Emerald and ruby miner Gemfields (GEM) put in a solid operational performance in the year to June, although the real kicker to the headline earning per share figure was beyond the group's control. Interestingly, the issue was not pricing - which remains robust, according to chief executive Ian Harebottle - but an unexpected tax credit of $8.9m (£6.9m) following a change in the Zambian government's treatment of profit generated by the Kagem mine.
The performance of Kagem, which contributed $101m of revenue, was similar to 2015: total production and average grade were flat year on year, while unit operating costs edged up from $1.48 to $1.58 per carat. However, sales of up to $70.68 per carat for higher-quality emerald and beryl stones were well up on comparable auctions in 2015.
Mr Harebottle argues that sales from both Kagem and Montepuez in Mozambique have been supported by the brand association with the 100 per cent-owned Fabergé, and that the luxury division's operating loss of $11.4m in the period doesn't reflect its marketing power.
Broker finnCap is forecasting adjusted pre-tax profit of $47.2m and EPS of 1.9¢ for the year to June 2017, against $41.8m and 2.2¢ in 2016.
GEMFIELDS (GEM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 47p | MARKET VALUE: | £258m | |
| TOUCH: | 45-47p | 12-MONTH HIGH: | 60p | LOW: 31p |
| DIVIDEND YIELD: | nil | PE RATIO: | 28 | |
| NET ASSET VALUE: | 46¢ | NET DEBT: | 3% | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 84.0 | 249.0 | 37.0 | nil |
| 2013 | 48.0 | -20.0 | -5.0 | nil |
| 2014 | 160 | 36.3 | 2.0 | nil |
| 2015 | 171 | 26.3 | 0.7 | nil |
| 2016 | 193 | 41.8 | 2.2 | nil |
| % change | +13 | +59 | +220 | - |
£1=$1.29 | ||||
