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Polymetal International plc (POLY)
Polymetal International plc: Preliminary results for the year ended 31
December 2018
11-March-2019 / 10:00 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Release time IMMEDIATE LSE, MOEX: POLY / ADR: AUCOY
Date 11 March 2019
Polymetal International plc
Preliminary results for the year ended 31 December 2018
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
2018.
"2018 was a year of strong operating and financial results, including solid
cost performance and smooth ramp-up of Kyzyl", said Vitaly Nesis, Group CEO
of Polymetal, commenting on the results. "We have also advanced our
long-term development pipeline, continued to generate free cash flows and
pay substantial dividends".
FINANCIAL HIGHLIGHTS
? In 2018, revenue increased by 4% over 2017 to US$ 1,882 million,
primarily driven by gold equivalent (GE) production growth of 9%. Gold
sales were 1,198 Koz, up 10% year-on-year, while silver sales were down 3%
to 25.7 Moz, in line with production volume dynamics. Average realised
prices largely tracked market dynamics.
? Group Total cash costs[1] (TCC) for the full year were US$ 649/GE oz,
down 1% year-on-year and just below the bottom of the range of the Group's
initial cost guidance of US$ 650-700/GE oz. All-in sustaining cash costs1
(AISC) amounted to US$ 861/GE oz, also below the lower end of the Group's
cost guidance of US$ 875-925/GE oz, a decrease of 4% year-on-year.
? Adjusted EBITDA1 increased by 5% over 2017 to US$ 780 million, mostly
driven by higher production volumes and stable cost performance. The
Adjusted EBITDA margin was at 41.4% (2017: 41.0%).
? Net earnings[2] were US$ 355 million (2017: US$ 354 million), with basic
EPS of US$ 0.78 per share (2017: US$ 0.82 per share). Underlying net
earnings1 increased by 19% to US$ 447 million driven by EBITDA growth and
lower depreciation and income tax expenses.
? Capital expenditure was US$ 344 million[3], down 10% compared to 2017.
With the addition of loans that were extended to Nezhda and Prognoz before
consolidation of these assets, capital expenditure comprised US$ 395
million, below the original guidance of US$ 400 million. The Group has
successfully completed and launched the Kyzyl project ahead of the
original schedule with cumulative project capex of US$ 319 million, below
the original budget of US$ 325 million.
? Net debt1 increased to US$ 1,520 million during the period (31 December
2017: US$ 1,420 million), representing a Net debt/Adjusted EBITDA ratio of
1.95x (2017: 1.91x). Despite investments in the Amursk POX debottlenecking
and Kyzyl projects over the course of 2018 as well as start-up working
capital at Kyzyl, the Company continued to generate meaningful free cash
flow1 that amounted to US$ 176 million (2017: US$ 143 million), while
maintaining stable net cash operating inflow of US$ 513 million (2017: US$
533 million).
? A final dividend of US$ 0.31 per share (approx. US$ 146 million)
representing 50% of the Group's underlying net earnings for 2H 2018 has
been proposed by the Board in accordance with the dividend policy while
complying with the hard ceiling of Net debt/Adjusted EBITDA ratio below
2.5x. This will bring the total dividend declared for FY 2018 to US$ 223
million (2017: US$ 196 million), or US$ 0.48 per share (2017: US$ 0.44 per
share).
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[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.
OPERATING HIGHLIGHTS
? Polymetal delivered a robust operational performance in 2018: annual GE
production of 1,562 Koz was up 9% year-on-year exceeding our original
production guidance of 1,550 Koz, on the back of the full ramp-up at
Kyzyl, as well as a strong performance at Albazino/Amursk and Svetloye.
? Full year gold production totalled 1,216 Koz, a 13% increase
year-on-year. Gold sales generally followed production dynamics. Silver
production was down 6% to 25.3 Moz compared to 2017.
? Polymetal regrettably reported one fatal accident at Kapan underground
mine in 2018. While full year safety statistics demonstrated a meaningful
improvement year-on-year, we are yet to achieve our principal goal of zero
fatalities at all operations. The Company has implemented additional
safety measures aimed at mitigating the risks associated with air quality
and efficiency of ventilation in underground mines.
? The Company reiterates its current production guidance of 1.55 Moz and
1.6 Moz of GE for 2019 and 2020, respectively. Traditionally, production
in both years will be weighted towards 2H due to seasonality.
? TCC in 2019 is expected to be in the range of US$ 600-650/ GE oz while
AISC is expected to average US$ 800-850/ GE oz, with the decrease to be
driven by the fully ramped-up Kyzyl operation and the disposal of higher
cost Kapan and Okhotsk mines. The cost guidance is contingent on the
Rouble/Dollar exchange rate and Brent oil price.
Financial highlights[4] 2018 2017 Change, %
Revenue, US$m 1,882 1,815 +4%
Total cash cost, US$ /GE oz 649 658 -1%
All-in sustaining cash cost, US$ /GE oz 861 893 -4%
Adjusted EBITDA, US$m 780 745 +5%
Average realised gold price, US$ /oz 1,226 1,247 -2%
Average realised silver price, US$ /oz 14.8 16.1 -8%
Net earnings, US$m 355 354 +0%
Underlying net earnings, US$m 447 376 +19%
Return on Assets, % 17% 18% -1%
Return on Equity (underlying), % 16% 16% -
Basic EPS, US$ /share 0.78 0.82 -5%
Underlying EPS, US$ /share 1.00 0.88 +14%
Dividend declared during the period, US$ 0.47 0.32 +47%
/share[5]
Dividend proposed for the period, US$ 0.48 0.44 +9%
/share[6]
Net debt, US$m 1,520 1,420 +7%
Net debt/Adjusted EBITDA 1.95 1.91 +2%
Net operating cash flow, US$m 513 533 -4%
Capital expenditure, US$m 344 383 -10%
Free cash flow[7], US$m 176 143 +23%
[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.
[5] FY 2018: final dividend for FY 2017 declared in May 2018 and interim
dividend for the 1H 2018 declared in September 2018.
FY 2017: final dividend for FY 2016 declared in May 2017 and interim
dividend for the 1H 2017 declared in September 2017.
[6] FY 2018: interim and final dividend for FY2018. FY 2017: interim and
final dividend for FY2017.
[7] Net cash generated by operating activities less net cash used in
investing activities excluding acquisitions of joint venture and associate,
loans forming part of net investment in joint ventures and proceeds from
disposal of subsidiaries.
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 11 March 2019 at 11:00
London time (14:00 Moscow time), where senior management will discuss the
results.
To participate in the call, please dial:
8 800 500 98 63 access code 48861556# (free from Russia), or
44 203 009 24 76 (free from the UK), or
1 646 502 51 26 (free from the US), or
follow the link: http://polymetal110319-live.audio-webcast.com/ [1].
Please be prepared to introduce yourself to the moderator.
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 418835942#, from 14:30 Moscow
time Monday, 11 March, till 14:30 Moscow time Monday, 18 March, 2019.
A webcast replay will be available on Polymetal's website
(www.polymetalinternational.com [2]) and at
http://polymetal110319-live.audio-webcast.com [3].
Enquiries
Media Investor Relations
FTI +44 20 3727 Polymetal ir@polymetalinternational.com
Consulting 1000
Eugenia +44 20 7016 9505 (UK)
Leonid Fink Onuschenk
o
Viktor
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