As foreshadowed, Gemfields (GEM) turned in a headline loss last financial year, but the results were distorted as the coloured gemstone producer was obliged to postpone two auctions of high-grade emeralds in Singapore, which marred an otherwise strong year of operational progress.
The postponements severely hit revenues which resulted in underlying pre-tax profits tumbling from $47.9m (£29.6m) in 2012 to a loss of $19.4m this time round, once you strip out accounting gains which flattered the prior year figures. Earnings were also held in check due to costs associated with the acquisition of iconic jewellery brand Fabergé. Zambia's government wanted all emeralds mined in the country to be auctioned at home, but while the subsequent domestic auctions attracted record prices, Gemfields now anticipates holding three out of the five auctions planned for the current period outside of Zambia, including the first auction of rubies from its Montepuez licence in Mozambique.
The planned auctions will help Gemstones shift part of its $77.9m inventory (from $28m in 2012) that has built up on the back of the postponement and a 42 per cent rise in production from the Kagem emerald mine to 30m carats on the back of improved grades.
Subject to review post results, analysts expect current year EPS of 2¢, rising to 4¢ in 2014-15.
| GEMFIELDS (GEM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 25p | MARKET VALUE: | £135m | |
| TOUCH: | 24-26p | 12-MONTH HIGH: | 44p | LOW: 19p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 42¢* | NET DEBT: | nil | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 0.8 | -0.3 | -51.0 | nil |
| 2010 | 19.9 | 1.5 | 1.0 | nil |
| 2011 | 40.2 | 19.9 | 5.0 | nil |
| 2012 | 83.7 | 248.9 | 37.0 | nil |
| 2013 | 48.4 | -20.1 | -5.0 | nil |
| % change | -42 | - | - | - |
*Includes intangible assets of $48m, or 9¢ a share £1=1.62 | ||||
