REG - Polymetal Int PLC - Report on Payments to Governments 2017

Polymetal International PKAnnouncement

20/06/2018 07:00

RNS Number : 9611R
Polymetal International PLC
20 June 2018
 


 



 
Release time


 
IMMEDIATE




Date


20 June 2018



 
 
Polymetal International plc
Report on payments to governments for the year 2017
 
Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") issues its report on payments to government for the year ended 31 December 2017.
INTRODUCTION
This Report provides an overview of the payments to governments made by Polymetal International plc and its subsidiary undertakings (hereinafter referred to as "Polymetal") for the year 2017 as required under the UK's Report on Payments to Governments Regulations 2014 (as amended in December 2015). These UK Regulations enact domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013)) and apply to large extractive companies, whose securities are publicly listed on a UK-regulated stock market,  that are involved in the exploration, prospection, discovery, development and extraction of minerals, oil, natural gas deposits or other materials. This Report is also intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the United Kingdom.
 
BASIS OF PREPARATION
Legislation
This report is prepared in accordance with The Reports on Payments to Governments Regulations 2014 as enacted in the UK in December 2014 and as amended in December 2015.
Reporting entities
This Report includes payments to governments made by Polymetal plc and its subsidiary undertakings (Polymetal). Payments made by entities over which Polymetal has joint control or significant influence are excluded from this Report.
Activities
Payments made by Polymetal to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals are disclosed in this Report. It excludes payments related to refining activities made to the refineries owned by the government agencies and any payments which are not directly attributable to the production and exploration activities.
Government
Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a subsidiary of a government.
Project
Payments are reported at project level except that payments that are not attributable to a specific project are reported at legal entity level. Project is defined as operational activities which are governed by a single contract, or licence agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project.
"Substantially interconnected" means forming a set of operationally and geographically integrated contracts, or licence agreements that are signed with a government giving rise to payment liabilities. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management.
License agreements are aggregated for the purposes of reporting as a single project only when those legal agreements have substantially similar terms and are both geographically and operationally integrated.
 
Payments
The information is reported under the following payment types:
Income taxes
These are taxes paid by Polymetal on its income and profits in accordance with legislation enacted in the applicable jurisdiction. Payments are reported net of refunds. Value added tax, personal income taxes, social taxes, property taxes are excluded.
The maximum income tax in Russia is set at 20% and is allocated between federal budget and he budgets of the relevant constituent regions. In 2017 the following proportion was applied: 3% to the federal budget, whereas 17% allocated to the regional budgets (2016: 2% to the federal budget, whereas 18% allocated to the regional budgets). From 1 January 2017 Omolon Gold Mining Company LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of 17% (2018:18%) for the operations held in the Special Economic Zone of the Russian Far East, as well as decreased mining tax rate (paying at 60% of the standard mining tax rates). In return for obtaining this tax relief the members of the regional free economic zone are obliged to invest 50% of their tax savings each year in the Special Economic Zone Development Program.  From 1 January 2017 Svetloye LLC has received tax relief as Regional Investment Project and is entitled to the statutory income tax rate of 0% up to 2021, as well as decreased Mining tax rates.
In Kazakhstan and Armenia income taxes are set at 20% and there are no regional or local income taxes in these countries.
Mining tax
Mining tax is a royalty payable in Russian Federation, Kazakhstan and Armenia, which is calculated based on the value of the precious metals extracted in the period. This value is usually determined based on the realised selling price of precious metals or, in case if there were no sales during the period, cost of production of metals extracted (Russian Federation) or the average market price (Kazakhstan) during the period. Royalty payable in Armenia is calculated as a percentage of actual sales during the reporting period.
Mining tax in Russia is levied at federal level, and then is reallocated between federal and respective regional budgets based on the following proportion: 40% of total tax collected to the federal budget, 60% to regional budgets. Mining tax and royalties in Kazakhstan and Armenia are levied at republican level.
Licence fees
These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. No significant licence fees individually more than 86,000 GBP were paid during the year ended 31 December 2017.
Rental fees
The land in the Russian Federation and Kazakhstan on which the Group's production facilities are located is owned by the state. The Group leases this land through operating lease agreements.
Other payments
Other payments include payments made and social commitments in accordance with subsoil contracts attributable to the Kyzyl project and investment in the Special Economic Zone Development Program of Omolon Gold Mining Company LLC and Magadan Silver JSC.
Cash and in-kind payments
Payments are reported on cash basis. No in-kind payments were made during years ended 31 December 2017 and 31 December 2016.
Materiality Level
Any payment, whether made as a single payment or as a series of related payments, below GBP 86,000 within a financial year is excluded from this Report.
Payments made to a governments by a joint ventures or associates of the Group in proportion to the company's interest in the respective venture or associate are insignificant to this Report based on materiality level set.
Exchange Rate
Relevant payments are made by Polymetal in Russian Rubles, Kazakh Tenge and Armenian Dram and for the purpose of this Report are translated to the US Dollar based on the foreign exchange rate at the relevant monthly average rate.
 
 



PAYMENTS PER GOVERNMENT




































FOR THE YEAR 2017


















































































Government          000'$














Income tax


Mining
tax


Rental
fees


Licence fees


Other1


Total














































Russia














79,692  


61,728  


2,096  


         31  


18,267  


 161,814  




Kazakhstan














12,960  


8,911  


61  


-  


4,370  


26,302  




Armenia














-  


3,961  


222  


-  


1,302  


5,485  




Total














92,652  


74,600  


    2,379  


31  


                              23,939  


                 193,601 














































PAYMENTS PER
PROJECT1


















































































Entity                   000'$


Project


Country/ Government


Region


Income tax


Mining
tax


Rental
fees


Licence fees


Other1


Total














































Gold of Northern Urals CJSC


Voro


Russia


Svedlovsk Region


                            23,305  


                            8,102  


                                         98  


                               5  


                                      65  


                   31,575  




Okhotskaya Mining and Exploration Company LLC


Okhotsk


Russia


Khabarovsk Region


                               9,211  


                            7,382  


                                       287  


                               2  


                                      34  


                   16,916  




Svetloye LLC


Svetloye


Russia


Khabarovsk Region


-  


-  


217  


-  


    14  


      231  




Magadan Silver JSC


Dukat


Russia


Magadan Region


                            21,548  


                            8,814  


                                       655  


                             13  


                              14,172  


                   45,202  




Mayskoye Gold Mining Company LLC


Mayskoye


Russia


Chukotka Autonomous Region


-  


                            9,644  


                                            -  


-  


                                      28  


                      9,672  




Omolon Gold Mining Company LLC


Omolon


Russia


Magadan Region


                            14,587  


                            9,715  


                                       403  


                               9  


                                3,890  


                   28,604  




Albazino Resources Ltd


Albazino


Russia


Khabarovsk Region


11,041  


18,071  


436  


2  


64  


29,614  




Varvarinskoye JSC


Varvara


Kazakhstan


n/a


9,803  


3,370  


11  


-  


511  


13,695  




Komarovskoye Mining Company LLC


Komar


Kazakhstan


n/a


2,637  


5,527  


11  


-  


307  


8,482  




Bakyrchik Mining Venture LLC


Kyzyl


Kazakhstan


n/a


484  


14  


36  


-  


3,522  


4,056  




Inter Gold Capital LLC


Kazakhstan


n/a


36  


-  


        3  


-  


30  


 69  




Kapan MPC CJSC


Kapan


Armenia


n/a


-  


3,961  


222  


-  


1,302  


5,485  




Total














                            92,652  


                         74,600  


                                   2,379  


                             31  


                              23,939  


                 193,601  



 
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 3,822 for Omolon Gold Mining Company LLC and kUS$ 13,952 for Magadan Silver JSC.




 
 



PAYMENTS PER GOVERNMENT FOR THE YEAR 20161
 


































 




Government                    000'$














Income tax


Mining
tax


Rental
fees


Licence fees


Other


Total














































Russia














133,114  


   76,503  


       1,231  


        18  


443  


211,309  




Kazakhstan














    5,324  


   4,501  


            49  


           -  


1,522  


11,395  




Armenia














-  


       3,046  


 1  


              -  


9  


  3,056  




Total














138,438  


      84,050  


1,281  


        18  


1,973  


225,760  














































PAYMENTS PER
PROJECT1


















































































Entity                               000'$


Project


Country/ Government


Region


Income tax


Mining
tax


Rental
fees


Licence fees


Other


Total














































JSC Gold of Northern Urals


Voro


Russia


Sverdlovsk Region


21,983  


    11,023  


7  


          0  


53  


33,066  




LLC Okhotskaya Mining and Exploration Company


Okhotsk


Russia


Khabarovsk Region


13,056  


        8,206  


143  


8  


                  20  


21,433  




JSC Magadan Silver2


Dukat


Russia


Magadan Region


66,728  


  22,690


435  






206  


90,058  




Mayskoye Gold Mining Company LLC


Mayskoye


Russia


Chukotka Autonomous Region


-  


      7,459  


1  


-  


     16  


   7,476  




Omolon Gold Mining Company LLC


Omolon


Russia


Magadan Region


12,838  


     9,100  


338  


10  


32  


22,318  




Albazino Resources Ltd


Albazino


Russia


Khabarovsk Region


18,509  


18,025  


        307  


-  


    117  


36,958  




JSC Varvarinskoye


Varvara


Kazakhstan


n/a


4,271  


4,501  


11  


          -  


612  


9,396  




JSC Komarovskoye Mining Company


Komar


Kazakhstan


n/a


905  


             -  


     -  


              -  


87  


     992  




Bakyrchik Mining Venture LLP


Kyzyl


Kazakhstan


n/a


147  


             -  


34  


           -  


799  


979  




JSC Inter Gold Capital


Kyzyl


Kazakhstan


n/a


     -  


     -  


4  


-  


25  


      28  




Kapan MPC CJSC


Kapan


Armenia


n/a


-  


  3,046  


1  






9  


  3,056  




Total














138,438  


84,050  


1,281  


    18  


1,973  


225,760  






















______________________
1 For the entities, acquired during the year ended 31 December 2016, payments to governments are reported from the acquisition date, namely for Kapan MPC CJSC and JSC Komarovskoye Mining Company from 28 April 2016 and 1 August 2016, respectively.
2  Individually less than GBP 86,000
Enquiries



Media


 


Investor Relations




FTI Consulting
Leonid Fink
Viktor Pomichal


+44 20 3727 1000


Polymetal
Eugenia Onuschenko
Maryana Nesis
Michael Vasiliev                   


ir@polymetalinternational.com
+44 20 7016 9505 (UK)
 
+7 812 334 3666 (Russia)




Joint Corporate Brokers


 




Morgan Stanley
Andrew Foster
Richard Brown


Panmure Gordon
Adam James
James Stearns


+44 20 7425 8000
 
 
 
+44 20 7886 2500


RBC Europe Limited
Tristan Lovegrove
Marcus Jackson


+44 20 7653 4000



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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