FINANCIAL HIGHLIGHTS
Revenue in 1H 2013 decreased by 6% to US$ 721 million compared to 1H 2012 ("year-on-year") with average realised gold and silver prices decreasing 13% and 18% respectively year-on-year. Price decline was partially offset by 8% growth in the volume of gold equivalent sold.
Group Total Cash Cost was US$ 787/ per gold equivalent ounce ("GE oz"), up 13% compared to 2H 2012 ("half-on-half") and 17% year-on-year. Costs were negatively affected by the ramp-up at the Amursk POX facility and the decision to suspend mining at Birkachan. All-in cash costs comprised US$ 1,210/GE oz and increased 9% year-on-year, driven mostly by an increase in total cash costs during the period which was meaningfully offset by production growth and the resulting decline of SG&A and capex per gold equivalent ounce sold. Both cost measures are expected to decline in 2H as operating cash costs decline at both Albazino and Omolon.
Adjusted EBITDA was US$ 239 million, a decrease of 38%, driven mainly by a decline in commodity prices and Adjusted EBITDA margin was 33% compared to 51% in H1 2012;
A non-cash pre-tax impairment charge resulting from the decline in gold and silver prices of US$ 305 million was recorded as at 30 June 2013, mainly due to the write-off of goodwill and mining assets at Varvara, Khakanja and low-grade ore stockpiles at Omolon. The post-tax amount recorded was US$ 273 million. The impairment calculations were performed using conservative price assumptions of US$ 1,200/oz for gold and US$ 18/oz for silver, which are meaningfully below current spot prices.
As a result of non-cash foreign exchange losses and impairment charges, the Group recorded a net loss of US$ 255 million in 1H 2013, compared to a US$ 157 million net profit in 1H 2012. Underlying net earnings (adjusted for the after-tax amount of impairment charges) were US$ 17 million.
Special and regular dividends for 2012 in the amount of US$ 0.50 and US$ 0.31 per share (total of US$ 313 million) were paid in January and in June 2013, respectively, in accordance with Polymetal's dividend policy. Based on Net Debt / Adjusted EBITDA as at 30 June 2013 of 1.6 (31 December 2012: 1.1), an interim dividend of US$ 0.01 per share representing 30% of the Group's underlying net earnings for 1H 2013 is declared by the Board.
The Group's liquidity profile remained comfortable. Net debt increased over the period to $1.3 billion as working capital requirements increased by US$ 94 million mostly due to increases in inventories at Albazino, Dukat, Mayskoye, and Omolon combined with reduced operating cash flows to due lower metals prices. The build-up in working capital is expected to reverse in 2H releasing substantial cash flows and leading to a decline in net debt.
The Company maintains its full-year Total Cash Cost guidance of US$ 700-750 per ounce of gold equivalent ounce and annual production guidance of 1.2 Moz of gold equivalent.
