REG-Polymetal International plc Polymetal: Preliminary results for the year ended 31 December 2020
03/03/2021 07:05
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Polymetal International plc (POLY)
Polymetal: Preliminary results for the year ended 31 December 2020
03-March-2021 / 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 IMMEDIATE LSE,
time MOEX, AIX: POLY / ADR: AUCOY
Date 03 March 2021
Polymetal International plc
Preliminary results for the year ended 31 December 2020
Polymetal is pleased to announce the Group's preliminary results for the
year ended 31 December 2020.
"We are pleased to report record net earnings for the year amidst a
challenging global backdrop. A strong operating performance, a favourable
commodity price environment and stable cost performance underpinned a
significant increase in the Group's cash flow and dividends whilst
achieving a material reduction in leverage. We also achieved our target of
zero fatalities and have importantly been able to minimise the impact of
the COVID-19 pandemic on our people, communities, and operations", said
Vitaly Nesis, Group CEO, commenting on the results.
FINANCIAL HIGHLIGHTS
• In 2020, revenue increased by 28%, totalling US$ 2,865 million (2019:
US$ 2,241 million). Average realised gold and silver prices tracked
market dynamics and increased by 27% for both metals. Gold sales were
1,392 Koz, up 2% year-on-year, while silver sales were down 13% to
19.3 Moz, largely in line with production volume trends.
• Group Total Cash Costs ("TCC") 1 1 for the full year were US$ 638/GE
oz, down 3% year-on-year, and 2% below the lower end of the Company's
full year guidance of US$ 650-700/GE oz mostly due to a weakness in
the Russian Rouble and the Kazakh Tenge which outweighed additional
COVID-related costs and a price-driven increase in royalties.
• All-in Sustaining Cash Costs ("AISC")1 remained broadly unchanged from
2019 at US$ 874/GE oz, up 1% year-on-year and within the Company's
full year guidance of US$ 850-900/GE oz, as the Company has
accelerated pre-stripping and mine fleet renewals against a backdrop
of higher commodity prices.
• Adjusted EBITDA1 was US$ 1,686 million, a 57% increase over 2019,
driven by higher production volumes, higher commodity prices, and
lower cash costs. Adjusted EBITDA margin increased by 11 p.p. and
reached an all-time high of 59% (2019: 48%).
• Net earnings 2 2 were a record US$ 1,086 million (2019: US$ 483
million), with a basic EPS of US$ 2.30 per share (2019: US$ 1.02 per
share), reflecting the increase in operating profit. Underlying net
earnings1 increased by 82% to US$ 1,072 million (2019: US$ 586
million).
• Capital expenditure was US$ 583 million 3 3 , up 34% compared to US$
436 million in 2019 and 8% above guidance. As previously announced,
the increase is mainly related to accelerated spending across the
project portfolio in a bid to neutralise the impact of the pandemic on
project schedules and an increase in capitalised underground
development and pre-stripping, aimed at ensuring operational
flexibility against the backdrop of heightened epidemiological risks.
The Group is on track for development activities at both POX-2 and
Nezhda.
• Net debt1 decreased to US$ 1,351 million during the period (31
December 2019: US$ 1,479 million), representing a Net debt/Adjusted
EBITDA ratio of 0.80x (2019: 1.38x), significantly below the Group's
target leverage ratio of 1.5x. The Company generated significant free
cash flow1, which amounted to US$ 6101 million (2019: US$ 256
million), supported by a net cash operating inflow of US$ 1,192
million (2019: US$ 696 million).
• In view of the strong balance sheet and underlying business
performance in 2020, the Board has proposed a final dividend of US$
0.89 per share (approx. US$ 419 million), which includes US$ 0.74 per
share representing 50% of underlying net earnings for the 2H 2020 and
a discretionary payment of US$ 0.15 per share adjusting the total
dividend for 2020 for 100% of free cash flow for the FY 2020, in
accordance with Polymetal's revised dividend policy. This will bring
the total dividend declared for FY 2020 to US$ 608 million (2019: US$
385 million), which represents US$ 1.29 per share, up 57% compared to
US$ 0.82 per share in 2019.
Financial highlights 4 4 2020 2019 5 5 Change, %
Revenue, US$m 2,865 2,241 +28%
Total cash cost 6 6 , US$ /GE oz 638 655 -3%
All-in sustaining cash cost3, US$ /GE oz 874 866 +1%
Adjusted EBITDA3, US$m 1,686 1,075 +57%
Average realised gold price 7 7 , US$ /oz 1,797 1,411 +27%
Average realised silver price4, US$ /oz 20.9 16.5 +27%
Net earnings, US$m 1,086 483 +125%
Underlying net earnings3, US$m 1,072 586 +83%
Return on Assets3, % 34% 20% +14%
Return on Equity (underlying) 3, % 30% 19% +11%
Basic EPS, US$ /share 2.30 1.02 +125%
Underlying EPS 3, US$ /share 2.28 1.25 +82%
Dividend declared during the period 8 8 , US$ 1.02 0.51 +100%
/share
Dividend proposed for the period 9 9 , US$ 1.29 0.82 +57%
/share
Net debt3, US$m 1,351 1,479 -9%
Net debt/Adjusted EBITDA 0.80 1.38 -42%
Net operating cash flow, US$m 1,192 696 +71%
Capital expenditure, US$m 583 436 +34%
Free cash flow3, US$m 610 256 +138%
Free cash flow post-M&A3, US$m 603 299 +102%
COVID-19 IMPACT ON GROUP's PERFORMANCE TO DATE
• There were 20 active cases of COVID-19 as at 1 March 2021 across the
Group. We regret to report that five of our employees (four in 2020
and one in 2021) died of the COVID-19 or related consequences.
• The epidemiological situation in the Company remains under control.
Operations and development projects are unaffected so far.
• Strict precautionary procedures which were previously implemented,
including mandatory isolation of new arrivals and restrictions on
meetings and travel, continue to be maintained at all production sites
and offices. These restrictions are currently expected to continue
into full year of 2021.
• Polymetal provides comprehensive assistance in the voluntary
vaccination of its employees and is currently awaiting for the Russian
Sputnik-V vaccine to become widely available.
• Polymetal continues to provide financial and operational support to
healthcare facilities across all regions of its presence with US$ 3.4
million spent in 2020. The main areas of assistance include purchasing
medical and diagnostic equipment and key supplies for local clinics.
OPERATING AND ESG HIGHLIGHTS
• There were no fatal accidents among the Group's workforce or its
contractors in 2020 (compared with two employee fatalities and one
contractor fatality in 2019). Lost time injury frequency rate (LTIFR)
among the Group's employees decreased by 38% year-on-year to 0.12. In
2020, the Company started to use the DIS metric (days lost due to
work-related injuries) as the main Health and Safety KPI. For the full
year, DIS amounted to 1,583 days, a 10% decrease compared to 2019.
Polymetal will also continue to report its LTIFR going forward.
• The Company's FY2020 gold equivalent output amounted to 1,559 Koz, a
4% increase y-o-y and 4% above the original production guidance of 1.5
Moz. Strong contribution from Kyzyl, Varvara and Albazino offset
planned grade decline at Voro, as well as lower production at
Svetloye.
• Construction and development activities at Nezhda and POX-2 progressed
on schedule despite significant challenges posed by COVID-related
disruptions and slowdowns.
• Our operational achievements are underpinned by the value that we
place on environmental, social and governance (ESG) issues integrated
into all areas of our business. In 2020, Polymetal was added to the
Dow Jones World Sustainability Index ("DJSI") for the first time and
retained its place in DJSI Emerging Markets, as well as reaffirmed
membership in FTSE4Good Index.
• In 2020, as a part of our carbon transition strategy we have adopted
Green Financing Framework and raised a US$ 125 million Green Loan with
Société Générale to finance the transition. Our total green and
sustainability-linked loan portfolio now reaches US$ 280 million, or
16% of the total outstanding debt.
• In 2020, greenhouse gas emissions intensity reduced by 4%, attributing
to energy efficiency initiatives, switching our mining fleet to
electric vehicles, a shift from diesel to grid energy sources and
green energy contracts.
CORPORATE TRANSACTIONS
• In March 2020, Polymetal acquired a 9.1% stake in ThreeArc, 100% owner
of the Tomtor project, through a US$ 20 million cash investment into
newly issued share capital. The proceeds will be used to complete the
Tomtor pre-feasibility study and initial JORC-compliant ore reserve
and mineral resource estimate. Tomtor is one of the largest and
highest grade rare earth elements (REE) projects in Russia and
considered to be the highest grade development stage niobium (Nb)
project globally.
• In April 2020, VTB acquired 25.7% stake in Amikan from the existing
minority shareholders for a cash consideration of US$ 36 million and
invested US$ 35 million in cash in exchange for newly issued Amikan
(Veduga) share capital resulting in VTB holding a 40.6% stake in the
asset. These cash-in proceeds will be used to fund the Project's
ongoing exploration and development costs. As part of transaction VTB
was granted a put option to sell its stake in Amikan to Polymetal
under certain conditions, along with the similar call option granted
to Polymetal. Both put and call options are to be settled in newly
issued Polymetal shares.
• In June 2020, Polymetal entered into a preliminary lease agreement to
lease on pre-agreed terms the single-circuit 110 kV grid power line
running from Khandyga to Nezhda production site and the related
substation. The power line will be built, owned and operated by an
independent grid management company. The construction will be funded
with the Far East and Arctic Development Fund 10-year senior loan,
guaranteed by the Group, and the Credit Bank of Moscow subordinated
loan facility. The completion and commencement date of the lease is
scheduled for second quarter 2022.
• During 2020, the Group disposed of non-core assets (Irbychan Gold,
PGGK and North Kaluga) with the total consideration amounting to US$
32 million, including cash proceeds of US$ 23 million and deferred
consideration of US$ 9 million.
• Polymetal continued to further develop its cooperation with junior
exploration companies in the regions of our presence. In 2020, the
Group entered into four new strategic partnerships with total initial
investment in joint ventures of US$ 10 million.
2021 OUTLOOK
• The Company reiterates its current production guidance of 1.5 Moz of
GE for FY2021 and 1.6 Moz of GE for FY2022. Production will be
weighted towards 2H due to seasonality.
• TCC in 2021 is expected to be in the range of US$ 700-750/GE oz, while
AISC is expected at US$ 925-975/GE oz. The expected increase over 2020
cost levels is driven by the assumed appreciation of the Russian
rouble and Kazakhstan Tenge and increased domestic diesel fuel prices
compared to 2020, as well as above-CPI inflation in the mining
industry and full-year impact of COVID-related measures.
• The Company will continue to prioritize timely project execution and
stands ready to incur reasonable additional costs to avoid project
schedule slippage. The guidance remains contingent on the
Rouble/Dollar exchange rate and oil price.
CONFERENCE CALL AND WEBCAST
The company will hold a conference call and webcast on Wednesday, 3 March
2021 at 11:30 London time (14:30 Moscow time).
To participate in the call, please dial:
From the UK:
+44 (0) 330 336 9411(local access)
0800 279 7204 (toll free)
From the US:
+1 929 477 0324 (local access)
800 458 4121 (toll free)
From Russia:
+7 495 646 9190 (local access)
8 10 8002 867 5011 (toll free)
To participate from other countries, please dial any of the local access
numbers listed above.
Conference code: 9588333
To participate in the webcast follow the link:
https://webcast-eqs.com/register/polymetal20210303. Please be prepared to
introduce yourself to the moderator or register.
A recording of the call will be available at 0 808 101 1153 (from the UK),
888 203 1112 (from the USA) and 8 10 800 2702 1012 (from Russia), access
code 9588333, from 17:30 Moscow time Wednesday, 3 March, till 17:30 Moscow
time Wednesday, 10 March 2021. Webcast replay will be available on
Polymetal's website ( 10 www.polymetalinternational.com) and at
11 https://www.webcast-eqs.com/register/polymetal20210303.
About Polymetal
Polymetal International plc (together with its subsidiaries - "Polymetal",
the "Company", or the "Group") is a top-10 global gold producer and top-5
global silver producer with assets in Russia and Kazakhstan. The Company
combines strong growth with a robust dividend yield.
Enquiries
Media Investor Relations
Polymetal
12 ir@polymetalinternational.com
FTI Consulting Evgeny
+44 20 Monakhov +44 20 7887 1475 (UK)
Leonid Fink 3727
1000 Timofey
Viktor Pomichal Kulakov
+7 812 334 3666 (Russia)
Kirill
Kuznetsov
Joint Corporate Brokers
+44 20
Morgan Stanley & Co. 7425
International plc 8000
Andrew Foster RBC Europe
Limited
Richard Brown
Marcus +44 20 7653 4000
Panmure Gordon Jackson
Daniel Norman Jamil Miah
John Prior +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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13 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.
14 2 Profit for the financial period.
15 3 On a cash basis, representing cash outflow on purchases of
property, plant and equipment in the consolidated statement of cash flows.
16 4 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.
17 5 Excluding Kapan in 2019 (disposed in January 2019). This note
applies to all tables in this release.
18 6 Defined in the "Alternative performance measures" section below.
19 7 In accordance with IFRS, revenue is presented net of treatment
charges which are subtracted in calculating the amount to be invoiced.
Average realised prices are calculated as revenue divided by gold and
silver volumes sold, excluding effect of treatment charges deductions from
revenue.
20 8 FY 2020: special and final dividend for FY 2019 paid in 2020 and
interim dividend for the 1H 2020 paid in September 2020. FY 2019: final
dividend for FY 2018 paid in May 2019 and interim dividend for the 1H 2019
paid in September 2019.
21 9 FY 2020: interim and final dividend for FY2020. FY 2019: interim,
final and special dividend for FY2019.
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Attachment
File: 22 Polymetal: Preliminary results for the year ended 31 December
2020
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ISIN: JE00B6T5S470
Category Code: FR
TIDM: POLY
LEI Code: 213800JKJ5HJWYS4GR61
Sequence No.: 94687
EQS News ID: 1172644
End of Announcement EQS News Service
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