Gemfields pre-tax profit up 140% to £29.8m

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Gemstone producer says financial year has been "outstanding".

Gemfields, the London-based emerald and gemstone producer, has released its financial results for the year ended June 30, with revenue from sales more than doubling and profit before tax standing at $47.8 million (£29.8m).

The company’s chief executive and 2012 Professional Jeweller Hot 100 Business Big Shot, Ian Harebottle, dubbed the financial year “outstanding”.

He said: “The past financial year has been an outstanding year for Gemfields. We have more than doubled our revenues, improved our profitability, expanded into new products and broadened the depth and breadth of our marketing and distribution activities.

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“We can to use this position of strength to support future growth and to solidify our position as the ‘Leading Coloured Gemstone Company’.”

Key financial highlights include revenue from emerald and beryl sales more than doubling to US$83.7 (£52.2m) million, compared to 2011’s $40.2 million.

Gemfields’ profit before tax and exceptional items increased by 140% to US$47.8 million (£29.8m), while profit after tax, including the impairment reversal of its Kagem mine, stood at $161.5 million (£101m).

At the year-end, Gemfields’ cash at bank improved by 169% to $36.7 million (£22.9m), while the estimated cost of its emerald and beryl inventory sat at $26.6 million (£16.6m).

In terms of Gemfields’ production there was a heavy focus on waste removal during H1 of the financial year, so while the grade for the year was reduced to 205 carats per tonne of material mined, this was said to be a direct result of lower grade areas being mined during the waste removal programme.

There was a drop in Gemfields’ annual production to 21 million carats, a 36% decrease in year-on-year production, due to its waste removal during the first half of the year.

Gemfields also completed the acquisition of a 75% stake in the Montepuez ruby deposit in Mozambique, while also winning a certificate of commendation for its Kagem mine by the Zambian Mines Safety Department in recognition of achieving two million injury-free shifts.

With a view to its sales of rough and polished stones, Gemfields said that it is benefitting from a strong cash position and has confidence in the growing emerald market, opting not to sell any lots where the bids received do not meet its pre-determined minimum reserve prices.

This year, Gemfields says it achieved record revenues, something it says it “testament to the high level of demand that continues to be evident for our unique supply of ethical emeralds”, supported by its ability to supply well graded emeralds to carefully selected distribution partners, coupled with global marketing initiatives at both trade and consumer levels.

Gemfields held higher quality emerald auctions in July 2011 and March 2012, and lower quality emerald auctions in November 2011 and June 2011, totalling four auctions for the year. Selected companies drawn from Germany, India, Israel and the USA attended the auctions which saw 23.52 million carats of emerald and beryl being offered in 107 separate lots. The sales from these auctions totalled US$77.8 million with 74 lots being sold. Total emerald and beryl sales (including rough material, geological specimens and cut-and-polished gemstones) totalled US$83.7 million for the period. The results of the auctions are summarised below.

With a view to its cut and polished stone sales, since its inception in 2011, Gemfields’ London-based cut-and-polished sales office is said to have achieved a high degree of success, initiating work with a number of leading manufacturers and retailers within the United Kingdom and Europe.

The company has enjoyed such high demand that a number of additional offices have been opened including Cape Town, Mumbai and Jaipur. Other key locations are currently under consideration.

Graham Mascall, Gemfields’ chairman, outlined the company’s outlook for the year ahead. He said: “While the global economy remains uncertain, demand for ethically sourced rare coloured gemstones continues to increase across all major markets, including the USA, Europe, India and China.

“We are thus confident that this, coupled with Gemfields’ proven operating efficiencies and accelerated expansion, sales and marketing initiatives, will support continued growth throughout the coming year.

"Furthermore, our efforts to increase the production levels at each of our mines and to bring online certain targeted acquisitions, should serve to reduce our operating risks and ensure healthy production volumes for each of our core products. With sales being well supported by our ability to expand our existing and proven marketing initiatives across a broader target market, and given the various strategic initiatives that we have planned for the coming year, we remain encouraged by the opportunities that are available to us and their potential to secure our continued growth into the future."

Harebottle added that, with the support and unwavering dedication of his fellow team members, and the numerous exciting opportunities that Gemfields continues to be presented with, he remains convinced that this is "yet still only the beginning" for the company.

 

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