Media release
Unaudited interim results
for the six months ended 30 June 2023
for the six months ended 30 June 2023
FINANCIALS Notes to the condensed consolidated financial statements
1. Revenue
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Revenue | ||
| Revenue from contracts with customers | 2,266.3 | 2,235.3 |
| – Gold1 | 2,151.7 | 2,132.1 |
| – Copper2 | 114.6 | 103.2 |
| Disclosure of disaggregated revenue from contracts with customers | ||
| The Group generates revenue primarily from the sale of gold bullion and copper concentrate to refineries and banks. All revenue from contracts with customers is recognised at a point in time. The Group also produces silver which is an insignificant by-product. | ||
| The disaggregation of revenue from contracts with customers by primary geographical market and product is described in the Segmental Operating and Financial Results | ||
2. Cost of sales
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Cost of sales | ||
| Salaries and wages | (205.4) | (199.9) |
| Consumable stores | (196.2) | (187.6) |
| Utilities | (71.8) | (69.6) |
| Mine contractors | (366.0) | (322.5) |
| Other | (174.1) | (164.3) |
| Cost of sales before gold inventory change and amortisation and depreciation | (1,013.5) | (943.9) |
| Gold inventory change | 74.3 | 21.3 |
| Cost of sales before amortisation and depreciation | (939.2) | (922.6) |
| Amortisation and depreciation | (423.5) | (377.8) |
| Total cost of sales | (1,362.7) | (1,300.4) |
3. Investment Income
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Interest received – environmental trust funds | 1.7 | 0.6 |
|---|---|---|
| Interest received – cash balances | 11.7 | 2.9 |
| Total investment income | 13.4 | 3.5 |
4. Finance expense
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Finance expense | ||
| Interest expense – borrowings | (40.3) | (37.9) |
| Interest expense – lease liability | (11.2) | (11.3) |
| Interest expense – environmental rehabilitation | (11.0) | (6.0) |
| Unwinding of discount rate on silicosis settlement costs3 | (0.4) | – |
| Borrowing costs capitalised4 | 30.4 | 17.0 |
| Total finance expense | (32.5) | (38.2) |
5. Share of results of equity-accounted investees, after taxation
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Far Southeast Gold Resources Incorporated (“FSE”) | (0.7) | (0.6) |
|---|---|---|
| Asanko Gold Inc (Asanko) | 17.3 | (3.8) |
| Windfall Project (Windfall) | (5.7) | – |
| Lunnon Metals Limited (Lunnon) | (1.1) | (0.7) |
| Share of results of equity-accounted investees, after taxation | 9.8 | (5.1) |
| 1 | All regions. |
| 2 | Only Peru region (Cerro Corona). |
| 3 | Unwinding of the discount rate on silicosis settlement of US$0.5m for the period ended 30 June 2022 was included in other costs. |
| 4 | General borrowing costs of US$30.4m (June 2022: US$17.0m) arising on Group general borrowings were capitalised during the periods and related to the Salares Norte project. An average interest capitalisation rate of 3.3% (June 2022: 3.1%) was applied. |
6. Gain on financial instruments
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Unrealised gain and prior year mark-to-market reversals on derivative contracts | – | 8.0 |
|---|---|---|
| Realised gain on derivative contracts | – | 15.4 |
| Total gain on financial instruments | – | 23.4 |
Hedging/derivatives
The Group's policy is to remain unhedged to the gold price. However, hedges are sometimes undertaken as follows:
- to protect cash flows at times of significant expenditure;
- for specific debt servicing requirements; and
- to safeguard the viability of higher cost operations.
Gold Fields may from time to time establish currency financial instruments to protect underlying cash flows.
Derivative instruments
There are currently no hedge positions for the period under review.
7. Share-based payments
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Share based payment expense1 | (4.7) | (4.1) |
|---|---|---|
| Total included in profit or loss for the period | (4.7) | (4.1) |
8. Long-term incentive plan
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Long-term incentive plan expense2 | (24.1) | (11.4) |
|---|---|---|
| Total included in profit or loss for the period | (24.1) | (11.4) |
9. Included in profit before royalties and taxation are the following
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Unwinding of discount on silicosis settlement costs3,4 | – | (0.5) |
|---|---|---|
| Social contributions and sponsorships3 | (7.4) | (7.6) |
| Offshore structure costs3 | (9.1) | (7.2) |
10. Exploration expense
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Australia | (15.1) | (10.0) |
|---|---|---|
| Ghana | (4.5) | (6.3) |
| Chile | (15.3) | (15.2) |
| Peru | (2.0) | (1.3) |
| Other | (0.7) | – |
| Total exploration expense | (37.6) | (32.8) |
11. Royalties
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Australia | (25.3) | (25.0) |
|---|---|---|
| South Africa | (1.5) | (1.5) |
| Ghana | (28.6) | (28.7) |
| Peru | (4.8) | (3.4) |
| Total royalties | (60.2) | (58.6) |
| Royalty rates | ||
| Australia5 | 2.5 % | 2.5% |
| South Africa (effective rate)6 | 0.5 % | 0.5% |
| Ghana7 | 4.1 % | 4.1% |
| Peru8 | 4.0 % | 3.9% |
| 1 | The Group granted equity-settled instruments comprising share options and restricted shares to executive directors, certain officers and employees. During the periods ended 30 June 2023 and 2022, the Gold Fields Limited 2012 Share Plan as amended in 2016 was in place. At the Annual General Meeting on 18 May 2016, shareholders approved the adoption of the revised Gold Fields Limited 2012 Share Plan to replace the long-term incentive scheme (LTIP). The plan provides for four types of participation, namely Performance Shares (PS), Retention Shares (RS), Restricted Shares (RSS) and Matching Shares (MS). This plan is in place 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 shareholders. |
| 2 | Senior and middle management receive awards under the LTIP. The performance conditions of the LTIP are approved annually by the Remuneration Committee. The expected timing of the cash outflows in respect of each grant is at the end of three years after the original award was made. |
| 3 | Included under "Other costs, net" in the consolidated income statement. |
| 4 | Unwinding of the discount on silicosis settlement costs of US$0.5m for the period ended 30 June 2022 was included in net interest expense. Refer note 4. |
| 5 | The Australian operations are subject to a 2.5% (June 2022: 2.5%) gold royalty on revenue as the mineral rights are owned by the state. |
| 6 | The Mineral and Petroleum Resource Royalty Act 2008 (Royalty Act) was promulgated on 24 November 2008 and became effective from 1 March 2010. The Royalty Act imposes a royalty on refined (mineral resources that have undergone a comprehensive level of beneficiation such as smelting and refining as defined in Schedule 1 of the Act) and unrefined (mineral resources that have undergone limited beneficiation as defined in Schedule 2 of the Act) minerals payable to the state. The royalty in respect of refined minerals (which include gold refined to 99.5% and above and platinum) is calculated by dividing earnings before interest and taxes (EBIT) by the product of 12.5 times gross revenue calculated as a percentage, plus an additional 0.5%. EBIT refers to taxable mining income (with certain exceptions such as no deduction for interest payable and foreign exchange losses) before assessed losses but after capital expenditure. A maximum royalty of 5.0% has been introduced on refined minerals. The effective rate of royalty tax payable for the period ended 30 June 2022 was 0.5% of mining revenue (30 June 2022: 0.5%) equalling the minimum charge per the formula. |
| 7 | Minerals are owned by the Republic of Ghana and held in trust by the President. During 2016, Gold Fields signed a Development Agreement (DA) with the GoG for both the Damang and Tarkwa mines. This agreement stated that the Ghanaian operations will be subject to a sliding scale for royalty rates, linked to the prevailing gold price (effective 1 January 2017). The sliding scale is as follows: |
| Average gold price | ||||
| Low value | High value | Royalty rate | ||
| US$0.00 | – | US$1,299.99 | 3.0% | |
|---|---|---|---|---|
| US$1,300.00 | – | US$1,449.99 | 3.5% | |
| US$1,450.00 | – | US$2,299.99 | 4.1% | |
| US$2,300.00 | – | Unlimited | 5.0% | |
| 8 | The Peruvian operations are subject to a mining royalty calculated on a sliding scale with rates ranging from 1.0% to 12.0% of the value of operating profit. |
12. Mining and income taxation
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| The components of mining and income tax are the following: | ||
| South African taxation | ||
| – dividend withholding tax | (9.0) | (6.1) |
| – company and capital gains taxation | (3.8) | (1.7) |
| – non-mining taxation | (0.2) | – |
| – deferred taxation | (33.9) | (45.3) |
| Foreign taxation | ||
| – current taxation | (239.9) | (216.4) |
| – deferred taxation | 12.2 | (4.0) |
| Total mining and income taxation | (274.6) | (273.5) |
| South Africa – current tax rates | ||
| Mining tax1 | Y=34-170/X | Y=34-170/X |
| Non-mining tax2 | 27.0% | 28.0% |
| Company tax rate | 27.0% | 28.0% |
| International operations – current tax rates | ||
| Australia | 30.0% | 30.0% |
| Ghana | 32.5% | 32.5% |
| Peru | 29.5% | 29.5% |
| 1 | South African mining tax on mining income is determined according to a formula which takes into account the profit and revenue from mining operations. South African
mining taxable income is determined after the deduction of all mining capital expenditure, with the proviso that this cannot result in an assessed loss. Capital expenditure
amounts not deducted are carried forward as unredeemed capital expenditure to be deducted from future mining income. Accounting depreciation is ignored for the purpose
of calculating South African mining taxation. During June 2022, the South African Revenue Services published the draft 2022 Rates & Monetary Bill, inclusive of an
amendment to the gold tax formula from Y = 34 – 170/X to Y = 33 – 165/X in respect of year assessments ending on or after 31 March 2023, which is considered to be
substantively enacted. This resulted in the effective mining tax rate used for deferred tax purposes for Gold Fields Operations Limited (GFO) and GFI Joint Venture Holdings
(Proprietary) Limited (GFIJVH), owners of the South Deep mine, decreasing from 29.0% at 30 June 2021 to 28.0% at 30 June 2022, amounting to a charge of R76.2m
(US$4.9m) through profit or loss for the six month period ended 30 June 2022. In the formula above, Y is the percentage rate of tax payable and X is the ratio of mining profit, after the deduction of redeemable capital expenditure, to mining revenue expressed as a percentage. |
| 2 | Non-mining income of South African mining operations consists primarily of interest income. The corporate income tax rate will be reduced from 28.0% to 27.0% for tax years ending on after 31 March 2023, and is considered to be substantively enacted. Deferred tax is provided at the expected future rate for mining operations arising from temporary differences between the carrying values and tax values of assets and liabilities. In South Africa the tax rate which has been used for deferred tax purposes for mining assets is Y = 33 – 165/X and for non-mining assets is 27.0%, on the basis that these rates are considered to be substantively enacted. |
13. Earnings per share
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| 13.1 Basic earnings per share – cents | 51 | 57 |
|---|---|---|
| Basic earnings per share is calculated by dividing the profit attributable to owners of the parent of US$457.8m (June 2022: US$509.7m) by the weighted average number of ordinary shares in issue during the period of 893,093,236 (June 2022: 890,640,752). | ||
| 13.2 Diluted earnings per share – cents | 51 | 56 |
| Diluted earnings per share is calculated by dividing the diluted profit attributable to owners of the parent of US$453.5m (June 2022: US$504.9m) by the diluted weighted average number of ordinary shares in issue during the period of 894,598,728 (June 2022: 894,668,622). | ||
| Net profit attributable to owners of the parent has been adjusted by the following to arrive at the diluted profit attributable to owners of the parent: | ||
| Profit attributable to owners of the parent | 457.8 | 509.7 |
| South Deep minority interest at 10% | (4.3) | (4.8) |
| Diluted profit attributable to owners of the parent | 453.5 | 504.9 |
| The weighted average number of shares has been adjusted by the following to arrive at the diluted number of ordinary shares: | ||
| Weighted average number of ordinary shares | 893,093,236 | 890,640,752 |
| Share options in issue | 1,505,492 | 4,027,870 |
| Diluted weighted average number of ordinary shares | 894,598,728 | 894,668,622 |
| 13.3 Headline earnings per share – cents | 51 | 58 |
| Headline earnings per share is calculated by dividing headline earnings of US$457.7m (June2022:US$518.0m) by the weighted average number of ordinary shares in issue during the period of 893,093,236 (June 2022: 890,640,752). | ||
| Net profit attributable to owners of the parent is reconciled to headline earnings as follows: | ||
| Long-form headline earnings reconciliation | ||
| Profit attributable to owners of the parent | 457.8 | 509.7 |
| (Profit)/loss on disposal of assets, net | (0.2) | 0.1 |
| Gross | (0.3) | 0.1 |
| Taxation effect | 0.1 | – |
| Impairment, reversal of impairment and write-off of investments and assets and other, net | 0.1 | 8.2 |
| Impairment of investments and assets | 0.2 | 9.3 |
| Taxation effect | (0.1) | (1.1) |
| Headline earnings | 457.7 | 518.0 |
| 13.4 Diluted headline earnings per share – cents | 51 | 57 |
| Diluted headline earnings per share is calculated by dividing diluted headline earnings of US$453.4m (June 2022: US$513.2m) by the diluted weighted average number of ordinary shares in issue during the period of 894,598,728 (June 2022: 894,668,622). | ||
| Headline earnings has been adjusted by the following to arrive at dilutive headline earnings: | ||
| Headline earnings | 457.7 | 518.0 |
| South Deep minority interest at 10% | (4.3) | (4.8) |
| Diluted headline earnings | 453.4 | 513.2 |
14. Impairment of investments and assets
| United States Dollars | ||
| Six months ended | ||
| Figures in millions unless otherwise stated | June 2023 | June 2022 |
| Investments | – | (5.7) |
|---|---|---|
| Equity-accounted investees | ||
| – Far Southeast Gold Resources Incorporated (FSE)1 | – | (5.7) |
| Property, plant and equipment | (0.2) | (3.6) |
| Impairment of property, plant and equipment – other2 | (0.2) | (3.6) |
| Impairment of investments and assets | (0.2) | (9.3) |
| 1 | During the six month period ended 30 June 2022, impairment indicators were identified as a result of the reduction in the share price of Lepanto and FSE was impaired by US$5.7m to its recoverable amount. The recoverable amount was based on the fair value less cost of disposal (FVLCOD) of the investment (level 2 in the fair value hierarchy). The FVLCOD was indirectly derived from the market value of Lepanto Consolidated Mining Company, being the 60% shareholder of FSE. |
| 2 | The US$0.2m (June 2022: US$3.6m) in 2023 comprises US$0.1m (June 2022: US$3.0m) impairment of redundant assets in Peru, US$0.1m (June 2022: US$nil) impairment of redundant assets in Australia and US$nil (June 2022: US$0.6m) impairment of redundant assets in Chile. |
15. Debt maturity ladder
| Figures in millions unless otherwise stated | 31 Dec 2023 | 31 Dec 2024 | 31 Dec 2028 | 31 Dec 2029 | Total |
| Uncommitted loan facilities | |||||
| Rand debt | 1,562.0 | – | – | – | 1,562.0 |
| Rand debt translated to US Dollar | 82.9 | – | – | – | 82.9 |
| Total (US$m) | 82.9 | – | – | – | 82.9 |
| Committed loan facilities | |||||
| US Dollar debt | – | 749.2 | 1,200.0 | 497.2 | 2,446.4 |
| Rand debt | – | – | 2,500.0 | – | 2,500.0 |
| A$ Dollar debt | 500.0 | – | – | – | 500.0 |
| Rand debt translated to US Dollar | – | – | 132.6 | – | 132.6 |
| A$ Dollar debt translated to US Dollar | 333.3 | – | – | – | 333.3 |
| Total (US$m) | 333.3 | 749.2 | 1,332.6 | 497.2 | 2,912.3 |
| Total (US$m) | |||||
| Uncommitted and committed loan facilities | 416.2 | 749.2 | 1,332.6 | 497.2 | 2,995.2 |
| Utilisation – Uncommitted loan facilities | |||||
| Rand debt | – | – | – | – | – |
| Rand debt translated to US Dollar | – | – | – | – | – |
| Total (US$m) | – | – | – | – | – |
| Utilisation – Committed loan facilities(including US Dollar bond) | |||||
| US Dollar debt | – | 582.7 | – | 497.2 | 1,079.9 |
| Rand debt | – | – | – | – | – |
| A$ Dollar debt | 300.0 | – | – | – | 300.0 |
| Rand debt translated to US Dollar | – | – | – | – | – |
| A$ Dollar debt translated to US Dollar | 200.0 | – | – | – | 200.0 |
| Total (US$m) | 200.0 | 582.7 | – | 497.2 | 1,279.9 |
| Total (US$m) – Utilisation – ncommitted and committed loan facilities | 200.0 | 582.7 | – | 497.2 | 1,279.9 |
Exchange rate: US$1.00 = R18.85 and US$1.00 = A$0.67 being the closing rates at 30 June 2023.
16. Fair value hierarchy
The Group has the following hierarchy for measuring the fair value of assets and liabilities at the reporting date:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived
from prices); and
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. There were no transfers during the periods ended 30 June 2023 and 31 December 2022.
The following table sets out the Group's financial assets and financial liabilities by level within the fair value hierarchy at the reporting date:
| United States Dollars | ||||||||
| 30 June 2023 | 31 December 2022 | |||||||
| Figures in millions unless otherwise stated | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 |
| Financial assets measured at fair value | ||||||||
| Environmental trust funds | 2.7 | – | 2.7 | – | 2.9 | – | 2.9 | – |
| Trade receivables from provisional copper sales | 36.0 | – | 36.0 | – | 29.6 | – | 29.6 | – |
| Investments – listed | 30.0 | 30.0 | – | – | 34.5 | 34.5 | – | – |
| Asanko redeemable preference shares | 63.4 | – | – | 63.4 | 60.3 | – | – | 60.3 |
| Financial assets not measured at fair value | ||||||||
| Environmental trust funds | 103.8 | – | 103.8 | – | 95.9 | – | 95.9 | – |
| Loan advanced – contractor | 23.4 | – | – | 23.4 | 23.4 | – | – | 23.4 |
| Financial liabilities measured at fair value | ||||||||
| Windfall contingent consideration and exploration liability | 235.0 | – | – | 235.0 | – | – | – | – |
| Financial liabilities not measured at fair value | ||||||||
| Borrowings | 1,286.4 | 1,003.0 | – | 283.4 | 1,089.6 | 1,006.1 | – | 83.5 |
Environmental trust funds
The environmental trust funds are measured at fair value through profit or loss and amortised cost which approximates fair value based on
the nature of the fund's underlying investments.
Trade receivables from provisional copper sales
Valued using quoted market prices based on the forward London Metal Exchange (LME) and, as such, classified within level 2 of the fair
value hierarchy.
Listed investments
Comprise equity investments in listed entities and therefore valued using quoted market prices in active markets.
Asanko redeemable preference shares
The fair value is based on the expected cash flows of the Asanko Gold Mine based on the life-of-mine model. The key inputs used in the
valuation of the fair value were market related interest rates and expected redemption period.
Loan advanced – contractor
The fair value of the contractor loan approximates its carrying amount, determined using the discounted cash flow method and market
related interest rates and is classified within level 3 of the fair value hierarchy.
Windfall contingent consideration and exploration liability
The fair value is based on the expected cash payments when the EIA and other key permits for the Windfall Project are obtained. The key
inputs used in the valuation of the fair value were the probability of success in obtaining the permits, the expected period of time required to
obtain the approval and a market related discount rate. Classified within level 3 of the fair value hierarchy.
Borrowings
The five year notes and the 10-year notes are issued at a fixed interest rate. The fair values of these notes are based on listed market
prices and are classified within level 1 of the fair value hierarchy. The fair value of the remaining borrowings approximates their carrying
amount, determined using the discounted cash flow method using market related interest rates and are classified within level 3 of the fair
value hierarchy.
17. Capital commitments
| United States Dollars | ||
| Figures in millions unless otherwise stated | June 2023 | Dec 2022 |
| Commitments | ||
| Capital expenditure | ||
| Contracted for1 | 154.8 | 78.1 |
| 1 | Contracted for capital expenditure includes US$81.0m (2022: US$31.6m) for Salares Norte. |