TIDMPOLY
RNS Number : 3703H
Polymetal International PLC
12 March 2018
Release time IMMEDIATE
Date 12 March 2018
Polymetal International plc
Preliminary results for the year ended 31 December 2017
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 2017.
FINANCIAL HIGHLIGHTS
-- In 2017, revenue increased by 15% over 2016 to US$ 1,815
million, primarily driven by gold equivalent (GE) production growth
of 13%. Gold sales were 1,090 Koz, up 24% year-on-year, while
silver sales were down 14% to 26.5 Moz, in line with production
volume dynamics. Average realised gold and silver prices remained
largely unchanged from 2016 at US$ 1,247/oz and US$ 16.1/oz
respectively.
-- Group Total cash costs(1) ("TCC") were US$ 658/GE oz for the
year, up 15% from 2016 levels and at the lower end of the Company's
updated guidance of US$ 650-675/GE oz. The increase in TCC was
predominantly driven by the strengthening of the Russian Rouble (by
15% from an average rate of 67.1 RUB/USD in 2016 to 58.3 RUB/USD in
2017) on the back of the recent oil price rally and stabilising
macroeconomic conditions in Russia. All-in sustaining cash costs(1)
("AISC") amounted to US$ 893/GE oz, also within the Company's
updated guidance, an increase of 15% year-on-year, driven mostly by
the same factors, as well as significantly increased exploration
spending across the portfolio.
-- Adjusted EBITDA(1) was US$ 745 million, down 2% compared to
2016, as increased costs incurred due to a stronger Russian Rouble
largely offset the production growth. The Adjusted EBITDA margin
was at 41% compared to 48% in 2016.
-- Net earnings(2) were US$ 354 million versus US$ 395 million
in the prior year, reflecting the decrease in EBITDA and the impact
of foreign exchange gains on 2016 earnings. Underlying net
earnings(1) were US$ 376 million (2016: US$ 382 million).
-- Capital expenditure came in at US$ 383 million(3) , up 41%
compared to 2016 due to accelerated pre-stripping and construction
at Kyzyl, as well as an increased brownfield exploration spend
across the operating assets portfolio. The Group is on track with
the commissioning of Kyzyl and the ramp up of the debottlenecked
POX plant in the second half of 2018.
-- Net debt(1) increased to US$ 1,420 million during the period
(31 December 2016: US$ 1,330 million), representing a Net
debt/Adjusted EBITDA ratio of 1.91x. Despite intensive construction
activities at Kyzyl in the course of 2017, the Company continued to
generate meaningful free cash flow(1) that amounted to US$ 143
million (2016: US$ 257 million), while maintaining stable net cash
operating inflow of US$ 533 million (2016: US$ 530 million).
-- A final dividend of US$ 0.30 per share (approx. US$ 129
million) representing 50% of the Group's underlying net earnings
for 2H 2017 has been proposed by the Board in accordance with the
revised dividend policy and in compliance with the hard ceiling of
Net debt/Adjusted EBITDA ratio below 2.5x. This will bring the
total dividend declared for the period to US$ 189 million.
___________________________
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.
2) Profit for the financial period.
3) On a cash basis, representing cash outflow on purchases of
property, plant and equipment in the statement of consolidated cash
flows. Total capital expenditure including loans advanced on
capital spending at Nezhda and Prognoz joint ventures comprised US$
435 million.
OPERATING HIGHLIGHTS
-- Polymetal delivered a strong operational performance in 2017:
total GE production increased 13% year-on-year to 1,433 Koz, 2%
above our initial production guidance of 1,400 Koz. The strong
finish to 2017 was driven by contributions from the fully ramped-up
Svetloye heap leach (Okhotsk hub), as well as a strong performance
at Komar (Varvara hub), Omolon and Amursk/Albazino.
-- Full year gold production totalled 1,075 Koz, a 21% increase
year-on-year. Gold sales generally followed production dynamics.
Silver production was down 8% to 26.8 Moz compared to 2016.
-- Polymetal has increased production materially over the 20
years since the Company's inception, delivering a compound annual
growth rate of 24%
-- Polymetal regrettably reports two fatal accidents in 2017.
While the total number of fatalities for the year has halved
compared to 2016, we view this result as unsatisfactory. The
Company has commenced implementing additional safety measures in
2018 with a particular focus on smaller operating units, especially
those in remote locations.
-- The Company reiterates its production guidance for 2018 and
2019 of 1.55 Moz and 1.7 Moz of gold equivalent, respectively. As
in prior years, production in both years will be skewed towards the
2H due to seasonality.
-- TCC in 2018 are expected to be in the range of US$ 650-700/GE
oz while AISC are expected at US$ 875-925/GE oz. The anticipated
increase in costs comes on the back of rising domestic diesel
prices and further potential strengthening of the Russian Rouble.
Cost guidance remains contingent on the Rouble/Dollar exchange rate
dynamic which has a significant effect on the Group's operating
costs.
"I am delighted to report strong operational delivery and robust
earnings for the year", said Vitaly Nesis, Group CEO of Polymetal,
commenting on the results. "While we have reached peak capital
expenditure during 2017 ahead of the launch of the Kyzyl project in
Q3 2018, the Group continued to deliver positive free cash flow and
generate meaningful cash returns to our shareholders".
Financial highlights(1) 2017 2016 Change, %
------ ------ ----------
Revenue, US$m 1,815 1,583 +15%
Total cash cost, US$ /GE oz 658 570 +15%
All-in sustaining cash cost, US$ /GE oz 893 776 +15%
Adjusted EBITDA, US$m 745 759 -2%
Average realised gold price, US$ /oz 1,247 1,216 +3%
Average realised silver price, US$ /oz 16.1 16.3 -1%
Net earnings, US$m 354 395 -10%
Underlying net earnings, US$m 376 382 -1%
Return on Assets, % 18% 26% -8%
Return on Equity (underlying), % 16% 18% -2%
Basic EPS, US$ /share 0.82 0.93 -12%
Underlying EPS, US$ /share 0.88 0.90 -3%
Dividend declared during the period, US$ /share(2) 0.32 0.37 -14%
Dividend proposed for the period, US$ /share(3) 0.44 0.42 +5%
Net debt, US$m 1,420 1,330 +7%
Net debt/Adjusted EBITDA 1.91 1.75 +9%
Net operating cash flow, US$m 533 530 +1%
Capital expenditure, US$m 383 271 +41%
Free cash flow(4) , US$m 143 257 -44%
___________________________
1) 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.
2) FY 2017: final dividend for FY 2016 declared in May 2017 and
interim dividend for the 1H 2017 declared in September 2017.
FY 2016: final dividend for FY 2015 declared in May 2016,
interim dividend for the 1H 2016 declared in September 2016, and
special dividend declared in December 2016.
3) FY 2017: interim and final dividend for FY2017. FY 2016:
interim, final and special dividend for FY2016.
4) Net cash flows from operating activities less cash flows used
in investing activities excluding acquisition costs in business
combinations and investments in associates and joint ventures.
Please find the full version of the announcement in the attached
PDF.
http://www.rns-pdf.londonstockexchange.com/rns/3703H_1-2018-3-12.pdf
CONFERENCE CALL AND WEBCAST
Polymetal will hold a conference call and webcast on Monday, 12
March 2018 at 09:00 London time (12:00 Moscow time).
To participate in the call, please dial:
8 10 800 500 98 63 access code 50622354# (free from Russia),
or
+44 20 3009 2483 (free from the UK), or
+1 646 722 4912 (free from the US), or
or follow the link:
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5403
Please be prepared to introduce yourself to the moderator or
register.
Webcast replay will be available on Polymetal's website
(www.polymetalinternational.com) and at
http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5403.
A recording of the call will be available immediately after the
call at +44 20 3364 5147 (from within the UK), +1 646 722 4969 (USA
Toll Free) and +7 495 249 16 71 (from within Russia), access code
418742254#, from 12:30 Moscow time Monday, 12 March, till 12:30
Moscow time Monday, 19 March, 2018.
Enquiries
Media Investor Relations
------------------------- --- ------------------------------------------------------------------------
FTI Consulting +44 20 3727 1000 Polymetal ir@polymetalinternational.com
Leonid Fink Evgenia Onuschenko +44 20 7016 9505 (UK)
Viktor Pomichal Maryana Nesis
Michael Vasiliev +7 812 334 3666 (Russia)
-------------------------- ---------------------- -------------------- ------------------------------
Joint Corporate Brokers
-------------------------------------------------- ----------------------------------------------------
Morgan Stanley
Andrew Foster
Richard Brown +44 20 7425 8000
Panmure Gordon RBC Europe Limited
Adam James Tristan Lovegrove
James Stearns +44 20 7886 2500 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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