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Corporate governance report

 
 

OUR COMMITMENT TO OUR STAKEHOLDERS

The Sun International Group remains committed to ethical and responsible leadership, demonstrating sound corporate governance practices which are embedded throughout the Group companies, in all jurisdictions in which it operates.

Our commitment to good governance remains underpinned by the pillars of responsibility, fairness, transparency and accountability to all stakeholders. These pillars preserve the Group’s long-term sustainability, thereby delivering value to all stakeholders.
 
img
 
The Group, having embraced best practice governance requirements, has effectively been implementing and reporting on a broad range of governance principles over the years. The Group’s key tenet is to do the right thing and its governance practices are integral to its licence to operate in society.

The independent assurance statement can be accessed here. Furthermore, the Group continues to use the Global Reporting Initiative (GRI) framework as the basis of its integrated sustainability reporting. Our GRI table is available here.
 
 
img The following reports can be accessed here:
 
img audit committee report
   
img remuneration committee report
   
img social and ethics committee report
 
 
 

KING III ASSESSMENT REGISTER

The Group has long embraced the principles of sound governance and regulatory frameworks, as well as corporate best practice. This is evidenced in the register documenting the assessment of 75 principles of King III for the year ended 30 June 2013. The board confirms that the Group complied with the Code of Governance Principles as set out in the King III assessment register, which can be accessed here.
 
 
 

KEY DEVELOPMENTS FOR THE YEAR UNDER REVIEW

  Implemented the Group’s anti-corruption policy
  Participated in the JSE’s SRI Index 2012
  Submitted a water and forest disclosure to the Carbon Disclosure Project (CDP) during 2013
  Undertook initiatives to drive ethical awareness throughout the Group
  Increased awareness of the corporate ethics hotline and launched a Spanish-medium ethics hotline for Monticello, Chile
  Commissioned independent research to establish supplier perceptions of the Group’s procurement relative to ethical practices
  Launched a unique programme that integrates social and environmental initiatives under the banner of “EarthGlow”
  Group membership of the World Wide Fund for Nature (WWF) and the National Business Initiative
  Close to completing the Group’s membership of the UN Global Compact
  Revision of a Group corporate social investment policy
  Formulated a Group policy on HIV/Aids and other potentially life-threatening diseases
  Approved IT risk-related policies
  Rolled out Business Continuity Management across the Group
  Implemented a Group legal compliance policy
  Engaged further with our people through a Group-wide culture survey
  Reformulated the Group’s ranking of risks and risk approach
  Reviewed the Group’s risk appetite and risk tolerance and applying this to the Group’s decision-making
  Applied the Group’s assurance model to key risks facing the Group, particularly in a challenging economic environment.
 
 
 

REPORT ON THE SUN INTERNATIONAL LIMITED BOARD

The board, in providing effective and responsible leadership, is the custodian of the Group’s ethical values and remains at the centre of the Group’s corporate governance system. The board is ultimately accountable and responsible for the key governance processes and the sustainable growth, performance and affairs of the Group, taking into account the legitimate interests and expectations of all stakeholders.
 

Statement of compliance

The board has satisfied itself with the extent of the Company’s compliance with King III and with the JSE Listings Requirements as articulated in this report and the King III assessment register.

The board is pleased to report that there have been no material instances of non-compliance or material fines imposed during the year under review. While the board is satisfied with its level of compliance in accordance with applicable governance and regulatory requirements, it recognises that the Group’s practices can always be improved, and accordingly the board has, and will continue to, review the Group’s governance framework against best practices. Further details can be found in the statement of responsibility by directors and the directors' report, which can be accessed here.
 

Composition of the board at a glance

Sun International has a unitary board structure comprising a mix of executive and non-executive directors, the majority of whom are independent non-executive directors. The board presently comprises three executive and ten non-executive directors, eight of whom are considered independent in terms of governance criteria. The non-executive directors have the necessary skills, qualifications and experience, as is evident from their resumés, to provide judgment independent of management on material board issues. The composition of the board is detailed in the directorate section of the report.

We value diversity on our board and of the thirteen directors, six are women. The tenure of directors serving on the board ranges from directors who are long-serving and are familiar with the industry within which we operate, to new directors with skills and experience in other industries.
 

Board charter

The board is regulated by the board charter which details the manner in which the board should conduct its business in accordance with the principles of sound corporate governance and organisational integrity. The board charter is reviewed annually. The full board charter can be accessed here.
 

Chairman

The board is chaired by Mr MV Moosa, a non-executive director, appointed as Chairman on 1 July 2009. Mr Moosa has been reappointed as board Chairman for the year under review.

The board Chairman is not considered to be independent, as he is a shareholder and director of Lereko Investments (Pty) Limited, which is a material shareholder of Dinokana Investments (Pty) Limited, a 6.5% shareholder of the Company.

Although the Chairman is not independent, he brings valuable expertise to the board and continues to exercise independent judgement in relation to board matters.

The Chairman of the board is responsible for, inter alia, ensuring the integrity and effectiveness of the board's governance processes, and in terms of the Company's Memorandum of Incorporation, is subject to annual election from among its members. The Chairman’s reappointment follows an evaluation of his performance during the year under review. Mr Moosa’s resumé summarising his experience, can be accessed here.
 

Lead Independent Director (LID)

The board charter requires the appointment of a LID in the event that the board Chairman does not meet the independence criteria in terms of the appropriate governance principles. Mr IN Matthews was appointed as the LID with effect from 1 July 2009 and has been reappointed as the LID for the year under review. The LID is appointed annually. The role of the LID is to provide leadership and guidance at any meetings or in consultations with other directors or executives in circumstances where the board Chairman may be subject to a conflict of interest. The LID is instrumental in leading and introducing discussion at board and committee meetings regarding the performance and evaluation of the board Chairman. Mr Matthews’s resumé summarising his experience can be accessed here.
 

Board appointments

Procedures for appointment to the board are formal and transparent and are a matter for the board as a whole. The board is assisted in this process by the nomination committee, which has clear criteria for the selection of board directors.

This year, the board welcomed Mr Peter Bacon as an independent non-executive director. Mr Bacon, a former chief executive of the Group (2003 to 2006) brings a wealth of industry experience to the board. In addition, changes in the executive management of the Group resulted in the appointment of two executive directors, Mr Graeme Stephens (Chief Executive) and Mr Anthony Leeming (Chief Financial Officer).
img
 
In terms of the Company’s Memorandum of Incorporation, new directors appointed since the last annual general meeting (AGM) may only hold office until the next AGM at which time they will be required to retire and offer themselves for election. Accordingly, Messrs Bacon and Stephens, having been appointed with effect from 1 February 2013 and Mr Leeming, having been appointed with effect from 1 March 2013, will stand for election at the forthcoming AGM. Their resumés summarising their experience can be accessed here.
 

Rotation of directors

Directors retire by rotation at least once in every three years in accordance with the Company’s Memorandum of Incorporation. The nomination committee assesses the performance of those directors and recommends their re-election to the board and shareholders.
 
In this regard, the nomination committee, having concluded its assessment, recommends the re-election of the retiring directors, Mr IN Matthews, Mr PL Campher and Ms BLM Makgabo-Fiskerstrand, all of whom, being eligible, have offered themselves for re-election at the 2013 AGM. Their resumés summarising their experience can be accessed here.
 

Independence

The board, through the nomination committee, annually assesses the independence of the non‑executive directors against the criteria set out in King III, the JSE Listings Requirements, as well as the Companies Act. The board confirms that two of its non-executive directors are not considered independent as they are shareholders and directors of Lereko Investments (Pty) Limited, the Group’s empowerment partner. The remaining eight non-executive directors are considered independent in terms of the 2013 independence assessment.

The nomination committee conducted a rigorous independence assessment of the non-executive directors that have served on the board for nine years or more, and concluded that these directors retain 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 the aforesaid non-executive directors bring valuable experience and skill to the board, and that they will continue to exercise their independent judgement.
 

Chief Executive and delegation of authority

Mr Graeme Stephens was appointed as Chief Executive on 1 February 2013. The board’s governance and management functions are linked through the Chief Executive, who is tasked with the running of the business and the implementation of the policies and strategies adopted by the board. The role and function of the Chief Executive is formalised, and the board, through the remuneration committee, annually evaluates the performance of the Chief Executive against specified criteria.

Board authority conferred on management is delegated through the Chief Executive, who has authority over and is accountable for management. Appropriate and uniform controls and processes are in place, and are communicated to management to ensure the monitoring of the application of authority levels throughout the Group. Board authority is delegated by way of written board resolutions and board meetings. Levels of authority and materiality have been established and are reviewed annually by the board and the remuneration committee.
 

Group Company secretary

Chantel Reddiar was appointed as the Group company secretary in April 2010. Chantel holds the following qualifications: BA; LLB; LLM; MBA and has 13 years’ experience as a corporate lawyer. She provides a central source of advice to the board on the requirements of the JSE Listings Requirements, the Companies Act, King III and corporate governance.

In addition to the Group company secretary’s statutory and other duties, she provides the board as a whole, directors individually, and the committees, with guidance as to the manner in which their responsibilities should be discharged in the best interests of the Company. The appointment and removal of the Group company secretary is a matter for the board as a whole.

The board is satisfied that, following an assessment conducted by the nomination committee, the Group company secretary has the requisite knowledge, qualifications and experience to carry out the duties of a company secretary of a public listed company. The board is of the opinion that, as the Group company secretary is not a director of the board, she accordingly maintains an arm’s length relationship with the board and its directors. Ms Reddiar’s resumé summarising her experience can be accessed here.
 

Board, director and committee evaluations

The board Chairman, LID, board committees and the board members are evaluated annually on their performance, processes and procedures in an online self-evaluation, the last evaluation having been carried out during April 2013.

All committee evaluations are reviewed by the board and action plans, when required, are implemented to improve any areas of development that are raised in the results. The nomination committee appraises the performance of the board Chairman, the LID, the board and each board member, based on the evaluation results.
 
Based on the results of the 2013 evaluations, the directors are of the opinion that the board and its various committees have effectively discharged their responsibilities in accordance with their respective written terms of reference.
 

Retirement of directors

The retirement age for an executive director is 60, and for a non-executive director 70; subject to review at the discretion of the board on the recommendation of the nomination committee.
 

Succession planning

Executive and senior management

Succession planning, which involves identifying, developing and advancing future leaders and executives of the Group, is an ongoing responsibility of the board and is carried out through the remuneration committee. Detailed succession plans are presented annually to the remuneration committee in this regard.
 

Non-executive directors

Board and committee succession planning is carried out through the nomination committee. The nomination committee reviews the composition of all committees and the committee members’ readiness to succeed a committee Chairman if the need arises.
 

Induction of directors

On appointment to the board all directors are provided with an induction programme and materials aimed at broadening their understanding of: their fiduciary duties and responsibilities; the regulatory, statutory and governance framework; the Group and the business environment and markets in which it operates. This programme is carried out over a period of time and includes the provision of background material, meetings with senior management and visits to the Group’s operations. The Group company secretary is responsible for the coordination of the induction of new directors and ongoing director training and development.
 

Director training and development

All directors are expected to keep abreast of changes and trends in the business and in the Group’s markets. This includes changes and trends in the economic, political, social and legal environment. Training is provided to accelerate board competencies, where necessary, in terms of the Group’s professional development policy.

This training is made available to all directors both internally and externally at accredited institutions, at the Company’s expense.

In the year under review the following training was provided to directors:
Date Topics
24 August 2012 Executive remuneration by PwC
17 May 2013 Audit committee members: technical update by PwC
28 May 2013 Presentation on Latin America
23 August 2013 JSE Listings Requirements update presented by RMB
 

Access to Company information and confidentiality

Procedures are in place to ensure that directors have access, at all reasonable times, to all relevant Company information and to senior management, to assist them in the discharge of their duties and responsibilities and to enable them to take informed decisions. This is facilitated through the office of the Group company secretary. Directors are expected to strictly observe the provisions of the legislation applicable to the use and confidentiality of information.
 

Independent professional advice

A written policy is in place for directors to seek independent professional advice, for the furtherance of their duties if necessary, at the Company’s expense, subject to prior notification of the board Chairman or the Group company secretary.
 

Directors’ and prescribed officers’ liability insurance

Sufficient directors’ and officers’ liability insurance cover remains in place and is reviewed on an annual basis by the risk committee.
 

Conflicts of interest

Directors are required to inform the board of any conflicts or potential conflicts of interest which they may have in relation to any particular 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, and the board will request a director to recuse himself/herself from the meeting for the duration of the matter under discussion.
 
 

Board meetings

A minimum of four board meetings are scheduled each financial year to consider, deal with and review, inter alia: strategic/key issues, financial issues, quarterly operational performance, and any specific proposals for capital expenditure and investment decisions relative to the Company and the Group.

In addition, the board holds a fifth meeting, in the form of an annual strategy meeting, together with executive management, to deliberate the Group’s strategic direction and to agree the Group’s annual budget as proposed by management. Progress against the strategic plan is monitored by the board on a quarterly basis. Additional board meetings are convened on an ad hoc basis, if necessary, to deal with extraordinary issues of importance which may require urgent attention or decision. The 2013 attendance table reflects an attendance rate at board meetings of 95% (2012: 87%) over the year.
 

Review of board and committee composition and attendance – 1 July 2012 to date of this report

  img img img img img img img
 
Non-executive directors
PDS Bacon1 imgimgimgimg           img
ZBM Bassa imgimgimgimgimgimg imgimgimgimgimg   imgimgimgimgimgimg   imgimgimgimg  
PL Campher2 imgimgimgimgimgimg imgimgimgimgimg imgimgimgimg imgimgimgimgimg imgimgimgimg imgimgimgimg  
NN Gwagwa imgimgimgimgimgimg           imgimgimg
BLM Makgabo-Fiskerstrand imgimgimgimgimgimg       imgimgimgimg    
IN Matthews imgimgimgimgimgimg imgimgimgimgimg imgimgimgimg     imgimgimgimg imgimgimg
B Modise imgimgimgimgimgimg     imgimgimgimgimgimg      
LM Mojela3 imgimgimgimgimgimg   img     imgimgimgimg  
MV Moosa imgimgimgimgimgimg imgimgimgimgimg imgimgimgimg   imgimgimgimg    
DM Nurek4 img     imgimg     img
GR Rosenthal5 imgimgimgimgimgimg     imgimgimgimgimgimg img   imgimgimg
Executive directors
GE Stephens6 imgimgimgimg           imgimgimg
AM Leeming7 imgimgimg           imgimgimg
KH Mazwai imgimgimgimgimgimg           imgimgimg
RP Becker8 imgimgimg           imgimg
G Collins9 imgimg           imgimg
Executive management
S Montgomery             imgimgimg
TS Ndlela             imgimgimg
CA Reddiar             imgimgimg
SD Wing11             img
TC Kaatze10             imgimg
JA Lee10             imgimg
DS Whitcher10             imgimg
DR Mokhobo10             imgimg
M Naidoo10             imgimg
HJ Brand10             imgimg
J Coetzee10             imgimg
imgBoard meeting attendance imgCommittee meeting attendance  imgApologies
1 Appointed to board on 1 February 2013 and to the risk committee
on 28 May 2013
2 Appointed to the audit committee on 23 November 2012
3 Appointed to the nomination committee on 20 August 2013
4 Retired from the board and audit committee on 23 November 2012
5 Appointed to the social and ethics committee on 28 May 2013
6 Appointed to board on 1 February 2013
7 Appointed to board on 1 March 2013
8 Resigned from the board with effect from 28 February 2013
9 Resigned from the board with effect from 1 February 2013
10 Membership to risk committee formally re-constituted on 28 May 2013
11 Appointed and attended the risk committee on 21 August 2013
 
img

Board committees

The board is authorised to form committees to assist in the execution of its duties, powers and authorities and currently has six standing committees, as depicted alongside.

Various other committees are established throughout the Group from time to time. The terms of reference and composition of the committees are determined and approved by the board and have been adopted by all the committees. Terms of reference are reviewed by the board (and each committee) annually, with the most recent review having been conducted in May 2013 to ensure that the terms of reference remain current and reflect an appropriate focus during the year. The terms of reference of the various committees can be accessed here. The chairpersons of the committees report to the board on a quarterly basis in terms of their committees’ respective terms of reference and copies of all committee minutes are circulated to the full board.
 
 
 

KEY MATTERS DEALT WITH BY THE COMMITTEES DURING THE YEAR

Nomination committee

  Concluded the search for and nomination to the board of the Chief Executive
  Recommended the establishment of an investment committee to consider and evaluate the viability of proposed investment opportunities, given the Group’s expansion strategy
  Made specific recommendations to the board on the reconstitution of the risk committee and its IT governance sub-committee, to create alignment with the executive management restructure and streamline processes under committee review
 

Risk committee

  The number of executive members on the committee was reduced to align its composition with the Group’s key business functions
  Revised the risk methodology underpinning the Group’s practices
  Provided oversight over the Group-wide rollout of Business Continuity Management, the Group’s legal compliance policy and the anti-corruption policy
  Developed, through its IT governance sub-committee, a policy and charter outlining the decision-making rights and accountability framework for IT governance together with a review of the IT governance framework, in particular the relevant structures, processes and mechanisms to enable IT to deliver value to the business and mitigate IT risk
  Made recommendations on several key IT governance-related policies with Group-wide implication
 

Investment committee

  Considered and evaluated the viability of proposed investment opportunities, disposals and expansion projects, for recommendation to the board
  Reviewed feasibilities and prospects of success relating to such projects
  Considered potential strategies relating to the Group’s existing asset portfolio
 
img Key matters dealt with by the audit, remuneration and the social and ethics committees are set out in their reports.
 
 
 

RISK MANAGEMENT, ACCOUNTABILITY AND AUDIT

Risk management

A sound and effective risk management system is crucial to the long-term development of the Group over and beyond the key role provided by the Group’s risk committee. The realisation of the Group’s business strategy depends on being able to take calculated risks in a way that does not jeopardise the legitimate interests of stakeholders. Sound management of risk enables the Group to anticipate and respond to changes in its business environment, as well as take informed decisions under conditions of uncertainty.

An enterprise-wide approach to risk management has been adopted by the Company, which means that every key risk in each part of the Group is included in a structured and systematic process of risk management. All key risks are managed within a unitary framework that is aligned to the Company’s corporate governance responsibilities.

Risk management processes are embedded in the Group’s business systems and processes, so that its responses to risk remain current and dynamic. All key risks associated with major change and significant actions by the Company also fall within the processes of risk management. The nature of the Group’s risk profile demands that Sun International adopts a prudent approach to corporate risk, and that decisions around risk tolerance and risk mitigation reflect this. Nonetheless, it is not the intention to slow down the Group’s growth with inappropriate bureaucracy. Controls and risk interventions are chosen on the basis that they increase the likelihood that the Company will fulfil its intentions to stakeholders. The Group firmly believes that every employee has a part to play in this important endeavour.

The Group’s top 20 key risks, which have been comprehensively reviewed by the risk committee, are summarised as follows:
img
 
Each risk is comprehensively reviewed and is managed by the business through mitigating controls, key action plans and accountability by risk owners. This structure is depicted below.
img
 

ACCOUNTABILITY AND AUDIT

Group internal audit

Group internal audit (GIA) provides management and the board of directors with independent evaluations and examinations of the Group’s activities and resultant business risks.

The purpose, authority and responsibility of the internal audit department are formally defined in an internal audit charter which is reviewed by the audit committee and approved by the board. This review takes place annually, with the charter revised as necessary.

The internal audit department is designed to maintain an appropriate degree of independence to render impartial and unbiased judgements in performing its services. The scope of the internal audit function includes: performing independent evaluations of the adequacy and effectiveness of Group companies' controls, financial reporting mechanisms and records, information systems and operations; reporting on the adequacy of these controls; and providing additional assurance regarding the safeguarding of assets and financial information. Internal audit is also responsible for monitoring and evaluating operating procedures and processes through, inter alia, gaming compliance, Responsible Gambling Programme compliance, operational health and safety, and environmental audits. Risk assessment is coordinated with the board's assessment of risk through interaction between internal audit and the audit and risk committees so as to minimise duplication of effort. The director of Group internal audit reports at all audit and risk committee meetings and has unrestricted access to the board Chairman and chairmen of the audit and risk committees. The appointment or dismissal of the director of internal audit is done with agreement of the audit committee.

In accordance with the International Standards for the Professional Practice of Internal Auditing, GIA will be subject to an external quality assurance. The last such review was conducted in respect of the 2011 financial year.
 

External audit

The external auditors provide the board and the audit committee with their independent observations and findings on the Group’s internal controls, and make recommendations on improving the financial reporting. The Group’s external auditors are PricewaterhouseCoopers Inc.

The external auditors’ audit approach is risk-based, requiring them to continually identify and assess risks throughout the audit process. The external auditors are directed by operating procedures and place emphasis on understanding how management obtains the assurance that the business is generating reliable information, and then evaluate and validate the basis of this assurance. This approach aligns the methodology closely with the organisational structures and risk management processes.

There is close cooperation between internal and external audit and reliance is placed, where possible, on the work of internal audit, therefore minimising the duplication of effort. The annual external audit plan together with the associated audit fee are reviewed and approved by the audit committee. The external auditors attend all shareholder meetings of the Company and are re-elected by shareholders annually at the AGM.
 

Internal financial controls

The board of directors is responsible for the Group’s systems of internal financial controls. These systems are designed to provide reasonable but not absolute assurance as to the integrity and reliability of the financial statements and to safeguard, verify and maintain accountability of its assets, as well as to detect and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable laws and regulations.

The controls throughout the Group concentrate on critical risk areas. All controls relating to the critical risk areas in the casino and hotel control environments are closely monitored and subjected to internal audit reviews. Furthermore, assessments of the information technology environments are also performed.

GIA has provided a positive assurance to the board on the state of the Group’s internal financial controls for the year under review. Further detail in this regard can be found in the audit committee report, which can be accessed here.

Continual review and reporting structures enhance the control environments. Nothing has come to the attention of the directors to indicate that a material breakdown in the controls within the Group has occurred during the year.
 
 

Assurance model

The board has adopted a combined assurance model, which aims to optimise the assurance coverage obtained from management and its internal and external assurance providers on the risk areas affecting the Company. The combined assurance model and strategy for 2013 was approved by our risk and audit committees and addresses the balance between executive management and the independent internal and external assurance providers in providing assurance on the coverage of the Group’s key risks.
 
img
 
The Group’s application of its assurance model is depicted as follows:
          THREE LINES OF DEFENCE   FOURTH LEVEL OF DEFENCE
          img   img
          Management   Corporate
functions
  Independent assurance   Board committees/
executive team
          img   img   img    
Risk       Assigned responsibility img img img img   img img   img img img img    
1   GrandWest licence exclusivity renewal   CE and COO img img img img     img             SIL, EXCO and Risk
2   Impending smoking legislation   CE, COO, Director: Corporate Services and Legal   img img img     img       CASA     SIL, EXCO and Risk
3   Gaming policies changes   CE and COO img img img img   img img       CASA    IRAS      SIL and Risk
4   Increase in gaming taxes   CFO   img img img     img             SIL, EXCO and Risk
5   Competition for disposable income   CE and COO img   img img     img             SIL and Risk
6   Empowerment charter pressures   CE, CFO and Director: Group Human Resources   img img img   img img       Empowerdex IRAS   SIL, EXCO, S & E and Risk
7   Appointment and retention of PDIs   COO and Director: Group Human Resources img img img img   img img       Government
authorities
IRAS   SIL, Risk, Remco and S & E
8   Increase in Class 2 slot machines (Bingo)   CE, COO and Director: Corporate Services and Legal img img img img     img       CASA     SIL and Risk
9   International expansion or diversification   CE, CFO, COO and Director: Corporate Services and Legal   img img img   img img       Country Risk
Reports, Probity
providers, merchant
Bank Advisers
    SIL, Risk
10   Illegal slot machines   CE and COO   img img img   img img       CASA, Government
   authorities and SAPS   
    SIL, Risk
11   Industrial relations   CE, COO and Director: Group Human Resources img img img img     img             SIL, EXCO and Risk
12   Competitor actions   CE and COO   img img img   img img             SIL, EXCO and Risk
13   Value for money and service ethics   COO img img img img     img             SIL, EXCO and Risk
14   Pressure on management agreements and fees   CE, CFO and COO   img img img     img             SIL, EXCO and Risk
15   Marketing and sales restructure   CE and COO   img img img     img             SIL, EXCO and Risk
16   Gearing levels prevent achieving objectives   CFO img img img img   img img      PwC            SIL, EXCO and Risk
17   Career planning   CE and Director: Group Human Resources     img img     img             SIL, EXCO, Remco and Risk
18   Underperformance of new acquisitions   CE and CFO img img img img   img img             SIL, EXCO, Investment and Risk
19   Competition from online gaming   COO, CE, CIO and Director: Corporate Services and Legal   img img img   img img             SIL, EXCO and Risk
20   Limited payout machines licensed under new conditions   CE, COO and Director: Corporate Services and Legal   img img img   img img       CASA     SIL, EXCO and Risk
Inherent risk                                
Health and safety   Divisional directors img img img img   img img     GIA Marsh     SIL and EXCO
Environmental   Group Environmental Manager and Development Director img img img img   img img     GIA    Chand Consulting    IRAS   SIL and EXCO
Financial control   Finance img img img img   img img   PwC    KPMG   
and
GIA
      SIL and EXCO
 
 
 

STAKEHOLDER ENGAGEMENT

The board has delegated the responsibility to deal with stakeholder relationships in a proactive and constructive manner to management. some of the matters addressed with key stakeholders in the year are as follows:
 
Stakeholder Material issue Outcome Frequency Responsibility for engagement
UNION Negotiation of the Group’s wage increase. Ongoing engagement As required Director: Group Human Resources
PROVINCIAL AUTHORITIES GrandWest exclusivity.
Increased gaming levies.
Ongoing engagement As required Chief Executive/ Chief Operations Officer/ Group Compliance Manager
GAMING BOARDS Renewal of gaming licences. Successful renewals of subsidiary casino licences Annually Company secretary/ Chief Operations Officer/ Group Compliance Manager
  Electronic bingo terminals
(EBTs).
Court application opposing
EBTs
In response Chief Executive/ Chief Operations Officer/ Director: Legal Affairs/ Group Compliance Manager
CASA Continuing support on common matters of interest. Combined industry position As required Chief Executive/ Director: Legal Affairs
LIQUOR BOARDS Amendments to legislation. Representations made on draft bills In response Company secretary/ Director: Legal Affairs/ Group Compliance Manager
COMMUNITY-BASED GROUPS Ongoing support to enterprise development, charities and social action organisations. Ongoing focus required Ongoing Director: Group Human Resources, Chief Financial Officer
EMPLOYEES Organisational culture. Improved culture with engaged employees Ongoing Director: Group Human Resources, Chief Executive
 
 
 

REGULATORY COMPLIANCE

In light of gaming being core to the Group’s business activities, monitoring and compliance with gambling regulatory measures in the Group’s licensing jurisdictions remains a priority in the management processes of our gaming units.

International trends in developed gaming jurisdictions are also monitored, to keep abreast with developments elsewhere and so position the Group to be proactive in considering and implementing best practice opportunities that may apply to our own operations.

In addition to our internal activities, the Group is an active member of the Casino Association of South Africa (CASA), and participates in working committees in connection with industry contributions regarding casino regulatory matters.

The gaming industry in which the Group operates is highly regulated and is subject to significant probity and external regulatory monitoring both locally and internationally. This requires the Group, its major shareowners, directors, senior management and key employees to observe and uphold the highest standards of corporate governance.

Statutory regulation of the gambling industry in South Africa takes place through the National Gambling Act and the gambling legislation of each province. Among the other statutory laws of the land, the Group’s business activities require particular sensitivity to its rights and obligations under the legislation pertaining to competition, consumer protection, money laundering, the environment, and occupational health and safety.

Our trading environment remains at risk of increased regulation. Previously announced increased restrictions on advertising gambling activities have been withdrawn but may be republished at any time. Previously announced draft regulations to further curb the smoking of tobacco products in public places are undergoing drafting and are expected to be released again for public comment.

Accordingly, the Group has identified the main areas of legislation that materially affect its operations and regularly engages with its key regulators to make public comments and submissions on proposed new industry and other relevant legislation.
 

Specific regulatory matters:

Dealing in listed securities

Directors, the Group company secretary, and certain identified senior executives who may have access to price sensitive information (and therefore defined as ‘insiders’), may not deal in the shares of the Company during certain closed periods which fall on the following dates:
  between 31 December and the date on which the interim results are published;
  between 30 June and the date on which the year-end results are published; and
  outside the above closed periods, while the Company is in the process of price-sensitive negotiations or acquisitions, or while the Company is trading under cautionary or pending any price sensitive announcements.
 
Directors, certain senior executives and the Group company secretary are required to obtain prior clearance in writing of any proposed share transactions (which includes any transactions under the Company’s share option scheme and share plans) from the Chairman of the board, or failing him, the LID, before dealing outside the closed periods, to ensure there are no price sensitive negotiations taking place. Requests for clearance are routed through the Group Company secretary who also maintains a written record of requests for dealing and clearances.

Details of any transactions by directors, certain senior executives and the Group company secretary in the shares of the Company (including transactions under the share option scheme and share plans) are advised to the JSE, through the sponsor, for publication on SENS.

The Group company secretary is the designated compliance officer as prescribed by the Companies Act. There have been no incidents of transgression during the year under review.
 

Environmental and occupational health and safety

The board is responsible for compliance with environmental standards and the occupational health and safety regulations and is assisted by the social and ethics committee in reviewing this area of responsibility. Compliance with the occupational health and safety requirements is monitored by GIA.

The Group has formulated a new corporate environmental strategy, EarthGlow, as further set out in the governance and sustainability section of the Integrated Annual Report. The Group’s environmental report can be accessed here.
 

Promotion of Access to Information Act (PAIA)

The Group has published its PAIA manual online at http://suninternational.investoreports.com. During the year under review, the Group received one request for access to information, which was granted on 19 June 2013.
 

Financial Intelligence Centre Act (FICA)

Money laundering remains a global concern. Owing to the increasing sophistication of technical and electronic financial systems, opportunities for money laundering have increased. This has led to renewed attention by governments and additional legislation has been put in place to curb this. In terms of South African anti-money laundering and anti-terrorist financing legislation, being FICA, and the Protection of Constitutional Democracy against Terrorist and Related Activities Act (POCDATARA), the Group has an obligation to apply such legislation in preventing and curbing attempts at money laundering and terrorist financing.

In terms of its legislated obligations, the Group meets all its obligations and requirements in respect of reporting procedures, specific controls and administration, and staff training.

As a member of CASA, the Group remains in liaison with other members in the industry to ensure that industry-wide compliance with the legislated requirements are met and maintained. It is of utmost importance to the Group to maintain and protect its corporate reputation both in society and in the regulatory environment. This is of particular relevance to the gaming industry in which the Group operates, and is linked to the requirements of its casino licences through which the Group observes regulatory compliance.
 

Consumer Protection Act (CPA)

The Group successfully rolled out its CPA project to all Group operations, and conducted an extensive review of its various practices and operations. There have been no complaints lodged against the Group in respect of the year under review.
 

Separate compliance function

King III further recommends the establishment of a separate compliance function. The Group confirms that while several business functions are responsible for compliance, including regulatory, statutory and gaming compliance, a Group compliance manager has been appointed to assume direct responsibility for all government and stakeholder relationships. The board has furthermore adopted a legal and compliance framework policy.
 
 
 

CODE OF ETHICS

The Group code of ethics commits management and employees to the highest ethical standards of conduct and has been reviewed during the year, without amendment. The code articulates the Group’s commitment to all its stakeholders. The code of ethics is available here.

Whistle blowing and fraud response policies are encapsulated in clear guidelines which have been disseminated throughout the Group. These are intended to provide an infrastructure and mechanism for protected disclosure to executive management for investigation, action and mitigation of criminal, legal, health and safety, environmental, discriminatory, and other improprieties by colleagues, other stakeholders or employers, as well as fraud and misconduct, without fear of occupational detriment. Employees who are aware of any crime or fraud within the Group may also contact the Ethics Line anonymously. This toll-free number is staffed by operators employed by an external service provider, and is available to staff on a 24 hour basis.
 
 
 

SUSTAINABLE BUSINESS PRACTICES

The board is cognisant of the Group’s responsibility to people, planet and profit, and considers the sustainability of the Group’s business practices and its potential impact on all stakeholders, including the environment. The detail provided above, as well as the Group’s key strategic focus areas, lend themselves to the continued support of and commitment to sustainable business practices. The board addresses this by conducting an assessment of the long-term impact of any strategic project on the Group’s stakeholders. Our corporate citizenship is enhanced through continuously monitoring the sustainability of our business practices and it remains our strategic intent to protect and grow our business into the future.

The board has again engaged the services of an external assurance provider, IRAs, to provide an independent assurance statement on the Group’s sustainability reporting as advocated by King III. Although the Group has had several independent assessments conducted, particularly in the areas of environmental management and risk, an external assurance assessment of this nature can be beneficial in indicating those areas where the Group’s business practices meet sustainability criteria, and in identifying those areas where there is room for improvement. The board confirms that the Group has achieved a GRI B+ rating on the sustainability information set out in the Integrated Annual Report and the full assurance statement can be accessed here.
 
 
 

CONCLUSION

The board is of the opinion that the Group creates value for its stakeholders ethically and responsibly and that these governance principles will continue to provide a principled and ethical foundation that enhances the Group’s corporate reputation and contributes to its long-term sustainability. We will continue to report transparently and on material sustainability issues facing the Group. Interested stakeholders can find detailed information about the Group’s governance practices online and we invite stakeholders to send their comments to investor.relations@suninternational.com.