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Plant Closure Provisions

9 Months Ended

Sep. 30, 2012

NOTE 9 – PLANT CLOSURE PROVISIONS

The principal site giving rise to environmental remediation liabilities is the Octane Additives manufacturing site at Ellesmere Port in the United Kingdom. There are also environmental remediation liabilities on a much smaller scale in respect of our other manufacturing sites in the U.S. and Europe. The liability for estimated closure costs of Innospec’s Octane Additives manufacturing facilities includes costs for decontamination and environmental remediation activities (remediation) as demand for TEL diminishes.

Movements in the provisions are summarized as follows:


	2012									2011
(in millions)	Severance			Remediation			Total			Total
Total at January 1	$	1.5		$	27.1		$	28.6		$	27.5
Charge		0.2			1.9			2.1			2.1
Expenditure		(0.6	)		(1.6	)		(2.2	)		(2.8	)
Exchange effect		0.0			0.0			0.0			0.2

Total at September 30		1.1			27.4			28.5			27.0
Due within one year		(0.1	)		(3.5	)		(3.6	)		(3.5	)

Balance at September 30	$	1.0		$	23.9		$	24.9		$	23.5

Amounts due within one year refer to provisions where expenditure is expected to arise within one year of the balance sheet date. Severance charges are recognized in the income statement as restructuring costs along with other restructuring costs. Remediation costs are recognized in cost of goods sold.

Remediation

The remediation provision represents the fair value of the Company’s liability for environmental liabilities and asset retirement obligations. The accretion expense recognized in the first nine months of 2012 was $1.9 million.

We recognize, at fair value, 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. The Company has to anticipate the program of work required and the associated future expected costs, and has to comply with environmental legislation in the relevant countries in which it operates or has operated in. The Company views the costs of vacating our Ellesmere Port site as a contingent liability because there is no present intention to exit the site. The Company has further determined that, due to the uncertain product life of TEL, particularly in the market for aviation gasoline, there exists such uncertainty as to the probability and timing of such cash flows that it is not possible to estimate them sufficiently reliably to recognize a provision.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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