15 Mar 2017 07:01
Release time |
IMMEDIATE |
Date | 15 March 2017 |
Polymetal International plc
Preliminary results for the year ended 31 December 2016
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 2016.
FINANCIAL HIGHLIGHTS
· 2016 revenue increased 10% over 2015, totaling US$ 1,583 million. Average realised gold and silver prices increased by 8% and 11%, respectively. Gold sales were 880 Koz, up 2% year-on-year, while silver sales were 30.7 Moz, down 2% year-on-year, in line with production volume dynamics.
· Group Total cash costs1 ("TCC") were US$ 570/gold equivalent ounce ("GE oz"), up 6% from 2015 levels and within our original guidance of US$ 550-575/GE oz.
· All-in sustaining cash costs1 ("AISC") amounted to US$ 776/GE oz, up 6% year-on-year, slightly above the guidance range of US$ 700-750/GE oz and driven mostly by an increase in TCC during the period and the appreciation of the Russian Rouble against the US dollar in the second half of the year.
· Adjusted EBITDA1 was US$ 759 million, an increase of 15% year-on-year, on the back of higher commodity prices and stable production. The Adjusted EBITDA margin was 48% compared to 46% in 2015.
· Net earnings2 were US$ 395 million versus US$ 221 million in 2015, reflecting an increase in EBITDA and the impact of foreign exchange gains driven by the strengthening of the Russian Rouble. Underlying net earnings (adjusted for the after-tax amount of write-down of metal inventory to net realisable value, foreign exchange gains/losses and change in fair value of contingent consideration liability) were US$ 382 million (2015: US$ 291 million), up 31% year-on-year.
· Capital expenditure was US$ 271 million3, up 32% compared to 2015 but below the reduced guidance of US$ 310 million, due to favourable exchange rate dynamics in the beginning of the year. The Group is on track with the construction of Kyzyl and the POX debottlenecking project.
· In the course of 2016, the Company continued to generate significant pre-acquisition free cash flow1, which amounted to US$ 257 million (2015: US$ 263 million). Net debt of US$ 1,330 million as at 31 December 2016 remained broadly unchanged over the previous year, bringing the Net debt/Adjusted EBITDA ratio at 31 December 2016 down to 1.75x versus 1.97x as at 31 December 2015.
· A final dividend of US$ 0.18 per share (approx. US$ 77 million) representing 30% of the Group's underlying net earnings for 2H 2016 is being proposed by the Board in accordance with the current dividend policy. This will bring total dividend declared for the period to US$ 179 million.
OPERATING HIGHLIGHTS
· Polymetal delivered a strong performance in 2016, producing 1.27 Moz of gold equivalent which is slightly above the production guidance of 1.26 Moz. A strong finish to the year was driven by a solid performance at Omolon and our new operations - Svetloye (Okhotsk hub), Komar (Varvara) and Kapan.
· Gold production was 890 Koz, up 3% year-on-year, while silver production decreased 9% to 29.2 Moz compared to 2015. Gold sales generally followed production dynamics.
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[1] The definition and calculation of non-IFRS measures used in this report, including Adjusted EBITDA, Total cash costs, All-in sustaining cash costs, Underlying net earnings, Net debt, Free cash flow and the related ratios, are explained in the "Financial Review" section below.
2 Profit for the financial period.
3 On a cash basis.
· While the total number of fatalities for the year decreased to four compared to six in 2015, Polymetal remains committed to the implementation of additional measures in order to fully eliminate fatalities at all of its operations. A Critical Risks Management system will be introduced in 2017 that will complement existing safety measures and help reduce the risk of injuries across the business.
· The Company reconfirms its production guidance for 2017 and 2018 of 1.40 Moz and 1.55 Moz of gold equivalent, respectively. Traditionally, production in both years will be skewed towards the H2.
· TCC for 2017 are expected to be in the range of US$ 600-650/GE oz and AISC at US$ 775-825/GE oz, 10% and 3% above 2016 levels, respectively. The increase is due to rising domestic diesel prices and the strengthening of the Russian Rouble on the back of rising global oil prices.
"I am delighted to report robust earnings for the year on the back of a strong operating performance", said Vitaly Nesis, Group CEO of Polymetal, commenting on the results. "Delivering solid free cash flows and dividends reaffirms the strength of our strategy and allows us to advance our long-term project pipeline while sustaining cash returns to our shareholders".
Financial highlights1 | 2016 | 2015 | Change, % |
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Revenue, US$m | 1,583 | 1,441 | +10% |
Total cash cost, US$ /GE oz | 570 | 538 | +6% |
All-in sustaining cash cost, US$ /GE oz | 776 | 733 | +6% |
Adjusted EBITDA, US$m | 759 | 658 | +15% |
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Average realised gold price, US$ /oz | 1,216 | 1,127 | +8% |
Average realised silver price, US$ /oz | 16.3 | 14.7 | +11% |
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Net earnings, US$m | 395 | 221 | +79% |
Underlying net earnings, US$m | 382 | 291 | +31% |
Return on Assets, % | 26% | 17% | +9% |
Return on Equity (underlying), % | 18% | 16% | +2% |
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Underlying EPS, US$ /share | 0.90 | 0.70 | +28% |
Dividend declared during the period, US$ /share2 | 0.37 | 0.51 | -27% |
Dividend proposed for the period, US$ /share3 | 0.42 | 0.51 | -18% |
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Net debt, US$m | 1,330 | 1,298 | +2% |
Net debt/Adjusted EBITDA | 1.75 | 1.97 | -11% |
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Net operating cash flow, US$m | 530 | 490 | +8% |
Capital expenditure, US$m | 271 | 205 | +32% |
Free cash flow4, US$m | 257 | 263 | -2% |
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1 Totals may not correspond with 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 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.
FY 2015: final dividend for FY 2014 declared in May 2015, interim dividend for the 1H 2015 declared in September 2015, and special dividend declared in December 2015.
3 FY 2016: final dividend, interim and special dividend for FY2016.
FY 2015: final dividend, interim and special dividend for FY2015.
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 press release in the attached PDF.
http://www.rns-pdf.londonstockexchange.com/rns/5128Z_-2017-3-15.pdf
PRESENTATION AND WEBCAST
Polymetal will hold a conference call and webcast on Wednesday, March 15, 2017 at 9:30 am London time (12:30 pm Moscow time).
To participate in the call, please dial:8 10 800 249 020 44 (free from Russia), or 0808 109 0700 (free from the UK), or+1 866 966 5335 (free from the US), or +44 (0) 20 3003 2666 (Standard International Access),
or follow the link: http://webcast.instinctif.tv/795-1028-17991/en.
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://webcast.instinctif.tv/795-1028-17991/en. A recording of the call will be available immediately after the call at +44 (0) 20 8196 1480 (from within the UK), 1 866 583 1035 (USA Toll Free) and +7 (8) 495 249 9840 (from within Russia), access code 8525867#, from 15:30 Moscow time Wednesday, March 15, till 15:30 Moscow time Wednesday, March 22, 2017.
Enquiries
| Media | Investor Relations | ||
FTI Consulting Leonid Fink Jenny Payne | +44 20 3727 1000 | Polymetal Maxim Nazimok Evgenia Onuschenko Maryana Nesis | ir@polymetalinternational.com
+7 812 313 5964 (Russia) +44 20 7016 9503 (UK) |
| Joint Corporate Brokers | |||
Morgan Stanley Sam McLennan Richard Brown Panmure Gordon Adam James Tom Salvesen | +44 20 7425 8000
+44 20 7886 2500 | RBC Europe Limited Tristan Lovegrove 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