TIDMIOF
RNS Number : 1990N
Iofina PLC
23 September 2019
D
23 September 2019
Iofina plc
("Iofina", the "Company" or the "Group")
(LSE AIM: IOF)
INTERIM RESULTS
EBITDA up 172%; Construction of IO#8 underway
Iofina plc, specialists in the exploration and production of
iodine and manufacturers of specialty chemical products, is pleased
to announce its Interim Results for the six months ended 30 June
2019 (the "Period").
During the Period the Group significantly strengthened its
financial performance, with revenue up 29% to $14.53m (H1 2018:
$11.30m) and EBITDA up 172% to $1.97M (H1 2018: $0.72m). The $3.23m
increase in revenue and substantial increase in EBITDA was a result
of the growth in sales volumes and higher iodine prices.
The Group's four IOsorb(R) iodine production plants produced a
total of 286.7 metric tonnes ("MT") of crystalline iodine, an 8.6%
increase from the prior year (H1 2018: 264.1 MT). The Group is
pleased to confirm that a fifth IOsorb(R) plant, IO#8, is now in
the first phase of construction and the new partner in IO#8 is
anticipated to provide opportunities for future plants at future
sites.
KEY FINANCIAL POINTS:
-- Revenue increased by 29% to $14.53m (H1 2018: $11.30m);
-- Gross profit increased by 53% to $3.90m (H1 2018: $2.55m), and from 23% to 27% of sales;
-- EBITDA increased by 172% to $1.97m (H1 2018: $0.72m), and from 6% to 14% of sales;
-- Operating profit was $1.21m (H1 2018 loss $0.05m);
-- Loss before and after tax was $0.30m (H1 2018 $0.75m) (profit
of $0.13m if $0.43m residual non-cash convertible loan notes
charges are excluded);
-- Basic loss per share was $0.002 (H1 2018: $0.006);
-- Cash balances were $10.26m (H1 2018: $3.0m) ($5.05m unspent
from fundraise after debt repayment of $3.26m, $5.21m other
cash);
-- Equity increased by $8.31m cash from fundraising and $4.19m from debt converted to equity;
-- Debt was restructured by extending term and removing
convertibility, and reduced by $7.46m to $18.18m.
KEY OPERATIONAL AND MARKET HIGHLIGHTS:
-- IO#8 is in the first phase of construction;
-- Production of crystalline iodine up 8.6% to 286.7 metric tonnes ("MT") (H1 2018: 264.1 MT)
-- Iodine prices have continued to rise with the current spot price at or near $33/kg
-- Launch of IofinaEX, licensed in Kentucky to process and
develop products derived from hemp such as CBD
-- Incorporation of IofinaEX Global, a specialist division
focused on the production of hemp derived products in Central
America and the Caribbean
-- Iofina Chemical continues strong performance with a diverse
portfolio of iodine and other halogen products and has increased
capacity of some key products to meet demand.
OUTLOOK
-- Iodine market remains tight, with iodine prices likely to
move higher with Chilean supply being squeezed
-- Iodine expansion remains on track, with the new partner at
IO#8 providing opportunities for future plants at future sites.
Commenting on today's results, Dr. Tom Becker, President and CEO
stated: "It has been an exceptionally strong first half for Iofina,
with the Group having achieved a record revenue of $14.53 million
in the period. This, together with the significantly improved
EBITDA, has been a result of an increase in iodine production
accompanied by growth in sales volumes and higher iodine
prices.
"The Company has been working diligently to expand its iodine
production capabilities further and is delighted to confirm that
IO#8 is currently in its first phase of construction. Whilst iodine
expansion remains on track, the Group has also successfully
launched IofinaEX and IofinaEx Global, entities that are designed
to directly benefit from the profitable and rapidly growing hemp
market.
"The strengthening iodine market, coupled with our timely
execution of iodine expansion and product development, will ensure
that Iofina expands in line with its growth strategy and achieves a
record profit in 2019 and future years to come."
Enquiries:
Iofina plc
Dr. Tom Becker, CEO & President
Tel: +44 (0)20 3006 3135
www.iofina.com
finnCap Ltd
Christopher Raggett/Matthew Radley/Camille Gochez
Tel: +44 (0)20 7220 0500
Media Contact:
Yellow Jersey
Charles Goodwin/Harriet Jackson
Tel: +44 (0)7544 275 882
Overview
Iofina plc ("Iofina" or the "Company") is the holding company of
a group of companies (the "Group") involved in the exploration and
production of iodine with complete vertical integration into its
specialty chemical derivatives business. Iofina Resources ("IR")
identifies, develops, builds, owns and operates iodine extraction
plants, currently focused in North America, based on Iofina's
WET(R) IOsorb(R) technology. Iodide is isolated from a brine waste
stream produced from existing oil and gas operations, and without
Iofina, this resource would not be realised. The isolation of
iodine from this waste stream adds value to Iofina and its
shareholders, our oil and gas partners and the overall global
iodine market. Iodine containing or other halogen based products
are produced at and sold through the Company's wholly owned
subsidiary Iofina Chemical ("IC") with the major raw material being
the Group's produced iodine. Additionally, the Group's crystalline
IOflo(R) iodine is sold directly to other iodine end-users through
IC. IofinaEX ("EX") is a new venture for the Group exploring hemp
derived products such as CBD and is licensed to process hemp in the
state of Kentucky. IofinaEX Global is exploring hemp derived
product opportunities outside of the USA.
Financial Review
Highlights
The most notable features of the period under review were the
172% $1.23m increase in EBITDA, and the debt restructure and equity
fundraise. The bulk of the EBITDA improvement reflected increases
in iodine prices, with the balance related to sales volume
increases. The fundraise resulted in net funds received of $8.31m,
followed by the repayment of $3.26m debt and the conversion of a
further $4.19m of debt into equity.
Sales
Total sales increased by $3.23m (29%) to $14.53m. Sales of
iodine products increased by 46% from $6.72m to $9.77m, while
non-iodine sales increased by 4% from $4.59m to $4.75m. Sales
volumes of IOsorb(R) plant produced iodine increased by 27%
overall, comprising an increase of 123% in sales of raw iodine
offset by a reduction of 27% in sales of crystallised iodine in
derivative compounds. The net volume increase reflects both
increased production at IOsorb(R) plants with the most recent IO#7
plant in full production throughout the period, and also some
reduction in work in progress inventories of derivative compounds.
The average raw iodine selling price achieved was 15% higher for
the six months to 30 June 2019 compared to the same period last
year. Sales prices of derivative compounds overall reflected the
same value per kilogram increase as raw iodine, though the rate of
increase in certain products is somewhat lagging behind the raw
iodine increases. Non-iodine sales continued to perform strongly,
with a net volume increase of 10%, offset by some price reductions
associated with higher volumes.
Operational expense
Iofina Resources' IOsorb(R) plant average production costs per
kilogram for the period were 2.5% higher than for H1 2018.
Manufacturing and fulfilment costs at the Iofina Chemical plant
were overall 1% higher than for H1 2018. Administrative expenses
were up by 5% on 2018, this reflecting $102k of additional non-cash
share option charges compared to 2018. Against this background of
well contained operational expenditure the great majority of the
benefit of the sales increases described above has been able to
flow through to gross profit (up by $1.34m and increased from 23%
to 27% of sales) and EBITDA (up by $1.23m and increased from 6% to
14% of sales) - operational gearing in action.
Interest payable
Interest payable of $1.09m is significantly greater than the
$0.62m amount for H1 2018. The increase reflects the provisions of
the debt restructure agreement, completed on 29 March 2019 but
including new interest rates retroactive to 1 January 2019. The H1
2018 interest payable of $0.62m represents interest capitalised at
5% on convertible loan notes of $20m plus capitalised interest to
date, and interest capitalised at 6% in the same fashion on the
term loan of $3m. The H1 2019 interest of $1.09m represents
interest payable quarterly at 7.5% on the $25.63m total balance of
the loan notes (convertibility removed) and the term loan including
accrued interest at 31 December 2018. This balance was reduced to
$18.18m by the repayment of the term loan balance of $3.26m on 20
June 2019 and the conversion of $4.19m loan notes debt into equity
on 14 June 2019. The revised terms also included an arrangement of
fee of 1% on all debt outstanding as of 31 December 2018, to be
paid on 1 July 2020. The 2019 interest payable amount includes
$135k amortisation of this fee. Based on the reduced amount of debt
of $18.18m outstanding as of 30 June 2019 it is anticipated that
interest payable in the second half of 2019 will be reduced to
$687k and amortisation of arrangement fees for the same period will
be $61k, assuming in both cases that there are no further
alterations to the balance of debt outstanding.
Finance expense accounting
The September 2016 debt agreements continued legally in force
until completion of the restructure agreements on 29 March 2019,
and therefore the residual amounts of the conversion rights
accounting were carried forward into 2019. These appear as loan
note discount expense of $0.81m and derivative liability
revaluation credit of $0.39m, both non-cash items. However, as
noted above, there were increased rates of interest effective 1
January 2019 under the new agreements, inter alia in anticipation
of the removal of convertibility. Consequently there was in effect
an overlap in the accounting for the previous and the new
agreements, and a very high total finance expense of $1.52m.
If one discounts the non-cash net conversion rights expense of
$0.43m as de facto relating to prior to 1 January 2019, then the H1
2019 loss after tax shown of $0.30m would become a profit of
$0.13m.
Fundraise and cash flow
The equity fundraise completed in June 2019 brought in funds of
$8.31m net of expenses. The principal purposes of the fundraise
were to pay off the outstanding term loan of $3.26m, on which the
interest rate increased from 7.5% to 12.0% as of 1 June 2019, and
to accelerate the expansion of the business, in the first instance
by funding the imminent building of a new IOsorb(R) plant at a cost
in the region of $3m. The loan of $3.26m was paid off in June 2019
and therefore $5.05m of the sums raised remained at 30 June 2019.
Operating cash flow was $1.77m positive in H1 2019 (H1 2018 $0.32m
positive). Deducted from this amount are $0.12m of capital
expenditure (H1 2018 $0.75m), and interest paid of $0.95m (H1 2018
Nil). Therefore excluding the $5.05m from the fundraise the net
cash inflow for the period was $0.69m (H1 2018 $0.43m outflow).
Adding in the cash on hand of $4.52m at the start of the year
brings the total at 30 June 2019 excluding fundraise funds to
$5.21m, and with the $5.05m fundraise funds to $10.26m.
Debt
The debt restructuring that was completed at the end of March
2019 removed the former share conversion rights and the option to
capitalise interest payable, and extended the repayment date from 1
June 2019 to 1 July 2020. As described above, interest rates were
increased from 5% and 6% to 7.5% and there is a 1% arrangement fee
on the total sum outstanding at 31 December 2018. All debt is now
therefore treated as term loans with interest payable quarterly,
and comprehensive security remains in place. Debt outstanding at 31
December 2018 was $25.64m, and that sum has been reduced by
repayment of the previous term loan due to one debt holder of
$3.26m as part of the utilisation of the equity fundraise, and the
conversion by the other debt holder of $4.19m of previous loan
notes into equity. After these reductions the balance of debt
outstanding at 30 June 2019 was $18.18m.
Iofina Resources
During H1 2019 (the "Period") Iofina Resources produced a total
of 286.7 metric tonnes ("MT") of crystalline iodine from its four
Oklahoma IOsorb(R) iodine production plants, an 8.6% increase from
the prior year (H1 2018: 264.1 MT).
IR continues to execute its strategy of minimising production
costs and process improvements resulting in a 5% increase in iodine
recovery efficiencies year-over-year. Efficiency improvements,
particularly at IO#4 and IO#6, were achieved within H1 2019. The
Company placed a greater emphasis on the small details of
operations of its WET(R) IOsorb(R) process by reviewing everything
from sampling and testing procedures to data collection and input
and all steps in the IOsorb(R) process. The team continues to
execute other process improvement projects at its other current
sites.
During the Period the Company ramped up its exploration program.
IR increased its area of focus and the frequency of sampling and
testing in specific areas. This has resulted in the identification
of additional locations for future IOsorb(R) plants. The Company
recently announced an agreement and start of construction of IO#8,
an important continuation of its corporate growth policy. This
plant is expected to be online in H1 2020 and will significantly
increase iodine production. Iofina has partnered with a new company
for the source of the brine water raw material for IO#8. The new
location is outside of the Company's current core area, but is
located in a rapidly expanding portion of oil and gas drilling in
western Oklahoma. This is in-line with the Company's iodine
production expansion strategy, which was re-launched in 2018 with
the development of the very successful IO#7 plant. IR continues to
identify possibilities for future sites with various partners and
the Iofina team is committed to continue to grow its iodine
production operation in the ever-expanding worldwide iodine market.
Diversity and increasing the number of plants it operates gives
Iofina's customers additional comfort in the reliability of
Iofina's iodine supply. The Company is currently assessing the
future use of IO#5 which is currently not in operation.
Iofina Chemical
All of the Group's products are currently sold through Iofina
Chemical, a specialty chemical enterprise that has been in
operation for over 35 years and is well respected and known
globally in the specialty iodine product market. IC continues to
develop sales channels for IR's produced crystalline iodine and
IC's specialty chemical products. IC prides itself as a dynamic
organisation, which can quickly meet customers' needs and develop
new chemistries to continue to grow the Company's portfolio of
specialty chemical products.
Iofina Chemical, Inc. closed the first half of 2019 with the
highest first half sales in Company history. IC's sales closed June
2019 at $14.53m, 29% higher than H1 2018. IC expects sales to
continue to be strong in H2 2019. Sales of the Group's crystalline
iodine were higher than for any half year in Group history.
Additionally, sales of non-iodine products are also robust and the
Group has added additional shifts to meet product demand. With the
increasing sales of the Group's crystalline iodine, Iofina has
achieved REACH (Registration, Evaluation, Authorisation and
Restriction of Chemicals) compliance for iodine, and iodine samples
have been sent for evaluation at new opportunities in the EU. IC
has purchased additional equipment for two iodide products to meet
customer demands and it is working on a pilot expansion of a
non-iodine process to scale up to larger reactions in order to meet
the increasing needs of our major customer.
IofinaEX
IofinaEX is a new endeavour for the Group, investigating hemp
derived products such as CBD. The Group has specialty chemical
experience and expertise in extraction, distillation, analytical
chemistry, scale-up and other knowledge which, the Board believes,
provides a strong base for IofinaEX to be successful in this
rapidly growing area. The Group is continuing R&D efforts in
the state of Kentucky, where it holds a Hemp Processor/Handler
License, and is constantly evaluating its R&D efforts as well
as the rapidly changing cannabinoid/CBD market to determine the
best path forward.
Currently IofinaEx is extracting full spectrum cannabinoid
products and evaluating their composition. The next phase will be
distilling and isolating additional products. The Group intends to
update the market on its progress as appropriate. To that, the
Group is also working to develop this business outside of the USA
with its announced subsidiary IofinaEX Global. This Company has
started to explore non-USA prospects with its initial focus in
Central America. Whilst the Directors are excited about the
prospects of the specialty hemp derived products, the Group remains
fully focused on its core iodine businesses.
Iodine Outlook
Iodine prices in H1 2019 have moved higher, faster than expected
and have continued to rise in H2 2019. End of H1 year-on-year
pricing for iodine rose approximately 20%. From the Company's
observations of the iodine market and sales of its produced iodine,
current iodine prices on the spot market are generally in the low
$30's per kilogram and moving higher towards the mid $30's.
Contract iodine pricing lags a bit behind the spot price but is
also increasing. The iodine market supply is tight verses the
demands of the market. Iofina continues to see strong demand for
its crystalline iodine. The Group expects iodine pricing to
continue to rise in H2 2019, as it believes the supply and demand
conditions in the global iodine market are not likely to change
significantly in the near term.
Current pricing levels for large iodine purchases are now
similar to levels in 2011 before the supply disruption caused by
the tragic tsunami in Japan and factors in Chilean production. The
Directors believe that our strategy of prudent growth will place
Iofina in a positive position without disrupting the market
dynamics. Our ability to develop IOsorb(R) plants quickly, with
relatively low Capex per kg of iodine produced at these plants,
differentiates Iofina from its competition. Based on observations
in the market we forecast iodine global consumption to grow 3-4% in
2019. Pricing of iodine derivatives has slightly lagged behind the
current iodine price. As iodine derivative producers consume iodine
purchased at lower prices, we expect iodine derivative prices and
margins to rise going forward.
Outlook
Iofina has never been better positioned and the Directors are
excited about the Group's future prospects. The recent
oversubscribed fundraise and debt reduction has allowed the Group
to fast-track growth and new prospects and we are expanding our
iodine production with the construction of IO#8. Exploration and
plans for future iodine production sites are moving forward and
iodine prices are rising and are likely to move higher. New
specialty chemical products through Iofina Chemical and IofinaEX
are exciting opportunities for the Group and its shareholders.
Safety, regulatory compliance, exceeding customer expectations, and
focusing on employee satisfaction are key elements to the success
of Iofina.
There have been great achievements in the past six months and
the direction of the iodine market continues to work in Iofina's
favour. The successful support of new and current investors has
allowed Iofina to embark on its next phase of growth in iodine and
other specialty chemicals. Iofina has a new partner in IO#8 which
provides opportunities for future plants at future sites. The
Directors believe that the Group's cost of iodine production is one
of the lowest in the industry and that its ability to build plants
quickly, with minimal Capex relative to its competition, puts the
Group at a competitive advantage in the market. Construction of
IO#9 is expected to commence in 2020 and the Board will continue to
assess its options for utilising the assets of IOsorb(R) plant
IO#5.
The specialty chemical divisions Iofina Chemical and IofinaEX
are working hard to continue to grow the Group's current products
and develop new specialty chemical products. Specifically, the
Group's focus to develop products derived from hemp is a bold new
step utilising the Group's specialty chemical expertise. We will
provide the market updates on the progress of IofinaEX during H2
2019.
The Company's management team continues to nimbly adjust to
global changes in areas such as tariffs, currency, and others to
mitigate any risk. The Company, in conjunction with its debt
holders, has significantly reduced its debt in H1 2019. The
Directors are conscious that ongoing debt must be managed
effectively whilst having the proper capital available to meet
growth targets. The Directors believe the business strategies it
has executed, combined with the recovery of the iodine market, have
positioned the Company well for the future to achieve record
profits in 2019 and beyond.
IOFINA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE PERIODED 30 JUNE 2019
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December
2019 2018 2018
Note $ $ $
Continuing operations
Revenue 14,527,110 11,302,914 23,958,289
Cost of sales (10,631,843) (8,749,925) (17,651,387)
--------------
Gross profit 3,895,267 2,552,989 6,306,902
Administrative expenses (1,924,696) (1,828,142) (3,664,716)
----------------- ---------------- --------------
EBITDA - Earnings before
interest, tax, depreciation
and amortisation 1,970,571 724,847 2,642,186
Depreciation and amortisation (755,966) (771,774) (1,576,317)
Operating profit/(loss) 1,214,605 (46,927) 1,065,869
Impairment expense - - (2,592,276)
Finance income 162 573 974
Interest payable (1,086,313) (623,251) (1,273,178)
Amortisation of convertible
loan notes 5 (821,649) (887,546) (1,789,804)
Revaluation of derivative
liability 5 392,835 806,722 3,214,166
Loss before taxation (300,360) (750,429) (1,374,249)
Taxation 7 - - 231,233
Loss for the period attributable
to owners of the parent $(300,360) $(750,429) $(1,143,016)
----------------- ---------------- --------------
Other comprehensive income
Foreign currency differences - (534) (9,516)
--------------
Total comprehensive income
for the period $(300,360) $(750,963) $(1,152,532)
----------------- ---------------- --------------
Basic and diluted loss per
share 4 $(0.002) $(0.006) $(0.009)
----------------- ---------------- --------------
IOFINA PLC
CONSOLIDATED BALANCE
SHEET
30 JUNE 2019
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
Note $ $ $
Intangible assets 965,651 1,843,456 1,064,642
Goodwill 3,087,251 3,087,251 3,087,251
Property, plant & equipment 17,171,120 19,431,841 17,351,258
-------------
Total non-current assets 21,224,022 24,362,548 21,503,151
------------- ------------- -------------
Inventories 5,299,785 5,410,222 5,674,168
Trade and other receivables 5,748,542 4,488,620 4,428,004
Cash and cash equivalents 10,257,607 3,018,948 4,519,895
-------------
Total current assets 21,305,934 12,917,790 14,622,067
------------- ------------- -------------
Total assets $42,529,956 $37,280,338 $36,125,218
------------- ------------- -------------
Trade and other payables 5,740,793 4,760,840 4,970,843
Lease liabilities 130,252 - -
Convertible loan notes 5 - 20,094,629 -
Term loan 5 - 3,167,014 -
Derivative liability 5 - 2,800,279 -
Total current liabilities 5,871,045 30,822,762 4,970,843
------------- ------------- -------------
Term loans 5 18,177,207 - 3,263,529
Lease liabilities 211,927 - -
Convertible loan notes 5 - - 21,550,297
Derivative liability 5 - - 392,835
Deferred tax liability - 231,233 -
Total non-current liabilities 18,389,134 231,233 25,206,661
------------- ------------- -------------
Total liabilities $24,260,179 $31,053,995 $30,177,504
------------- ------------- -------------
Issued share capital 6 3,112,078 2,292,683 2,292,683
Share premium 60,681,312 48,991,647 48,991,647
Share-based payment
reserve 1,882,056 1,645,753 1,768,693
Retained earnings (41,461,347) (40,768,400) (41,160,987)
Foreign currency reserve (5,944,322) (5,935,340) (5,944,322)
-------------
Total equity 18,269,777 6,226,343 $5,947,714
------------- ------------- -------------
Total equity and liabilities $42,529,956 $37,280,338 $36,125,218
------------- ------------- -------------
IOFINA PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY
Share Share Share-based Retained Foreign Total
capital Premium payment earnings currency equity
reserve reserve
$ $ $ $ $ $
Balance at 31 December
2017 (Audited) 2,292,683 48,991,647 1,634,390 (40,017,971) (5,934,806) 6,965,943
Share-based expense - - 134,303 - - 134,303
---------- ----------- ------------ ------------- ------------ ------------
Total transactions with
owners - - 134,303 - - 134,303
Loss for the year attributable
to owners of the parent - - - (1,143,016) - (1,143,016)
Other comprehensive
income
Exchange differences
on translating foreign
operations - - - - (9,516) (9,516)
---------- ----------- ------------ ------------- ------------ ------------
Total comprehensive
income attributable
to owners of the parent - - - (1,143,016) (9,516) (1,152,532)
---------- ----------- ------------ ------------- ------------ ------------
Balance at 31 December
2018 (Audited) 2,292,683 48,991,647 1,768,693 (41,160,987) (5,944,322) 5,947,714
---------- ----------- ------------ ------------- ------------ ------------
Issue of shares 814,112 11,694,948 - - - 12,509,060
Share-based expense - - 113,363 - - 113,363
Prior year options adjustment 5,283 (5,283) - - - -
Total transactions with
owners 819,395 11,689,665 113,363 - - 12,622,423
Loss for the period
attributable to owners
of the parent - - - (300,360) - (300,360)
Total comprehensive
income attributable
to owners of the parent - - - (300,360) - (300,360)
---------- ----------- ------------ ------------- ------------ ------------
Balance at 30 June 2019
(Unaudited) 3,112,078 60,681,312 1,882,056 (41,461,347) (5,944,322) 18,269,777
---------- ----------- ------------ ------------- ------------ ------------
IOFINA PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIODED 30 JUNE
2019
Unaudited Audited
Six months ended Year ended
30 June 30 June 31 December
2019 2018 2018
$ $ $
Cash flows from operating activities
EBITDA - Earnings before interest,
tax, depreciation and amortisation 1,970,571 724,847 2,642,186
Share options expense 113,363 11,359 134,303
Impairment adjustments - - (378,944)
2,083,934 736,206 2,397,545
Changes in working capital
Trade receivables (increase)/decrease (1,320,537) 133,061 193,677
Inventories decrease/(increase) 374,382 (1,096,722) (1,360,668)
Trade and other payables increase 633,462 546,261 756,263
------------ ------------ ------------
Net cash inflow from operating
activities 1,771,241 318,806 1,986,817
------------ ------------ ------------
Cash flows from investing activities
Interest received 163 573 974
Acquisition of intangible assets (23,512) - -
Acquisition of property, plant
& equipment (98,677) (749,578) (908,056)
Net cash outflow from investing
activities (122,026) (749,005) (907,082)
------------ ------------ ------------
Cash flows from financing activities
Issue of shares 8,314,320 - -
Term loan repaid (3,263,529) - -
Interest paid (949,826) - -
Lease payments (12,468)
Net cash inflow from financing
activities 4,088,497 - -
------------ ------------ ------------
Net increase/(decrease) in
cash 5,737,712 (430,199) 1,079,735
Effects of foreign exchange - (534) (9,521)
Cash and equivalents at beginning
of period 4,519,895 3,449,681 3,449,681
Cash and equivalents at end
of period $10,257,607 $3,018,948 $4,519,895
------------ ------------ ------------
1. Nature of operations and general information
Iofina plc is the holding company of a group of companies (the
"Group") involved primarily in the exploration and production of
iodine and the manufacturing of halogen-based specialty chemical
derivatives. Iofina's principal business strategy is to identify,
develop, build, own and operate iodine extraction plants, with a
current focus in North America, based on Iofina's WET(R) IOsorb(R)
technology. Iofina has current production operations in the United
States, specifically in Kentucky and Oklahoma. The Group has
complete vertical integration from the production of iodine from
produced brine waters, to the manufacture of the chemical
end-products derived from iodine and sold to global customers.
Iofina is also investigating the isolation of hemp derived products
such as CBD and is licensed in the state of Kentucky to manufacture
these products.
The address of Iofina plc's registered office is 48 Chancery
Lane, London WC2A 1JF.
Iofina plc's shares are listed on the London Stock Exchange's
AIM market.
Iofina's consolidated financial statements are presented in US
Dollars, which is the functional currency of the operating
subsidiaries.
The figures for the six months ended 30 June 2019 and 30 June
2018 are unaudited and do not constitute full statutory accounts.
The comparative figures for the year ended 31 December 2018 are
extracts from the 2018 audited accounts (which are available on the
Company's website, and have been delivered to the Registrar of
Companies) and do not constitute full statutory accounts. The
independent auditor's report on the 2018 accounts was unqualified
and did not contain statements under sections 498(2) or (3)
(accounting records or returns inadequate, accounts not agreeing
with records and returns or failure to obtain necessary information
and explanations) of the Companies Act 2006.
2. Accounting policies
The basis of preparation and accounting policies set out in the
Annual Report and Accounts for the year ended 31 December 2018 have
been applied in the preparation of these condensed consolidated
interim financial statements. These interim financial statements
have been prepared in accordance with the recognition and
measurement principles of the International Financial Reporting
Standards ("IFRS") as endorsed by the EU that are expected to be
applicable to the consolidated financial statements for the year
ending 31 December 2019 and on the basis of the accounting policies
expected to be used in those financial statements. The Group has
implemented IFRS 16 Leases with effect from 1 January 2019, using
the modified retrospective approach.
3. Segment reporting
(a) Business segments
The Group's operations during the period comprised the
exploration and production of iodine with complete vertical
integration into its specialty chemical halogen derivatives
business, and are therefore considered to fall within one business
segment.
(b) Geographical segments
The Group reports by geographical segment. All the Group's
activities during the period were related to exploration for, and
development of, iodine in certain areas of the USA and the
manufacturing of specialty chemicals in the USA with support
provided by the UK office. In presenting information on the basis
of geographical segments, segment assets and the cost of acquiring
them are based on the geographical location of the assets.
Unaudited Audited
Six months ended 30 June 31 December
2019 2018 2018
Total assets $ $ $
UK 1,013,401 185,183 124,847
USA 41,516,555 37,095,155 36,000,371
------------- ------------ ------------
Total $42,529,956 $37,280,338 $36,125,218
------------- ------------ ------------
Total liabilities
UK 18,191,877 26,468,486 25,393,479
USA 6,068,302 4,585,509 4,784,025
------------- ------------ ------------
Total $24,260,178 $31,053,995 $30,177,504
------------- ------------ ------------
Capital expenditures
UK - - -
USA 476,837 749,578 908,056
------------- ------------ ------------
Total $476,837 $749,578 $908,056
4. Loss per share
The calculation of loss per ordinary share is based on losses of
$300,360 (H1 2018: $750,429) and the weighted average number of
ordinary shares outstanding of 133,557,963 (H1 2018: 127,569,398).
The diluted weighted average number of ordinary shares outstanding
was 168,147,936 (H1 2018: 192,094,916). Due to the loss in the
period, there is no difference between the diluted loss per share
and the basic loss per share, because the additional shares
outstanding on a diluted basis would have the effect of reducing
the loss per ordinary share and would not therefore be dilutive
under the terms of IAS 33.
5. Term loans, convertible loan notes and derivative liability
Derivative
liability
Convertible (share conversion
Term loans loan notes rights)
$ $ $
At 31 December 2018 $3,263,529 $21,550,297 $392,835
Debt restructure 29 March
2019:
Revaluation of derivative
liability - - (392,835)
Amortisation of discount - 821,649 -
Loan notes restructured
as term loans 22,371,946 (22,371,946)
------------ ------------- -------------------
25,635,475 - -
Debt for equity conversion
14 June 2019 (4,194,739) - -
Term loan repaid 20 June
2019 (3,263,529) - -
At 30 June 2019 $18,177,207 - -
------------ ------------- -------------------
As of 29 March 2019 the total amounts of $22,371,946 repayable
at 31 December 2018 in respect of the convertible loan notes,
representing $20,000,000 principal together with $2,371,946 accrued
capitalised interest, were restructured as term loans. As the term
loans have no rights of conversion into shares of the Company, the
derivative liability ceased to have any value, and the remaining
unamortised discount on the loan notes was added to the brought
forward balance to reflect the amounts actually repayable.
Under the terms of the debt restructure interest is payable
quarterly on the term loans at the rate of 7.5% per annum with
effect from 1 January 2019. In the case of the $3,263,259 term loan
outstanding at 31 December 2018 the rate increased to 12.0% per
annum with effect from 1 June 2019. This loan was repaid in cash on
20 June 2019.
On 14 June 2019 $4,194,739 of the term loans was repaid by the
issue of 20,449,355 ordinary shares of GBP0.01 each at a price of
16p, as set out in Note 6 below.
The other principal terms applying to the term loans are:
a) Repayment is due on 1 July 2020, and repayment may be made at
any time without penalty;
b) An arrangement fee of 1% on the total loan balances
outstanding at 29 March 2019 is payable
on 1 July 2020;
c) The loans are secured against the assets of the Group, by a
share pledge and a debenture granted
by the Company, and by further pledges, a security agreement and
guarantees granted by certain
subsidiaries of the Group.
6. Share capital
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
Authorised:
Ordinary shares of
GBP0.01 each
-number of
shares 1,000,000,000 1,000,000,000 1,000,000,000
-nominal value GBP10,000,000 GBP10,000,000 GBP10,000,000
Allotted, called up and
fully paid:
Ordinary shares of
GBP0.01 each
-number of shares 191,858,408 127,569,398 127,569,398
-nominal value GBP1,918,584 GBP1,275,694 GBP1,275,694
Details of shares issued during the six months ended 30 June
2019 are as follows:
Nominal
Shares issued value Share premium
$ $
At 31 December 2018 127,569,398 $2,292,683 $48,991,647
Issue of shares:
- for cash 43,839,655 551,941 8,279,119
-on conversion of loan
notes 20,449,355 262,171 3,932,569
Expenses of issue - - (516,740)
Adjustment re options - 5,283 (5,283)
-------------- ----------- --------------
At 30 June 2019 191,858,408 $3,112,078 $60,681,312
-------------- ----------- --------------
On 14 June 2019 43,839,655 ordinary shares of GBP0.01 each were
issued at a price of 16p per share for a total gross consideration
of GBP7,014,345 ($8,831,060). The shares issued comprised
33,804,375 placing shares, 570,625 directors' subscription shares,
and 9,464,655 open offer shares.
On 14 June 2019 20,449,355 ordinary shares of GBP0.01 each were
also issued at a price of 16p per share for a total gross
consideration of GBP3,271,897 ($4,194,739). These shares were
issued as consideration for the conversion of $4,194,739 term loan
into equity of the company.
7. Income tax
No income tax expense was recognised for the period due to the
loss during the period of the Group as well as the carried forward
losses of the Group. A deferred tax asset has not been recognised
due to uncertainty over the timing of the recovery of these tax
losses.
8. Post balance sheet events
There were no material events arising after the balance sheet
date that need to be reflected in these interim financial
statements.
9. Cautionary Statement
This report contains certain forward-looking statements with
respect to the financial condition, results of operations and
businesses of Iofina plc. These statements are made by the
directors in good faith based on the information available to them
up to the time of their approval of this report. However, such
statements should be treated with caution as they involve risk and
uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements. Nothing in this announcement should be construed as a
profit forecast.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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