Iodine producer Iofina continues to make progress in turning its innovative method of extracting iodine from brine - in this case the salty wastewater that's a by-product of oil and gas production - into a growing, money-making business.
But financial results for 2011 show just how difficult the transition has been: a "business model realignment" in favour of higher-capacity extraction plants is expected to sharply boost capacity, but unexpected issues with the first plant installation have led to production delays and the company missing guidance targets. And while revenues hit record levels with iodine prices near all-time highs, Iofina recorded another net loss for the year despite gross profit rising 14 per cent over the prior period.
Fortunately, iodine prices are expected to remain strong for the remainder of 2012, as supply is tight and major producers in Japan, Chile and the US have been operating at full capacity for a while now. Accordingly, Iofina hopes to commission its first large plant this summer, with a second shortly thereafter. The company has also built up a large pipeline of third-party sites and brine streams to roll-out iodine plants over the coming years. However, it's the delivery on these plans that Iofina now has to focus on.
IOFINA (IOF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 39p | MARKET VALUE: | £50m | |
| TOUCH: | 38-40p | 12-MONTH HIGH: | 47p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 14p* | NET CASH: | £4.3m** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | nil | -0.39 | -0.65 | nil |
| 2008 | nil | 0.83 | 0.94 | nil |
| 2009 | 3.38 | -4.12 | -4.09 | nil |
| 2010 | 8.85 | -3.32 | -3.16 | nil |
| 2011 | 10.05 | -1.74 | -1.47 | nil |
| % change | +13 | - | - | - |
*Includes intangible assets of £3.8m, or 3p a share **Excludes a £4.3m share placing in May | ||||
