Iofina Share Discussion Threads

[beercapafn] 04/8/2013 15:45

up pomp.. that was a realy funny and accurate comment / observation. . just a constant buzz in my ear, cant make it go away. but have learnt to live with it.. only a £ 10 take out will cure it. converting some ISA shares to IOF Monday..

[uppompeii] 04/8/2013 15:14

Bloody hell this thread is like tinnitus.

[baguette] 04/8/2013 15:00

Lib yes but the margin is still affected, so its a cost other than the direct manufacturing cost

[the librarian] 04/8/2013 14:50

Shipping costs are usually paid for by the buyer, FOB or CIF, but built in as an extra to the cost of the product, so it's not an overhead but an agreement at the point of sale

[baguette] 04/8/2013 14:41

Just as a matter of interest as we all feel this is "our" business, I think shipping costs will become quite significant as all the iodine has to be moved somewhere and any not going to the conversion plant will either be sold in U.S. or India ? or somewhere. Shipping of course will not be in the cost of manufacture but an additional variable overhead.

Fortunately I imagine that shipping is much cheaper in the U.S. than in U.K. specially for chemical type products.

[bobbyshilling] 04/8/2013 13:26

pcjoe,6473 - absolutely.

[bogg1e] 04/8/2013 12:59

Naphar cheers. Given that IOF are a pretty lean outfit I cant see these other expenditures becoming an impediment to progress, but I shall look into it. Thanks.

[naphar] 04/8/2013 12:51

Bogg1e,

When you make and sell something, the costs of manufacturing are generally included in the cost of goods line of the P&L.

The costs of marketing and selling would be separate under a marketing and distribution line.

Costs of running the company, like legal, finance, general management, might come under a General and administration line.

The opex costs quoted most likely only cover the cost of making the iodine, and in Iofina's case appear to include royalties payable.

He P&L might take a slightly different structure from company to company but should basically reflect something similar to what I described above.

I just looked back to last years accounts and IOF have the following lines in their published P&L:-
Sales
Cost of sales ( which will include production costs and royalty payment costs)
Gross profit
Admin expenses (ie hr finance legal general management, maybe sales or customer services team in Iofina's case)
Financial income
It goes on but you can see for yourself

[ansana] 04/8/2013 12:05

"Iofina should be able to materially exceed ...... Excellent information Noli, work is proceeding at quite a pace in spite of Chris Fays interesting stewardship, poorly worded news releases and less than accurate figs. We have achieved a significant patent and we have a new CEO on order! It is no wonder that IOF is a difficult beast to assess whether you are PI, a naysayer or a competitor. Materially exceed, I like that, materially exceed.

[bogg1e] 04/8/2013 11:53

Net, a 70% cut actually seems fair for now, once i got my head around annualised output for 2013 did not mean 1500 tons for 2013 it became blatantly obvious that the 2013 output would be drastically less than forecast.

"Bag, you are absolutely right, it is much more complex. I hunk when people multiply plant outputs by market price less opex, work out profits and come up with share prices, they are indeed ignoring the fixed costs of offices, people etc which are not included in those opex figures." - interesting to know that, i assumed that the opex costs included all related expenditure, not just plant running costs, thanks.

Noli - cheers re IO#4 ground work, that does need clarification though, if the rns states that the lease for IO#4 is still being procured, it begs the question as to why anyone would be allowed to commence groundwork without the lease signed off?

[n3tleylucas] 04/8/2013 10:57

Let's not forget FC have slashed their 2013 pre-tax profits estimate from £7.3m to just £2.2m! Yep, a 70% cut!!

It's flabbergasting that IOF's broker hasn't dared to follow suit. Unbelievable!

[pcjoe] 04/8/2013 10:13

Nice one Noli - 1st Columbus - 820T production in 2014?!!!!! - If that supports their target share price of £2.30ish then we have nothing to worry about - Your news just supports that IMO

[the librarian] 04/8/2013 09:35

Thanks noli, nice to have confirmation of that, I get the feeling that you have been talking to the man with a shovel in his hand :-)

[naphar] 04/8/2013 09:16

Thanks for that noli, very good news indeed. Another week you say for groundworks. So given Io3 groundworks started roughly mid June, Io4 probably started mid July to be finishing in a week or so, we should be expecting one month of groundworks per plant, right?

If So Io5 groundworks should be finished mid sept and Io6 mid October?

That would give 6 weeks to get Io6 built and possibly even commissioned before the end of the year, weather permitting and assuming we will have the plant, towers etc on time. (Edit: although given it is stated builds can take 60-90 days IO6 built let alone commissioned by year end could still be a stretch)

Looks like Io6 by year end might well be doable but no room for problems I would guess.

[baguette] 04/8/2013 09:13

Naphar

Yes of course the good news is that any further revenue beyond the say 1000mt I was using will tend to drop much more directly to the bottom line. For instance the interest on the $15m loan is approx $1m a year whatever the output and sales.

[noli] 04/8/2013 09:10

Just thought i would drop another FACT for you, the IO#4 groundwork has been on-going as per the rns, (i.e 30 days after IO#3 started), i am hearing approx another week of groundwork and the team move onto the IO#5 site to start the groundwork.

Things seem to be moving along very well indeed at the mo.

[naphar] 04/8/2013 09:01

Bag, you are absolutely right, it is much more complex. I hunk when people multiply plant outputs by market price less opex, work out profits and come up with share prices, they are indeed ignoring the fixed costs of offices, people etc which are not included in those opex figures. I also think it is fair to do so to a degree. We made a small loss in 2012, but most infrastructure costs were covered by the gross profit of iofina chemical. Infrastructure costs will grow in 2013 for sure, but so should iofina chemical gross profits, which could cover increased infrastructure costs. That would mean the iodine output profit falling to the bottom line. As we grow plant wise, so will infrastructure costs, but so should iofina chemical. It is an over simplification but I don't think it's so unreasonable at this stage. If 5 plants were to produce 2000mt that could produce a gross profit of 27p per share. If we have additional infrastructure costs of £2.6m associated with that output, that would equate to 2p per share. Not even 0% of the 27p and not that much in the grand scheme of things that we should worry at this stage, in my opinion. On the other hand, would £2.6m be enough? Not sure but it is quite a lot of people.

[the librarian] 04/8/2013 08:57

Just to add further, the plants will be (theoretically) running 24 hours a day, less downtime etc; so 168 hours a week. The majority of the company will be costed at X amount of hours but the plants running full time do reduce the opex.

I'm sure an accountant would explain it better than me, but that is how I understand the opex situation relating to the plants and costs.

[jungmana] 04/8/2013 08:51

The share price forcast by some here is just too rampy. They need to get realistic and do a bit more research.At 150p an not a buyer at this stage of the company and will be happy to get to heights of 240p by year end.Dyor

[the librarian] 04/8/2013 08:47

I don't disagree BAG, but there are economies of scale and each plant will have it's own cost centre in the accounting procedure add that to five in proximity to each other and that brings in flexibility too, so the opex will be calculated for each as the costs arise. $15 has been mooted for plants up and running and that could rise or fall according to the bpd going in and ppm's of course.

I do get to the point that they know what they are doing and are aware of costs, the only one on a big salary is Forest Dorn (150k) we don't know how many are employed by IOC, so all associated costs will be similar to any company with a growing workforce.

[orslega] 04/8/2013 08:44

just looking at First Columbus note (post 6346 - thanks Noli).

FC acknowledge in their note that they could be way out "Iofina remains a difficult beast to forecast" eg they state...

"Iofina should be able to materially exceed our reduced forecast for FY2014" ( Revenue $59.7m Profit $23.3m)

"Plant operating metrics - higher content sites would significantly increase average production from 130MT per plant"

"Mobile sites and high producing sites (Maxsorb, Hydrosorb) etc not built into our forecast production"

Nothing for Water but acknowledge, "Atlantis could become a major part of the Group's business, worth $80K per day".

Incidentally, didn't see any comment from FC on the Chemical Division - did they build anything into the numbers? (Or maybe not considered material enough - even though recent record sales??)

So some big upside variables in FC forward looking guesstimate - managing client expectations eh, lol

....be good to see new CEO appointment soon who can get a firm grip on rollout...

[baguette] 04/8/2013 08:27

Steveolds - the subject was nothing to do with levels of importance in the business thats totally obvious - it was in response to questions concerning when we might get cash self sufficient and that means profitability.

I have seen so many posts over the last weeks /months where people multiply iodine output by the market price and translate that into profit then into some ramped up share price forecast.

I was only responding by reminding people that the stuff needs transporting around and everything else that costs a business to operate, so the question "when do we become cash positive" is not as simple as taking sales less plant building costs its so much more complex than that.

[steveolds] 04/8/2013 07:47

Bags, your points are very valid ones but are hardly the most important issues at this time. Getting the plant up and running smoothly are of faaaaar greater importance. Cover for sickness, days off and pension benefits etc does, at this stage of the companies history, sound like nit picking. Sorry but it does.

[baguette] 04/8/2013 07:01

Monty, Lib I am not feeling negative about IOF nor trying to be but just think being realistic about business. Some people are only looking at the potential income from Sales of iodine and forgetting that a business builds up staff and cost. I do not think you can just say "don't need a sales force" well I may agree about the "force" but it will need sales people. Here are a couple of thoughts on running a business.

5/6 people at each plant (or whatever number it is) do not recruit themselves, pay themselves, look after their own social, pension needs or whatever, cover for their own days off, sickness etc, replace themselves if they leave, sort out their on going training, organise the Christmas party etc.

iodine does find customers,keep them happy, sell itself,invoice itself, collect the receivables money, look for new market opportunities

When we have say 12 plants operational that would probably equate to at least 70-80 people at the sharp end or near to, all of whose needs have to be addressed all of which will need someone organising the purchase of spares for pipes, pumps , filters etc and overseeing maintenance programmes. I am not a chemist but the conversion process is naturally dealing with aggressive reactions which will be hard on the plants.

All the leases and legal agreements which IOF have been tying up do not look after themselves and deal with future legal challenges etc

I could go on but the point is most businesses finish up only making relatively small percentages of turnover at the bottom line. Maybe IOF will be a very high profit business but one thing is certain it will need a fair team of people if we are to generate several or many tens of millions's of dollars.

Its this area where perhaps none of us knows how many are already in place and what the fixed costs of the business are, but they will certainly grow and that is why I remain unsettled until a CEO is in place who can start putting some obvious structure on the thing

[hitsha3] 03/8/2013 23:54

Lib, yes i agree with you and we have come along way and we still need to go long way to dominate the market.