Iofina Share Discussion Threads

[bogg1e] 28/5/2015 09:29

Does anyone have any links to iodine prices please? I have checked but can only find small quantities on alibaba etc. Where do we find the large wholesale orders, for India etc please? Tia.

[roundup] 28/5/2015 09:09

"With the efficiency improvements implemented following our operational review we have been able to refocus our efforts in exploring new areas for potential iodine deposits. We have identified a number of sites for expansion and these areas show great potential even at today's iodine prices. I look forward to updating the market accordingly once plans are finalised."In view of the above statement we will be able to expand, "even at today's prices". Now whenever the iodine price increases we should have a very profitable company, especially when we get the water permit.

[superg1] 28/5/2015 08:21

lol votes down.

I'm not stopping with relevant info just because we are going through accounts and news. When it pops up I'll post it.

The last one (news in the last 24hrs) highlights the ongoing water issues in Chile that will impact SQM and others. The numerous growing cases also highlight the problems faced in Chile. Toyota took a 25.5% in the Algorta iodine mine and they are losing cash at a rapid rate.

[superg1] 28/5/2015 08:14

Che

It does seem they spotted something to me. As mentioned previously they talked of a drop in admin expenses on the staff side. I was surprised by H1 figures and said that at the time, I was expecting much worse. So it could be a knock on explanation, just speculating. Hopefully the answer will be given shortly.

[che7win] 28/5/2015 08:06

Superg, I have asked the company, I'm surprised they did not put an explanation in the notes. If that was true, they should have said as they do themselves no favours - how are we meant to extrapolate the figures going forward.?

[superg1] 28/5/2015 07:53

:-)

Nice to see a few falling trying to read it all. I put it on hold, busy at the moment.

Just one thought and you figures guys may know the answer.

All the talk was of a H1 shocker due to overspending and unnecessary additional staff when G and G were in charge. Then H1 figures seemed to be a bit of a surprise compared to expectation.

Now H2 the reverse is the case when cost savings have been made.

So was there an error somewhere or some of the expected costs have spilled over into H2 figures. Perhaps that was the hold up when someone spotted it, just speculation, but H1 was a surprise to me as mentioned at the time.



I know some will have put the question to the company, so an answer may appear shortly.

[che7win] 27/5/2015 22:16

Cheers Crosseyed,
Maybe some of the improvement they made to plants e.g. Pumps and the rollout across each one is part of this cost of sales?

I would like to find out...

[monty panesar] 27/5/2015 21:54

Naphar,

First thing I looked at was the cash and that it had increased in period. Inventory down but they also spend money on improving sites over period. Now iodine production 30% higher it makes a big difference.

Monty

[naphar] 27/5/2015 21:51

Difficult to know if my post above is a factor,as we simply dont know what the manuf cost of our year end stocks were.
Also the release over cdi period bit was possibly rubbish in this instance.

[naphar] 27/5/2015 21:45

Haven't looked at accounts at all yet as too busy on a business trip.
On the topic of cogs, they may have had to revalue inventory downwards, as stated somewhere above, due to the lower realisable price in the market.
Its possibly unlikely it would have been a jan 1st revaluation, as the price declined a lot during 2014. It may have been revalued sometime during the second half, and would have been released over their CDI period. That would be a charge against cost of goods sold and could explain the second half peak. I might have expected a note about that though.

If its true, it would mean cash had not benefited from a large reduction in inventory, which given the low level of year end cash compared to estimates, makes me happy. Why? Because it means normal operations were maintaining cash levels, and not sales of inventory.

its never nice to write down value of stock, and take the p&l hit, but at least its not touching cashflow exactly

[crosseyed] 27/5/2015 21:36

Bogg1e,

I had noticed the increase in production wages apportioned to cost of sales at $1.3 million (Note 5 as also posted by Che7win, post 32761) which is the figure I mentioned in my earlier post. But it still does not explain the big increase in the cost of sales. I tend to agree with Monty that there has been a revision in the way certain costs have been attributed between H1 and FY results. It would have been nice if that had been stated! (Or perhaps I have not yet found such a statement.)

che7win

Re the inventory valuations, it had occurred to me that lower valuations may have occurred because of the lower market price, since inventory is valued at the lower of actual cost and market value. I think that would largely apply to the inventory of raw iodine. I notice that WIP is slightly higher than in the Interims though reduced from 2013; like raw materials, inventory of finished goods is much reduced. As regards raw iodine inventory, I haven't checked it but given that valuation is done on a FIFO basis and recent stocks are averaged from below-market-value IOsorb production, I doubt that market-price reductions would be a significant contributor. My model indicates that IOsorb averaged production costs have consistently been below market price throughout the year.

Still a lot of delving to do though I'm saving that until tomorrow.

c

[monty panesar] 27/5/2015 20:44

Che,

As I say I have stopped looking at the accounts now but what seems to have happened is they have moved a lot of what was put in the admin expenses into cost of sales since admin expenses only rose 630k in H2 having been 4.6m in H1.

It just mean admin expenses should be lower going forward. I think it gives a better reflection on the business. I think they may well have restated some of the figures from the interims. Only the finals were audited.

I will take another look over next few days.

Monty

[che7win] 27/5/2015 20:43

Monty/crosseyed,

On raw materials, WIP and finished goods, I would add the following point to yours Monty.

Iodine prices have fallen 30% over the past year, so that alone might reduce the value for 2014 by up to 30%.
They are probably managing the working cashflow better too?

[che7win] 27/5/2015 20:29

Monty,
The specific staff costs in Cost of sales are helpfully in the notes 5:

"Of the total staff costs above, $3,710,561 (2013: $2,368,023) is included within cost of sales; $1,706,292 (2013: $2,620,968) is included within administrative expenses and $289,099 (2013: $199,832) has been capitalised as additions to property, plant and equipment."

That doesn't explain the large increase in cost of sales as the increase in the staff part was only approx. a ~$1.3m increase....

[monty panesar] 27/5/2015 20:24

Cross eyed,

Just seen you post above about inventories. 2 reasons why I think they are lower. Inventories are at the lower of cost or realisable value. Prudent accounting and all that. Over the last year the cost of production at IR should have been falling as production increases meaning a lower value per kg in the books. Secondly they had poor production at IR so amount they had in stock was low.

Also worth nothing old management said they had large inventory at end of 2013 pending big order for delivery in H1 last year.


Had enough of looking at the accounts now.


Monty

[superg1] 27/5/2015 20:23

I don't know how the accounts work on post Y/E events, but as an example SQM added tax changes coming into play in the next few years into last years accounts, something like $50 mill.

It's a fairly common thing, why, and what the advantages are, I don't know.

The accountants here may know re this one but for example (as I understand it), costs of plants aren't set against tax in full for the year they are completed. It's not allowed, so they are set as a loss over a number of years under depreciation. Various other capital expenditures get recorded this way.

As for the point Cross raised (and others), I'm curious myself. I know a number of staff appeared when G and G were in charge, middle management. Whether that meant severance costs I don't know but quite a few will have gone.

[writz] 27/5/2015 20:15

Oh, I see what you mean. Sorry, much haste, little speed.

[monty panesar] 27/5/2015 20:10

It's swings and roundabouts but to me means it is more reflective of the true costs of the business. If sales grow then the gross profit will grow disproportionately.

[writz] 27/5/2015 20:05

Monty, if I understand you correctly, that would account for roughly 3m added to the cost of sales? If so, it may be a better way of reporting it, but it seems rather self-defeating.

[monty panesar] 27/5/2015 19:58

Writz

Just looked and 640k looks to have been spent on plant in H2. I imagine to sort out the past issues on io3-6.

Monty

[writz] 27/5/2015 19:54

Che, just a thought, but do we know when the capital cost of plants 5 and 6 was accounted?

[monty panesar] 27/5/2015 19:52

I just had a look. Admin expenses in June were 4.618m and only rose to 5.375m at end of year so I think staff costs have been shifted to cost of sales from admin as mentioned above.

If right I think that is probably a better way of reporting it. Also means the hurdle for EBITDA positive is higher.

[che7win] 27/5/2015 19:43

Monty,
Yes, I agree with you.

Boggle/crosseyed - the staff costs doesn't explain it, I'm baffled myself.

I don't understand how first half we had cost of sales of $9m and by year end it had jumped to $23.2m?
I would have expected it to be around $18m, but maybe that is too simple to extrapolate - then again it's only plant 5 and 6 that went online.