ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 30, 2022

Accounting policies [abstract]

Reporting entity

Reporting entity

The DRDGOLD Group is primarily involved in the retreatment of surface gold. The consolidated financial statements comprise

DRDGOLD Limited (the “

Company

”) and its subsidiaries who are all wholly owned subsidiaries and solely operate in South Africa

(collectively the “

Group

” and individually “

Group Companies

”). The Company is domiciled in South Africa with a registration

number of 1895/000926/06. The registered address of the Company is Constantia Office Park, Cnr 14th Avenue and Hendrik

Potgieter Road, Cycad House, Building 17, Ground Floor, Weltevreden Park, 1709.

The DRDGOLD Group is

50.1

% held by Sibanye Gold Limited, which in turn is a wholly owned subsidiary of

Sibanye Stillwater

Limited

 (“

Sibanye-Stillwater

”).

Basis of accounting

Basis of accounting

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards

(“

IFRS

”) and its interpretations issued by the International Accounting Standards Board (“

IASB

”). The consolidated financial

statements were approved by the board for issuance on October 28, 2022.

Functional and presentation currency

Functional and presentation currency

The functional and presentation currency of DRDGOLD and its subsidiaries is South African rand (“

Rand

”). The amounts in these

consolidated financial statements are rounded to the nearest million unless stated otherwise. Significant exchange rates during

the year are set out in the table below:

South African rand / US dollar

2022

2021

2020

Spot rate at year end

16.27

14.27

17.32

Average prevailing rate for the financial year

15.21

15.40

15.66

Basis of measurement

Basis of measurement

The consolidated financial statements are prepared on the historical cost basis, unless otherwise stated.

Basis of consolidation

Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable

returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial

statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the

date that control ceases.

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI

and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former

subsidiary is measured at fair value when control is lost.

Transactions eliminated on consolidation

Intra-group balances, transactions and any unrealised gains and losses or income and expenses arising from intra-group

transactions, are eliminated in preparing the consolidated financial statements.

Use of accounting assumptions, estimates and judgements

2 USE OF ACCOUNTING ASSUMPTIONS, ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements requires management to make accounting assumptions, estimates and

judgements that affect the application of the Group's accounting policies and reported amounts of assets and liabilities, income

and expenses.

Accounting assumptions, estimates and judgements are reviewed on an ongoing basis. Revisions to reported amounts are

recognised in the period in which the revision is made and in any future periods affected. Actual results may differ from these

estimates.

Information about assumptions and estimates in applying accounting policies that have the most significant effect on the amounts

recognised in the consolidated financial statements are included in the notes:

NOTE 9 PROPERTY, PLANT AND EQUIPMENT

NOTE 11 PROVISION FOR ENVIRONMENTAL REHABILITATION

NOTE 18 INCOME TAX

NOTE 24 PAYMENTS MADE UNDER PROTEST

NOTE 25 OTHER INVESTMENTS

Information about significant judgements in applying accounting policies that have the most significant effect on the amounts

recognised in the consolidated financial statements are included in the notes:

NOTE 24 PAYMENTS MADE UNDER PROTEST

NOTE 25 OTHER INVESTMENTS

NOTE 26 CONTINGENCIES

Mineral reserves and resources estimates

The Group is required to determine and report mineral reserves and resources in accordance with the South African Code for the

Reporting of Exploration Results, Mineral Resources and Mineral Reserves (“

SAMREC Code

”). In order to calculate mineral

reserves and resources, estimates and assumptions are required about a range of geological, technical and economic factors,

including but not limited to quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity

demand, commodity prices and exchange rates. Estimating the quantity and/or grade of mineral reserves and resources requires

the size, shape and depth of reclamation sites to be determined by analysing geological data such as the logging and assaying

of drill samples. This process may require complex and difficult geological judgements and calculations to interpret the data.

Because the assumptions used to estimate mineral reserves and resources change from period to period and because additional

geological data is generated during the course of operations, estimates of mineral reserves and resources may change from

period to period. Mineral reserves and resources estimates prepared by management are reviewed by independent mineral

reserves and resources experts.

Changes in reported mineral reserves and resources may affect the Group’s life-of-mine plan, financial results and financial

position in a number of ways including the following:

• asset carrying values may be affected due to changes in estimated future cash flows;

• depreciation charged to profit or loss may change where such charges are determined by the units-of-production method, or

where the useful lives of assets change;

• decommissioning, site restoration and environmental provisions may change where changes in estimated mineral reserves and

resources affect expectations about the timing or cost of these activities; and

• the carrying value of deferred tax assets and liabilities may change due to changes in estimates of the likely recovery of the tax

benefits and charges.

Depreciation

The calculation of the units-of-production rate of depreciation could be affected if actual production in the future varies significantly

from current forecast production. This would generally arise when there are significant changes in any of the factors or

assumptions used in estimating mineral reserves and resources. These factors could include: 

• changes in mineral reserves and resources;

• the grade of mineral reserves and resources may vary from time to time;

• differences between actual commodity prices and commodity price assumptions;

• unforeseen operational issues at mine sites including planned extraction efficiencies; and

• changes in capital, operating, mining processing and reclamation costs, discount rates and foreign exchange rates.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains a lease if the

contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The contract

must also be enforceable.

To

assess whether a contract conveys the right to control the use of an identified asset, requires

judgement particularly on contracts with service contractors, which may contain embedded leases.

The Group assesses whether:

• the contract involves the use of an identified asset;

• the Group has the right to obtain substantially all the economic benefits from use of the asset throughout the period of use; and

• the Group has the right to direct the use of the asset.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the

contract to each lease component on the basis of their relevant stand-alone prices. However, for the lease of land and buildings

in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease

component as a single lease component.

Some property leases contain options to renew under the contract. Judgement is applied in whether the renewable option periods

must be included in the lease term i.e. it is reasonably certain that the options to renew will be exercised. In applying judgement,

the Group also considers whether the lease term is commensurate with estimated future mine plans requirements and

environmental rehabilitation obligations associated with the property post reclamation.

Estimates of future environmental rehabilitation costs are determined with the assistance of an independent expert and are based

on the Group’s environmental management plans which are developed in accordance with regulatory requirements, the life-of-

mine plan (as discussed in note 9) which influences the estimated timing of environmental rehabilitation cash outflows and the

planned method of rehabilitation which in turn is influenced by developments in trends and technology.

An average nominal discount rate ranging between

10.2

% and

10.3

% (2021: between

8.9

% and

9.0

%), average inflation rate of

5.5

% (2021:

5.2

%) and the discount periods as per the expected life-of-mine were used in the calculation of the estimated net

present value of the rehabilitation liability.

Management periodically evaluates positions taken where tax regulations are subject to interpretation. This includes the treatment

of both Ergo and FWGR as single mining operations respectively, pursuant to the relevant ring-fencing legislation.

The deferred tax liability is calculated by applying a forecast weighted average tax rate that is based on a prescribed formula. The

calculation of the forecast weighted average tax rate requires the use of assumptions and estimates and are inherently uncertain

and could change materially over time. These assumptions and estimates include expected future profitability and timing of the

reversal of the temporary differences. Due to the forecast weighted average tax rate being based on a prescribed formula that

increases the effective tax rate with an increase in forecast future profitability, and vice versa, the tax rate can vary significantly year

on year and can move contrary to current period financial performance.

A

100

 basis points increase in the effective tax rate will result in an increase in the net deferred tax liability at June 30, 2022 of

approximately R

18.7

 million (2021: R

14.2

 million; 2020: R

10.3

 million).

The assessment of the probability that future taxable profits will be available against which the tax losses and unredeemed capital

expenditure can be utilised requires the use of assumptions and estimates and are inherently uncertain and could change materially

over time.

Capital expenditure is assessed by the South African Revenue Service (“

SARS

”) when it is redeemed against taxable mining income

rather than when it is incurred. A different interpretation by SARS regarding the deductibility of these capital allowances may

therefore become evident subsequent to the year of assessment when the capital expenditure is incurred.

Payments made under protest

The determination of whether the payments made under protest give rise to an asset or a contingent asset or neither, required

the use of significant judgement. The definition of an asset in the conceptual framework was applied as well as the considerations

in the outcome of the IFRS Interpretations Committee (“

IFRIC

”) agenda decision – Deposits relating to taxes other than income

tax (IAS 37

Provisions, Contingent Liabilities and Contingent Assets

) (“

IFRIC Agenda Decision

”) published in January 2019. The

IFRIC Agenda Decision has a similar fact pattern to that of the payments made under protest. With the consideration of the facts

and circumstances surrounding the payments made under protest in applying the definition of an asset and the IFRIC Agenda

Decision, management considered the following: 

• payments were made under protest and without prejudice or admission of liability. Such payments were not made as a

settlement of debt or recognition of expenditure;

• the Group therefore retains a right to recover the payments from the City of Ekurhuleni Metropolitan Municipality

(“

Municipality

”) if the Group is successful in the Main Application (as defined below);

• if the Group is not successful in the Main Application, the payments will be used to settle the resultant liability to the Municipality;

and 

• these two possible outcomes (i.e. success in the Main Application or not) therefore, will lead to economic benefits to the Group.

Therefore, the right to recover the payments made under protest is not a contingent asset because it meets the definition and

recognition criteria of an asset. No specific guidance exists in developing an accounting policy for such asset. Therefore,

management applied judgement in developing an accounting policy that would lead to information that is relevant to the users of

these financial statements and information that can be relied upon.

Contingent liabilities

The assessment of whether an obligating event results in a liability or a contingent liability requires the exercise of significant

judgement of the outcome of future events that are not wholly within the control of the Group.

Litigation and other judicial proceedings inherently entail complex legal issues that are subject to uncertainties and complexities

and are subject to interpretation.

SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES

The discounted amount of the payments made under protest is determined using assumptions about the future that are inherently

uncertain and can change materially over time and includes the discount rate and discount period. 

These assumptions about the future include estimating the timing of concluding on the Main Application, i.e. the discount period,

the ultimate settlement terms, the discount rate applied and the assessment of recoverability.

The Group has one (1) director representative on the Rand Refinery board. Therefore, judgement had to be applied to ascertain

whether significant influence exists, and if the investment should be accounted for as an associate under IAS 28

Investments in

Associates and Joint Ventures

. The director representation is not considered significant influence, as it does not constitute

meaningful representation. It represents

11.11

% of the entire board and is proportional to the

11.3

% shareholding that the Group

has. 

SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES

The fair value of the listed equity instrument is determined based on quoted prices on an active market. Equity instruments which

are not listed on an active market are measured using other applicable valuation techniques depending on the extent to which the

technique maximises the use of relevant observable inputs and minimizes the use of unobservable inputs. Where discounted

cash flows are used, the estimated cash flows are based on management’s best estimate based on readily available information

at measurement date. The discounted cash flows contain assumptions about the future that are inherently uncertain and can

change materially over time.

SIGNIFICANT ACCOUNTING JUDGEMENTS

The assessment of whether an obligating event results in a liability or a contingent liability requires the exercise of significant

judgement of the outcome of future events that are not wholly within the control of the Group. Litigation and other judicial

proceedings inherently entail complex legal issues that are subject to uncertainties and complexities and are subject to

interpretation.

New standards, amendments to standards and interpretations not yet adopted

New standards, amendments to standards and interpretations effective for the year ended June 30, 2022

During the financial year, there were no new and revised accounting standards, amendments to standards and new interpretation

adopted by the Group.

New standards, amendments to standards and interpretations not yet effective

At the date of authorisation of these consolidated financial statements, the following relevant standards, amendments to standards

and interpretations that may be applicable to the business of the Group were in issue but not yet effective and may therefore have

an impact on future consolidated financial statements. These new standards, amendments to standards and interpretations will

be adopted at their effective dates. 

Annual Improvements to IFRS Standards 2018-2020 (Effective July 1, 2022)

As part of its process to make non-urgent but necessary amendments to IFRS

Standards, the International Accounting Standards

Board (“

IASB

”) has issued the

Annual Improvements to IFRS Standards 2018–2020.

These are not expected to have a significant

impact on the Group. 

Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) (Effective July 1, 2022)

The IASB has amended IAS 16

Property, Plant and Equipment

to provide guidance on the accounting for such sale proceeds and

the related production costs.

Under the amendments, proceeds from selling items before the related item of property, plant and equipment (“

PPE

”) is available

for use should be recognised in profit or loss, together with the costs of producing those items. IAS 2

Inventories

 should be applied

in identifying and measuring these production costs.

The amendments apply retrospectively, but only to items of property, plant and equipment made available for use on or after the

beginning of the earliest period presented in the financial statements in which the amendments are adopted. The amendment is

not expected to have a significant impact on the Group.

Definition of Accounting Estimate (Amendments to IAS 8) (Effective July 1, 2023)

The amendments introduce a new definition for accounting estimates: clarifying that they are monetary amounts in the financial

statements that are subject to measurement uncertainty.

The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company

develops an accounting estimate to achieve the objective set out by an accounting policy. The amendment is not expected to

have a significant impact on the Group. 

Deferred Tax related to Assets and Liabilities Arising from a single transaction – Amendments to IAS 12

Income Taxes

(Effective July 1, 2023)

IAS 12

Income taxes

 clarifies how companies should account for deferred tax on certain transactions – e.g. leases and

decommissioning provisions. The amendments narrow the scope of the initial recognition exemption so that it does not apply to

transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a deferred

tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning

provision. The amendment is not expected to have a significant impact on the Group.

Classification of liabilities as current or non-current (Amendments to IAS 1

Presentation of Financial Statements

)

(Effective July 1, 2023)

To

promote consistency in application and clarify the requirements on determining if a liability is current or non-current, the IASB

has amended IAS 1 as follows: 

Right to defer settlement must have substance

Under existing IAS 1 requirements, companies classify a liability as current when they do not have an

unconditional right

 to defer

settlement of the liability for at least twelve months after the end of the reporting period.

As part of its amendments, the IASB has removed the requirement for a right to be unconditional and instead, now requires that

a right to defer settlement must have substance and exist at the end of the reporting period.

Classification of debt may change

A company classifies a liability as non-current if it has a right to defer settlement for at least twelve months after the reporting

period. The IASB has now clarified that a right to defer exists only if the company complies with conditions specified in the loan

agreement at the end of the reporting period, even if the lender does not test compliance until a later date. The amendment is not

expected to have a significant impact on the Group.

3 NEW STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS

continued

New standards, amendments to standards and interpretations not yet effective

(continued)

Disclosure of Accounting Policy (Amendments to IAS 1 and IFRS Practice Statement 2) (Effective July 1, 2023)

The Board has recently issued amendments to IAS 1

Presentation of Financial Statements

 and an update to IFRS Practice

Statement 2

Making Materiality Judgements

 to help companies provide useful accounting policy disclosures.

The key amendments to IAS 1 include:

●

 requiring companies to disclose their material accounting policies rather than their significant accounting policies;

●

 clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and

as such need not be disclosed; and

●

 clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material

to a company’s financial statements.

The amendments are applied prospectively.

Management has commenced an evaluation to assess the impact the amendment will have on the Group from a disclosure

perspective. More detail will be disclosed in future financial statements.

Revenue

ACCOUNTING POLICIES

Revenue comprises the sale of gold bullion and silver bullion (produced as a by-product). 

Up to April 11, 2022 revenue is measured based on the consideration specified in a contract with the customer, which is based

on the London Bullion Market fixing price on the date when the Group transfers control over the goods to the customer. The Group

recognises revenue at a point in time when Rand Refinery Proprietary Limited (“

Rand Refinery

”), acting as an agent for the sale

of all gold produced by the Group, delivers the Gold to the buyer and the sales price is fixed, as evidenced by the certificate of

sale. It is at this point that the revenue can be measured reliably and the recovery of the consideration is probable. Rand Refinery

is contractually obliged to make payment to the Group within two business days after the sale of the gold and silver and therefore

no significant financing component exists. 

Subsequent to April 11, 2022 revenue is measured based on the consideration specified in a contract with the customer, being

South African bullion banks. The consideration is based on the gold price derived on the gold market on the day a contract is

entered into with the customer. The Group recognises revenue at a point in time when the Group transfers the gold bullion and

silver bullion to the bullion bank and the sale price is fixed, as evidenced by deal confirmations.

It is at this point that the customer obtains control of the gold bullion or silver bullion, which is the settlement date specified in the

contract. At this point that the revenue can be measured reliably and the recovery of the consideration is probable. The customer

is contract ually obliged to make payment to the Group on the same day that the Group settles the contract and therefore no

significant financing component exists.

Other Income

ACCOUNTING POLICIES

Other income is recognised where it is probable that the economic benefits associated with a transaction will flow to the Group

and it can be reliably measured.

Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include

COVID-19 and other insurance payouts, gains on disposal of property, plant and equipment and gains on financial instruments at

fair value through profit or loss.

Finance income and expense

ACCOUNTING POLICY

Finance income includes interest received, growth in cash and cash equivalents in environmental rehabilitation trust funds, growth

in investment in Guardrisk, growth in the reimbursive right for environmental rehabilitation guarantees, dividends received and the

unwinding of the Payments made under protest and foreign exchange gains.

ACCOUNTING POLICY

Finance expenses comprise interest payable on financial instruments measured at amortised cost calculated using the effective

interest method, unwinding of the provision for environmental rehabilitation, interest on lease liabilities, the discount recognised on

Payments made under protest and foreign exchange losses.

Property, plant and equipment

ACCOUNTING POLICIES

Recognition and measurement

Property, plant and equipment comprise mine plant facilities and equipment, mine property and development (including mineral

rights) and exploration assets. These assets (excluding exploration assets) are initially measured at cost, whereafter they are

measured at cost less accumulated depreciation and accumulated impairment losses. Exploration assets are initially measured

at cost, whereafter they are measured at cost less accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition or construction of the asset, borrowing costs capitalised,

as well as the costs of dismantling and removing an asset and restoring the site on which it is located. Subsequent costs are

included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future

economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Exploration

and evaluation costs are capitalised as exploration assets on a project-by-project basis, pending determination of the technical

feasibility and commercial viability of the project.

Exploration assets consists of costs of acquiring rights, activities associated with converting a mineral resource to a mineral

reserve - the process thereof includes drilling, sampling and other processes necessary to evaluate the technical feasibility and

commercial viability of a mineral resource to prove whether a mineral reserve exists. Exploration assets also include geological,

geochemical and geophysical studies associated with prospective projects and tangible assets which comprise property, plant

and equipment used for exploratory activities. Costs are capitalised to the extent that they are a directly attributable exploration

expenditure and classified as a separate class of assets on a project by project basis. Once a mineral reserve is determined or

the project ready for development, the asset attributable to the mineral reserve or project is assessed for impairment and then

reclassified to the appropriate class of assets. Depreciation commences when the assets are available for use.

Exploration and

evaluation expenses prior to acquiring rights to explore is recognised in profit or loss.

Depreciation

Depreciation of mine plant facilities and equipment, as well as mining property and development (including mineral rights) are

calculated using the units of production method which is based on the life-of-mine of each site. The life-of-mine is primarily based

on proved and probable mineral reserves. It reflects the estimated quantities of economically recoverable gold that can be

recovered from reclamation sites based on the estimated gold price. Changes in the life-of-mine will impact depreciation on a

prospective basis. The life-of-mine is prepared using a methodology that takes account of current information to assess the

economically recoverable gold from specific reclamation sites and includes the consideration of historical experience.

The depreciation method, estimated useful lives and residual values are reassessed annually and adjusted if appropriate. The

current estimated useful lives are based on the life-of-mine of each site, currently between

two

 (2021:

three

; 2020:

four

) and

19

years (2021:

13

; 2020:

13

) years for Ergo mining assets and between

two

 (2021:

three

; 2020:

four

) and

20

 years (2021:

18

; 2020:

20

) years for FWGR mining assets.

Impairment

The carrying amounts of property, plant and equipment are reviewed at each reporting date to determine whether there is any

indication of impairment, or whenever events or changes in circumstances indicate that the carrying amount may not be

recoverable. If any such indication exists, the asset’s recoverable amount is estimated. For the purposes of assessing impairment,

assets are grouped at the lowest levels for which there are separately identifiable cash flows (“

CGUs

”). The key assets of a

surface retreatment operation which constitutes a CGU are a reclamation site, a metallurgical plant and a tailings storage facility.

These key assets operate interdependently to produce gold. The Ergo and FWGR operations each have separately managed

and monitored reclamation sites, metallurgical plants and tailings storage facilities and are therefore separate CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The estimated

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of

the time value of money and the risks specific to the asset. An impairment loss is recognised in profit or loss if the carrying amount

of an asset or CGU exceeds its recoverable amount.

Right of use assets and leases

ACCOUNTING POLICIES

Right of use asset

The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability and is adjusted by any

lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to

dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease

incentives received. The Group recognises a right of use asset and lease liability at the lease commencement date. 

The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of

the end of the useful life of the right of use asset or the end of the lease term. The right of use asset carrying value is allocated to

the CGU it belongs to and the CGU is reviewed at each reporting date to determine whether there is any indication of impairment.

The carrying value is reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. 

Lease liability

The lease liability is initially measured at the present value of the outstanding lease payments at commencement date over the

lease term, discounted using the interest rate implicit in the lease or if that rate is undeterminable, the Group’s incremental

borrowing rate. The lease term includes the non-cancellable period for which the lessee has the right to use an underlying asset

including optional periods when the Group is reasonably certain to exercise an option to extend a lease. 

Lease payments comprise fixed payments, variable lease payments that depend on an index or rate, initially measured using the

index or rate as at the commencement date, and the exercise price under a purchase option that the Group is reasonably certain

to exercise.

The lease liability is measured using the effective interest rate method. The Group re-measures the lease liability when the lease

contract is modified and this does not give rise to modification accounting, when the lease term has been changed or when the

lease payments have changed as a result of a change in an index or rate or a change in the assessment of a purchase option.

Upon remeasurement, a corresponding adjustment is made to the carrying amount of the right of use asset or is recorded in profit

or loss if the carrying amount of the right of use asset has been reduced to zero. 

Right of use assets are presented in “property, plant and equipment” and lease liabilities are separately disclosed in the statement

of financial position. 

Short term leases and leases of low value assets

The Group has elected not to recognise right of use assets and lease liabilities for short-term leases of machinery and equipment

that have a lease term of 12 months or less and leases of low value assets which include IT equipment, security equipment and

administration equipment.

Provision for environmental rehabilitation

ACCOUNTING POLICIES

The net present value of the estimated rehabilitation cost as at reporting date is provided for in full. These estimates are reviewed

annually and are discounted using a pre-tax risk-free rate that is adjusted to reflect the current market assessments of the time

value of money and the risks specific to the obligation.

Annual changes in the provision consist of financing expenses relating to the change in the present value of the provision and

inflationary increases in the provision, as well as changes in estimates.

The present value of dismantling and removing the asset created (decommissioning liabilities) are capitalised to property, plant

and equipment against an increase in the rehabilitation provision. If a decrease in the liability exceeds the carrying amount of the

asset, the excess is recognised in profit or loss. If the asset value is increased and there is an indication that the revised carrying

value is not recoverable, an impairment test is performed in accordance with the accounting policy dealing with impairments of

property, plant and equipment. Over time, the liability is increased to reflect an interest element, and the capitalised cost is

depreciated over the life of the related asset. Cash costs incurred to rehabilitate these disturbances are charged to the provision

and are presented as investing activities in the statement of cash flows.

The present value of environmental rehabilitation costs relating to the production of inventories and sites without related assets

(restoration liabilities) as well as changes therein are expensed as incurred and presented as operating costs within cost of sales.

Cash costs incurred to rehabilitate these disturbances are presented as operating activities in the statement of cash flows. The

cost of ongoing rehabilitation is recognised in profit or loss as incurred.

Investments of rehabilitation obligation funds

ACCOUNTING POLICIES

Cash and cash equivalents in environmental rehabilitation trusts 

Cash and cash equivalents included in environmental rehabilitation trusts comprise low-risk, interest-bearing cash and cash

equivalents and are non-derivative financial assets categorised as financial assets measured at amortised cost.

Cash and cash equivalents are initially measured at fair value. Subsequent to initial recognition, cash and cash equivalents are

measured at amortised cost, which is equivalent to their fair value.

The cash and cash equivalents in environmental rehabilitation trusts are for the sole use of material future environmental

rehabilitation payments and are therefore included in non-current assets.

Reimbursive right for environmental rehabilitation guarantees

(“old environmental rehabilitation policy”)

Funds held in the cell captive that secure the environmental rehabilitation guarantees issued are recognised as a right to receive

a reimbursement and are measured at the lower of the amount of the consolidated environmental rehabilitation liability recognised

and the consolidated fair value of the fund assets.

Changes in the carrying value of the fund assets, other than those resulting from contributions and payments, are recognised in

finance income.

The funds held in the cell captive under the old environmental rehabilitation policy are for the sole use of material future

environmental rehabilitation payments and are therefore included in non-current assets.

Investments in Guardrisk Cell Captive

Funds invested in the Guardrisk Cell Captive, held within Guardrisk Insurance Company Limited (“

GICL

”) or “

Guardrisk

” are non-

derivative financial assets categorised as financial assets measured at fair value through profit and loss as the funds are invested

by Guardrisk in liquid money market funds. These assets are initially measured at fair value and subsequent changes in fair value

are recognised in profit or loss as they arise and included in finance income. The investments in GICL are for the sole use of

environmental financial guarantees, Directors’ and Officers’ insurance and other insurance requirements.

The investment in the Guardrisk Cell Captive is for the sole use as determined in the insurance policies and are therefore included

in non-current assets.

Cash and cash equivalents

ACCOUNTING POLICIES

Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to cash without significant risk of

changes in value and comprise cash on hand, demand deposits, and highly liquid investments which are readily convertible to

known amounts of cash.

Cash and cash equivalents are non-derivative financial assets categorised as financial assets measured at amortised cost. Cash

and cash equivalents are initially measured at fair value. Subsequent to initial recognition, cash and cash equivalents are

measured at amortised cost, which is equivalent to their fair value.

Trade and other receivables

ACCOUNTING POLICIES

Recognition and measurement

Trade and other receivables, excluding Value Added Tax and prepayments, are non-derivative financial assets categorised as

financial assets at amortised cost.

These assets are initially measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, they

are measured at amortised cost using the effective interest method less any expected credit losses using the Group’s business

model for managing its financial assets. 

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the

rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the

financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does

not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the

Group is recognised as a separate asset or liability.

Impairment

The Group recognises loss allowances for trade and other receivables at an amount equal to expected credit losses (“

ECLs

”).

The Group uses the simplified ECL approach. When determining whether the credit risk of a financial asset has increased since

initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and

available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on informed

credit assessments and including forward-looking information. The maximum period considered when estimating ECLs is the

maximum contractual period over which the Group is exposed to credit risk. 

ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls

(i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group

expects to receive). The Group assesses whether the financial asset is credit impaired at each reporting date. A financial asset is

credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset

have occurred, including but not limited to financial difficulty or default of payment. The Group will write off a financial asset when

there is no reasonable expectation of recovering it after considering whether all means to recovery the asset have been exhausted,

or the counterparty has been liquidated and the Group has assessed that no recovery is possible.

Any impairment losses are recognised in the statement of profit or loss.

Trade receivables relate to gold sold to the bullion banks. Settlement is usually received on the gold sold date. Previously trade

receivables related to gold sold on the bullion market by Rand Refinery in its capacity as an agent for the Group. Settlement was

usually received

two working days

 from gold sold date.

Trade and other payables

ACCOUNTING POLICIES

Trade and other payables, excluding Value Added Tax, payroll accruals, accrued leave pay and provision for performance based

incentives, are non-derivative financial liabilities categorised as financial liabilities measured at amortised cost.

These liabilities are initially measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition,

they are measured at amortised cost using the effective interest method. The Group derecognises a financial liability when its

contractual rights are discharged, or cancelled or expire.

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected

to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the

employee and the obligation can be estimated reliably.

Inventories

ACCOUNTING POLICIES

Gold in process is stated at the lower of cost and net realisable value. Costs are assigned to gold in process on a weighted

average cost basis. Costs comprise all costs incurred to the stage immediately prior to smelting, including costs of extraction and

processing as they are reliably measurable at that point. Gold bullion is stated at the lower of cost and net realisable value. Selling

and general administration costs are excluded from inventory valuation.

Consumable stores are stated at cost less allowances for obsolescence. Cost of consumable stores and stockpile material is

based on the weighted average cost principle and includes expenditure incurred in acquiring inventories and bringing them to

their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and

selling expenses.

Income tax

ACCOUNTING POLICIES

Income tax expense comprises current and deferred tax. Each company is taxed as a separate entity and tax is not set-off between

the companies.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment on tax

payable or receivable in respect of the previous year. Amounts are recognised in profit or loss except to the extent that it relates to

items recognised directly in equity or OCI. The current tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the reporting date. 

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts and the tax bases of assets and

liabilities. Deferred tax is not recognised on the initial recognition of assets or liabilities in a transaction that is not a business

combination and that affects neither accounting nor taxable profit.

Deferred tax assets relating to unutilised tax losses and unutilised capital allowances are recognised to the extent that it is probable

that future taxable profits will be available against which the unutilised tax losses and unutilised capital allowances can be utilised.

The recoverability of these assets is reviewed at each reporting date and adjusted if recovery is no longer probable.

Deferred tax related to gold mining income is measured at a forecast weighted average tax rate that is expected to be applied to

temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The calculation of

the forecast weighted average tax rate requires the use of assumptions and estimates, including the Group’s life-of-mine plan (as

discussed in note 9 to the consolidated financial statements) that is applied to calculate the expected future profitability.

Employee benefits

ACCOUNTING POLICIES

Cash settled share-based payments (“outgoing long-term incentive” or “CLTI”)

Cash settled share-based payments are measured at fair value and remeasured at each reporting date to reflect the potential

outflow of cash resources to settle the liability, with a corresponding adjustment in profit or loss. Vesting assumptions for non-

market conditions are reviewed at each reporting date to ensure they reflect current expectations.

Equity settled share-based payments (“new long-term incentive” or “ELTI”)

The grant date fair value of equity settled share-based payment arrangements is recognised as an expense, with a corresponding

increase in equity, over the vesting period of the awards. The expense is adjusted to reflect the number of awards for which the

related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is

based on the number of awards that meet the related service and non-market performance conditions at vesting date.

Stated share capital

Stated share capital

Ordinary shares and the cumulative preference shares are classified as equity. Incremental costs directly attributable to the issue

of ordinary shares are recognised as a deduction from equity, net of any tax effect.

Repurchase and reissue of ordinary shares (treasury shares)

Repurchase and reissue of share capital (treasury shares)

When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable

costs is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a

deduction from stated share capital.

Dividends

Dividends

Dividends are recognised as a liability on the date on which they are declared which is the date when the shareholders’ right to

the dividends vests.

Interest in subsidiaries

ACCOUNTING POLICIES

Significant subsidiaries of the Group are those subsidiaries with the most significant contribution to the Group's profit or loss or

assets.

Operating Segments

ACCOUNTING POLICIES

Operating segments are reported in a manner consistent with internal reports that the Group’s chief operating decision maker

(“

CODM

”) reviews regularly in allocating resources and assessing performance of operating segments. The CODM has been

identified as the Group’s Executive Committee. The Group has one material revenue stream, the sale of gold. To identify operating

segments, management reviewed various factors, including operational structure and mining infrastructure. It was determined that

an operating segment consists of a single or multiple metallurgical plants and reclamation sites that, together with its tailings

storage facility, is capable of operating independently.

When assessing profitability, the CODM considers,

inter alia,

the revenue and cash operating costs of each segment. The net of

these amounts is the segment operating profit or loss. Therefore, segment operating profit has been disclosed as the primary

measure of profit or loss. The CODM also considers the additions to property, plant and equipment.

Payments made under protest

ACCOUNTING POLICIES

Payments made under protest

Recognition and measurement

The payment made under protest asset that arises from the Municipality Electricity Tariff Dispute is initially measured at a

discounted amount, and any difference between the face value of payments made under protest and the discounted amount on

initial recognition is recognised in profit or loss as a finance expense. Subsequent to initial recognition, the payments made under

protest is measured using the effective interest method to unwind the discounted amount to the original face value less any write

downs for recovery. Unwinding of the carrying value and changes in the discount period are recognised in finance income.

Assessment of recoverability

The discounted amount of the payments under protest is assessed at each reporting date to determine whether there is any

objective evidence that the full amount is no longer expected to be recovered. The Group considers the reasonable and

supportable information related to the creditworthiness of the Municipality and events surrounding the outcome of the Main

Application. Any write down is recognised in finance expense.

Contingent liabilities

A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence

or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent liability may also

be a present obligation arising from past events but is not recognised on the basis that an outflow of economic resources to settle

the obligation is not viewed as probable, or the amount of the obligation cannot be reliably measured. When the Group has a

present obligation, an outflow of economic resources is assessed as probable and the Group can reliably measure the obligation,

a provision is recognised.

Other investments

ACCOUNTING POLICIES

On initial recognition of an equity investment that is not held for trading, the Group may make an irrevocable election to present

subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-

investment basis. 

These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition

they are measured at fair value and changes therein are recognised in other comprehensive income (“

OCI

”), and are never

reclassified to profit or loss, with dividends recognised in profit or loss unless the dividend clearly represents a recovery of part of

the cost of the investment.

The Group’s listed and unlisted investments in equity securities are classified as equity instruments at fair value through OCI.

Contingent liabilities and contingent assets

ACCOUNTING POLICIES

Contingent liabilities

A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence

or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent liability may

also be a present obligation arising from past events but is not recognised on the basis that an outflow of economic resources to

settle the obligation is not viewed as probable, or the amount of the obligation cannot be reliably measured. When the Group has

a present obligation, an outflow of economic resources is assessed as probable and the Group can reliably measure the

obligation, a provision is recognised.

Contingent assets

Contingent assets are possible assets whose existence will be confirmed by the occurrence or non-occurrence of uncertain future

events that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed when it is

more likely than not that an inflow of benefits will occur. However, when the inflow of benefits is virtually certain an asset is

recognised in the statement of financial position, because that asset is no longer considered to be contingent.