Polymetal International plc (POLY)
Polymetal: Report on payments to governments for the year 2018
14-Jun-2019 / 09:00 MSK
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Release time IMMEDIATE LSE, MOEX, AIX: POLY / ADR: AUCOY
Date 14 June 2019
Polymetal International plc
Report on payments to governments for the year 2018
Polymetal issues the report on payments to government for the year ended 31 December
2018.
INTRODUCTION
This Report provides an overview of the payments to governments made by Polymetal
International plc and its subsidiary undertakings (hereinafter referred to as
"Polymetal") for the year 2018 as required under the UK's Report on Payments to
Governments Regulations 2014 (as amended in December 2015). These UK Regulations enact
domestic rules in line with Directive 2013/34/EU (the EU Accounting Directive (2013))
and apply to large extractive companies, whose securities are publicly listed on a
UK-regulated stock market, that are involved in the exploration, prospection, discovery,
development and extraction of minerals, oil, natural gas deposits or other materials.
This Report is also intended to satisfy the requirements of the Disclosure and
Transparency Rules of the Financial Conduct Authority in the United Kingdom.
BASIS OF PREPARATION
Legislation
This report is prepared in accordance with The Reports on Payments to Governments
Regulations 2014 as enacted in the UK in December 2014 and as amended in December 2015.
Reporting entities
This Report includes payments to governments made by Polymetal plc and its subsidiary
undertakings (Polymetal). Payments made by entities over which Polymetal has joint
control or significant influence are excluded from this Report.
Activities
Payments made by Polymetal to governments arising from activities involving the
exploration, prospection, discovery, development and extraction of minerals are
disclosed in this Report. It excludes payments related to refining activities made to
the refineries owned by the government agencies and any payments which are not directly
attributable to the production and exploration activities.
Government
Government includes any national, regional or local authority of a country, and includes
a department, agency or entity that is a subsidiary of a government.
Project
Payments are reported at project level except that payments that are not attributable to
a specific project are reported at legal entity level. Project is defined as operational
activities which are governed by a single contract, or licence agreement, and form the
basis for payment liabilities with a government. If such agreements are substantially
interconnected, those agreements are to be treated as a single project.
"Substantially interconnected" means forming a set of operationally and geographically
integrated contracts, or licence agreements that are signed with a government giving
rise to payment liabilities. Indicators of integration include, but are not limited to,
geographic proximity, the use of shared infrastructure and common operational
management.
License agreements are aggregated for the purposes of reporting as a single project only
when those legal agreements have substantially similar terms and are both geographically
and operationally integrated.
Payments
The information is reported under the following payment types:
Income taxes
These are taxes paid by Polymetal on its income and profits in accordance with
legislation enacted in the applicable jurisdiction. Payments are reported net of
refunds. Value added tax, personal income taxes, social taxes, property taxes are
excluded.
The maximum income tax rate in Russia is set at 20% and is allocated between federal
budget and the budgets of the relevant constituent regions. In 2018 and 2017 the
following proportion was applied: 3% was remitted to the federal budget, whereas 17%
were allocated to the regional budgets. From 1 January 2017 Omolon Gold Mining Company
LLC and Magadan Silver JSC are entitled to the decreased statutory income tax rate of
17% for the operations held in the Special Economic Zone of the Russian Far East, as
well as decreased mining tax rate (paying at 60% of the standard mining tax rates). In
return for obtaining this tax relief the members of the regional special economic zone
are obliged to invest 50% of their tax savings each year in the Special Economic Zone
Development Program. From 1 January 2017, Svetloye LLC has received tax relief as
Regional Investment Project and is entitled to the statutory income tax rate of 0% up to
2021, as well as to decreased mining tax rates.
In Kazakhstan and Armenia income taxes are set at 20% and there are no regional or local
income taxes in these countries.
Mining tax
Mining tax is a royalty payable in Russian Federation, Kazakhstan and Armenia, which is
calculated based on the value of the precious metals extracted in the period. This value
is usually determined based on the realised selling price of precious metals or, in case
if there were no sales during the period, cost of production of metals extracted
(Russian Federation) or the average market price (Kazakhstan) during the period. Royalty
payable in Armenia is calculated as a percentage of actual sales during the reporting
period.
Mining tax in Russia is levied at federal level, and is then reallocated between federal
and respective regional budgets based on the following proportion: 40% of total tax
collected to the federal budget, 60% to regional budgets. Mining tax and royalties in
Kazakhstan and Armenia are levied at central government level.
Licence fees
These are fees and other sums paid as consideration for acquiring a licence for gaining
access to an area where extractive activities are performed. Administrative government
fees that are not specifically related to the extractive sector, or to access to
extractive resources, are excluded. No significant licence fees individually more than
86,000 GBP were paid during the year ended 31 December 2018.
Rental fees
The land in the Russian Federation and Kazakhstan on which the Group's production
facilities are located is owned by the state. The Group leases this land through
operating lease agreements.
Other payments
Other payments include payments made and social commitments in accordance with subsoil
contracts attributable to the Kyzyl project and investment in the Special Economic Zone
Development Program of Omolon Gold Mining Company LLC and Magadan Silver JSC.
Cash and in-kind payments
Payments are reported on cash basis. No in-kind payments were made during years ended 31
December 2018 and 31 December 2017.
Materiality Level
Any payment, whether made as a single payment or as a series of related payments, below
GBP 86,000 within a financial year is excluded from this Report.
Payments made to governments by a joint ventures or associates of the Group in
proportion to the company's interest in the respective venture or associate are
insignificant to this Report based on materiality level set.
Exchange Rate
Relevant payments are made by Polymetal in Russian Rubles, Kazakh Tenge and Armenian
Dram and for the purpose of this Report are translated to the US Dollar based on the
foreign exchange rate at the relevant monthly average rate.
PAYMENTS PER
GOVERNMENT
FOR THE YEAR
2018
Government Income Mining Rental Licence Other1 Total
tax fees
000'$ tax fees
Russia 94,652 68,408 2,161 130 9,643 174,9
94
Kazakhstan 9,611 15,898 60 - 5,425 30,99
4
Armenia 388 13,241 228 - 12 13,86
9
Total 104,65 97,547 2,449 130 15,080 219,8
1 57
PAYMENTS PER
PROJECT1
Entity Project Country/ Region Income Mining Rental Licence Other1 Total
Government tax fees
000'$ tax fees
Gold of Voro Russia Svedlovskaya 25,962 8,180 83 - 79 34,30
Northern oblast' 4
Urals CJSC
Okhotskaya Okhotsk Russia Khabarovskiy 8,328 5,751 301 34 42 14,45
Mining and Kray 6
Exploration
Company LLC
Svetloye LLC Svetloye Russia Khabarovskiy - 290 3 33 326
Kray
Magadan Dukat Russia Magadanskaya 34,420 14,527 604 45 5,111 54,70
Silver JSC oblast' 7
Mayskoye Gold Mayskoye Russia Chukotka 12,322 6 25 12,35
Mining Autonomous 3
Company LLC Okrug
Omolon Gold Omolon Russia Magadanskaya 6,929 8,603 403 31 4,230 20,19
Mining oblast' 6
Company LLC
Albazino Albazino Russia Khabarovskiy 19,013 19,025 474 17 123 38,65
Resources Ltd Kray 2
Varvarinskoye Varvara Kazakhstan n/a 4,701 2,370 11 - 444 7,526
JSC
Komarovskoye Komar Kazakhstan n/a 3,004 5,333 11 - 467 8,815
Mining
Company LLC
Bakyrchik Kyzyl Kazakhstan n/a 1,906 8,195 34 - 4,489 14,62
Mining 4
Venture LLC
Inter Gold Kazakhstan n/a - - 4 - 25 29
Capital LLC
Kapan MPC Kapan Armenia n/a 388 13,241 228 - 12 13,86
CJSC 9
Total 104,65 97,547 2,449 130 15,080 219,8
1 57
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 4,172 for
Omolon Gold Mining Company LLC and kUS$ 4,979 for Magadan Silver JSC.
PAYMENTS PER
GOVERNMENT
FOR THE YEAR
2017
Government Income Mining Rental Licence Other1 Total
tax fees
000'$ tax fees
Russia 79,692 61,728 2,096 31 18,267 161,8
14
Kazakhstan 12,960 8,911 61 - 4,370 26,30
2
Armenia - 3,961 222 - 1,302 5,485
Total 92,652 74,600 2,379 31 23,939 193,6
01
PAYMENTS PER
PROJECT1
Entity Project Country/ Region Income Mining Rental Licence Other1 Total
Government tax fees
000'$ tax fees
Gold of Voro Russia Svedlovskaya 23,305 8,102 98 5 65 31,57
Northern oblast' 5
Urals CJSC
Okhotskaya Okhotsk Russia Khabarovskiy 9,211 7,382 287 2 34 16,91
Mining and Kray 6
Exploration
Company LLC
Svetloye LLC Svetloye Russia Khabarovskiy - - 217 - 14 231
Kray
Magadan Dukat Russia Magadanskaya 21,548 8,814 655 13 14,172 45,20
Silver JSC oblast' 2
Mayskoye Gold Mayskoye Russia Chukotka - 9,644 - - 28 9,672
Mining Autonomous
Company LLC Okrug
Omolon Gold Omolon Russia Magadanskaya 14,587 9,715 403 9 3,890 28,60
Mining oblast' 4
Company LLC
Albazino Albazino Russia Khabarovskiy 11,041 18,071 436 2 64 29,61
Resources Ltd Kray 4
Varvarinskoye Varvara Kazakhstan n/a 9,803 3,370 11 - 511 13,69
JSC 5
Komarovskoye Komar Kazakhstan n/a 2,637 5,527 11 - 307 8,482
Mining
Company LLC
Bakyrchik Kyzyl Kazakhstan n/a 484 14 36 - 3,522 4,056
Mining
Venture LLC
Inter Gold Kazakhstan n/a 36 - 3 - 30 69
Capital LLC
Kapan MPC Kapan Armenia n/a - 3,961 222 - 1,302 5,485
CJSC
Total 92,652 74,600 2,379 31 23,939 193,6
01
______________________
1 Includes payments under Special Economic Zone Development Program of kUS$ 3,822 for
Omolon Gold Mining Company LLC and kUS$ 13,952 for Magadan Silver JSC.
About Polymetal
Polymetal International plc (LSE, MOEX, AIX: POLY, ADR: AUCOY) (together with its
subsidiaries - "Polymetal", the "Company", or the "Group") is a top-20 global gold
producer and top-5 global silver producer with assets in Russia and Kazakhstan. The
Company combines strong growth with a robust dividend yield.
Enquiries
Media Investor Relations
FTI +44 20 3727 Polymetal ir@polymetalinternational.com
Consulting 1000
Eugenia +44 20 7887 1476 (UK)
Leonid Fink Onuschenk
o
Viktor
Pomichal Timofey
Kulakov
+7 812 334 3666 (Russia)
Michael
Vasiliev
Joint Corporate Brokers
Morgan +44 20 7425 RBC +44 20 7653 4000
Stanley 8000 Europe
Limited
Andrew
Foster Marcus
Jackson
Richard
Brown Jamil
Miah
Panmure
Gordon +44 20 7886
2500
Charles
Lesser
James
Stearns
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
ISIN: JE00B6T5S470
Category Code: PGR
TIDM: POLY
Sequence No.: 10107
EQS News ID: 824449
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