REG-Polymetal International plc Polymetal: Preliminary results for the year ended 31 December 2019
04/03/2020 07:05
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Polymetal International plc (POLY)
Polymetal: Preliminary results for the year ended 31 December 2019
04-March-2020 / 10:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR:
AUCOY
Date 04 March 2020
Polymetal International plc
Preliminary results for the year ended 31 December 2019
Polymetal International plc (LSE, MOEX: POLY, ADR: AUCOY) (together with
its subsidiaries - "Polymetal", the "Company", or the "Group") is pleased
to announce the Group's preliminary results for the year ended 31 December
2019.
"We are pleased to report record earnings and solid free cash flow for the
year underpinned by a robust operating performance and strong commodity
prices", said Vitaly Nesis, Group CEO of Polymetal, commenting on the
results. "We have also advanced our key strategic projects, reduced net
debt and paid substantial dividends".
FINANCIAL HIGHLIGHTS
• In 2019, revenue increased by 19%, totalling US$ 2,246 million (2018:
US$ 1,882 million). Average realised gold and silver prices followed
market dynamics and increased by 13% and 11%, respectively. Gold sales
were 1,366 Koz, up 14% year-on-year, while silver sales were down 14%
to 22.1 Moz, in line with production volume trends and further
supported by working capital release.
• Group Total cash costs 1 1 (TCC) for the full year were stable
compared to 2018 at US$ 655/GE oz, 1% above the Group's guidance of
US$ 600-650/GE oz owing to higher domestic diesel prices and higher
royalties. All-in sustaining cash costs1 (AISC) were broadly unchanged
from 2018 at US$ 866/GE oz, 2% above the Group's guidance of US$
800-850/GE oz, driven by the same factors.
• Polymetal posted record Adjusted EBITDA1 of US$ 1,075 million, a 38%
increase over 2018, against the backdrop of higher production volumes,
higher commodity prices, and stable costs. Adjusted EBITDA margin
reached 48% (2018: 41%).
• Net earnings 2 2 were a record US$ 483 million (2018: US$ 355
million), with basic EPS of US$ 1.02 per share (2018: US$ 0.78 per
share). Underlying net earnings1 increased by 31% to US$ 586 million
on the back of higher operating profit.
• Capital expenditure was US$ 436 million 3 3 , up 27% compared to US$
344 million in 2018 and above the initial guidance of US$ 380 million,
mostly due to accelerated pre-stripping and construction at Nezhda.
Construction at Nezhda is around 45% complete as of year end.
• Net debt1 decreased to US$ 1,479 million (31 December 2018: US$ 1,520
million), representing a Net debt/Adjusted EBITDA ratio of 1.38x
(2018: 1.95x), well below the Group's target leverage ratio of 1.5x.
The Company continued to generate significant free cash flow1 which
amounted to US$ 299 4 4 million (2018: US$ 134 million), supported
by a net cash operating inflow of US$ 696 million (2018: US$ 513
million).
• A final dividend of US$ 0.42 per share (approx. US$ 197 million)
representing 50% of the Group's underlying net earnings for 2H 2019
has been proposed by the Board in accordance with our dividend policy
while remaining within the Net debt/Adjusted EBITDA target of 1.5x and
comfortably below the hard ceiling ratio of 2.5x. In January 2020, the
Board also announced a special dividend of US$ 0.20 per ordinary share
(approx. US$ 94 million). This will bring the total dividend declared
for FY 2019 to US$ 385 million (2018: US$ 223 million), or US$ 0.82
per share versus US$ 0.48 per share in 2018.
OPERATING AND ESG HIGHLIGHTS
• The Company's FY2019 GE production amounted to 1,614 Koz, an increase
of 3% over 2018 and 4% above the original production guidance of 1.55
Moz. A strong contribution from Kyzyl more than compensated for asset
disposals while the rest of the portfolio continued to demonstrate
stable results. Production from continuing operations grew by 14%
year-on-year to 1,609 Koz GE.
• Full year gold production totalled 1,316 Koz, a 8% increase
year-on-year, while silver output decreased by 15% on the back of
asset disposals and planned grade decline at Dukat.
• Safety performance in 2019 deteriorated both in terms of frequency of
lost-time injuries and the number of fatalities. The Board approved
significant safety-related changes to the remuneration structure for
all levels of the Company management together with a comprehensive
action plan focused on impacting behaviors and attitudes of employees.
• Our operational achievements are underpinned by the value that we
place on environmental, social and governance (ESG) issues and this
has contributed to Polymetal's international recognition as a leading
ESG advocate within Russia and the CIS. In 2019, the Company was
reaffirmed as a member of the Dow Jones Sustainability and FTSE4Good
indices, MSCI ESG Ratings score improved from BBB to A.
2020 OUTLOOK
• The Company reiterates its current production guidance of 1.6 Moz of
GE for each of FY2020 and 2021. Traditionally, production in both
years will be weighted towards 2H due to seasonality.
• TCC in 2020 is expected to be in the range of US$ 650-700/GE oz while
AISC is expected at US$ 850-900/GE oz. The expected increase over 2019
cost levels is driven by the appreciation of the Russian rouble and
increased domestic diesel fuel prices compared to 2019, as well as
increased royalties on the back of continued strong gold and silver
price performance. The guidance remains contingent on the
Rouble/Dollar exchange rate and oil price.
Financial highlights 5 5 2019 2018 Change, %
Revenue, US$m 2,246 1,882 +19%
Total cash cost, US$ /GE oz 655 654 6 6 0%
All-in sustaining cash cost, US$ /GE oz 866 8642 0%
Adjusted EBITDA, US$m 1,075 780 +38%
Average realised gold price, US$ /oz 7 7 1,411 1,253 +13%
Average realised silver price, US$ /oz3 16.5 14.8 +11%
Net earnings, US$m 483 355 +36%
Underlying net earnings, US$m 586 447 +31%
Return on Assets 8 8 , % 20% 17% +3%
Return on Equity (underlying)4, % 19% 16% +3%
Basic EPS, US$ /share 1.02 0.78 +31%
Underlying EPS, US$ /share 1.25 1.00 +26%
Dividend declared during the period, US$ 0.51 0.47 +9%
/share 9 9
Dividend proposed for the period, US$ 0.82 0.48 +71%
/share 10 10
Net debt, US$m 1,479 1,520 -3%
Net debt/Adjusted EBITDA 1.38 1.95 -29%
Net operating cash flow, US$m 696 513 +36%
Capital expenditure, US$m 436 344 +27%
Free cash flow 11 11 , US$m 256 176 +45%
Free cash flow post-M&A 12 12 , US$m 299 134 +122%
CONFERENCE CALL AND WEBCAST
The company will hold a conference call and webcast on Wednesday, 4 March
2020 at 11:00 London time (14:00 Moscow time).
To participate in the call, please dial:
From the UK:
+44 208 089 2860 (local access)
0800 756 3333 (toll free)
From the US:
+1 334 777 6978 (local access)
800 367 2403 (toll free)
From Russia:
+7 499 609 1260 (local access)
8 800 100 3687 (toll free)
To participate from other countries, please dial any of the local access
numbers listed above.
Conference code: 2522219
To participate in the webcast follow the link:
https://webcasts.eqs.com/polymetal20200304. Please be prepared to
introduce yourself to the moderator or register.
A recording of the call will be available immediately after the call at
+44 207 660 0134 (from the UK), +1 719 457 0820 (from the USA) and 8 10
800 2702 1012 (from Russia), access code 2522219, from 17:30 Moscow time
Wednesday, 04 March, till 17:30 Moscow time Wednesday, 11 March, 2020.
Webcast replay will be available on Polymetal's website
( 13 www.polymetalinternational.com) and at
https://webcasts.eqs.com/polymetal20200304.
Enquiries
Media Investor Relations
Polymetal
14 ir@polymetalinternational.com
FTI Consulting Evgeny
Monakhov +44 20 7887 1475 (UK)
Leonid Fink +44 20
3727 1000 Timofey
Viktor Pomichal Kulakov
+7 812 334 3666 (Russia)
Kirill
Kuznetsov
Joint Corporate
Brokers
+44 20
Morgan Stanley 7425 8000
RBC Europe
Andrew Foster Limited
Richard Brown Marcus Jackson +44 20 7653 4000
Panmure Gordon Jamil Miah
James Stearns +44 20
7886 2500
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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15 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). For more information on the APMs used by the Group,
including justification for their use, please refer to the "Alternative
performance measures" section below. 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 and
Free cash flow are explained in the "Financial Review" section below.
16 2 Profit for the financial period.
17 3 On a cash basis, representing cash outflow on purchases of
property, plant and equipment in the consolidated statement of cash flows.
18 4 After assets disposal and acquisition.
19 5 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.
20 6 Restated in respect of Dukat's TCC for 2018 to include the
concentrate treatment charges by the third-party offtakers.
21 7 Excluding effect of treatment charges deductions from revenue.
22 8 Defined in the "Alternative performance measures" section below.
23 9 FY 2019: final dividend for FY 2018 declared in May 2019 and
interim dividend for the 1H 2019 declared in September 2019. FY 2018:
final dividend for FY 2017 declared in May 2018 and interim dividend for
the 1H 2018 declared in September 2018.
24 10 FY 2019: interim, final and special dividend for FY2019. FY 2018:
interim and final dividend for FY2018.
25 11 Net cash generated by operating activities less net cash used in
investing activities excluding acquisitions of joint venture and
associate, loans forming part of net investment in joint ventures and
proceeds from disposal of subsidiaries.
26 12 Free cash flow including cash used in/received from
acquisition/disposal of assets and joint ventures.
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Attachment
Document title: Preliminary results for the year ended 31 December 2019
Document: 27 http://n.eqs.com/c/fncls.ssp?u=VOWUKYNNGP
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ISIN: JE00B6T5S470
Category Code: FR
TIDM: POLY
Sequence No.: 50283
EQS News ID: 989055
End of Announcement EQS News Service
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