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CONTENTS 02 06 10 15 Group structure Key strategic Directorate Chairman’s and focus imperatives report 18 99 118 122 Joint report of the Corporate governance Seven year review Value added Chief Executive and report statements Chief Financial Officer 123 124 127 Shareholders Independent Remuneration assurance statement report 138 205 208 209 Financial Notice of Shareholders’ Form of proxy statements annual general diary meeting 210 ibc Instructions on Administration form of proxy ABBREVIATIONS ADMINISTRATION Afrisun Gauteng: Afrisun Gauteng (Proprietary) Limited Afrisun KZN: Afrisun KZN (Proprietary) Limited Afrisun KZN Manco: Afrisun KZN Manco (Proprietary) Limited Afrisun Leisure: Afrisun Leisure Investments (Proprietary) Limited AHEPS: Adjusted headline earnings per share B-BBEE Codes: Broad-Based Black Economic Empowerment Codes BEE: Black Economic Empowerment Camara: Chilean base interest rate CASA: Casino Association of South Africa CGU: Cash Generating Unit CGT: Capital Gains Tax Company: Sun International Limited Companies Act: Companies Act 1973, as amended CSP: Conditional Share Plan DBP: Deferred Bonus Plan DCF: Discounted Cash Flow Dinokana: Dinokana Investments (Proprietary) Limited EBITDA: Earnings before interest, tax, depreciation and amortisation ECGBB: Eastern Cape Gambling and Betting Board EGP: Equity Growth Plan Emfuleni Manco: Emfuleni Casino Resorts Manco (Proprietary) Limited Emfuleni Resorts: Emfuleni Resorts (Proprietary) Limited Employee Share Trusts: Sun International Employee Share Trust and Sun International Black Executive Management Trust Gauteng Manco: Gauteng Casino Resort Manco (Proprietary) Limited GPI: Grand Parade Investments Limited Group: Sun International Group HEPS: Headline earnings per share IFRS: International Financial Reporting Standards JSE: JSE Limited Kimberley Manco: Kimberley Casino Resort Manco (Proprietary) Limited Life Esidimeni: Life Esidimeni Group Holdings (Proprietary) Limited LPMs: Limited Payout Machines Mahogony Rose: Mahogony Rose Investments 46 (Proprietary) Limited Mangaung Manco: Mangaung Casino Resort Manco (Proprietary) Limited Mangaung Sun: Mangaung Sun (Proprietary) Limited Meropa: Meropa Leisure and Entertainment (Proprietary) Limited Meropa Manco: Meropa Casino Resort Manco (Proprietary) Limited MVG: Most Valued Guest NAV: Net Asset Value NRGP: National Responsible Gambling Programme PAYE: Pay As You Earn PDI: Previously Disadvantaged Individuals RAH: Real Africa Holdings Limited RFP: Request for proposal RRHL: Royale Resorts Holdings Limited RSP: Restricted Share Plan SCE: Ster Century Europe Limited SCME: Ster Century Middle East Holdings Limited SENS: Security Exchange News Service SFIR: SFI Resorts SA (Monticello) SIBEMT: Sun International Black Executive Management Trust SIEST: Sun International Employee Share Trust SIL: Sun International Limited SIML: Sun International Management Limited SISA: Sun International (South Africa) Limited STC: Secondary Tax on Companies Sun International Investments No. 2: Sun International Investments No. 2 Limited SunWest: SunWest International (Proprietary) Limited TCN: Tourist Company of Nigeria Plc TCOE: Total Cost of Employment Teemane: Teemane (Proprietary) Limited Top 3 Employees: 3 highest paid employees TSR: Total Shareholder Return V&A: Victoria & Alfred Waterfront (Proprietary) Limited VAT: Value Added Tax Western Cape Manco: Western Cape Casino Resort Manco (Proprietary) Limited Wild Coast Sun: Transkei Sun International Limited Wild Coast Sun Manco: Wild Coast Sun Manco (Proprietary) Limited Winelands Manco: Winelands Casino Manco (Proprietary) Limited Worcester: Worcester Casino (Proprietary) Limited ABOUT THE INTEGRATED REPORT This report marks a new way of reporting for Sun International Limited in that it integrates overall reporting with sustainability, in line with the principles of King III. The group has eleven strategic imperatives which are critical to the long-term success and sustainability of our business. 1. Shareholder delivery 2. Protect our business 3. Our customers 11. Good governance 4. Strategic 10. Socialocial responsibility growth and expansion KEY STRATEGIC IMPERATIVES 5. Business partnerships 9. Environmental management 6. Innovation 8. Transformation 7. Human capital 01 SUN INTERNATIONAL ANNUAL REPORT ’10 GROUP STRUCTURE AND FOCUS SOUTH AFRICA Carousel Morula Sun City Naledi Sun SISA 100% SISA 100% SISA 100% SISA 100% Slots 700 Slots 510 Slots 601 Slots 150 Tables 19 Tables 12 Tables 38 Rooms 30 Rooms 57 Rooms 73 Rooms 1 301 Sun International Limited invests in and manages businesses in the hotel, resort and casino industry. We are specifically focused on the development, management and operation of hotels, resorts and casinos in South Africa, Africa and South America. We will continue to position ourselves to take advantage of opportunities in the markets where we can achieve a strong market position, benefiting both from our innovation and depth of experience. Windmill Meropa GrandWest The Table Bay MANGAUNG SUN 70% MEROPA 45% 68% SUNWEST 50% 60% Slots 300 Slots 384 Slots 2 525 Rooms 329 Tables 13 Tables 15 Tables 73 Rooms 39 Effective voting control Economic interest Notes: Economic interest excludes shares held by the SIEST. Unless otherwise indicated the voting and economic interest of the entities are the same. 02 GROUP STRUCTURE AND FOCUS SOUTH AFRICA Carnival City Sibaya Boardwalk Fish River Sun AFRISUN GAUTENG 85% 84% AFRISUN KZN 63% 56% EMFULENI 64% 74% Slots 1 755 Slots 1 123 Slots 765 Tables 60 Tables 44 Tables 23 Rooms 105 Rooms 154 OUR MISSION ‘We will be recognised internationally as a successful leisure group offering superior gaming, hotel and entertainment experiences, which exceed our customers’ expectations. We will create an environment in which all employees are well trained, motivated and take pride in working for the group. Innovation, fun and an obsession with service excellence and efficiency will make Sun International a formidable competitor and provide our shareholders with superior returns. We will at all times remain mindful of our responsibilities towards our stakeholders, including the communities we serve’. MANAGEMENT ACTIVITIES 100% SIML 44% Gauteng Manco Flamingo Wild Coast Sun Golden Valley 29% Western Cape Manco TEEMANE 49% 74% TRANSUN 70% WORCESTER 48% 44% 38% Emfuleni Manco Slots 250 Slots 450 Slots 224 30% Afrisun KZN Manco Tables 11 Tables 14 Tables 6 50% Kimberley Manco Rooms 246 Rooms 98 50% Mangaung Manco 50% Meropa Manco 50% Winelands Manco 03 SUN INTERNATIONAL ANNUAL REPORT ’10 GROUP STRUCTURE AND FOCUS SOUTHERN AFRICA Gaborone Sun / Letsatsi / Marang / Menateng Lesotho Sun / Maseru Sun Kalahari Sands BOTSWANA 80% LESOTHO 47% NAMIBIA 100% Slots 285 Slots 120 Slots 137 Tables 10 Tables 8 Tables 10 Rooms 196 Rooms 262 Rooms 173 Royal Swazi Spa / Ezulwini Sun / Lugogo Sun Royal Livingstone / Zambezi Sun SWAZILAND 51% ZAMBIA 100% Slots 150 Rooms 363 Tables 13 Rooms 411 REVENUE BY COUNTRY REVENUE BY UNIT REVENUE BY NATURE INTERNATIONAL Monticello Federal Palace CHILE 40% NIGERIA 49% Slots 1 500 Slots 200 Tables 83 Tables 8 Rooms 155 Rooms 248 04 SUN INTERNATIONAL ANNUAL REPORT ’10 KEY STRATEGIC IMPERATIVES 1. SHAREHOLDER DELIVERY p19 STAKEHOLDERS CURRENT STATUS Drive cash flows and earnings Shareholders Cash generated by operations of R2.44 billion. billion Financiers EBITDA declined 7% and the EBITDA margin declined 2.2 percentage points Employees to 32.0%. Diluted AHEPS of 507 cents was 18% below last year. Dividends Dividends were resumed at the end of the financial year at 100 cents per share. Manage our financial position Successfully managed gearing levels and debt covenants remain intact. Debt to be restructured in the medium term and initial discussions with financiers have commenced. 2. PROTECT OUR BUSINESS p35 STAKEHOLDERS CURRENT STATUS Continuous improvement Shareholders Improvements in relationship marketing and in gaming marketing. Employees The MVG programme maintained its position as the premier casino Customers rewards programme in Africa and is the benchmark in Chile. Suppliers It is also available at the new Federal Palace casino in Nigeria. Protect and grow market share Promotional activity and brand campaigns continue to focus on retaining and growing market share where possible. Protect and grow our brand Two years into the new brand promise ‘A Million Thrills. One Destination’ using Charlize Theron as brand ambassador, our brand has been better positioned throughout the group and recognition improved. Planning for the next cycle commencing in 2011 is well advanced. Deliver and enhance brand promise High focus on service levels and customer centricity (see also 3). Significant focus on costs Initiated project on casino costs improvement including management structure and operating hours. Monitor casino regulatory environment Participated in DTI review commission and monitoring developments at provincial level. Enhance corporate reputation A particular focus during the year under review has been with the company’s internal stakeholders and the group will focus on enhancing its external stakeholder engagement in the forthcoming year. 06 KEY STRATEGIC IMPERATIVES 3. OUR CUSTOMERS p47 STAKEHOLDERS CURRENT STATUS Customer strategy Customers Our Customer Management strategy summarises our customers’ Employees behavioural drivers, expectations, and emotional links with our business, and value perceptions. Rolling out Single View of the Customer database and focusing on enhanced customer experience and value for money offerings.