JSE- and Aim-listed Gemfields delivered record group revenue and a healthy growth in operating profit in the year ended December 31, 2019; however, the fallout from Covid-19 is expected to have an adverse impact on the company’s operating and financial performance this year.
“Widespread travel and movement restrictions mean that our gemstone auctions, which provide about 93% of our revenue, have been put on hold for an unknown period of time.
“Fortunately, our robust financial position and the historical resilience of coloured gemstones during times of market volatility puts us on sound footing to face the challenges for the remainder of the year,” says CEO Sean Gilbertson.
The company reported revenue of $216-million for 2019, with free cash flow having increased by 16% year-on-year to $31.1-million.
Gemfields generated earnings before interest, taxes, depreciation and amortisation of $81-million, compared with $59-million in 2018.
The company reported an operating profit of $91-million for the year under review, compared with an operating profit of $82-million in the prior year.
Some highlights in the year under review included the company commissioning an industry-leading sort house at the Montepuez ruby mine, in Mozambique; extending the Kagem emerald mining licence for a further 25 years; and the suspension of Zambia’s 15% export duty for previous coloured gemstones.
Gemfields also signed a joint venture agreement for gold exploration in Mozambique and generated $30-million from the sale of its stake in Jupiter Mines.
Gemfields owns 75% of the Kagem emerald mine, in Zambia and owns 75% of the Montepuez ruby mine. Gemfields also holds controlling interests in various other gemstone mining and prospecting licences in Zambia, Mozambique, Ethiopia and Madagascar.
“We are pleased to report a strong set of results for the 2019 financial year, with the team delivering record group revenues and a healthy growth in operating profit. The successful listing on the Aim division of the LSE took place in February this year, a development which we believe will benefit the company by providing, over time, greater share trading liquidity and easier access to the precious coloured gemstones sector for a wider audience of international investors.
“While there were many positives during 2019, the new year has already presented notable challenges including an increase in trespassing artisanal miners at our Montepuez mine and the turmoil triggered by Covid-19.
"I would like to thank all of our employees, communities and stakeholders for the vigilance that they have shown in managing these challenges and to reassure them of our ongoing efforts to safeguard their welfare,” Gilbertson notes.