An 11 per cent jump in gold-equivalent production, a 6 per cent rise in the average realised gold price and flat all-in sustaining costs: put these changes together, and you see why adjusted cash profits climbed a fifth in Polymetal International’s (POLY) first half.
Big dividend payments, negative free cash flow and a seasonal increase in working capital: combine these metrics, and you see why net debt edged up 16 per cent in the period to $1.65bn (£1.29bn), despite a 12 per cent drop in year-on-year capital expenditure.
With production ramping up, balance sheet gearing looks to have finally peaked. Working capital is expected to pare back in the second half, as working capital commitments unwind and production and sales increase from both Mayskoye and Svetloye, alongside the ramp-up at Kyzyl.
Assuming all else remains equal, a secondary effect of growing output from the three sites will be a decline in all-in costs, which are already in the bottom half of the full-year guidance range of $875-$925 per gold-equivalent ounce. Confident that will lead to a swing to free cash flow, Polymetal has upped its dividend to 50 per cent of underlying net earnings.
On average, analysts forecast full-year pre-tax profits of $507m and EPS of 91.8¢, rising to $688m and $1.26 in 2019.
POLYMETAL INTERNATIONAL (POLY) | ||||
ORD PRICE: | 644p | MARKET VALUE: | £2.91bn | |
TOUCH: | 643-644p | 12-MONTH HIGH: | 984p | LOW: 578p |
DIVIDEND YIELD: | 5.7% | PE RATIO: | 9 | |
NET ASSET VALUE: | 302¢ | NET DEBT: | 121% |
Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2017 | 683 | 150 | 28 | 14 |
2018 | 789 | 210 | 40 | 17 |
% change | +16 | +40 | +43 | +21 |
Ex-div: | 06 Sep | |||
Payment: | 28 Sep | |||
£1=$1.28 |