Half-year report for six months ended 30 June 2017

RNS Number : 1354P

Polymetal International PLC

29 August 2017

 

Release time	IMMEDIATE
Date	29 August 2017

Polymetal International plc

Half-yearly report for the six months ended 30 June 2017

Polymetal International plc (LSE, MICEX: POLY; ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased to announce the Group's financial results for the six months ended 30 June 2017.

FINANCIAL HIGHLIGHTS

·      Revenue in 1H 2017 increased by 15% to US$ 683 million compared to 1H 2016 ("year-on-year") driven by production growth and tighter management of the seasonal gap between production and sales at Dukat, Omolon and Albazino. Gold sales were 380 Koz, up 19% year-on-year, while silver sales were 12.4 Moz, down 5% year-on-year, in line with production volume dynamics. Average realised gold and silver prices remained largely unchanged from 1H 2016.

·      Group Total cash costs ("TCC")¹ were US$ 656 per gold equivalent ounce ("GE oz"), up 28% year-on-year, driven predominantly by the appreciation of the Russian Rouble against the US Dollar (by 21%, from an average rate of 70.2 RUB/USD in 1H 2016 to 58.1 RUB/USD in 1H 2017) on the back of stabilising macroeconomic conditions in Russia and Kazakhstan. All-in sustaining cash costs ("AISC")¹ amounted to US$ 906/GE oz, an increase of 20% year-on-year, driven mostly by the same factors. Both cost measures are expected to decline in 2H on the back of seasonally higher production and sales, particularily at Mayskoye and Okhotsk.

·      Adjusted EBITDA¹ was US$ 257 million, down 12% year-on-year as a result of increased costs incurred due to a stronger Russian Rouble which was partially offset by an increase in production. The Adjusted EBITDA margin was 38% compared to 49% in 1H 2016.

·      Net earnings² were US$ 120 million versus US$ 165 million in 1H 2016, reflecting the decrease in EBITDA and non-cash foreign exchange gains year-on-year. Underlying net earnings (adjusted for the after-tax amount of write-down of metal inventory to net realisable value, foreign exchange gains and change in fair value of contingent consideration liability) were US$ 117 million (1H 2016: US$ 125 million), down 6% year-on year.

·      Regular dividends for 2016 of US$ 0.18 per share (total of US$ 77 million) were paid in May 2017. An interim dividend of US$ 0.14 per share (1H 2016: US$ 0.09 per share) representing 50% of the Group's underlying net earnings for 1H 2017 is proposed by the Board in accordance with the revised dividend policy, while complying with hard ceiling of Net debt/Adjusted EBITDA ratio below 2.5x.

·      Net debt increased to US$ 1,582 million during the period (31 December 2016: US$ 1,330 million), representing 2.19x of last twelve months Adjusted EBITDA, driven by a seasonal working capital increase and intensive construction activities at Kyzyl as capital expenditure for the project expected to peak this year. As in prior years, free cash flow generation will be skewed towards the second half of the year driven by higher production and an expected seasonal working capital drawdown.

·      Polymetal remains on track to meet its 2017 production guidance of 1.40 Moz of gold equivalent. TCC and AISC are expected to trend downward in 2H to meet the original FY 2017 guidance range of US$ 600-650/GE oz and US$ 775-825/GE oz, respectively. This guidance remains dependent on exchange rate and oil price fluctuations.

 "Our stable operational results in the first half of the year largely offset the negative impact of a stronger Russian Rouble on our financial performance while free cash flow declined, as expected, primarily due to the peak capex required to advance the Kyzyl project", said Vitaly Nesis, Group CEO, commenting on the results. "We expect stronger production, lower costs and materially higher cash flow generation in the second half of the year".

_______________________
¹ The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to compliment measures that are defined or specified under International Financial Reporting Standards (IFRS). APMs aim to facilitate analysis of the underlying financial performance of the Group and should not be considered as a substitute for measures of performance reported in accordance with the IFRS. The definition and calculation of non-IFRS APMs used in this report, including Adjusted EBITDA, Total cash costs, All-in sustaining cash costs, Underlying net earnings, Net debt, Free cash flow and the related ratios are explained in the "Financial Review" section below.

² Profit for the financial period

Financial highlights1	1H 2017	1H 2016	Change, %
Revenue, US$m	683	593	+15%
Total cash cost, US$/GE oz	656	514	+28%
All-in sustaining cash cost, US$/GE oz	906	754	+20%
Adjusted EBITDA, US$m	257	293	-12%
Average realised gold price, US$/ oz	1,240	1,224	+1%
Average realised silver price, US$/ oz	16.3	15.5	+5%
Net earnings, US$m	120	165	-27%
Underlying net earnings, US$m	117	125	-6%
Return on Assets, %	12%	20%	-8%
Return on Equity (underlying),%	10%	12%	-2%
Basic EPS, US$/share	0.28	0.39	-28%
Underlying EPS, US$/share	0.27	0.29	-7%
Dividend declared during the period, US$/share2	0.18	0.13	+38%
Dividend proposed for the period, US$/share	0.14	0.09	+56%
Net debt, US$m	1,582	1,3303	+19%
Net debt/Adjusted EBITDA4	2.19	1.75	+25%
Net operating cash flow, US$m	35	65	-46%
Capital expenditure, US$m	193	117	+65%
Free cash flow5, US$m	(163)	(53)	+208%

________________________

¹ Totals may not correspond to the sum of the separate figures due to rounding. % changes can be different from zero even when absolute amounts are unchanged because of rounding. Likewise, % changes can be equal to zero when absolute amounts differ due to the same reason. This note applies to all tables in this release.

² 1H 2017: Final dividend for FY 2016 paid in May 2017. 1H 2016: Final dividend for FY 2015 paid in May 2016.

³ As at 31 Dec 2016.

⁴ On a last twelve months basis. Adjusted EBITDA for 2H 2016 was US$ 466 million.

⁵ Net cash flows from operating activities less cash flows used in investing activities excluding acquisition costs in business combinations and investments in associates and joint ventures. 

Please find the full version of the half-yearly results in the attached PDF.

Conference call and webcast

Polymetal will hold a conference call and webcast on Tuesday, August 29, 2017 at 15:00 London time (17:00 Moscow time).

To participate in the call, please dial:

8 10 800 204 140 11 access code 88322264# (free from Russia), or

[phone] (free from the UK), or

1 855 402 7762 (free from the US), or 

follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4961.

Please be prepared to introduce yourself to the moderator or register.

The webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4961. A recording of the call will be available immediately after the call at [phone] (from within the UK), 1 877 642 3018 (USA Toll Free) and [phone] (from within Russia), access code 310531#, from 17:00 Moscow time Tuesday, August 29, till 17:00 Moscow time Tuesday, September 5, 2017.

Please find the full version of the press release in the attached PDF.
http://www.rns-pdf.londonstockexchange.com/rns/1354P_-2017-8-29.pdf

Enquiries

Media		Investor Relations
FTI Consulting Leonid Fink Viktor Pomichal	[phone]	Polymetal Evgenia Onuschenko Maryana Nesis Michael Vasiliev	[e-mail] [phone] (UK) [phone] (Russia)
Joint Corporate Brokers
Morgan Stanley Sam McLennan Richard Brown Panmure Gordon Adam James Tom Salvesen	[phone] [phone]	RBC Europe Limited Tristan Lovegrove Marcus Jackson	[phone]

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS". THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS. THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS. BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE. THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED

 

END

 

 

IR KMGZRKLLGNZG