FINANCIAL HIGHLIGHTS
Revenue in 1H 2015 decreased by 11% to US$ 648 million compared to 1H 2014 ("year-on-year") driven by gold and silver prices decreasing 7% and 18% respectively year-on-year. The volume of both gold and silver sold was largely unchanged from 1H 2014, with gold equivalent sold lower by 4% to 537 Koz year-on-year driven by an adverse movement in the gold/silver price ratio.
Group Total cash cost ("TCC")1 were US$ 552 per gold equivalent ounce ("GE oz"), down 14% compared to 2H 2014 ("half-on-half") and down 12% year-on-year on the back of robust operating performance across the portfolio and significant Russian Rouble depreciation against the US Dollar, which more than offset the combined negative impact of domestic inflation and change in gold/silver price ratio.
All-in sustaining cash costs ("AISC")1 amounted to US$ 786/GE oz, a decrease of 16% year-on-year, mainly driven by a reduction in TCC during the period, combined with the reduction in per ounce sustaining capital and exploration expenditure at the operating mines.
Adjusted EBITDA1 was US$ 297 million, a decrease of 4% compared to 1H 2014, driven mainly by a decline in commodity prices largely offset by strong cost performance. Adjusted EBITDA margin was 46% compared to 43% in 1H 2014;
Net earnings2 were US$ 98 million. Underlying net earnings (adjusted for the after-tax amount of impairment charges/reversals and forex exchange loss) were US$ 118 million (1H 2014: US$ 124 million), down 5% year-on-year.
Special and regular dividends for 2014 in the amount of US$ 0.20 and US$ 0.13 per share (total of US$ 139 million) were paid in January and May 2015 respectively, in accordance with Polymetal's dividend policy. An interim dividend of US$ 0.08 per share representing 30% of the Group's underlying net earnings for 1H 2015 is proposed by the Board. In accordance with the current dividend policy, the Board has the discretion to declare a regular dividend at the Net debt/Adjusted EBITDA ratio above 1.75.
Net debt at 30 June 2015 decreased by US$ 18 million to US$ 1,231 million (31 December 2014: US$ 1,249 million), while the Company paid dividends of US$ 139 million during the period3. Free cash flow was US$ 77 million, compared to US$ 29 million a year earlier, and is expected to be even stronger in the second half of the year due to the planned de-stockpiling at Mayskoye and the seasonal reduction of the timing gap between production and sales.
The Company reaffirms its annual production guidance of 1.35 Moz of gold equivalent in 2015 and reduces its full-year Total cash cost guidance from US$ 575-625/GE oz to US$ 525-575/GE oz and its All-in sustaining cash costs guidance from US$ 750-800/GE oz to US$ 700-750/GE oz on the back of continued weakness of the Russian Rouble and expectation of a continued strong operating performance.
"I am pleased to report robust cost performance and cash flow generation in these challenging market conditions", said Vitaly Nesis, Group CEO. "With strong operational delivery and financial strength in the current environment, we remain focused on free cash flow generation and providing dividends while progressing steadily on the development of the next generation of assets, including the Kyzyl project.
