https://ir2018.suninternational.com

It is the board’s responsibility to steer the group towards achieving our sustainability strategy. The board is aided by the group’s governance framework. The framework is based on mindful application of the principles and practices recommended by the King IV Code of Corporate Governance South Africa 2016 (King IVTM[1]). This culminates in stakeholder value creation. Below is a summary of how Sun International applied the principles, the outcomes thereof, and references to further information contained in our report.

Applications and explanations

Outcomes

Online reference

Application: Ethics training is provided to all newly appointed directors through an induction programme. Directors are kept apprised of the group’s codes and policies. They attend various committee meetings of the board. This allows direct oversight of group operations. The delegated levels of authority and terms of reference relating to the committees are regularly reviewed. The board determines the strategic direction of the group in support of a sustainable business. It monitors management’s implementation and execution thereof. The group sustainability manager continued to enhance synergies across the group in relation to health, safety, the environment and socio-economic development (SED) initiatives.

The nomination committee is responsible for identifying and recommending suitable appointments to the board to ensure effective governance groupwide.

Explanation: Induction and ethics training ensures directors have the necessary competence and knowledge to execute their functions and responsibilities. Committee meeting attendance ensures oversight in delivering group objectives and executing delegated powers. Committee meeting attendance is greater than 95%. This is testament to the members’ commitment and purposeful oversight of the group’s activities. Attendance at the board and various committee meetings are:

  • Board: 100%
  • Audit committee: 100%
  • Investment: 97.5%
  • Nomination committee: 100%
  • Remuneration committee: 95%
  • Risk committee: 100%
  • Social and ethics committee: 100%
  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The directors set the overall tone for ethical leadership of the board. The directors, together with the executive committee, are signatories to a declaration that lists their commitment to Sun International’s ethical principles. The code of ethics and policies were updated, and a dedicated ethics officer is assigned to overseeing ethics within the group. Contracts with third parties now substantially include a provision on adherence to Sun International’s code of ethics. A revised code of ethics and policy in relation to supplier conduct was issued in 2018. During 2018, an ethics survey was conducted across all South African units to determine Sun International’s ethical climate and to create an inclusive culture. The social and ethics committee ensures the group’s ethics are managed effectively. The group adopts a zero-tolerance approach to breaching ethical standards.

Explanation: The board’s commitment to ethical practices sets the tone for the company’s ethical conduct. The adoption of revised policies and codes renewed the company’s commitment to an enhanced ethical culture, with clear expectations and outcomes for all stakeholders. Sun International’s anonymous tip-offs ethics hotline is managed by Deloitte.

IBIS ESG Assurance (IBIS) assessed Sun International’s ethics and integrity-related policies, procedures, systems and controls as part of our annual independent third-party assurance audit on sustainability aspects. The review included interviews at a group level and visits to selected units, to assess adherence to Sun International’s relevant policies, procedures, systems and controls, and whether they meet reasonable expectations for monitoring and managing ethics and integrity at Sun International. No material issues were identified during the audit. For more detail, refer to IBIS ESG’s assurance statement.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: Several initiatives ensure the workplace becomes more responsive to the needs of society and the environment in which the company operates. Compliance with relevant laws, including the Constitution of South Africa and the Bill of Rights is core. The SunWay project promotes enabling values and discourages disabling ones. Training was provided in regard to health, safety and environmental awareness.

Several projects are in place across the group to develop small businesses, facilitate transformation and uplift local communities. The total spend on SED initiatives over the past year was R23.8 million (2017: R16 million) and applied mainly to projects related to education, sport, and arts and culture. The amount spent on supplier development and enterprise and supplier development (E&SD) was R46 million (2017: R34.5 million) and R10.2 million (2017: R9 million) respectively. The group supports corporate social investment (CSI) initiatives through sponsorships, donations and charitable givings.

Explanation: The company identified three pillars for SED support: education, sports, and arts and culture, with an emphasis on education. These pillars align with the company’s vision of creating shared value for surrounding communities. Procurement processes have been reviewed to ensure there is true empowerment of small companies, which ultimately contributes to the growth of the South African economy.

The spend in the SED and E&SD areas exceeded the mandated targets. This is evidence of Sun International’s commitment to the projects it endorses, thereby demonstrating its upliftment of communities and contribution towards transformation and economic growth.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Governance and sustainability report

Applications and explanations

Outcomes

Online reference

Application: The board convenes an annual strategy meeting to approve the strategy and goals for each financial year and measures performance against the targets established for the comparative year. Management is responsible for implementing this strategy to achieve the desired goals and to assess and respond to any issues that may impact the group’s activities and outputs. The risk assessment and ranking methodology led by the executive team ensures that the board is apprised of the risks and opportunities facing the group and it takes an integrated approach to assessing risks and material matters. The sustainability committee assists with assessing and monitoring environmental, health and safety, and SED issues, internal and external, to the business. The audit committee and board consistently monitor the going-concern status of the group.

Explanation: Sun International’s strategy is discussed before the start of the financial year, following which an executive conference is held where senior and executive management are advised on the group’s performance over the past year and the strategy for the upcoming year. The strategy implementation is included in the key performance areas for executives to ensure the effective execution of the group’s objectives, and their individual performance is measured against the achievement of the company’s objectives. Bonuses are linked to the execution and delivery of group performance to ensure that the correct behaviour is driven group-wide, ultimately creating value for all stakeholders.

Strategy sessions are held by the executive committee during April/May, and at the units during July/September and by the full board during November.

  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation

Applications and explanations

Outcomes

Online reference

Explanation: The regular tabling of reports at the various committee meetings ensures the board is aware of all developments across the group and can track progress against established targets in the short, medium and long term. Each committee chairperson provides feedback to the board. The chairman of the social and ethics committee reports back to shareholders at each annual general meeting of the company. This bottom-up approach is vital.

The integrated annual report provides details on the operations and performance of the company over the past year and allows stakeholders to assess and gauge how value is created. This report sets out the group’s highlights, challenges and future focus areas to provide stakeholders with a realistic view of the company.

Engagement with investors takes place through roadshows and investor presentations, which are published on our website.

  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: A protocol guides the board in relation to obtaining external advice. The board charter guides the board in executing its duties and is revised periodically. A director’s handbook guides directors on their duties under the Companies Act and King IV™. The group’s MoI aligns with several corporate governance practices.

Explanation: The board charter sets out the board’s expectations in relation to its duties towards the group, including in Nigeria and Latam. With various directors sitting on the different committees, there is first-hand oversight on the group’s activities. The external advice protocol allows the board to understand what process to follow regarding obtaining external advice, and ensures the board obtains the necessary advice and expertise in the execution of and delivery of the group’s objectives. Though the board remains ultimately responsible, the committees provide focused attention on areas to ensure initiatives and projects are properly assessed and implemented. The company secretary is pivotal in ensuring good corporate governance.

The board is comfortable that it has fulfilled its responsibilities in accordance with its charter and is satisfied with the strategic direction set for the group. It appropriately manages its duty as custodian of corporate governance.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The board consists of a diverse group of people in terms of gender, race, age, skills and experience. The race and gender targets for the board were reviewed to ensure that future appointments align with the group’s policy on gender and race diversity, and the B-BBEE Codes. The board consists of executive, non-executive and independent directors. The chief executive and chief financial officer are executive board members. The board comprises more independent than executive or non-executive directors.

Explanation: The board embraces diversity by improving gender and race representation. With the variety of board member qualifications, there is further assurance that the business is considered from different perspectives to provide a holistic review of the group’s strategy. A brief and detailed CV of each director is available here. The board-approved diversity policy incorporates gender and race diversity as required by the JSE Listings Requirements. Members of committees are carefully selected, having regard to race, gender, skills and experience, and the provisions of the Companies Act, the JSE Listings Requirements and good corporate governance practices.

The independence of directors is monitored in accordance with the JSE Listings Requirements. We believe that the board has the appropriate mix of knowledge, skills and experience, diversity and independence. The company secretary and chief financial officer are evaluated annually in terms of their skills, experience and expertise.

The remuneration committee conducts annual evaluations of each executive director and prescribed officer.

Target

Actual

Race

50% black directors

57%

Gender

30% female directors

29%

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation

Applications and explanations

Outcomes

Online reference

Application: The board has five standing committees: nomination, audit, risk, remuneration and social and ethics committees; and one ad hoc committee: the investment committee. Most committee members are independent non-executive directors. The executive committee has two sub-committees, the sustainability and IT governance committees. These committees comprise senior executives and management only. The board charter and composition of the committees are determined and approved by the board.

Explanation: The committees are pertinent to overseeing the group’s business and its core operations. The non-executive directors are included across the various committees, with many sitting on more than one committee to ensure that there is effective collaboration across the committees and an integrated approach is adopted in relation to the execution and evaluation of all strategic projects and plans. The committees regularly provide feedback to the board, which facilitates the execution of its responsibilities. The independent directors provide an objective assessment of the company’s projects, plans and initiatives.

The composition of the board committees contributes to effective collaboration, balanced distribution of power and the board’s effectiveness in fulfilling its duties.

There is a clearly defined delegation of authority matrix for all executives and senior managers of the group.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The board chairman, the lead independent director, board members and the board committees are evaluated every other year, and by an independent third party every six years regarding their performance, processes and procedures. The members of the board are evaluated annually by the nomination committee, and the executive directors’ performance is assessed by the remuneration committee and nomination committee by way of an annual performance review for purposes of awarding TCOE incentives and STIs. Non-executive directors are evaluated by the nomination committee annually to determine eligibility for election and re-election. The chief financial officer and company secretary are evaluated annually by the audit committee and board respectively.

The following assessments were conducted during the year under review: social and ethics, audit, risk, nomination and remuneration committees; the board; external and internal auditors; and the head of GIA. No material concerns were raised.

Explanation: The evaluations assess individual and committee performance against the specific terms of reference, the board charter and best governance practices. The nomination committee annually considers the competence of the group company secretary and the audit committee annually considers the competence of the chief financial officer. As recorded in the annual financial statements, the chief financial officer and the group company secretary were declared competent and have the necessary expertise and experiences to carry out their functions and duties on behalf of the company. Bonuses and remuneration of the executive directors are linked to their performance reviews.

Sun International is cognisant that the performance of the board, statutory and board committees is essential considering the increased focus on accountability, transparency and adding value.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The chief executive was appointed by the board and the nomination committee considers executive succession planning. The chief executive’s performance is evaluated annually by the chairman and the remuneration committee. The board annually reviews the delegation of authority to the chief executive, who in turn delegates authority to other executives and prescribed officers. Professional governance services are provided by the group company secretary, who is evaluated annually by the nomination committee and board. Following an assessment by the nomination committee, the group company secretary has the requisite competence, qualifications and experience to carry out his duties. The board has access to governance support and guidance at all times.

Explanation: The nomination committee has the experience and skills required to ensure a balanced constitution of the board and is most suitably placed to evaluate the executive team’s performance. The chief executive’s delegation of authority to the executive committee ensures the delivery and implementation of the company’s strategy. Sun International’s board was significantly strengthened by the appointment of four non-executive directors, three of whom are independent. During 2018, the executive management team was restructured to include the property general managers of key units, to improve decision-making and enhance alignment with the group strategy.

The nomination committee evaluates the board and company secretary. The chief executive evaluates other executives and prescribed officers. The remuneration committee evaluates the performance of executive directors and prescribed officers for TCOE and STIs. The audit committee reviews the chief financial officer and head of GIA.

The board is comfortable and satisfied that the delegation of authority framework provides for effective exercise of authority and responsibilities.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: Sun International’s risk methodology and risk ranking system require each division, under the direction of their respective executive, to complete a risk assessment dashboard. The results are consolidated using a formula that categorises all risks in order of importance and details actions to mitigate the risks. This risk categorisation guides the group in relation to its business operations’ priorities going forward. The risk function is assisted by the audit and risk management committees.

Explanation: An evaluation of risks group-wide ensure all risks and opportunities are identified and ranked, which informs the group’s material matters and strategy. The risk methodology ensures each executive is assigned responsibility for a specific area and that risks are managed and mitigated.

The main three key risks identified in 2018:

  • weak economic conditions
  • smoking legislation (South Africa and Latam)
  • erosion of market share due to EBT and LPMs in catchment areas.
  • Effective control, compliance and accountability
  • Performing to strategic expectation
  • Responsive and transparent stakeholder engagement

Applications and explanations

Outcomes

Online reference

Application: The executive committee constituted the IT governance committee as a sub-committee, with responsibility for monitoring, developing and communicating the processes for managing IT governance, information flows and technology across the group.

The deliberations of the IT governance committee do not reduce the individual and collective responsibilities of the executive committee, risk committee members and board members regarding their fiduciary duties and responsibilities. They continue to exercise due care and judgement in accordance with their statutory obligations.

The board has the ultimate responsibility for IT governance of the company, and the IT governance committee assists the risk committee and the board in fulfilling this responsibility.

The company monitors the IT governance structure to ensure it addresses critical IT risks (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, cybersecurity threat (which is a key focus area), Protection of Personal Information (POPI), General Data Protection Regulation (GDPR), and key incidences management.

Explanation: Through the IT governance sub-committee, operations report to the board, which ensures significant information and technology risks are identified with the mitigating controls. Effective controls are in place to address and mitigate any potential cyber threats, and an e-learning portal facilitates IT e-learning. Projects involving various areas of the business are monitored and overseen by the IT governance sub-committee. Progress is reported to the risk committee to ensure an integrated approach to monitoring and assessing IT risks within the business.

  • Effective control, compliance and accountability
  • Performing to strategic expectation
  • Responsive and transparent stakeholder engagement
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The compliance function supports the wider sustainability objectives of the group. Polices are reviewed and revised as necessary. The policy revitalisation management sub-committee reviews, updates and consolidates group policies. The automated compliance portal will be fully rolled out during 2019.

Employee access to material policies is monitored to ensure that all policies are brought to their attention. Policies are reviewed regularly to ensure compliance with latest developments and legislation.

Explanation: The compliance function ensures all aspects of the business are covered. By monitoring policy access and review, the group ensures that employees keep abreast with latest developments and can address any evident gaps. The central policy portal prompts employees on any policy updates. A revised code of ethics was issued in 2018 with a campaign relating to creating awareness of the ethics hotline.

There were no material or repeated regulatory penalties for the year under review.

  • Ethical and cohesive culture
  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The remuneration committee reviews the remuneration policy of the group annually, which is approved by the board and tabled at the AGM for a non-binding shareholder advisory vote. The policy is published online as a part of the remuneration committee report.

Explanation: The remuneration policy is reviewed annually to ensure that Sun International attracts top talent and returns value to shareholders in a fair, transparent and balanced manner. Remuneration is linked to performance to ensure executives and employees are motivated to achieve the company’s strategic objectives and goals, and that their interests are aligned with those of shareholders.

Sun International engages with its shareholders around its remuneration policy and procedures, which are disclosed in the 2018 remuneration policy and report. Changes were effected to Sun International and Latam policies during 2018.

  • Ethical and cohesive culture
  • Responsive and transparent stakeholder engagement
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The board, in the statement of responsibility of directors, provides their independent assurance of the company’s integrated annual report and confirms this to be an accurate reflection of the company to all stakeholders. An external independence assurance provider is appointed to review the sustainability aspects of the sustainability practices of the company, as well as ethics initiatives and external auditors assure the financial information.

Explanation: The company follows a combined assurance model to ensure objectivity of all information provided to stakeholders. The board and its committees consist of persons from varied backgrounds with diverse skills and experience to ensure risks and opportunities are considered from various perspectives.

  • Effective control, compliance and accountability
  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust

Applications and explanations

Outcomes

Online reference

Application: The risk committee reviews the stakeholder register regularly. The stakeholder register comprises, inter alia, the gambling boards, the communities, and shareholders. Engagement with stakeholders is undertaken throughout the year and material matters are reported to the board. The board is the custodian of Sun International’s corporate governance framework.

Explanation: Regular stakeholder engagement ensures the board is advised of all material issues that may impact the company. During 2018, the group’s community engagement methodology was refreshed to ensure all community engagement and interventions align with the group’s sustainability strategy and, more broadly, with provincial and national growth and development plans. Specific executives are tasked with stakeholder engagement according to their executive responsibilities. A group SED specialist is responsible for targeted community engagement.

Sun International does not subscribe to the shareholder-exclusive model but rather the stakeholder-inclusive model.

  • Responsive and transparent stakeholder engagement
  • Performing to strategic expectation
  • Legitimacy and trust