deferred tax assets includes, but is not limited to, cumulative losses

arising in recent accounting periods, the Company’s estimate of future taxable income and any applicable tax-planning strategies.

Available evidence considered in determining the use of deferred tax assets includes, but is not limited to, cumulative losses arising in recent accounting periods, the Company’s estimate of future taxable income and any applicable tax-planning strategies.

Based on such evidence, if it is more likely than not that some portion or all of such deferred tax assets will not be realized, a valuation allowance is recorded to reduce the Company’s deferred tax assets.

On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $ 2.8 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized.

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 other evidence becomes available.

As of December 31, 2024, the Company has approximately $ 0.2 million of tax-effected state net operating loss carryforwards, net of federal benefit.

Some of these loss carryforwards will begin to expire in 2037 if not utilized.

The Company also has approximately $ 7.0 million of tax-effected foreign net operating loss carryforwards, net of valuation allowance, across four of the Company’s foreign subsidiaries, which can also be carried forward indefinitely.

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 other evidence becomes available.

As of December 31, 2025, the Company has approximately $ 6.8 million of tax-effected foreign net operating loss carryforwards, net of valuation allowance, across three of the Company’s foreign subsidiaries, which can be carried forward indefinitely.

A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:

(in millions)

Opening balance at January 1, 2023

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2023

Opening balance at January 1, 2024

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2024

Opening balance at January 1, 2025

Reductions for tax positions of prior periods

Additions for tax positions of prior periods

Closing balance at December 31, 2025

As at December 31, 2025, the Company has no unrecognized tax benefits.

Long-Term Debt

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and certain subsidiaries of the Company (together with the Company, the “Borrowers”) entered into a Multicurrency Revolving Facility Agreement with various lenders (the “Agreement”) which replaces the Company’s credit facility agreement dated September 26, 2019 .

The Agreement provides for a $ 250,000,000 four-year multicurrency revolving loan facility available to the Borrowers (the “Facility”).

The Agreement also contains an accordion feature whereby the Company may elect to increase the total available borrowings by an aggregate amount of up to $ 125,000,000 .

The Agreement provides for a $ 250.0 million four-year multicurrency revolving loan facility available to the Borrowers (the “Facility”).

The Agreement 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.

The termination date of the Facility is May 30, 2027 , but the Agreement includes an option for the Company to request an extension of the Facility for a further year.

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Plant Closure Provisions

The Company has continuing plans to remediate manufacturing facilities at sites around the world as and when those operations are expected to cease or we are required to decommission the sites according to

local laws and regulations.

The liability for estimated plant closure costs includes costs for environmental remediation liabilities and asset retirement obligations.

The principal site giving rise to asset retirement obligations is the manufacturing site at Ellesmere Port in the United Kingdom.

There are also asset retirement obligations and environmental remediation liabilities on a much smaller scale in respect of other manufacturing sites.

The liability for estimated plant closure costs includes costs for asset retirement obligations and environmental remediation liabilities.

The principal site giving rise to asset retirement obligations is the site at Ellesmere Port in the United Kingdom.

There are also asset retirement obligations on a much smaller scale in respect of other sites.

Environmental remediation liabilities are insignificant.

Movements in the provisions are summarized as follows:

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Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date.

The charge for the period in 2024 represents the accretion expense recognized of $ 3.6 million and a further $ 1.1 million primarily in respect of changes in the expected cost and scope of future remediation activities.

The charge for the period in 2025 represents the accretion expense recognized of $ 3.6 million and a further $ 2.0 million primarily in respect of changes in the expected cost, scope and timing of future obligations.

The charges for plant closure provisions are recognized in cost of goods sold for our reporting segments and within selling, general and administrative expenses for Corporate costs.

We recognize environmental remediation liabilities when they are probable and the costs can be reasonably estimated, and asset retirement obligations when there is an obligation based on a legal requirement, including those arising from a Company promise, and the costs can be reasonably estimated.

The Company has to anticipate the program of work required and the associated future expected costs, and comply with environmental legislation in the countries in which it operates or has operated in.

The Company has to make significant judgments when anticipating 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.

Expenditure utilizing plant closure provisions was $ 5.8 million, $ 3.8 million and $ 4.9 million in 2025, 2024 and 2023, respectively.

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The Company utilizes a mid-market pricing convention for valuing the majority of its assets and liabilities measured and reported at fair value.

The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market corroborated or generally unobservable.

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The Company gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair

value measurement.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy Levels.

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Derivatives (Level 1 measurement):

Other current liabilities:

Foreign currency forward exchange

Non-financial liabilities (Level 3 measurement):

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Contingent consideration payable in cash is discounted to its fair value at each balance sheet date.

Where contingent consideration is dependent upon pre-determined financial targets, an estimate of the fair value of the likely consideration payable is made at each balance sheet date.

The contingent consideration payable at December 31, 2024 has been calculated based on the latest forecast.

Where contingent consideration is dependent upon pre-determined financial target s, an estimate of the fair value of the likely consideration payable is made at each balance sheet date.

The contingent consideration payable at December 31, 2025 has been calculated

based on the latest forecast.

The movement in the current year relates to an $ 18.5 million reduction in the fair value of the expected payable relating to the acquisition of QGP, partially offset by an accretion charge of $ 2.6 million, the impact of foreign exchange of $ 2.8 million and a $ 1.3 million increase relating to the acquisition of the trade and net assets of Biotechnology Solutions LLC which has not been discounted to its fair value on the basis of materiality (see Note 8 of the Notes to the Consolidated Financial Statements for additional information).

Derivative Instruments and Risk Management

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The Company does use derivatives to manage certain interest rate, foreign currency exchange rate, raw material cost exposures and greenhouse gases emission allowances, as the need arises.

The Company previously entered into interest rate swap contracts to reduce interest rate risk on its core debt.

The Company has previously entered into interest rate swap contracts to reduce interest rate risk on its core debt.

As at December 31, 2025 and 2024, there were no interest rate swaps in place.

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The Company enters into various foreign currency forward exchange contracts to minimize currency exchange rate exposure from expected future cash flows.

As at December 31, 2024, foreign currency forward exchange contracts with a notional value of $ 212.8 million were in place (December 31, 2023 $ 156.5 million), with maturity dates of up to two years from the date of inception.

These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for 2024 was a gain of $ 5.3 million (2023 – loss $ 4.0 million).

As at December 31, 2025, foreign currency forward exchange contracts with a notional value of $ 238.9 million were in place (December 31, 2024 $ 212.8 million), with maturity dates of up to twelve months from the date of inception.

These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement for 2025 was a loss of $ 3.1 million (2024 – gain $ 5.3 million).

As at December 31, 2025 and 2024, the Company did not hold any raw material derivatives.

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Commitments and Contingencies

Environmental remediation liabilities and asset retirement obligations

Commitments in respect of environmental remediation liabilities and asset retirement obligations are disclosed in Note 13 of the Notes to the Consolidated Financial Statements.

Asset retirement obligations and environmental remediation liabilities

Commitments in respect of asset retirement obligations and environmental remediation liabilities are disclosed in Note 13 of the Notes to the Consolidated Financial Statements.

Capital commitments

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As reported in the 2023 Form 10-K, we have incurred financial losses and lodged a civil and criminal legal claim related to a misappropriation of inventory in Brazil.

As at the time of filing, there have been no significant developments to report in relation to the claims being made.

At the time of filing, there have been no significant developments to report in relation to the claims being made.

Consistent with prior quarters, a corresponding asset for the potential legal or insurance recoveries has not been recorded for the resulting financial losses arising from this matter.

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The Company has two stock option plans, the Omnibus Long-Term Incentive Plan and the ShareSave Plan 2008 under which it currently grants awards.

Innospec's ShareSave plan is an employee stock purchase plan, or ESPP.

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.

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For all other awards granted, a fair market value methodology has been used to calculate the grant-date fair value.

The awards granted with market conditions include a performance measure for Innospec's total shareholder return as compared to a peer group of companies.

This measure can result in a maximum 130 % vesting for the number of stock options granted.

The maximum potential vesting has been reflected in the grant-date fair value calculation, but not reflected for the number of awards granted, as shown in

the table above.

All other awards granted in the quarter have similar vesting conditions to those granted in the previous periods.

The awards granted with market and non-market conditions include performance measures that can result

in a maximum 200 % vesting for the number of stock options granted.

The predicted vesting has been reflected in the grant-date fair value calculation, but has not been reflected for the number of awards granted, as shown in the table above.

Other disclosures

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See (1) below

Pension scheme settlement

See (1) below

Total before tax

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See (1) below

Pension scheme settlement

See (1) below

Total before tax

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Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

This guidance establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing guidance.

Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation.

They must also further disaggregate income taxes paid.

This ASU was effective for fiscal years beginning after December 15, 2024.

Early adoption was permitted.

The adoption of this ASU has not had a material impact on the Company’s disclosures.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

The amendments in this ASU require disclosure within the notes to the financial statements, of specified information about certain costs and expenses.

The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

We do not currently expect the adoption of this ASU will have a material impact on the Company’s disclosures.

The Company adopted the guidance on a retrospective basis for the period ending December 31, 2025, and the adoption of this ASU is demonstrated within Note 11 of the Notes to the Consolidated Financial Statements.

Related Party Transactions

Williams has been an executive director of the Company since April 2009 and has been a non-executive director of AdvanSix, a chemicals manufacturer, since February 2020.

In 2024, the Company did no t purchase any product from AdvanSix (2023 – $ 0.4 million;

In 2025, the Company did no t purchase any product from AdvanSix (2024 – nil ;

2023 - $ 0.4 million).

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From January 1, 2024 until May 10, 2024 the Company incurred fees from SGR of $ 0.2 million (2023 – $ 0.3 million).

2022 – $ 0.3 million).

As at December 31, 2024, the Company owed nil to SGR (December 31, 2023 – nil ).

As at December 31, 2024, the Company owed nil to SGR.

Landless has been a non-executive director of the Company since January 1, 2016 and is a non-executive director of Ausurus Group Limited which owns European Metal Recycling Limited (“EMR”).

The Company has sold scrap metal to EMR in 2024 for a value of less than $ 0.1 million (2023 - $ 0.1 million;

The Company has sold scrap metal to EMR in 2025 for a value of less than $ 0.1 million (2024 - less than $ 0.1 million;

2023 – $ 0.1 million).

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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 8. Financial Statements and Supplementary Data