RAPAPORT… Gemfields slid into the red in 2018 due to the impact of a new tax regime and a costly legal case, it said Monday.
The company reported a loss of $60.4 million for the year, compared with a profit of $45.1 million the previous year. In 2018, the Zambian government introduced a 15% tax levy that required Gemfields to have its Kagem emerald mine revalued. This contributed to a $26.6 million devaluation charge, which included an inventory impairment charge of $2.6 million.
Gemfields also paid GBP 5.8 million ($7.7 million) to law
firm Leigh Day in a no-admission-of-liability settlement regarding a
human-rights-abuse case brought against the company.
Excluding all those charges,
as well as other tax-related costs, the company’s profit for the year was $18
million, it noted.
Revenue for the year more than doubled to $206.1 million,
compared with $81.7 million in 2017. Proceeds included ruby sales of $127.1 million,
and $60.3 million from emerald auctions.
Image: The 5,655-carat Lion Emerald from the Kagem mine, which was recovered in October 2018. (Gemfields)
Gemfields Saw $60M Loss in 2018
The Bottom Line
- Gemfields posted a $60.4 million loss in 2018, down from a $45.1 million profit in 2017.
- A 15% tax levy by the Zambian government led to a $26.6 million devaluation charge on the Kagem emerald mine.
- Legal settlement costs of $7.7 million related to a human-rights-abuse case further impacted the financial results.
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