Polymetal: H1 2020 Results Presentation
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1H 2020 Financial Results 26 August 2020 POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 2 DISCLAIMER This presentation includes forward-looking statements technological and market change in the industries in management in the market in which the Company that involve known and unknown risks and which the Company operates, as well as other risks operates. While the Company believes that such uncertainties, many of which are beyond the specifically related to the Company and its operations. research and estimates are reasonable and reliable, Company’s control and all of which are based on the Past performance should not be taken as an indication they, and their underlying methodology and directors’ beliefs and expectations about future or guarantee of future results, and no representation assumptions, have not been verified by any events. These forward-looking statements include or warranty, express or implied, is made regarding independent source for accuracy or completeness and statements concerning plans, objectives, goals, future performance. Neither the Company, nor any of are subject to change without notice. Accordingly, strategies, future events or performance, and its agents, employees or advisors intend or have any undue reliance should not be placed on any of the underlying assumptions, predictions and other duty or obligation to supplement, amend, update or industry, market or competitive position data statements, which are other than statements of revise any of the forward-looking statements contained in this presentation. The information historical facts. The words “believe,” “expect,” contained in this presentation. to reflect any change contained in this presentation has not been “anticipate,” “intends,” “estimate,” “forecast,” in their expectations or any change in events, independently verified. Neither the Company, any of “project,” “will,” “may,” “should”, “shall”, “could”, “risk”, conditions or circumstances on which such its affiliates, subsidiaries or subsidiary undertakings “aims”, “plans”, “predicts”, “continues”, “assumes”, statements are based nor any of their respective advisors or representatives “positioned” and similar expressions or the negative makes any representation or warranty, express or thereof identify certain of the forward-looking Nothing in this presentation constitutes an offer, implied, and no reliance should be placed on the statements. Forward-looking statements include invitation, recommendation to purchase, sell or fairness, accuracy, completeness or correctness of the statements regarding: strategies, outlook and growth subscribe for any securities in any jurisdiction or information or opinions contained in this presentation. prospects; future plans and potential for future solicitation of any offer to purchase, sell or subscribe Percentages and certain amounts included in this growth; liquidity, capital resources and capital for any securities in any jurisdiction and neither the presentation have been rounded for ease of expenditures; growth in demand for products; issue of the information nor anything contained herein presentation. Accordingly figures shown as totals in economic outlook and industry trends; developments shall form the basis of or be relied upon in connection certain tables may not be the precise sum of the of markets; the impact of regulatory initiatives; and with, or act as any inducement to enter into, any figures that precede them. Neither the Company, or the strength of competitors. The forward-looking investment activity. any of its affiliates, advisors or representatives statements in this presentation are based upon accepts any liability whatsoever (in negligence or various assumptions and predictions, many of which To the extent available, the industry, market and otherwise) for any loss howsoever arising from any are based, in turn, upon further assumptions and competitive position data contained in this information contained in the presentation. predictions, including, without limitation, presentation come from official or third party sources. management’s examination of historical operating Third party industry publications, studies and surveys trends, data contained in the Company’s records and generally state that the data contained therein have other data available from third parties. Although the been obtained from sources believed to be reliable, Company believes that these assumptions were but that there is no guarantee of the accuracy or reasonable when made, these assumptions are completeness of such data. While the Company inherently subject to significant uncertainties and believes that each of these publications, studies and contingencies which are difficult or impossible to surveys has been prepared by a reputable source, the predict and are beyond its control, and the Company Company has not independently verified the data may not achieve or accomplish these expectations, contained therein. In addition, certain of the industry, beliefs or projections. Many factors could cause the market and competitive position data contained in this actual results to differ materially from those contained presentation come from the Company's own internal in predictions or forward-looking statements of the research and estimates based on the knowledge and Company, including, among others, general economic experience of the Company's conditions, the competitive environment, risks associated with operating in Russia and Kazakhstan, rapid POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 3 1H 2020 – STRONG PERFORMANCE AND INCREASED RETURNS TO SHAREHOLDERS GE Production Adjusted EBITDA Underlying EPS 723 Koz $616m $0.79 +4% y-o-y +53% y-o-y +98% y-o-y AISC YTD Dividend Yield* 1H 2020 DPS $880/oz 5.4% $0.40 -3% y-o-y +21% y-o-y +100% y-o-y Notes: * DPS declared for 1H 2020 ($0.4) + Final 2019 DPS ($0.42) + Special 2019 DPS ($0.2) divided by YTD average share price ($18.8) POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 4 1H 2020 - PROGRESS CORPORATE PROJECTS ESG GOVERNANCE POX-2: Board renewal: Zero fatalities and significant Autoclave was successfully 1 NED and 1 INED LTIFR decrease delivered (21st Jul) and departed, 3 INEDs joined th Introduction of ESG KPI for installed (16 Aug) on As a result the share of CEO and COO schedule INEDs increased from 50% Scope 3 downstream and Nezhda: to 67% and share of women from 25% to 33% upstream emissions disclosure SAG and ball mills have been installed Quorate hybrid AGM with 97%+ Disclosure in line with SASB support of all resolutions and TCFD in 2019 Sustainability UVES LLC, an independent Report grid management company, Approval of the revised funded by Far East and Remuneration policy for 3 years Tailings and Water Storage Arctic Development Fund (99.9% votes “for”) Facilities Management Policy and Credit Bank of Moscow, has started Permafrost FAQs disclosure construction of the grid power line and substation Refinitiv ESG rating upgrade for Nezhda from B+ to A- No.1 employer for women in metals and mining industry in Russia according to Forbes POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 5 COVID-19 UPDATE No interruptions in production, supply chain or sales due to COVID-19 yet No material COVID-19 outbreaks have so far occurred at our operations There are currently 72 employees across all operations tested positive with the vast majority of confirmed cases occurring during intra-shift breaks away from mines or during mandatory 14-days observatory period Strict precautionary procedures are maintained at all production sites The additional COVID-related costs are estimated at approximately $2.5m per month Polymetal provides financial support to all regions of operations in Russia and Kazakhstan. In 1H, the Company purchased various critical medical supplies for 25 regional and municipal hospitals, and volunteers for the total amount of RUB 129 million (US$ 1.8 million) POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 6 SAFETY There were no fatal accidents during 1H 2020 within LTIFR Polymetal and the Company’s contractors LTIFR improved by 70% year-on-year to 0.07 with only four minor injuries recorded for the period 0.23 0.18 0.15 0.16 0.07 1H 2016 1H 2017 1H 2018 1H 2019 1H 2020 FATALITIES 2 2 1 1 - 1H 2016 1H 2017 1H 2018 1H 2019 1H 2020 Notes: LTIFR per 200,000 hours worked POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 7 PRODUCTION Strong performance at Kyzyl compensated for the planned decline at Svetloye and Voro GE PRODUCTION RECONCILIATION, Koz +53 723 694 -21 -3 1H 2019 Kyzyl Other assets Discontinued 1H 2020 operations POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 8 FINANCIAL HIGHLIGHTS Robust growth of all profitability metrics driven by higher prices and production at lower unit costs 1H 2020 1H 2019 Change Revenue, $m 1,135 941 +21% Adjusted EBITDA, $m 616 403 +53% Adjusted EBITDA margin 54% 43% +11% Total cash cost, $/GE oz 638 667 -4% All-in sustaining cash cost, $/GE oz 880 904 -3% Underlying net earnings, $m 373 188 +98% Underlying EPS, $/share 0.79 0.40 +98% Dividends proposed for 1H, $/share 0.40 0.20 +100% Net operating cash flow, $m 300 127 +136% Capital expenditure, $m 248 189 +31% Free cash flow (pre M&A), $m 53 -63 NA Net debt, $m 1,690 1,4791 +14% Net debt/Adjusted LTM EBITDA, x 1.31 1.38 -5% Notes: 1) As at 31/12/2019 POLYMETAL INTERNATIONAL PLC 1H 2020 FINANCIAL RESULTS 9 REVENUE Substantial increase on the back of higher gold and silver prices REVENUE RECONCILIATION, $m +21% 1,135 +231 941 -37 1H 2019 Metal sales Metal prices 1H 2020