Iofina Share Discussion Threads

[che7win] 27/5/2015 19:27

Wooly,
Yes, that's correct, the impairment will impact the profit and loss figure but has no impact on the iodine figures or underlying business performance. That's why it's adjusted out of the cash flow figure.

If Io1 is reused, it won't be added into future profits because the impairment is only for part of Io1's asset value and already assumes some of the plant will be moved and reused.

[bogg1e] 27/5/2015 19:25

crosseyed, I found this deep in the financial bit:

"Of the total staff costs above, $3,710,561 (2013: $2,368,023) is included within cost of sales"

This may help explain some of the difference between cost of sales in H1 and H2.

[monty panesar] 27/5/2015 19:24

Wooly,

Yes the impairment charges are a non cash item and as you say a springcleaning exercise. Funny they took the impairment charge for io1 in 2014 accounts as I would think it should have been in the 2015 ones since it was working the first few months but best to have it out the way.

Just going back to my thoughts a couple of weeks ago I think today's results to a large degree are down to the cr*p production at IR in H2. To emphasise what I said before. If at 32t/month the OPEX at IR was $25/kg, then this drops to around $19 at the Q1 figure of 42t per month and if they hit 52t per month then you are looking at a cost of $15 per t.

On reading the results I think my figure of 750k per month on 50t production per month is too high but should be a minimum of 500k per month.

DYOR blah blah.




"Thought I would give myself a rain check on monthly iodine production:
H1 2014 23.3mt
H2 2014 31.3mt
Q1 2015 42.6mt

The difference the increased production makes to the bottom line is huge as almost all the costs remain the same. The negative will have been the iodine price fall but the fall in OPEX costs will have outweighed that. If they get production up to 50t per month then OPEX is probably in the mid teens and that might mean a gross profit in the region of $750k per month. The gearing effect on profitability increases dramatically when production exceeds 35t per month IMHO."

[woolybanana] 27/5/2015 18:33

Can anyone please help a simple person? Are the impairment charges are write downs in the value of assets which are not part of the basic profit and loss in producing iodine and are non recurring? Are these two charges basically a 'springclean' of leftover business from previous management? Presumably, any reuse of part or all of Io! would then be counted as a plusvalue in future accounts?
Thank you, grateful.
Tim

[crosseyed] 27/5/2015 16:48

Bogg1e,

"As iodine derivative revenue is $16,919,865 from 150 tonnes of iodine (172 tonnes - 22 tonnes wholesale), means each tonne equals $112,000 revenue??? Really?"

The revenue figure is deduced from the annual report excluding sales of raw iodine, ie $17.670k - $750k.
My estimate is that iodine used for production of derivatives was 292 tonnes (and a further 21 tonnes was sold as raw iodine).
That gives about $58,000/tonne of original iodine.

However, that is based on a steadily increasing inventory of raw iodine. Given that such inventory had fallen considerably since June 2013, and that about 380 tonnes of iodine was produced inhouse (including my estimate of 60 tonnes through re-cycling which the report confirms as continuing), that 292 tonnes may be too low.

As regards..."was the higher H2 cost of sales due in part to a recruitment drive at the IOC division?"...
there may be something in that, and particularly the higher wage bill (increased production staff from 53 to 74 over the year). But still, an increase of about $7 million in H2 over H1 in cost-of-sales implies rather higher costs from some other source than the wages bill which actually increased by about $1.3 million year-on-year (see Note 5).

As I said, I'm still puzzling over the figures and looking for answers.

c

[arlington chetwynd talbot] 27/5/2015 16:40

Cheggers, I'm sure this isn't the place to discuss other shares but perhaps one day you may go over to TUNG, read what I said and ask why a ramping thread was subsequently created? The real story over there in relation to 'me' is not what you're describing - no matter how amusing you think you are being.

Anyway, have a great Summer guys and we'll see how things look in the Autumn.

[freshvoicem] 27/5/2015 16:29

Cross eyed, any idea what contributed to the increase in H2 costs to 14.2m$. Seems as though the cuts talked about are rather virtual, like the expansion plans.
I also note in the 'going concern' section the answer seems to be we can raise more money easily rather than we have enough.

Gives the impression of a company still out of control on costs. Over 50% increase in the second half when Lance was in full control seems to belie the impression of concentrating on the bottom line.
How many people did we hire, or how much redundancy do you get for 4.5m$ nowadays!

[woodpeckers] 27/5/2015 16:18

At the risk of stating the obvious, can I just point out that what the years' results show us is that we now have absolute confirmation that we have patented technology which is capable of producing increasingly large quantities of a chemical at a cost with which most other producers can't compete. Credit where it's due.

[bogg1e] 27/5/2015 16:06

Netters, i think they are still focussed on cutting costs and streamlining production costs. They are making cash now.

[arlington chetwynd talbot] 27/5/2015 15:47

The business model appears to be completely wrong. The emphasis on production must be replaced by a focus on making cash every quarter. This means that if sales/margins are poor production should actually be reduced not increased or money is simply being poured down the drain in an attempt to maintain market share. As a small operator this is where the Chileans can bleed you to death if you're not careful. A funding will still come once the cash dwindles and the debt still needs repaying or converting. No wonder some want to talk about the water, it's the sound of fiddling. I will be Suetonius and Graham can be Nero.

[bogg1e] 27/5/2015 15:18

Also, just a thought, was the higher H2 cost of sales due in part to a recruitment drive at the IOC division?

[bogg1e] 27/5/2015 15:12

crosseyed, cheers. One interesting thing. As iodine derivative revenue is $16,919,865 from 150 tonnes of iodine (172 tonnes - 22 tonnes wholesale), means each tonne equals $112,000 revenue??? Really?

[neddo] 27/5/2015 15:02

mm , I don't use the filter at all usually, but the bombardment was idiotic

[crosseyed] 27/5/2015 14:51

I'm still analysing the 2014 Final Results. The headline revenues and iodine production figures had already been reported. Cash was roughly in line with what was expected, a little more than my forecast though easily explained by the net increase in receivables less payables. I'm astonished by the fall in inventories in all categories to $3,552,232 from $6,902,227 as at 31/12/2013 and $6,155,401 as at 30/6/2014. That's a big contributor to cash.

However, what surprised me most, and presumably the market in general, was the magnitude of the overall loss of $6,616,764. Some $2,522,696 of that was due to the impairment charges on IO1 and Atlantis assets. Further delving, Note 4 reveals the astounding increase in "labour, manufacturing overhead and royalties" from $2,332,380 (2013) to $10,961,181 with no explanation.

The Chairman stated that "IC [Iofina Chemical] is traditionally a first-half weighted business and this was true in 2014". Really! H1 revenues were reported at $13,020,185. H2 revenues were therefore $12,828,742 so not much difference there.
H1 cost-of-sales were $8,946,095 implying H2 costs of $14,261,500. Surely that warrants some explanation.

Interestingly, this report provides a deduced breakdown of revenues:
- Iodine Derivatives: $16,919,865
- Raw Iodine: $750,132
- Non-iodine Products: $8,179,062
Not revealed last year is that revenue from Non-iodine Products was $6,058,230, much higher than I had thought.

Much is made of the impact of lower iodine prices. As other posters have observed, very little produced iodine is sold into the market; in fact just $750,132-worth or about 20-22 tonnes in total. Those were the first ever sales of raw iodine, probably contracted towards the latter end of 2013. Certainly the lower market price would have had an impact on derivative prices of which 70-75% (my estimate) of costs might be attributable to raw iodine. But it does seem to me to be a smoke-screen whilst ignoring the elephant in the room - apologies for the mixed metaphors :{.

Back to analysing the report.

c

[cyberbub] 27/5/2015 14:00

Boggle 32735, a very fair post IMO.Remember our share price is no longer 250p but 30p... I think fair value for a company which has struggled against a number of issues in the last 24 months but seems to have bottomed and be turning the corner... has much better management than before... and the prospect of substantial expansion through both iodine and water...Barring any calamities my view is that the only way is up from here... albeit perhaps more slowly than we hoped...GLA NAI

[roundup] 27/5/2015 13:56

Iof has again done what it does best:- D I S A P P O I N T.

[bogg1e] 27/5/2015 13:41

Well done Netters. I must admit to be being a bit shocked this morning. I underestimated the losses considerably, the falling iodine price reducing IOC profit margins by more than I thought seems to be the chief issue. Nevertheless, I got the point I was hoping for, that we have turned the corner from loss making to profitability and, given that production and the iodine price are stable, we should have had about 7 profitable months in a row by now. Im a little bit disappointed by Lances conservative growth plan; 3 more high ppm sites to come hopefully in the latter half of the year should the iodine price show a stable rise, is good, but I thought we had numerous sites where the agreements were in place to proceed already? The ones on Lances original plan at the end of 2012? Generally disappointed by the share price drop, but overall Im happy that we are now a profitable company and should remain so going forward. Slow but solid progress.

[che7win] 27/5/2015 12:18

Fresh, Derivatives are affected by iodine, despite what some think, it is watched by our customers who demand price reductions.ACT, thought you had lost your TUNG, you don't get everything right! I expected a loss here, but the headline figures I agree are more disappointing than we expected, the underlying business however is geared for a rerate once iodine does.I have been reading the results most of this morning... The operating activities consumed $576k first half, but for the full year $196k, I'd say that was a good result in the face of selling prices falling and a good result on H1/H2 comparison. Good cash management also apparent.That is a significant improvement and we would have been cash flow positive if iodine price hadn't declined.I think we are generating positive cash flow...but others can read the accounts and give their thoughts.operations have improved significantly and it's the iodine price fall that has cloaked the turnaround.Just look at the improvement in admin expenses...very good progress I'd say.

[monkeymagic3] 27/5/2015 12:13

Neddo - change your filter list

[odvod] 27/5/2015 11:55

I did some restructuring.

Sacking off people costs. Severance, golden parachute. Study and evaluations by experts cost. Re pipeing costs. Write off of IO1 consist of dismantling cash costs and paper write off. Was there any cash cost to IO1 water provider? Lawyers cost. Did they said about how iodine pricing effects their chemical end product pricing - I did not read through. But profits should increase. Not be down. So there were huge costs of around 2 mill cash if we take 1 mil loss from op in H2.



Capitalization method of the costs accounting - what is their present way - conservative or not - must look up.

[superg1] 27/5/2015 11:53

Going on the info.

Sqm have dropped 1700mt of production with a question mark over claimed NV figures.

RB off the scene means 1600mt that went into the market last year will drop off to half or less year, and be nil next year.

SQM talk of a 1400mt expected demand increase. That's 4,700 not being covered. It will all have an impact at some point.

SQM have no extra capacity at Pedro D. El Toco is too expensive. They show extra capacity available at NV but that is a bit of a bluff.

We know if they use the extra water rights to expand there then the national reserve will be damaged. We know that as Cosayach stole water, which SQM have the rights too, and it DID damage the national reserve nearby (Tamarugal forest).

So the expansion capability, imo, due to the facts, is a bluff.

SQM need Cosayach to fail and they are going all out to do whatever they can to make that happen.

H2 due to various cases should see the beginning of the end of Cosayach and SQM will acquire their leases.

I anticipate SQM will bid for the RB mine and mothball it, turning to it depending on market circs as a bit of a reserve.

[freshvoicem] 27/5/2015 11:44

Looking in more detail, first half loss 1.3m$, Whole year loss 4.1m$
Therefore loss increased
Interim stated positive EBITDA. Now stated as an achievement positive in 2015.
What happened in second half

If most production is used internally how does low iodine price affect profit? Surely Chemical aren't reducing prices that much. At least that is what we were told.

[superg1] 27/5/2015 11:38

Freshvoicem 27 May'15 - 09:58 - 32723 of 32728 1 0

Super
In the heading you quote someone in the co. Saying in October cash was increasing. Surely that must have been a lie? Who was it?


The answer is in the header in brackets after the quote you pasted. Here it is, the Tom Becker ineterview

"OUR CASH POSITION MONTH OVER MONTH IS INCREASING" (Stock tube interview early October 14) Cash in bank mentioned as $7.5 mill.

No lie, just SQM going on a price plunge spoiling the game to kill off Cosayach and end any expansion thoughts of others.

Either way the cash is roughly the same as that date, so even with SQM killing the market it's not killing IOF it's just put them on hold.

[uppompeii] 27/5/2015 11:30

Though at some point odvod the future becomes the past...

[odvod] 27/5/2015 11:14

ditto - but he is wrong about its future. I am happy about the work done, about the future market, about holding back. Not happy with the results. If the management plays smart there will be loan conversion at 40 which solves the debt situation as well.