Revenue up 20%; IO#7 production ramps up; Iodine prices up a further 8%
Iofina, specialists in the exploration and production of iodine and halogen based specialty chemical derivatives, is pleased to announce its Interim Results for the six months ended 30 June 2018 (the "Period"). During the Period the Group opened IOsorb® plant IO#7 which has increased the Group's iodine production and reduced the overall unit cost of iodine production. The Group has continued to improve its financial performance during the Period and anticipates additional positive operational and financial progress for the rest of 2018.
In particular, the Group's half year revenue increased by 20% compared with H1 2017 to $11.3M (H1 2017: $9.4m) as a result of improving iodine prices and increased sales of crystallised iodine via the Group's chemicals business. EBITDA performance continued to improve and increased by 6% to $725,000 (H1 2017: $683,000).
The Group's IOsorb® plants produced a total of 264.1 metric tonnes ("MT") of crystalline iodine in H1 2018, an increase of 12% from the prior year (H1 2017: 235.5MT), with production from the new IOsorb plant, IO#7, continuing to ramp up. With four IOsorb® plants in operation, the Board expects the Group to produce between 575 - 605 MT of crystalline iodine for the entire year in 2018, which would be a significant increase compared to last year (FY 2017: 503MT).
The Group continues to improve in terms of both revenue and profitability. Spot iodine prices have already risen by approximately 8% to $26/kg since the start of the year, and any further rise in iodine price will positively impact profits. Moving forward the Group will look to continue to increase iodine production through increasing productivity at current sites and bringing new iodine plants online, whilst striving to reduce the unit cost of iodine production. Iofina Chemical is also expanding the capacities of some key products and continues to develop new technologies and products for the Group.
KEY FINANCIAL POINTS:
- Revenue increased by 20% to $11.3m (H1 2017: $9.4m), and gross profit increased by 8% to $2.6m (H1 2017: $2.4m);
- EBITDA increased by 6% to $725,000 (H1 2017: $683k);
- Cash balances were $3.0m (H1 2017 $3.3m);
- Operating loss was reduced to $47,000 (H1 2017 $331k);
- Loss before tax was $0.8m (H1 2017 $2.0m) after $0.1m convertible loan notes accounting adjustments (H1 2017 $1.2m); and
- Basic loss per share was $0.006 (H1 2017: $0.016).
KEY OPERATIONAL AND MARKET HIGHLIGHTS:
- Iodine prices have increased in the Period and continue to rise steadily. Current spot prices of iodine are at or near $26/kg for large purchases
- Revised production targets exceeded:
o 264.1 MT crystalline iodine produced in H1 2018, an increase of 12% (H1 2017: 235.5 MT)
o Expect to produce 575 - 605 MT of crystalline iodine in 2018 (FY 2017: 503 MT)
- Successful opening of IO#7, which is now a major contributor to the total iodine production of the Group
- Iofina Chemical continues strong performance with a diverse portfolio of iodine and other halogen products and has increased capacity of some key iodine and non-iodine products to meet demand.
- The production rate of crystalline iodine in Q3 2018 has thus far exceeded Q2 2018. Iofina Resources is on track to achieve the expected full year production target of 575-605 MT of crystalline iodine in 2018
- The Company is evaluating options for IO#5 and is determining whether to source an alternative brine supply or move IO#5 to another site. Final determinations should be complete by the end of 2018
- The Company is working to resolve its debt which is due for repayment on 1 June 2019. As the business continues to move forward with a strong outlook the Directors are confident of a positive outcome that will allow the Group to manage its debt.
Commenting on today's results, Dr. Tom Becker, President and CEO stated: "Notably, the successful construction of IO#7 was a major milestone for the Group in the first half of the year. We are pleased with the performance of the new IOsorb® plant, which is the Group's lowest production cost plant, and we anticipate a strong second half of the year because of this.
"In addition to the Group's increased iodine production, expansion at the Group's chemical business is also extremely encouraging. We have increased production capacity of three of our key iodine compounds as well as increasing production of a key non-iodine based product in response to rapidly increasing customer demand.
"The Board acknowledges that new terms for the debt facility will need to be negotiated by June 2019, and we are working hard to achieve a solution for this. Whilst addressing the debt repayment requirements, the Board remains committed to executing its growth strategy; to increase production of iodine and sales, whilst remaining a low cost iodine producer.''