https://ir2018.suninternational.com

Good corporate governance is paramount to Sun International. We live by the pillars of integrity, responsibility, fairness, transparency, honesty and accountability to all stakeholders. These pillars preserve the group’s long-term sustainability so we can deliver value to all stakeholders. The outcomes of good corporate governance ensure an ethical culture, good performance, effective control and legitimacy.

MESSAGE FROM THE CHAIRMAN

Dear stakeholders

During the past year, we saw further changes at Sun International, particularly regarding the board and its committees. These changes included resignations and appointments to further strengthen the board and its skills, diversity and experience. Ms Zarina Bassa resigned and Mr Graham Rosenthal retired as independent non-executive directors effective 12 February 2018 and 15 May 2018, respectively. In line with the principles of King IV™[1] and given the number of new non-executive directors recently appointed to the board, Mr Khati Mokhobo agreed to step down as executive director effective 5 September 2018, while retaining his executive responsibilities. Mr Samuel (Sam) Sithole was appointed as a non-executive director effective 20 June 2018. Effective 5 September 2018, Mr Jabulane (Jabu) Mabuza was appointed as deputy chairman and Mr Vusumuzi (Vusi) Khanyile as an independent non-executive director. Ms Zimkhitha Zatu was appointed as an independent non-executive director effective 23 November 2018.

1 Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved.

Following these board changes, board committee membership was modified to ensure alignment with King IV™ and to deliver on our strategic objectives.

There were no material instances of non-compliance during the year under review. The board is satisfied with the group’s level of compliance in accordance with applicable governance and regulatory requirements and it will continue to review the group’s governance against best practice.

Sun International is proud that its business practices are underpinned by ethical principles embraced by the board, practised by the leadership team and cascaded down to our employees group-wide. We are unwavering in our zero-tolerance approach to crime, including corruption at every level of the organisation. To reinforce the board’s ethical leadership commitment, several ethics training initiatives were concluded with the assistance of the ethics office to determine Sun International’s current ethics climate and create a culture of inclusivity. Engagement took place with the board and employees to find out how they felt about ethics in the organisation. We continued to engage with Deloitte Tip-Offs Anonymous, who independently manages the group’s 24-hour ethics hotline. We invited all stakeholders to use the hotline by way of an announcement on SENS.

The board continues to focus on reviewing the fundamentals of how we govern our business and how our structures enhance and unlock shareholder value. We continued to apply the 16 King IV™ principles, which are detailed in our King IV™ application register. The board is satisfied with the extent of the group’s application of these principles, the group’s regulatory universe, and compliance with the JSE Listings Requirements, as articulated in this report.

Sun International’s risk management committee is satisfied that the group’s integrated risk methodology and ranking system accurately identified, quantified and ranked group-wide risks and opportunities in South Africa and Latam. This risk approach helps the board govern risk in a way that helps achieve our strategic objectives. It also ensures that Sun International is managed in accordance with principle 11 of King IV™. Specific executives are accountable for managing, monitoring, mitigating and reporting on identified risks and opportunities in their areas of expertise.

The sustainability committee focuses on environmental, health and safety, SED, E&SD and the group’s progress against B-BBEE. Further, the policy revitalisation management sub-committee continues to review, update and consolidate group policies.

With increased cyber threats across our operating environment, the group’s IT governance structures remain resilient and responsive in securing the information stored across the group’s various systems. To further bolster the group’s IT governance environment, several actions were taken including, inter alia, aligning IT policies with King IV™, deactivating USB ports and engaging an external assurance adviser annually to review the activities, methodologies and performance of the IT governance committee in accordance with best practice. A great amount of work was done in Chile to align IT governance with best practice, including an external assessment of its IT governance structures.

The stewardship of customer information and data protection is important. During 2018, management implemented a group-wide self-service kiosk to allow customers to sign up and update their own identification documents. We implemented a data governance programme to address data quality issues of gaming customers.

Governance in Latam is a focus area and good progress was made in aligning its board and committee processes to the South African operations. This includes a best practice integrated governance framework between South Africa and Latam, and the group company secretary attends all Sun Dreams committee meetings. The Latam committees report into the Sun Dreams South African board committees so the local operations can focus on operational matters while material governance, risk and strategy issues are elevated to group level. Mr Enrique Cibie chairs the Sun Dreams board committees, serves as a member of the Sun International remuneration, risk and audit committees, and is a member of the Sun International board. Latam’s social and ethics report is tabled at their financial review and risk committee meeting. It is included in South Africa’s social and ethics committee meeting to monitor sustainability, compliance and money laundering. Great synergies are being created between the internal audit function at Sun Dreams and Sun International’s head of Group Internal Audit. We acknowledge that, although significant progress was made in this regard, there is still work to be done to align governance with the rest of the group.

In Nigeria, the TCN has a robust governance structure, including a statutory audit committee, finance review and risk committee and a nomination and governance committee that monitors remuneration. All committees operate under approved mandates and terms of reference and all non-executive directors have letters of appointment. The non-executive directors’ fees are determined by the nomination and governance committee and shareholders.

The regulatory and operating environment continues to pose challenges such as the proposed amendments to smoking legislation, the ongoing threat of increased gaming taxes, and the erosion of market share due to EBTs and LPMs in catchment areas. The tough economic situation requires a balance between innovative thinking and disciplined processes. We continue to strive for balance. The automated compliance portal will be finalised during 2019 and steps were taken to implement FICA legislation. Sun International engages the gaming boards regarding simplifying our group corporate structure. It is anticipated that the restructuring will be finalised during 2019.

Looking ahead our key focus areas include:

  • continuing to embed an ethical culture through regular ethics awareness campaigns
  • implementing a permanent central policy repository, which will track the reading of policies, alert employees to updates on any of the policies, and provide competence testing on policies with reporting capabilities
  • continuing to remain resilient to cyber threats by developing robust IT systems and processes
  • continuing work on the integration of Latam’s governance structures with South Africa.

We are satisfied that the group meets the requisite standards of governance and compliance, and that matters for our consideration have been robustly interrogated and canvassed. We will continue to apply our minds individually and collectively to guide the group’s strategic direction and to facilitate the group’s delivery of its strategic objectives.

Following my decision to retire as Sun International’s chairman on 14 May 2019, I welcome Jabu Mabuza as the new incumbent and wish him the best as he steers the group forward. I would like to thank the board and management for their support over my 14-year tenure at Sun International. I am and continue to be inspired by the management team and am confident in their ability to drive the group strategy forward, albeit in tough trading conditions.

Valli Moosa
Chairman
29 March 2019

This governance report should be read with the separate sub-committee reports – audit, remuneration and social and ethics – to obtain a holistic view of the governance matters under consideration during the year under review. Certain fundamental principles are discussed in this report. These reflect the governance and workings of the board given that the board’s primary role is to exercise effective, ethical and responsible leadership in determining the group’s strategy, overseeing the implementation of this strategy by the management team, and closely monitoring business performance.

SUPPORTING VALUE CREATION THROUGH GOVERNANCE OUTCOMES AND EFFECTIVE LEADERSHIP

The governing body (the board) is the custodian of Sun International’s corporate governance framework. It acknowledges its responsibility to lead the group in an ethical and effective manner through the mindful application of King IV™ with substance prevailing over form. This entails the integration of King IV™’s recommended 16 principles and practices that culminate in specific outcomes: namely an ethical and cohesive culture, effective control, compliance and accountability, responsive and transparent stakeholder engagement, performing to strategic expectation, and legitimacy and trust.

Sun International’s board and executive management collectively have a wealth of knowledge that spans across South Africa and internationally to provide the expertise required to achieve the group’s strategic objectives and ultimately create great memories for our guests, people and stakeholders. The SunWay culture and code of ethics further reinforce positive behaviours to ensure a cohesive ethical culture group-wide. Sun International’s governance framework and policies provide the foundation for responsible, accountable and transparent reporting.

Through the various inputs and outputs, the board achieves specific outcomes that support the group’s value creation. These outcomes include maintaining an ethical culture from the top down throughout the organisation. Through effective control of our risk universe, material matters and responsive stakeholder relations, the group maintains compliance with relevant legislation, codes and frameworks. These enable performance according to strategic expectations to enhance its legitimacy and trust among its stakeholders.

GOVENANCE FRAMEWORK

Sun International’s governance framework provides clear direction for implementing robust governance practices. Our framework is underpinned by our corporate governance policies, ethics and human rights to promote an organisational culture that embraces the SunWay culture and ensures that we remain a good corporate citizen.

KING IV™ APPLICATION AND GOVERNANCE OUTCOMES

The board is committed to best practice governance through the application of King IV™ principles. All principles are applied and align with our governance outcomes as detailed in the King IV™ application register.

BOARD OVERVIEW

The board’s role is to exercise effective and ethical leadership, and sound judgement in directing Sun International and thereby the group, to achieve sustainable growth in the best interests of all its stakeholders.

Board charter

The board operates under a formal and defined board charter that sets out specific responsibilities that are collectively discharged by board members and the roles and responsibilities of the directors as individuals. This board charter is reviewed annually or sooner as required to ensure relevance. The board is satisfied that it has fulfilled its responsibilities in accordance with the charter for the reporting period.

To comply with best corporate governance practices, Sun International conducts periodic board reviews. These reviews are anonymous, and focus on evaluating the board, governance issues and the group company secretary’s competence. After the review process held in 2018, no material concerns were noted.

Board and committee attendance: 1 January 2018 to 31 December 2018

Board

Remuneration committee

Nomination committee

Audit committee

Social and ethics committee

Risk committee

Investment committee

Non-executive directors

PD Bacon

5/5

3/3

3/3

ZBM Bassa[1]

PL Campher[2]

5/5

4/4

3/3

3/3

3/3

5/7

EAMMG Cibie

5/5

4/4

3/3

3/3

GW Dempster

5/5

0/2

7/7

NN Gwagwa

5/5

1/2

3/3

3/3

CM Henry

5/5

3/3

2/2

3/3

VP Khanyile[3]

2/2

JA Mabuza[4]

2/2

2/2

BLM Makgabo-Fiskerstrand

5/5

3/3

MV Moosa

5/5

4/4

3/3

3/3

7/7

GR Rosenthal[5]

1/1

1/1

1/1

1/1

S Sithole[6]

3/3

1/1

4/4

ZK Zatu[7]

Executive directors

N Basthdaw

5/5

3/3

3/3

3/3

7/7

AM Leeming

5/5

4/4

3/3

3/3

3/3

3/3

7/7

DR Mokhobo[8]

2/3

1 Ms Bassa resigned effective 12 February 2018.
2 Mr Campher was appointed lead independent director effective 1 January 2018, after Mr Matthews retired as the lead independent director effective 31 December 2017.
3 Mr Khanyile was appointed to the board effective 5 September 2018.
4 Mr Mabuza was appointed to the board effective 5 September 2018.
5 Mr Rosenthal retired from the board effective 15 May 2018.
6 Mr Sithole was appointed to the board effective 20 June 2018.
7 Ms Zatu was appointed to the board effective 23 November 2018.
8 Mr Mokhobo resigned from the board effective 5 September 2018.

BOARD COMPOSITION

Sun International’s unitary board structure comprises executive and non-executive directors, most of whom are independent non-executive directors. The non-executive directors have the necessary skills, qualifications, industry experience and diversity to provide judgement independent of management on material board issues.

Age

30 – 40 years

41 – 50 years

51 – 60 years

61 – 70 years

70+ years

Average age

Board members

1

3

3

5

2

57

Independence

The board, through the nomination committee, annually assesses the independence of the non-executive directors against the criteria set out in
King IV™ and the JSE Listings Requirements. During 2018 and prior to the date of this report, the nomination committee agreed that 10 non-executive directors continue to satisfy the independence criteria. These directors are: Messrs Bacon, Campher, Cibie, Dempster, Khanyile, Moosa, and Mesdames Gwagwa, Henry, Makgabo-Fiskerstrand and Zatu. In 2017, Mr Moosa and Dr Gwagwa were classified as not independent, as they were both directors of the group’s empowerment partner Dinokana and had not yet served out their cooling-off period. Following an independence reassessment in 2018, it was noted that both had resigned as directors of Dinokana in 2015 and they had served an appropriate cooling-off period since then to allow them to be reclassified by the board as independent directors. An advisory agreement was concluded with Mr Mabuza for the provision of certain key strategic services to the group. As a result of this advisory agreement, he is not classified as an independent non-executive director. Mr Sithole is not classified as an independent non-executive director as he represents a major shareholder of the group.

The nomination committee conducted a rigorous independence assessment of those independent non-executive directors who had served on the board for nine years or longer (these being Messrs Campher and Moosa and Dr Gwagwa) and concluded that these directors retained their independence in character and judgement, notwithstanding their length of service, and that there were no relationships or circumstances that were likely to affect or be perceived to affect their independence. The board concurred with these findings and is of the view that these non-executive directors bring valuable experience and skills to the board, and that they will continue to exercise independent judgement.

Independence
(at 31 December 2018)

Executive an non-executive directors
(at 31 December 2018)

Tenure of directors
(at 31 December 2018)

Group gender and race diversity policy

Sun International’s gender and race diversity policy sets out Sun International’s approach to gender and race diversity on the board. This revised policy was approved by the board on 23 November 2018. The board applied this policy in the appointment of the new directors during the year under review.

Factors considered in ensuring appropriate gender and race targets included: the current composition and expected changes in the board; the B-BBEE Codes of Good Practice; the sectoral charter for the tourism industry; the gaming board licences and their respective requirements; and the group’s employment equity plan. Although the board marginally missed achieving its 30% target for female directors (29%), it achieved and exceeded its race target of 50% black directors with 57% black representation.

Gender
(at 31 December 2018)

Ethnicity
(at 31 December 2018)

EFFECTIVE LEADERSHIP

The board provides effective leadership and directs the group within the group governance framework and delegation of authority.

Chairman and lead independent director

The board is chaired by Mr Valli Moosa, a non-executive director who has annually been reappointed as board chairman since 1 July 2009. The chairman of the board is responsible for, among others, ensuring the integrity and effectiveness of the board’s governance processes. In terms of the company’s MoI, the board chairman is subject to an annual appointment from among its members. The chairman’s reappointment, effective 1 January 2019, follows an evaluation of his performance by all directors during the year under review.

Mr Moosa will retire as Sun International’s chairman effective 14 May 2019 and as a director. Mr Jabulane (Jabu) Mabuza’s appointment will be subject to election by shareholders, assuming the role of chairman of Sun International. Mr Mabuza brings a wealth of industry experience to the board, having previously served as group chief executive officer of Tsogo Sun Holdings and as the present chairman of the CASA.

The board charter, which is aligned with King IV™, requires the appointment of a lead independent director. This is particularly relevant where the board chairman is conflicted vis à vis executive management, other directorships or stakeholders. Mr Campher was reappointed as lead independent director effective 1 January 2019.

In terms of the board charter, the chairman, lead independent director and chief executive have separate responsibilities as tabled below. The deputy chairman assists the chairman and fills his position if he is unavailable. The chairman and deputy chairman maintain a good working relationship to ensure collaboration and teamwork in fulfilling their roles and responsibilities. The deputy chairman is a successor to the chairman and there will be a handover from Mr Moosa to Mr Mabuza.

Responsibilities

 

Description

Chairman   Responsible for providing ethical and effective board and committee leadership by encouraging candid board debates; overseeing the group’s strategy; board succession and performance; managing any conflicts of interest; actively engaging with the chief executive; ensuring positive stakeholder relations are maintained.
Lead independent director  

Responsible for providing support and advice to the chairman as a trusted confidante. If the chairman has a conflict of interest, the lead independent director maintains ethical and effective leadership without undermining the chairman.

The lead independent director is instrumental in leading and introducing discussion at board and committee meetings regarding the performance and evaluation of the board chairman and his remuneration.

Chief executive  

Responsible for effectively monitoring and managing the business and implementing the policies and strategies adopted by the board; ensuring appropriate internal control mechanisms are in place to maintain compliance with all relevant laws and best practice; to safeguard assets; and guiding and assessing executive management’s performance against strategic objectives.

The chief executive delegates the appropriate authority to his management team in terms of defined levels of authority and retains accountability to the board.

Chief executive and delegation of authority

Mr Anthony Leeming is the chief executive. The board’s governance and management functions are linked through the chief executive. The role and function of the chief executive is formalised, and the board, through the remuneration committee, annually evaluates his performance against specified key performance indicators. In addition, the chief executive’s performance as a director is assessed by the chairman of the board in conjunction with the nomination committee. Following an assessment conducted in 2018, the chief executive was found to possess the requisite competence, qualifications and experience to carry out the duties of his role.

Group company secretary

Mr Andrew Johnston continued to serve in his capacity as group company secretary during the year under review. Mr Johnston holds the following qualifications: BA, LLB, FCIS PGDip in Environmental Law and a certificate in advanced corporate and securities law. He was a member of the Accounting and Auditing Task Force of The King Committee responsible for implementing the King Report on Corporate Governance for South Africa 2009. He is a qualified and admitted attorney and served as a senior executive and group company secretary of several large public listed companies in South Africa over the past 26 years. The appointment and removal of the group company secretary is a matter for the board as a whole.

Group company secretary responsibilities

Guides

The board and committees (collectively and individually) on how their responsibilities should be discharged in the company’s best interests.

Provides

Ongoing legal, secretarial and corporate governance support and advice to the board.

Ensures

That new directors receive an induction pack on joining the board with the requisite training in terms of their responsibilities as a board member.

Facilitates

Ongoing board training to ensure directors are aware of relevant legislation, codes or frameworks impacting the group.

Distributes

Board packs and the minutes of all the board and committee meetings and ensures that copies of the group’s annual financial statements are distributed to relevant persons.

Certifies

That the group has filed the required returns and notices as per the Companies Act and complied with the JSE Listings Requirements.

In line with the JSE Listings Requirements, the board is satisfied that, following an assessment by the nomination committee, the group company secretary has the requisite competence, qualifications and experience to carry out the duties of his role. The board believes that in each instance, the incumbent group company secretary has maintained an arm’s-length relationship with the board and its directors.

ETHICAL LEADERSHIP

The board provides ethical leadership and directs the group based on the fundamental principles of integrity, transparency, honesty, accountability, fairness and responsibility. The group has several processes, policies, codes and controls in place and supports several initiatives to ensure a cohesive ethical culture is cascaded throughout the organisation.

Code of ethics
The group recognises the vested interest of all stakeholders in the manner its various businesses are conducted and is committed to ethical behaviour at all levels of the organisation. This code of ethics assists in fulfilling our responsibility to all stakeholders.

During 2018, Sun International relaunched its revised code of ethics booklet, which was delivered to each employee.

Sun Dreams has its own code of ethics booklet that is broadly aligned with Sun International’s code of ethics booklet. In Nigeria, the TCN has its own code of ethics.

Ethics hotline
Greater awareness was created around the importance of whistleblowing and using the 24-hour anonymous ethics hotline. Trained operators respond to calls in all South Africa’s official languages by guiding stakeholders through specific questions. Information is analysed and reported to a designated senior official in the group, who investigates the matter confidentially. There is also a guideline on how to report protected disclosures.

United Nations Global Compact.
Sun International remains committed to embedding the 10 United Nations Global Compact (UNGC) Principles as part of its strategy, culture and day-to-day operations. These principles cover human rights, labour environment and anti-corruption.

Conflicts of interest
Directors are required to inform the board of any conflicts or potential conflicts of interest that they may have in relation to any area of business. Directors are required to recuse themselves from discussions or decisions on those matters where they have conflicts, or potential conflicts of interest, in terms of the Companies Act, board charter and separate policy.

Equal pay for work of equal value
Salaries are continually benchmarked to ensure a fair remuneration for all employees. The work around for EPWEV is an ongoing process. The EPWEV principles are also applied when appointing new employees and promoting existing employees.

Sustainable Development Goals (SDGs)
Sun International embraces the United Nations SDGs, and we endeavour to help achieve them through our operations and business strategies. Although Sun International is only formally aligning and assessing the relevant goals in 2019, we are working towards addressing various SDGs in our ongoing sustainability journey.

Group values
Our values represent an unwavering commitment to behaving in a consistent, positive manner every day, in everything we do.

  • Team work
  • The customer comes first
  • Passion
  • Professionalism

SunWay
Employees recognised their responsibilities, based on the SunWay culture programme, to uphold the principles that support the establishment of an ethical culture and abide by the code of ethics principles.

Organisation for economic cooperation and development
The group adheres to the guidelines for multinational enterprises regarding anti-corruption.

Insider trading and dealing in securities
The following policies are in place:

Policy of dealing with price-sensitive information.

This policy deals with the determination of price-sensitive information, the maintenance of confidentiality and prompt dissemination of such information in accordance with JSE Limited guidelines and group disclosure policy. This policy is applicable to all group employees.

Dealing in securities policy

This policy regulates the dealings in securities of Sun International by directors, the company secretary, directors of major subsidiaries, executive officers and other employees of the group in compliance with this policy, the JSE Listings Requirements and the Securities Services Act 36 of 2004.

This policy is applicable to all employees and directors who may be deemed to be insiders for the purposes of dealing in the company’s securities. Furthermore, this policy is binding on the immediate family members of all persons deemed to be insiders and any persons who may have acquired insider information from an insider.

Responsible gambling
Being a responsible corporate citizen is part of the group’s DNA and we fully support responsible gambling through the South African Responsible Gambling Foundation, the entity that supervises the National Responsible Gambling Programme (NRGP) in cooperation with the gambling industry operators and governmental regulators. The NRGP integrates education, research and treatment into one programme. Through the group’s CASA[3] membership, R15.6 million was earmarked by CASA to provide free support to problem gamblers.

3 2018 Survey of Casino Entertainment in South Africa.

BOARD PROCESSES

To operate effectively, the board and its committees conduct several processes and procedures that align to legislative requirements, King IV™ and best practice.

Board appointments and rotation of directors

Procedures for appointment to the board are formal, transparent and concern the whole board. The board is assisted in this process by the nomination committee, which has clear criteria for selecting board directors. In terms of the company’s MoI, new directors appointed since the last AGM may only hold office as casual vacancies until the next AGM, at which time they will be required to retire and offer themselves for election.

In accordance with the company’s MoI, one third of non-executive directors is required to retire at each AGM. If eligible, they may offer themselves up for election or re-election, as the case may be. The directors who are to retire are: firstly, those who have been appointed to fill a casual vacancy; and secondly, those who have held their positions for the longest period since their last election or re-election.

If, at the date of the company AGM, any non-executive director has reached the age of 70 years or older and/or held office for an aggregate period of nine years since their first election or appointment, they shall retire at the AGM. If they are eligible, they may then offer themselves for election and/or re-election. Dr NN Gwagwa and Messrs PD Bacon and PL Campher retire from the board in accordance with clauses 25.6.1 and 25.17 of the company’s MoI, while Messrs VP Khanyile, JA Mabuza, S Sithole and ZP Zatu retire from the board in accordance with clauses 25.5 and 25.17 of the company’s MoI. The nomination committee reviewed the board composition against corporate governance and transformation requirements and recommended the election/re-election of these directors.

A brief CV of each director offering themselves for election/re-election is provided online as Annexure B to the annual statutory report.

Nomination and selection process for board appointments

The nomination committee is mandated by the board and its terms of reference to regularly review the composition of the board and its committees. If deemed necessary, the nomination committee makes recommendations to the board on its composition, any new appointments and board committee membership. The nomination committee reviews the annual employment equity results of the group and ensures succession planning for the board and committees.

Board induction

The chairman, in consultation with the group company secretary, is responsible for ensuring each director receives an induction on joining the board and the requisite training in terms of their responsibilities as a board member. During the induction process, each new non-executive director meets with key executive management to better understand the group’s operations. The company furthermore conducts specific JSE Listings Requirements training for each new director to familiarise them with the regulations affecting listed companies and the directors meet with the company’s sponsor, Investec. The directors have access to a directors’ handbook that includes a quick reference to their duties and responsibilities.

Ongoing director training and development

Keeping up to date with key business developments within the group and industry is essential to enhancing the board’s effectiveness. During 2018 this was achieved by:

  • presentations from executives on matters of significance to the group
  • planned investor relations events throughout the year, excluding during closed periods to engage with the major investors on their market views
  • visits to different unts within the group to view group operations
  • regular briefings and updates on the regulatory environment, from external specialists and the company secretary.

Following the board’s ongoing review of its effectiveness, the board is confident that all members have the knowledge, skills and experience to perform the functions required of a director of a listed company.

Succession planning

Succession planning, which involves identifying, developing and advancing future leaders and executives of the group, is an ongoing board responsibility and is carried out through the nomination committee. Detailed succession plans are presented annually to the nomination committee. The nomination committee reviews the composition of the board and all committees, and the committee members’ readiness to succeed a committee chairman if the need arises. This also applies to the executive committee, prescribed officers and general managers of the units.

Board, directors and committee evaluations

The board, board chairman, deputy chairman and lead independent director, board committees and board members are evaluated every other year or more frequently, as required, on their performance in relation to their governance of economic, environmental and sustainability issues, and board and committee processes and procedures. The following assessments were conducted during the year under review: social and ethics committee, audit committee, risk committee, board, nomination committee, remuneration committee, external and internal audit and the head of GIA. Sun International remains cognisant that the performance of the board, and statutory and board committees is essential considering the increased focus on accountability, transparency and adding value.

Board meetings

A minimum of four board meetings are scheduled for each financial year. The board holds a fifth meeting in the form of its annual strategy meeting with the broader executive management team, to deliberate on the group’s strategic direction and agree on the group’s annual budget as proposed by management. The group’s key strategic objectives are set at the strategy meeting and progress is reported at each board meeting. Additional board meetings are held on an ad hoc basis as required by the board.

BOARD COMMITTEES AND ATTENDANCE

The board and its committees have a symbiotic relationship that ensures knowledge is shared, and not siloed, across the committees. The board is authorised to form committees to assist in executing its duties, powers and authorities, and has one statutory committee, four board committees and one ad hoc committee.

The board is responsible for the implementation of the company’s strategic objectives. This is supported by committees that focus on specific areas within the business. The composition of the committees and committee member attendance during the year is tabled below.

Each committee comprises three or more members, the majority of whom are independent.

All committees operate in accordance with their terms of reference, which are reviewed and updated annually, where applicable, to ensure alignment with the latest developments in legislation, King IV™, the JSE Listings Requirements and the requirements of the business. Key members of senior management are invited to attend meetings as invitees and to provide input on matters for discussion.

Sun International’s audit and social and ethics committees perform the same function for all Sun International’s subsidiary companies, which in terms of the Companies Act would otherwise be required to have their own audit and social and ethics committees. This is subject to annual confirmation.

Each committee satisfied itself that it justified its responsibilities in accordance with its terms of reference during the year.

Audit committee

Committee member

Eligible to attend

Attended

Caroline Henry (Chairman)[1]

3

3/3

Graham Rosenthal[2]

1

1/1

Enrique Cibie

3

3/3

Leon Campher

3

3/3

Zimkhitha Zatu[3]

Peter Bacon

3

3/3

Invitees

Anthony Leeming (CE)[†]

3

3/3

Catherine Nyathi[†]

3

3/3

Norman Basthdaw (CFO)[†]

3

3/3

1 Ms Henry was appointed the chairman of audit committee effective 15 May 2018.
2 Mr Rosenthal retired effective 12 May 2018.
3 Ms Zatu was appointed to the audit committee effective 23 November 2018.
  Ms Bassa resigned effective 12 February 2018.
Executive.

Purpose of the committee

  • enhances the credibility of financial reporting
  • ensures an effective control environment is maintained by supporting the board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems and controls, risk management and the integrity of financial statements and reporting
  • reviews activities of the internal audit function and the external auditor
  • oversees effective governance of the group’s financial results.

Focus areas during 2018

  • reviewed the group’s capital and liquidity
  • received frequent feedback on the Sun Dreams financial review and risk committee deliberations
  • updated the terms of reference for the committee and drafted terms of reference for the financial risk and review committee in Latam
  • continues to focus on compliance with terms of reference
  • aligned the internal audit charter with international standards
  • endorsed the revised integrated risk methodology – the risk committee chair provides feedback at each audit committee meeting
  • significantly improved the internal audit function
  • approved the non-audit related services provided by the company’s external auditor PricewaterhouseCoopers (PwC)
  • reviewed the competence of the chief financial officer, who is an executive director, and was satisfied with his expertise and experience
  • reviewed the internal controls within the business and satisfied itself that there were no material breakdowns in systems and controls that would need to be highlighted to the board or shareholders and that the company has established appropriate financial procedures and those procedures are working effectively
  • confirmed its status as the audit committee for the group and its subsidiaries
  • satisfied itself as to the appointment and independence of the external auditor as per the requirements of the Companies Act and that the individual audit partner was an accredited auditor (as per the JSE Listings Requirements)
  • obtained regular feedback and reports from the company’s legal, compliance, audit and tax departments
  • approved the auditor’s terms of engagement and the audit fees to be paid to the auditor
  • recommended the company’s interim and audited annual financial statements to the board for approval and satisfied itself that the group will be a going concern for the following 12-month period.

Focus areas going forward

  • further embedding Sun Dreams’ governance structures with the South African operations
  • further strengthening and creating synergies between the internal audit functions at Sun Dreams and Sun International
  • continuously ensuring an integrated approach in relation to the risk and audit committees
  • embedding combined assurance initiatives across the group
  • implementing new accounting standards as they become effective.

Nomination committee

Committee member

Eligible to attend

Attended

Valli Moosa (Chairman)

3

3/3

Leon Campher

3

3/3

Dr Lulu Gwagwa

3

3/3

Jabu Mabuza[1]

Invitees

Anthony Leeming (CE)[†]

3

3/3

1 Mr Mabuza was appointed to the nomination committee effective 22 November 2018.
Executive.

Purpose of the committee

  • evaluates the skills requirements of the board, committees and executive management
  • continuously evaluates the performance of the chairman, lead independent director, board committees and its members, and the group company secretary for recommendation to the board
  • makes recommendations on board, committee and executive composition, succession planning and diversity
  • considers the independence of directors and their correlating classification and thereafter makes recommendations to the board
  • ensures that employment equity and race diversity is considered in all appointments and that the board’s equity status is either maintained or improved
  • confirms the appointment of employer-appointed trustees to the provident fund.

Focus areas during 2018

  • recommended the appointment of additional independent non-executive directors to the main board
  • assessed the competence of the company secretary who was found to be competent to fulfill his role to the board
  • reviewed gender and race targets and ensured that these were addressed
  • reviewed the performance of the non-executive directors and the audit committee members standing for re-election or reappointment in the following year and recommended the same to the board and shareholders
  • assessed the independence of the non-executive directors
  • satisfied itself that the mandate and terms of reference for the committee remain appropriate
  • referred all appointments to the board, board committees and the Sun International Employee Share Trust
  • reviewed feedback from Sun Dreams’ remuneration and nominations committee
  • satisfied itself regarding the succession plan for Sun Dreams’ and Sun International’s executive management, the group chairman, chief executive and chief financial officer
  • reviewed the composition of the board committees and recommended changes to the membership to further strengthen the committees
  • assessed the performance of the chairman, deputy chairman and the lead independent director.

Focus areas going forward

  • succession planning for executive management and effectively managing the succession of the chairman
  • ensuring the board improves its voluntary gender and race diversity targets across the group
  • confirming the succession plan for the Sun Dreams chief executive
  • possibly identifying a non-executive director with sector experience i.e. hospitality and gaming.

Risk committee

Committee member

Eligible to attend

Attended

Peter Bacon (Chairman)

3

3/3

Norman Basthdaw (chief financial officer)[†]

3

3/3

Dr Lulu Gwagwa

3

3/3

Anthony Leeming (chief executive)[†]

3

3/3

Graham Rosenthal[1]

1

1/1

Enrique Cibie

3

3/3

Caroline Henry

3

3/3

Graham Dempster[2]

2

0/2

Thabo Mosololi (chief operating officer)[†]

3

2/3

Verna Robson[†]

3

3/3

Zaine Miller[†]

3

3/3

Rob Collins[†]

3

3/3

1 Mr Rosenthal resigned effective 15 May 2018.
2 Mr Dempster was appointed to the risk committee effective 1 June 2018.
  Ms Bassa resigned effective 12 February 2018.
In addition to the above, certain key members of senior management attend the risk committee meetings by invitation.
Executive.

Purpose of the committee

  • reviews the adequacy, effectiveness and integrity of the group’s risk management and internal controls, and assists the board to discharge its functions in terms of the management, assurance and reporting of risks
  • provides oversight of the IT governance function
  • monitors and reviews stakeholder engagement with regard to assessing and dealing with stakeholder issues and concerns
  • assesses the compliance environment in which the group operates
  • reviews and satisfies itself regarding the group’s insurance portfolio (South Africa and Latam).

Focus areas during 2018

  • reviewed the revised risk methodology and ranking of risks that were implemented to assess group-wide risks
  • monitored progress on the renewal of licences in Latam and South Africa, as well as GrandWest licensing exclusivity and the more onerous licence conditions in South Africa
  • monitored sustainability risks impacting the group across the environment, health and safety and SED functions
  • monitored the IT systems in place to address the increase in cyber crime and Sun Dreams’ IT system alignment with South Africa’s IT systems
  • noted that the risk of cyber attacks is becoming more prevalent and considered the need for securing cyber insurance for the group
  • the compliance manager continued to monitor and report on compliance issues throughout the group
  • considered the insurance policies and practices for the group and reviewed the consolidated insurance cover adopted for the group incorporating Latam
  • reviewed policies within the group to ensure that they are updated and align with best practice.

Focus areas going forward

  • monitoring the group’s key risks and ensuring adequate mitigation actions are in place to manage these risks
  • continuing to monitor the licensing renewals and conditions in South Africa and Latam
  • continuing to focus on the Latam IT assurance dashboard
  • continuing to monitor all proposed legislation that could impact the group
  • continuing to monitor the IT governance structure to ensure it addresses critical IT risk (IT governance project dashboard) and IT investments (the Sun International App). IT governance includes group business continuity, data governance and scoring, strategic vendor analysis, IT policies, cyber security threat, POPI and GDPR, key incidences management.

Social and ethics committee

The social and ethics committee is constituted as a statutory committee in respect of its statutory duties in terms of section 72(4) of the Companies Act read together with Regulation 43 of the Companies Act, and as a board committee in respect of its responsibilities prescribed by the board in its mandate and terms of reference. A separate social and ethics report is available online.

Committee member

Eligible to attend

Attended

Tumi Makgabo-Fiskerstrand (Chairman)

3

3/3

Valli Moosa

3

3/3

Graham Rosenthal[1]

1

1/1

Leon Campher

3

3/3

Caroline Henry[2]

2

2/2

Vusi Khanyile[3]

Invitees

Anthony Leeming (CE)[†]

3

3/3

Norman Basthdaw (CFO)[†]

3

3/3

Andrew Johnston[†]

3

3/3

Jannette Horn[4]

3

3/3

Verna Robson[†]

3

3/3

1 Mr Rosenthal resigned effective 15 May 2018.
2 Ms Henry was appointed to the social and ethics committee effective 1 June 2018.
3 Mr Khanyile was appointed to the social and ethics committee effective 22 November 2018
4 Mrs Horn head of sustainability.
In addition to the above, certain key members of senior management attend the audit committee meeting by invitation.
Executive.

Purpose of the committee

  • monitors the group’s social, transformation, economic and environmental performance and the social impact of its reputational risk
  • reports to the board and the group’s stakeholders on social, transformation, economic and environmental developments and progress
  • oversees the group’s ethical conduct and confirms that it carries out its responsibilities in accordance with section 72 and Regulation 43 of the Companies Act.

Focus areas during 2018

  • reviewed the terms of reference and confirmed that this committee is appointed as the social and ethics committee for those subsidiaries of the group that score above 500 points in terms of Regulations 26(2) and 43(1)(c ) of the Companies Act, as amended
  • monitored the material matters arising from the group’s ethics hotline
  • monitored the company’s employment equity progress in accordance with the group’s employment equity plan and the company’s B-BBEE results as issued by Empowerdex, the verification agency
  • reviewed policies that were revised and issued to the group in relation to corruption, economic crime, gifts, tips and entertainment, and responsible gambling
  • monitored the group’s social, health and safety and environmental and transformation performance in line with relevant codes and legislation, and the principles set out in the UNGC, as well as the OECD recommendations regarding corruption
  • reviewed Sun International’s board diversity policy for recommendation and approval to the board
  • reviewed the sustainability matters pertinent to the group, such as the water crisis in the Eastern and Western Cape, and zero-waste-to-landfill at certain operations
  • monitored the projects undertaken in relation to SED and the spend by the group on sponsorships, donations and charitable givings
  • reviewed reports issued in relation to consumer relations and adherence to consumer laws, and the group’s marketing practices
  • monitored Monticello’s anti-money-laundering certification process
  • reviewed the compliance function in Puerto Varas and Valdivia
  • monitored regular feedback received from the ethics office.

Focus areas going forward

  • monitoring the rollout of the ethics programme introduced during 2018 and creating further awareness of, and training employees on, ethics pursuant to the ethics survey
  • Monitoring roll-out of the revised code of ethics and addressing the results of the ethics survey
  • ensuring that all initiatives implemented align with the SunWay to further strengthen positive values and enhance ethical conduct throughout the group
  • monitoring the group’s social, transformation, economic and environmental performance
  • engaging with stakeholders on the group’s social, transformation, economic and environmental progress
  • integrating the financial and non-financial aspects of the business to create a sustainable business strategy for the group
  • monitoring results of the first round of OHASA audit results.

Remuneration committee

Committee member

Eligible to attend

Attended

Leon Campher (Chairman effective 1 January 2018)

4

4/4

Valli Moosa

4

4/4

Dr Lulu Gwagwa[1]

2

1/2

Enrique Cibie

4

4/4

Sam Sithole[2]

1

1/1

Jabu Mabuza[3]

Invitees

Anthony Leeming (CE)[†]

4

4/4

Verna Robson†

4

4/4

1 Dr Gwagwa was appointed to the remuneration committee effective 29 August 2018.
2 Mr Sithole attended the meeting on 29 August 2018 as an invitee and was subsequently appointed to the remuneration committee effective 31 August 2018.
3 Mr Mabuza was appointed to the remuneration committee effective 22 November 2018.
Ms Bassa resigned effective 12 February 2018.
Executive.

Purpose of the committee

  • assists the board to discharge its responsibilities to ensure fair and responsible remuneration by the group
  • reviews and recommends the group’s remuneration policy and oversees its implementation
  • oversees benefit schemes in the group such as pension, provident fund and medical aid
  • reviews proposed changes to the short-term incentive scheme (STI) and the long-term share-based incentive plans.

Focus areas during 2018

  • reviewed the group remuneration policy and practices, the annual STIs (executive bonus scheme) and the long-term share-based incentives following engagement with shareholders
  • built on previous practices to allow for improved disclosure practices relating to remuneration
  • monitored discussions with the group’s bargaining council to lock in the wage increases for the next three years
  • approved a separate remuneration policy for Sun Dreams, based on similar remuneration principles to those adopted by Sun International
  • reviewed Sun Dreams’ external benchmarking for senior managers and executives in Latam
  • amended the share plan to align with the Companies Act and best governance practices.

Focus areas going forward

  • continuing to improve annual disclosure in relation to remuneration practices
  • improving engagement with shareholders in accordance with the principles enunciated by King IV™
  • progressing the EPWEV exercise initiated by human resources
  • reviewing the share incentive plan guidelines for use by group employees
  • implementation of a new share incentive plan for key employees which addresses shareholder queries and suggestions.

Investment committee

Committee member

Eligible to attend

Attended

Graham Dempster (Chairman effective 1 January 2018)

7

7/7

Leon Campher[1]

7

5/7

Valli Moosa

7

7/7

Sam Sithole[2]

4

4/4

Jabu Mabuza[3]

1

1/1

Invitees

Anthony Leeming (CE)[†]

7

7/7

Norman Basthdaw (CFO)[†]

7

6/7

1 Mr Campher resigned as chairman of the investment committee effectives effective 31 December 2017 but remained as an investment committee member.
2

Mr Sitole appointed to the investment committee effective 20 June 2018.

3

Mr Mabuza appointed to the investment committee effective 22 November 2018.

Ms Bassa resigned effective 12 February 2018.
Executive.

Purpose of the committee

  • operates under a separate mandate of the board and is chaired by an independent non-executive director
  • considers and evaluates, on an ad hoc basis, the viability of proposed investment opportunities (mergers and acquisitions), disposals and expansion projects for recommendation to the board for consideration and approval
  • reviews and approves capex budget of the group
  • regularly values the portfolio of group assets to see where returns on investment are being achieved.

Due to the nature of the price-sensitive information discussed during the investment committee meeting and which may not already be in the public domain, no details pertaining to the deliberation of this committee or focus areas are disclosed in this report.

IT GOVERNANCE

The board is responsible for overseeing IT governance within Sun International, which operates within its IT mandate that incorporates King IV™ IT governance requirements and is aligned with the group’s strategic objectives. The board delegated the group’s IT responsibilities to the IT governance committee, which reports to the risk committee.

Sun International’s group chief information officer reports directly to the CE and is responsible for IT operations and IT strategy within the group.

The focus during 2018 included enhancing customer services, improving internal efficiencies, and integrating, automating and standardising systems and processes. We refine IT infrastructure and security continuously. Sun International’s e-learning portal continued to contribute to developing and retaining IT skills within the group. The group is committed to ensuring business continuity and has a robust business continuity programme aligned to ISO 22301 and ISO 27031 standards. Good progress was made in aligning Latam’s IT governance framework with the South African operations’ IT governance framework.

Going forward, we will place emphasis on extracting relevant business intelligence to make informed strategic decisions around customer interaction and behaviour, IT resilience, information security, cyber security and upskilling employees around mobile application development and data security.

SUPPORTING SUSTAINABLE BUSINESS PRACTICES

The group is aware of its responsibility to be a good corporate citizen as it considers sustainability and the potential business impact on all stakeholders and the environment. Sustainability is interwoven into Sun International’s business strategy and decision-making process, from board and management level to our employees at each unit.

The achievement of the group’s key strategic imperatives is underpinned by the group’s sustainable business practices and is often an enabler by ensuring that a sound corporate reputation and the group’s brand are synonymous.

Two strategic objectives in particular, our people and governance and sustainability, ensure that sustainability remains at the heart of our business operations. The group’s sustainability agenda also influences three other strategic objectives: improving our existing operations and our guest experiences, protecting and leveraging our existing asset portfolio, and growing our business into new areas and products.

The group’s sustainability approach continues to evolve and includes, among others, measurable sustainability practices that engage all our stakeholders through relevant internal and external sustainability reporting, face-to-face community engagement, health, safety and environmental initiatives, and sustainability campaigns.

The board engaged the services of an external assurance provider to provide an independent assurance statement on the group’s sustainability reporting as advocated by King IV™. This external review is also beneficial in identifying those areas where there is room for improvement. Furthermore, the group continues to use the GRI Standard as the basis for its integrated sustainability reporting.

THE ACTS, REGULATIONS, FRAMEWORKS AND LISTINGS REQUIREMENTS THAT APPLY TO SUN INTERNATIONAL

Sun International conducts business in a highly regulated industry. We have identified our legal and regulatory universe, which we continuously monitor given the increased changes in law and the varied jurisdictions we operate in. Being a responsible corporate citizen is imperative for maintaining our casino licences and we provide a snapshot of our legal and regulatory universe below.

What we comply with

JSE Listings Requirements

Sun International is a public company listed on the Johannesburg Stock Exchange and accordingly complies with the JSE Listings Requirements.

King IV Code on Corporate Governance for South Africa 2016 (King IV™)

King IV™ and its recommended practices are applied throughout the group as shown in our King IV™ application register that is available online. The board confirms that the group applied the 16 principles of King IV™ and that the spirit of King IV™ is preserved and embedded in the way the group operates.

Local and international legislation

Sun International is committed to complying with all relevant legislation and best practices in the jurisdictions in which it operates. The group identified the main areas of legislation that materially affect its operations and regularly engages with key regulators to make public comments and submissions on proposed new industry and other relevant legislation.

Licence conditions issued by the various gambling boards

The gaming industry is highly regulated and subject to significant probity and external regulatory monitoring both locally and internationally. In addition, the casino licence conditions contain their own requirements, which must be adhered to.

What we choose to comply with

Carbon Disclosure Project (CDP) – water and energy

Sun International participates annually in the CDP.

International Integrated Reporting Council’s (IIRC) <IR> Framework

Sun International applies the IIRC’s <IR> Framework in compiling its integrated annual report.