Governance

DRDGOLD’s Board of Directors ensures that the principles of good corporate governance as recognised and practised throughout the world are upheld and implemented. All the directors are fully aware that they are the custodians of corporate governance in the organisation and this is reflected in the way they execute their fiduciary duties, which is with diligence, integrity and honour. The intention is that this filters down to all employees. The upholding of such ideals puts the company in a position to improve organisational performance and deliver value to shareholders and stakeholders alike. DRDGOLD has set up systems and controls to promote discipline, transparency, accountability, responsibility and fairness for the protection of the interests of shareholders, employees and the communities in which the company operates.

A detailed account of corporate governance matters (PDF - 195KB) may be found in the Annual Report.

Compliance

DRDGOLD is committed to observing the provisions of the King Report on Corporate Governance for South Africa (the King III Report), which came into effect on 1 March 2010. This is a codified body of principles which is intended to serve as a guideline for the enhancement of high standards of corporate governance. The company will enforce the provisions of the King III Report to the extent possible within the context of the report’s ‘apply or explain principle’.

As DRDGOLD’s primary listing is on the JSE Limited, the company is compliant with the JSE Listings Requirements. Its secondary listing is on the Nasdaq Capital Market and the company is registered with the Securities and Exchange Commission in the United States of America. Accordingly, DRDGOLD is subject to compliance with the Sarbanes-Oxley Act of 2002 and to certain Nasdaq Rules.

Board of Directors

The Board of Directors currently comprises two executive directors and four non-executive directors. The board charter sets out the directors’ responsibilities and serves as a standing guideline for the benefit of directors.

The roles of chairman and chief executive officer are separate and distinct and the chairman is independent in full compliance with the King III Report. As the chairman is not part of the executive, he approaches the business of the company in an impartial and objective manner.

A board evaluation exercise was conducted by a new independent facilitator on 25 August 2010. This exercise took the form of a workshop at which all the directors exchanged views on a variety of relevant aspects of board effectiveness and also tracked the progress of previous evaluations. The facilitator made observations about the way in which the directors interacted during the discussion.

In compliance with both Nasdaq and JSE requirements, the board has adopted a formal and transparent policy in terms of which the Nominations Committee identifies candidates, interviews them and recommends the short-listed candidates to the board. The board deliberates on the suitability of the candidates before making appointments.

Board committees

There are a number of committees in place to enable the board to discharge its duties and responsibilities properly and to carry out its decision-making functions effectively. Each committee is governed by a set of terms of reference with respect to its composition, duties and responsibilities.

The board established the Transformation and Sustainable Development Committee (Transco) to assist the company to achieve the triple bottom line espoused in the King III Report and the black economic empowerment targets set by South African legislation.

The objectives of this committee are to:

• promote transformation within the company and economic empowerment of previously disadvantaged communities, particularly within the areas where the company conducts business;
• strive towards achieving the goal of equality, as required by the South African constitution and other legislation and within the context of the demographics of the country, at all levels in the company and its subsidiaries; and
• conduct business in a manner that is conducive to the attainment of internationally acceptable environmental and sustainability standards.

Transco, which met four times during the year under review, is chaired by an independent, non-executive director.

Sustainability issues also fall within the ambit of the Audit, Risk, Remuneration and Nominations Committees. The Audit Committee is composed solely of non-executive directors, all of whom are independent. The six-member Risk Committee includes three independent, non-executive directors and one non-executive director. Four non-executive directors comprise the Remuneration Committee, three of whom are independent. Two independent non-executive directors make up the Nominations Committee.

Code of Ethics

The text that follows highlights aspects of the group's Code of Ethics, a complete copy of which will be made available on request or may be accessed on the company's website at www.drdgold.com. Any contravention of this code is regarded as a serious matter.

DRDGOLD acknowledges that all employees have a right to work in a safe and healthy environment; that they are entitled to fair employment practices; and that they have a right to a working environment free from discrimination and harassment.

The group recognises a very real responsibility to contribute to the local communities and encourages employees to participate in, among others, religious, charitable, educational and civic activities, provided that such participation does not make undue demands on their work time or create a conflict of interest.

DRDGOLD expects employees to perform their duties in accordance with the best interests of the group, and not to use their position or the knowledge gained through their employment with the group for their private or personal advantage.

Employees may not take up outside employment or hold outside directorships without prior approval of management. Directors who hold outside directorships must disclose these at the quarterly board meetings.

Employees should ensure that they are independent of any business organisation which has a contractual relationship with the group or provides goods or services to the group.

An employee should neither accept nor solicit any non-minor gifts, hospitalities or other favours from suppliers of goods or services.

While directors and employees are encouraged to invest in and own shares in the group, such investment decisions must not contravene the conflict of interest provisions of this code, any applicable legislation, or any policies and procedures established by the various operating areas of the group, and must not be based on material non-public information acquired by reason of an employee's connection with the group.

Directors and employees are expected to treat all information pertaining to the group, which is not in the public domain, in the strictest confidence and may not divulge such information to any third party without permission, even after the termination of their services with the group.

The company has an anonymous whistle-blower hotline to deal with complaints from within or outside the company and the Group Risk Manager provides the Audit Committee with a regular report on the whistle-blowing programme.

Risk management

The Board of Directors has overall responsibility for risk management at DRDGOLD. The purpose of the Risk Committee is to assist the board in the discharge of its duties relating to risk management and control responsibilities, assurance issues, health, safety and environmental compliance, and the monitoring and reporting of all these matters. Responsibility for the quality, integrity and reliability of the group's risk management rests with the Risk Committee which facilitates communication between the board, the Audit Committee, internal auditors and other parties engaged in risk management activities.

The Risk Committee meets every quarter and reports back to the board. The Risk Committee ensures that:

• an effective risk management programme is implemented and maintained;
• risk management awareness is promoted among all employees;
• risk programmes (financing/insurance) adequately protect the company against catastrophic risks;
• regular risk assessments are conducted;
• the total cost of risk in the long term is reduced;
• the protection of DRDGOLD's assets is promoted throughout the group;
• the health, safety and well-being of all stakeholders is improved; and
• DRDGOLD's activities are carried out in such a way that the safety and health of employees is ensured.

In addition to strategic and corporate risks, the committee also reviews the effectiveness of the operational risk programmes. A ‘heat map’, which brings together all the risks that the group faces, is tabled at every meeting.

The system to manage risk involves all significant business and operational risks which could undermine the achievement of business objectives and the preservation of shareholder value. The significant risks facing DRDGOLD, including those at an operational level, have been identified. People have been assigned to each risk and the results of their work to improve controls are reviewed by senior management through regular risk meetings.

In addition to the above initiatives, DRDGOLD also employs thirdparty consultants to benchmark its operations against other mining operations throughout South Africa and more than 300 different mining companies worldwide.

Employee and stakeholder participation

DRDGOLD engages on a regular basis with its various stakeholders, including employees, unions, communities, government and regulators, non-governmental organisations and investors.

In respect of its relations with employees and employee representatives, DRDGOLD has formal and informal employee participation structures in place at its operations to deal with a broad range of issues. The company actively encourages open communication, consultation and the identification and resolution of conflicts through workplace forums.

DRDGOLD is involved in the communities in which it operates and Social and Labour Plans and Local Economic Development Plans have been developed in compliance with the requirements of South African mining legislation. Apart from formal consultations with interested and affected parties, operational management has regular, formal and informal, interaction with its surrounding communities.

The company is in regular contact with shareholders and other members of the investing community, and reports to these groups through presentations, teleconferences, webcasts and roadshows at least once a quarter.

Membership of industry body

DRDGOLD is an advocacy member of the Chamber of Mines of South Africa. The chamber is a voluntary membership, private sector employer organisation and is the principal advocate of major policy positions endorsed by the mining employers and represents these to various organs of South African national and provincial governments and to other relevant policy-making and opinionforming entities, both within the country and abroad. The chamber also works closely with the various employee organisations in formulating these positions where appropriate.

Fines and legal issues

DRDGOLD did not incur any fines during the year under review in respect of non-compliance with laws or regulations. The company is engaged in some legal actions, the details of which appear in Annexure 2 of the notice to shareholders (pages 123 to 124 of the Annual Report) (PDF - 38KB).