MATERIAL MATTERS

Our material matters are influenced by our internal and external operating environment, our key stakeholder concerns, and the risks impacting our business. These matters inform our business model, strategy, capital resource allocation and our stakeholder engagement process.

OPERATING ENVIRONMENT

The group operates in eight countries across two continents. This provides a dynamic and often challenging operating context, which can impact the delivery of our vision. Continually monitoring external factors helps identify risks and opportunities, which we respond to through our business model and strategy. The external factors indicated alongside are the most material issues that impact on our dayto- day operating environment.

Key external factors

Local and global economic conditions

Socio-economic and social issues

Gambling boards requirements

Government policy and legislation

Local infrastructure

Climate change

STAKEHOLDER ENGAGEMENT

Proactive and transparent stakeholder engagement is important to achieving our strategy and vision. It enables us to determine and address stakeholders’ material concerns and manage their expectations. Our reputation directly impacts whether consumers become our guests, whether suppliers become vendors and whether government believes we comply with regulations and give back to the community by driving economic and social development (E&SD). Sun International has numerous stakeholders with whom we engage on various platforms. Our key stakeholders for the year under review are shown alongside.

Key stakeholders

Communities

Customers and guests

Employees

Equity partners and debt funders

Gambling boards

Partners and suppliers

Regulators and industry bodies

RISK MANAGEMENT

Through a formal risk management process and governance structure, Sun International identifies, reviews, monitors and responds to the most material risks and opportunities across our business units and countries in which we operate. Risk identification is key to safeguarding our assets, recognising opportunities, and implementing strategies to ensure we continue to address our material matters and deliver on our strategy.

Top 10 risks

STRATEGY

Our group strategy consists of five objectives that guide our growth and operational aspirations. These strategic objectives are informed by and address the material matters, risks and opportunities the group faces as well as key stakeholder concerns.

Strategic objectives

Improve our existing operations and our guest experience

Protect and leverage our existing asset portfolio

Grow our business into new areas and products

Our people

Governance and sustainability

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MATERIALITY DETERMINATION PROCESS

Our materiality determination process, outlined below, remains dynamic and is reviewed by relevant governance bodies and updated annually. The material matters methodology incorporates the various elements detailed above, namely our operating environment, stakeholder engagement, risk management and strategy.

STEP 1

Determine boundaries

Determine boundaries by taking account of internal and external macro-economic factors, local and international unit demographics, as well as key stakeholders that might have a positive and/or negative impact on the group and vice versa.

STEP 2

Consult and engage

Consult and engage with our key stakeholders through a range of different communication platforms.

STEP 3

Collect, review and analyse

Collect additional information through various internal and external engagement platforms and by monitoring our external operating environment. Review and analyse all information to identify the most material matters that impacted our business during the year under review. Certain documents and stakeholders have a higher weighting depending on the nature and impact of the issue raised.

STEP 6

Review, address and respond

Review, address and respond to the material matters where relevant and applicable.

STEP 5

Discuss and approve

Discuss, approve and monitor the identified material matters at the relevant governance committees. An external assurance provider also performs a materiality review of our governance committees (and sub-committees) to verify and confirm that Sun International’s material matters are relevant, and representative of the process followed.

STEP 4

Identify and prioritise

Identify and assessmaterial matters identified in step 3 based on the impact on our business, our key stakeholders and the internal and external operating environment. We prioritise our material matters as those which we have a high, medium or low level of control over.

2019 MATERIAL MATTERS

In 2019, certain material matters from 2018 have been consolidated under related material matters. These include: smoking legislation, high gearing levels, and expiring licences and GrandWest exclusivity. To achieve the group’s strategic objectives and manage risks, our material matters are continuously monitored and mitigated by Sun International through its various risk and governance processes.

Why this matter is considered material

Our business depends on consumer spending at our properties. The prevailing tough economic environment in South Africa continues to strain consumers’ disposable income, particularly discretionary spending on gaming and hospitality. This also negatively impacts our profitability and our ability to continuously reduce debt levels and manage certain properties that have performed below expectations. The ongoing political and social challenges including the COVID-19 virus in South Africa remain a concern for the group.

Status since prior year

INCREASED

MITIGATING ACTIONS

Geographic and alternative gaming diversification

Improving efficiencies

Prudently managing debt levels

Continuous refurbishments of properties to attract and retain customers

Strong cash flows

STRATEGIC
OBJECTIVES

Level of control

LOW

Why this matter is considered material

We operate in a highly regulated and complex environment. The group continues to focus on compliance requirements, ensuring we maintain our operational and social licence to operate. Specific regulatory requirements/amendments directly impacting our operations include:

Smoking legislation: The proposed amendments to the smoking legislation, which will ban smoking in public areas and severely impact casino revenues.
Gaming taxes: The possibility of increased taxes and more onerous licence conditions will all impact the group’s profitability.
Alternative gaming: The increased availability of alternative gaming and the encroachment of EBTs in our catchment areas remain a concern as our market share has eroded.
Carbon taxes: The introduction of carbon taxes effective 1 July 2019 requires the group to ensure we remain compliant while at the same time implement initiatives that will continue to reduce the tax payable.

Status since prior year

INCREASED

MITIGATING ACTIONS

Ongoing compliance monitoring

Continuous engagements and relationship building with key stakeholders (gambling boards and industry bodies)

STRATEGIC
OBJECTIVES

Level of control

LOW

Why this matter is considered material

We continue to strategically allocate capital and carefully monitor underperforming investments, in line with the economic environment.

Status since prior year
unchanged logo

UNCHANGED

MITIGATING ACTIONS

Quality acquisitions and capital investments

Disciplined strategic investments

Optimising debt levels

STRATEGIC
OBJECTIVES

Level of control

MEDIUM

Why this matter is considered material

Proactive stakeholder engagement is important in understanding our stakeholder needs to achieve our strategic objectives, minimise our risks and optimise business opportunities.

As most of our casino licences provide for exclusive area rights, we must offer products and services that support and uplift, the communities in which we operate.

Status since prior year

INCREASED

MITIGATING ACTIONS

Ongoing transparent and effective stakeholder communication

Focusing on being an employer of choice

Uplifting communities through our supply chain

Remain relevant and continue to improve our products and service offerings

STRATEGIC
OBJECTIVES

Level of control

MEDIUM

Why this matter is considered material

To remain relevant to our customers and to adapt in a weak trading environment, the group focuses on extracting efficiencies across the business and optimising systems. External factors such as water scarcity, material energy cost increases and the financial crisis facing South Africa’s energy supply continue to create additional pressure on our business operations.

Status since prior year

INCREASED

MITIGATING ACTIONS

Improving operating efficiencies

Investing and optimising IT systems

Standardising policies and procedures

Strategic procurement

Implementing targeted solutions to reduce water and energy consumption

Ongoing employee training and development

STRATEGIC
OBJECTIVES

Level of control

MEDIUM

Why this matter is considered material

Our casino business depends on the renewal and exclusivity of our casino licences. The group continues to monitor licence renewal bidding processes and changes in licence conditions that impact the business.

Status since prior year
unchanged icon

UNCHANGED

MITIGATING ACTIONS

Ongoing engagement and advocacy with regulators, particularly in the Western Cape and Latam

Economic bidding

Establishing effective partnerships

Ongoing engagement with gaming authorities

STRATEGIC
OBJECTIVES

Level of control

MEDIUM

Why this matter is considered material

Our customers are critical to our sustainability. It is important that we provide products and services that continue to attract and retain their custom by providing excellent customer service, conducting ongoing property upgrades and refurbishments as part of creating memorable experiences.

Status since prior year
new matter

NEW
MATERIAL
MATTER

MITIGATING ACTIONS

Continuing to improve our customer value proposition through our loyalty programmes

Focusing on customer service

Ongoing property refurbishments and maintenance

Remaining relevant and continuing to improve our products and service offerings

STRATEGIC
OBJECTIVES

Level of control

HIGH

1	Previously named ‘capital allocation and underperformance of our investments’.
2	Previously named ‘managing relations with our key stakeholders and remaining relevant in the areas where we operate’.
3	Previously named ‘reliability and sustainability of natural resources like energy and water’.