Polymetal appoints new auditor to replace Deloitte

Anglo-Russian gold producer Polymetal International plans to announce its half-year results in September after appointing a new auditor to check its accounts.

The London-listed company said MHA MacIntyre Hudson had agreed to become its new group auditor, replacing Deloitte, which stepped down in April after Russia’s invasion of Ukraine made it impossible to work in the country.

Polymetal’s listing on the London Stock Exchange would have been under threat had it not managed to find another company to sign off its accounts — a requirement of the Financial Conduct Authority’s disclosure and transparency rules.

Deloitte and its rivals, EY, KPMG and PwC, have all announced plans to split from their Russian member firms, meaning they cannot complete work for clients in the country and leaving companies such as Polymetal scrambling to find replacements.

Polymetal said it had analysed its legal position and concluded that the appointment of MHA, which will work with Deloitte’s former Russian arm, was not contradictory to any of the sanctions imposed on Moscow. The company is not currently selling any gold to Russia’s central bank.

“The company is not an entity or a body established in Russia and does not consider itself to be an entity owned by or acting on behalf or at the direction of a ‘person connected with Russia’,” it said.

Two-thirds of Polymetal’s assets are in Russia, while its management team is based in St Petersburg. The remainder of its business is in Kazakhstan, where it operates two mines that produced more than 550,000 ounces of gold equivalent last year.

The company’s biggest shareholder is a company connected to its founder, Russian businessman Alexander Nesis, and while the miner produces most of its gold in Russia its main holding company is incorporated in Cyprus.

That company is in turn owned by an entity domiciled in Jersey, which is listed on the London Stock Exchange.

Polymetal said MHA’s first assignment would be a review of its half-year results, which are now expected to be published on September 22, and then its annual audit for the year to December.

News of MHA’s appointment came as the company provided an update on current trading. It said sales of gold bullion and concentrate to customers in Asia had returned to a “regular schedule” in May and June after significant interruptions early this year because of Covid restrictions in China and sanctions imposed on Moscow.

“The gap between production and sales and the resulting finished goods inventory are expected to peak in September,” the company said in a statement, which also reiterated guidance for gold production of 1.7mn ounces this year.

Polymetal said it would make a decision on whether to pay its full-year dividend for 2021 and half-year payout for 2022 at the time of its results in September. Due to sanctions it cannot pay dividends to its Russian shareholders.

“Significant challenges and delays in establishing new sales channels and the resulting decline in operating cash flows will be the key factor informing these decisions,” the company said.

Polymetal also said it had recently put in place a $200mn credit line and was seeking an additional $300m facility, which it hopes to secure this month.

Polymetal was once the biggest gold company listed in London and a favourite of analysts and investors because of its growth projects and industry-leading positions on sustainability.

Since Russia invaded Ukraine, investors such as Norway’s sovereign wealth fund have dumped their holdings in Polymetal. Its stock is down more than 80 per cent since the start of the year, giving it a market value of about £850mn.

Polymetal has been ejected from the FTSE 100 index and has been studying plans to spin off its Kazakh operations into a new company, although no mention was made of those deliberations in Thursday’s update.

Shares in Polymetal rose 11 per cent on Thursday to 200p..