Polymetal International PLC Russian Court ruling on 2007 tax dispute (4349H)

TIDMPOLY TIDMTTM

RNS Number : 4349H

Polymetal International PLC

11 July 2012

 
Release time  IMMEDIATE 
Date          11 July 2012 
 

Polymetal International plc

Russian Supreme Arbitration Court ruling on 2007 tax dispute

Polymetal International plc (LSE: POLY) (together with its subsidiaries - the "Company" or the "Group") announces that the Russian Supreme Arbitration Court yesterday made a final ruling on the tax dispute of the Group, and supported the tax authorities, requiring the Group to pay RUB 883 million (approx. US$27 million) in additional taxes (including fines and accrued interest).

On July 10, 2012, the Supreme Arbitration Court (SAC) made a final ruling on the tax dispute between CJSC Magadan Silver, a wholly owned subsidiary of the Group, and tax authorities in relation to the sale of silver by the Group in 2007 pursuant to certain forward sale contracts with ABN AMRO Bank (originally entered into with Standard Bank of London). The tax authorities claimed that the Group lowered its tax base by selling silver at 30-45% below the market price. The Group argued that the silver sales to ABN AMRO were part of a US$105 million loan agreement signed in December 2004, which included forward contract sales at the then current market price. The decision of the SAC supports the tax authorities, requiring the Group to pay RUB 883 million (approx. US$27 million) in additional taxes (including fines and accrued interest), and this ruling is not subject to appeal.

The nature and details of the tax dispute and the history of the litigation since the completion of the field tax audit in 2009 and up to 28 October 2011 were disclosed by the Company in its Prospectus related to its Initial Public Offering of shares on the London Stock Exchange, with subsequent disclosure provided in the Annual Report of the Company for the year ended 31 December 2011. The Company also disclosed the uncertainties surrounding the litigation and the relevant tax law, including a possibility of not being able to ultimately defeat the claim.

In 2011, based on success in defending the case in lower level courts and an assessment of the Group's tax position, the Board concluded that the payment of the amounts claimed by the tax authorities was not probable, and accordingly no provision had been created in the financial statements as at 31 December 2011.

The additional tax charges according to the SAC decision (approx. US$27 million) will be reflected as an expense in the financial statements for the six months ended 30 June 2012 and are due to be paid in July 2012.

Enquiries

 
 Media                                 Investor Relations 
-----------------  -----------------  ------------------------------------- 
 College Hill                          Polymetal 
  Leonid Fink                           Pavel Danilin 
  Tony Friend       [phone]    Maxim Nazimok      [phone] 
-----------------  -----------------  ------------------  ----------------- 
 Joint Corporate Brokers 
------------------------------------  ------------------------------------- 
 Morgan Stanley                        Canaccord Genuity 
  Edward Knight                         John Prior 
  Sandip Patodia    [phone]    Roger Lambert      [phone] 
-----------------  -----------------  ------------------  ----------------- 
 

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