2 May
2024
Iofina plc
("Iofina", the
"Company" or the "Group")
(AIM:
IOF)
2023 FULL YEAR
RESULTS
Revenue up 18.5% to $50
million
Iofina plc, specialists in the exploration and
production of iodine and manufacturers of specialty chemical
products, announces its audited full-year results for the 12 months
to 31 December 2023 (the "Period").
Higher sales of crystalline iodine drive
18.5% revenue growth, profits resilient despite higher inflation
and input costs:
·
Revenue of $50.0m (2022: $42.2m); Sixth successive year of
revenue growth
·
Gross profit of $15.7m (2022: $15.8m)
·
Adjusted EBITDA1 of $10.8m (2022:
$11.5m)
·
Operating profit of $8.6m (2022: $9.6m)
·
Profit before tax of $8.3m (2022: $10.0m)
Strong balance sheet and swing to net
cash position:
·
Cash of $6.5m at year-end up 10.0% (2022: $5.9m)
·
Further debt reduction moved the Company into a net cash
position of $1.2m
Investing for growth:
·
Capital investment into chemical and new iodine plants
doubled to $6.2m (2022: $3.1m)
·
Signed agreement in Q4 2023 for IO#10
2024 so far:
·
Production of 123.7 MT of crystalline iodine in Q1
from Iofina's six IOsorb® plants
·
The iodine global spot price started around the mid to upper
sixties $ per kg and prices are expected to stay at these levels
into the second half of 2024
·
IO#10 is currently on schedule and expected to be operational
in Q3 2024
·
Potential sites for IO#11 identified
·
Renewal of iodide-rich brine water supply agreements for
two IOsorb® plants
1Refer to the Consolidated Statement of Comprehensive Income
for calculation
Commenting,
President and CEO, Dr. Tom Becker, stated:
"Iofina
delivered another strong year across the business, which culminated
in record sales of just over $50m. Despite the impact of sustained
inflation and higher input costs during 2023, profits remained
resilient and were only marginally down on last year. The business
has continued to generate cash and further reduced its debt level,
moving into a net cash position of $1.2m. We have made important
investments for growth, in particular the completion and switch on
of IO#9 in June 2023 as well as further R&D within our
derivatives business to introduce new products to our
customers.
"In Q4 2023,
we announced the agreement was signed for IO#10 and we remain on
track to have this in operation in Q3 2024. Like IO#9, the new
plant is expected to add 100MT-150MT of crystalline iodine per
annum. We are also pleased that negotiations are progressing well
with several interested parties for IO#11, with potential sites
identified. Outside of the construction of new IOsorb® plants, the
Board continues to examine other potential growth projects that
complement Iofina's existing skill set and range of products, which
may present cross-selling opportunities.
"2024 has
started well, with Q1 production up 15.5% year-on-year as recently
announced, and iodine prices continue to remain at their higher,
favourable levels. We have also confirmed the long-term agreement
to supply two IOsorb® plants with iodide-rich brine
water with the current supplier. The security in the new agreement
ensures the Company can keep on track with its strategy in aiming
to increase production from our existing plants and to match the
increased production with additional sales."
Enquiries:
Dr. Tom Becker
CEO & President
Iofina
plc
Tel: +44 (0)20 3006 3135
Nomad & Broker:
Henry Fitzgerald-O'Connor/Harry
Rees
Canaccord Genuity Limited
Tel: +44 (0)20 7523
8000
Media Contact:
Charles Goodwin/Shivantha
Thambirajah/Zara McKinlay
Yellow Jersey
PR Limited
Tel: +44 (0)7747 788 221/+44 (0)7983 521
488
About
Iofina:
Iofina plc (AIM: IOF) is a vertically
integrated company that specialises in
the production of Iodine and the manufacturing of specialty
chemical products. Iofina is the second largest producer of iodine
in North America and operates the manufacturing entities Iofina
Resources and Iofina Chemical.
LEI: 213800QDMFYVRJYYTQ84
ISIN: GB00B2QL5C79
Iofina Resources
Iofina Resources develops, builds, owns, and
operates iodine extraction plants using Iofina's WET® IOsorb®
technology. Iofina currently operates six producing IOsorb® plants
in Oklahoma and is consistently using technology and innovation to
improve and expand its operations.
Iofina Chemical
Iofina Chemical has manufactured high quality
halogen speciality chemicals derived from raw iodine, as well as
non-iodine-based products. Iofina Chemical celebrated its
40th anniversary in 2023 as a preeminent halogen-based
specialty chemicals company.
www.iofina.com
Contents
COMPANY
INFORMATION.......................................................................................................
..2
CHAIRMAN'S
STATEMENT........................................................................................................
..3
FINANCIAL
REVIEW..................................................................................................................
..8
DIRECTORS'
BIOGRAPHIES……...................................................................................................
10
STRATEGIC
REPORT...................................................................................................................
12
S172
STATEMENT………………………………………………………………………………………………………………….22
CORPORATE
GOVERNANCE……………………………………………………………………………………………………24
DIRECTORS'
REPORT..................................................................................................................
25
CORPORATE GOVERNANCE
STATEMENT....................................................................................27
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
("ESG")………………………………………………………….34
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
IOFINA PLC......................................37
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
.....................................................47
CONSOLIDATED BALANCE SHEET
..............................................................................................
48
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS'
EQUITY.....................................49
CONSOLIDATED CASH FLOW STATEMENT
.................................................................................
50
COMPANY BALANCE SHEET
........................................................................................................51
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY.............................................52
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS...........................................................53
COMPANY
INFORMATION
Directors
L J Baller
T M Becker
W D Bellamy
M T Lewin
J F Mermoud
M Fallin Christensen
Secretary
Simon Holden
Company
number
05393357
Registered
office
48 Chancery Lane
London WC2A 1JF
Auditor
UHY Hacker Young LLP
Quadrant House
4 Thomas More Square
London E1W 1 YW
Nominated Adviser and Broker Canaccord Genuity
Limited
88 Wood Street
London EC2V 7QR
Solicitors
Keystone Law Limited
48 Chancery Lane
London WC2A 1JF
Registrar
Link Asset Services (Holdings) Limited
10th Floor, Central Square
29 Wellington Square
Leeds LS1 4DL
Financial
PR
Yellow Jersey PR Limited
Thanet House
231-232 Strand
London WC2R 1DA
CHAIRMAN'S
STATEMENT
Introduction
Iofina delivered another strong performance in
2023 against a backdrop of higher inflation, which saw input costs
rise materially across all industries. We achieved increased
revenues for the sixth consecutive year of $50.0m, an increase of
19% on the previous year (2022: $42.2m). The Group's adjusted
EBITDA of $10.8m was marginally down from the previous year (2022:
$11.5m). Gross profit reduced marginally from $15.8m in 2022 to
$15.7m and profit before tax was $8.3m (2022: $10.0m).
Cash started the year at $5.9m and ended $0.6m
higher at $6.5m. This included paying off $1.4m of the bank term
loan per the borrowing schedule and investing heavily into capital
projects. We remain strategically well-positioned to finance our
ongoing operational investment program through a strong cash
position and availability of bank facilities, which includes $4.0m
of currently undrawn loans for new plant construction. The Group's
net debt of $0.9m improved to a net cash position of $1.2m and net
cash inflow from operating activities was strong at
$8.4m.
Iofina produced 559 metric tonnes ("MT") of
crystalline iodine in 2023, an increase of 8.3% over 2022 (516 MT).
Average prices per kilogram achieved for sales of crystalline
iodine, based on 100% iodine, decreased 2.8% on the previous year
to an average of $69.19 per kg for 2023, whilst non-iodine product
sales fell by 25% from $10.8m in 2022 to $8.1m in 2023 due to
slowing end market demand.
One of the Key Performance Indicators
("KPI's") the Company utilises to measure progression showed a
healthy bank term debt to Adjusted EBITDA ratio of 0.50 for
year-end 2023. This compared to 0.58 for year-end 2022 (1.19 for
year-end 2021). In 2017, we set out to reduce the Group's
debt-to-EBITDA ratio to below one from an unhealthy and
unsustainable 15.53 ratio. The debt-to-EBITDA ratio is a leverage
metric that measures the amount of income that is available to pay
down debt before covering interest, taxes, depreciation, and
amortisation expenses. Industry standards indicate a term debt to
EBITDA ratio of below three is standard and acceptable. A
debt-to-EBITDA ratio below one indicates that the Group is
generating enough cash from operations to cover its debts plus has
excess funds for other purposes such as plant expansion. In
addition, the Company was able to reduce its net debt position from
$0.9m to a net cash position of $1.2m, as stated above, while at
the same time doubling capital investments and reinvestments into
chemical and iodine plants of $6.2m (2022: $3.1m).
Iofina remains committed to the safety of our
employees and our communities. We continue to improve upon our
robust Environmental Health and Safety ("EH&S") programs and
apply the tenets of these programs in our daily activities. At the
end of 2023, the Group has not had a Lost Time Incident ("LTI") in
993 days has not experienced any LTI's so far in 2024. Iofina
continues to invest heavily in training and software for EH&S
and is committed to the highest standards.
We have built an excellent business with
diversified, low-cost production across a diverse array of IOsorb®
plants and a specialty chemicals business, supplying customers
globally across several end markets. While many of our KPI's were
encouraging in 2023, overall results were mixed as we tried to
maintain a stronger sales margin, giving up lower-margin business,
whilst dealing with inflationary pressures, especially on new plant
construction.
Iofina
Chemical ("IC")
IC operates as the Group's chemical
derivatives manufacturer and processes all product sales. Sales in
2023 exceeded $50m for the first time in the Group's history.
Iodine prices, which remain strong, contributed to this
achievement, along with new product offerings. The largest revenue
driver was direct sales of Iofina-produced crystalline iodine,
which had strong global demand in 2023. Total sales of other iodine
and non-iodine derivatives were mixed and declined year-on-year.
After recording strong sales of Hydriodic acid ("HI") and
Iodopropynyl butylcarbamate ("IPBC") in 2022, sales of these
compounds were down in 2023 versus the prior year. These declines
were likely a result of inventory adjustments by customers, with
slower demand for HI in agricultural applications, and some
consolidation in the IPBC market over the last two years. However,
we do expect IPBC sales to bounce back in 2024. Methyl
iodide, which is used in pharmaceutical applications, acetic acid
manufacturing and as a methylating agent in organic specialty
chemical manufacturing, was a strong performer for IC in 2023. As
previously communicated, changes in product mixes year over year
are common and we will continue to drive sales of all IC
products.
IC production and sales of non-iodine halogen
derivatives remain a strategic segment of the Group. These
compounds add to the diversity of our offerings and support various
applications including biocides and semiconductor etchant uses.
Non-iodine sales accounted for 16% of the Group's total sales in
2023, with overall sales for these non-iodine derivatives falling
in 2023. Iofina expects semiconductor demand to be the key driver
of sales for our non-iodine derivatives in 2024 as this sector
continues to strengthen.
IC is an ISO 9001:2015 certified company,
continuing to meet or exceed our internal KPI's regarding IC's
quality performance to ensure it is delivering quality compounds
timely that meet or exceed customer expectations.
In 2023, several plant improvements at IC were
authorised, including the installation of a new chiller to support
the production of numerous iodine derivatives, process improvements
to produce a specialty gas used in semiconductor applications, and
equipment replacements in our Sodium Iodide and Methyl Iodide
processes. The most significant changes in 2023 affected IPBC,
where improvements have resulted in faster reaction times, reduced
costs, and increased quality. Additionally, IC added
equipment to produce a new IPBC formulation for the
Group.
As a specialty chemical manufacturer, IC
handles numerous hazardous substances and performs various chemical
reactions in large quantities. It is imperative that IC follow a
robust safety program and we strive for continual improvement in
these safety-related measures. IC is proud to have had no LTI's in
the last 1,181 days as of 31 December 2023 and no LTI's so far in
2024. Additionally, IC management continues to build, with our
employees, a strong culture focused on safety and
performance.
Research and Development ("R&D") is
critical for IC to meet the Group's expectations of continued
growth. The IPBC improvements, mentioned above, were accomplished
due to our R&D efforts. Additionally, the IC research team has
focused on the following areas: systems to recover iodine from
specific industrial waste streams, the development of iodine
compounds used in the agricultural industry which is expected to be
produced by IC in 2024, developing of synthetic routes for new
iodine compounds for IC, and the development of a new synthesis of
a specialty fluorinated gas. The investments that IC continues to
make in its R&D facilities and team are expected to enhance
future new product opportunities and margins realised by the
Group.
As Iofina continues its expansion strategy,
the Company recognised it needed to add resources to the Group to
accomplish our goals. To that end, IC hired a new Sales and
Marketing Manager in 2023 who has extensive experience in the
specialty chemical industry. In 2024, the Company's website will go
through a restructuring process to drive more traffic and further
enhance the capabilities of Iofina. With the increased marketing
efforts, we expect to expand our customer base and identify new
opportunities for existing offerings. Finally, the Company believes
the new strategy will obtain new R&D opportunities, within our
core chemistries, to drive additional growth and further new
research for our customers growing needs.
Iodine
Market
The global demand for iodine in 2023 was
mixed. Overall, we believe that the consumption of iodine slightly
decreased in 2023 versus the previous year. There were areas of
strong growth including X-ray contrast media applications, with
other segments declining in demand such as automotive uses and some
agricultural applications due to end-market production constraints.
Additionally, there were likely some inventory corrections,
especially at the beginning of 2023, that contributed to the
year-over-year decline in iodine demand.
Nevertheless, prices remained robust and
demand for Iofina's crystalline iodine was strong among our growing
customer base. Spot iodine prices began the year near $70/kg and
ended 2023 in the mid to upper sixties per kilogram. At the time of
writing, iodine prices are in the same range as year-end 2023
levels. The largest iodine application, X-ray contrast
agents, is expected to continue to grow while the totality of the
rest of the iodine derivative market is likely to stabilise or
slightly increase in 2024. Barring any unforeseen global recession
or any unexpected change in supply, Iofina expects near-term prices
to remain relatively steady. The growth of Iofina's production in
2023 and 2024 is not expected to impact the overall supply and
demand equilibrium in the global iodine market, and therefore not
negatively impact iodine prices. We believe as Chile modernises to
fully incorporate water conservation through desalination and
renewable energy, this will begin to protect the fragile ecosystems
of the Atacama Desert but will also likely increase the production
cost of iodine.
Iofina
Resources ("IR")
IR operates as the Group's iodine manufacturer
and conducts exploration efforts for future growth in the
extraction of valuable substances, such as iodine, from brine
waters. IR has developed its proven technology to obtain iodine
from produced water brines, which are a by-product of oil and gas
production. IR currently operates six IOsorb® iodine plants in the
state of Oklahoma. In 2023, IR continued to execute its growth
strategy and switched on its newest plant IO#9 in June 2023. It
also began construction of an additional iodine plant, IO#10, in
late 2023, which is expected to be completed in Q3 2024. IR
produced 559.3 MT of crystalline iodine in 2023, an 8% increase
year-on-year. With a full year of production from IO#9, and
additional production expected from IO#10, IR expects to produce a
record amount of iodine for the Group in 2024.
The opening of IO#9 is a significant
achievement for IR. This iodine production plant operates with a
new brine supply partner in a new core area of production. We note
that there were challenges in the timing of the opening of this
plant, and the costs associated with the building of IO#9. We have
documented and learned lessons that we will apply to the
construction of future IOsorb® plants. In late 2023, the Group
announced the start of construction of a new plant IO#10 in the
same new core area in Oklahoma as IO#9. Once operational, IO#10 is
expected to produce 100-150 MT of crystalline iodine annually, with
this plant operating with a large new brine supply partner. IR has
recently welcomed back our former VP of Operations from a Fortune
100 company into a new role to focus on managing new major business
development and overseeing the new construction of IO#10. This
project manager was heavily involved in the building of past iodine
plants and has extensive experience in iodine recovery and
exploration. As previously communicated, IR expects to double its
production from 2021 levels in the next few years, and the
development of new plants such as IO#9 and IO#10 is part of that
process to achieve that goal.
To that, the IR team continues to strengthen
its business development efforts to increase future production. We
have added personnel to our geological team to provide additional
capabilities to meet our growth goals and to have adequate
resources to explore new areas both inside and outside of our
current core production regions. IR continues its intern program in
conjunction with an Oklahoma university to provide additional
support to our exploration efforts.
We continue to make positive progress towards
finalising the plans and agreements necessary for our next plant,
IO#11. The Directors of Iofina will make the proper business
decision regarding the timing of IO#11 based on market and business
management factors. The most likely location for IO#11 will be in
our new core area in Oklahoma where IO#9 is based, and IO#10 is
being developed. IR is exploring other opportunities both in our
Oklahoma core areas, as well as in two other states in the US. We
are excited about the future growth opportunities outside of our
current core areas, which could be a step change in the magnitude
of growth for Iofina.
Outside of IO#9, IR operates five other
IOsorb® iodine production plants. These plants performed as
expected in 2023, and we recently announced, on 16 April 2024, a
market-rate brine fee agreement with a long-term partner at two of
our sites. This agreement will help better align our partner to
maximise brine flow to those two plants. These five historic plants
are situated in Western Oklahoma, and three different partners
supply our plants with produced brine water. We continue to ensure
we maintain good relationships with each partner. IR's focus at
these plants in 2023 emphasised working with our partners to
maximise brine water inputs and to achieve maximum efficiencies to
produce iodine from these plants. As these plants age, it is
important to reinvest in these facilities to avoid production
downtime and ensure cost controls at these plants are a focus for
the Group. To that, our maintenance team continues to improve its
preventative maintenance program to be more proactive in our
approach to maintaining our facilities rather than
reactive.
Costs of raw materials to process the brine
water into iodine continued to increase in 2023, however, chemical
cost increases in 2023 were lower than those of 2022. We have
worked with our major raw material suppliers, and have supply
agreements in place to minimise the impact of inflation of
chemicals used in our process. We will continue to source from
various suppliers, and we may explore producing these chemicals
ourselves if needed.
IR continues to make strides in our safety
culture and systems. The Group has invested in software to aid in
our EH&S program as well as increase training for our
employees. This system has improved IR's data collection of
important EH&S information and enhanced our corrective action
program to continually improve how we operate. IR had no LTIs in
993 days as of 31 December 2023 and no LTI's in 2024 at the time of
writing. In late 2023, IR hired an additional dedicated EH&S
employee to support our facilities as we continue to build and
operate additional iodine plants.
Outlook
As we go into 2024, IO#10 currently appears to
be in a location of strong brine flows and good iodine content and
will be a material addition to the Group. We believe that our
current focus area of future plants will be a paradigm shift for
the Group, and it will ignite our long-term development plans as we
seek to diversify geographically from prior plant locations. In
2023, we were able to provide evidence that Iofina is a highly
attractive and profitable Group, and we continued to share our
story with global institutional funds, family offices, and retail
investors. Our shareholder register expanded in the financial year
with the addition of new institutional holdings. We will continue
to hold roadshows and investor programs in 2024 under the
stewardship of Canaccord Genuity, the Company's nominated adviser
and broker. We have a strategic plan to stabilise costs from
inflationary pressures, which will help as we go into the next
growth phase.
In terms of our expansion, we are squarely
focused on growing our current iodine production and specialty
chemical businesses, including developing new and exciting chemical
compounds through internal research, development, and joint
ventures. We are focused on developing strategies to reduce our
reliance on our current oil and gas partners and explore new
geographic areas in North America. We continue to analyse all
potential business partnerships and product combinations in our
chemical Group that could be beneficial to shareholders as a
growing halogen chemistry Group, and we always continue to focus on
calculated opportunities in our approach to
growth.
I would like to thank all our shareholders for
their continued support. We are looking forward to appraising the
excellent developments we are seeing as we move the Company forward
in setting continued record years.
Lance J Baller
Non-Executive Chairman
Iofina plc
1 May 2024
FINANCIAL
REVIEW
Summary 2023 v 2022
·
Sixth successive year of record
revenue
·
Revenue increased by 19% from $42.2m to
$50.0m
·
Gross profit decreased by 1% from $15.8m to
$15.7m
·
Adjusted EBITDA declined by 6% from $11.5m to
$10.8m
·
Profit before tax decreased by 17% from $10.0m to
$8.3m
·
Net debt of $0.9m became net cash of
$1.2m*
·
Capital investment into chemical and iodine
plants was $6.2m (2022: $3.1m)
*excludes lease liabilities
Trading
results
Turnover
|
Crystallised
|
2023
|
|
Crystallised
|
2022
|
|
Iodine 85%
|
Sales
|
|
Iodine 85%
|
Sales
|
|
MT
|
$m
|
|
MT
|
$m
|
Crystallised iodine
|
423
|
24.9
|
|
220
|
13.3
|
Derivatives
|
185
|
12.9
|
|
221
|
16.3
|
Prilled iodine
|
|
4.1
|
|
|
1.8
|
Total iodine sales
|
608
|
41.9
|
|
441
|
31.4
|
Non-iodine
|
|
8.1
|
|
|
10.8
|
Total sales
|
|
$50.0
|
|
|
$42.2
|
Revenue increased by 19% from $42.2m to $50.0m
with the main driver being strong demand for the Company's
crystallised iodine. Volumes sold increased by 92% from 220MT to
423MT, and the average price achieved (based on 100% prilled iodine
equivalent) was only 3% below the record levels achieved in 2022,
at $69.19 per kg compared to $71.20 per kg.
Derivative compounds turnover declined by 21%
from $16.3m to $12.9m as some expected demand did not materialise
and pricing was an issue for some products. Consequently, resources
were shifted towards better opportunities in the raw iodine
market.
The higher level of iodine sales was
facilitated by an increase in production to 559MT from 516MT in
2022, reflecting a contribution of 32MT from the new IO#9 plant
that commenced production in July 2023. There was also an efficient
conversion of production into sales, with 608MT of crystallised
iodine sold in total compared to production of 559MT (2022: 441MT
sold compared to 516MT produced).
Prilled iodine sales more than doubled from
$1.8m to $4.1m, representing further success with iodine sales
channels.
Non-iodine sales fell back by 25% from $10.8m
to $8.1m, reflecting some reduction in demand for the Company's
specialty chemical gases.
Gross profit fell slightly by 1% from $15.8m
(38% of sales) to $15.7m (31% of sales). Iodine prices showed only
a slight decline, but the average cost of iodine production
increased by more than 20%. The areas chiefly responsible for the
increase in cost were plant chemicals and maintenance. Also,
internally produced iodine aside, the sales mix was less favourable
for profitability, with a reduction in non-iodine sales.
Adjusted EBITDA fell by $0.7m (6%) from $11.5m
(27% of sales) to $10.8m (22% of sales). As well as the factors
mentioned above, SG&A costs increased somewhat with some
investment in personnel and programmes to support the planned
expansion of the business.
Interest swap
derivative asset
The swap contract that pegs interest on 70% of
the bank loan to 3.99% continues to deliver benefits in the
continuing higher interest rate environment. The swap rebate for
2023 amounted to $152k (2022: $23K). The derivative asset resulting
from the swap contract has been revalued at $161k as at 31 December
2023 (31 December 2022: $249K) by reference to market expectations
for future SOFR rates, and an amount of $88k has been charged
against 2023 income to reflect the unwinding of the benefit (2022
credit: $249k).
Profit before
tax
Profit before tax decreased by $1.7m (17%)
from $10.0m (2022) to $8.3m (2023). In addition to the
factors set out above there was also an exceptional
credit of $0.45m in 2022 (Note 12) with nothing in that category
for 2023.
Tax
The Group is utilising previous years'
accumulated US Federal tax losses against current profits that
would otherwise be taxable. Based on current projections, the Group
expects that US Federal tax will not be payable in respect of 2023,
but is likely to become payable in respect of 2024.
Capital
investment
The Group invested $6.2m in capital projects
and equipment in the year (2022: $3.1m). Approximately $4m of this
2023 capex relates to the continued construction of the IO#9 plant
in Oklahoma, which was completed mid-year and produced 32MT of
iodine in the second half, with total costs amounting to $5.8m. A
further $0.3m was spent in 2023 on the beginning of construction of
IO#10 plant, and a $5m capital commitment for this plant is
disclosed in Note 27. Most of the balance of expenditure ($1.2m)
relates to new projects, process improvements and replacements at
the Iofina Chemical plant.
Cash
flow
Cash started the year at $5.9m and ended $0.6m
higher at $6.5m, after paying off $1.4m of the bank term loan in
accordance with the borrowing schedule and investing $6.2m in
capital projects. Net debt of $0.9m improved to net cash of $1.2m.
Net cash inflow from operating activities was $8.4m.
Malcolm
Lewin
Chief Financial Officer
Iofina plc
1 May 2024
DIRECTORS'
BIOGRAPHIES
Lance J.
Baller, Non-Executive Chairman
Mr. Baller was co-founder, CEO and President of
Iofina Plc prior to his departure for health reasons in June 2013.
Mr. Baller was the Group's Finance Director from 2007 until his
appointment as CEO in 2010. Mr. Baller returned as Chairman in
April 2014. Mr. Baller currently serves as a
director and as sole or principal shareholder of several privately
owned businesses, including Baller Enterprises, Inc. (personal
holding company), Titan Au, Inc, Empire Leasing LLC, Valdez Au,
Inc, Extrac Technologies Limited, Extrac, Inc, Wyoming Sand Company
LLC (which all are in gold, sand, rock, SiO2 and gravel mining),
Ultimate Investment (personal investment company) and Baller Family
Foundation, Inc. (personal family foundation) plus many others that
he has founded and successfully sold over the years. He is the
former managing partner of Shortline Equity Partners, Inc., a
mid-market merger and acquisitions consulting and investment
company. Mr. Baller is also the former Managing Partner of
Elevation Capital Management, LLC and is the former alternative
investment hedge fund manager of the Elevation Fund. He is also a
former Vice-President of Corporate Development and Communications
of Integrated Biopharma, Inc. and prior to that a vice-president of
the investment banking firms UBS and Morgan Stanley. Mr. Baller has
been a CEO, interim CEO, Chairman, CFO and secretary of various
private and public listed companies throughout his career.
He has served as Chairman to various companies and has led
successful restructurings. Mr. Baller has had
extensive experience in all aspects of corporate finance. Mr.
Baller currently is on the board of trustees of Index Fund and
Digital Funds where he serves as the chairman of the audit
committee and as the audit committee financial expert under
Sarbanes-Oxley.
Dr. Thomas M. Becker, Chief
Executive Officer
Dr. Becker has served as
President/CEO of Iofina plc since 2014 and has led Iofina Chemical
since March 2010. Previously, Dr. Becker was the Vice President of
Research and Development at H&S/Iofina Chemical. Iofina bought
H&S in July 2009. Dr. Becker has conducted extensive research
in both inorganic and organic halogen-based chemistry. Dr. Becker
has written a magnitude of published technical papers in his
career. Prior to H&S Dr. Becker worked as an Oak Ridge Scholar
on behalf of the US EPA and for various other chemical
manufacturing companies. Dr. Becker earned a BS in Chemistry from
Indiana University, and a PhD in Chemistry from the University of
Cincinnati. He has extensive experience in scale-up of chemical
processes from laboratory to pilot to full scale production. Dr.
Becker is a former member of the Board of Governors of the Society
of Chemical Manufacturers and Affiliates ("SOCMA").
Dr. William
D. Bellamy, Non-Executive Director
Dr. Bellamy is the former Senior Vice
President of the Water Business Group at CH2M HILL, Inc. ("CH2M"),
a company he has worked at for 30 years until his recent
retirement. CH2M is one of the largest consulting engineering
companies in the world, providing leadership and strategic
direction for the water business and application of technologies
worldwide. Dr. Bellamy has participated in energy and
sustainability forums, including as a panellist at the World Future
Energy Conference in Abu Dhabi, the World Bank Sustainable Cities
Symposium and the Future of Water Economic Forum. Dr. Bellamy
serves as Professor of Practice at the University of Wyoming, where
he teaches graduate courses and is responsible for securing grants
and research funding in the areas of water resources, water
treatment and sustainable energy development. Dr. Bellamy has a PhD
in Civil Engineering from Colorado State University, an MSc in
Civil (Environmental) Engineering from the University of Wyoming
and a BSc in Electrical (Bio-Medical) Engineering from the
University of Wyoming.
Malcolm T. Lewin, Chief Financial
Officer
Mr. Lewin was named CFO and a
director of the Group in November 2016 after having joined Iofina
as interim CFO in February 2016. Mr. Lewin is based in the UK
and has over 30 years of experience in finance and accounting for
both public and private companies. As well as being a partner in a
chartered accounting firm for 11 years, he has acted for various
companies listed on AIM and other exchanges. In particular, from
2000 to 2003 he was the Finance Director of Oxford Metrics plc, an
AIM company supplying motion capture and visual geometry systems.
From 2004 to 2006 he was the Finance Director of Real Estate
Investors plc, an AIM property investment company with interests in
quality commercial and industrial properties. From 2006 to 2011 he
was a Director and CFO of Hunter Bay Minerals plc, a junior mining
company listed on the Toronto Venture Exchange with interests in
South America and Canada. From 2011 to 2014 he was CFO and
Treasurer of VolitionRX Limited, an OTC life sciences company
focused on developing blood tests for a broad range of cancer types
and other conditions. Mr. Lewin has an MA in Classics from Oxford
University and qualified as a chartered accountant with Coopers
& Lybrand.
J. Frank Mermoud, Non-Executive
Director
Mr. Mermoud has more than 30
years' experience in international business, facilitating trade and
investment in both the public and private sectors. He has held
senior international, economic and commercial policy positions
within the United States Government having served as the Secretary
of State's Special Representative for Commercial and Business
Affairs at U.S. Department of State from 2002 to 2009. Mr. Mermoud
is also a Non-Executive Director of Cub Energy Inc. an oil and gas
company headquartered in Houston, Texas.
Mary Fallin Christensen, Non-Executive
Director
Mary Fallin Christensen has
served the State of Oklahoma for over 30 years. She was elected the
first female Governor of the State in 2010, and was re-elected for
a second term in 2014. Prior to serving as Governor, she held a
number of state and federal positions, including serving as US
Congresswoman for Oklahoma's 5th district between 2007-2011 and
serving as Lieutenant Governor of Oklahoma between 1995-2006.
Mary has been a major contributor to natural resources industries
in Oklahoma, and implemented the State's first comprehensive energy
plan as well as its State-wide water plan. She has held several
positions, including Chair of the Southern State Energy Board,
Chair of the Interstate Oil & Gas Compact Commission, and has
served on the natural resource committee of the National Governors
Association (NGA). Previously, she also served on the United States
House of Representatives Committee on Small Business, was Small
Business Chairman on the Republican Policy Committee, and was named
the "Guardian of Small Business" by the National Federation of
Independent Business. Mary has also served on numerous Boards of
Directors for both commercial organizations and
non-profits.
STRATEGIC
REPORT
Principal
activities and review of the business
Iofina plc ("Iofina" or the "Company") is the
holding company of a group of companies (the "Group") involved in
the exploration and isolation of iodine and the production of
specialty chemicals. Iofina Resources, Inc. is the Group's wholly
owned subsidiary which uses proprietary Wellhead Extraction
Technology® (WET®) and WET® IOsorb® methods to produce iodine from
brine. Large volumes of brine water are sourced from partnerships
with oil and gas operators and saltwater disposal ("SWD") operators
in the United States and are used as a raw material to produce
iodine at the Group's multiple IOsorb® plants. The Group's unique
business model isolates a resource, iodine, from a produced waste
stream that, without Iofina's technology, would be lost. The
Company's WET® IOsorb® technology has unique elements that allow
Iofina to handle brines which contain residual hydrocarbons and
efficiently produce high-quality iodine. The Directors of the
Company believe that Iofina's production process, which utilises
brine water from third-party oil and gas production, is
advantageous for long-term sourcing of the raw material as well as
minimised production and expansion costs. Compounds containing
iodine or other specialty chemicals are produced at and sold
through the Company's wholly owned subsidiary, Iofina Chemical,
Inc., with the major raw material being the Group's produced
iodine. Additionally, the Group's crystalline IOflo® iodine is sold
directly to other iodine end-users.
Iodine is a rare element that is produced only
in a few countries in the world, with approximately 90 per cent of
global production coming from Chile (~60 per cent) and Japan (~30
per cent, including recycled waste streams). Iodine and its
compounds have many human health-related applications, including
X-ray contrast agents, pharmaceuticals, antiseptics, thyroid
function, and others. Additional high-volume uses of iodine include
LCD screen technology, material heat stabilisation, animal feed
additives, biocides, catalysts and more. The Group produces iodine
in the United States where the overall global iodine production is
approximately six per cent of the world's total production, but
where there is a large consumption of the world's iodine by various
American users. Iofina believes it is the second largest producer
of iodine in North America.
The ability of the Group to expand its iodine
production quickly, at a low cost, differentiates Iofina from other
iodine producers. This has been proven by the expansion of
production and opening of new IOsorb® plants such as IO#9, which
opened in 2023, and IO#10 which is under construction and scheduled
to open in Q3 2024. Additionally, the Directors believe that the
Group's technology to produce iodine is far more environmentally
friendly compared to other producers. By using a produced water
waste stream from the oil and gas industry to isolate iodine versus
isolating iodine from ores, Iofina's process is considered
ecologically efficient in obtaining a valuable product from a waste
stream versus the environmentally intensive processes of mining
iodine from ores by Chilean producers.
Economically viable iodide-rich brine
co-produced during oil and gas production is not common, and the
Group's proprietary geological model to locate and anticipate
iodide-rich sources is unique. The Directors of Iofina are
committed to producing its products in a sustainable and
environmentally friendly manner, and to improving communications
regarding our long-term strategy in respect of Iofina's sustainable
practices and other ESG tenets.
The focus of Iofina's current business model
is the production of iodine from brine and the creation and sales
of specialty chemicals through Iofina Chemical. The Directors feel
strongly that diversification within the business whilst focusing
on our core expertise is important. Iofina Resources diversifies
its iodine production through multiple IOsorb® production plants,
with multiple brine suppliers in western Oklahoma. The technology
the Group has developed, utilising a waste resource already being
produced allows Iofina the ability to expand its operations quickly
with minimal capital expenditure. Continued prudent growth in the
number of IOsorb® plants increases production, profit, and
diversification. Continued expansion of the Group's geological
model provides opportunities for Iofina outside of its current core
areas.
Iofina Chemical produces a wide range of
iodine-based products with applications in various industries
including agricultural, pharmaceutical, biocides and others, whilst
additional diversification is realised by the production of
non-iodine-based products. The demand for various products can
change, and Iofina Chemical's ability to produce a variety of
products allows the Group to take advantage of growing markets
while not being as affected by temporarily depressed or declining
markets.
Iodine prices rose significantly between 2021
through mid-year 2022, exceeding $70/kg by July 2022 and
stabilising at these levels through early 2023. Pricing at these
levels has not been seen since 2011, when a combination of the
Fukushima disaster in Japan and Chilean supply disruptions resulted
in a shortage of iodine and a price spike. Supply and demand
changes, as well as manufacturing cost increases, are the major
factors influencing the iodine price. As an iodine manufacturer,
iodine prices have a significant impact on the Group's gross profit
margins.
During 2023, Iofina believes the total global
demand for iodine was slightly lower than in 2022, with some
inventory corrections at the beginning of the year contributing to
this slightly lower demand. Demand for X-ray contrast media
applications, continued to show significant increases, whilst other
applications such as automotive and some agricultural applications
had weaker demand. Currently, iodine prices remain high versus
historical levels, and the range of prices remains larger than
typical historical prices. Spot prices peaked above $70/kg during
2022 and have settled into the current range of mid to upper
sixties per kilogram. Contracted iodine prices for large customers
are generally slightly lower than spot prices. Demand for Iofina's
iodine and iodine derivatives was mixed in 2023, with Iofina
Chemical seeing mixed demand for some of its iodine derivatives but
strong demand for Iofina's crystalline iodine. Although it is
difficult to predict, we expect demand for iodine to slightly
increase versus 2023 levels as most inventory corrections have
already occurred and it is now less likely that a global recession
will occur. We expect iodine prices to remain steady at least
through H1 2024 but we note that any additional Chilean production
coming onstream may increase overall global iodine supplies.
Inflation in 2023 has remained at high levels but less than in
2022. However, this has resulted in higher costs for Iofina's raw
materials, labour and energy.
The Directors recognised that, as the Company
built its IOsorb® plants, it was imperative for Iofina's iodine
production costs to be amongst the lowest in the industry to be
competitive. Between 2014 and 2017, numerous initiatives were
successfully implemented to optimise Iofina's technology and lower
production costs. Once most of these goals were achieved and iodine
market conditions became more favourable, the Directors commenced
the next phase of Iofina's business plan with a focus on growth. In
early 2018, the Group's newest iodine plant at the time, IO#7, was
completed. By expanding our operations and building IO#7, the Group
successfully lowered its overall iodine production costs with its
most efficient plant at that time. The next major growth
development occurred in Q2 2019 when the Company performed an
equity raise to reduce debt and provide working capital for
expansion projects. The result was the construction of IO#8, which
began in late 2019 and was completed in early April 2020. The Group
has continued its expansion efforts and successfully opened IO#9 in
June 2023 and is currently constructing IO#10 which is expected to
open in Q3 2024.
The Group is committed to establishing new
routes to growth and is investigating new locations and
partnerships to expand iodine production. Lessons learned from past
expansion play a role in management's iodine plant growth. Building
of future IOsorb® plants will be done prudently to ensure to the
best of our knowledge that Iofina has a long-term, low-cost iodine
production. With an expanding iodine market and Iofina's improved
balance sheet, Iofina will likely embark on additional iodine
plants after IO#10 completion, although this will only be done with
the correct evaluations of potential future sites and market
conditions.
The Directors are aware of the risk of
declining brine availability if our partners do not maintain or
increase their hydrocarbon production in areas that supply the
Group's IOsorb® plants. The Group continues to investigate the
economics and the technology to have better control of the
iodide-rich brine supplies that feed the current and future
plants.
Iofina Chemical continues to be recognised as
a world-renowned halogen specialty chemical producer. Vertical
integration of the Group's iodine into iodine derivatives gives
Iofina's customers stability of supply in addition to the
long-standing quality and technical support to Iofina's global
customers for the goods sold to them. Additionally, the
non-iodine-based halogen derivatives produced by Iofina Chemical
give the Group further diversity. Iofina Chemical invested in
multiple projects in 2023, and will continue to invest in areas to
expand current products and develop new products for Iofina using
the Company's core expertise.
Key Performance
Indicators
The Directors review a range of financial
indicators to assess and manage the Group's performance, including
the following relating to revenue and iodine production:
|
|
Year
ended
|
|
Year
ended
|
|
|
|
31 December
|
|
31 December
|
|
|
|
2023
|
|
2022
|
|
|
|
$'000
|
|
$'000
|
|
|
|
|
|
|
|
Revenue from sales of iodine and iodine
derivatives
|
|
$41,940
|
|
$31,422
|
|
Revenue from non-iodine products
|
|
$8,096
|
|
$10,776
|
|
Total revenue
|
|
$50,036
|
|
$42,198
|
|
Total pounds of product shipped (LBS
'000)
|
|
1,824
|
|
1,640
|
|
Crystallised iodine produced (Metric
Tonnes)
|
|
559
|
|
516
|
|
IOsorb® plants in operation
(year-end)
|
|
6
|
|
5
|
|
Commentary on some of the above indicators is to
be found in the Chairman's Statement on pages 3 to 7.
Further commentary on the results for the year
and the financial position at the year-end is to be found in the
Financial Review on pages 8 to 9.
Objectives
At the end of 2023, the Group had
six operating IOsorb® iodine production facilities in the two core
areas of Oklahoma and a seventh under construction. While the
theoretical capacity of these plants is very high, the practical
capacity of the plants is somewhat lower. Practical capacity
considers multiple causes of downtime, including weather, repairs
and maintenance, inadequate brine (low parts per million of iodine,
heavily contaminated brine or little to no supply), power outages
and other conditions. As we have proven our technology and continue
to improve operations at current facilities, more accurate
practical capacity operating targets have been realised as well as
improvements for maximising practical capacity.
Iofina Resources' unique business
model allows the Group to determine sites for new iodine production
plants utilising existing brine produced from oil and gas
production and quickly bring these sites into production. The
execution of a prudent growth strategy continued with the start of
construction of IO#8 in late 2019, which was completed in April
2020, and we continue to open new iodine plants, including IO#9
which opened in June of 2023. While technology and efficiency
improvements at current facilities remain an ongoing priority, the
Company continues to explore new iodine production opportunities.
This objective of strategic expansion in 2020 and beyond is focused
on sites that will continue to improve Iofina's output with low
production costs. As previously stated, the Group expects to
continue its iodine production and expects to double iodine
production from 2021 levels in the next few years. In late 2023,
the Group began construction on IO#10 with an expectation to
complete this plant in Q3 2024.
Brine supply to our IOsorb® plants
can be affected by regulatory changes and adjustments to our
partners' saltwater disposal systems and oil production programs.
Iofina continues to work with its partners to implement plans to
maximise brine input and iodine output at each of our existing
sites. The mutually beneficial relationship between Iofina and its
brine supply partners, which allows Iofina to create iodine and for
the brine suppliers to realise value from a waste stream, is a key
component for existing projects and potentially for future sites.
Continued efforts by our business development and geological teams
have identified numerous further expansion opportunities. The
Company will continue to evaluate and potentially execute these
with current and new potential brine supply partners when
management determines the proper timing for new
sites.
The timing of future iodine
production growth will be dependent on a series of factors. These
include the stability or increase of iodine prices, global demand,
availability and cost of production at new sites, partnership
agreements, oil prices and production in areas with high iodide
content brines, and the regulatory landscape concerning brine
injection. Lower oil prices can lead to lower oil production if
certain wells become uneconomical, which in turn can affect brine
supplies from our partners. Therefore, the Group is increasingly
focused on evaluating alternative brine sourcing opportunities to
have better control of brine supply at future sites. Whilst the
Directors are focused on expanding production capacity in the right
manner, it is also important to maintain the Company's strong
balance sheet and cash flow. Expansion in 2024 will occur with the
completion of IO#10 and we expect to determine the site for IO#11.
The Directors will evaluate market conditions and detailed
information on potential future plant sites before spending capital
on new IOsorb® plants.
Iofina Chemical has continued its progress to
improve current processes, ensure capacity meets demand, and
continue R&D efforts to bring new product lines in line with
our core chemistries. These include investments in both
iodine-based products and other non-iodine specialty
chemicals. Significant capital investment projects in 2023 at
Iofina Chemical included ongoing methyl fluoride process
improvements and IPBC process enhancements. In 2023, Iofina
Chemical hired a new sales manager to support current sales
channels as well as develop new sales channels for current products
and identify other product opportunities for future growth.
Iofina expects in the second half of 2024 to bring a new iodine
compound, used in agricultural applications, to the market. We are
also actively pursuing multiple R&D projects aimed at new
iodine and halogen-based compounds, many of which are for new
applications. It is also expected that Iofina Resources'
expansion plans over the next few years will result in the need for
expansion of our customer base for our products.
Lastly, the Directors are committed to
employee retention whilst controlling costs. Employee safety and
training are also key objectives for the Group. A key component for
the Group is the high operational gearing whereby the Group's
business model allows for the control of administrative and fixed
expenses whilst expanding
operations.
Principal risks
and uncertainties
Iofina plc is subject to a number of risks and
uncertainties, which could have a material effect on its business,
operations or future performance, including but not limited
to:
Raw
Materials: Brine water produced from oil and
gas operations is the raw material source for Iofina's iodine
production. The Group continues to evaluate opportunities to
integrate its IOsorb® process into produced brine water streams
associated with hydrocarbon operations in the USA, as well as other
brine stream sources throughout the world. However, there is
significant risk and no guarantee as to the volume of commercial
quantities of iodide-rich brine available to our current and future
IOsorb® plants. Oil and gas prices and demand for these
hydrocarbons generally will dictate whether our partners continue
to expand their production or possibly reduce hydrocarbon output.
Changes in hydrocarbon production by our partners will change the
total brine availability to isolate iodine and thus the iodine
output of our IOsorb® plants. The salt-water disposal wells that
our partners operate may have temporary or permanent issues which
would likely affect the brine supply to IOsorb® plants. In
the past, reduction of capital spent by our partners for new
drilling and completion of wells in our core area resulted in a
decline in total amounts of brine co-produced with oil and gas in
our key areas. Current brine volume availability to existing plants
is relatively steady but could change. Contract terms regarding
brine supply are a risk to our iodine source. Iofina strives to
maintain good relationships with our partners who provide the brine
water to our existing IOsorb® plants. Maintaining a positive,
mutually beneficial relationship with our brine suppliers is a top
priority for the Group. By continuing an aggressive water testing
program and active exploration utilising geology and data analytics
and incorporating reservoir and production engineering, we are
constantly evaluating new potential locations for iodine extraction
in our core area and other locations.
Iofina Chemical sources raw materials
throughout the globe. Understanding the supply chain of these
materials is important to minimise supply disruptions. Global
supply change disruptions and logistic bottlenecks can adversely
affect the ability to obtain key raw materials and may result in
increased costs for these materials. Iofina Chemical has long-term
relationships with many of its suppliers. Additionally, when
possible, Iofina Chemical sources materials from multiple suppliers
to reduce risk. Increased regulations can adversely affect
availability and cost of materials. Prices of raw materials and
energy can change and if increases in these prices are not able to
be passed on to our customers, it would negatively affect margins
for our products.
Global
Crises: Global crises, while rare, can impact
businesses significantly. The COVID-19 pandemic was an example of
such an event. Similar events in the future could have a negative
effect on the markets we serve and on the Group's profits. For
instance, COVID-19 resulted in a global economic slowdown and a
reduced demand for many of Iofina's products. These types of events
can also result in delays in shipping, worker limitations, business
closures and other challenges which may negatively affect the
Group. The diversity of Iofina's products along with the uses of
products in areas like human health applications make Iofina less
susceptible than many other businesses. During the COVID-19
pandemic, Iofina quickly implemented many protocols to minimise any
negative impacts on the business, but these protocols only reduce
risk and cannot eliminate it. COVID-19 or other events such as
political unrest, acts of aggression (wars), other health crises,
major weather events or others would likely have a negative effect
for the Group.
Currently, Russia's invasion of Ukraine and
the current Middle East conflicts have not directly affected
Iofina's operations. Additional political sanctions or negative
impacts on global economies because of these conflicts may
adversely impact our business. Iofina does not have any current
sales exposure with Russia, Ukraine, or in or around the Middle
East. Other geopolitical events could negatively affect the
Group.
Environmental:
The Group's operations are subject to the environmental risks
inherent in the exploration and chemical industries. The Group is
subject to environmental laws and regulations in connection with
all its operations. Although the Group intends to comply in respect
of all applicable environmental laws and regulations, there are
certain risks inherent to its activities, such as accidental
spills, leakages or other circumstances that could expose the Group
to extensive liability. Accordingly, the Group promotes wherever
possible environmental sustainability in its working practices and
seeks to minimise, mitigate, or remedy any harmful effects from the
Group's operations on the environment at each of its operational
sites. Regulations on brine injections in the state of Oklahoma
into the Arbuckle geological formation in the Group's core area due
to seismic activity were implemented mainly in late 2015 to early
2016 and have affected Iofina's partners' brine disposal into this
formation near some of our sites. This reduced some brine
availability to Iofina at some sites. The Group and its partners
have implemented and continue to implement strategies to minimise
the effect on the availability of iodine-rich brine to Iofina due
to these regulations. Moving forward the Group and its
partners will continue to monitor these risks and act accordingly.
While the frequency and intensity of earthquakes have significantly
reduced in Oklahoma, and this reduction is likely a result of
regulated changes in brine disposal into the Arbuckle formation,
there is still a risk of additional earthquakes and regulation
moving forward. Changes in laws or regulation of brine streams
could affect brine availability or the cost of producing
iodine.
As a specialty chemical manufacturer, new
regulations based on chemical uses, adverse human health or
environmental impact are a risk and may lead to higher costs or
controlled production. Greenhouse Gas ('GHG') regulations in the
USA have not impacted Iofina's ability to produce products it
currently manufactures, however, if production allocations are
reduced in the future, this would likely negatively affect Iofina's
production output. Other environmental regulations that restrict
manufacturing of chemicals that Iofina produces would have a
negative impact on the Group. The Group has a robust Environmental,
Health and Safety program and strives for continual improvement in
this area. Additionally, Iofina Chemical is a certified
Chemstewards® facility and has obtained ISO 9001:2015
certification.
Changes in
Markets and Competition: Iofina is diversified
in the markets we serve. As a result, small changes to these
markets generally will not materially affect our business. However,
major disruptions in key markets that use iodine or the other
specialty compounds we manufacture could have a material negative
effect on the Group. The current high-interest rate environment
implemented by central banks to combat inflation may slow down
global economies. A significant contraction in global economies may
negatively affect demand and pricing of the Group's goods.
Additionally, increased competition in the markets we serve could
negatively impact prices or the ability to sell our goods. In
particular, large increases in iodine production from competitors
could negatively affect iodine prices and the Group's market share.
Future planned expansions of iodine production in Chile may change
the market's supply and demand dynamics. However, the exact change
is subject to several factors, the scale of expansion, the timing
of increased supply and the overall global demand for iodine at the
time of new supplies coming onstream.
Iodine Price
volatility: Iodine's price and demand are
highly dependent on a variety of factors, including international
supply and demand, the level of consumer product demand, the price
and availability of alternatives, actions taken by governments and
global economic and political developments. Increases in current
iodine producers' production capacities or new iodine producers
entering the market could negatively impact prices. Fluctuations in
iodine prices and a material decline in the price of iodine would
have a material adverse effect on the Group's business, financial
condition and operations. Iodine prices are currently elevated
relative to historical trends. After a lull in demand during the
COVID-19 pandemic, demand for iodine rose significantly in H1 2021.
Continued substantial demand for iodine and iodine-incorporated
products has continued through today. As a result, iodine prices
rose significantly between H1 2021 and mid-year 2022. During H2
2022, iodine prices peaked and have subsequently slowly come off
these highs during 2023 and have currently settled in the mid to
upper sixties per kilogram.
Key
customers: There are a limited number of
potential customers who purchase many of the products of the
Group's chemical business, which makes relationships with these
customers, as well as the success of those customers' businesses,
critical to the Group's success. The loss of one or more major
customers could harm the business, operating results and financial
condition of the Group. Iofina is continuing to diversify its
customer base in its Chemical subsidiary. In addition, Iofina works
closely with all its customers to develop strong relationships,
with a significant focus on ensuring that its products and services
meet the needs of its customers and are of the highest
quality. In 2023, 13% of revenue recognised was attributable
to one long-term customer and six other customers each contributed
to over 5% of sales. Relations with these customers are
good.
Key Partners: Iofina partners
with third-party oil and gas producers and saltwater disposal
operators to process iodine-rich brine they extract with oil and
gas production. Fluctuations of oil and gas prices in the US can
affect the financial stability of oil and gas producers. Any
changes in operator status or the financial strength of our
partners are a risk to brine production and availability. The Group
has agreements with our partners to reduce any risk of change in
status. Material changes in these brine supply
contracts with our partners could negatively affect the Group. In
2023, Iofina executed a new agreement for IO#10 with a new brine
supply partner. Post Period, we announced market rate
brine fee agreements with a long-term brine supplier for two of our
sites.
Regulation and Trade: Iofina's businesses
are subject to various significant international, federal, state,
and local regulations currently in effect including but not limited
to environmental, health and safety and import/export regulations.
These regulations are complex, change frequently, can vary from
country to country, state to state and have generally increased
over time. Iofina may incur significant expenses to comply with
these regulations or to remedy violations of them. The current
federal administration in the USA has increased regulations in our
industries versus the previous administration. Any new regulation
that would increase the cost of raw materials the Group uses,
reduces availability of these raw materials or caps production of
products the Group produces would likely have a negative effect on
margins.
Any failure by Iofina to comply with
applicable government regulations could result in non-compliant
portions of our operations being shut down, product recalls or
impositions of civil and criminal penalties and, in some cases,
prohibition from distributing our products or performing our
services until the products and services are brought into
compliance, which could significantly affect our
operations.
The Group closely monitors regulations across
its businesses to ensure that it complies with the relevant laws
and regulations. While Iofina believes that it is compliant with
all laws and regulations, any instances of non-compliance would be
brought to the attention of the appropriate authorities as soon as
possible.
Trade relationships between the USA and other
areas of the world, particularly China, have become more unstable.
Increased tariffs implemented by the USA and retaliatory tariffs
imposed by other governments against the USA have the potential to
adversely affect both raw material supply and final product sales
for Iofina in certain areas of the world. Iofina has been proactive
in reducing the impact of tariffs which directly impact the
Company's supply and sales lines.
Inventory
Fluctuations: Inventory level changes can cause
financial instability. High inventories negatively affect cash
flow, while low inventories can negatively affect sales volumes and
customer relationships. In 2021, the Group started the year
with larger-than-normal iodine inventories and ended the year with
lower-than-normal iodine inventories. In 2022, the Group
ended the year with more normalised iodine inventories and slightly
higher than ideal specialty chemical derivative end products and
in-process goods. By the end of 2023, the total inventory levels
declined slightly from 31 December 2022 levels. Inventories are
cyclical within our business and management closely tracks these
inventories along with known and anticipated demand for products to
maintain appropriate inventories.
Insurance may
not cover all material losses: The Group
strives to carry standard insurance for our industry that would
minimise loss when events occur. However, certain scenarios or
events may not be covered by insurance and could have a negative
material impact on the Group. For example, cyber-attacks have
increased globally and while the Group has increased measures to
thwart potential cyber-attacks, we cannot guarantee these measures
will prevent a cyber-attack for which we do not carry specific
insurance.
Personnel: As a
small technical organisation, the loss of key technical or senior
management employees could negatively affect the business.
Additionally, the USA labour market remains tight. This could
result in increased labour costs and a risk of delays or inability
to produce products due to labour shortages.
Significant
Shareholders: Significant shareholders may have
the ability to effect changes that result in a material adverse
effect on the organisation, including a change in senior management
or control of the Group or its Board of Directors.
Interest
Rates and Inflation: As a result of the 2020
debt changes that served to significantly reduce both overall debt
and interest rates for the Group, a significant portion of the debt
carries variable interest rates. While overall debt has continued
to decline, interest rates remain relatively high and have
negatively impacted debt costs. The Group adjusted its capital
improvement credit line to a $4 million term loan with a drawdown
period through to 1 July 2024, to be used for IO#10 plant
expenditures and other Capex projects as appropriate. This line
carries variable interest rates.
Inflation in the USA and globally remained
relatively high in 2023, but declined compared to 2022.
However, the costs of goods, energy, and labour have increased
substantially in the last few years and while inflation is
declining, it is still a risk for the Group moving forward. The
ability to maintain margins in an increasingly inflationary
environment is uncertain. Additionally, as prices rise, there
is a risk that some products the Group sells may be replaced by
cheaper alternatives which could result in an adverse effect to the
business.
Litigation: While
the Group has no pending litigation matters, there are
possibilities that future judgements or settlements could result in
an adverse effect on our business.
Going
concern
The Group has performed well in 2023 and is
performing as anticipated in 2024 and generating cash. In
2023, the Group achieved a profit before taxation of $8.3m and a
net cash inflow from operating activities of $8.4m. Net debt of
$0.9m at the end of 2022 improved to net cash of $1.2m as of 31
December 2023. The markets into which the Group sells its products
continue to experience good demand. Iofina has obtained appropriate
credit facilities to fund current business growth objectives. The
Group has prepared forecasts and projections that indicate there
are adequate resources to continue in operational existence for the
foreseeable future. The Directors consider it appropriate to
continue to adopt the going concern basis in preparing the
financial statements.
On behalf of the Board
Dr. Thomas M.
Becker
Chief Executive Officer and
President
1 May 2024
STATEMENT IN
ACCORDANCE WITH SECTION 172 OF THE COMPANIES ACT
2006
As required by section 172 of the Companies
Act 2006, a director of a company must act in a way they consider,
in good faith, would most likely promote the success of the company
for the benefit of its shareholders. In doing this, the Director
must have regard, amongst other matters, to the:
(a) likely
consequences of any decision in the long-term;
(b)
interests of the company's employees;
(c) need
to foster the company's business relationships with suppliers,
customers, and others;
(d) impact
of the company's operations on the community and the
environment;
(e)
company's reputation for high standards of business conduct;
and
(f)
need to act fairly as between members of the company.
As a Board our aim is always to uphold the
highest standards of governance and business conduct, taking
decisions in the interests of the long-term sustainable success of
the Group, generating value for our shareholders and contributing
to wider society. We recognise that our business can only grow and
prosper over the long term by understanding the views and needs of
our stakeholders. Engaging with stakeholders is key to ensuring the
Board has informed discussions and factors stakeholder interests
into decision-making.
The Directors insist on high operating
standards and fiscal discipline and routinely engage with
management and employees of the Group to understand the underlying
issues within the organization. Additionally, the Board looks
outside the organization at macro factors affecting the
business. The Directors consider all known facts when
developing strategic decisions and long-term plans, taking into
account their likely consequences for the Group.
The Directors and management are committed to
the interests and well-being of Iofina's employees. Iofina is
committed to the highest levels of integrity and transparency
possible with employees and other stakeholders. Safety
initiatives, consistent training, strong benefits packages and open
dialogue between all employees are just some of the ways the Group
ensures its employees improve skill sets and work hand-in-hand with
management to improve all aspects of the Group's
performance.
Other stakeholders include customers,
suppliers, lenders, industry associations, government and
regulatory agencies, media, local communities and
shareholders. The Board, both individually and together,
consider that they have acted in the way they consider would be
most likely to promote the success of the Group as a whole. To do
this, there is a process of dialogue with stakeholders to
understand the issues that they might have. Iofina believes that
any supplier/customer relationship must be mutually beneficial, and
the Group is known for its commitment to details to its
customers. Communications with the Group's lenders and
shareholders occur on an ongoing basis and as questions arise. The
Group also communicates through media interviews and
Twitter.
The Directors are committed to positive
involvement in the local communities where we operate. Part
of this commitment is our program 'Iofina Gives Back', where Iofina
supports local charities by donating time and goods.
Additionally, Iofina adheres to environmental regulations at its
sites and supports sustainability practices where
possible.
Integrity is a key tenet for the Directors and
the Company's employees. The Company believes that any
partnership must benefit both parties. We strive to provide
our stakeholders with timely and informative responses and are
always striving to meet or exceed customers' needs.
The Board recognises its responsibilities
under section 172 as outlined above and has acted at all times in a
way consistent with promoting the success of the Company with
regard to all stakeholders.
CORPORATE
GOVERNANCE
It is the Chairman's responsibility, working
with Board colleagues, to ensure that good standards of corporate
governance are embraced throughout the Group. As a Board, we set
clear expectations concerning the Group's culture, values and
behaviours.
In September 2018, the Company adopted the
2018 Quoted Companies Alliance Corporate Governance Code (the "QCA
Code") in line with the London Stock Exchange's AIM Rules. The QCA
Code was reissued on 13 November 2023 and the Company will be
following the principles set out therein for 2024. The three themes
for the 2023 QCA Code are: (1) deliver growth; (2) maintain a
dynamic management framework; and (3) build trust.
This Statement, in conjunction with the
corporate governance statement published on our website (see:
https://iofina.com/corporate-governance/) follows the 10
principles of the 2018 QCA Code and how we have applied it. The
following sections of the Corporate Governance Statement explain
how the QCA Code is applied by the Company.
The Board comprises six Directors: the
Non-Executive Chairman, two full time Executive Directors and three
Non-Executive Directors (each of whom is considered by the Board to
be independent), reflecting a blend of different experiences and
backgrounds. The function of the Chairman is to supervise and
manage the Board and to ensure its effective control of the
business. The Board believes that its composition brings a
desirable range of skills and experience given the Group's
challenges and opportunities as a publicly quoted company, while at
the same time ensuring that no individual (or group of individuals)
can dominate the Board's decision-making.
The Board meets regularly to review, formulate
and approve the Group's strategy, budgets, corporate actions and
oversee the Group's progress towards its goals. The Board has
established the following committees to fulfil specific functions,
each with formally delegated duties and responsibilities (details
of which can be found on our website; see: http://www.iofina.com/about/committees):
the Audit Committee and the Remuneration Committee. These
committees meet on a regular basis and at least two times a year.
The Board has elected not to constitute a dedicated nomination
committee, instead retaining such decision making with the Board as
a whole. This approach is considered appropriate to enable all
Board members to take an active involvement in the consideration of
Board candidates and to support the Chair in matters of nomination
and succession.
From time to time, separate committees may
also be set up by the Board to consider specific issues when the
need arises.
DIRECTORS' REPORT
The Directors present their report and
financial statements for the Group for the year ended 31 December
2023.
Strategic
report
Included in the Strategic Report on pages 12
to 21 is the review of the business and principal risks and
uncertainties.
Post balance
sheet events
Post balance sheet events are set out in Note
28.
Directors'
responsibilities for the preparation of the financial
statements
The Directors are responsible for preparing
the Strategic Report and the Directors' Report and the financial
statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare
Group and Company financial statements for each financial year. The
Directors are required by the AIM Rules for Companies (as published
by the London Stock Exchange) to prepare Group financial statements
in accordance with UK adopted International Accounting Standards,
and have elected under company law to prepare the Company financial
statements in accordance with International Accounting
Standards.
The financial statements are required by law
and UK adopted International Accounting Standards to present fairly
the financial position of the Group and the Company and the
financial performance of the Group. The Companies Act 2006
provides, in relation to such financial statements, that references
in the relevant part of that Act to financial statements giving a
true and fair view are references to their achieving a fair
presentation.
Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and the Company and of the profit or loss of the Group for that
period.
In preparing the Group and Company financial
statements, the directors are required to:
a.
select suitable accounting policies and then apply them
consistently;
b. make
judgements and accounting estimates that are reasonable and
prudent;
c.
state whether they have been prepared in accordance with UK adopted
International Accounting Standards; and
d. prepare
the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will
continue in business.
The directors are responsible for keeping
adequate accounting records that are sufficient to show and explain
the Group's and the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group
and the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for the
maintenance and integrity of the corporate and financial
information included on the Iofina plc website.
Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Results and dividends
The results for the year are set out in the
consolidated statement of comprehensive income and detailed in the
Financial Review.
The directors do not recommend payment of a
dividend.
Financial
instruments and risk management
Note 14 details the risk factors for
the Group and how these risks are managed, including the degree to
which it is appropriate to use financial instruments to mitigate
risks.
Directors
The directors who served during the year and
subsequently were as follows:
Lance J. Baller, Non-Executive
Chairman
Dr. William D. Bellamy, Non-Executive
Director
J. Frank Mermoud, Non-Executive
Director
Mary Fallin Christensen, Non-Executive
Director
Dr. Thomas M. Becker, Chief Executive Officer
and President
Malcolm T. Lewin, Chief Financial
Officer
Statement as
to disclosure of information to the auditor
The directors who were in office
on the date of approval of these financial statements have
confirmed that, as far as they are aware, there is no relevant
audit information of which the auditor is unaware. Each of the
directors has confirmed that they have taken all the steps that
they ought to have taken as directors in order to make themselves
aware of any relevant audit information and to establish that it
has been communicated to the auditor.
Auditor
UHY Hacker Young were appointed as auditors to
the Company and in accordance with Section 485 of the Companies Act
2006 a resolution proposing that they be reappointed will be put to
the next Annual General Meeting.
On behalf of the Board
Dr. Thomas M.
Becker
Chief Executive Officer and President
1 May 2024
CORPORATE
GOVERNANCE STATEMENT
The Board ensures that the Group is managed
for the long-term benefit of all shareholders with corporate
governance being an essential element of this. The Company has
adopted the 2018 Quoted Companies Alliance ("QCA") Corporate
Governance Code which is considered appropriate for an AIM quoted
company. The Board is responsible for the overall leadership,
strategy, development and control of the Group in order to achieve
its strategic objectives.
The Group is led and controlled by the Board
which currently consists of two Executive Directors and four
Non-Executive Directors. Board meetings are held on a regular basis
and no significant decision is made other than by the Directors.
All Directors participate in the key areas of decision
making.
Business
model, strategy and approach to risk
The Group focuses on the exploration and
production of iodine and halogen-based specialty chemical
derivatives. We identify, develop, build, own and operate iodine
extraction plants, currently focused in North America, based on
Iofina's Wellhead Extraction Technology® (WET®) IOsorb® technology.
The Group has complete vertical integration from the production of
iodine in the field to the manufacture of the chemical end-products
derived from iodine to the consumer, and the recycling of iodine
using iodinated side-streams from waste chemical processes. We use
patented or proprietary processes throughout all business lines.
Together these allow us to be the Technology Leaders in Iodine®.
The Group's strategy is to continue to focus on the exploration and
production of iodine and iodine specialty chemical derivatives,
delivering growth throughout our operations. Growth is intended to
be achieved with the continued upgrading and expanding of our
plants, which in turn will boost the level of iodine
production.
All the Group's activities involve an ongoing
assessment of risks, and the Group seeks to mitigate such risks
where possible. The Board has undertaken an assessment of the
principal risks and uncertainties facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity. Further, the Board has considered the
longer-term viability of the Group, including factors such as the
prospects of the Group and its ability to continue in operation for
the foreseeable future. The Board considers that the disclosures
outlined in the Strategic Report on pages 12 to 21 are appropriate.
The Board considers that these disclosures provide the information
necessary for shareholders and other stakeholders to assess the
Group's future viability and potential requirements for further
capital to fund its operations.
Having carried out a review of the level of
risks that the Group is taking in pursuit of its strategy, the
Board is satisfied that the level of retained risk is appropriate
and commensurate with the financial rewards that should result from
achievement of its strategy.
Board of
Directors
As of the date of this Report the Board
comprises six Directors in total: the Non-Executive Chairman, two
Executive Directors (being the Chief Executive Officer ("CEO") and
the Chief Financial Officer ("CFO")) and three Non-Executive
Directors (each of whom are considered by the Board to be
independent), reflecting a blend of different experiences and
backgrounds. The skills and experience of the Board are set out in
their biographical details on pages 10 and 11. The experience and
knowledge of each of the Directors give them the ability to
challenge strategy constructively and to scrutinize
performance.
The Board is responsible to the shareholders
for the proper management of the Group. The Board and the Group's
management team are responsible for reviewing and evaluating risk
and the Executive Directors meet at least monthly to review ongoing
trading performance, discuss budgets and forecasts and new risks
associated with ongoing trading. The Board typically meets monthly
to set the overall direction and strategy of the Group, review
operational and financial performance and advise on management
appointments (if necessary). All key operational and investment
decisions are subject to Board approval. The Company Secretary is
responsible for ensuring that Board procedures are followed and
applicable rules and regulations are complied with. The number of
meetings attended by each Director can be found on page
30.
There is a clear separation of the roles of
CEO and Non-Executive Chairman. The Chairman is responsible for
overseeing the running of the Board, ensuring that no individual or
group dominates the Board's decision making and ensuring the
Non-Executive Directors are properly briefed on matters. The CEO
has the responsibility for implementing the strategy of the Board
and managing the day-to-day business activities of the
Group.
Time
commitment
On joining the Board, Non-Executive Directors
receive a formal appointment letter, which identifies the terms and
conditions of their appointment and, in particular, the time
commitment expected of them. A potential Director candidate
(whether an Executive Director or Non-Executive Director) is
required to disclose all significant outside commitments prior to
their appointment. The Board is satisfied that both the Chairman
and the other Non-Executive Directors can devote sufficient time to
the Group's business.
Independence
of Directors
The Directors acknowledge the importance of
the principles of the 2018 QCA Code which recommends that a company
should have at least two independent Non-Executive Directors. The
Board considers it has sufficient independence on the Board and
that all the Non-Executive Directors are of sufficient competence
and calibre to add strength and objectivity to the Board, and bring
considerable experience in industry, operational and financial
development of chemical products and companies. Specifically, the
Board has considered and determined that since the date of their
respective appointments William Bellamy, J. Frank Mermoud and Mary
Fallin Christensen are independent in character and judgement,
specifically that they:
·
have not been employees of the Company within the last five
years;
·
do not have a material business relationship with the
Group;
·
have no close family ties with any of the Group's advisers,
Directors or senior employees;
·
do not hold cross-directorships or have significant links
with other Directors through involvement in other companies or
bodies; and
·
do not represent any shareholder.
The Board notes that the Independent
Non-Executive Directors have received share options in the Company.
The Board does not believe the issue of options affects their
independence as they are of a modest amount and not deemed material
to the individual.
The Company Secretary maintains a register of
outside interests and any potential conflicts of interest are
reported to the Board.
If they so wish, the Non-Executive Directors
have opportunities to meet without Executive Directors being
present (including after Board and Committee meetings). Because the
Board is spread out geographically, the majority of communications
between Directors is conducted by video. However, the Board does
convene in person at least once a year, and this presents an
opportunity (before, after and between management and operational
meetings) for the Non-Executive Directors to meet in person without
the Executive Directors being present.
Professional
development
Throughout their period in office, the
Directors are continually updated on the Group's business, the
competitive and regulatory environments in which it operates,
corporate social responsibility matters and other changes affecting
the Group and the industry it operates in as whole. The updates are
usually provided by way of written briefings and meetings with
senior management. Directors are also advised on appointment of
their legal and other duties and obligations as a director of an
AIM quoted company both in writing and in communications (being
face-to-face meetings whenever possible) with the Company's
Nominated Adviser. The Directors also have recourse to the Company
Secretary, a qualified and practising solicitor, who is a
recognised practitioner within the AIM community.
All the Directors are subject to election by
shareholders at the first Annual General Meeting of the Company
("AGM") after their
appointment to the Board. Each Director is required, under the
Company's articles of association, to seek re-election at least
once every three years.
Board
Committees
There are two committees - the Audit Committee
and the Remuneration Committee. Their full terms of reference are
published on the Company's website at
https://iofina.com/committees/.
Audit Committee
During the financial period under review, the
members of the Audit Committee were Lance Baller, Dr William
Bellamy, J. Frank Mermoud and Mary Fallin Christensen. Mr Baller is
the Chairman of the Audit Committee. The responsibilities of the
committee include the following:
·
ensuring that the financial performance of the Group is
properly monitored, controlled and reported on;
·
reviewing accounting policies, accounting treatment and
disclosures in the financial reports;
·
meeting the auditors and reviewing reports from the auditors
relating to accounts and internal control systems; and
·
overseeing the Group's relationship with external auditors,
including making recommendations to the Board as to the appointment
or re-appointment of the external auditors, reviewing their terms
of engagement, and monitoring the external auditors' independence,
objectivity and effectiveness.
During the year, the committee met to review
audit planning and findings. In addition, it reviewed the
appointment of auditors, and agreed unanimously to re-elect UHY
Hacker Young LLP.
Remuneration Committee
During the financial period under review, the
members of the Remuneration Committee were Dr William Bellamy,
Lance Baller, Mary Fallin Christensen and J. Frank Mermoud. Dr
Bellamy is the Chairman of the Remuneration Committee. The
responsibilities of the committee include the following:
·
reviewing the performance of the Executive Directors and
setting the scale and structure of their remuneration with due
regard to the interest of shareholders;
·
overseeing the evaluation of the Executive Directors;
and
·
determining the vesting of awards, including the setting of
any performance criteria in relation to the exercise of share
options, granted under the Company's share option plan.
During the year, the committee met to discuss
remuneration and bonuses for the Executive Directors, and share
option awards for the Directors and senior management.
The Directors' remuneration information is
presented on page 32.
Attendance at
meetings
The Board meets regularly, typically on a
monthly basis, together with further meetings as required. The
Audit and Remuneration Committees meet as required, and try to hold
a minimum of two meetings each year.
The Directors attended the following meetings
during the year:
|
Board
|
Audit
|
Remuneration
|
Lance Baller
|
11
|
1
|
2
|
Dr Thomas Becker
|
11
|
-
|
-
|
Malcolm Lewin
|
10
|
-
|
-
|
Dr William Bellamy
|
10
|
1
|
2
|
J. Frank Mermoud
|
10
|
1
|
2
|
Mary Fallin Christensen
|
11
|
-
|
1
|
Risk
management and internal control
The Board is responsible for the systems of
internal controls and for reviewing their effectiveness. The
internal controls are designed to manage rather than eliminate risk
and provide reasonable but not absolute assurance against material
misstatement or loss. The Board reviews the effectiveness of these
systems annually by considering the risks potentially affecting the
Group.
Iofina employs strong financial and management
controls within the business. Examples of control procedures
include:
·
an annual budget set by the Board with regular review of
progress;
·
regular meetings of Executive Directors and senior management
to review management information and follow up on operational
issues or investigate any exceptional circumstances;
·
clear levels of authority, delegation and management
structure; and
·
Board review and approval of significant contracts and
overall project spend.
The Company's system of internal control is
designed to safeguard the Company's assets and to ensure the
reliability of information used within the business. The system of
controls manages appropriately, rather than eliminates, the risk of
failure to achieve business objectives and provides reasonable, but
not absolute, assurance against material misstatement or loss. The
Group does not consider it necessary to have an internal audit
function due to the small size of the administrative function.
Instead, there is a detailed monthly review and authorisation of
transactions by the CFO and the CEO.
The independent auditors do not perform a
comprehensive review of internal control procedures, but do report
to the Audit Committee on the outcomes of its annual audit process.
The Board confirms that the effectiveness of the system of internal
control, covering all material controls including financial,
operational and compliance controls and risk management systems,
has been reviewed during the year under review and up to the date
of approval of the Annual Report.
The Group maintains appropriate insurance
cover in respect of actions taken against the Directors because of
their roles, as well as against material loss or claims against the
Group. The insured values and type of cover are comprehensively
reviewed on a periodic basis.
Board
effectiveness and performance evaluation
The Board is mindful that it needs to
continually monitor and identify ways in which it might improve its
performance and recognises that board evaluation is useful for
enhancing a board's effectiveness.
The individual contributions of each of the
members of the Board are regularly assessed to ensure that: (i)
their contribution is relevant and effective; (ii) that they are
committed; and (iii) where relevant, they have maintained their
independence. The Board intends to review the performance of the
team as a unit to ensure that the members of the Board collectively
function in an efficient and productive manner. As required
pursuant to the Company's articles of association, one-third of the
Directors must stand for re-election by shareholders annually in
rotation and all Directors must stand for re-election at least once
every three years.
The Company considers that the Board and its
individual members continue to perform effectively, that the
Chairman performs his role appropriately and that the process for
evaluation of his performance has been conducted in a professional
and rigorous manner.
Corporate
Social Responsibility
The Board recognises the growing awareness of
social, environmental and ethical matters and it endeavours to take
into account the interest of the Group's stakeholders, including
its investors, employees, suppliers and business partners, when
operating the business.
Employment
The Group endeavours to appoint employees with
appropriate skills, knowledge and experience for the roles they
undertake and thereafter to develop and incentivise staff. The
Board recognises its legal responsibility to ensure the wellbeing,
safety and welfare of its employees and maintain a safe and healthy
working environment for them and for its visitors.
Investor
Relations
The Board recognises the importance of
communication with the Company's shareholders to ensure that its
strategy and performance is understood and that it remains
accountable to shareholders. Our website has a section dedicated to
investor matters and provides useful information for the Company's
shareholders (see: http://iofina.com/investors/).
The Board as a whole is responsible for ensuring that a
satisfactory dialogue with shareholders takes place, while the
Chairman and the CEO ensure that the views of the shareholders are
communicated to the Board as a whole. The Board ensures that the
Group's strategic plans have been carefully reviewed in terms of
their ability to deliver long-term shareholder value. Fully audited
Annual Reports are published, and Interim Results notified via
Regulatory News Service announcements. All financial reports and
statements are available on the Company's website (see:
http://iofina.com/investors/financial-results).
There is an opportunity at the Annual General
Meeting for individual shareholders to question the Chairman and
the Executive Directors. Notice of the meeting is sent to
shareholders at least 21 clear days before the meeting.
Shareholders are given the opportunity to vote on each separate
issue. The Company counts all proxy votes and indicates the
level of proxies lodged on each resolution, after it has been dealt
with by a show of hands.
Directors'
remuneration
Remuneration provided to each Director was as
follows:
|
2023
|
|
2022
|
|
Salary
|
Bonus
|
Total
$
|
|
Salary
|
Bonus
|
Total
$
|
Lance Baller
|
122,120
|
-
|
122,120
|
|
109,620
|
-
|
109,620
|
Dr. Thomas Becker
|
286,388
|
45,000
|
331,388
|
|
274,400
|
30,000
|
304,400
|
Malcolm Lewin
|
181,020
|
35,000
|
216,020
|
|
175,275
|
25,000
|
200,275
|
William Bellamy
|
42,500
|
-
|
42,500
|
|
30,000
|
-
|
30,000
|
Frank Mermoud
|
42,500
|
-
|
42,500
|
|
30,000
|
-
|
30,000
|
Mary Fallin Christensen
|
42,500
|
-
|
42,500
|
|
30,000
|
-
|
30,000
|
Total
|
$717,028
|
$80,000
|
$797,028
|
|
$649,295
|
$55,000
|
$704,295
|
No pension contributions were paid on behalf
of the directors in 2022 or 2023.
Directors' and officers' insurance is in place
on a Group-wide basis.
The interests of the Directors in office as at
31 December 2023 in the shares of the Company at the end of the
financial year and the beginning of the financial year or date of
appointment, if later, were as
follows:
31 December
2023
1 January 2023
L J
Baller
5,500,000
5,500,000
Dr. T M
Becker
139,430
139,430
W D
Bellamy
46,875
46,875
M T
Lewin
93,750
93,750
J F
Mermoud
23,750
23,750
All outstanding options over shares granted to
Directors up to 31 December 2023 are set out in the table below. No
further options have been granted between 31 December 2023 and the
date of signing these financial statements. No Directors exercised
options in 2023.
Name
|
2018 Options
granted
|
2019 Options
granted
|
2020 Options
granted
|
2022 Options
granted
|
2023 Options
granted
|
Dr T Becker
|
660,000
|
242,000
|
266,200
|
266,200
|
266,200
|
M Lewin
|
330,000
|
165,000
|
181,500
|
181,500
|
181,500
|
L Baller
|
220,000
|
165,000
|
165,000
|
165,000
|
165,000
|
Dr W Bellamy
|
110,000
|
82,500
|
82,500
|
82,500
|
82,500
|
JF Mermoud
|
-
|
82,500
|
82,500
|
82,500
|
82,500
|
M Fallin Christensen
|
-
|
-
|
82,500
|
82,500
|
82,500
|
|
1,320,000
|
737,000
|
860,200
|
860,200
|
860,200
|
Exercise price
|
16.2p
|
21.3p
|
12.5p
|
17.6p
|
31.8p
|
Lapse date
|
13/06/28
|
24/07/29
|
15/12/30
|
8/3/32
|
27/4/33
|
On behalf of the Board
Dr. Thomas M.
Becker
Chief Executive Officer and
President
1 May 2024
Environmental,
Social, and Governance ('ESG')
The Group has continually maintained a philosophy
and commitment to perform its operations in a safe, responsible
manner regarding all stakeholders including, but not limited to,
staff, shareholders, customers and our communities.
The Group has long applied ESG tenets even before
the term ESG became commonplace across global industries. Iofina
chose to produce our iodine from a brine water source that is a
by-product of the oil and gas industry. By partnering with
oil & gas operators, Iofina produces iodine from this brine
water, and this iodine would not be realised if Iofina was not
operating its iodine manufacturing plants. Most of the
world's iodine is manufactured from iodate deposits in ores in
Chile through processes we believe are much more negatively
intensive to the environment than our WET® IOsorb®
technology. The Group also manufactures specialty chemicals
through the Iofina Chemical division. IC has held a
long-established business philosophy to develop its processes in
aqueous-based chemistries, whenever possible, to reduce the use of
organic solvents, with the vast majority of IC's processes being
performed in aqueous media.
The iodine compounds the Group produces have a
positive impact on society, with iodine being essential for human
and animal health. Whether it is directly through the ingestion of
foods containing iodides or fortified salt as a micro-nutrient to
ensure proper thyroid function and to stimulate proper human and
animal development; or by using iodine-containing compounds in
medical uses, such as iodinated X-ray contrast agents, production
of pharmaceuticals or the use PVP-I in antiseptic applications,
iodine plays many important roles in a healthy society.
Environmental
The Group is committed to minimising its energy
consumption and waste generation. Energy use and environmental
impacts are key criteria when ordering and replacing equipment at
our manufacturing sites. As an example, Iofina Resources is
continuing to progress in a long-term initiative to replace some
large older blowers with more efficient units. Iofina Chemical
improved a process to remove a raw material input and reduce the
time to create a batch of the material, which will improve the
overall environmental impact of production. Iofina continues to
implement strategies to reduce the environmental impacts of current
operations, as well as continually evaluating the minimisation of
emissions from new plants and processes. Upgrades and new processes
undergo a review which comprises evaluations to minimise energy use
and environmental impact.
The Group's total energy consumption at our
manufacturing facilities in 2023 was:
Electricity (kWh) 11,404,278; Natural gas (CCF)
67,281; for the 1267 MT of goods produced in 2023 by the Group. In
2022, consumption was: Electricity (kWh) 11,390,576; Natural gas
(CCF) 70,945; for the 1496 MT of goods produced in 2022 by the
Group.
The Company is continuing to develop metrics to
measure the Group's environmental impact.
Company and Group information
Iofina plc is a company incorporated in England and
Wales; company number 05393357, with a registered office at 48
Chancery Lane, London WC2A 1JF (c/o Keystone Law, Attn: Simon
Holden). SECR is prepared for the Group's UK activities and
reported below.
Streamlined energy and carbon
reporting (SECR)
Group's greenhouse gas emission data
|
Year End
31 December 2023
|
Base Year
|
Scope 3
|
|
|
Emissions in MT CO2e from business
travel involving trips where the journey started or ended in the UK
including emissions from air, taxi, hotel stays, etc.
|
28.67
|
28.67
|
Intensity ratio MT CO2e per $m of
income
|
0.573
|
0.573
|
Reporting Period
The reporting period for SECR data is 1 January 2023
through 31 December 2023.
Methodology and Discussion
We have followed the 2019 UK Government
Environmental Reporting Guidelines and have calculated emissions
based on 2023 UK Government Conversion Factors. The SECR data
lists 2023 levels and 2023 will be considered the 'base year' for
future reporting as 2023 is the first year that Iofina was required
to communicate this SECR information. Scope 3 emissions are listed
as required in the reporting guidelines. We have chosen to report
the ratio of CO2e per $m of income, as this is a reasonable
reflection of the business activities. The Scope 3 emissions
reported only reflect the impact on UK travel activities. The
company is committed to reduce environmental impacts, as discussed
in the previous section of this report, as well as minimise the
impact of UK travel. Some initiatives to reduce impacts due
to UK travel include taking direct flights when available and
affordable, holding virtual meetings with stakeholders to minimise
frequency of trips to the UK from Iofina's USA based employees, and
using public transportation in the UK whenever possible.
Targets
Iofina continues to prioritise the minimisation of
environmental impacts of our UK operations by minimising any trips
to and from the UK and holding virtual meetings when
appropriate. We will continue to utilise public
transportation in the UK on trips whenever practical.
We feel that our current travel actions in the UK are appropriate
and will continue to maintain these policies. We expect that the
Group's total Scope 3 emissions per $m of income to reduce by 10%
over the next five years.
Social
Health and Safety
The safety and health of Iofina's employees is the
top priority for the Group. This also extends to our
contractors, visitors, and communities. Processing and
creating specialty chemicals have inherent risks. Through
engineering designs, extensive training and procedures, and PPE to
name a few, our culture insists that as a group we work together to
ensure everyone's safety. We are proud of our safety record
but recognize that continual improvement is always necessary as we
evolve. Iofina is proud to report that in 2023 there were
zero Lost Time Incidents ('LTI') for the Group. In fact, the Group
has not experienced a LTI in over three years.
Iofina Lost Time Incidents
|
2022
|
2023
|
Lost Time Incidents
|
0
|
0
|
Incident Rate
|
0
|
0
|
Lost Time Incidents ('LTIs') are
incidents where the person is unable to work the next day of the
incident. Incident rate is the number of LTIs per 200,000
hrs. worked.
Many other health and safety metrics are evaluated,
and corrective actions performed to continually improve our systems
in order to reduce incident occurrences and severity.
These health and safety matrices are routinely reviewed and
discussed with upper management.
Community
Iofina is committed to being a socially responsible
organization. Our program, 'Iofina Gives Back', is an
employee-driven program designed to support our local communities.
Some of the program's initiatives include the donation of items and
funds for disaster relief, local schools, toy/food drives, and
sponsorships that benefit first responder equipment and STEM
scholarships.
Additionally, for many years, Iofina Resources has
partnered with Northwestern Oklahoma State University and the OCAST
Intern Partnership Program, which is designed to advance science
and technology opportunities and provide experience and educational
opportunities for undergraduate students. Multiple students
involved in these internships with Iofina have gone on to achieve
advanced level science degrees.
Diversity
Iofina is an Equal Opportunity Employer and all
employment decisions at Iofina are based on individual
qualifications, particular job responsibilities, and business needs
without regard to race, color, religion, national origin, age,
gender, disability, or any other status protected by laws where we
operate. A culture of respect at Iofina is our commitment to
all our employees and we demand that our team treats our fellow
workers and business partners in a professional and
non-discriminatory manner. Historically, the job applicants that
Iofina receives tend to underrepresent minorities and females when
compared to the general population. Iofina continues to
investigate ways to find a more diverse pool of job applicants.
Governance
The following are summaries of some of Iofina's
Governance data and practices. Corporate policies are
reviewed by the Board.
|
Total Board Members
|
%Male
|
%Female
|
%Non-executive
|
%
Executive
|
CEO/Chairman separate roles
|
Board of Directors
|
6
|
83%
|
17%
|
67%
|
33%
|
Yes
|
· The
Group has adopted the QCA Corporate Governance Code
· The
Group has adopted several policies including but not limited
to:
o Whistleblowing
Policy
o Anti-Fraud
Policy
o Anti-Corruption and
Bribery Policy
o Share Dealing
Code
o AIM Rules
Compliance Policy
Further detail regarding Corporate Governance
practices can be found on pages 22 and 24 of this report.
Independent
auditor's report to the members of Iofina PLC
Opinion
We have audited the financial statements of
Iofina PLC (the 'Parent Company') and its subsidiaries (the
'Group') for the year ended 31 December 2023 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Balance Sheet, the Consolidated Statement of Changes in
Shareholders' Equity, the Consolidated Cash Flow Statement, the
Company Balance Sheet, the Company Statement of Changes in
Shareholders' Equity and notes to the financial statements,
including the significant accounting policies. The financial
reporting framework that has been applied in the preparation of the
Group's financial statements is applicable law and UK adopted
International Accounting Standards. The financial reporting
framework that has been applied in the preparation of the Parent
Company's financial statements is FRS 101 'Reduced Disclosure
Framework applicable in the UK and Republic of Ireland' ("FRS 101"
or "UK GAAP") and in accordance with the provisions of the
Companies Act 2006.
In our opinion:
·
the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
December 2023 and of the Group's profit for the year then
ended;
·
the Group financial statements have been properly prepared in
accordance with UK adopted International Accounting
Standards;
·
the Parent Company financial statements have been properly
prepared in accordance with FRS 101 and as applied in accordance
with the provisions of the Companies Act 2006; and
·
the Group financial statements have been prepared in
accordance with the requirements of the Companies Act
2006.
Basis for
opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of
the Group and Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Conclusions
relating to going concern
In auditing the financial statements, we have
concluded that the director's use of the going concern basis of
accounting in the preparation of the financial statement is
appropriate.
Our evaluation of the director's assessment of
the entity's ability to continue to adopt the going concern basis
of accounting included:
Evaluation of
management assessment
|
Key
observations
|
Management have prepared detailed consolidated
cash flow forecasts incorporating all entities within the Group
covering the period to 31 December 2025. These are based on their
expectation of future costs, including budgeted operating and
capital expenditure on all of the group's operating plants licence
areas and expectations of future iodine production levels and
commodity price.
Our review included:
·
Assessing the transparency, completeness and accuracy of the
matters covered in the going concern disclosure and management's
cash flow projections;
·
Reviewing the cash flow forecasts, the methodology behind
these, challenging the assumptions with management and
corroborating them with our historical knowledge of the
Group;
·
Performing a sensitivity analysis on the budgets provided to
assess the change in revenue and iodine prices that would need to
occur to push the Group into a cash negative position;
·
Ensuring arithmetic accuracy of the model;
·
Obtaining post year end management information and comparing
these to forecasts to assess whether budgeting is reasonable and
the results are in line with expectations;
·
Comparing the prior year budgeted cash flow with actual
results to assess management's ability to budget; and
·
Reviewing post year end loan covenants submitted as well as
recalculated based on projected figures to ensure
compliance.
|
The cash flow forecasts demonstrates that the
Group will have a cash flow surplus throughout the forecast period.
These incorporated all budgeted and committed expenditure, the
schedule of repayment for the term loan and movements in working
capital.
We challenged management on assumptions used
including iodine prices, iodine production and sales, inflation and
various other costs. In reviewing the cash flow forecasts, we
separately sensitised the commodity price to determine the maximum
the price of iodine could fall by, assuming a constant volume, in
order for the cash to be depleted to Nil by the end of the forecast
period. Overall, the price of iodine would need to decrease by 51%
in 2024 and 58% in 2025 in order for EBITDA to be Nil for both
years of the forecasts. Given the price of iodine has been
increasing since 2018, this is not considered likely.
We have further sensitised the demand for
crystallised iodine, reducing it to Nil. The results of this still
showed a positive EBITDA for the group as a result of the flex in
variable costs.
We compared managements forecast to actual
results post year end and noted timing differences and no other
material variances.
We have compared the prior year cash flow
projection with the current year actual results and noted some
differences noted in demand of lower gross margin products and the
remaining differences for cash flow due to timing only.
Finally, we have obtained the loan covenants
submitted to the lender post year end as well as recalculated loan
covenants for 31 December 2024 and 2025 showing no breaches based
on actual or budgeted figures.
|
Based on the work we have performed, we have
not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant
doubt on the entity's ability to continue as a going concern for a
period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities
of the directors with respect to going concern are described in the
relevant sections of this report.
Our approach
to the audit
As part of designing our audit, we determined
materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the
directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions
and considering future events that are inherently
uncertain.
We tailored the scope of our audit to ensure
that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account an
understanding of the structure of the Company and the Group, their
activities, the accounting processes and controls, and the industry
in which they operate. Our planned audit testing was directed
accordingly and was focused on areas where we assessed there to be
the highest risk of material misstatement.
Our Group audit scope includes all of the
group companies. At the Parent Company level, we also tested the
consolidation procedures. The audit team communicated regularly
throughout the audit with the Chief Financial Officer (CFO) in
order to ensure we had a good knowledge of the business of the
Group. During the audit we reassessed and re-evaluated audit risks
and tailored our approach accordingly.
The audit testing included substantive testing
on significant transactions, balances and disclosures, the extent
of which was based on various factors such as our overall
assessment of the control environment, the effectiveness of
controls and the management of specific risk.
We communicate with those charged with
governance regarding, among other matters, the planned scope and
timing of the audit and significant findings, including any
significant deficiencies in internal control that we identify
during the audit.
Key Audit Matters
Key audit matters are those matters that, in
our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement
team.
These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters.
Key audit
matters
|
How our audit
addressed the key audit matters
|
Revenue
Recognition
(applicable to the Group)
Under IFRS 15, the entity shall recognise
revenue to depict the transfer of goods or services to customers in
an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or
services.
The revenue stream for the group is derived
from sale of iodine derivatives, iodine chemicals and ancillary
products, all of which are fundamental to the financial statements
and a systematic error in the calculation could lead to a material
error.
In this regards, we therefore consider that
there is a significant risk over the cut off, occurrence and
accuracy of revenue recognition.
|
Our audit work included, but was not
restricted to:
·
Documenting our understanding of management's process for
evaluating revenue recognition and assessing the design
effectiveness and implementation of related key
controls;
·
Testing a sample of transactions throughout the year to
ensure the recognition is in line with IFRS 15, the Group
accounting policy and to ensure the accuracy and occurrence of
revenue;
·
Tested a sample of transactions pre and post year end to
assess whether sales are accounted for in the correct
period;
·
Tested a sample of post year end credit notes to ensure no
large credit notes were issued post year end relating to 2023
sales; and
·
Using our data analytics software to assess the correlations
between revenue entries, trade receivables and subsequent cash
receipt. This would identify whether any subsequent reversal
of trade receivables should have impacted the recognition of the
revenue.
The Group's accounting policy on revenue
recognition is shown in Principal Accounting Policies for the
consolidated financial statements and related disclosures are
included in note 1d.
Key
observations
As a result of the audit procedures we
performed and, after considering management's disclosures of the
judgements applied by them, we have concluded that revenue
recognition is materially complete, accurate, has occurred and
recognised on an appropriate basis.
|
Valuation and
Impairment review of property plant and equipment
(applicable to the Group)
Under International Accounting Standard 36
'Impairment of Assets' (IAS 36), companies are required to assess
whether there is any indication that an asset may be impaired at
each reporting date.
Property, plant and equipment represent a
significant balance in the financial statements with a combined net
book value of $24.8m (2022 - $20.6m). The balance is primarily
comprised of the IOSorb plants, equipment and machinery and
construction in progress.
The estimated recoverable amount of these
balances is subjective due to the inherent uncertainty involved in
forecasting and probability of the related future cash flows which
is based on expected future cash flows of the IOSorb
plants.
Significant management judgement and
estimation uncertainty is involved in this area, where the primary
inputs are:
• Estimating cash flow forecasts;
and
• Selecting appropriate assumptions such as
growth rate, Iodine prices and discount rate.
We therefore identified the risk over the
valuation of property plant and equipment as a significant
risk.
|
Our audit work included, but was not
restricted to:
·
Reviewing Management's assessment of forecasted cash flows
and challenged significant movements in forecasted cash flows
compared to historic performance;
·
Reviewing Management's forecasted cash flows that feed into
the discounted cash flow model and challenged significant
assumptions with reference to historic results, market trends,
appropriateness of discount rates and future expectations of
commodity prices and sales growth;
·
Critically analysing whether or not the IOSorb plants should
be viewed as one Cash Generating Unit ("CGU") or multiple
CGU's;
·
Challenging management and gained an understanding of what is
considered a cash generating unit; and
·
Performing a downside sensitivity analysis and held
discussions with Management to assess the likelihood of certain
circumstances crystallising.
The Group's accounting policy on Impairment is
shown in Principal Accounting Policies for the consolidated
financial statements and related disclosures are included in note
1m.
Key
observations
As a result of the audit procedures we
performed and, after considering management's disclosures of the
judgements applied by them, we have concluded that no impairments
are required.
We have confirmed the estimates and judgements
utilised within the models applied in relation to the impairment of
property, plant and equipment are within acceptable
ranges.
We are also satisfied that the plants should
be considered one CGU.
|
Valuation of
Inventory
(applicable to the Group)
Inventory primarily consists of iodine and
iodine derivatives. Inventory should be held at the lower of cost
and net realisable value.
The net realisable value is the estimated
selling price in the ordinary course of business less any
applicable selling expenses. As at 31 December 2023, the inventory
is valued at $10.1m (2022 - $10.2m). There is a risk that the
carrying value in the Group accounts is higher than the recoverable
amount and therefore materially misstated. Further, there is the
added risk of the complexity of the measurement of the costs of
conversion of the inventory and the estimates and judgements around
this.
We therefore identified the valuation of
inventory as a key audit matter, which was one of the most
significant assessed risks of material misstatement.
|
Our audit work included, but was not
restricted to:
·
Reviewed the inventory valuation on a sample basis to assess
whether it is held at the lower of cost and net realisable
value;
·
Considered the inputs used and accuracy of the billable of
materials calculation to value the initial cost per unit of the
inventory; and
·
Considered the inputs used and accuracy of calculations of
the value of overheads absorbed into inventory. We challenged these
assumptions with management to ensure they are
appropriate.
The Group's accounting policy on Inventories
is shown in Principal Accounting Policies for the consolidated
financial statements and related disclosures are included in note
1o.
Key
observations
As a result of the audit procedures we
performed and, after considering Management's disclosures of the
judgements applied by them, we have concluded that the valuation of
inventory is materially accurate and recognised on an appropriate
basis.
We have confirmed the estimates and judgements
utilised within the models applied in relation to the valuation of
inventory are within acceptable ranges.
|
Valuation and
Impairment review of investments in subsidiaries and intercompany
balances
(applicable to the Company only)
Due to the material size of the investments
in, and loans to, the subsidiaries the directors should critically
consider if any indicators of impairment exist in relation to the
balances.
The estimated recoverable amount of these
balances is subjective due to the inherent uncertainty involved in
forecasting the profitability of the subsidiaries.
Where indicators of impairment have been
identified a robust review of the investments held by the Parent
Company and any amounts due from subsidiaries to the Parent Company
should be undertaken by the directors to confirm the value in use
of these amounts and that there are no indications, or requirements
for, impairments of the amounts.
Significant management judgement and
estimation uncertainty is involved in this area, where the primary
inputs are:
• Estimating cash flow forecasts;
• Selecting an appropriate assumption such as
growth rate and discount rate.
We therefore identified the valuation of
investments in subsidiaries and intercompany balances as a key
audit matter, which was one of the most significant assessed risks
of material misstatement.
|
Our audit work included, but was not
restricted to:
·
obtaining and reviewing the director's assessment of
impairment with regards to investment and loans due from its
subsidiaries to assess whether the treatment of the balances was in
line with IAS 36;
·
reviewing the results of the impairment reviews undertaken by
the directors and critically assess and challenge management for
the assumptions used within the impairment review to ensure they
are appropriate;
·
reviewing the 2023 forecasts against actual results to
determine the Directors' historic forecasting accuracy;
·
performing a sensitivity analysis on the key inputs mentioned
above with the key being the decline in Iodine prices and sales
growth; and
·
calculating the enterprise value of the company and compared
to net book value ("NBV") of the investment and loans due to
subsidiaries.
The Group's accounting policy on impairment is
shown in Principal Accounting Policies for the consolidated
financial statements and related disclosures are included in note
1m.
Key
observations
As a result of the audit procedures we
performed and, after considering management's disclosures of the
judgements applied by them, we have concluded that no impairments
are required.
We have confirmed the estimates and judgements
utilised within the models applied in relation to the valuation and
impairment of investments in subsidiaries and intercompany balances
are within acceptable ranges.
|
Our
application of materiality
The scope and focus of our audit was
influenced by our assessment and application of materiality. We
apply the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements on our
audit and on the financial statements.
We define financial statement materiality as
the magnitude by which misstatements, including omissions, could
reasonably be expected to influence the economic decisions taken on
the basis of the financial statements by reasonable
users.
In order to reduce to an appropriately low
level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to
determine the extent of testing needed. Importantly, misstatements
below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a
whole.
Materiality
Measure
|
Group
|
Parent
|
Overall materiality
|
We determined materiality for the financial
statements as a whole to be $415,700 (2022: $501,500).
|
We determined materiality for the financial
statements as a whole to be $366,700 (2022: $374,000).
|
How we determine it
|
For 2023 materiality is based 5% of Profit
Before Tax ("PBT") for the Group.
|
As the Parent is a holding company,
materiality was based on 1% of gross assets.
|
Rationale for benchmarks applied
|
As a trading group, materiality based on PBT
is an appropriate factor given the group's performance in the past
few years has been steadily increasing.
|
As a holding company, materiality is based on
1% of the total assets of the group. This is appropriate as the
company is a holding company.
|
Performance materiality
|
On the basis of our risk assessment, together
with our assessment of the Group and Company's control environment,
our judgement is that performance materiality for the financial
statements should be 75% of materiality for the Group and 60% for
the Company:
|
$311,800 (2022: $376,000)
|
$220,000 (2022: $280,000)
|
Specific materiality
|
We also determine a lower level of specific
materiality for certain areas such as directors' remuneration and
related party transactions of $2,000.
|
Reporting threshold
|
We agreed with the Audit Committee that we
would report to them all misstatements over 5% of Group and Company
materiality identified during the audit, as well as differences
below that threshold that, in our view, warrant reporting on
qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall
presentation of the financial statements.
|
$20,750 (2022: $25,000)
|
$16,600 (2022: $19,000)
|
Other
information
The other information comprises the
information included in the annual report other than the financial
statements and our auditor's report thereon. The directors are
responsible for the other information contained within the annual
report. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements
themselves.
If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this
regard.
Opinions on
other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken
in the course of the audit:
·
the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
·
the strategic report and the directors' report have been
prepared in accordance with applicable legal
requirements.
Matters on
which we are required to report by exception
In the light of the knowledge and
understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the
following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
·
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
·
the Parent Company financial statements are not in agreement
with the accounting records and returns; or
·
certain disclosures of directors' remuneration specified by
law are not made; or
·
we have not received all the information and explanations we
require for our audit.
Responsibilities of
directors
As explained more fully in the statement of
directors' responsibilities set out on page 25, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the Group's and the Parent
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the group or Parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor's
responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable
assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and
to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed
below:
Based on our understanding of the Group and
the industry in which it operates, we identified that the principal
risks of non-compliance with laws and regulations related to the
use of regulated chemicals, tax legislation, employment and health
and safety regulations, anti-bribery, corruption and fraud and we
considered the extent to which non-compliance might have a material
effect on the financial statements. We also considered those laws
and regulations that have a direct impact on the preparation of the
financial statements such as the Companies Act 2006, UK adopted
International Accounting Standards and United Kingdom Generally
Accepted Accounting Practice. We evaluated management's incentives
and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and
determined that the principal risks were related to posting manual
journal entries to manipulate financial performance, management
bias through judgements and assumptions in significant accounting
estimates, in particular in relation to revenue recognition, and
significant one-off or unusual transactions.
Our audit procedures were designed to respond
to those identified risks, including non-compliance with laws and
regulations (irregularities) and the QCA's Code on Corporate
Governance and fraud that are material to the financial statements.
Our audit procedures included but were not limited to:
•
Review of the financial statement disclosures to underlying
supporting documentation;
•
Review of reports from the regulators, including
correspondence with SOCMA (Society of Chemical Manufacturers and
Affiliates), DEA (Drug Enforcement Administration), US tax
authorities and OSHA (Occupational Safety & Health
Administration);
•
Review of correspondence with legal advisors;
•
Discussing with management their policies and procedures
regarding compliance with laws and regulations;
•
Enquiries of management and review of internal audit
committee reports in so far as they related to the financial
statements;
•
Enquiring of management as to actual and potential litigation
and claims;
•
Review of relevant legal or professional costs within the
accounting records for any evidence of previously un-detected or
un-reported instances of non-compliance;
•
Communicating identified laws and regulations throughout our
engagement team and remaining alert to any indications of
non-compliance throughout our audit; and
•
Considering the risk of acts by the
company which were contrary to the applicable
laws and regulations, including fraud.
Our audit procedures in relation to fraud
included but were not limited to:
•
Making enquiries of the management on whether they had
knowledge of any actual, suspected or alleged fraud;
•
Gaining an understanding of the internal controls established
to mitigate risks related to fraud;
•
Substantively testing of revenue and testing of journals to
identify unusual transactions and evaluating whether there was
evidence of bias by the Directors that represented a risk of
material misstatement due to fraud;
•
Performed analytical procedures to identify any unusual or
unexpected relationships;
•
Assessed whether judgements and assumptions made in
determining the accounting estimates were indicative of potential
bias;
•
Investigated the rationale behind any significant or unusual
transactions;
•
Discussing amongst the engagement team the risks of fraud;
and
•
Addressing the risks of fraud through management override of
controls by performing journal entry testing.
There are inherent limitations in the audit
procedures described above and the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we would
become aware of it. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
A further description of our
responsibilities for the audit of the financial statements is
located on the Financial Reporting Council's website at
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Use of our
report
This report is made solely to the Parent
Company's members, as a body, in accordance with part 3 of Chapter
16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the Parent Company's members those matters
we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent
Company and the Parent Company's members as a body, for our audit
work, for this report, or for the opinions we have
formed.
Colin
Wright
(Senior
Statutory Auditor)
For and on
behalf of UHY Hacker Young
Chartered Accountants and Statutory
Auditor
UHY Hacker Young
4 Thomas More Square
London E1W 1YW
1 May 2024
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
|
|
Year ended
|
|
Year ended
|
|
|
31 December
|
|
31 December
|
|
|
2023
|
|
2022
|
|
Note
|
$'000
|
|
$'000
|
|
|
|
|
|
Revenue
|
3
|
50,036
|
|
42,198
|
Cost of sales
|
4
|
(34,382)
|
|
(26,369)
|
Gross
profit
|
|
15,654
|
|
15,829
|
|
|
|
|
|
Administrative expenses
|
4
|
(4,873)
|
|
(4,361)
|
Depreciation and amortisation
|
4
|
(2,187)
|
|
(1,824)
|
Operating
profit
|
|
8,594
|
|
9,644
|
|
|
|
|
|
Other
income
|
|
|
|
|
Release of plant acquisition
accrual
|
12
|
-
|
|
450
|
|
|
|
|
|
Profit before
finance expense
|
|
8,594
|
|
10,094
|
|
|
|
|
|
Finance income
|
7
|
135
|
|
13
|
Interest payable
|
6
|
(327)
|
|
(326)
|
Interest swap derivative asset
|
19
|
(88)
|
|
249
|
Profit before
taxation
|
4
|
8,314
|
|
10,030
|
|
|
|
|
|
Taxation
|
8
|
(1,750)
|
|
(2,165)
|
Profit for
the year attributable to owners of the parent
|
|
$6,564
|
|
$7,865
|
|
|
|
|
|
Earnings per share attributable to owners of
the parent:
|
|
|
|
|
-
Basic
|
9
|
$0.034
|
|
$0.041
|
-
Diluted
|
9
|
$0.033
|
|
$0.040
|
|
|
2023
|
|
2022
|
Adjusted
EBITDA:
|
|
$'000
|
|
$,000
|
Profit before finance expense
|
|
8,594
|
|
10,094
|
Depreciation and amortisation
|
|
2,187
|
|
1,824
|
EBITDA
|
|
10,781
|
|
11,918
|
Net other income
|
|
-
|
|
(450)
|
Adjusted
EBITDA
|
|
$10,781
|
|
$11,468
|
All activities are classed as
continuing.
The accompanying notes form part of these
financial statements.
CONSOLIDATED BALANCE SHEET
|
|
|
31 December
|
|
31 December
|
|
|
|
2023
|
|
2022
|
|
Note
|
|
$'000
|
|
$'000
|
Assets
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Intangible assets
|
10
|
|
103
|
|
283
|
Goodwill
|
11
|
|
3,087
|
|
3,087
|
Property, plant and equipment
|
12
|
|
24,784
|
|
20,557
|
Deferred tax asset
|
23
|
|
240
|
|
1,932
|
Term loan - interest swap asset
|
19
|
|
161
|
|
249
|
Total non-current
assets
|
|
|
28,375
|
|
26,108
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Inventories
|
13
|
|
10,138
|
|
10,184
|
Trade and other receivables
|
15
|
|
15,491
|
|
10,487
|
Cash and cash equivalents
|
16
|
|
6,518
|
|
5,927
|
Total current
assets
|
|
|
32,147
|
|
26,598
|
Total
assets
|
|
|
$60,522
|
|
$52,706
|
|
|
|
|
|
|
Equity and
liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Trade and other payables
|
17
|
|
9,933
|
|
7,538
|
Term loan - due within one year
|
19
|
|
1,429
|
|
1,429
|
Lease liabilities
|
18
|
|
141
|
|
101
|
Total current
liabilities
|
|
|
11,503
|
|
9,068
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Term loan - due after one year
|
19
|
|
3,928
|
|
5,357
|
Lease liabilities
|
18
|
|
341
|
|
309
|
Total non-current
liabilities
|
|
|
4,269
|
|
5,666
|
Total
liabilities
|
|
|
$15,772
|
|
$14,734
|
|
|
|
|
|
|
Equity attributable
to owners of the parent
|
|
|
|
|
|
Issued share capital
|
21
|
|
3,107
|
|
3,107
|
Share premium
|
|
|
60,687
|
|
60,687
|
Share-based payment reserve
|
22
|
|
2,367
|
|
2,153
|
Retained losses
|
|
|
(15,467)
|
|
(22,031)
|
Foreign currency reserve
|
|
|
(5,944)
|
|
(5,944)
|
Total
equity
|
|
|
$44,750
|
|
$37,972
|
Total equity and
liabilities
|
|
|
$60,522
|
|
$52,706
|
The financial statements on pages
47 to 81 were approved and authorised for issue by the Board and
were signed on its behalf on 1 May 2024.
Dr. Thomas M. Becker - Chief Executive Officer and
President
The accompanying notes form part
of these financial
statements.
Company number 05393357
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting
policies
The Company is a public limited company
incorporated and domiciled in the United Kingdom. The Company is
listed on the AIM Market of the London Stock Exchange.
The registered office is located at 48
Chancery Lane, London, WC2A 1JF. The principal activities of the
Company have been and continue to be investment in subsidiaries
engaged in the production of iodine and iodine derivatives,
including the arrangement of finance for and the provision of
management services to subsidiaries.
a) Statement
of compliance
These consolidated financial statements have
been prepared in accordance with UK adopted International
Accounting Standards ('IFRS') and IFRS Interpretations Committee
('IFRIC') and the Companies Act 2006 applicable to companies
reporting under IFRS. The accounts of the parent company, Iofina
plc, have been prepared in accordance with FRS101 'Reduced
Disclosure Framework applicable in the UK and Republic of Ireland'
(FRS 101). The company has taken advantage of certain disclosure
exemptions conferred by FRS101, including not presenting a Company
Cash Flow Statement.
The accounting policies set out below have
been applied consistently to all periods presented in these
consolidated financial statements.
b) New standards, interpretations
and amendments
Management continues to evaluate standards,
amendments and interpretations which are applicable and effective
for reporting periods beginning after the date of these financial
statements and have not been adopted early, including:
-
IFRS16 Amendments (Lease Liability in a Sale and
Leaseback)
-
IAS1 Amendments (Classification of Liabilities as Current or
Non-current)
-
IAS1 Amendments (Non-current Liabilities with
Covenants)
-
IAS7 Amendments (Supplier Finance Arrangements)
Implementation of the above is not expected to
have a material effect on the Group's financial statements in the
future.
c) Basis of
preparation of financial statements
The financial statements have been prepared on
the historical cost convention as modified by the revaluation of
financial liabilities at fair value through profit and
loss.
The financial statements are presented in US
Dollars, which is also the Group's functional currency.
Amounts are stated in thousands of US Dollars,
unless otherwise stated.
As permitted by Section 408 of the Companies
Act 2006, the parent company's income statement has not been
included in these financial statements.
d) Revenue
recognition
Revenue is measured as the amount of
consideration we expect to receive in exchange for transferring
goods or providing services, and is recognized when performance
obligations are satisfied under the terms of contracts with our
customers. A performance obligation is deemed to be satisfied when
transfer of benefit of the product or service is transferred to our
customer. The transaction price of a contract, or the amount we
expect to receive upon satisfaction of all performance obligations,
is determined by reference to the contract's terms and includes
adjustments, if applicable, for any variable consideration, such as
customer rebates or commissions, although these adjustments are
generally not material. Costs incurred to obtain contracts with
customers are expensed immediately.
Revenue consists of sales of iodine
derivatives, iodine, chemicals and ancillary products. All of our
revenue is derived from contracts with customers, and almost all of
our contracts with customers contain one performance obligation for
the transfer of goods where such performance obligation is
satisfied at a point in time. Transfer of benefit of a product is
deemed to be transferred to the customer upon shipment or delivery.
Significant portions of our sales are sold free on board shipping
point or on an equivalent basis, while delivery terms of other
transactions are based upon specific contractual arrangements. Our
standard terms of delivery are generally included in our contracts
of sale, order confirmation documents and invoices, while the
timing between shipment and delivery generally ranges between 1 and
45 days. Costs for shipping and handling activities, whether
performed before or after the customer obtains control of the
goods, are accounted for as fulfilment costs.
e) Research
and development expenditures
Expenditure on research (or the research phase
of an internal project) is recognised as an expense in the period
in which it is incurred. Costs that are directly attributable to
the development phase of a new customised chemical manufacturing
process or development of a new iodine project are recognised as
intangible assets provided they meet the following recognition
requirements:
§ completion of the
intangible asset is technically feasible so it will be available
for use or sale;
§ the Group intends to
complete the intangible asset and use or sell it;
§ the Group has the
ability to use or sell the intangible asset;
§ the intangible asset
will generate probable future economic benefits;
§ there are adequate
technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
§ the expenditure
attributable to the intangible asset during its development can be
measured reliably.
Among other things, this requires that there
is a market for the output from the intangible asset or for the
intangible asset itself, or, if it is to be used internally, the
asset will be used in generating such benefits.
Development costs not meeting these criteria
for capitalisation are expensed as incurred. In 2023, all research
and development expenditures were expensed as incurred.
f) Going
concern
The Group considers that it is now well placed
financially in light of recent reductions in debt, generation of
profits and sustained upwards trends in iodine pricing. On that
basis the Group has prepared forecasts and projections that
indicate there are adequate resources to continue in operational
existence for the foreseeable future. However, the Group recognises
that there can be no certainty where these predictions are
concerned. After due consideration of the foregoing, the Directors
consider it appropriate to continue to adopt the going concern
basis in preparing the financial statements.
g) Basis of
consolidation and investments in subsidiary
undertakings
The consolidated financial statements
incorporate the financial statements of the Company and its
subsidiaries made up to 31 December 2023. Subsidiaries are entities
over which the Group has the power to control the financial and
operating policies so as to obtain benefits from their activities.
The Group obtains and exercises control through voting rights. The
acquisition method of accounting is used to account for the
purchase of subsidiaries by the Group. On acquisition, the
subsidiary's assets and liabilities are recorded at fair value,
reflecting their condition at the date of acquisition.
The financial statements of subsidiaries are
included in the consolidated financial statements from the date
control commences until the date control ceases.
Intra-Group balances and any unrealised gains
and losses or income and expenses arising from intra-Group
transactions are eliminated in preparing the consolidated financial
statements, unless the losses provide an indication of impairment
of the assets transferred.
Amounts reported in the financial statements
of the subsidiaries are adjusted where necessary to ensure
consistency with the accounting policies adopted by the
Group.
Investments in subsidiary undertakings are
stated in the parent company balance sheet at cost less provision
for any impairment losses.
h) Business
combinations and goodwill
Business combinations are accounted for using
the acquisition method. The acquisition method involves the
recognition of the acquiree's identifiable assets and liabilities,
including contingent liabilities, regardless of whether they were
recorded in the financial statements prior to acquisition. On
initial recognition, the assets and liabilities of the acquired
subsidiary are included in the consolidated balance sheet at their
fair values, which are also used as the basis for subsequent
measurement in accordance with the Group's accounting policies.
Acquisition costs are expensed as incurred.
Goodwill represents the excess of the fair
value of consideration payable in a business combination over the
fair value of the Group's share of the identifiable net assets of
the acquiree at the date of acquisition. Any excess of identifiable
net assets over the fair value of consideration is recognised in
profit or loss immediately after acquisition.
As described in Note 1m) below, goodwill is
tested for impairment at least annually.
i) Foreign
currency
The vast majority of the Group's business is
denominated in U.S. Dollars, which is the functional currency of
the main operating subsidiaries. U.S. Dollars is the presentational
currency for the Group financial statements.
Transactions denominated in foreign currencies
are translated at the rates of exchange ruling at the date of the
transaction. Monetary assets and liabilities in foreign currencies
are translated at the rates of exchange ruling at the balance sheet
date. Non-monetary items that are measured at historical cost in a
foreign currency are translated at the exchange rate at the date of
transaction. Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange rates at the
date the fair value was determined.
Any exchange differences arising on the
settlement of monetary items or on translating monetary items at
rates different from those at which they were initially recorded
are recognised in profit and loss in the period in which they
arise. Exchange differences on non-monetary items are recognised in
other comprehensive income to the extent that they relate to a gain
or loss on that non-monetary item taken to the statement of changes
in equity, otherwise such gains and losses are recognised in profit
and loss.
The results and financial position of foreign
operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation currency
as follows:
• assets and liabilities for each balance
sheet presented are translated at the closing rate at the date of
that balance sheet;
• income and expenses for each statement of
profit or loss and statement of comprehensive income are translated
at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
• all resulting exchange differences are
recognised in other comprehensive income.
On disposal of a foreign operation for which
the presentational and functional currencies were different in
previous periods, the cumulative translation differences are
transferred to profit and loss as part of the gain or loss on
disposal. The US Dollar/Pounds Sterling exchange rate averaged
1.2436 in 2023 (2022 1.2334), and at 31 December 2023 was 1.273
(2022: 1.209).
j) Intangible
assets
Undeveloped
leasehold costs
Undeveloped leasehold costs relate to the
costs of acquiring brine leases in respect of the surface and
mineral rights of landowners in areas of interest outside of those
currently connected to the Group's operating plants.
These costs are capitalised as exploration and
evaluation assets and are carried at historical cost less any
impairment losses recognised. If areas leased provide brine to
operating plants, the related costs are transferred to the relevant
plants and amortized over the lives of those plants.
Other
intangible assets
Other identifiable intangible assets arose
from the acquisition of H&S Chemical in 2009. These assets were
valued by an external, independent valuation firm. Based on the
type of asset, the useful life of each asset was estimated. The
value of each identifiable intangible asset is amortised evenly
over its useful life. The following useful lives are
applied:
§ WET® patent: 15
years
§ Customer
relationships: 10 years
§ Patent portfolio: 8
years
§ EPA registrations: 2
years
Goodwill
Goodwill represents the excess of the fair
value of consideration in a business combination over the fair
value of the Group's share of the identifiable net assets acquired.
Goodwill is carried at cost less accumulated impairment
losses.
k) Property,
plant and equipment
Property, plant and equipment are stated at
historical cost, net of depreciation and any provision for
impairment. Cost includes purchase price and costs directly
attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended
by management, such as costs relating to construction, site
preparation, installation and testing.
Costs relating to assets put into service at a
later date are accumulated as construction in progress, and
depreciation only commences once such assets are put into
use.
Depreciation is provided at rates calculated
to write off the depreciable amount of each asset on a straight
line basis over its expected useful life, as follows:
§ Buildings: 2.5
percent per annum
§ Office lease: term
of the lease (28 months)
§ Vehicle finance
leases: term of the leases (57 months)
§ Equipment and
machinery:
o
IOsorb® plants - 5 percent per annum
o
Other plant and equipment - 5 to 7 years
o
Vehicles and office equipment - 20 percent per annum
o
Computer equipment - 33 percent per
annum
Reviews of the estimated remaining lives and
residual values of individual assets are made at least
semi-annually, and adjustments are made where appropriate.
Construction in progress is also reviewed for
impairment.
Freehold land and construction in progress are
not depreciated.
l) Financial
instruments
1) Financial
liabilities
Trade and
other payables
Trade and other payables are initially
recognised at fair value and subsequently measured at amortised
cost using the effective interest rate method.
Loan
notes
Financial liabilities and equity instruments
are classified according to the substance of the contractual
arrangements entered into. An equity instrument is any contract
that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Interest-bearing loans are recorded initially
at their fair value, net of direct transaction costs. Such
instruments are subsequently carried at their amortised cost and
finance charges, including premiums payable on settlement,
redemption or conversion, are recognised in profit or loss over the
term of the instrument using the effective rate of
interest.
2) Financial
assets
Cash and cash equivalents represent short
term, highly liquid investments with an original maturity of fewer
than three months that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in
value. At the end of 2023 and 2022, all cash amounts were in 100
percent liquid accounts.
The Group uses the 'simplified method of
expected credit losses'. Trade receivables are recognised initially
at fair value and subsequently measured at amortised cost using the
effective interest rate method, less provision for expected credit
losses. Expected credit losses are based on the Group's historical
credit losses experienced, then adjusted for current and forward
looking information on factors affecting the Group's
customers.
m)
Impairment
Whenever events or changes in circumstances
indicate that the carrying value of an asset may not be
recoverable, that asset is reviewed for impairment. An asset's
carrying value is written down to its estimated recoverable amount
(being the higher of the fair value less costs to sell and value in
use) if that is less than the asset's carrying amount.
Goodwill is allocated to those cash-generating
units that are expected to benefit from synergies of the related
business combinations and represent the lowest level within the
Group at which management monitors goodwill.
Cash-generating units to which goodwill has
been allocated are tested for impairment at least annually. An
impairment loss is recognised for the amount by which the asset's
or cash generating unit's carrying amount exceeds its recoverable
amount, which is the higher of fair value less costs to sell and
value in use. To determine the value in use, management estimates
expected future cash flows from each cash-generating unit and
determines a suitable discount rate in order to calculate the
present value of those cash flows. The data used for impairment
testing procedures are directly linked to the Group's latest
approved budget, adjusted as necessary to exclude the effects of
future reorganisations and asset enhancements. Discount factors are
determined individually for each cash-generating unit and reflect
their respective risk profiles as assessed by
management.
Impairment losses for cash-generating units
reduce first the carrying amount of any goodwill allocated to that
cash-generating unit. Any remaining impairment loss is charged pro
rata to the other assets in the cash-generating unit. With the
exception of goodwill, all assets are subsequently reassessed for
indications that an impairment loss previously recognised may no
longer exist. An impairment charge is reversed if the
cash-generating unit's recoverable amount exceeds its carrying
amount.
The Group assesses on a forward-looking basis
the expected credit losses associated with its debt instruments
carried at amortised cost. The impairment methodology applied
depends on whether there has been a significant increase in credit
risk.
For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables. Intercompany loans due to the parent company from its
subsidiaries are tested for impairment as part of the overall
investment in those subsidiaries, by reference to the present
values of estimated future cash flows of the subsidiaries, as
further described in Note 2d.
n)
Equity
Equity comprises the following:
§ "Share capital"
represents the nominal value of equity shares.
§ "Share premium"
represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses for the
share issue.
§ "Share-based payment
reserve" represents the cumulative fair value of options and
warrants issued by the Company and recognised in profit and
loss.
§ "Retained losses"
represents accumulated losses.
§ "Foreign currency
reserve" represents the cumulative differences arising from
translation of foreign operations.
o)
Inventories
Inventories are stated at the lower of cost
and net realisable value. Cost includes all expenses directly
attributable to the manufacturing process as well as suitable
portions of related production overheads, based on normal operating
capacity. Costs of ordinarily interchangeable items are assigned
using the first in, first out cost formula. Cost excludes
unrealised gains arising from intra-Group transactions. Net
realisable value is the estimated selling price in the ordinary
course of business less any applicable selling expenses. When
inventory is sold the cost is included in Cost of Sales on the
Statement of Comprehensive Income.
p)
Taxation
Tax expense recognised in profit or loss is
the tax currently payable based on taxable profit for the year and
deferred tax not recognised directly in equity.
Deferred income taxes are calculated using the
balance sheet liability method. Deferred tax is generally provided
on the difference between the carrying amounts of assets and
liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction
is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in
subsidiaries is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that
reversal will not occur in the foreseeable future. In addition, tax
losses available to be carried forward, as well as other income tax
credits to the Group, are assessed for recognition as deferred tax
assets according to the likelihood of their recoverability in the
foreseeable future.
Deferred tax liabilities are provided in full,
with no discounting. Deferred tax assets are recognised to the
extent that it is probable that the underlying deductible temporary
differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or
substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities
are recognised as a component of tax expense in profit or loss,
except where they relate to items that are charged or credited
directly to equity in which case the related deferred tax is also
charged or credited directly to equity.
q)
Leases
The Group assesses whether a contract is, or
contains, a lease, at inception of the contract. The Group
recognises a right-of-use asset and a lease liability on the
balance sheet at the lease commencement date. The right-of-use
asset is initially measured at cost. This comprises the initial
amount of the lease liability adjusted for any lease payments made
at or before the commencement date and an estimate of any costs to
restore the underlying asset to the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently
depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the
right-of-use-asset or the end of the lease term. Amounts relating
to such assets are disclosed separately in note 12. In addition,
the Group assesses the right-of-use asset for impairment when such
indicators exist.
At the commencement date, the lease liability
is initially measured at the present value of the lease payments
discounted using the Group's incremental borrowing rate at the date
of transition as the interest rate implicit in the lease could not
be readily determined. Interest is charged at the same discount
rate used to calculate the present value of the lease.
The lease liability is re-measured if the
Group changes its assessment of whether it will exercise a
purchase, extension or termination option. When the lease liability
is re-measured in this way, a corresponding adjustment is made to
the carrying amount for the right-of-use asset, or is recorded in
profit or loss if the carrying amount of the right-of-use asset has
been reduced to zero.
The Group has elected not to recognise
right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low value
operating value. These are charged to profit and loss on a
straight-line basis over the period of the lease. At 31 December
2023 the Group had four leases, one for office space and three for
vehicles.
r)
Share-based payments
The cost of equity settled transactions is
measured at fair value at the grant date as measured by use of the
Black Scholes model. If vesting periods or other vesting conditions
apply, the expense is allocated over the vesting period, based on
the best available estimate of the number of share options expected
to vest. Non-market vesting conditions are included in assumptions
about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any
indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior to
vesting is recognised in the current period. No adjustment is made
to any expense recognised in prior periods if share options
ultimately exercised are different to those estimated on
vesting.
Charges made to profit or loss, in respect to
share-based payments, are credited to the share-based payment
reserve.
s) Segment
reporting (Note 3)
In identifying its operating segments,
management follows the Group's service lines, which represent the
main products provided by the Group and are based on the
information presented to the chief operating decision maker, which
is the Board.
2. Significant
judgements and estimates
Judgements and estimates are regularly
evaluated based on historical experience, current circumstances and
expectations of future events.
The critical estimates made in the preparation
of the financial statements are set out below. The resulting
accounting estimate may not equal the related actual result, and
management must also make judgements about current circumstances
and expectations of future events. Significant judgements made by
management include:
a.
Intangible and tangible assets are tested for impairment
where there is an indication that they may be impaired. In
accordance with IAS 36 - Impairment of Assets, an intangible or
tangible asset is considered impaired when its carrying amount
exceeds its recoverable amount on an individual cash generating
unit basis. The recoverable amounts of relevant cash generating
units are based on value in use calculations using management's
best estimate of future business performance. For this purpose
management regards all the iodine production plants as a single
cash generating unit given their mutual dependence on centralised
management, financial, maintenance and sales and marketing
functions. In carrying out impairment testing, management makes a
number of significant estimates in relation to the assumptions
incorporated into their calculations. These will include factors
such as growth rates and discount rates. Cash flow projections over
the next five years were used and a discount rate of 7.43% was
applied. Details and carrying values of intangible assets, goodwill
and property, plant and equipment are provided in notes 10, 11 and
12.
b.
Management reviews the useful lives of depreciable and
amortisable assets at each reporting date. The carrying amounts are
analysed in notes 10 and 12. Management's estimate of the useful
lives of plant and equipment as detailed in note 1k are common life
expectancies for the industry. In particular, the expected
useful life attributed to each IOsorb® plant is 20 years. Changes
in the expected level of usage or other technological developments
could impact the life and residual value of these
assets.
c.
Management applies the accounting polices set out in Note 1o)
Inventories to determine the carrying value of raw materials, work
in progress and finished goods (Note 13). Based on historical
experience and current market intelligence, judgements are made as
regards net realisable value, which may include but are not limited
to obsolescence, usage in alternative formulations, production
needs, market demand, costs to complete production, condition,
regulatory requirements and limitations, and allocations of
production overheads to the cost of work in progress and finished
goods. Based on these assessments no requirement for provisions
against the carrying value of inventories was
identified.
d.
The carrying amount of the parent company's investment in its
subsidiaries of $36.4m (2022: $37.3M) has been evaluated for
impairment. The investment amounts include debts due from
subsidiaries of $19.2m (2022 $20.1m). For this purpose the two
operating subsidiaries have been treated as one unit, given the
vertical integration of the Group's operating activities. The
carrying amount of the parent company's investment of $36.4m (2022:
$37.3M) compares to carrying amounts of the subsidiaries' net
assets, excluding loans from the parent company, of $44.5m (2022:
$38.0m). An assessment has been made of the present values of the
future cash flows related to the operating activities of the
subsidiaries to determine whether any impairment losses should be
recognised. The assessment took into account cash flow projections
of the subsidiaries over the next five years, and applied a
discount rate of 7.43%. The Group has concluded that no impairment
provision is required.
e.
The deferred tax asset balance of $240k (Note 23) includes
the tax benefit of prior years US Federal tax losses not yet
recovered of $2.6m (31 December 2022 $9.2m). This assumes that
these tax losses can be recovered in the near term against taxable
income. Management concurs with this treatment in light of the
continuing level of profitability being achieved by the
Group.
3. Segment
reporting
a. Business segments - The Group's
operations comprise 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.
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$
|
|
$
|
Assets
|
|
|
|
Halogen Derivatives and Iodine
|
60,522
|
|
52,706
|
Total
|
$60,522
|
|
$52,706
|
|
|
|
|
Liabilities
|
|
|
|
Halogen Derivatives and Iodine
|
15,772
|
|
14,734
|
Total
|
$15,772
|
|
$14,734
|
b. Geographical segments - The Group
reports by geographical segment. The Group's activities are 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.
3. Segment reporting
(continued)
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Assets
|
|
|
|
UK
|
185
|
|
96
|
USA
|
27,974
|
|
23,927
|
|
32,363
|
|
28,683
|
Total
|
$60,522
|
|
$52,706
|
|
|
|
|
Liabilities
|
|
|
|
UK
|
204
|
|
153
|
USA
|
15,568
|
|
14,581
|
Total
|
$15,772
|
|
$14,734
|
|
|
|
|
Revenue
|
|
|
|
North America
|
17,448
|
|
19,822
|
Asia
|
25,952
|
|
17,960
|
South America
|
4,131
|
|
3,588
|
Europe
|
2,379
|
|
783
|
Other
|
126
|
|
45
|
Total
|
$50,036
|
|
$42,198
|
c.
Significant customers - in 2023
Iofina Chemical had seven customers in excess of 5% of sales
(2022 six customers). 2023 percentages were 13%, 8%, 8%, 8%, 6%,
6%, 6% (2022 percentages were 11%, 8%, 7%, 7%, 6%,6%). The amounts
in excess of 10% of sales for individual customers were: 2023
$6,448,680 (13%) and 2022 $4,665,925 (11%).
4. Profit before
taxation
Profit before
taxation is stated after charging:
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Depreciation expense
|
1,966
|
|
1,643
|
Deficit on disposal of fixed asset
|
41
|
|
-
|
Amortisation expense
|
180
|
|
180
|
|
|
|
|
Other:
|
|
|
|
Annual audit fees for audit of parent company and
consolidated financial statements
|
140
|
|
125
|
4. Profit before taxation
(continued)
Cost of sales -
analysis by nature
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Raw materials
|
15,345
|
|
12,872
|
Freight
|
530
|
|
657
|
Sales commission
|
806
|
|
378
|
Labour, manufacturing overhead and royalties
|
17,701
|
|
12,462
|
|
$34,382
|
|
$26,369
|
Administrative
expenses - analysis by nature
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Remuneration and benefits
|
3,194
|
|
2,955
|
Share-based payments
|
214
|
|
146
|
Office expenses
|
283
|
|
254
|
Professional services
|
658
|
|
655
|
Travel
|
227
|
|
169
|
Rent
|
31
|
|
(34)
|
Other
|
266
|
|
216
|
|
$4,873
|
|
$4,361
|
Research and development expenses recognised
during the period were $237k (2022: $237k), and are included in
administrative expenses above.
5. Staff numbers and
costs
The average number of Group employees,
including executive directors, and their costs were:
|
Year ended
|
|
Year ended
|
|
31
December
|
|
31
December
|
|
2023
|
|
2022
|
|
Number
|
|
Number
|
Production
|
91
|
|
80
|
Administrative
|
15
|
|
14
|
Sales
|
2
|
|
1
|
Total staff
|
108
|
|
95
|
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Wages and salaries
|
8,306
|
|
7,245
|
Social security costs
|
1,385
|
|
1,120
|
|
$9,691
|
|
$8,365
|
5. Staff numbers and
costs (continued)
Of the total staff costs above,
$6,746k (2022: $5,600k) is included within cost of sales and
$2,946k (2022: $2,765k) is included within administrative
expenses.
Payments to executive directors and senior
officers of subsidiaries (considered to be key management
personnel) for their services during the year were as
follows:
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Wages and salaries
|
1,029
|
|
1,116
|
Social security costs
|
112
|
|
85
|
Total key management cost
|
$1,141
|
|
$1,201
|
Included within wages and salaries above is
$331k (2022: $309k) in respect of the highest paid director. No
options were exercised by a director in 2023 (2022 Nil).
6. Finance
expense
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Term loan interest
|
309
|
|
310
|
IFRS16 lease interest
|
18
|
|
16
|
Total finance
expense
|
$327
|
|
$326
|
7. Finance
income
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Interest income
|
135
|
|
13
|
|
$135
|
|
$13
|
8.
Taxation
|
Year ended
|
|
Year ended
|
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Current tax
|
60
|
|
31
|
Deferred tax (Note 23)
|
1,690
|
|
2,134
|
|
$1,750
|
|
$2,165
|
|
|
|
|
Tax
reconciliation:
|
|
|
|
Profit on ordinary activities before
tax
|
8,314
|
|
10,030
|
|
|
|
|
Tax at UK income tax rate of 23.5% (2022:
19%)
|
1,954
|
|
1,905
|
Effects
of:
|
|
|
|
Temporary differences
|
968
|
|
(149)
|
Permanent differences
|
3
|
|
10
|
UK losses not recognised
|
259
|
|
165
|
Difference in tax rates US/UK
|
113
|
|
203
|
Tax effect of US rate change
|
(340)
|
|
-
|
State losses benefit
|
(277)
|
|
|
Credits not recognised as deferred tax
asset
|
(1,029)
|
|
-
|
Other adjustments
|
39
|
|
|
Current tax
|
60
|
|
31
|
Total tax
charge/(credit)
|
$1,750
|
|
$2,165
|
As previously disclosed, the Group has
accumulated US Federal tax losses that are expected to be
deductible from US Federal taxable profits subject to agreement
with the relevant tax authorities. As of 31 December 2023 these
losses were estimated to be approximately $2.6 million (2022: $9.2
million). To the extent US Federal tax losses are not utilised to
offset current income taxes they will begin to expire in
2035.
9. Earnings per
share
The calculation of earnings per ordinary share
is based on the profit after tax attributable to shareholders of
$6,564k (2022 profit $7,865k) and the weighted average number of
ordinary shares outstanding of 191,858,408 (2022: 191,858,408).
After including the weighted average effect of dilutive share
options of 5,000,400 (2022: 4,186,203) the diluted weighted average
number of ordinary shares outstanding was 196,858,808 (2022
196,044,611).
10.
Intangible assets (Group)
Details of intangible assets are set out
below:
Intangible
assets
|
WET®
patent
|
Customer
relationships
|
Patent
portfolio
|
EPA
registrations
|
Total
|
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Cost
|
|
|
|
|
|
At 1 January 2022
|
2,700
|
661
|
187
|
271
|
3,819
|
At 31 December 2022 & 2023
|
$2,700
|
$661
|
$187
|
$271
|
$3,819
|
Accumulated amortization
|
|
|
|
|
|
At 1 January 2022
|
2,237
|
661
|
212
|
271
|
3,356
|
Charge for the year
|
180
|
-
|
-
|
-
|
180
|
At 31 December 2022
|
2,417
|
661
|
187
|
271
|
3,536
|
Charge for the year
|
180
|
-
|
-
|
-
|
180
|
At 31 December 2023
|
$2,597
|
$661
|
$187
|
$271
|
$3,716
|
Carrying amounts
|
|
|
|
|
|
At 31 December 2021
|
$463
|
-
|
-
|
-
|
$463
|
At 31 December 2022
|
$283
|
-
|
-
|
-
|
$283
|
At 31 December 2023
|
$103
|
-
|
-
|
-
|
$103
|
Intangible assets were acquired in the
acquisition of H&S Chemical in 2009.
WET®
Patent
The WET® Patent technology employs two
different iodine extraction methods depending on brine chemistry
for optimal efficiency. We utilised a with and without analysis, a
variation of the discounted cash-flow method, to estimate the fair
value of a WET® Patent at date of acquisition. The methodology
compared the cash flow generating capacity of Iofina Chemical
assuming it was operating without the benefit of the WET® Patent to
the projected cash flow with the benefit of the patent. The
contractual life of the patent is in excess of 20 years; however,
the useful life of the patent was estimated at 15 years based on
the following:
§ Management's
expectation for the expected viability of the technology
§ Management's
expectations regarding the timing of significant substitute
technology
§ The lack of
comparable substitute technologies as of the valuation
date
§ The remaining
amortization period is 0.5 years
11. Goodwill
(Group)
Carrying
amounts
|
|
$'000
|
At 31 December 2021, 31 December 2022 and 31
December 2023
|
|
$3,087
|
Goodwill arose on the acquisition of H&S
Chemical in 2009 and is wholly allocated to Iofina Chemical
Goodwill impairment testing is conducted annually, based on
projected cash flow to be generated.
The Chemical business has been in operation
for 40 years, and much of its products and customer base are long
established. For impairment testing, a long term growth rate of
1.00% per annum was applied to budgeted and projected cash flows
over the next five years and a discount rate of 7.43% per annum was
used. On this basis the net present value of cash flow exceeded the
goodwill amount of $3,087k.
Sensitivity
analysis
Projections based on the above assumptions
show headroom of $14.2m between the value in use of the business of
$22.5m and the carrying value of $8.3m, comprising goodwill of
$3.1m, other intangible assets of $0.1m, and fixed assets of $5.1m.
In order for the value in use to equal the carrying value it would
be necessary for the discount rate to rise to 20.5% or the long
term growth rate to be 38.0% negative or projected EBITDA to be
lower by 48.0%. Based on the results of this impairment testing
management are satisfied that a reasonably possible change in
assumptions would not lead to an impairment.
12. Property,
plant and equipment (Group)
|
Freehold
Land
|
Buildings
|
|
Equipment and
Machinery
|
Construction in
Progress
|
Total
|
|
Right of
use
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Cost
|
|
|
|
|
|
|
At 1 January 2022
|
$209
|
$2,044
|
$752
|
$26,276
|
$751
|
$30,032
|
Additions
|
-
|
18
|
-
|
230
|
2,885
|
3,133
|
Transfers
|
-
|
(37)
|
-
|
103
|
(113)
|
(46)
|
At 31 December 2022
|
$209
|
$2,025
|
$752
|
$26,610
|
$3,524
|
$33,119
|
Additions
|
-
|
(20)
|
-
|
230
|
6,024
|
6,234
|
Transfers
|
-
|
765
|
-
|
6,785
|
(7,763)
|
(213)
|
Disposals
|
-
|
-
|
-
|
(57)
|
-
|
(57)
|
At 31 December 2023
|
$209
|
$2,770
|
$752
|
$33,567
|
$1,784
|
$39,082
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
At 1 January 2022
|
-
|
$549
|
$301
|
$10,069
|
-
|
$10,919
|
Charges for the year
|
-
|
61
|
104
|
1,479
|
-
|
1,644
|
At 31 December 2022
|
-
|
$610
|
$405
|
$11,548
|
-
|
$12,563
|
Charges for the year
|
-
|
107
|
104
|
1,755
|
-
|
1,966
|
Transfers
|
-
|
-
|
-
|
(213)
|
-
|
(213)
|
Disposals
|
|
|
|
(16)
|
|
(16)
|
At 31 December 2023
|
-
|
$717
|
$509
|
$13,074
|
-
|
$14,299
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
At 31 December 2021
|
$209
|
$1,495
|
$451
|
$16,207
|
$751
|
$19,113
|
At 31 December 2022
|
$209
|
$1,415
|
$346
|
$15,062
|
$3,524
|
$20,557
|
At 31 December 2023
|
$209
|
$2,054
|
$242
|
$20,495
|
$1,785
|
$24,784
|
Right-of-use
assets
Right-of-use assets relate to the Group's
lease on office premises in Denver, Colorado, which expires in
April 2026. Liabilities for future payments are shown in Note
18.
Release of
plant acquisition accrual
In 2023 an accrual balance of $0.45m relating
to the acquisition of #IO2 plant was no longer considered to be
required, and was therefore transferred to income. No claims have
been made and the period of validity for such claims has
expired.
13. Inventories
Group
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Raw materials
|
5,672
|
|
7,231
|
Work in progress
|
4,431
|
|
2,895
|
Finished goods
|
35
|
|
58
|
|
$10,138
|
|
$10,184
|
At year end, there were no provisions against
the carrying value of inventories (2022: nil). During the year, the
cost of inventories recognised as expense and included in 'cost of
sales' amounted to $33,044k (2022: $25,334k).
14. Financial
instruments
The Board of directors determines, as
required, the degree to which it is appropriate to use financial
instruments to mitigate risks. The main risks for which such
instruments may be appropriate are interest rate risk, foreign
currency risk, credit risk, investment risk, liquidity risk and
commodity risk. The Group's principal financial asset is cash,
which is invested with major banks. The Group has a term loan and
no other borrowings currently drawn (see Note 19).
Financial
assets and liabilities
Group
|
Loans and receivables at
amortised cost
|
Financial liabilities at
amortised cost
|
Investment and swap
asset at fair value
|
|
Total
|
2023
|
$'000
|
$'000
|
$'000
|
|
$'000
|
Cash and cash
equivalents
|
6,518
|
|
|
|
6,518
|
Trade receivables
|
14,638
|
|
|
|
14,638
|
Interest rate swap
asset
|
|
|
161
|
|
161
|
|
|
|
|
|
$21,317
|
|
|
|
|
|
|
Trade payables
|
|
3,146
|
|
|
3,146
|
Accrued
liabilities
|
|
6,788
|
|
|
6,788
|
Lease liabilities
|
|
482
|
|
|
482
|
Term loan
|
|
5,357
|
|
|
5,357
|
|
|
|
|
|
$15,773
|
2022
|
|
|
|
|
|
Cash and cash
equivalents
|
5,927
|
|
|
|
5,927
|
Trade receivables
|
9,950
|
|
|
|
9,950
|
Interest rate swap
asset
|
|
|
249
|
|
249
|
|
|
|
|
|
$16,126
|
|
|
|
|
|
|
Trade payables
|
|
2,510
|
|
|
2,510
|
Accrued
liabilities
|
|
5,028
|
|
|
5,028
|
Lease liabilities
|
|
410
|
|
|
410
|
Term loan
|
|
6,785
|
|
|
6,785
|
|
|
|
|
|
$14,733
|
14. Financial
instruments (continued)
Company
|
Loans and receivables at
amortised cost
|
Financial liabilities at
amortised cost
|
|
Total
|
2023
|
$'000
|
$'000
|
|
$'000
|
Cash and cash
equivalents
|
179
|
|
|
179
|
Other receivables
|
6
|
|
|
6
|
Due from subsidiaries
|
19,186
|
|
|
19,186
|
|
|
|
|
$19,371
|
|
|
|
|
|
Accruals
|
|
203
|
|
203
|
|
|
|
|
$203
|
2022
|
|
|
|
|
Cash and cash
equivalents
|
94
|
|
|
94
|
Other receivables
|
2
|
|
|
2
|
Due from subsidiaries
|
20,112
|
|
|
20,112
|
|
|
|
|
$20,208
|
|
|
|
|
|
Accruals
|
|
153
|
|
153
|
|
|
|
|
$153
|
The interest rate swap liability at fair value
is valued on the basis of Level 2 inputs as defined in IFRS
13.
Interest rate
risk
Surplus funds are held within the Group's
checking and savings accounts. The benefit of fixing rates for the
longer term is kept under review, having regard to forecast cash
requirements and the levels of return available. Given the
short-term nature of Iofina's surplus funds, the Group has limited
interest rate risk. As of 31 December 2023, all surplus funds were
invested in checking and savings accounts that had no terms and
were 100% liquid. Bank facilities have variable interest rate terms
and therefore there is an exposure to increases in interest rates.
This is mitigated by the use of an interest rate swap to fix the
rate on the majority of the term loan. Also the interest on the
revolving credit facility (if drawn) is reduced by arrangements to
sweep surplus funds into that account.
Foreign
currency risk
The Group has potential transactional currency
exposure in respect of items denominated in foreign currencies
relating to the Group's administration in the UK. The balance of
cash held in foreign currency was $179k (GBP £141k) as of year-end,
and provides a hedge against GBP denominated UK
expenses.
Sales transactions are denominated in US
Dollars, which is the operating currency. Other impacts of foreign
currency risk are not deemed material to these financial
statements.
14. Financial
instruments (continued)
Credit
risk
The maximum exposure is reflected by the
carrying amount of financial assets. Because the counterparties to
Iofina's holdings of cash and cash equivalents are prime financial
institutions, Iofina does not expect any counterparty to fail to
meet its obligations. Additionally, the Group is exposed to
marginal credit risk in the form of receivables for product sales.
Credit risk in this regard is mitigated through long-term customer
payment history, insurance of certain foreign
receivables, extensive credit analysis of large purchasers,
use of letters of credit, and the requirement for partial or total
payment prior to shipment for some customers.
Liquidity
risk
The Group raises funds as required on the
basis of forecast expenditure and cash inflows over the next 12
months. When necessary, the scope and rate of activity are adjusted
to take account of the funds available. There is a risk that the
Group may not be able to raise sufficient funds to repay loans at
their maturity.
The following table sets out the contractual
maturities (representing undiscounted contractual cash flows) of
financial liabilities:
Group
|
Up to 3 months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 6
years
|
At 31 December 2023:
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade payables
|
3,146
|
-
|
-
|
-
|
Accrued liabilities
|
2,864
|
3,924
|
-
|
-
|
Lease liabilities
|
35
|
106
|
141
|
200
|
Term loan
|
357
|
1,071
|
1,429
|
2,499
|
|
$6,402
|
$5,102
|
$1,570
|
$2,699
|
Group
|
Up to 3
months
|
Between 3 and 12
months
|
Between 1 and 2
years
|
Between 2 and 6
years
|
At 31 December 2022:
|
$'000
|
$'000
|
$'000
|
$'000
|
Trade payables
|
2,510
|
-
|
-
|
-
|
Accrued liabilities
|
2,059
|
2,969
|
-
|
-
|
Lease liabilities
|
19
|
82
|
260
|
49
|
Term loan
|
357
|
1,071
|
1,429
|
3,929
|
|
$4,944
|
$4,122
|
$1,689
|
$3,978
|
Commodity
risk
The Group is exposed to movements in the price
of raw iodine. Sales of iodine based products were
$41,940k (2022: $31,422k). The effects of
changes in the price of iodine on 2023 revenue and profits are set
out in the Financial Review on pages 8 to 9. Iodine is produced
internally and is the most significant cost component for iodine
based products.
15. Trade and
other receivables
Group
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Trade receivables
|
14,638
|
|
9,950
|
Prepayments and other receivables
|
853
|
|
537
|
|
$15,491
|
|
$10,487
|
Company
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Prepayments and other receivables
|
6
|
|
2
|
|
$6
|
|
$2
|
All receivables and prepayments are short term
in nature. The carrying values are considered a reasonable
approximation of fair value. There are no expected credit
losses.
The Group and the Company have not received a
pledge of any assets as collateral for any receivable or
asset.
16. Cash and cash equivalents
Group
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Cash in US Dollar accounts
|
6,339
|
|
5,833
|
Cash in GB Pound Sterling accounts
|
179
|
|
94
|
|
$6,518
|
|
$5,927
|
Company
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Cash in GB Pound Sterling accounts
|
179
|
|
94
|
|
$179
|
|
$94
|
17. Trade and
other payables
Group
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Trade payables
|
3,146
|
|
2,510
|
Accrued expenses and deferred
income
|
6,787
|
|
5,028
|
|
$9,933
|
|
$7,538
|
Company
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Accrued expenses
|
203
|
|
152
|
|
$203
|
|
$152
|
All trade and other payables are considered
short term. The carrying values are considered to be a reasonable
approximation of fair value.
Except as regards the bank facilities described
in Note 19, the Group and Company have not pledged any assets as
collateral for any liabilities or contingent
liabilities.
18. Lease
liabilities
Group
|
|
31
December
|
|
|
|
31
December
|
|
|
|
2023
|
|
|
|
2022
|
|
|
|
$'000
|
$'000
|
$'000
|
|
$'000
|
$'000
|
$'000
|
|
|
Total
|
Office
Lease
|
Vehicles
|
|
Total
|
Office
Lease
|
Vehicles
|
|
Lease liabilities -
current
|
141
|
108
|
33
|
|
101
|
101
|
-
|
|
Lease liabilities -
non-current
|
341
|
183
|
158
|
|
309
|
309
|
-
|
|
|
$482
|
$291
|
$191
|
|
$410
|
$410
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Movements:
|
|
2023
|
|
|
|
2022
|
|
|
$'000
|
$'000
|
$'000
|
|
$'000
|
$'000
|
$'000
|
|
Total
|
Office
Lease
|
Vehicles
|
|
Total
|
Office
Lease
|
Vehicles
|
Opening balance
|
410
|
410
|
-
|
|
468
|
468
|
-
|
Lease finance
|
199
|
-
|
199
|
|
-
|
-
|
-
|
Payments
|
(144)
|
(132)
|
(13)
|
|
(74)
|
(74)
|
-
|
Interest accrued
|
18
|
13
|
5
|
|
16
|
16
|
-
|
|
$482
|
$291
|
$191
|
|
$410
|
$410
|
-
|
Lease liabilities relate to:
1) The Group's lease on
office premises in Denver, Colorado, which runs till 30 April
2026;
2) The acquisition of
vehicles on credit terms over the five years to 15 September 2028
for use at the Group's Oklahoma plants.
19. Term loans
and other facilities
Group
|
Term loan
|
|
$'000
|
At 1 January 2022
|
$8,214
|
Term loan instalment
repayments
|
(1,429)
|
At 31 December 2022
|
$6,785
|
Term loan instalment
repayments
|
(1,429)
|
At 31 December 2023
|
$5,357
|
|
|
Due within one year
|
$1,429
|
Due after one year
|
$3,928
|
The above bank facilities, with First
Financial Bank of Ohio, are fully secured by fixed and floating
charges and the principal terms are:
Term
loan
a) The term loan balance of $5.4m (20221
$6.8m) relates to a $10.0m loan drawn down in September 2020 and
repayable in full by equal monthly instalments over the seven years
to 30 September 2027. The interest rate on $7 million of the loan
has been fixed to maturity by a swap contract at 3.99%, and the
interest rate on the balance is variable monthly at 2.50% above the
one month Secured Overnight Financing Rate ("SOFR"), subject to a
minimum SOFR rate of 1.00%. Repayment of all or part of the loan
may be made at any time without penalty.
Revolving
loan facility
b) The revolving loan facility is for
$6.0m over the period to September 2025, and may be drawn and
repaid in variable amounts at the Group's discretion. Amounts that
may be drawn are subject to a borrowing base of sufficient eligible
discounted monthly values of receivables and inventory, and
compliance on a quarterly basis with trailing 12 months financial
covenant ratios of 1) a maximum multiple of 2.5 total debt to
EBITDA, and 2) a minimum multiple of 1.2 EBITDA net of capital
expenditure to the total of principal and interest payments on the
total debt. The interest rate is variable monthly at 2.11% above
SOFR, subject to a minimum SOFR rate of 1.00%. No amounts were
drawn and outstanding at 31 December 2023.
Project loan
facilities
c) There is a $4 million term loan with a
drawdown period through to 1 July, 2024 to be used for IO#10 plant
expenditures and other Capex projects as appropriate. A seven-year
term begins from 1 July, 2024 with interest payable during the
drawdown period. The interest rate is 2.11% plus SOFR (1 month
Secured Overnight Financing Rate) subject to a minimum of 1%. No
drawings have as yet been made on this loan.
19. Term loans
and Revolving loan facility (continued)
Swap
contract
d) The derivative asset resulting from the
swap contract described above has been revalued at $161k as
at 31 December 2023 (2022: $249k) by reference to market
expectations for future SOFR rates, and included in the balance
sheet. An amount of $88k has been charged to comprehensive income
(2022 credit $249k). During the year the swap contract generated a
net reduction of interest otherwise payable of $152k (2022:
$23k).
20. Net
debt
Net debt excludes lease liabilities totalling
$482k (2022 $410k) and is made up as follows:
Group
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
|
|
|
|
Term loan
|
(5,357)
|
|
(6,785)
|
Cash and cash equivalents
|
6,518
|
|
5,927
|
Net cash/(debt) at 31 December
|
$1,161
|
|
$(858)
|
21. Share
capital
|
|
31 December
|
|
31 December
|
|
|
2023
|
|
2022
|
Authorised:
|
|
|
|
|
Ordinary shares of £0.01 each
|
- number of
shares
|
1,000,000,000
|
|
1,000,000,000
|
|
- nominal
value
|
£10,000,000
|
|
£10,000,000
|
|
|
|
|
|
Allotted, called up and fully paid:
|
|
|
|
|
Ordinary shares of £0.01 each
|
- number of
shares
|
191,858,408
|
|
191,858,408
|
|
- nominal
value
|
£1,918,584
|
|
£1,918,584
|
There was no change in share capital or share
premium in 2023.
22. Share based
payments
On 27 April 2023 options over 1,196,700
ordinary shares of the Company, representing 0.62% of the Company's
issued share capital at that date, were granted to directors and
key management personnel. The options are exercisable at the
closing share price on 27 April 2023 of 31.75p per share, with 50%
vesting after one year on 27 April 2024 and 50% vesting after two
years on 27 April 2025. The options expire ten years from the date
of grant.
The above options were valued using the Black
Scholes model and the exercise price of 31.75p, an expected term of
5.75 years, historical volatility of 69.07% and a risk free rate of
3.59%. The resulting valuation of $300,355 is being amortised over
the vesting periods, and $152,709 has been charged as an expense in
respect of the period from 27 April 2023 to 31 December 2023. The
total options expense for 2023 was $214,199, and also included
$61,590 in respect of options granted as of 9 March,
2022.
22. Share based
payments (continued)
No options lapsed or were forfeited or
exercised during the year. There were 6,197,100 total options
outstanding at 31 December 2023, representing 3.23% of shares in
issue.
Options granted to directors and key employees
and outstanding at 31 December 2023 are as follows:
Date of
Grant
|
Number of Options
|
Vesting
Date
|
Share Price
|
Exercise Price
|
Exercise Price 2023
|
Exercise Price 2022
|
|
|
|
£
|
£
|
$
|
$
|
13 June 2018
|
880,000
|
13 June 2019
|
0.162
|
0.162
|
0.21
|
0.20
|
13 June 2018
|
880,000
|
13 June 2020
|
0.162
|
0.162
|
0.21
|
0.20
|
25 July 2019
|
451,000
|
25 July 2020
|
0.213
|
0.213
|
0.27
|
0.26
|
25 July 2019
|
451,000
|
25 July 2021
|
0.213
|
0.213
|
0.27
|
0.26
|
16 December 2020
|
570,850
|
16 December 21
|
0.125
|
0.125
|
0.16
|
0.15
|
16 December 2020
|
570,850
|
16 December 22
|
0.125
|
0.125
|
0.16
|
0.15
|
9 March 2022
|
598,350
|
9 March 2023
|
0.176
|
0.176
|
0.22
|
0.21
|
9 March 2022
|
598,350
|
9 March 2024
|
0.176
|
0.176
|
0.22
|
0.21
|
27 April 2023
|
598,350
|
27 April 2024
|
0.318
|
0.318
|
0.40
|
-
|
27 April 2023
|
598,350
|
27 April 2025
|
0.318
|
0.318
|
0.40
|
-
|
Weighted
average
|
6,197,100
|
|
£0.20
|
£0.20
|
$0.25
|
$0.20
|
The weighted average contractual life of
options outstanding at 31 December 2023 was 6.7 years (2022 7.1
years).
Exercise prices for 2023 shown in USD are
based on the US Dollar/Pounds Sterling exchange rate at 31 December
2023 of 1.27 (2022 1.21). Options outstanding at 31 December 2023
expire the earlier of ten years from grant date or 90 days after
the termination of service to the Company.
|
2023 Number of
Options
|
Weighted average exercise
price
|
2022 Number of
Options
|
Weighted average exercise
price
|
|
|
£
|
$
|
|
£
|
$
|
Options outstanding
|
|
|
|
|
|
|
At 1 January
|
5,000,400
|
£0.17
|
$0.21
|
3,803,700
|
£0.16
|
$0.20
|
Granted
|
1,196,700
|
£0.32
|
$0.40
|
1,196,700
|
£0.18
|
$0.21
|
At 31 December
|
6,197,100
|
£0.20
|
$0.25
|
5,000,400
|
£0.17
|
$0.20
|
|
|
|
|
|
|
|
Options exercisable
|
|
|
|
|
|
|
At 1 January
|
3,803,700
|
£0.16
|
$0.21
|
3,232,850
|
£0.17
|
$0.21
|
Vested
|
598,350
|
£0.18
|
$0.22
|
570,850
|
£0.13
|
$0.17
|
At 31 December
|
4,402,050
|
£0.16
|
$0.21
|
3,803,700
|
£0.16
|
$0.20
|
Movements in the Share-based payment reserve
were as follows:
|
31 December
|
|
31 December
|
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Balance 1 January
|
2,153
|
|
2,007
|
Share-based payment charge
|
214
|
|
146
|
Balance 31 December
|
$2,367
|
|
$2,153
|
23. Deferred
tax
Group
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
|
|
|
|
At 1 January asset
|
1,932
|
|
4,066
|
Prior years' tax losses utilized against US Federal
tax liability
|
(1,102)
|
|
(2,134)
|
(see Note 8)
|
|
|
|
Fixed asset basis differences
|
(2,557)
|
|
-
|
Accruals adjustments
|
938
|
|
-
|
Recognition of R&D business credits
|
1,029
|
|
-
|
At 31 December asset
|
$240
|
|
$1,932
|
24. Related
party transactions
Transactions between group companies were as
follows:
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Iofina Resources
to/(from) Iofina Chemical:
|
|
|
|
Crystallised iodine sales
|
28,913
|
|
22,115
|
Expenses recharged
|
(969)
|
|
(697)
|
Iofina Plc
to/(from) Iofina Resources:
|
|
|
|
Management fee
|
50
|
|
50
|
Funding payments
|
(1,000)
|
|
(750)
|
Expenses recharged
|
(8)
|
|
(7)
|
Share based payments contribution
|
37
|
|
-
|
Iofina Plc
to/(from) Iofina Chemical:
|
|
|
|
Management fee
|
50
|
|
50
|
Expenses recharged
|
(18)
|
|
(22)
|
Share based payments contribution
|
63
|
|
-
|
In both 2022 and 2023 all iodine produced by
Iofina Resources was sold to Iofina Chemical.
Additional related party transactions with
directors, who are considered to be key management
personnel, are set out in the Corporate Governance Statement
on page 32. Option grants as described in note 22 are to employees
and Directors.
The Company has entered into a number of
unsecured related party transactions with its subsidiary
undertakings. The most significant transactions carried out between
the Company and its subsidiary undertakings are
financing.
25. Capital
management
The Group's objectives when managing capital
are to safeguard the Group's ability to continue as a going
concern, to provide returns for shareholders and to maintain an
optimal capital structure to reduce the cost of capital. The Group
defines capital as being share capital plus reserves as shown in
the balance sheet. The Directors continue to monitor the level of
capital as compared to the Group's commitments and adjust the level
of capital as is determined to be necessary by issuing new shares.
Iofina plc is not subject to any externally imposed capital
requirements. The Directors consider the capital of the Group to be
the total equity attributable to the equity holders of the parent
of $44.8 million as at 31 December
2023 (2022: $38.0 million).
26.
Subsidiary undertakings
Investment in
subsidiaries
|
Investment in
|
|
subsidiaries
|
|
$'000
|
Company
|
|
Balance at 31 December 2021 and 2022
|
17,199
|
Subsidiaries' share options contributions
|
100
|
Balance at 31 December 2023
|
$17,299
|
Due from
subsidiaries
|
2023
|
|
2022
|
|
$'000
|
|
$'000
|
Company
|
|
|
|
At 1 January
|
20,112
|
|
20,792
|
Management fees
|
100
|
|
100
|
Funding from subsidiaries
|
(1,000)
|
|
(750)
|
Expenses recharged to Plc
|
(26)
|
|
(30)
|
At 31 December
|
$19,186
|
|
$20,112
|
The Group's debt arrangements are on a joint and
several basis with all Group companies excluding dormant
subsidiaries. The principal beneficiary of these arrangements is
Iofina Resources, Inc., and therefore the debt is accounted for in
that company and in the consolidated balance sheet, and does not
appear in the balance sheet of Iofina Plc.
Company
|
Country of incorporation and
operation
|
Principal activity
|
Interest in ordinary shares and voting
rights
|
Iofina, Inc.
|
United
States/CO
|
Holding
company
|
100%
|
Iofina Resources, Inc.
|
United
States/CO
|
Iodine
production
|
100%
|
Iofina Chemical, Inc.
|
United
States/DE
|
Specialty
chemical
|
100%
|
IofinaEX, Inc.
|
United
States/KY
|
Dormant
|
100%
|
Iofina Resources, LLC
|
United
States/CO
|
Dormant
|
100%
|
Iofina Resources, LLC
|
United
States/TX
|
Dormant
|
100%
|
26.
Subsidiary undertakings (continued)
Iofina, Inc. was established in February 2006
and is a wholly owned subsidiary of Iofina plc. Iofina, Inc. owns
the whole of the issued share capital of Iofina Resources, Inc.,
Iofina Chemical, Inc. and IofinaEX, Inc. Other entities are
subsidiaries of Iofina Resources, Inc., the iodine production
company.
The registered offices of the above companies
are as follows:
Company
|
Registered office
|
Iofina, Inc.
|
8480 East Orchard Road, Greenwood
Village CO 80111, USA
|
Iofina Resources, Inc.
|
8480 East Orchard Road, Greenwood
Village CO 80111, USA
|
Iofina Chemical, Inc.
|
306 W. Main Street, Frankfort, KY
40601, USA
|
IofinaEX, Inc.
|
212 N 2nd St., Suite 100,
Richmond, KY 40475
|
Iofina Resources, LLC (CO)
|
8480 East Orchard Road, Greenwood
Village CO 80111, USA
|
Iofina Resources, LLC (TX)
|
815 Brazos Street, Austin TX 78701,
USA
|
27. Capital
commitments
At 31 December 2023 the Group had capital
commitments amounting to approximately $5m in respect of the
construction of #IO10 plant.
28. Post
balance sheet events
There were no significant post balance sheet
events.
29.
Contingent liabilities
The Group considers that a contingent
liability exists in respect of overdue interest on amounts that may
be due in relation to certain iodine related property rights. The
theoretical exposure is estimated at approximately $600k, but in
light of considerable past experience the Company believes that
amounts actually paid will be a very small proportion of that
amount.
30. Ultimate
controlling party
There is no ultimate controlling party of the
Group.
Iofina and
the environment
Iofina promotes, wherever possible,
environmental sustainability in its working practices and seeks to
minimise, mitigate, or remedy any harmful effects from the Group's
operations on the environment at each of its operational sites. To
continue that effort through all aspects of business, this report
has been produced to minimise its effect on the environment by
using thinner paper, fewer pages, smaller type set, and non‐colour
printing as much as possible. As part of this effort Iofina is
trying to move attention to its online annual reports available at
www.iofina.com. By being a
better steward of the environment, Iofina saves valuable
shareholder funds instead of producing glossy magazine pages
throughout the whole document.