UK Regulatory | 27 August 2019 07:56

Polymetal International plc: Half-yearly report for the six months ended 30 June 2019

Polymetal International plc (POLY)

27-Aug-2019 / 08:56 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

Release time	IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY
Date	27 August 201 9

Polymetal International p lc

Half -y ear ly r eport for the six months ended 30 June 201 9

“Our strong earnings during the period reflect solid operational delivery, and most notably excellent results from Kyzyl”, said Vitaly Nesis, Group CEO, commenting on the results. “ Traditionally, w e expect seasonally lower costs, higher production and materially stronger cash flow generation in the second half of the year , allowing us to meet our full year cost and production guidance “.

FINANCIAL HIGHLIGHTS

• Revenue in 1H 201 9 in creased by 20 % to US$ 946 million compared to 1H 201 8 (“year-on-year”) , primarily driven by gold equivalent (GE) production growth of 22 % . Gold sales were 604 Koz, up 36 % year-on-ye ar , while silver sales were down 15% to 10.3 Moz , in line with production volume dynamics. Average realised price s largely tracked market dynamics : gold prices achieved were broadly flat year-on-year , while silver prices w ere down 7 % .
• Group T otal cash cost s (“TCC”) 1 were US$ 667 / GE oz for 1H 2019 , down 3 % year-on-year , and 3% above the Company’s full year guidance of US$ 600-65 0/GE oz owing to the seasonality of sales . All-in sustaining cash costs (“AISC”) 1 amounted to US$ 904 /GE oz , in creasing by 1 % year-on-year due to one-off investments at Varvara (locomotive and mining fleet) and Dukat ( scheduled tailings storage facility upgrade) . Both cost metrics are expected to decline in the second half of the year on the back of seasonally higher production, notably at Svetloye and Mayskoye , and due to a clos er alignment of sales to production at Dukat and Kyzyl .
• Adjusted EBITDA [1] was US$ 403 million, an increase of 3 4 % year-on-year, mostly driven by higher production volumes . The A djusted EBITDA margin increased by 5 p . p . to 43 % (1H 2018: 3 8 %) , reflecting a successful launch and ramp-up of Kyzyl delivering at full capacity during the period .
• Net earnings [2] were US$ 1 5 3 million versus US$ 175 million in 1H 2018 , mostly impacted by the foreign exchange loss on USD denominated intercompany loans between entities with different functional currencies . Underlying net earnings 1 increased by 2 1 % to US$ 18 8 million (1H 2018 : US$ 155 million ) on the back of higher operating profit .
• A final d ividend for 2018 of US$ 0.31 per share (total of US$ 14 6 million) w as paid in May 2019 . An i nterim dividend of US$ 0.20 per share (1H 2018: US$ 0.17 per share) representing 5 0% of the Group’s und erlying net e arnings for 1H 2019 has been approved by the Board in accordance with the dividend policy , while compl ying with the hard ceiling of 2.5x Net debt/Adjusted EBITDA .
• Net debt 1 increased to US$ 1,698 million during the period (31 December 2018 : US$ 1, 5 20 million), representing 1.9 2 x of last twelve months Adjusted EBITDA, driven by a seasonal working capital increase and payment of FY 2018 final dividend . Seasonally higher production and a working capital drawdown are expected to drive stronger free cash flow generation in 2H 201 9 .
• Polymetal r emains on track to meet its 2019 production guidance of 1.55 Moz of gold equivalent . TCC and AISC are expected to be with in the guidance range of US$ 600-650 /GE oz and US$ 800-850 /GE oz, respectively. This guidance remain s contingent on the RUB / USD and KZT/USD exchange rate s that ha ve a significant effect on the Group’s local currency denominated operating costs .

Financial highlights [3] [4]	1H 2019	1H 2018	Change, %
Revenue, US$m	946	789	+20%
Total cash cost, US$/GE oz	667	68 9 [5]	– 3 %
All-in sustaining cash cost, US$/GE oz	904	89 8	+1%
Adjusted EBITDA, US$m	403	30 0	+3 4 %
Average realised gold price, US$/ oz	1,332	1,31 3	+1 %
Average realised silver price, US$/ oz	15.2	1 6 . 4	– 7 %
Net earnings, US$m	15 3	175	-1 3 %
Underlying net earnings, US$m	18 8	155	+2 1 %
Return on Assets, %	14%	13%	+1%
Return on Equity (underlying),%	1 3 %	12%	+1%
Basic EPS, US$/share	0.3 3	0.40	– 18 %
Underlying EPS, US$/share	0.40	0.35	+14%
Dividend declared during the period, US$/share [6]	0.31	0.30	+3%
Dividend proposed for the period, US$/share	0.20	0.17	+18%
Net debt, US$m	1,698	1,520 [7]	+12%
Net debt/Adjusted EBITDA [8]	1.9 2	1.95	-1%
Net operating cash flow, US$m	127	93	+37%
Capital expenditure, US$m	189	169	+12%
Free cash flow, US$m	(63)	(64)	NM [9]
Free cash flow post-M&A, US$m	(23)	(91)	NM

[1] The financial performance reported by the Group contains certain Alternative Performance Measures (APMs) disclosed to compl e ment 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.

[2] Profit for the financial period.

[3] 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.

[4] For more information on the APMs used by the Group refer to the “Alternative performance measures” section below.

[5] Restated on Dukat’s TCC including the effect of concentrate treatment cha r ges. Previously reported TCC for 1H 2018 were US$ 683/GE oz.

[6] 1H 2019: Final dividend for FY 2018 paid in May 2019. 1H 2018: Final dividend for FY 2017 paid in May 2018.

[7] As at 31 December 2018.

[8] On a last twelve months basis. Adjusted EBITDA for 2H 2018 was US$ 475 million.

[9] NM – Not meaningful .

Please find the full PDF version of the announcement at the link at the bottom of the page.

Conference call and webcast

Polymetal will hold a conference call and webcast on Tuesday, 27 August 2019 at 12:00 London time (14:00 Moscow time).

To participate in the call, please dial:

8 800 500 98 63 access code 23612986# (free from Russia), or

44 203 009 24 83 (free from the UK), or

1 646 502 51 26 (free from the US), or

follow the link: https://webcasts.eqs.com/polymetal20190827

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 https://webcasts.eqs.com/polymetal20190827 . 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 (from within the USA) and +7 495 249 16 71 (from within Russia), access code 418870681#, from 14:30 Moscow time Tuesday, 27 August, till 14:30 Moscow time Tuesday, 3 September, 2019.

Enquiries

Media		Investor Relations
FTI Consulting Leonid Fink Viktor Pomichal	+44 20 3727 1000	Polymetal Eugenia Onuschenko Timofey Kulakov Kirill Kuznetsov	ir@polymetalinternational.com +44 20 7016 9505 (UK) +7 812 334 3666 (Russia)
Joint Corporate Brokers
Morgan Stanley Andrew Foster Richard Brown Panmure Gordon Charles Lesser James Stearns	+44 20 7425 8000 +44 20 7886 2500	RBC Europe Limited Marcus Jackson Jamil Miah	+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 .

Attachment

Document title: Full version of the 1H 2019 report
Document: http://n.eqs.com/c/fncls.ssp?u=XUJDFHFFVB

ISIN:	JE00B6T5S470
Category Code:	IR
TIDM:	POLY
Sequence No.:	18063
EQS News ID:	863257

End of Announcement EQS News Service