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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DJ Polymetal: Preliminary results for the year ended -2-
resulting in VTB holding a 40.6% stake in the asset. These cash-in proceeds will be used to fund the Project's
ongoing exploration and development costs. As part of transaction VTB was granted a put option to sell its stake in
Amikan to Polymetal under certain conditions, along with the similar call option granted to Polymetal. Both put and
call options are to be settled in newly issued Polymetal shares. - In June 2020, Polymetal entered into a preliminary lease agreement to lease on pre-agreed terms the single-circuit
110 kV grid power line running from Khandyga to Nezhda production site and the related substation. The power line
will be built, owned and operated by an independent grid management company. The construction will be funded with
the Far East and Arctic Development Fund 10-year senior loan, guaranteed by the Group, and the Credit Bank of
Moscow subordinated loan facility. The completion and commencement date of the lease is scheduled for second
quarter 2022. - During 2020, the Group disposed of non-core assets (Irbychan Gold, PGGK and North Kaluga) with the total
consideration amounting to USUSD 32 million, including cash proceeds of USUSD 23 million and deferred consideration of
USUSD 9 million. - Polymetal continued to further develop its cooperation with junior exploration companies in the regions of our
presence. In 2020, the Group entered into four new strategic partnerships with total initial investment in joint
ventures of USUSD 10 million.
2021 OUTLOOK - The Company reiterates its current production guidance of 1.5 Moz of GE for FY2021 and 1.6 Moz of GE for FY2022.
Production will be weighted towards 2H due to seasonality. - TCC in 2021 is expected to be in the range of USUSD 700-750/GE oz, while AISC is expected at USUSD 925-975/GE oz. The
expected increase over 2020 cost levels is driven by the assumed appreciation of the Russian rouble and Kazakhstan
Tenge and increased domestic diesel fuel prices compared to 2020, as well as above-CPI inflation in the mining
industry and full-year impact of COVID-related measures. - The Company will continue to prioritize timely project execution and stands ready to incur reasonable additional
costs to avoid project schedule slippage. The guidance remains contingent on the Rouble/Dollar exchange rate and
oil price. CONFERENCE CALL AND WEBCAST
The company will hold a conference call and webcast on Wednesday, 3 March 2021 at 11:30 London time (14:30 Moscow time).
To participate in the call, please dial:
From the UK:
+44 (0) 330 336 9411(local access)
0800 279 7204 (toll free)
From the US:
+1 929 477 0324 (local access)
800 458 4121 (toll free)
From Russia:
+7 495 646 9190 (local access)
8 10 8002 867 5011 (toll free)
To participate from other countries, please dial any of the local access numbers listed above.
Conference code: 9588333
To participate in the webcast follow the link: https://webcast-eqs.com/register/polymetal20210303. Please be prepared to introduce yourself to the moderator or register.
A recording of the call will be available at 0 808 101 1153 (from the UK), 888 203 1112 (from the USA) and 8 10 800 2702 1012 (from Russia), access code 9588333, from 17:30 Moscow time Wednesday, 3 March, till 17:30 Moscow time Wednesday, 10 March 2021. Webcast replay will be available on Polymetal's website (www.polymetalinternational.com) and at https://www.webcast-eqs.com/register/polymetal20210303.
About Polymetal
Polymetal International plc (together with its subsidiaries - "Polymetal", the "Company", or the "Group") is a top-10 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 ir@polymetalinternational.com
FTI Consulting
Evgeny Monakhov +44 20 7887 1475 (UK)
Leonid Fink +44 20 3727 1000
Timofey Kulakov
Viktor Pomichal
Kirill Kuznetsov +7 812 334 3666 (Russia)
Joint Corporate Brokers
Morgan Stanley & Co. International plc +44 20 7425 8000
Andrew Foster
RBC Europe Limited
Richard Brown
Marcus Jackson +44 20 7653 4000
Panmure Gordon Jamil Miah
Daniel Norman
+44 20 7886 2500
John Prior
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. -----------------------------------------------------------------------------------------------------------------------
[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.
[2] Profit for the financial period.
[3] On a cash basis, representing cash outflow on purchases of property, plant and equipment in the consolidated statement of cash flows.
[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] Excluding Kapan in 2019 (disposed in January 2019). This note applies to all tables in this release.
[6] Defined in the "Alternative performance measures" section below.
[7] In accordance with IFRS, revenue is presented net of treatment charges which are subtracted in calculating the amount to be invoiced. Average realised prices are calculated as revenue divided by gold and silver volumes sold, excluding effect of treatment charges deductions from revenue.
[8] FY 2020: special and final dividend for FY 2019 paid in 2020 and interim dividend for the 1H 2020 paid in September 2020. FY 2019: final dividend for FY 2018 paid in May 2019 and interim dividend for the 1H 2019 paid in September 2019.
[9] FY 2020: interim and final dividend for FY2020. FY 2019: interim, final and special dividend for FY2019. ----------------------------------------------------------------------------------------------------------------------- Attachment File: Polymetal: Preliminary results for the year ended 31 December 2020 -----------------------------------------------------------------------------------------------------------------------
ISIN: JE00B6T5S470 Category Code: FR TIDM: POLY LEI Code: 213800JKJ5HJWYS4GR61 Sequence No.: 94687 EQS News ID: 1172644 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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