DJ Polymetal: Preliminary results for the year ended 31 December 2020
Polymetal International plc (POLY) Polymetal: Preliminary results for the year ended 31 December 2020 03-March-2021 / 10:00 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 03 March 2021
Polymetal International plc
Preliminary results for the year ended 31 December 2020
Polymetal is pleased to announce the Group's preliminary results for the year ended 31 December 2020.
"We are pleased to report record net earnings for the year amidst a challenging global backdrop. A strong operating performance, a favourable commodity price environment and stable cost performance underpinned a significant increase in the Group's cash flow and dividends whilst achieving a material reduction in leverage. We also achieved our target of zero fatalities and have importantly been able to minimise the impact of the COVID-19 pandemic on our people, communities, and operations", said Vitaly Nesis, Group CEO, commenting on the results.
FINANCIAL HIGHLIGHTS - In 2020, revenue increased by 28%, totalling USUSD 2,865 million (2019: USUSD 2,241 million). Average realised gold and
silver prices tracked market dynamics and increased by 27% for both metals. Gold sales were 1,392 Koz, up 2%
year-on-year, while silver sales were down 13% to 19.3 Moz, largely in line with production volume trends. - Group Total Cash Costs ("TCC")[1] for the full year were USUSD 638/GE oz, down 3% year-on-year, and 2% below the
lower end of the Company's full year guidance of USUSD 650-700/GE oz mostly due to a weakness in the Russian Rouble
and the Kazakh Tenge which outweighed additional COVID-related costs and a price-driven increase in royalties. - All-in Sustaining Cash Costs ("AISC")1 remained broadly unchanged from 2019 at USUSD 874/GE oz, up 1% year-on-year
and within the Company's full year guidance of USUSD 850-900/GE oz, as the Company has accelerated pre-stripping and
mine fleet renewals against a backdrop of higher commodity prices. - Adjusted EBITDA1 was USUSD 1,686 million, a 57% increase over 2019, driven by higher production volumes, higher
commodity prices, and lower cash costs. Adjusted EBITDA margin increased by 11 p.p. and reached an all-time high of
59% (2019: 48%). - Net earnings[2] were a record USUSD 1,086 million (2019: USUSD 483 million), with a basic EPS of USUSD 2.30 per share
(2019: USUSD 1.02 per share), reflecting the increase in operating profit. Underlying net earnings1 increased by 82%
to USUSD 1,072 million (2019: USUSD 586 million). - Capital expenditure was USUSD 583 million[3], up 34% compared to USUSD 436 million in 2019 and 8% above guidance. As
previously announced, the increase is mainly related to accelerated spending across the project portfolio in a bid
to neutralise the impact of the pandemic on project schedules and an increase in capitalised underground
development and pre-stripping, aimed at ensuring operational flexibility against the backdrop of heightened
epidemiological risks. The Group is on track for development activities at both POX-2 and Nezhda. - Net debt1 decreased to USUSD 1,351 million during the period (31 December 2019: USUSD 1,479 million), representing a
Net debt/Adjusted EBITDA ratio of 0.80x (2019: 1.38x), significantly below the Group's target leverage ratio of
1.5x. The Company generated significant free cash flow1, which amounted to USUSD 6101 million (2019: USUSD 256
million), supported by a net cash operating inflow of USUSD 1,192 million (2019: USUSD 696 million). - In view of the strong balance sheet and underlying business performance in 2020, the Board has proposed a final
dividend of USUSD 0.89 per share (approx. USUSD 419 million), which includes USUSD 0.74 per share representing 50% of
underlying net earnings for the 2H 2020 and a discretionary payment of USUSD 0.15 per share adjusting the total
dividend for 2020 for 100% of free cash flow for the FY 2020, in accordance with Polymetal's revised dividend
policy. This will bring the total dividend declared for FY 2020 to USUSD 608 million (2019: USUSD 385 million), which
represents USUSD 1.29 per share, up 57% compared to USUSD 0.82 per share in 2019.
Financial highlights[4] 2020 2019[5] Change, % Revenue, USUSDm 2,865 2,241 +28% Total cash cost[6], USUSD /GE oz 638 655 -3% All-in sustaining cash cost3, USUSD /GE oz 874 866 +1% Adjusted EBITDA3, USUSDm 1,686 1,075 +57% Average realised gold price[7], USUSD /oz 1,797 1,411 +27% Average realised silver price4, USUSD /oz 20.9 16.5 +27% Net earnings, USUSDm 1,086 483 +125% Underlying net earnings3, USUSDm 1,072 586 +83% Return on Assets3, % 34% 20% +14% Return on Equity (underlying) 3, % 30% 19% +11% Basic EPS, USUSD /share 2.30 1.02 +125% Underlying EPS 3, USUSD /share 2.28 1.25 +82% Dividend declared during the period[8], USUSD /share 1.02 0.51 +100% Dividend proposed for the period[9], USUSD /share 1.29 0.82 +57% Net debt3, USUSDm 1,351 1,479 -9% Net debt/Adjusted EBITDA 0.80 1.38 -42% Net operating cash flow, USUSDm 1,192 696 +71% Capital expenditure, USUSDm 583 436 +34% Free cash flow3, USUSDm 610 256 +138% Free cash flow post-M&A3, USUSDm 603 299 +102%
COVID-19 IMPACT ON GROUP's PERFORMANCE TO DATE - There were 20 active cases of COVID-19 as at 1 March 2021 across the Group. We regret to report that five of our
employees (four in 2020 and one in 2021) died of the COVID-19 or related consequences. - The epidemiological situation in the Company remains under control. Operations and development projects are
unaffected so far. - Strict precautionary procedures which were previously implemented, including mandatory isolation of new arrivals
and restrictions on meetings and travel, continue to be maintained at all production sites and offices. These
restrictions are currently expected to continue into full year of 2021. - Polymetal provides comprehensive assistance in the voluntary vaccination of its employees and is currently awaiting
for the Russian Sputnik-V vaccine to become widely available. - Polymetal continues to provide financial and operational support to healthcare facilities across all regions of its
presence with USUSD 3.4 million spent in 2020. The main areas of assistance include purchasing medical and diagnostic
equipment and key supplies for local clinics.
OPERATING AND ESG HIGHLIGHTS - There were no fatal accidents among the Group's workforce or its contractors in 2020 (compared with two employee
fatalities and one contractor fatality in 2019). Lost time injury frequency rate (LTIFR) among the Group's
employees decreased by 38% year-on-year to 0.12. In 2020, the Company started to use the DIS metric (days lost due
to work-related injuries) as the main Health and Safety KPI. For the full year, DIS amounted to 1,583 days, a 10%
decrease compared to 2019. Polymetal will also continue to report its LTIFR going forward. - The Company's FY2020 gold equivalent output amounted to 1,559 Koz, a 4% increase y-o-y and 4% above the original
production guidance of 1.5 Moz. Strong contribution from Kyzyl, Varvara and Albazino offset planned grade decline
at Voro, as well as lower production at Svetloye. - Construction and development activities at Nezhda and POX-2 progressed on schedule despite significant challenges
posed by COVID-related disruptions and slowdowns. - Our operational achievements are underpinned by the value that we place on environmental, social and governance
(ESG) issues integrated into all areas of our business. In 2020, Polymetal was added to the Dow Jones World
Sustainability Index ("DJSI") for the first time and retained its place in DJSI Emerging Markets, as well as
reaffirmed membership in FTSE4Good Index. - In 2020, as a part of our carbon transition strategy we have adopted Green Financing Framework and raised a USUSD 125
million Green Loan with Société Générale to finance the transition. Our total green and sustainability-linked loan
portfolio now reaches USUSD 280 million, or 16% of the total outstanding debt. - In 2020, greenhouse gas emissions intensity reduced by 4%, attributing to energy efficiency initiatives, switching
our mining fleet to electric vehicles, a shift from diesel to grid energy sources and green energy contracts.
CORPORATE TRANSACTIONS - In March 2020, Polymetal acquired a 9.1% stake in ThreeArc, 100% owner of the Tomtor project, through a USUSD 20
million cash investment into newly issued share capital. The proceeds will be used to complete the Tomtor
pre-feasibility study and initial JORC-compliant ore reserve and mineral resource estimate. Tomtor is one of the
largest and highest grade rare earth elements (REE) projects in Russia and considered to be the highest grade
development stage niobium (Nb) project globally. - In April 2020, VTB acquired 25.7% stake in Amikan from the existing minority shareholders for a cash consideration
of USUSD 36 million and invested USUSD 35 million in cash in exchange for newly issued Amikan (Veduga) share capital
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