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Plant Closure Provisions

12 Months Ended

Dec. 31, 2012

Note 12. 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, which management believes is the last ongoing manufacturer of TEL. 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) when demand for TEL diminishes. Severance provisions have been made in relation to Corporate personnel and personnel in each of the three reporting segments.

Movements in the provisions are summarized as follows:


(in millions)	Severance			Other Restructuring			Remediation			Total
Total at January 1, 2010	$	1.3		$	1.0		$	26.1		$	28.4
Charge for the period		0.5			0.0			2.5			3.0
Expenditure		(0.4	)		(0.8	)		(2.7	)		(3.9	)
Exchange effect		0.1			(0.1	)		0.0			0.0

Total at December 31, 2010		1.5			0.1			25.9			27.5
Due within one year		(0.5	)		(0.1	)		(3.3	)		(3.9	)

Balance at December 31, 2010	$	1.0		$	0.0		$	22.6		$	23.6

Total at January 1, 2011	$	1.5		$	0.1		$	25.9		$	27.5
Charge for the period		0.7			(0.1	)		4.5			5.1
Expenditure		(0.7	)		0.0			(3.1	)		(3.8	)
Exchange effect		0.0			0.0			(0.2	)		(0.2	)

Total at December 31, 2011		1.5			0.0			27.1			28.6
Due within one year		(0.5	)		0.0			(3.6	)		(4.1	)

Balance at December 31, 2011	$	1.0		$	0.0		$	23.5		$	24.5

Total at January 1, 2012	$	1.5		$	0.0		$	27.1		$	28.6
Charge for the period		0.2			0.0			4.0			4.2
Expenditure		(0.6	)		0.0			(2.1	)		(2.7	)
Exchange effect		0.0			0.0			0.3			0.3

Total at December 31, 2012		1.1			0.0			29.3			30.4
Due within one year		(0.1	)		0.0			(5.0	)		(5.1	)

Balance at December 31, 2012	$	1.0		$	0.0		$	24.3		$	25.3

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.

Severance

A charge of $0.2 million was recognized in respect of a reduction in EMEA headcount.

Other restructuring

A residual accrual of $0.1 million, in respect of the relocation of a U.S. sales and administration facility, was released in 2011.

Remediation

The remediation provision represents the Company’s liability for environmental liabilities and asset retirement obligations. The accretion expense recognized in 2012 was $2.5 million. The remediation charge also included a further $1.5 million primarily in respect of changes in the expected cost and scope of future remediation activities.

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. 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 views the costs of vacating our Ellesmere Port site as contingent upon if and when it vacates the site because there is no present intention to do so. The Company has further determined that, due to the uncertain product life of TEL particularly in the market for aviation gasoline and other products being manufactured on the site, there are uncertainties as to the probability and timing of the expected costs. Such uncertainties have been considered in estimating the provision.

Remediation expenditure against provisions was $2.1 million, $3.1 million and $2.7 million in 2012, 2011 and 2010, respectively.

- 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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