IOFINA PLC
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
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IOFINA PLC
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
Auditor
48 Chancery Lane
London WC2A 1JF
UHY Hacker Young LLP
Quadrant House
4 Thomas More Square
London E1W 1 YW
Nominated Adviser and Broker Canaccord Genuity Limited
Solicitors
Registrar
Financial PR
88 Wood Street
London EC2V 7QR
Keystone Law Limited
48 Chancery Lane
London WC2A 1JF
Link Asset Services (Holdings) Limited
10th Floor, Central Square
29 Wellington Square
Leeds LS1 4DL
Yellow Jersey PR Limited
Thanet House
231-232 Strand
London WC2R 1DA
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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 iodine
Derivatives
Prilled iodine
Total iodine sales
Non-iodine
Total sales
Crystallised
Iodine 85%
MT
423
185
608
2023
Sales
$m
24.9
12.9
4.1
41.9
8.1
$50.0
Crystallised
Iodine 85%
MT
220
221
441
2022
Sales
$m
13.3
16.3
1.8
31.4
10.8
$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%.
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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.
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IOFINA PLC
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.
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IOFINA PLC
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
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IOFINA PLC
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
31 December
2023
$’000
Year ended
31 December
2022
$’000
Revenue from sales of iodine and iodine derivatives
Revenue from non-iodine products
Total revenue
Total pounds of product shipped (LBS ‘000)
Crystallised iodine produced (Metric Tonnes)
IOsorb® plants in operation (year-end)
$41,940
$8,096
$50,036
1,824
559
6
$31,422
$10,776
$42,198
1,640
516
5
Commentary on some of the above indicators is to be found in the Chairman’s Statement on pages 3
to 7.
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IOFINA PLC
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.
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IOFINA PLC
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
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IOFINA PLC
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.
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IOFINA PLC
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
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IOFINA PLC
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
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IOFINA PLC
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.
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IOFINA PLC
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
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IOFINA PLC
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)
(b)
(c)
(d)
(e)
(f)
likely consequences of any decision in the long-term;
interests of the company’s employees;
need to foster the company’s business relationships with suppliers, customers, and others;
impact of the company’s operations on the community and the environment;
company’s reputation for high standards of business conduct; and
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.
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IOFINA PLC
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.
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IOFINA PLC
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.
24
IOFINA PLC
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:
select suitable accounting policies and then apply them consistently;
a.
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
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.
d.
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.
25
IOFINA PLC
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
26
IOFINA PLC
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
27
IOFINA PLC
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.
28
IOFINA PLC
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
including making
recommendations to the Board as to the appointment or re-appointment of the external
relationship with external auditors,
the Group’s
29
IOFINA PLC
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:
Lance Baller
Dr Thomas Becker
Malcolm Lewin
Dr William Bellamy
J. Frank Mermoud
Mary Fallin Christensen
Board
11
11
10
10
10
11
Audit
1
-
-
1
1
-
Remuneration
2
-
-
2
2
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.
30
IOFINA PLC
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.
31
IOFINA PLC
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:
Lance Baller
Dr. Thomas Becker
Malcolm Lewin
William Bellamy
Frank Mermoud
Mary Fallin Christensen
Salary
122,120
286,388
181,020
42,500
42,500
42,500
2023
Bonus
Total $
-
122,120
45,000
331,388
35,000
216,020
-
-
-
42,500
42,500
42,500
Total
$717,028
$80,000 $797,028
Salary
109,620
274,400
175,275
30,000
30,000
30,000
$649,295
2022
Bonus
-
30,000
25,000
-
-
-
Total $
109,620
304,400
200,275
30,000
30,000
30,000
$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.
32
IOFINA PLC
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
5,500,000
139,430
46,875
93,750
23,750
L J Baller
Dr. T M Becker
W D Bellamy
M T Lewin
J F Mermoud
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.
1 January 2023
5,500,000
139,430
46,875
93,750
23,750
2018
Options
granted
660,000
330,000
220,000
110,000
-
2019
Options
granted
2020
Options
granted
242,000
266,200
2022
Options
granted
266,200
2023
Options
granted
266,200
165,000
181,500
181,500
181,500
165,000
165,000
165,000
165,000
82,500
82,500
82,500
82,500
82,500
82,500
82,500
82,500
Name
Dr T Becker
M Lewin
L Baller
Dr W Bellamy
JF Mermoud
M Fallin
Christensen
82,500
860,200
31.8p
27/4/33
-
1,320,000
-
737,000
82,500
860,200
82,500
860,200
Exercise price
Lapse date
16.2p
13/06/28
21.3p
12.5p
24/07/29 15/12/30
17.6p
8/3/32
On behalf of the Board
Dr. Thomas M. Becker
Chief Executive Officer and President
1 May 2024
33
IOFINA PLC
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
34
IOFINA PLC
Scope 3
Year End
31 December 2023
Base Year
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.
Intensity ratio MT CO2e per $m of income
28.67
0.573
28.67
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
Lost Time Incidents
Incident Rate
2022
0
0
2023
0
0
35
IOFINA PLC
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.
36
IOFINA PLC
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:
prepared
Evaluation of management assessment
Management
detailed
have
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:
Key observations
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
37
IOFINA PLC
• 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.
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
is not
considered likely.
increasing since 2018,
this
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
timing
results post year end and noted
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.
38
IOFINA PLC
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
Revenue Recognition
(applicable to the Group)
How our audit addressed the key audit
matters
Our audit work included, but was not restricted
to:
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.
39
effectiveness
• Documenting our understanding of
management’s process for evaluating
revenue recognition and assessing the
design
and
implementation of related key controls;
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;
• Testing a sample of
• 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
the
• Using our data analytics software to
assess
correlations between
revenue entries, trade receivables and
subsequent cash receipt. This would
subsequent
identify whether any
reversal of trade receivables should
IOFINA PLC
have impacted the recognition of the
revenue.
The Group’s accounting policy on revenue
recognition is shown in Principal Accounting
Policies
financial
statements and related disclosures are included
in note 1d.
consolidated
the
for
after
Key observations
As a result of the audit procedures we performed
considering management’s
and,
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.
Our audit work included, but was not restricted
to:
• Reviewing Management’s assessment
of forecasted cash flows and challenged
forecasted
significant movements
cash
to historic
performance;
flows compared
in
• Reviewing Management’s
forecasted
cash flows that feed into the discounted
flow model and challenged
cash
significant assumptions with reference
to historic
trends,
appropriateness of discount rates and
future expectations of commodity prices
and sales growth;
results, market
• Critically analysing whether or not the
IOSorb plants should be viewed as one
(“CGU”) or
Cash Generating Unit
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
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
is any
required
indication that an asset may be impaired at each
reporting date.
to assess whether
there
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
forecasting and
probability of the related future cash flows which
is based on expected future cash flows of the
IOSorb plants.
involved
in
judgement
and
Significant management
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.
identified
therefore
We
the
valuation of property plant and equipment as a
significant risk.
the risk over
40
IOFINA PLC
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)
Our audit work included, but was not restricted
to:
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
of material
misstatement.
assessed
risks
Impairment
Valuation and
investments
intercompany balances
(applicable to the Company only)
in
subsidiaries
review of
and
41
• Reviewed the inventory valuation on a
sample basis to assess whether it is
held at the lower of cost and net
realisable value;
the
inputs used and
accuracy of the billable of materials
calculation to value the initial cost per
unit of the inventory; and
• Considered
• Considered
the
inputs used and
accuracy of calculations of the value of
overheads absorbed into inventory. We
these assumptions with
challenged
management
they are
appropriate.
to ensure
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.
after
Key observations
As a result of the audit procedures we performed
and,
considering Management’s
disclosures of the judgements applied by them,
we have concluded
the valuation of
inventory is materially accurate and recognised
on an appropriate basis.
that
We have confirmed the estimates and
judgements utilised within the models applied in
relation to the valuation of inventory are within
acceptable ranges.
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
IOFINA PLC
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
the
profitability of the subsidiaries.
forecasting
involved
in
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
for,
are no
impairments of the amounts.
indications, or
requirements
judgement
Significant management
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.
identified
therefore
We
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.
•
•
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.
after
Key observations
As a result of the audit procedures we performed
and,
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
42
IOFINA PLC
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
Overall materiality
Group
We determined materiality for the
financial statements as a whole to
be $415,700 (2022: $501,500).
Parent
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
Performance
materiality
Specific materiality
Reporting threshold
trading group, materiality
As a
based on PBT is an appropriate
factor
group’s
performance in the past few years
has been steadily increasing.
given
the
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.
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)
We also determine a lower level of specific materiality for certain areas
such as directors’ remuneration and related party transactions of $2,000.
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.
$220,000 (2022: $280,000)
$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.
43
IOFINA PLC
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
44
IOFINA PLC
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.
45
IOFINA PLC
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
46
IOFINA PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Cost of sales
Gross profit
Administrative expenses
Depreciation and amortisation
Operating profit
Other income
Release of plant acquisition accrual
Profit before finance expense
Finance income
Interest payable
Interest swap derivative asset
Profit before taxation
Taxation
Profit for the year attributable to owners of the
parent
Earnings per share attributable to owners of the
parent:
- Basic
- Diluted
Adjusted EBITDA:
Profit before finance expense
Depreciation and amortisation
EBITDA
Net other income
Adjusted EBITDA
Year ended
31 December
Note
2023
$’000
Year ended
31 December
2022
$’000
3
4
4
4
12
7
6
19
4
8
50,036
(34,382)
15,654
(4,873)
(2,187)
8,594
-
8,594
135
(327)
(88)
8,314
(1,750)
$6,564
42,198
(26,369)
15,829
(4,361)
(1,824)
9,644
450
10,094
13
(326)
249
10,030
(2,165)
$7,865
9
9
$0.034
$0.033
$0.041
$0.040
2023
$’000
8,594
2,187
10,781
-
$10,781
2022
$,000
10,094
1,824
11,918
(450)
$11,468
All activities are classed as continuing.
The accompanying notes form part of these financial statements.
47
IOFINA PLC
CONSOLIDATED BALANCE SHEET
Assets
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Deferred tax asset
Term loan – interest swap asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Current liabilities
Trade and other payables
Term loan – due within one year
Lease liabilities
Total current liabilities
Non-current liabilities
Term loan – due after one year
Lease liabilities
Total non-current liabilities
Total liabilities
Equity attributable to owners of the parent
Issued share capital
Share premium
Share-based payment reserve
Retained losses
Foreign currency reserve
Total equity
Total equity and liabilities
31 December
2023
$’000
31 December
2022
$’000
Note
10
11
12
23
19
13
15
16
17
19
18
19
18
21
22
103
3,087
24,784
240
161
28,375
10,138
15,491
6,518
32,147
$60,522
9,933
1,429
141
11,503
3,928
341
4,269
$15,772
3,107
60,687
2,367
(15,467)
(5,944)
$44,750
$60,522
283
3,087
20,557
1,932
249
26,108
10,184
10,487
5,927
26,598
$52,706
7,538
1,429
101
9,068
5,357
309
5,666
$14,734
3,107
60,687
2,153
(22,031)
(5,944)
$37,972
$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
48
IOFINA PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to owners of the parent
Share
capital
Share
premium
$’000
$’000
Share-
based
payment
reserve
$’000
Retained
losses
$’000
Foreign
currency
reserve
$’000
Total
equity
$’000
Balance at 1 January 2022
$3,107
$60,687
$2,007
$(29,896)
$(5,944)
$29,961
Transactions with owners
Share-based expense
Total transactions with owners
Profit for the year attributable to
owners of the parent
Total comprehensive income
attributable to owners of the
parent
–
–
–
–
–
–
–
–
146
146
–
–
–
–
7,865
7,865
–
–
–
–
146
146
7,865
7,865
Balance at 31 December 2022
$3,107
$60,687
$2,153
$(22,031)
$(5,944)
$37,972
Transactions with owners
Share-based expense
Total transactions with owners
Profit for the year attributable to
owners of the parent
Total comprehensive income
attributable to owners of the
parent
–
–
–
–
–
–
–
–
214
214
–
–
–
–
6,564
6,564
–
–
–
–
214
214
6,564
6,564
Balance at 31 December 2023
$3,107
$60,687
$2,367
$(15,467)
$(5,944)
$44,750
49
IOFINA PLC
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Loss on disposal of fixed asset
Amortisation of intangible assets
Share-based payments
Revaluation of derivative asset
Lease finance
Finance expense
Finance income
Tax paid
Operating cash inflow before changes
in working capital
Changes in working capital
Increase in trade and other receivables
Decrease/(increase) in inventories
Increase in trade and other payables
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Term loan repayments
Interest paid
Lease payments
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
50
Year ended
31 December
2023
$’000
8,314
1,966
41
180
214
88
199
327
(135)
(40)
Year ended
31 December
2022
$’000
10,030
1,643
-
180
146
(249)
-
327
(13)
(31)
11,154
12,033
(5,004)
46
2,376
8,572
135
(6,234)
(6,099)
(1,429)
(309)
(144)
(1,882)
591
5,927
$6,518
(4,329)
(3,888)
1,737
5,551
13
(3,087)
(3,074)
(1,429)
(311)
(74)
(1,814)
665
5,262
$5,927
IOFINA PLC
COMPANY BALANCE SHEET
31 December
2023
$’000
31 December
2022
$’000
Note
Assets
Non-current assets
Investment in subsidiary undertakings
Total non-current assets
Current assets
Due from subsidiaries
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Current liabilities
Trade and other payables
Total current liabilities
Equity attributable to the owners of the
parent
Issued share capital
Share premium
Share-based payment reserve
Retained losses
Foreign currency reserve
Total equity
Total equity and liabilities
26
26
15
16
17
21
22
17,299
17,299
19,186
6
179
19,371
$36,670
17,199
17,199
20,112
2
94
20,208
$37,407
203
203
152
152
3,107
60,687
2,367
(23,935)
(5,759)
36,467
$36,670
3,107
60,687
2,153
(22,933)
(5,759)
37,255
$37,407
The directors have taken advantage of the exemption offered by section 408 of the Companies Act
2006 not to present a separate statement of comprehensive income for the parent company.
The parent company has also taken advantage of certain disclosure exemptions conferred by FRS
101 and has not provided a Cash Flow Statement.
The loss for the financial year dealt with in the financial statements of the parent company was
$1,002k (2022 loss $911k).
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
Company number: 05393357
51
IOFINA PLC
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to equity holders of the parent
Share
capital
Share
Share based
Retained
premium
payment
losses
$’000
$’000
reserve
$’000
$’000
Foreign
currency
reserve
$’000
Total
equity
$’000
Balance at 1 January 2022
$3,107
$60,687
$2,007
$(22,022)
$(5,759)
$38,020
Transactions with owners
Share-based expense
Total transactions with
owners
Loss attributable to owners
of the parent
Total comprehensive income
for the year
–
–
–
–
–
–
–
–
146
146
–
–
–
–
(911)
(911)
–
–
–
–
146
146
(911)
(911)
Balance at 31 December 2022
$3,107
$60,687
$2,153
$(22,933)
$(5,759)
$37,255
Transactions with owners
Share-based expense
Total transactions with
owners
Loss attributable to owners
of the parent
Total comprehensive income
for the year
–
–
–
–
–
–
–
–
214
214
–
–
–
–
(1,002)
(1,002)
–
–
–
–
214
214
(1,002)
(1,002)
Balance at 31 December 2023
$3,107
$60,687
$2,367
$(23,935)
$(5,759)
$36,467
52
IOFINA PLC
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.
53
IOFINA PLC
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.
54
IOFINA PLC
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
55
IOFINA PLC
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).
56
IOFINA PLC
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
o
o
IOsorb® plants - 5 percent per annum
Other plant and equipment – 5 to 7 years
Vehicles and office equipment - 20 percent per annum
57
IOFINA PLC
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.
58
IOFINA PLC
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.
59
IOFINA PLC
▪
"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.
60
IOFINA PLC
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.
61
IOFINA PLC
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.
62
IOFINA PLC
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.
Assets
Halogen Derivatives and Iodine
Total
Liabilities
Halogen Derivatives and Iodine
Total
31 December
2023
$
31 December
2022
$
60,522
$60,522
15,772
$15,772
52,706
$52,706
14,734
$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.
63
IOFINA PLC
3. Segment reporting (continued)
Assets
UK
USA
Total
Liabilities
UK
USA
Total
Revenue
North America
Asia
South America
Europe
Other
Total
31 December
2023
$’000
31 December
2022
$’000
185
27,974
32,363
$60,522
204
15,568
$15,772
17,448
25,952
4,131
2,379
126
$50,036
96
23,927
28,683
$52,706
153
14,581
$14,734
19,822
17,960
3,588
783
45
$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:
Depreciation expense
Deficit on disposal of fixed asset
Amortisation expense
Other:
Annual audit fees for audit of parent company and
consolidated financial statements
Year ended
31 December
2023
$’000
1,966
41
180
Year ended
31 December
2022
$’000
1,643
-
180
140
125
64
IOFINA PLC
4. Profit before taxation (continued)
Cost of sales – analysis by nature
Raw materials
Freight
Sales commission
Labour, manufacturing overhead and royalties
Administrative expenses – analysis by nature
Remuneration and benefits
Share-based payments
Office expenses
Professional services
Travel
Rent
Other
Year ended
31 December
2023
$’000
Year ended
31 December
2022
$’000
15,345
530
806
17,701
$34,382
12,872
657
378
12,462
$26,369
Year ended
31 December
2023
$’000
Year ended
31 December
2022
$’000
3,194
214
283
658
227
31
266
$4,873
2,955
146
254
655
169
(34)
216
$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:
Production
Administrative
Sales
Total staff
Wages and salaries
Social security costs
Year ended
31 December
2023
Number
Year ended
31 December
2022
Number
91
15
2
108
80
14
1
95
Year ended
31 December
2023
$’000
8,306
1,385
$9,691
Year ended
31 December
2022
$’000
7,245
1,120
$8,365
65
IOFINA PLC
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:
Wages and salaries
Social security costs
Total key management cost
Year ended
31 December
2023
$’000
1,029
112
$1,141
Year ended
31 December
2022
$’000
1,116
85
$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
Term loan interest
IFRS16 lease interest
Total finance expense
7. Finance income
Interest income
Year ended
31 December
2023
$’000
Year ended
31 December
2022
$’000
309
18
$327
310
16
$326
Year ended
31 December
2023
$’000
135
$135
Year ended
31 December
2022
$’000
13
$13
66
IOFINA PLC
8.
Taxation
Current tax
Deferred tax (Note 23)
Tax reconciliation:
Profit on ordinary activities before tax
Tax at UK income tax rate of 23.5% (2022: 19%)
Effects of:
Temporary differences
Permanent differences
UK losses not recognised
Difference in tax rates US/UK
Tax effect of US rate change
State losses benefit
Credits not recognised as deferred tax asset
Other adjustments
Current tax
Total tax charge/(credit)
Year ended
31 December
2023
$’000
Year ended
31 December
2022
$’000
60
1,690
$1,750
8,314
1,954
968
3
259
113
(340)
(277)
(1,029)
39
60
$1,750
31
2,134
$2,165
10,030
1,905
(149)
10
165
203
–
–
31
$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).
67
IOFINA PLC
10. Intangible assets (Group)
Details of intangible assets are set out below:
Intangible assets
Cost
At 1 January 2022
At 31 December 2022 &
2023
Accumulated amortization
At 1 January 2022
Charge for the year
At 31 December 2022
Charge for the year
At 31 December 2023
Carrying amounts
At 31 December 2021
At 31 December 2022
At 31 December 2023
WET® patent
Customer
relationships
$’000
$’000
Patent
portfolio
$’000
EPA
registrations
$’000
Total
$’000
2,700
$2,700
2,237
180
2,417
180
$2,597
$463
$283
$103
661
$661
661
-
661
–
$661
–
–
–
187
$187
212
-
187
–
$187
–
–
–
271
3,819
$271
$3,819
271
-
271
-
$271
–
–
–
3,356
180
3,536
180
$3,716
$463
$283
$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
68
IOFINA PLC
11. Goodwill (Group)
Carrying amounts
At 31 December 2021, 31 December 2022 and 31 December 2023
$’000
$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.
69
IOFINA PLC
12. Property, plant and equipment (Group)
Freehold
Land
$’000
Buildings
$’000
Right of
use
$’000
Equipment
and
Machinery
$’000
Construction
in Progress
$’000
Total
$’000
$209
–
–
$209
–
–
–
$209
–
–
–
–
–
–
$2,044
18
(37)
$2,025
(20)
765
–
$2,770
$549
61
$610
107
–
$752
–
–
$752
–
–
–
$752
$301
104
$405
104
–
$717
$509
$26,276
230
103
$26,610
230
6,785
(57)
$33,567
$10,069
1,479
$11,548
1,755
(213)
(16)
$13,074
$751
2,885
(113)
$3,524
6,024
(7,763)
–
$1,784
–
–
–
–
–
–
$30,032
3,133
(46)
$33,119
6,234
(213)
(57)
$39,082
$10,919
1,644
$12,563
1,966
(213)
(16)
$14,299
$209
$209
$209
$1,495
$1,415
$2,054
$451
$346
$242
$16,207
$15,062
$20,495
$751
$3,524
$1,785
$19,113
$20,557
$24,784
Cost
At 1 January 2022
Additions
Transfers
At 31 December 2022
Additions
Transfers
Disposals
At 31 December 2023
Accumulated
depreciation
At 1 January 2022
Charges for the year
At 31 December 2022
Charges for the year
Transfers
Disposals
At 31 December 2023
Carrying amounts
At 31 December 2021
At 31 December 2022
At 31 December 2023
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.
70
IOFINA PLC
13. Inventories
Group
Raw materials
Work in progress
Finished goods
31 December
2023
$’000
31 December
2022
$’000
5,672
4,431
35
$10,138
7,231
2,895
58
$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
2023
Cash and cash equivalents
Trade receivables
Interest rate swap asset
Trade payables
Accrued liabilities
Lease liabilities
Term loan
2022
Cash and cash equivalents
Trade receivables
Interest rate swap asset
Trade payables
Accrued liabilities
Lease liabilities
Term loan
Loans and
receivables at
amortised cost
$’000
Financial
liabilities at
amortised cost
$’000
Investment and
swap asset at
fair value
$’000
Total
$’000
6,518
14,638
5,927
9,950
3,146
6,788
482
5,357
2,510
5,028
410
6,785
71
161
249
6,518
14,638
161
$21,317
3,146
6,788
482
5,357
$15,773
5,927
9,950
249
$16,126
2,510
5,028
410
6,785
$14,733
IOFINA PLC
14. Financial instruments (continued)
Company
2023
Cash and cash equivalents
Other receivables
Due from subsidiaries
Accruals
2022
Cash and cash equivalents
Other receivables
Due from subsidiaries
Accruals
Loans and
receivables at
amortised cost
$’000
Financial
liabilities at
amortised cost
$’000
179
6
19,186
94
2
20,112
203
153
Total
$’000
179
6
19,186
$19,371
203
$203
94
2
20,112
$20,208
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.
72
IOFINA PLC
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:
Up to 3
months
$’000
3,146
2,864
35
357
$6,402
Up to 3
months
$’000
2,510
2,059
19
357
$4,944
Between 3
and 12
months
$’000
Between 1
and 2 years
$’000
Between 2
and 6 years
$’000
–
3,924
106
1,071
$5,102
–
–
141
1,429
$1,570
–
–
200
2,499
$2,699
Between 3
and 12
months
$’000
Between 1
and 2 years
$’000
–
2,969
82
1,071
$4,122
–
–
260
1,429
$1,689
Between 2
and 6 years
$’000
–
–
49
3,929
$3,978
Group
At 31 December 2023:
Trade payables
Accrued liabilities
Lease liabilities
Term loan
Group
At 31 December 2022:
Trade payables
Accrued liabilities
Lease liabilities
Term loan
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.
73
IOFINA PLC
15. Trade and other receivables
Group
Trade receivables
Prepayments and other receivables
Company
Prepayments and other receivables
31 December
2023
$’000
14,638
853
$15,491
31 December
2022
$’000
9,950
537
$10,487
31 December
2023
$’000
31 December
2022
$’000
6
$6
2
$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
Cash in US Dollar accounts
Cash in GB Pound Sterling accounts
Company
Cash in GB Pound Sterling accounts
31 December
2023
$’000
31 December
2022
$’000
6,339
179
$6,518
5,833
94
$5,927
31 December
2023
$’000
31 December
2022
$’000
179
$179
94
$94
74
IOFINA PLC
17. Trade and other payables
Group
Trade payables
Accrued expenses and deferred income
Company
31 December
2023
$’000
31 December
2022
$’000
3,146
6,787
$9,933
2,510
5,028
$7,538
31 December
2023
$’000
31 December
2022
$’000
Accrued expenses
152
$152
All trade and other payables are considered short term. The carrying values are considered to be a
reasonable approximation of fair value.
203
$203
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
2023
$’000
$’000
$’000
Lease liabilities – current
Lease liabilities – non-current
Total
141
341
$482
Movements:
2023
$’000
$’000
$’000
Office
Lease
108
Vehicles
33
Office
Lease
410
-
(132)
13
Vehicles
-
199
(13)
5
Opening balance
Lease finance
Payments
Interest accrued
Lease liabilities relate to:
Total
410
199
(144)
18
$482
31
December
2022
$’000
Total
$’000
Office
Lease
101
101
$’000
Vehicles
-
2022
$’000
Office
Lease
468
-
(74)
16
$’000
Total
468
-
(74)
16
$’000
Vehicles
-
-
-
-
-
183
158
$291
$191
309
$410
309
$410
-
-
$291
$191
$410
$410
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.
75
IOFINA PLC
19. Term loans and other facilities
Group
At 1 January 2022
Term loan instalment repayments
At 31 December 2022
Term loan instalment repayments
At 31 December 2023
Due within one year
Due after one year
Term loan
$’000
$8,214
(1,429)
$6,785
(1,429)
$5,357
$1,429
$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.
76
IOFINA PLC
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
Term loan
Cash and cash equivalents
Net cash/(debt) at 31 December
21. Share capital
Authorised:
Ordinary shares of £0.01 each
Allotted, called up and fully paid:
Ordinary shares of £0.01 each
2023
$’000
(5,357)
6,518
$1,161
2022
$’000
(6,785)
5,927
$(858)
31 December
2023
31 December
2022
- number of shares
- nominal value
1,000,000,000
£10,000,000
1,000,000,000
£10,000,000
- number of shares
- nominal value
191,858,408
£1,918,584
191,858,408
£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.
77
IOFINA PLC
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
13 June 2018
13 June 2018
25 July 2019
25 July 2019
16 December 2020
16 December 2020
9 March 2022
9 March 2022
27 April 2023
27 April 2023
Weighted average
Number
of
Options
Vesting
Date
13 June 2019
880,000
13 June 2020
880,000
25 July 2020
451,000
451,000
25 July 2021
570,850 16 December 21
570,850 16 December 22
9 March 2023
598,350
9 March 2024
598,350
27 April 2024
598,350
598,350
27 April 2025
6,197,100
Share
Price
£
0.162
0.162
0.213
0.213
0.125
0.125
0.176
0.176
0.318
0.318
£0.20
Exercise
Price
£
0.162
0.162
0.213
0.213
0.125
0.125
0.176
0.176
0.318
0.318
£0.20
Exercise
Price
2023
$
0.21
0.21
0.27
0.27
0.16
0.16
0.22
0.22
0.40
0.40
$0.25
Exercise
Price
2022
$
0.20
0.20
0.26
0.26
0.15
0.15
0.21
0.21
-
-
$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
£
$
5,000,400
1,196,700
6,197,100
£0.17
£0.32
£0.20
$0.21
$0.40
$0.25
3,803,700
1,196,700
5,000,400
£0.16
£0.18
£0.17
$0.20
$0.21
$0.20
3,803,700
598,350
4,402,050
£0.16
£0.18
£0.16
$0.21
$0.22
$0.21
3,232,850
570,850
3,803,700
£0.17
£0.13
£0.16
$0.21
$0.17
$0.20
Options outstanding
At 1 January
Granted
At 31 December
Options exercisable
At 1 January
Vested
At 31 December
Movements in the Share-based payment reserve were as follows:
Balance 1 January
Share-based payment charge
Balance 31 December
31 December
2023
$’000
2,153
214
$2,367
31 December
2022
$’000
2,007
146
$2,153
78
IOFINA PLC
23. Deferred tax
Group
At 1 January asset
Prior years’ tax losses utilized against US Federal tax
liability
(see Note 8)
Fixed asset basis differences
Accruals adjustments
Recognition of R&D business credits
At 31 December asset
24. Related party transactions
Transactions between group companies were as follows:
Iofina Resources to/(from) Iofina Chemical:
Crystallised iodine sales
Expenses recharged
Iofina Plc to/(from) Iofina Resources:
Management fee
Funding payments
Expenses recharged
Share based payments contribution
Iofina Plc to/(from) Iofina Chemical:
Management fee
Expenses recharged
Share based payments contribution
2023
$’000
2022
$’000
1,932
(1,102)
(2,557)
938
1,029
$240
4,066
(2,134)
–
–
–
$1,932
2023
$’000
2022
$’000
28,913
(969)
50
(1,000)
(8)
37
50
(18)
63
22,115
(697)
50
(750)
(7)
-
50
(22)
-
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.
79
IOFINA PLC
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
Company
Balance at 31 December 2021 and 2022
Subsidiaries’ share options contributions
Balance at 31 December 2023
Due from subsidiaries
Company
At 1 January
Management fees
Funding from subsidiaries
Expenses recharged to Plc
At 31 December
Investment in
subsidiaries
$’000
17,199
100
$17,299
2023
$’000
2022
$’000
20,112
100
(1,000)
(26)
$19,186
20,792
100
(750)
(30)
$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
Iofina, Inc.
Iofina Resources, Inc.
Iofina Chemical, Inc.
IofinaEX, Inc.
Iofina Resources, LLC
Iofina Resources, LLC
Country of
incorporation and
operation
United States/CO
United States/CO
United States/DE
United States/KY
United States/CO
United States/TX
80
Principal activity
Holding company
Iodine production
Specialty chemical
Dormant
Dormant
Dormant
Interest in
ordinary shares
and voting rights
100%
100%
100%
100%
100%
100%
IOFINA PLC
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
Iofina, Inc.
Iofina Resources, Inc.
Iofina Chemical, Inc.
IofinaEX, Inc.
Iofina Resources, LLC (CO)
Iofina Resources, LLC (TX)
Registered office
8480 East Orchard Road, Greenwood Village CO 80111, USA
8480 East Orchard Road, Greenwood Village CO 80111, USA
306 W. Main Street, Frankfort, KY 40601, USA
212 N 2nd St., Suite 100, Richmond, KY 40475
8480 East Orchard Road, Greenwood Village CO 80111, USA
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.
81
IOFINA PLC
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.
This page does not form part of the statutory financial statements.
82