REG-Polymetal International plc Polymetal: Preliminary results for the year ended 31 December 2022
16/03/2023 07:15
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Polymetal International plc (POLY)
Polymetal: Preliminary results for the year ended 31 December 2022
16-March-2023 / 10:00 MSK
The issuer is solely responsible for the content of this announcement.
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Release time IMMEDIATE LSE, MOEX, AIX: POLY
Date 16 March 2023 ADR: AUCOY
Polymetal International plc
Preliminary results for the year ended 31 December 2022
Polymetal International plc (“Polymetal” or the “Company”) announces the
Group's preliminary results for the year ended 31 December 2022.
“In 2022, the Company was subject to extraordinary and unprecedented
external challenges. Despite these adverse circumstances, Polymetal
managed to maintain operational stability and achieve excellent safety
performance. Nonetheless, international sanctions against Russia have had
a huge impact on domestic inflation, supply chains and sales channels. As
a result, costs have risen and working capital requirements ballooned with
cash flow plummeting. We start 2023 from a position of relative strength
and expect the resumption of free cash flows and a reduction in net debt
over the course of the coming year”, said Vitaly Nesis, Group CEO,
commenting on the results.
FINANCIAL HIGHLIGHTS
• In 2022, revenue decreased by 3%, totalling US$ 2,801 million (2021:
US$ 2,890 million), of which US$ 933 million (33%) was generated from
operations in Kazakhstan and US$ 1,868 million (67%) from operations
in the Russian Federation. Average realised gold price decreased by 2%
while silver price decreased by 12%, both almost tracking market
dynamics. Gold equivalent (GE) production was 1,712 Koz, a 2% increase
year-on-year (y-o-y). Gold sales decreased by 1% y-o-y to 1,376 Koz,
while silver sales increased by 6% to 18.5 Moz. Disruption in sales
channels resulted in a huge gap between production and sales in Q2-Q3
2022, but was largely eliminated in Q4 2022. The remaining gap is
expected to close during the course of 1H 2023.
• Group Total Cash Costs (TCC) 1 1 for 2022 were US$ 942/GE oz and
within the Group’s guidance of US$ 900-1,000/GE oz, although
representing an increase of 29% y-o-y, which was predominantly due to
double-digit domestic inflation and the appreciation of Rouble/USD
exchange rate. Escalation of logistical costs and sharp increases in
the price of consumables caused by the imposition of sanctions
(explosives, equipment spares, cyanide) also impacted the Group’s TCC.
• All-in Sustaining Cash Costs (AISC)1 amounted to US$ 1,344/GE oz, up
31% y-o-y, which was within the Group’s guidance of US$ 1,300-1,400/GE
and also driven by the same factors as above.
• Adjusted EBITDA1 was US$ 1,017 million, 31% lower than in 2021, as
costs rose and metals prices declined. US$ 478 million (47%) of Group
EBITDA originated in Kazakhstan and US$ 539 million (53%) in the
Russian Federation. The Adjusted EBITDA margin decreased by 15
percentage points to 36% (2021: 51%).
• Underlying net earnings 2 2 were US$ 440 million (2021: US$ 913
million). As a result of a lower Group EBITDA and non-cash impairment
charges (a post-tax amount of US$ 653 million), the Group recorded a
net loss for the period of US$ 288 million in 2022, compared to
profits of US$ 904 million in 2021.
• Capital expenditure was US$ 794 million 3 3 , up 5% compared with US$
759 million in 2021 and 2% above the guidance range of US$ 725-775
million, reflecting accelerated purchases and contractor advances for
ongoing projects (most notably, Amursk POX-2), combined with
inflationary and logistical pressures on imported equipment, materials
and services.
• Net operating cash inflow was US$ 206 million (2021: US$ 1,195
million), on the back of inventories build-up of US$ 473 million. This
includes positive cash flow of US$ 337 million from operations in
Kazakhstan and negative cash flow of US$ 131 million from operations
in the Russian Federation. The Group reported negative free cash flow1
of US$ 445 million in 2022 (2021: positive US$ 418 million).
• Net debt1 increased to US$ 2,393 million during the period (31
December 2021: US$ 1,647 million), representing 2.35x of the Adjusted
EBITDA (2021: 1.13x). The increase in net debt was driven by the
decline in profitability, the persistently high capital intensity of
the business and a very significant expansion in working capital.
DIVIDENDS
• The Board has carefully evaluated the liquidity and solvency of the
business in light of multiple external uncertainties. Taking into
account the Group’s leverage (2.35x Net debt/EBITDA, materially above
the level of 1.5x target leverage ratio and the significant level of
uncertainty regarding external factors, the Board has decided not to
propose any dividend for 2022 in order to allow the Group to maintain
strategic and operating flexibility in a highly volatile and uncertain
external environment.
Financial highlights 4 4 2022 2021 Change
Revenue, US$m 2,801 2,890 -3%
Total cash cost 5 5 , US$ /GE oz 942 730 +29%
All-in sustaining cash cost2, US$ /GE oz 1,344 1,030 +31%
Adjusted EBITDA2, US$m 1,017 1,464 -31%
Average realised gold price 6 6 , US$ /oz 1,764 1,792 -2%
Average realised silver price3, US$ /oz 21.9 24.8 -12%
Net (loss)/earnings, US$m (288) 904 n/a
Underlying net earnings2, US$m 440 913 -52%
Return on assets (underlying)2, % 9% 26% -65%
Return on equity (underlying)2, % 11% 23% -52%
Basic (loss)/earnings per share, US$ (0.61) 1.91 n/a
Underlying EPS2, US$ 0.93 1.93 -52%
Dividend declared during the period 7 7 , US$ - 1.34 -100%
/share
Dividend proposed for the period 8 8 , US$ /share - 0.97 -100%
Net debt2, US$m 2,393 1,647 +45%
Net debt/Adjusted EBITDA 2.35 1.13 +109%
Net operating cash flow, US$m 206 1,195 -83%
Capital expenditure, US$m 794 759 +5%
Free cash flow before acquisitions/ disposals2, US$m (445) 418 n/a
Free cash flow post-M&A, US$m (473) 407 n/a
OPERATING HIGHLIGHTS
• No fatal accidents among the Group’s employees and contractors
occurred in 2022. Lost time injury frequency rate (LTIFR) among the
Company’s workforce for the full year decreased by 17% y-o-y to 0.10.
Days lost due to work-related injuries (DIS) fell by 42% y-o-y to 877.
• The Company’s FY 2022 GE production amounted to 1,712 Koz, a y-o-y
increase of 2% and in line with the original production guidance of
1.7 Moz. The first full year of operations at Nezhda and initial
production at Kutyn (Albazino hub) compensated for declining grades at
mature assets.
• Amursk POX-2 and other development projects progressed in line with
schedules revised after the introduction of international sanctions
against Russia in Q1 and Q2 2022.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) HIGHLIGHTS
• Varvara Mine in Kazakhstan was certified for full compliance under the
International Cyanide Management Code by the International Cyanide
Management Institute (ICMI).
• In 2022, Polymetal continued to receive external recognition of its
ESG efforts with high ratings and scores by Sustainalytics, Vigeo
Eiris and ISS ESG Corporate Rating.
• In January 2023, the Group published its second green loan allocation
report under the corporate green financing framework, which confirmed
spending of US$ 125 million loan given by Société Générale for
environmentally friendly projects at the Company’s sites. Our total
green and sustainability-linked loan portfolio is now US$ 592 million,
amounting to 20% of the total outstanding debt of the Group.
• Greenhouse gas emissions intensity (scopes 1 and 2) was 15% lower in
2022 compared to 2019 (Scope 1 and 2), attributed to increasing our
renewable electricity consumption (30% of total), as well as energy
efficiency initiatives, such as improving heat utilization systems and
the implementation of solar power generation.
• In 2022, the share of water reused and recycled amounted to 91% of the
total water consumption at our sites (compared to 90% in 2021). In
2022, fresh water intensity for ore processing 9 9 decreased by 49%
(as compared to the 2019 baseline), to 138 m3/1000 t of ore processed.
• We continue to promote equal-opportunity culture through training and
communications, empowering more women to take leadership roles: in
2022, the share of female participants of our Talent Pool development
program increased to 35% (compared to 30% in 2021).
2023 OUTLOOK
• The Group reiterates its current production guidance of 1.7 Moz of GE
for FY 2023. Production will be weighted towards 2H 2023 due to
traditional seasonality at several production sites.
• Polymetal expects its costs to be in the ranges of US$ 950-1,000/GE oz
for TCC and US$ 1,300-1,400/GE oz for AISC 10 10 . A minor y-o-y
increase is mostly due to expected domestic inflation and royalty
increase in Kazakhstan.
• Capital expenditures are expected to be in the range of US$ 700-750
million. Major investment projects include Amursk POX-2, Albazino
power line, Voro flotation (completion expected Q2), Prognoz
(completion expected Q4), and Mayskoye backfill plant.
PRESERVING SHAREHOLDER VALUE
• The Group continues to evaluate all available options to modify the
Group’s asset-holding structure in order to maximise shareholder
value.
• The Group’s preferred option is the potential re-domiciliation of the
parent company, Polymetal International plc, into the Astana
International Financial Centre (AIFC), a financial hub in Astana,
Kazakhstan, taking into account the Group’s significant operations and
presence in the region, the AIFC legal system, tax regime and the
ability to execute such a re-domiciliation.
• The key objective of any re-domiciliation will be to preserve
shareholder value, restore our ability to pay dividends and increase
the strategic flexibility to conduct our operations, as well enabling
us to pursue different strategic developments for the Russian and
Kazakhstan businesses.
• No decision has been made and there can therefore be no certainty that
the Company will proceed with, or ultimately complete a
re-domiciliation.
• The Company has attempted to secure the services of a depository
interest provider in order to continue trading on the London Stock
Exchange, should the re-domiciliation proceed. However, as at the date
of this announcement, the Company has not yet been able to secure such
services due to the depository interest providers approached by the
Company being unable or unwilling to provide such arrangements, while
Euroclear, as the CREST system operator, has not confirmed the
availability of this kind of services for the AIFC jurisdiction. The
Company is continuing its efforts to secure such services.
• The Company confirms that any actions will be compliant with all
applicable international sanctions, counter-sanctions and regulatory
requirements and the Company will continue to take into consideration
the interests of its stakeholders prior to making a decision.
• Further announcements in relation to the Group’s efforts to restore
shareholder value and modify the Group’s asset-holding structure will
be made when appropriate.
Conference call and webcast
The Company will hold a conference call and webcast on Thursday, 16 March
2023 at 12:00 London time (15:00 Moscow time).
Please complete the registration form using the 11 link to participate in
the call. Dial-in details will be sent to you via email after
registration. Participants from Russia may use the webcast link below or a
dial-out option which will be provided after registration.
To participate in the webcast follow the link:
12 https://edge.media-server.com/mmc/p/ez66tpiw.
Please find the full PDF version of the announcement at the link at the
bottom of the page.
Enquiries
Investor Relations
Polymetal 13 ir@polymetalinternational.com
Evgeny Monakhov +44 20 7887 1475 (UK)
Kirill Kuznetsov +7 812 334 3666 (Russia)
+7 717 261 0222 (Kazakhstan)
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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Attachment
File: 14 Polymetal: Preliminary results for the year ended 31 December
2022
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Dissemination of a Regulatory Announcement, transmitted by EquityStory RS.
The issuer is solely responsible for the content of this announcement.
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ISIN: JE00B6T5S470
Category Code: FR
TIDM: POLY
LEI Code: 213800JKJ5HJWYS4GR61
OAM Categories: 3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 230186
News ID: 1583781
End of Announcement EquityStory RS News Service
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