Good day and welcome to the Innospec Q4 and full year 2007 results conference call. (Operator Instructions). At this time, I'd like to turn the call over to your host today, Mr. Andrew Hartley, Vice President and General Counsel. Please go ahead, sir.

Thank you and good morning everyone. Thanks for joining our fourth quarter 2007 financial results conference call. Today's call is being recorded. As you know, last night we reported our fourth quarter and full year 2007 financial results. The press release is posted on the company's website, www.innospecinc.com. An audio webcast of the call and a slide presentation of the results are also now available and will be archived on the website. Before we start, I would like to remind everybody that certain comments made during this call are to be characterized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. Generally speaking, any comments regarding management's beliefs, expectations, targets, or other predictions of the future, are forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the anticipated results implied by those forward-looking statements. These risks and uncertainties are detailed in Innospec's most recent 10-K report as well as other filings we have with the SEC. We refer you to the SEC's website or our website at innospecinc.com for these and other documents. In our discussion today, we have also included some non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measures is contained in our earnings release and in the presentation that follows, a copy of which is available on the Innospec website. With us today from Innospec are Paul Jennings, President and Chief Executive Officer and Ian Cleminson, Executive Vice President and Chief Financial Officer. And with that, I'll turn it over to you, Paul.

Thank you, Andrew, and thanks to everyone on the call for taking the time to join us. Turning to slide 4 in the presentation, I have a few summary comments about our results before Ian takes us through the numbers in greater detail. Overall we are very pleased with the results for the quarter. Total revenues were up 19% with GAAP EPS on a diluted basis of $0.45 a share, compared with a $0.03 loss a year ago. The results included Octane Additives goodwill impairment and a slow restructuring charge totaling $0.08 per share in the fourth quarter of 2007, compared with similar charges totaling $0.34 per share a year ago. Our EBITDA for the quarter was up 40% from a year ago. Fuel specialties led the way in the quarter, with impressive revenue growth of 16% well ahead of expectations. Octane Additives rebounded as we expected from the third quarter, although there has been no change in our longer-term outlook for decline in that business over the next few years. Active Chemicals results were slightly below our expectations, but we continue to believe that our restructuring of that segment early in the fourth quarter has positioned it for a better performance in 2008. For the full year, we delivered revenue growth of 13%, generally maintained our margins at strong levels in the face of numerous cost pressures, increased our investments in capital expenditures and R&D and delivered earnings per share on a GAAP basis of $1.19 per share more than doubled the $0.45 per share we reported for 2006. We generated free cash flow for the full year of nearly $36 million and used over $18 million to buy back our stock. In short, we continue to execute successfully against our stated objectives which are to run our core businesses better, to control our cost, to manage our capital effectively and to improve the visibility and understanding in this respect, and we are looking forward to further growth in 2008. And with, I'd like to turn the call over to Ian Cleminson, our Chief Financial Officer.

Thank you, Paul. Turning to slide 6, on a consolidated basis revenues for the quarter increased 19%, mainly due to continued strength in Fuel Specialties at an expected rebound in shipments of Octane Additives. Overall gross margin was 31.4%, down 70 basis points from a year ago. Margins in Fuel Specialties, which is by now our far largest business, improved or this is more than offset by lower margins in Octane Additives and Active Chemicals. Operating income of $15.4 million was up 54% from a year ago. EBITDA was $27.3 million or 40% from last year's fourth quarter. Our GAAP earnings per share of $0.45 on a diluted basis was up significantly from a loss of $0.03 per share a year ago. Turning to the individual business segments, starting with slide 7, in Fuel Specialties we have an exceptional quarter with reported revenue growth of 16%, which was achieved despite the absence of $6 million in revenues from one-off contract included in the 2006 period. Excluding those revenues a year ago, the segments revenue growth for the fourth quarter of 2007 was 24%. By region, reported earnings were up 16% in Americas, 21% in the EMEA region, that's even with the absence of the one-off contract and 29% in the Asia-Pacific region. Results in the Americas were fueled by very strong product volumes led by cetane enhancers and lubricity improvers as well as solid growth revenue in seasonal winter products. In the EMEA region, sales of cold flow improvers and heating oil additives were well ahead of expectations. In Asia-Pacific, the strong sales were achieved somewhat to the expensive margins as much of the growth reflected increased sales of lower margin diesel detergents. Overall, however, the segment's gross margin was improved at 31.5%, compared with 31.1% a year ago. We…

Thank you, Ian. Moving on to slide 13 which illustrates our concept of ongoing operating profitability. This is a critical report card, if you will, on our transformation of Innospec over the last 2.5 years. The point here is that we really need to evaluate the company's results and operating trends excluding Octane Additives, which we all know is in long-term decline. Two years ago, operating income from our continuing growth businesses in Fuel Specialties and Active Chemicals did not cover our corporate costs. As you can see, our ongoing operating profitability continues to improve. For the fourth quarter, it was more than tripled the level of a year ago and for the full year, it was up 62%. Turning to slide 14, which covers our new revenue and gross margin guidance ranges to 2008. In Fuel Specialties, we are looking for revenue growth of 7% to 11% with the gross margin percentage of 30% to 34%. In Active Chemicals, we expect growth of 8% to 12% in revenues and a gross margin of between 18% and 22%. And in Octane Additives, we expect to see a revenue decline of 15% to 20% with the gross margin of 43% to 47%. In addition in 2008, we currently expect the tax rate to be approximately 35%. Moving on to slide 15, I want to touch on a few more points before we take your questions. Two years ago we changed the name of the company to Innospec and the innovation concept has inspired our new name is very much a reality today across our ongoing Fuel Specialties and the Active Chemicals businesses. I am pleased to report you that our research and development expenses for 2007 were $13.6 million, a 23% increase from 2006. Also I wanted to update you on…

Thank you, sir. (Operator Instructions) We now take our first question from Jeffrey Zekauskas from JPMorgan. Please go ahead.

Hi, good day.

Hi, Jeff

Hi, Jeff

One of the themes of our conference call has been that your consolidated tax rate for the year was relatively high because you're making so much money in Fuel Specialties, which is in the U.S. largely or is it just a component there. But in the fourth quarter you have the highest results of the year in Fuel Specialties, but it tremendously low tax rate relatively to the third quarter, so how that's possible, why they trade so low?

Jeff, this is Ian. As you are aware, we trued up the tax charges here and we didn't keep very close eye on it in effective way as we move through the year and what we've been able to do is to dig some internal tax finding. So, the origins of our profit have been starting to realign in the fourth quarter. Also, we are at the stage now of filing our 2006 returns as well. So, we are able to drop some of the actual positions that we've go forward as well. So, longer-term, we expect the effective rate to drift higher up, as we've more profits in the U.S. and the guidance we've given is that the effective tax rate will be 35% in 2008.

So, if I understand what you just said to me there were some benefits from previous tax years that you booked in the quarter from 2006?

Yeah. As we trued up the final filing position on 2006. We were able to release some of the previously held charges through the P&L. And also as we (inaudible) 2007 year end as well and might see move some profits around the organization, we are able to low the tax charge slightly as well.

Okay. Now if I remember correctly, next year your amortization cost really dropdown in tetraethyl lead. My memory is that they fall about $9 million. Does that affect your book tax rate and is that a correct memory of mine about your amortization charges?

You are absolutely right, Jeff. Its $10 million it's amortization that finished at the end of 2007 calendar year. And we [probably took] our deferred tax asset and liability view about and that will move around in the 2007 position. Going forward, our profits really now are very much centered in the U.S. and also in the U.K. And we've to get back into the mix and hope we'll, as I said early on the drift towards in the effective tax rate.

Okay. Turning in Fuel Specialties, if you sort of break it into say, diesel, auto, and heating oils. How did those different pieces perform in fourth quarter relative to each other?

Jeff, this is Paul. We don't as such record the numbers we're not particular at it. But I can blow the comments on those three areas, if that makes sense.

Yeah.

If you look at the diesel aspect, it's by far the way the largest part of our Fuel Specialties business and we've seen some upticking there based on the treat rates in ultra low sulphur diesel and the increased penetration particularly in the U.S. market. We also saw a little bit of up tick in some of our cold flow sales as well, particularly in Europe, which helps grow the business and also in the heating oil segment as well. The automotive side and by that's I'm assuming mean gasoline not a dramatic impact on that quarter results. It's more about the diesel, the cold flow, and the heating business.

Lastly in Octane Additives for the year, can you give us a rough idea of how much your volumes changed and your prices changed?

Again it's Paul. What we've seen in -- if you look for the quarterly position we actually saw quite significant increase in volume as far as the quarter is concerned.

Okay.

----which was almost 50%. If you look at the full year position though as far as the splits on pricing etcetera and on volume, we've been able to get prices up on the full year a little bit of what we saw in 2006 and volumes have sort of slightly declined in the business and not at the level that we were originally expecting. We still see longer-term that business is kind of being declined I think we said 15% to 20% for 2008, but 2007 was a better year. I think the only thing I'd caution on that which you obviously know well is that it does get quite lumpy from quarter-to-quarter. We mentioned at quarter three, we had a poor Q3, but it's going to rebound back in Q4 and that’s what we've actually seen. The only comment I'd make is that we're not forecasting at this moment and time any country exits, which has seen a gradual decline in that business in 2008.

And lastly so if next year your amortization costs go down about $10 million in Octane Additives that will be a benefit at least to your book operating income and you expect Fuel Specialties to grow, and I guess you expect to fix whatever is going wrong in Active Chemicals. So, Octane is being equal operating profit should grow in all three segments is that right?

If you look, you would expect to see growth in operating profit in Fuel Specialties and the Active Chemicals. In the Octane Additives business, the way we tend to look at operating profit is before amortization.

Yeah.

And obviously we'd expect to see that picture decline, as we looking into 2008. I think, if you brought the amortization in then you are probably going to see it broadly the same level as 2007.

Okay, thank you very much. Thank you for your patience.

Thanks, Jeff.

Thanks, Jeff.

We now take our next question from Jonathan Lichter from Sidoti and Company. Please go ahead, sir.

Hi, guys.

Hi, Jonathan.

How much of the Fuel Specialties performance, do you think was related to cold winter in Europe? How much would they have been up if the winter had just been average, I'll say?

Jonathan, this is Ian and that's a cluster from cold actually. I mean the fourth quarter results were above our expectations and a couple of factors really curve that growth that we could manage what we couldn't necessarily forecast. Firstly, because of the unexpected weather, caused greater sales in our cold flow and heating products. And secondly, our competitors were caught short of inventory and that's (inaudible) and that wasn't necessarily simply that we could manage. So, it's difficult to put numbers on that because we don't know the weather is going to pan out, Jonathan.

Great all right, I understood. Did you see any indication of a slowdown in demand in Active Chemicals towards the end of the quarter; it seems like some other companies indicated that happened?

No. We actually haven't seen a slowdown in demand because our sales were up sort of 8% year-over-year and driven by some volume change as well. And I know, what you are referring to Jonathan about some of the published end users have about volumes etcetera. We’re not seeing that within that business, which is why we are confident about sort of giving a range of projection that showed close to double digit growth for 2008 over 2007 because we believe we are well positioned now in those business and the new structure will really allow us to grow sales.

Okay. Do you expect any additional accruals for the, as you see investigation during 2008?

I think at this particular moment I'm comfortable with the level of the accrual, we've actually got at the moment. It’s an ongoing discussion, an ongoing investigation we're cooperating fully and I feel that what we've at the moment is appropriate.

Okay. What are your expectations for CapEx for this year?

Jonathan, this is Ian again. We expect in 2008 recently round about $10 million in capital projects. But we're all very mindful that if opportunities come along, which are accretive to the company we'll take a very hard look at them.

And lastly on R&D what spend do you expect there?

We actually very pleased about our R&D expenditure. We managed to increase R&D spend year-over-year. And we'd imagine that it will continue to pickup approximately the same amount not until this year probably something with innovation in our name it's going to be hold very close to our heart. So, we won't stop the company of innovation in R&D spend.

Okay, thank you.

Thank you, Jonathan.

We now move to Greg Hillman from First Wilshire Securities. Please go ahead.

Yeah, good morning gentlemen.

Hi, Greg.

Hi, Greg.

Just a couple of things when you talked about potential customer claim in Fuel Specialties what was that, I don't know if you talked about that excluding onetime professional fees on a potential customer claim?

Yeah Greg, this is Ian and this relates back to quarter four 2006 and if I recall, when we are backed on the call back then we had a customer claim, which is $3.7 million. And we also had some legal fees from the Ethyl settlement, which was successfully completed now in June of 2007. They were really considered one-offs did not recurred in the quarter four 2007 numbers. So, we wanted to highlights them, so you could actually make a comparison yourself.

(Operator Instructions) We now take our next question from [Paul Zoff from Capital Flows]. Please go ahead.

Yes, good morning actually you've answered my question. But may be I could ask you to discuss about the income statement sensitivity to Euro dollar strength and also feedstock cost. And my thoughts are you have a lot of expenses in Euros and lot of revenues in dollars and that may change that ratio. And also with the price of oil feedstock high we may see some changes in….?

Paul, this is Ian that one of a fairly, break and roll question I was hoping the best to answer it. And luckily the multinational business were impacted by exchange rate movements. However, our free trading businesses are naturally hedged and the bottom line is fairly lightly impacted by movements in exchange rates. Where we do feel depending on exchange rates, if you wants to call it, it's in our corporate cost base. That is predominately based in the U.K. and is predominately British sterling. So, as the U.S. dollar weakened we've taken around about 9% and increasing our cost. Now what we've actually managed to do in our corporate cost base is to maintain it and actually lower in local terms in sterling terms, our corporate cost base, so the affect has been low across the whole piece. So, we'll fairly naturally hedge the business and as regard to oil prices and that is something which we feel is the older benefit to us. And the additives use of the oil, it's fairly low, and so oil prices going up and down, it doesn't impact too greatly. And what we also see as the higher price of oil goes up, refiners are looking always to get more out of each barrel and they have to cut the process harder and that give us opportunities productive usage further down the line.

And also of course, this is Paul Jennings. I think we've done a much better job of in the next couple of years is actually being able to see what's happening and to be quite proactive about managing our price increase in certain areas. And I think we've done a good job about that in Fuel Specialties. I think we're starting to do a better job of that in Active Chemicals. So Ian is exactly right, what we tend to see is that when oil prices going up, could actually help in the run because people wanting to get more fuel and so they are cracking and additives are great way to do that.

Thank you.

You're welcome.

(Operator Instructions) We've no further question at this time. I'd like to turn the call back to Mr. Jennings for any additional or closing remarks.

Thank you for your questions. And I'd now like to leave you with some final thoughts which are shown on the slide 17. Our fourth quarter results were very strong, exceeding expectations primarily due to the performance of Fuel Specialties, which is really our core business. This business is benefiting from our continued investments and innovation and the effectiveness of a service oriented approach to its markets. Fuel Specialties is delivering excellent performance with the combination of winning new business and growing significantly faster in the market in which he competes. Our Active Chemical segment, as we had acknowledged, it is couple of years behind the Fuel Specialties but we are very confident that our realignments of this business late last year has positioned Active Chemicals to deliver improved results in 2008. In both, Fuel Specialties and Active Chemicals are on going growth businesses we have strong leadership positions and attractive markets. We remained well positioned to leverage those strengths in the future, both organically and through potential acquisitions. In conclusion, we continue to deliver on the structures that we communicated over the lat few years. We returned substantial sales growth in our ongoing businesses. We are managing the decline in Octane Additives responsively and optimizing its cash generation for our shareholders. We've reduced our corporate cost structure to support our ongoing businesses. We worked hard to improve the visibility and understanding (inaudible) financial community and we've managed our capital better, [subletting] our we've share repurchases for the benefits of our stockholders. If you have any additional questions, please give Ian or myself a call. In any case, we look forward to sharing our first quarter results with you in a few months. Thanks again for being on the call with us today and good by to everybody.

Thus we conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may no disconnect.