DJ Polymetal: Preliminary results for the year ended 31 December 2022
Polymetal International plc (POLY) Polymetal: Preliminary results for the year ended 31 December 2022 16-March-2023 / 10:00 MSK The issuer is solely responsible for the content of this announcement.
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Release time IMMEDIATE LSE, MOEX, AIX: POLY
ADR: AUCOY
Date 16 March 2023
Polymetal International plc
Preliminary results for the year ended 31 December 2022
Polymetal International plc ("Polymetal" or the "Company") announces the Group's preliminary results for the year ended 31 December 2022.
"In 2022, the Company was subject to extraordinary and unprecedented external challenges. Despite these adverse circumstances, Polymetal managed to maintain operational stability and achieve excellent safety performance. Nonetheless, international sanctions against Russia have had a huge impact on domestic inflation, supply chains and sales channels. As a result, costs have risen and working capital requirements ballooned with cash flow plummeting. We start 2023 from a position of relative strength and expect the resumption of free cash flows and a reduction in net debt over the course of the coming year", said Vitaly Nesis, Group CEO, commenting on the results.
FINANCIAL HIGHLIGHTS
-- In 2022, revenue decreased by 3%, totalling USUSD 2,801 million (2021: USUSD 2,890 million), of which USUSD 933million (33%) was generated from operations in Kazakhstan and USUSD 1,868 million (67%) from operations in theRussian Federation. Average realised gold price decreased by 2% while silver price decreased by 12%, both almosttracking market dynamics. Gold equivalent (GE) production was 1,712 Koz, a 2% increase year-on-year (y-o-y). Goldsales decreased by 1% y-o-y to 1,376 Koz, while silver sales increased by 6% to 18.5 Moz. Disruption in saleschannels resulted in a huge gap between production and sales in Q2-Q3 2022, but was largely eliminated in Q4 2022.The remaining gap is expected to close during the course of 1H 2023.
-- Group Total Cash Costs (TCC)[1] for 2022 were USUSD 942/GE oz and within the Group's guidance of USUSD900-1,000/GE oz, although representing an increase of 29% y-o-y, which was predominantly due to double-digitdomestic inflation and the appreciation of Rouble/USD exchange rate. Escalation of logistical costs and sharpincreases in the price of consumables caused by the imposition of sanctions (explosives, equipment spares, cyanide)also impacted the Group's TCC.
-- All-in Sustaining Cash Costs (AISC)1 amounted to USUSD 1,344/GE oz, up 31% y-o-y, which was within theGroup's guidance of USUSD 1,300-1,400/GE and also driven by the same factors as above.
-- Adjusted EBITDA1 was USUSD 1,017 million, 31% lower than in 2021, as costs rose and metals prices declined.USUSD 478 million (47%) of Group EBITDA originated in Kazakhstan and USUSD 539 million (53%) in the Russian Federation.The Adjusted EBITDA margin decreased by 15 percentage points to 36% (2021: 51%).
-- Underlying net earnings[2] were USUSD 440 million (2021: USUSD 913 million). As a result of a lower GroupEBITDA and non-cash impairment charges (a post-tax amount of USUSD 653 million), the Group recorded a net loss forthe period of USUSD 288 million in 2022, compared to profits of USUSD 904 million in 2021.
-- Capital expenditure was USUSD 794 million[3], up 5% compared with USUSD 759 million in 2021 and 2% above theguidance range of USUSD 725-775 million, reflecting accelerated purchases and contractor advances for ongoingprojects (most notably, Amursk POX-2), combined with inflationary and logistical pressures on imported equipment,materials and services.
-- Net operating cash inflow was USUSD 206 million (2021: USUSD 1,195 million), on the back of inventoriesbuild-up of USUSD 473 million. This includes positive cash flow of USUSD 337 million from operations in Kazakhstan andnegative cash flow of USUSD 131 million from operations in the Russian Federation. The Group reported negative freecash flow1 of USUSD 445 million in 2022 (2021: positive USUSD 418 million).
-- Net debt1 increased to USUSD 2,393 million during the period (31 December 2021: USUSD 1,647 million),representing 2.35x of the Adjusted EBITDA (2021: 1.13x). The increase in net debt was driven by the decline inprofitability, the persistently high capital intensity of the business and a very significant expansion in workingcapital.
DIVIDENDS
-- The Board has carefully evaluated the liquidity and solvency of the business in light of multipleexternal uncertainties. Taking into account the Group's leverage (2.35x Net debt/EBITDA, materially above the levelof 1.5x target leverage ratio and the significant level of uncertainty regarding external factors, the Board hasdecided not to propose any dividend for 2022 in order to allow the Group to maintain strategic and operatingflexibility in a highly volatile and uncertain external environment.
Financial highlights [4] 2022 2021 Change Revenue, USUSDm 2,801 2,890 -3% Total cash cost[5], USUSD /GE oz 942 730 +29% All-in sustaining cash cost2, USUSD /GE oz 1,344 1,030 +31% Adjusted EBITDA2, USUSDm 1,017 1,464 -31% Average realised gold price[6], USUSD /oz 1,764 1,792 -2% Average realised silver price3, USUSD /oz 21.9 24.8 -12% Net (loss)/earnings, USUSDm (288) 904 n/a Underlying net earnings2, USUSDm 440 913 -52% Return on assets (underlying)2, % 9% 26% -65% Return on equity (underlying)2, % 11% 23% -52% Basic (loss)/earnings per share, USUSD (0.61) 1.91 n/a Underlying EPS2, USUSD 0.93 1.93 -52% Dividend declared during the period[7], USUSD /share - 1.34 -100% Dividend proposed for the period[8], USUSD /share - 0.97 -100% Net debt2, USUSDm 2,393 1,647 +45% Net debt/Adjusted EBITDA 2.35 1.13 +109% Net operating cash flow, USUSDm 206 1,195 -83% Capital expenditure, USUSDm 794 759 +5% Free cash flow before acquisitions/ disposals2, USUSDm (445) 418 n/a Free cash flow post-M&A, USUSDm (473) 407 n/a
OPERATING HIGHLIGHTS
-- No fatal accidents among the Group's employees and contractors occurred in 2022. Lost time injuryfrequency rate (LTIFR) among the Company's workforce for the full year decreased by 17% y-o-y to 0.10. Days lostdue to work-related injuries (DIS) fell by 42% y-o-y to 877.
-- The Company's FY 2022 GE production amounted to 1,712 Koz, a y-o-y increase of 2% and in line with theoriginal production guidance of 1.7 Moz. The first full year of operations at Nezhda and initial production atKutyn (Albazino hub) compensated for declining grades at mature assets.
-- Amursk POX-2 and other development projects progressed in line with schedules revised after theintroduction of international sanctions against Russia in Q1 and Q2 2022.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") HIGHLIGHTS
-- Varvara Mine in Kazakhstan was certified for full compliance under the International Cyanide ManagementCode by the International Cyanide Management Institute (ICMI).
-- In 2022, Polymetal continued to receive external recognition of its ESG efforts with high ratings andscores by Sustainalytics, Vigeo Eiris and ISS ESG Corporate Rating.
-- In January 2023, the Group published its second green loan allocation report under the corporate greenfinancing framework, which confirmed spending of USUSD 125 million loan given by Société Générale for environmentallyfriendly projects at the Company's sites. Our total green and sustainability-linked loan portfolio is now USUSD 592million, amounting to 20% of the total outstanding debt of the Group.
-- Greenhouse gas emissions intensity (scopes 1 and 2) was 15% lower in 2022 compared to 2019 (Scope 1 and2), attributed to increasing our renewable electricity consumption (30% of total), as well as energy efficiencyinitiatives, such as improving heat utilization systems and the implementation of solar power generation.
-- In 2022, the share of water reused and recycled amounted to 91% of the total water consumption at oursites (compared to 90% in 2021). In 2022, fresh water intensity for ore processing[9] decreased by 49% (as comparedto the 2019 baseline), to 138 m3/1000 t of ore processed.
-- We continue to promote equal-opportunity culture through training and communications, empowering morewomen to take leadership roles: in 2022, the share of female participants of our Talent Pool development programincreased to 35% (compared to 30% in 2021).
2023 OUTLOOK
-- The Group reiterates its current production guidance of 1.7 Moz of GE for FY 2023. Production will beweighted towards 2H 2023 due to traditional seasonality at several production sites.
-- Polymetal expects its costs to be in the ranges of USUSD 950-1,000/GE oz for TCC and USUSD 1,300-1,400/GE ozfor AISC[10]. A minor y-o-y increase is mostly due to expected domestic inflation and royalty increase inKazakhstan.
-- Capital expenditures are expected to be in the range of USUSD 700-750 million. Major investment projectsinclude Amursk POX-2, Albazino power line, Voro flotation (completion expected Q2), Prognoz (completion expectedQ4), and Mayskoye backfill plant.
PRESERVING SHAREHOLDER VALUE
-- The Group continues to evaluate all available options to modify the Group's asset-holding structure inorder to maximise shareholder value.
-- The Group's preferred option is the potential re-domiciliation of the parent company, PolymetalInternational plc, into the Astana International Financial Centre (AIFC), a financial hub in Astana, Kazakhstan,taking into account the Group's significant operations and presence in the region, the AIFC legal system, taxregime and the ability to execute such a re-domiciliation.
-- The key objective of any re-domiciliation will be to preserve shareholder value, restore our ability topay dividends and increase the strategic flexibility to conduct our operations, as well enabling us to pursuedifferent strategic developments for the Russian and Kazakhstan businesses.
-- No decision has been made and there can therefore be no certainty that the Company will proceed with, orultimately complete a re-domiciliation.
-- The Company has attempted to secure the services of a depository interest provider in order to continuetrading on the London Stock Exchange, should the re-domiciliation proceed. However, as at the date of thisannouncement, the Company has not yet been able to secure such services due to the depository interest providersapproached by the Company being unable or unwilling to provide such arrangements, while Euroclear, as the CRESTsystem operator, has not confirmed the availability of this kind of services for the AIFC jurisdiction. The Companyis continuing its efforts to secure such services.
-- The Company confirms that any actions will be compliant with all applicable international sanctions,counter-sanctions and regulatory requirements and the Company will continue to take into consideration the interests of its stakeholders prior to making a decision.
-- Further announcements in relation to the Group's efforts to restore shareholder value and modify theGroup's asset-holding structure will be made when appropriate.
Conference call and webcast
The Company will hold a conference call and webcast on Thursday, 16 March 2023 at 12:00 London time (15:00 Moscow time).
Please complete the registration form using the link to participate in the call. Dial-in details will be sent to you via email after registration. Participants from Russia may use the webcast link below or a dial-out option which will be provided after registration.
To participate in the webcast follow the link: https://edge.media-server.com/mmc/p/ez66tpiw. Please find the full PDF version of the announcement at the link at the bottom of the page.
Enquiries
Investor Relations
Polymetal ir@polymetalinternational.com
Evgeny Monakhov +44 20 7887 1475 (UK)
+7 812 334 3666 (Russia)
Kirill Kuznetsov
+7 717 261 0222 (Kazakhstan)
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.
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Attachment File: Polymetal: Preliminary results for the year ended 31 December 2022
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ISIN: JE00B6T5S470 Category Code: FR TIDM: POLY LEI Code: 213800JKJ5HJWYS4GR61 OAM Categories: 3.1. Additional regulated information required to be disclosed under the laws of a Member State Sequence No.: 230186 News ID: 1583781 End of Announcement EquityStory RS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
March 16, 2023 03:00 ET (07:00 GMT)
