Russian Court ruling on 2007 tax dispute

RNS Number : 4349H

Polymetal International PLC

11 July 2012

 



Release time	IMMEDIATE
Date	11 July 2012

Polymetal International plc

Russian Supreme Arbitration Court ruling on 2007 tax dispute

Polymetal International plc (LSE: POLY) (together with its subsidiaries - the "Company" or the "Group") announces that the Russian Supreme Arbitration Court yesterday made a final ruling on the tax dispute of the Group, and supported the tax authorities, requiring the Group to pay RUB 883 million (approx. US$27 million) in additional taxes (including fines and accrued interest).

On July 10, 2012, the Supreme Arbitration Court (SAC) made a final ruling on the tax dispute between CJSC Magadan Silver, a wholly owned subsidiary of the Group, and tax authorities in relation to the sale of silver by the Group in 2007 pursuant to certain forward sale contracts with ABN AMRO Bank (originally entered into with Standard Bank of London). The tax authorities claimed that the Group lowered its tax base by selling silver at 30-45% below the market price. The Group argued that the silver sales to ABN AMRO were part of a US$105 million loan agreement signed in December 2004, which included forward contract sales at the then current market price. The decision of the SAC supports the tax authorities, requiring the Group to pay RUB 883 million (approx. US$27 million) in additional taxes (including fines and accrued interest), and this ruling is not subject to appeal.

The nature and details of the tax dispute and the history of the litigation since the completion of the field tax audit in 2009 and up to 28 October 2011 were disclosed by the Company in its Prospectus related to its Initial Public Offering of shares on the London Stock Exchange, with subsequent disclosure provided in the Annual Report of the Company for the year ended 31 December 2011. The Company also disclosed the uncertainties surrounding the litigation and the relevant tax law, including a possibility of not being able to ultimately defeat the claim.

In 2011, based on success in defending the case in lower level courts and an assessment of the Group's tax position, the Board concluded that the payment of the amounts claimed by the tax authorities was not probable, and accordingly no provision had been created in the financial statements as at 31 December 2011.

The additional tax charges according to the SAC decision (approx. US$27 million) will be reflected as an expense in the financial statements for the six months ended 30 June 2012 and are due to be paid in July 2012.

Enquiries

Media		Investor Relations
College Hill Leonid Fink Tony Friend	[phone]	Polymetal Pavel Danilin Maxim Nazimok	[phone]
Joint Corporate Brokers
Morgan Stanley Edward Knight Sandip Patodia	[phone]	Canaccord Genuity John Prior Roger Lambert	[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

 

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