REG-Polymetal International plc Polymetal: Report on payments to governments for the year 2018
14/06/2019 07:00
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Polymetal International plc (POLY)
Polymetal: Report on payments to governments for the year 2018
14-Jun-2019 / 09:00 MSK
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Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY
Date 14 June 2019
Polymetal International plc
Report on payments to governments for the year 2018
Polymetal issues the report on payments to government for the year ended 31 December 2018.
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 2018 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 rate in Russia is set at 20% and is allocated between federal budget and the budgets of the relevant constituent regions. In 2018 and 2017 the following proportion was applied: 3% was remitted to the federal budget, whereas 17% were 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% 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 special 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 to 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 is then 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 central government 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 2018.
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 2018 and 31 December 2017.
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 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 2018
Government Mining Rental
Income tax Licence fees Other1 Total
000'$ tax fees
Russia 94,652 68,408 2,161 130 174,994
9,643
Kazakhstan 9,611 15,898
60 - 5,425 30,994
Armenia 388 13,241
228 - 12 13,869
Total 104,651 97,547 2,449 130 219,857
15,080
PAYMENTS PER
PROJECT1
Entity Country/ Mining Rental
Project Government Region Income tax Licence fees Other1 Total
000'$ tax fees
Gold of Northern Urals Voro Russia Svedlovskaya 25,962 8,180
CJSC oblast' 83 - 79 34,304
Okhotskaya Mining and Okhotsk Russia Khabarovskiy 8,328 5,751
Exploration Company LLC Kray 301 34 42 14,456
Svetloye LLC Svetloye Russia Khabarovskiy
Kray - 290 3 33 326
Magadan Silver JSC Dukat Russia Magadanskaya 34,420 14,527
oblast' 604 45 5,111 54,707
Mayskoye Gold Mining Chukotka
Company LLC Mayskoye Russia Autonomous 12,322 6 25 12,353
Okrug
Omolon Gold Mining Omolon Russia Magadanskaya 6,929 8,603
Company LLC oblast' 403 31 4,230 20,196
Albazino Resources Ltd Albazino Russia Khabarovskiy 19,013 19,025
Kray 474 17 123 38,652
Varvarinskoye JSC Varvara Kazakhstan n/a 4,701 2,370
11 - 444 7,526
Komarovskoye Mining Komar Kazakhstan n/a 3,004 5,333
Company LLC 11 - 467 8,815
Bakyrchik Mining Venture Kazakhstan n/a 1,906 8,195
LLC Kyzyl 34 - 4,489 14,624
Inter Gold Capital LLC Kazakhstan n/a
- - 4 - 25 29
Kapan MPC CJSC Kapan Armenia n/a 388 13,241
228 - 12 13,869
Total 104,651 97,547 2,449 130 219,857
15,080
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 4,172 for Omolon Gold Mining Company LLC and kUS$ 4,979 for Magadan Silver JSC.
PAYMENTS PER GOVERNMENT
FOR THE YEAR 2017
Government Mining Rental
Income tax Licence fees Other1 Total
000'$ tax fees
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 Country/ Mining Rental
Project Government Region Income tax Licence fees Other1 Total
000'$ tax fees
Gold of Northern Urals CJSC Voro Russia Svedlovskaya 98
oblast' 23,305 8,102 5 65 31,575
Okhotskaya Mining and Okhotsk Russia Khabarovskiy 287
Exploration Company LLC Kray 9,211 7,382 2 34 16,916
Svetloye LLC Svetloye Russia Khabarovskiy - - 217 - 14 231
Kray
Magadan Silver JSC Dukat Russia Magadanskaya 655 14,172
oblast' 21,548 8,814 13 45,202
Mayskoye Gold Mining Company Chukotka
LLC Mayskoye Russia Autonomous - 9,644 - - 28 9,672
Okrug
Omolon Gold Mining Company Omolon Russia Magadanskaya 403 3,890
LLC oblast' 14,587 9,715 9 28,604
Albazino Resources Ltd Albazino Russia Khabarovskiy 11,041 18,071 436 2 64 29,614
Kray
Varvarinskoye JSC Varvara Kazakhstan n/a 9,803 3,370 11 - 511 13,695
Komarovskoye Mining Company Komar Kazakhstan n/a 2,637 5,527 11 - 307 8,482
LLC
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 2,379 23,939
92,652 74,600 31 193,601
______________________
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.
About Polymetal
Polymetal International plc (LSE, MOEX, AIX: POLY, ADR: AUCOY) (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is a top-20 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 1 ir@polymetalinternational.com
FTI Consulting
Eugenia Onuschenko +44 20 7887 1476 (UK)
Leonid Fink +44 20 3727 1000
Timofey Kulakov
Viktor Pomichal
Michael Vasiliev +7 812 334 3666 (Russia)
Joint Corporate Brokers
Morgan Stanley
+44 20 7425 8000
Andrew Foster
RBC Europe Limited
Richard Brown
Marcus Jackson +44 20 7653 4000
Panmure Gordon
Jamil Miah
Charles Lesser
+44 20 7886 2500
James Stearns
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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ISIN: JE00B6T5S470
Category Code: PGR
TIDM: POLY
Sequence No.: 10107
EQS News ID: 824449
End of Announcement EQS News Service
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References
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1. mailto:ir@polymetalinternational.com
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