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| DIRECTORS’ REPORTThe directors have pleasure in submitting their report and the annual financial statements of the company and the Group for the year ended 30 June 2009. PROFILE Business of the company Gold Fields Limited is one of the world’s largest unhedged producers of gold with attributable steady state production of approximately 3.6* million ounces per annum from nine operating mines in South Africa, Peru, Ghana and Australia. The company has total attributable Mineral Reserves of 81 million ounces and Mineral Resources of 271 million ounces. Gold Fields is listed on JSE Limited (primary listing), New York Stock Exchange (NYSE), NASDAQ Dubai Limited (NASDAQ Dubai), NYSE Euronext in Brussels (NYX) and Swiss Exchange (SWX). FINANCIAL RESULTS The information on the financial position of the Group for the year ended 30 June 2009 is set out in the financial statements on pages 112 to 214 of this annual report. The income statement set out in this annual report shows profit attributable to Gold Fields Limited members of R1,535.6 million (US$170.4 million) compared to R4,457.5 million (US$613.0 million) in 2008. REVIEW OF OPERATIONS The various operations are comprehensively reviewed on pages 22 to 43. COMPLIANCE WITH FINANCIAL REPORTING STANDARDS The Gold Fields Group annual financial statements comply with International Financial Reporting Standards, the South African Companies Act, and JSE Limited Listings Requirements (JSE Listings Requirements). REPORTING IN UNITED STATES DOLLARS To assist international investors, the income statement, balance sheet, statement of changes in equity and cash flow statement of the Group have been translated into United States dollars on pages 140 to 198. SHARE CAPITAL Authorised The authorised share capital of the company is R500,000,010 divided into 1,000,000,000 ordinary par value shares of 50 cents each and 1,000 non-convertible redeemable preference par value shares of 1 cent each. The following are the movements in the issued ordinary share capital of the company for the year ended 30 June 2009
The following are the movements in the issued non-convertible redeemable preference share capital of the company for the year ended 30 June 2009:
*Based on the annualised run rate for the June 2009 quarter. In terms of the authority granted by shareholders at the annual general meeting held on 2 November 2007, 100 of the nonconvertible redeemable preference shares were issued to FirstRand Bank Limited on 20 December 2007. The reason for issuing the non-convertible redeemable preference shares was to provide the company with a mechanism to raise cost-effective capital equivalent to debt finance as part of a general capital management programme which, in the opinion of the directors, was deemed appropriate for the activities of the company. On 10 October 2008 the company elected to redeem 50 (fifty) preference shares from FirstRand Bank Limited for a consideration of R623,169,470.49. In terms of the authority granted by shareholders at the annual general meeting held on 12 November 2008, all of the authorised but unissued ordinary and preference share capital at that date, after setting aside so many ordinary shares as may be required to be allotted and issued pursuant to the share incentive schemes, was placed under the control of the directors. This authority expires at the next annual general meeting where shareholders will be asked to renew this authority. On 17 March 2009 the company announced that, in terms of the R4.1 billion Black Economic Empowerment transaction approved by shareholders of Gold Fields on 8 March 2004, and which reached maturity on 17 March 2009, Mvelaphanda Resources Limited (Mvela Resources) took receipt, through its wholly owned subsidiary Mvelaphanda Gold (Proprietary) Limited (Mvela Gold), of its 15% shareholding in GFI Mining South Africa (Proprietary) Limited (GFIMSA), a subsidiary of Gold Fields which owns and operates the South African gold mining assets of Gold Fields (the GFIMSA Shares). Upon receipt of the GFIMSA Shares, Mvela Gold exercised its right to require the exchange of the GFIMSA Shares for 50 million new ordinary shares in the issued share capital of the company. In terms of JSE Listings Requirements, shareholders may, subject to certain conditions, authorise the directors to issue the shares held under their control for cash other than by means of a rights offer to shareholders. In order that the directors of the company may be placed in a position to take advantage of favourable circumstances which may arise for the issue of such shares for cash, without restriction, for the benefit of the company, shareholders will be asked to consider an ordinary resolution to this effect at the forthcoming annual general meeting. Repurchase of shares The company has not exercised the general authority granted to buy back shares from its issued ordinary share capital granted at the annual general meeting held on 12 November 2008. At the next annual general meeting, shareholders will be asked to renew the general authority for the acquisition by the company, or a subsidiary of the company, of its own shares. Listings The abbreviated name under which the company is listed on JSE Limited (JSE) is “GFIELDS” and the short code is GFI. The company also has a secondary listing on the following stock exchanges: New York Stock Exchange (NYSE); NASDAQ Dubai Limited (NASDAQ Dubai); NYSE Euronext in Brussels (NYX) and Swiss Exchange (SWX). At 30 June 2009, the company had in issue through The Bank of New York Mellon on the NYSE, 298,196,921 (2008: 320,299,828) American Depositary Receipts (ADRs). Each ADR is equal to one ordinary share. The GF Management Incentive Scheme At the annual general meeting on 10 November 1999, shareholders approved the adoption of the GF Management Incentive Scheme (the Scheme) to substitute the scheme in place prior to the reverse takeover of Driefontein by Gold Fields in 1999. This scheme was introduced to provide an incentive for certain officers and employees of the Group to acquire shares in the company. No further allocations of options under this scheme are being made in view of the introduction of the Gold Fields 2005 Share Plan (see below) and the scheme will be closed once all options have been exercised or forfeited. Currently, the last date of expiry is 23 March 2013. The salient features of the scheme are that:
The directors are authorised to issue, allot and grant options to acquire up to a maximum of 22,791,830 ordinary shares in the unissued share capital of the company in terms of the scheme. At 30 June 2009, this represented 3.23 per cent of shares in issue. The unexercised options under the scheme represented 0.33 per cent of shares in issue as at 30 June 2009. Further details of the scheme are disclosed in note 5 of the financial statements on page 148. The GF Non-executive Director Share Plan At the annual general meeting on 31 October 2001, shareholders approved a resolution to proceed with the allocation of options to non-executive directors. As a result, each non-executive director has been allocated the options detailed on page 148. The salient features of the scheme are as follows:
No further allocations of options under this Plan are being made in view of the introduction of the Gold Fields Limited 2005 Non-executive Share Plan (see below) and the plan will be closed once all options have been exercised or forfeited. Currently, the last date of expiry is 12 February 2011. Further details of the scheme are disclosed in note 5 of the financial statements on page 148. Gold Fields Limited 2005 Share Plan At the annual general meeting on 17 November 2005, shareholders approved the adoption of the Gold Fields Limited 2005 Share Plan (the Plan) to replace the GF Management Incentive Scheme approved in 1999. The Plan provides for two methods of participation, namely the Performance Allocated Share Appreciation Rights Method (SARS) and the Performance Vesting Restricted Share Method (PVRS). The Plan seeks to attract, retain, motivate and reward participating employees on a basis which seeks to align the interests of such employees with those of the company’s share owners. The salient features of the plan are as follows:
The details of the executive directors’ participation in the above scheme are listed on page 117.
Gold Fields Limited 2005 Non-executive Share Plan At the annual general meeting on 17 November 2005, shareholders approved the adoption of the Gold Fields Limited 2005 Non-executive Share Plan to replace the GF Non-executive Director Share Plan approved in 2001. The 2005 Non-executive Plan provides for the award of restricted shares to non-executive directors that ordinarily vest after a period of three years from the award thereof. The salient features of the Plan are as follows:
Further details of the scheme are disclosed in note 5 of the financial statements on page 148. The directors are authorised to issue and allot all or any of such shares required for the plans, but in aggregate with the other schemes, may not exceed 5 per cent of the total issued ordinary shares in the capital of the company. The nexercised options and shares under the schemes and plans represented 1.98 per cent of shares in issue at 30 June 2009. Consolidated table of equity-settled instruments under all the schemes
Due to the number of prohibited periods which the company has been subjected to as a result of various transactions, the expiry dates of options under the Scheme and the Plan have been extended so as to not prejudice the individuals affected. DIRECTORATE Composition of the Board The Board currently consists of one executive director and twelve non-executive directors. The following changes in directorate occurred during the year under review:
Subsequent to year end, Professor Gill Marcus resigned from the Board with effect from 20 July 2009 and on 21 August 2009 Mr Alan Richard Hill was appointed on the Board as an independent non-executive director. Directors retiring in terms of the company’s articles of association are Ms CA Carolus, Messrs R Dañino, AR Hill, NJ Holland, RP Menell, and being eligible, are available for re-election. The board of directors of various subsidiaries of Gold Fields comprise some of the executive officers and the executive director, where appropriate. Interest of directors As at 30 June 2009, the directors’ beneficial and associate interest in the issued share capital of the company was 0.022 per cent (2008: 0.024 per cent) in aggregate per director and no one director individually exceeds one per cent of the issued share capital or voting control of the company.
* Terence Goodlace resigned on 15 October 2008 and Gill Marcus resigned on 20 July 2009. At the date this Director’s Report was prepared, none of the current directors of the Group has disposed of any of the shares held by them as at 30 June 2009, nor had they acquired any additional shares. The company has not entered into any contracts of service, other than the service contract with the executive director of the company. Directors’ equity-settled instruments The directors held the following equity-settled instruments at 30 June 2009:
A register of detailed equity-settled instruments outstanding by tranche is available for inspection at the company’s registered office. The equity-settled instrument terms are detailed on pages 114 and 148. Directors’ fees In terms of the articles of association the fees for services as non-executive directors are determined by the company in general meeting.
Remuneration policy The company’s remuneration policy is determined by the Remuneration Committee, which over the past year has utilised appropriate external advice in evaluating and setting this policy. Gold Fields’ remuneration philosophy is aimed at attracting and retaining motivated high-calibre executives aligned with the interests of shareholders. Such alignment is achieved through an appropriate mix of fixed and performance-based remuneration which provides for high performers to be well rewarded. Executives are paid gross remuneration packages (GRP), which include all fixed elements of remuneration, with the exception of a standard 24 working days’ leave per annum, with the company having no contingent retirement or medical liabilities. A portion of the fixed remuneration of executives with international responsibilities is paid in US dollars. Increases are determined, usually effective January each year, by the Remuneration Committee informed by remuneration surveys to which the company subscribes and independent advice, where necessary. The short-term incentive is an annual incentive bonus in terms of which the executive directors are able to earn bonuses of 50 per cent of their GRPs for on-target performance. This incentive bonus could increase above 50 per cent due to specific out-performance. Incentive bonuses are based on targets approved in advance by the Remuneration Committee, comprising safety, corporate, operational and personal objectives. In the case of the chief executive, 70 per cent of his incentive is based on corporate objectives. In other cases corporate and operational objectives (where applicable) comprise 35 per cent to 70 per cent of the incentive with personal objectives making up the balance. Based on the bonus accrued for the F2008 financial year, in F2009 the weighted average incentive bonus and retention bonus paid to members of the executive team (excluding executive directors, details of which are shown above) was 47.6 per cent of GRP. The corporate objectives comprise four elements. Twenty five per cent relates to safety achievements. Twenty five per cent of the corporate objective relates to the relative performance of the Gold Fields share price against the average performance of the AngloGold Ashanti and Harmony share prices over the year in question. The remaining corporate objectives, as measured against the operational plan approved by the Board, relate to notional cash expenditure per ounce produced (25 per cent) and total gold produced (25 per cent). Operational objectives are measured against the operational plans approved by the Board and cover safety, production, costs and progress in developing long-term ore reserves. Personal objectives are developed each year for each executive based on key performance areas and are approved at the beginning of each year by the Remuneration Committee. Performance against these objectives is reviewed by the Remuneration Committee at the end of the year. The fees for non-executive directors are dealt with by a special non-executive Remuneration Committee comprising independent external parties. Proposed changes to the fees payable to non-executive directors, together with proposed awards under the Gold Fields Limited 2005 Non-executive Share Plan (details of the plan are provided on page 114), are set out in the notice of the annual general meeting which accompanies this report. Directors’ and officers’ disclosure of interests in contracts During the year under review, no contracts were entered into in which directors and officers of the company had an interest and which significantly affected the business of the Group. Related party information is disclosed on pages 196 to 198. FINANCIAL AFFAIRS Dividend policy The company’s dividend policy is to declare an interim and final dividend in respect of each financial year, based on 50 per cent of the earnings for the year before taking account of investment opportunities and after excluding impairments. Earnings are adjusted to exclude unrealised gains and losses on financial instruments and foreign debt, but adjusted to include cash payments and receipts in relation to such underlying financial instruments. Interim dividend On Thursday, 28 January 2009, the company declared an interim cash dividend of 30 SA cents per ordinary share (2008: 65 SA cents) to shareholders reflected in the register of the company on Friday, 13 February 2009. The dividend was declared in the currency of the Republic of South Africa. This dividend was paid on Monday, 23 February 2009. Final dividend On Thursday, 5 August 2009, the company declared a final cash dividend of 80 SA cents per ordinary share (2008: 120 SA cents) to shareholders reflected in the register of the company on Friday, 21 August 2009. The dividend was declared in the currency of the Republic of South Africa. This dividend was paid on Monday, 31 August 2009. The dividend resulted in a total dividend of 110 SA cents per share for the year, with the final dividend being accounted for in F2010. Borrowing powers In terms of the provisions of article 12.1 of the articles of association, the borrowing powers of the company are unlimited. As at Fixed assets Capital expenditure Capital expenditure for the year amounted to R7,649 million compared to R9,014 million in F2008. Estimated capital expenditure for the 2010 financial year is R8,500 million and is intended to be funded from internal sources and, to the extent necessary, borrowings. Investments Acquisitions Investment purchases decreased from R978 million in F2008 to R99 million in F2009. The major net investment purchases comprising the R99 million spent in F2009 were:
The major net investment purchases comprising the R978 million spent in F2008 were:
Disposals Proceeds on the disposal of investments increased from R100 million in F2008 to R482 million in F2009. The major net investment disposals comprising the R482 million in F2009 were:
The major net investment disposals comprising the R100 million in F2008 were:
Significant announcements 25 August 2008 Gold Fields announced resources of 251 million ounces and reserves of 83 million. 10 September 2008 Gold Fields announced that the Arctic Platinum Project in Finland had reverted to Gold Fields after North American Palladium Limited did not follow its rights in terms of the agreement entered into between the parties on 18 October 2005. 14 January 2009 Gold Fields announced the appointment of Paul Schmidt as Chief Financial Officer of the Group. 17 March 2009 Gold Fields and Mvelaphanda Resources Limited (Mvela Resources) successfully completed the final step of the R4.1 billion Black Economic Empowerment transaction initiated in 2004 in which Mvela Resources took receipt through its wholly owned subsidiary Mvelaphanda Gold (Proprietary) Limited (Mvela Gold), of its 15 per cent shareholding in GFI Mining South Africa (Proprietary) Limited (GFIMSA), a subsidiary of Gold Fields which owns and operates the South African gold mining assets of Gold Fields (the GFIMSA Shares). Immediately upon receipt of the GFIMSA shares, Mvela Gold exercised its right to use the GFIMSA shares to subscribe for 50 million new ordinary shares in Gold Fields. 3 June 2009 Gold Fields announced that agreement had been reached in terms of which Gold Fields would sell its 19.9 per cent stake in Sino Gold Mining Limited to Eldorado Gold Corporation for a total consideration of approximately US$282 million payable in Eldorado Gold Corporation shares. 10 June 2009 Gold Fields announced the opening of its new Employee Housing Programme in the communities of Glenharvie and Blybank on the West Rand in South Africa. The programme consists of 192 family homes which will be occupied by employees of the Driefontein and Kloof gold mines. 26 June 2009 Gold Fields announced that it expected to beat guidance and increase production by 4 per cent to approximately 905,000 ounces during Q4 F2009. 31 July 2009 Gold Fields announced that Beatrix Gold Mine had achieved accreditation with the International Cyanide Management Code (ICMC). Beatrix is the fourth of Gold Fields’ nine mines to achieve Cyanide Code accreditation. The Tarkwa and Damang Gold Mines in Ghana achieved accreditation in June and May 2008, respectively and the South Deep Gold Mine in South Africa achieved accreditation in December 2008. 4 August 2009 Gold Fields Limited announced the appointment of Peter Turner, Executive Vice President: Head of the West Africa Region, Juan Luis Kruger (Juancho), Executive Vice President: Head South America Region and Ben Zikmundovsky, Executive Vice President: Head of International Capital Projects and International Technical Services to its Group Executive team. 24 August 2009 Gold Fields Limited announced that Mr Alan Richard Hill was appointed to its Board of Directors on 21 August 2009. 27 August 2009 Gold Fields Limited announced that an agreement has been executed in terms of which the royalty payable by Gold Fields’ wholly owned Australian subsidiary, St Ives Gold Mining Company (Pty) Ltd, to Morgan Stanley Bank’s subsidiaries, has been terminated for a consideration of A$308 million. 4 September 2009 Gold Fields Limited announced that it had disposed of its holding in Eldorado Gold Corporation. Gold Fields disposed of 27,824,654 Eldorado shares at CAD11,61 per share for a total consideration of CAD323 million (approximately US$293 million). GOING CONCERN The financial statements have been prepared using appropriate accounting policies, supported by reasonable judgements and estimates. The directors have reasonable belief that the company and the Group have adequate resources to continue as a going concern for the foreseeable future. DEMATERIALISATION OF SHARES (STRATE) Shareholders are reminded that as a result of the clearing and settlement of trades through STRATE, the company’s share certificates are no longer good for delivery for trading. Dematerialisation of the company’s share certificates is a prerequisite when dealing in the company’s shares. PROPERTY The register of property and mineral rights is available for inspection at the registered office of the company during normal business hours. OCCUPATIONAL HEALTHCARE SERVICES As previously reported, occupational healthcare services are made available by Gold Fields to employees in South Africa from its existing facilities. There is a risk that the cost of providing such services could increase in the future depending upon changes in the nature of underlying legislation and the profile of employees. This increased cost, should it transpire, is currently indeterminate. The Group is monitoring developments in this regard. ENVIRONMENTAL OBLIGATIONS The Group has made provision in the financial statements for environmental rehabilitation costs amounting to R2,268 million (2008: R2,016 million). Cash contributions of R58 million (2008: R56 million) have been paid during the year to a dedicated trust fund created to fund these provisions with the total amounts invested at the year end amounting to R887 million (2008: R747 million). SPECIAL RESOLUTIONS ADOPTED BY SUBSIDIARY COMPANIES There were no special resolutions passed by subsidiary companies during the year under review that related to capital structure, borrowing powers, the objects clause contained in the memorandum of association or any other material matter that affects the understanding of the company and its subsidiaries save for the Gold Fields Group Services (Proprietary) Limited which amended its main business and main object. Gold Fields Group Services was created as a separate service entity to act as administrative, financial and technical advisors to the company with effect from 23 February 2009. Prior to this date, these services were rendered by GFL Mining Services Limited. LITIGATION The directors of the company are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group’s financial position, save for the summons received on 21 August 2008 by Gold Fields Operations Limited (formerly known as Western Areas Limited) (Gold Fields Operations), a subsidiary of the company. The summons was received from Randgold & Exploration Company Limited (Randgold) and African Strategic Investments (Holdings) Limited. The summons claims that during the period that Gold Fields Operations was under the control of Mr Brett Kebble, Mr Roger Kebble and others, Gold Fields Operations was allegedly part of a scam whereby JCI Limited unlawfully disposed of shares owned by Randgold in Randgold Resources Limited (Resources) and Afrikander Lease Limited, now Uranium One. Gold Fields Operations’ preliminary assessment was that it had strong defences to these claims and accordingly, Gold Fields Operations’ attorneys were instructed to vigorously defend the claims. Werksmans Attorneys have been so instructed. Much of the preparatory work is still being undertaken and pleadings have not yet closed. The claims have been computed in various ways. The highest claims have been computed on the basis of the highest prices of Resources and Uranium One between the dates of the alleged thefts and March 2008 (approximately R11 billion). The alternative claims have been computed on the basis of the actual amounts allegedly received by Gold Fields Operations to fund its operations (approximately R519 million). It should be noted that claims lie only against Gold Fields Operations, whose only interest is 50 per cent stake in the South Deep Mine. ADMINISTRATION The office of company secretary of Gold Fields Limited was held by Mr C Farrel for the year under review. With effect from 23 February 2009, the administrative, financial and technical advisory services are being provided by Gold Fields Group Services (Proprietary) Limited to the company, as per above. Computershare Investor Services (Pty) Limited is the company’s South African transfer secretaries and Capita Registrars is the United Kingdom registrars of the company. AUDITORS PricewaterhouseCoopers Inc will continue in office in accordance with section 270(2) of the Companies Act. SUBSIDIARY COMPANIES Details of major subsidiary companies in which the company has a direct or indirect interest are set out on pages 210 and 211.
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