Note 3. 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. The Octane Additives segment is expected to decline in the near future as our one remaining refinery customer transitions to unleaded fuel.

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.

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

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.

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.

There are no significant customers with sales greater than 10% of our net group sales in the last three financial years.

The Company evaluates the performance of its segments based on operating income. The following table analyzes sales and other financial information by the Company’s reportable segments:


(in millions)	2017		2016		2015
Net Sales:
Refinery and Performance	$	397.0	$	388.9	$	408.0
Other		126.8		120.7		124.8

Fuel Specialties		523.8		509.6		532.8

Personal Care		200.0		126.8		119.6
Home Care		121.1		2.0		0.0
Fragrances		0.0		0.0		23.0
Other		98.4		9.9		12.4

Performance Chemicals		419.5		138.7		155.0

Oilfield Services		304.4		191.7		265.0
Octane Additives		59.1		43.4		59.5

	$	1,306.8	$	883.4	$	1,012.3


(in millions)	2017			2016			2015
Gross profit:
Fuel Specialties	$	188.2		$	186.4		$	176.0
Performance Chemicals		75.8			43.4			42.4
Oilfield Services		109.3			76.4			99.1
Octane Additives		30.0			26.1			28.5

	$	403.3		$	332.3		$	346.0

Operating income/(expense):
Fuel Specialties	$	107.1		$	110.6		$	102.1
Performance Chemicals		32.6			16.0			16.3
Oilfield Services		9.5			(4.7	)		9.0
Octane Additives		26.7			22.7			24.7
Pension credit		4.4			6.7			0.2
Corporate costs		(47.9	)		(53.9	)		(38.3	)
Adjustment to fair value of contingent consideration		0.0			9.4			40.7
(Loss)/profit on disposal of subsidiary		(0.9	)		(1.4	)		1.6
Foreign exchange loss on liquidation of subsidiary		(1.8	)		0.0			0.0

Total operating income	$	129.7		$	105.4		$	156.3

Identifiable assets at year end:
Fuel Specialties	$	437.0		$	397.2		$	408.9
Performance Chemicals		480.8			340.0			120.2
Oilfield Services		256.6			240.0			240.9
Octane Additives		41.7			38.1			28.7
Corporate		194.1			166.1			229.9

	$	1,410.2		$	1,181.4		$	1,028.6

The pension credit relates to the United Kingdom defined benefit pension plan which is closed to future service accrual. The charges related to our other much smaller pension arrangements in the U.S. and overseas are included in the segment and income statement captions consistent with the related employees’ costs.

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

•

running the corporate offices in the U.S. and Europe;

•

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

•

the corporate share of the information technology, accounting and human resources departments.

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


(in millions)	2017			2016			2015
Net sales by source:
United States & North America	$	615.7		$	474.4		$	571.9
United Kingdom		730.9			428.2			445.2
Rest of Europe		143.4			118.5			133.3
Rest of World		39.2			31.1			22.1
Sales between areas		(222.4	)		(168.8	)		(160.2	)

	$	1,306.8		$	883.4		$	1,012.3

Income before income taxes:
United States & North America	$	11.5		$	16.8		$	52.7
United Kingdom		51.9			42.6			60.6
Rest of Europe		63.1			39.2			42.0
Rest of World		1.6			4.5			(3.0	)

	$	128.1		$	103.1		$	152.3

Long-lived assets at year end:
United States & North America	$	149.7		$	155.3		$	185.8
United Kingdom		45.7			45.9			49.3
Rest of Europe		163.5			207.5			10.6
Rest of World		0.3			0.5			0.4

	$	359.2		$	409.2		$	246.1

Identifiable assets at year end:
United States & North America	$	452.2		$	377.3		$	410.9
United Kingdom		258.4			257.6			303.4
Rest of Europe		317.5			156.0			30.9
Rest of World		20.3			15.7			16.0
Goodwill		361.8			374.8			267.4

	$	1,410.2		$	1,181.4		$	1,028.6

Sales by geographical area are reported by source, being where the transactions originated. Intercompany sales are priced using an appropriate pricing methodology and are eliminated in the consolidated financial statements.

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

Goodwill has not been allocated by geographical location on the grounds that it would be impracticable to do so.