Performance against strategic targets
Group 2018 performance against BSC objectives
Our strategy is embodied through our Board-approved balanced scorecard (BSC), which is cascaded throughout our organisation. Below we reflect on our performance against these targets in 2018. On the pages that follow, we show our CEO's performance against his 2018 targets, as well as the Group's 2019 BSC.
VISION:
To be the global leader in sustainable gold mining
MEDIUM-TERM ASPIRATION:
By 2020 we are targeting All-in Cost (AIC) of approximately
US$900/oz1
ANNUAL TARGET:
Free cash-flow (FCF2) margin of 15% at
US$1,200/oz
gold price
1 At 2019 levels
2 FCF does not take project capital into account
THE GOLD FIELDS VALUES:
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Safety: |
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Integrity: |
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Respect: |
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If we cannot mine safely,
we will not mine |
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We act with
honesty, fairness and
transparency |
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We treat all stakeholders
with trust, dignity
and respect |
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Delivery: |
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Innovation: |
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Responsibility: |
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We strive for
excellence and do what
we say we will do |
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We encourage
innovation and an
entrepreneurial spirit |
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We responsibly manage our
impact on the environment
and host communities |
| 2018 BSC PILLARS |
STRATEGIC GOALS |
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PERFORMANCE AGAINST 2018 BALANCED SCORECARD TARGETS |
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SAFE
OPERATIONAL
DELIVERY |
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1 |
Deliver FCF margin of 15% at US$1,200/oz |
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2 |
Safely meet guidance for operations |
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Safely deliverstrategic projects |
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- Production and AIC/oz better than yearly guidance with spatial compliance to plan
- No fatalities and a reduction in TRIFR by 10% in the long term (due to a regression in 2017, the stretch target was 12% for 2018)
- Reduce energy usage by 5% to 10% against a future baseline through energy saving initiatives and implement renewable
energy initiative at South Deep
- Implement ICMM critical control guidelines on safety, health and environmental stewardship and stakeholder management
- Project delivery: deliver in accordance with key metrics for 2018
- Damang
- South Deep
- Gruyere
- Manage talent pipeline and succession cover for critical roles
- Reinvigorate vision and values to a winning culture that rewards teamwork and delivery of Group strategy
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4 |
Manage balance sheet and maximise capital returns |
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- Pay dividends in line with policy
- Debt:
- Maintain net debt:adjusted EBITDA ratio of under 1.25x-
- Extend debt maturity
- All new capital spend to have appropriate returns taking into account risks and cost of capital ranked and prioritised in
accordance with an agreed matrix and in line with internal capital control standards and study guidelines. Accordingly all growth
capital expenditure on existing mines, new projects or acquisitions to have hurdle rates of 15% at a US$1,300/oz gold price
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5 |
Improve the quality of our portfolio |
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- Deliver life extension, cost reduction, revenue enhancement and improved health and safety through innovation and technology
(I&T) and business improvement initiatives
- Reduce Group life-of-mine AIC/oz and increase reserve life per region through brownfields exploration, M&A and optimisation
of existing mines
- Deliver positive Salares Norte feasibility project that exceeds metrics set for the project
- Mine closure costs, along with concurrent rehabilitation plans, incorporated into strategic plans
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Protect licence to operate and enhance reputation |
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- Improve total shareholder return by positioning share price between median and upper quartile of peer group
- Increase the proportion of sustainable host community procurement and employment to drive Shared Value
- No Level 3 or above environmental incidents and a 10% reduction in Level 2 incidents
- Align management practices with ICMM tailings and water position statements
- Deliver and manage a robust and transparent group governance and compliance programme
- Maintain position in top five of the Dow Jones Sustainability Index (DJSI)
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Achieved |
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Ongoing |
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Not achieved |
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CEO’s 2018 performance against BSC objectives
Gold Fields recognises that remuneration is a critical part of value creation. We are committed to aligning our employees’
remuneration to our strategic objectives, as embodied in our Group BSC. The Group BSC is then cascaded into individual
scorecards, to ensure individual effort drives Group performance. Below is a summary of our CEO, Nick Holland’s, BSC for
2018 and his performance against it. His average score for 2018 was 2.9 out of 5, as evaluated by the Remuneration
Committee. The Board believes that by reflecting on the CEO’s scorecard and how it drives value creation, we demonstrate
to our stakeholders our commitment to fair and transparent reporting. For the detailed breakdown of the CEO’s BSC, refer to
our comprehensive Remuneration Report in the AFR.
| PERFORMANCE RATING SCALE: |
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CATEGORY KEY: |
| 1 / |
Target not achieved
(less than 60% of goals achieved) |
3.5 / |
Great performance
(106% - 110% of goals achieved) |
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Safe Operational Delivery |
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Portfolio Management |
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Licence and Reputation |
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Capital Discipline |
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| 2 / |
Underperformance
(60% - 90% of goals achieved) |
4 / |
High performance
(111% - 120% of goals achieved) |
| 2.5 / |
Development required
(91% - 99% of goals achieved) |
4.5 / |
Top performance
(121% -125% of goals achieved) |
| 3 / |
Good performance
(100% - 105% of goals achieved) |
5 / |
Exceptional performance
(126% or more of goals achieved) |
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Group 2019 performance targets
Each year, management and the Board assess the Group’s key objectives for the year ahead to ensure the Group achieves its medium-term target. The 2019 goals are captured in the BSC below.
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ORGANISATIONAL CAPACITY
Make sure the company has the capacity to deliver
1. IMPROVE IMPACT OF I&T
- Put in place dedicated senior Innovation & Technology leadership team per region that drive the initiatives to improve cost, safety and productivity
- Upgrade infrastructure to improve connectivity and real time information
- Increase the use of technology to Improve safety performance including people tracking and traffic management
- Automate or semi-automate equipment to improve efficiencies
- Implementation of integrated technical systems to enhance planning and delivery
2. IMPROVE QUALITY OF PORTFOLIO
- South Deep: 477 tonnes mined / employee as per business plan
Develop Individual development plans for mission critical positions and execute 2019 activities
- Damang: Deliver Damang at a cumulative cost of US$365m.
Spend project capital of US$69m for Damang and deliver ore from saddle pit area
- Gruyere: Deliver Gruyere first gold by Q2 at a cost of $621m
- Australia: Replace 100%–120% of depleted reserves
- Americas: >50% completion of pre-feasibility study for Cerro Corona on life extension beyond 2030
3. IMPROVE GOVERNANCE, COMPLIANCE & RISK
- No material deviations from guidelines / corporate standards as per the 2019 Compliance framework
- Independent verification of safety, health, environmental and community critical controls
- Carry out 1 self-assessment of the ICMM Performance Expectations Guidance
- Maintain certification to OHSAS 18001 / ISO 45001 (Safety) ISO 14001 and Cyanide code
- Australia, Ghana and South Africa: conduct gap analysis, develop and implement 60% of remedial actions to align to ISO 50001 (Energy); Cerro Corona to maintain ISO 150001 certification
4. IMPROVE SECURITY OF UTILITIES
- Reduce freshwater withdrawal by 3% (or 415ML)
- Increase recycling of total water use from 57% to 65%
- Energy saving initiatives between 5% to 7% against the baseline set in January 2019 (GJ savings)
5. IMPROVE PEOPLE CAPACITY & CULTURE
- 5% increase in productivity against the business plan (ounce / TEC)
- Decrease turnover of critical roles to 5%
- Reduce time to fill critical roles to between 90 and 100 days
- Enhance and further improve leadership capability and subsequent assessment and development to drive ethical and socially responsible leadership, with a strong focus on living the Gold Fields values, and embracing cultural diversity
- HDSA % in South Deep management > 54%
- Localisation in Ghana <4% expats
- Improve Bloomberg Gender Equality Index ranking to > 75% and 20% women in management
- Develop a baseline for measurement of the employment of vulnerable people across regions
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INTERNAL BUSINESS PROCESS
Build the processes required for delivery
1. Improve business planning processes
2. Improve safety and environmental performance
- No fatalities
- Establish and maintain an EnvironmentHealth and Safety scorecard with leading and lagging indicators
- Roll out courageous Safety Leadership programme to Exco and regional leadership teams
- Roll out Vital Behaviour (VB) safety programme to Exco and regional leadership teams
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STAKEHOLDERS
Maintain stakeholder support by delivering value
1. Increase stakeholder engagement
- Increase the number of informal and formal engagements with key community, government and investor stakeholders
- Extend sell side coverage and undertake timely detailed analysis of all sell side reports
- Maintain top 5 position in DJSI
- Consolidate sustainability of host community procurement spend at between 23%–25% of total procurement spend
- Maintain host community employment at 54%–56% of direct and indirect employment
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FINANCIALS
Make money
1. Increase total shareholder return
- TSR between median and upper quartile of peer group
2. Improve liquidity and profile of debt
- Reduce net debt by a range of US$100m – US$150m
- Extend maturity of debt profile
3. Improve free cash flow margin
- 15% FCF margin @US$1,200/oz
4. Improve capital returns
- 15% return on project capital spend @ US$1,300/oz
- 100% compliance to approved capital budget
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