5th Mar 2012 07:00
Gemfields plc
("Gemfields" or the "Company")
Interim results for the six months ended 31 December 2011
05 March 2012
Gemfields plc (AIM: GEM) presents its interim report for the six months ended 31 December 2011 (the "Period").
The Chairman's statement and the primary financial statements are set out below. The full interim report can be viewed on the Company's website at www.gemfields.co.uk.
Key financial indicators for the half year:
* Revenue from rough and finished emerald sales up by 57% to US$45.7 million
(2010: US$29.1 million). * EBITDA for the period up by 107% to US$32.2 million (2010: US$15.6 million). * Net profit after tax for the period up by 42% to US$22.0 million (2010: US$15.5 million). * Cash in hand at 31 December 2011 of US$32.4 million (2010: US$15.5 million).
* Estimated production cost of emerald inventory at hand of US$22.1 million
(US$13.4 million).
Key operational developments during the half year:
* Continued increase in achieved per-carat prices due to robust demand for
consistently and ethically supplied coloured gemstones across all major markets. * Mining contractor appointed to supplement in-house capacities for a
significant waste moving programme at the Kagem mine which will open new
areas of ore.
* 4.4 million tonnes of waste moved at a cash operating cost of US$3.25 per
tonne (2010: 1.7 million tonnes at US3.88 per tonne).
Key developments since the end of the period:
* Acquisition of a 75% stake in a significant ruby deposit in the Montepuez
district of the Cabo Delgado province in Mozambique. * Diamond core drilling and bulk sampling undertaken at key target sites within the Kagem licence area.
* Marketing initiatives upgraded in all major markets and extended to include
China and South Africa.
* Two auctions of rough emerald and beryl are scheduled prior to the end of
the financial year. The next emerald auction will be held in Singapore from
19 - 24 March 2012.
The Chairman's statement and the primary financial statements are set out below and can be viewed on the Company's website at www.gemfields.co.uk.
Ian Harebottle, CEO of Gemfields, commented:
"Gemfields has once again enjoyed a financially robust first half withincreasing demand, solid financial controls and improving operatingefficiencies underpinning gratifying margins. We're excited about the futuregiven the anticipated increase in production from the Kagem emerald mine (adirect result of our commitment to waste mining over the past half year) andthe acquisition of a controlling stake in the foremost Mozambican rubydeposit. We have a healthy cash position, an exceptional team and anexhilarating platform for growth."
Enquiries:
Gemfields [email protected]
Dev Shetty, CFO +44 (0)20 7518 3402
Canaccord Genuity Limited +44 (0)20 7050 6500
Nominated Adviser and Joint Broker to Gemfields
Tarica Mpinga/Andrew Chubb
Neil Passmore +44 (0)20 7155 8630
JP Morgan Cazenove
Jos Simson/Lydia Eades +44 (0)20 7920 3150
Tavistock Communications Gemfields PLC Chairman's statement Dear Shareholder,Gemfields has once again delivered pleasing results in the first half of thisnew financial year. The results justify our expectations for the continuedgrowth and success of the Company and the coloured gemstone sector as a whole.The sector has been undercapitalised and undervalued for some time andGemfields believes it is now poised for a period of dynamic growth.Despite uncertainties in the global markets and lower than expected productionat our flagship Kagem emerald mine, demand for our products (and thecommensurate increase in achievable prices) remains firm and we are confidentthat our unremitting quest for efficiency, and increased scale of operations,will deliver the positive revenue and production appreciation we anticipateover the longer term.The completed acquisition of a controlling interest in a substantial rubydeposit in Mozambique, the continued development of our exploration licences inMadagascar and the encouraging receptions we have received from the governmentsof Zambia (newly elected), Mozambique and Madagascar, further underpin ourconfidence in the jurisdictions in which we operate, our industry and ourCompany. As these results demonstrate, Gemfields is now well positioned toreward you, our loyal shareholders, with continued growth and positivefinancial performance.
Key financial indicators for the half year:
* Revenue from rough and finished emerald sales up by 57% to US$45,732,943
(2010: US$29,051,279).
* EBITDA for the period up by 107% to US$32,243,445 (2010: US$15,572,044 ).
* Net profit after tax for the period up by 42% to US$22,002,078 (2010: US$15,547,789).
* Cash in hand at 31 December 2011 of US$32,382,069 (2010: US$15,508,993).
* Estimated production cost of emerald inventory at hand of US$22,112,885
(US$13,364,736).
Key operational developments during the half year:
* Continued increase in achieved per-carat prices due to robust demand for
consistently and ethically supplied coloured gemstones across all major markets. * Mining contractor appointed to supplement in-house capacities for a
significant waste moving programme at the Kagem mine which will open new
areas of ore.
* 4.4 million tonnes of waste moved at a cash operating cost of US$3.25 per
tonne (2010: 1.7 million tonnes at US3.88 per tonne).
Key developments since the end of the period:
* Acquisition of a 75% stake in a significant ruby deposit in the Montepuez
district of the Cabo Delgado province in Mozambique.
* Diamond core drilling and bulk sampling undertaken in key targets within
the Kagem licence area.
* Marketing initiatives upgraded in all major markets and extended to include
China and South Africa.
* Two auctions of rough emerald and beryl are scheduled prior to the end of
the financial year. The next emerald auction will be held in Singapore from 19 - 24 March 2012. Gemfields PLC Chairman's statement (Continued) Strategic ReviewThe increasing number of opportunities for additional growth and developmentthat Gemfields is being presented with on a daily basis has required some levelof restructuring within the Group. These changes, which include the expansionof some of our core divisions have resulted in an increase in overhead costs,but will ensure that we are better positioned to maximise the inherent valuecontained within Gemfields' core and proprietary coloured gemstonecompetencies.While continuing to focus on reducing mine-level operating costs, improvingeconomies of scale, developing sales pipelines and increasing consumer demandfor Gemfields' ethical coloured gemstones, we will now also begin to prioritisethe way in which we manage, evaluate and bring to market these new and excitingopportunities.Operations * Mining - Kagem The Kagem emerald mine in Zambia is presently Gemfields' only operating emeraldmine and serves as the source of emeralds and beryl for our downstreambusiness. Despite prevailing uncertainty in the global markets, Gemfields'clearly demonstrated track record, our healthy cash and inventory positions andthe robust demand for ethically sourced and transparently supplied emeraldsmotivated our decision to escalate the scale of operations at the Kagem mine.The focus during the first half of this financial year has been directed atwaste mining with a view to opening new areas for future ore production andfurther improving our mining efficiencies over the longer term. A contractorwas thus appointed to supplement the Company's own in-house capabilities. Whilethe initial focus has been on waste removal and not on ore mining, operatingcosts for the period of US$175 per tonne of ore (known as "Reaction Zone") haveremained well below the historic average of US$196 per tonne.
Kagem's key annual production parameters are summarised below:
KAGEM Annual Units Yr to Yr to Yr to Yr to Yr to 6 monthsProduction Summary 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun to 31 07 08 09 10 11 Dec 11 Gemstone million 9.4 9.9 28.0 17.4 33.0 8.8 Production carats (Emerald + Beryl) Ore Production `000 29 42 80 61 69 42 (Reaction Zone) tonnes Grade (Emerald + carats/ 325 233 349 286 478 212 Beryl/Reaction tonne Zone) Waste Mined million 2.8 5.1 4.0 2.5 3.7 4.4 (including TMS)* tonnes Stripping Ratio 96 120 50 42 54 106 *Includes contractual miningKagem's unaudited total operating costs (excluding capitalised waste strippingcosts) for the six months ending 31 December 2011 totalled US$7.3 million,implying an average production cost during the period of US$0.83 per carat ofemerald and beryl (compared with US$0.43 per carat for the year ending 30 June2011). The increase in relative per-carat operating costs is a direct result ofthe Company's decision to focus primarily on waste mining, the areas beingmined and the resultant effect on production during the first half. While thesecosts are not likely to be fully offset during the remainder of this financialyear, they should be fully recovered over the life of the project.Low grades and a number of external factors (including contractor delays andheavier than anticipated seasonal rains), have negatively affected production Gemfields PLC Chairman's statement (Continued)
Waste stripping will continue to increase in the short to medium term as additional areas of overburden are mined in order to expand the levels of available ore and as the Company seeks to expand its scale of operations. This will have a commensurate impact on total mining costs.
Gemfields' trial underground mining project achieved a total linear developmentfor the calendar year 2011 of 169.5 meters, with total underground developmentsince the commencement of operations of 305 metres. With four production drivesaccessing ore bearing contact areas, the project has seen a steady increase inboth ore and carats produced within this zone. Some 61,077 carats were producedunderground in the quarter ending 31 December 2011, improving the project'sgrade to 61 carats per tonne. This trial project has provided Gemfields with ahigh degree of confidence that larger scale underground mining project could besafely and effectively implemented within the Zambian emerald belts, with plansunderway to evaluate the possibility of initiating underground mining inadditional areas.
* Sales and Inventories
Gemfields offers its rough production to selected market participants by way ofsealed bid auctions where all gemstones tendered are certified by Gemfields asnatural, untreated and of Zambian origin. Many of the world's top gem housesand emerald lapidaries are invited to attend these events.During the period, Gemfields hosted an auction of higher-quality rough emeraldsin July 2011 and a lower-quality rough emerald auction in November 2011. Some33 companies drawn from Germany, India, Israel and the USA attended theseevents which saw 11.9 million carats of rough emerald and beryl offered in 51separate lots. The sales from these auctions totalled US$42.6 million with 37out of the 51 lots being sold. The results of the auctions held to date aresummarised below. AUCTION JULY NOVEMBER '09 MARCH JULY DECEMBER `10 MARCH JULY `11 NOVEMBER RESULTS `09 '10 `10 `11 AUCTION `11 SUMMARY AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION AUCTION Dates 20-24 23-27 11-15 19-23 6-10 December 10-14 11-15 Jul 21-25 July November 2009 March July 2010 March 2011 November 2009 2010 2010 2011 2011 Location London, Johannesburg, Jaipur, London, Johannesburg, Jaipur, Singapore Jaipur, England SA India England SA India India Type Higher Higher Lower Higher Higher Lower Higher Lower Quality Quality Quality Quality Quality Quality Quality Quality Carats 1.36 1.12 million 28.90 0.85 0.87 million 16.83 1.07 10.83 offered million million million million million million Carats 1.36 1.09 million 22.80 0.80 0.75 million 12.98 0.74 9.82 Sold million million million million million million No. of 23 19 25 37 32 44 38 27 companies placing bids Average 10 13 8 18 16 14 16 9 no. of bids per lot No. of 27 19 56 27 19 35 25 26 lots offered No. of 26 14 49 24 18 34 18 19 lots sold Percentage 96% 74% 88% 89% 95% 97% 72% 73% of lots sold Percentage 99.8% 97.2% 78.9% 94.2% 86% 77% 69% 91% of lots sold by weight Percentage 82% 76% 89% 87% 99% 99% 91% 80% of lots sold by value Total USD 5.9 USD 5.6 USD 7.2 USD 7.5 USD 19.6 USD 9.9 USD 31.6 USD 11.0sales million million million million million million million million realised at auction
Average USD USD 5.10 per USD USD USD 26.20 per USD USD
42.71 USD 1.12per carat 4.40 carat 0.31 9.35 carat 0.77 /carat per sales per per per per carat value carat carat carat carat
Significant interest from downstream stakeholders to attend the Gemfields'auctions provides sound evidence of healthy demand. This trend was furtherdemonstrated in the positive results achieved at the auction held in November2011 where a 46% increase in quality-for-quality per carat prices was realisedin the seven months since March 2011. Gemfields PLC Chairman's statement (Continued) * Geology and Exploration
The Directors took the decision to write down the value of Kagem to zero inGemfields' annual financial statements to 30 June 2009, driven largely by theprevailing uncertainty in the global economy, the then loss-making performanceof the Kagem mine and the lack of reliable emerald prices, all of which made itdifficult to justify forecasts showing a positive cashflow with reasonablecertainty. Being increasingly optimistic that Kagem will become a consistentlyviable long term operation, and in recognition of the fact that many of theprevious uncertainties are either alleviating or better understood, Gemfieldshas initiated a re-assessment of the value of these assets. Additional drillinghas been carried out in this area with a total of 2,072.9 meters of drill corerecovered from 9 boreholes and a comprehensive resource evaluation has beeninitiated.Preliminary work has also been initiated on the Mozambican ruby deposit,covering approximately 34,000 hectares and which is believed to be potentiallyone of the largest ruby concessions in private hands in the world, with bulksampling and diamond core drilling set to begin in around mid-2012.
* Security
Securing the Group's assets, protecting its people and limiting the theft ofgemstones remain key operational priorities. While the various securityinitiatives implemented to date continue to show positive results - as attestedto by a reduction in the volumes of material available in the informal marketsneighbouring the mine - the reduction of theft and physically securing themining licence area remains an on-going challenge.An application has been made and a licence has been granted to Kagem by theRadiation Protection Authority of Zambia to install x-ray body-scanningequipment at key sites across the mine. Quotes from various suppliers are nowbeing evaluated and additional dialog with key government and employee bodieshas been initiated in an effort to identify and address all key issues andconcerns prior to purchase and installation.
* Illegal mining activities within the Kagem licence area
Kagem continues to experience organised illegal mining activity within theboundaries of the Kagem mining licence. While the matter is as yet not fullyresolved, Gemfields continues to work in cooperation with all key Zambianministries in its efforts to ensure that an amicable and peaceful solution isimplemented and Kagem's legal rights are protected and respected.
* Marketing and Promotions
Gemfields focus on the mining and marketing of consistently supplied andethically sourced coloured gemstones is delivering positive results as demandfor these products continue to increase across all major markets. While variousmarketing initiatives have been implemented on a broad base and across theglobe, the core focus to date has been on the Indian market, a market which hasa long-standing and well embedded love for emeralds and other colouredgemstones. A total of 12 Indian fashion and lifestyle magazines carriedGemfields' "Uniquely you" advertising campaign in the Indian market in April2011. Gemfields' advertising and PR programmes have proved to be extremelyeffective in both trade and luxury media and were extended into the UAE duringthe period, generating exposure and coverage for our products in these marketsvia paid for advertisements and editorials valued at well over US$3.8 million.
Building on the solid marketing platform that has been established within India and the UAE, Gemfields now plans to include China and some key European and African markets on its list of target countries.
Gemfields PLC Chairman's statement (Continued) * Environment and Corporate Social Responsibility
The Kagem emerald mine, in its enduring effort to better the lives of the people in the communities of the Lufwanyama District, is currently supporting two community farming projects, four schools and two medical clinics.
One of the clinics, built some years ago, is now in the process of beingrefurbished and extended to include the construction of staff housing, amaternity wing, bathrooms, toilets and a shelter for patients and guardians.The community is being encouraged to fully participate in order to engender asense of ownership.
Similarly, the schools are being upgraded and the farming communities are receiving support from Kagem through the provision of farming supplies and the purchasing of their produce (at market prices) for consumption at the Kagem mine site.
The Company's own CSR contributions are now also being augmented by additionalcontributions from third party downstream stakeholders. This is an excitingdevelopment and proof of the depth and breadth of value that can be forthcomingto local governments and communities when partnerships are managed in a formal,open and transparent manner.The company has initiated a base line biodiversity study, and through itsassociation with the World Land Trust and the Universities of East Anglia andZambia, is planning to progress its already exemplary environmental managementeven further.
* Mining - Kariba Amethyst Mine
The newly elected Patriotic Front Government of Zambia, under the leadership ofPresident Michael Sata, has elected to transfer its 50% stake in KaribaMinerals Ltd (of which Gemfields owns the remaining 50%) to the state-ownedresources holding company, ZCCM-IH. While the transfer of these shares remainsin progress, Gemfields has initiated preliminary discussions with themanagement of ZCCM-IH in terms of the possibility of the Company acquiring acontrolling stake in Kariba. This move would support a proposed increase inGemfields' financial commitment to Kariba, which would support additionalgrowth and development at the mine.
* Mining - Oriental Mining S. a. r. l.
In 2008, Gemfields exercised its option to acquire the entire issued share capital of Oriental Mining s.a.r.l., a company incorporated in Madagascar ("Oriental"). Gemfields was granted the option by Rox Limited (a company controlled by Pallinghurst Resources) ("Rox") pursuant to an agreement between Gemfields and Rox dated 18 December 2007.
Oriental has a total of 15 exploration licences covering emeralds, rubies, sapphires, tourmalines and garnets in the Antananarivo, Fianarantsoa and Toliara provinces of Madagascar, and the right to an additional five exploration licences that are pending approval from the Madagascan Ministry of Energy and Mines.
Madagascar is recognised as one of the most exciting colour gemstone provincesin the world today, with several key discoveries having been made there duringthe last decade. Gemfields believes that, in the medium to long term,gemstone-related activity in the country has the potential to become a valuablepart of Gemfields' asset portfolio. Given Madagascar's improving political andsecurity environment, a preliminary geological and geotechnical assessment ofthese areas, carried out by Mineralogical and Peterological Services("M.A.P.S.") has classified the various licences into four groups ranging from`highly prospective' to `limited or no potential'. A total of nine licenceshave been identified to fall into the `prospective' and `highly prospective'categories and will be undergoing additional investigation in the coming year. Gemfields PLC Chairman's statement (Continued)
Post reporting period events
Approximately US$1.8 million has been spent on early stage capital equipment for the Mozambique ruby, with a total of US$4 million budgeted for this financial year.
Gemfields' next auction of (predominantly higher-quality) rough emeralds is scheduled to take place in Singapore from 19-14 March 2012.
Objectives and Outlook for the remainder of the year
Objectives:
* Bring the Mozambican operation online by the end of calendar 2012; * Build on the sound management team and competencies that are now well entrenched within the Company;
* Leverage Gemfields' clear strategic advantages within the coloured gemstone
sector and look to use these to drive additional organic and acquisitional
growth;
* Use the Company's solid cash flow status to support growth and longer term
planning; and * Position Gemfields as the world's leader in the mining, marketing and supply of `Premium Coloured Gemstones'.
Outlook:
* The Kagem mine plan continues to be driven by improving mining
efficiencies, targeting of higher grade areas and the reduction of relative
operating costs. The focus over the coming months will be on improving
gemstone production volumes.
* Increasing demand for Gemfields' products, supported by targeted marketing
initiatives, is likely to continue for the near to medium term. While
indicators show that demand for the Company's products remains buoyant
across all major markets, it is likely that the rate of increase will begin
to normalise. * The introduction of Mozambican rubies offers exciting prospects for the Company to broaden its global footprint and should provide additional opportunities to further support the Companies growth objectives. Graham Mascall2 March 2012 Gemfields PLC Consolidated statement of comprehensive income for the six months ended 31 December 2011 Note 6 months 6 months Year ended ended ended 31 December 31 December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) US$'000 US$'000 US$'000 Revenue 45,733 29,051 40,157 Increase/(decrease) in 3,432 (3,180) 2,136 inventory Mining and production (8,530) (7,777) (14,370) costs (1,268) (1,231) (2,660) Depreciation Other cost of sales (3,425) - (114) ________ ________ ________ Total cost of sales (9,791) (12,188) (15,008) ________ ________ ________ Gross profit 35,942 16,863 25,149 Other income 89 61 98 Administrative expenses Other administrative (5,056) (2,583) (5,657) expenses Revaluation of (181) 1,246 313 available-for-sale investments Total Administrative (5,237) (1,337) (5,344) expenses ________ ________ ________ Profit from operations 30,794 15,587 19,903 ________ ________ ________ Finance income 384 12 110 Finance expenses (88) (51) (111) ________ ________ ________ Profit before taxation 31,090 15,548 19,902 ________ ________ ________ Tax (charge)/credit 3 (9,088) - 1,544 ________ ________ ________ Profit and total 22,002 15,548 21,446 comprehensive income for the period ________ ________ ________ Attributable to: Equity shareholders of the 16,551 12,445 17,046 parent Non-controlling interests 5,451 3,103 4,400 ________ ________ ________ 22,002 15,548 21,446 ________ ________ ________ Earnings per share Basic 4 US$0.05 US$0.04 US$0.05 Diluted 4 US$0.05 US$0.04 US$0.05 All amounts relate to continuing activities. Gemfields PLC Consolidated statement of changes in equity for the six months ended 31 December 2011 Attributable to equity holders of the parent Cumulative Share Share Merger Option Translation Retained Total Non-controlling Capital Premium Reserve Reserve Reserve Deficit Interest Equity $000s $000s $000s $000s $000s $000s $000s $000s $000s Balance at 31 6,160 96,823 121,005 1,690 (7) (192,719) 32,952 3,618 36,570December 2010 Total - - - - - 4,601 4,601 1,297 5,898comprehensive income for the six months Issue of shares 4 30 - - - - 34 - 34 Share based - - - 528 - - 528 - 528payments Expired options - - - (1,768) - 1,768 - - - ____ _______ ______ ______ ________ _______ _____ _______ _____ Balance at 30 6,164 96,853 121,005 450 (7) (186,350) 38,115 4,915 43,030June 2011 ____ _______ ______ ______ ________ _______ _____ _______ _____ Total - - - - - 16,551 16,551 5,451 22,002comprehensive income for the six months Issue of shares 4 41 - - - - 45 - 45 Share based - - - 322 - - 322 - 322payments Cancelled options - - - (8) - 8 - - - Exchange - - - - (102) - (102) - (102)difference arising on translation ____ _______ ______ ______ ________ _______ _____ _______ _____ Balance at 31 6,168 96,894 121,005 764 (109) (169,791) 54,931 10,366 65,297December 2011 ____ ______ ______ ______ ________ ______ _____ _______ _____
The nature and purpose of each reserve within Shareholders' equity is described as follows:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of nominal value.
Merger reserve The difference between the fair value of the shares issued asconsideration for acquisition of subsidiaries in excess of the nominal value ofthe shares, where 90% or more of shares are acquired.
Option reserve Cumulative fair value of options charged to the statement of comprehensive income.
Cumulative translation reserve Cumulative gains and losses on retranslating the net assets of overseas operations to the
presentational currency of the group.
Retained deficit Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Non-controlling interest Amounts attributable to non-controlling shareholders. Gemfields PLC Consolidated statement of financial position at 31 December 2011 31 December 31 December 31 June 20 2011 2010 11 (Unaudited) (Unaudited) (Audited) US$'000 US$'000 US$'000 Non-current assets Property, plant and 7,852 7,091 8,076 equipment Available-for-sale 1,544 2,658 1,725 Investments 6,969 - - Deferred stripping costs - - 2,205 Deferred tax asset ________ ________ ________ 16,365 9,749 12,006 ________ ________ ________ Current assets Inventory 23,338 14,316 20,054
Trade and other receivables 4,640 4,340 3,582
Cash and cash equivalents 32,382 15,509 13,649 ________ ________ ________ Total current assets 60,360 34,165 37,285 ________ ________ ________ Total assets 76,725 43,914 49,291 ________ ________ ________ Non-current liabilities Other non-current (1,132) (489) (895) liabilities (1,471) (46) - Deferred tax liability ________ ________ ________ (2,603) (535) (895) Current liabilities Trade and other payables (3,032) (2,461) (3,807) Current tax (5,026) - (743) Other current liabilities (767) (4,348) (816) ________ ________ ________ (8,825) (6,809) (5,366) ________ ________ ________ Total liabilities (11,428) (7,344) (6,261) ________ ________ ________ Total net assets 65,297 36,570 43,030 ________ ________ ________ Capital and reserves attributable to equity holders of the parent Share capital 6,168 6,160 6,164 Share premium 96,894 96,823 96,853 Merger reserve 121,005 121,005 121,005 Option reserve 764 1,690 450 Cumulative translation (109) (7) (7) reserve Retained deficit (169,791) (192,719) (186,350) ________ ________ ________ 54,931 32,952 38,115 Non-controlling interests 10,366 3,618 4,915 ________ ________ ________ Total equity 65,297 36,570 43,030 ________ ________ ________
The financial statements were approved by the Board of Directors and authorised for issue on 2 March 2012.
Devidas Shetty
Director
Company Registration Number 05129023
Gemfields PLC Consolidated statement of cash flows for the six months ended 31 December 2011 At 31 At 31 At 30 June December December 2011 2010 2011 (Unaudited) (Unaudited) (Audited) US$'000 US$'000 US$'000
Cash flows from operating activities
Profit for the year after tax 22,002 15,548 21,446 Depreciation 1,268 1,231 2,660 Deferred tax charge/(credit) 3,677 - (2,251) Share-based payments 322 77 605 Finance income (384) (12) (110) Finance expense 88 51 111 Profit on sale of property, plant and (144) 9 (107)equipment Impairment/(gain) of available for sale 181 (1,246) (313)investments (Increase) in trade and other (1,058) (2,685) (531)receivables Increase in trade and other payables and 3,508 440 1,939current tax Increase/(decrease) in other liabilities 188 625
(1,911)
(Increase)/decrease in inventory (3,284) 3,064 (2,674) ________ ________ ________
Net cash flow from operating activities 26,364 17,102 18,864
Cash flows from investing activities
Interest received 110 12 110 Purchase of property, plant and (1,045) (927) (4,728)equipment
Sale of property, plant and equipment 144 -
107 Deferred stripping costs (6,969) - - ________ ________ ________
Net cash flow from investing activities (7,760) (915) (4,511)
Cash flows from financing activities
Issue of ordinary shares 45 - 34 Repayment of borrowings - (3,506) (3,506) Finance expense (88) 72 - ________ ________ ________ Net cash flow from financing activities (43) (3,434) (3,472) Net increase in cash and cash 18,561 12,753 10,881equivalents Cash and cash equivalents at start of 13,649 2,879 2,879period Exchange differences on translation 172 (123) (111) ________ ________ ________ Cash and cash equivalents at end of 32,382 15,509 13,649period ________ ________ ________ Gemfields PLC Notes forming part of the interim report for the six months ended 31 December 2011 * Accounting policies The interim financial information has been prepared using policies based oninternational Financial Reporting Standards (IFRS and IFRIC interpretations)issued by the International Accounting Standards Board ("IASB") as adopted foruse in the EU. The interim financial information has been prepared using theaccounting policies which are consistent with those applied by the group in thefinancial statements to 30 June 2011 and will be applied in the Group'sstatutory financial information for the year ended 30 June 2012.The Directors are in the process of assessing the impact of the new standards,amendments to existing standards and interpretations in order to determinetheir impact on the Group. Based on the Directors assessment so far, the effectof the changes is considered likely to affect disclosure only.
* Financial reporting period
The interim financial information for the period 1 July 2011 to 31 December2011 is unaudited. In the opinion of the Directors the interim financialinformation for the period presents fairly the financial position, and resultsfrom operations and cash flows for the period in conformity with the generallyaccepted accounting principles consistently applied. The interim financialinformation incorporates unaudited comparative figures for the interim period 1July 2010 to 31 December 2010 and the audited financial year to 30 June 2011.
The financial information contained in this interim report does not constitute statutory accounts as defined by Section 435 of the Companies Act 2006.
The comparatives for the full year ended 30 June 2011 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under Section 498 (2)- (3) of the Companies Act 2006.
3 Taxation of profit for the period
6 months 6 months Year ended ended 31 ended 31 December December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) US$'000 US$'000 US$'000 Current tax charge (5,411) - (707) Deferred tax (charge)/credit (3,677) - 2,251 ________ ________ ________ Tax (charge)/credit (9,088) - 1,544 ________ ________ ________4 Earnings per share
Earnings per ordinary share have been calculated using the weighted average number of shares in issue during the period. The weighted average number of shares is 324,389,883 (31 December 2010 - 324,114,883; 30 June 2011 - 324,131,527) and the profit, being profit after tax attributable to equity holders of the parent is US$16,550,897 (31 December 2010 - US$12,445,463; 30 June 2011 - $17,045,957).
Gemfields PLC Notes forming part of the interim report for the six months ended 31 December 2011 (Continued) Diluted earnings per share amounts are calculated by dividing the profit forthe year attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year, plus theweighted average number of shares that would be issued on the conversion ofdilutive potential ordinary shares into ordinary shares. The calculation, ofthe dilutive potential ordinary shares related to employee and director shareoption plans, includes only those options with exercise prices below theaverage share trading price for each period. The diluted weighted averagenumber of shares is 332,548,883 (31 December 2010 - 332,564,883; 30 June 2011 -332,476,527).1
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