Download 2004 Annual Report - Polymetal

Sergey A. Cherkashin,CFOSalesFinancialReviewIn 2004, Polymetal demonstratedrapid growth of key financials andproduction figures. Gold salesgrew by 66% − from 129,000oz. to 213,000 oz.; silver sales in−creased by 76% − from 9,800,000oz. to 17,300,000 oz. In 2005,the company anticipates furthergrowth in sales volume.Total sales revenue for 2004was $204.5 million, which markeda 121% increase compared with2003. This increase was due toboth an increase in precious met−als sales and a rapid rise in theaverage sale price. Revenue fromgold sales was $86 million (an 87%increase compared with 2003),silver revenue reached $118million − a 159% increase. Othersales (for co−product metals) ac−counted for $800,000.The company’s income from min−ing operations grew by 205% andreached $111.6 million. Becauseof this dramatic growth, operatingprofit showed a 257% increasefrom $24.1 million to $95.6 million(the best dynamics in the Russianindustry).In 2004, EBITDA figures grew by230% and reached $100.5 mil−lion. The profit before taxation andminority interests grew by 259%and reached $62 million. And ac−cording to last year’s results,Polymetal’s net income rose to$83.6 million − a 520% increase.Revenue from sales and operating profitThroughout its history, Polymet−al’s sales have shown a consistentupward trend due to continued ex−pansion of the company’s produc−tion plants. In 2003, the launch ofa plant at the Khakanjinskoye de−posit contributed to greater goldsales and increased production atthe Dukat and Lunnoye depositshelped raiseincrease silver sales.The high growth dynamic is alsodue to favorable conditions in theglobal precious metals market.The average London PM gold Fix in2004 increased from $363.4/ [$]/oz. to $409.7/oz. − a 12.8% rise.The London PM silver Fix demon−strated a 36.7% increase, grow−ing from $4.88/oz. to $6.67/oz.3shipment of metal from refineries to banks and direct export.Financial Review15