Joint report of the Chief Executive & Chief Financial Officer

 
 

2011 saw a comprehensive review of our strategy and strategic initiatives. These were evaluated for relevance in the light of changing market dynamics and sustainability imperatives. Our refreshed strategy covers all important aspects of our business including asset optimisation, growth, customer focus, cost management, legal and regulatory compliance, human capital management and sustainability.
 
David Coutts-Trotter
Chief Executive
Rob Becker
Chief Financial Officer
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REVIEW OF THE GROUP STRATEGY AND DIRECTION

An important development in the last year has been the adoption of a more sophisticated and robust strategic planning process that clearly defines decision drivers and the filters that should be applied when considering new opportunities and potential ventures. In practical terms, this is a process that removes less viable options and investments before they are resourced. In addition to the obvious requirements around strategic fit, legislative compliance and financial returns we have now also included elements previously present but not articulated, including risk, ethical fit, values alignment and sustainability.

This refined process has helped us to clearly articulate what drives us, what our objectives are and how these are supported by a deliberately-structured set of strategic initiatives.

By definition, our external strategy will always contain an unpredictable element, driven by the diverse and changeable markets in which we operate; in a word, a degree of opportunism applies. Our internal strategies exist to support our external aspirations and ensure that we are always appropriately resourced and structured.

The following report represents a consolidated view of our strategy. It has been kept at a high level and consequently avoids the detail and complexity that is contained in our business plans.

For the most part, the review process confirmed the importance of existing strategic focus areas; refining our approach and prioritisation. This process has led to a reduction in the absolute number of initiatives both to create focus and to ensure appropriate resourcing. Changing market dynamics have also necessitated the creation of new emphasis within some of our initiatives and these are reported on below.
 
OUR OBJECTIVES

Our Group-wide strategic objectives for 2012 are the following:

1

To manage our existing asset portfolios in Resorts and Gaming.

2

To expand our asset portfolios in Resorts and Gaming.

3

To optimise our resorts source markets by protecting our current core markets and growing revenues from key emerging markets.

4

To grow our revenues in Gaming by maximising customer spend, acquisition and retention of new customers and through the reactivation of lapsed customers.

5

To deliver our agreed Customer Value Propositions.

6

To manage our costs through budget and cost-containment initiatives.

7

To ensure regulatory and governance compliance.

8

To embed a clear and pragmatic approach to sustainability.
 

Our regional strategy is best described as follows:

In South Africa we will protect what we have and pursue opportunities in both gaming and resorts. The GrandWest exclusivity and development of the Wild Coast Sun and Boardwalk are key strategic focus areas.
In West Africa we will develop our business in Nigeria and pursue opportunities in various countries using the model of a casino combined with a hotel in, or close to, a major city.
In East Africa, including the Indian Ocean Islands, we will pursue resort opportunities.
For the rest of the world we will consolidate our position in Chile and explore casino opportunities in emerging gaming markets.
 
 
GAMING
 
HOTELS AND RESORTS
Our gaming positioning remain constant. We will continue to focus on high quality and unique propositions and individual property branding in urban environments. We will remain a product leader through innovation and increased responsiveness to expressed customer needs.
Key focus areas for the next financial year are:

1

To manage our existing asset portfolio.

2

To explore opportunities, with a focus on Africa, Latin America and other emerging markets.

3

To grow our revenues through the acquisition of new customers and the reactivation of existing customers.

4

To deliver on our agreed Customer Value Propositions.

5

To manage costs through budgetary and cost-containment initiatives.
These objectives are supported by several established initiatives.

In terms of expanding our asset portfolio, we are also continuously monitoring acquisition or development and evaluating opportunities in targeted geographies. We are refreshing our online strategy and exploring new online product-based opportunities. A cohesive LATAM market strategy is under development.

Unit marketing strategies have been reviewed while retention and reactivation approaches have been energised to drive revenue generation. Customer value propositions are being developed for each property.

From a cost management perspective, unit operating costs will shortly be assessed against both internal best practice and industry standards through a comprehensive value-chain-based project. Replacement and refurbishment strategies continue to be reviewed and optimised as appropriate.
 
From a Hotels & Resorts perspective, our positioning remains unchanged. We will continue to focus on the delivery of unique propositions and individual brands in prime locations. Our intention is to progressively apply consistent standards across our four and five star properties.

Our source markets remain both local and international, but we are seeing changes in our international sources as these move progressively towards emerging markets, especially Africa, India and Latin America.
Key focus areas for the next financial year are:

1

To manage our existing asset portfolio.

2

To expand our asset portfolio, in South Africa and other parts of Africa.

3

To optimise our source markets.

4

To deliver on our agreed Customer Value Propositions.

5

To deliver consistent standards with property-specific enhancements to ensure unique experiences for our customers.

6

To manage costs through budgetary and cost-containment initiatives.
 
 
SUPPORT SERVICES
 
FINANCIAL
Support services include Finance, Human Capital, Information Technology, Sustainability & Governance and Customer Management.
Key focus areas for the next financial year are:

1

To support and enable the delivery of our business strategy.

2

To improve organisational engagement.

3

To continue our transformation.

4

To ensure regulatory and governance compliance.

5

To embed a clear and pragmatic approach to sustainability.

6

To formalise our Customer Strategy and Customer Value Propositions.
 
In addition to meeting the requirements of effective financial reporting, the emphasis in Finance is on:

1

Optimising the Group’s capital structure.

2

Balancing risk through portfolio management and hedging.

3

Effective risk management and retention.
These objectives are supported by initiatives that review our capital structure, including securing the Group’s long term funding requirements.
 
 
HUMAN CAPITAL
 
INFORMATION TECHNOLOGY
In addition to several process and system improvements that are already under way, our key focus areas for Human Capital over the next financial year are as follows:

1

To continually improve employee engagement and performance management within the business.

2

To actively drive the transformation of the business.

3

To maintain and progressively build relationships with our union.

4

To continually invest in learning and development, in line with our talent strategy.
We believe that leadership visibility, unit management engagement and unit communications are all key to improving overall employee engagement within the business. Required interventions have already been communicated to all units and are being implemented.

There are two ongoing initiatives supporting our commitment to the progressive transformation of the business. These involve employment equity and skills development. With regards to employment equity (EE), we are addressing matters raised during our recent Department of Labour review - including identifying potential or perceived barriers to EE - and putting measures in place to address these barriers. Skills development programmes have been categorised to assist units in deciding which training and development programmes to prioritise.
 
In addition to effectively managing IT service provision, our key focus areas for Information Technology are as follows:

1

To enhance the value of Information Technology to the Group.

2

To manage the total cost of ownership (TCO) of Information Technology.

3

To develop an Enterprise Application Integration Framework.

4

To implement our Enterprise Gaming System.

5

To support innovation in the Hotels & Resorts, Gaming and e-Business areas by providing appropriate solutions.
Enhancing the value and managing the TCO of IT for the Group involves several components. These include server virtualisation, multi-function device rationalisation, telecommunications convergence and Microsoft Exchange consolidation.

Implementing the Enterprise Application Integration Framework is the process of introducing new software (and its associated hardware) into an enterprise, while keeping or slowly phasing out 'legacy applications' and equipment. This involves standardising software, cross-platform programme communication via Middleware, establishing enterprise resource planning (ERP) and enterprise content management (ECM). One of the key components planned for implementation is a new suite of Business Intelligence software.

In the hospitality and e-Business areas we are presently exploring opportunities to capitalise on the increasing trend towards online bookings. This creates an internal focus on improving the searchability of Sun International hotels, particularly from foreign source markets. We are also exploring opportunities in social networking and microblogging services as these may potentially create quick and informal conversation platforms between Sun International and its customers.
 
 
SUSTAINABILITY AND GOVERNANCE
 
CUSTOMER MANAGEMENT
This Sun International focus area reflects our commitment to effective management of the social, legal and environmental aspects of our business. It includes a growing focus on the following key objectives:

1

To further develop and embed a pragmatic approach to sustainability.

2

To engage with stakeholders around their legitimate interests.

3

To refocus the business on managing and minimising our environmental impact.
Our approach to sustainability explicitly includes the consideration of social, legal, economic, governance, ethical and risk components. Each of these areas has an impact on identified stakeholder groups as well as the environments in which we operate. We are committed to managing them sensitively and pragmatically, taking into account legitimate interests and impacts. By definition, this includes the communities surrounding our operations, trade unions that represent internal stakeholders as well as the recycling of resources such as water and energy. The management of waste is also a key consideration. Our improving performance in these areas is covered under the Protect our Environment section of this report.

We routinely include stakeholder considerations in our decision-making processes; this effectively formalises the inclusion of longer-term considerations into our business strategy. We have refreshed our code of ethics and are in the process of enhancing, where appropriate, the Group's existing risk methodologies. The stakeholder register is under constant review and we have initiated the development of a Group-wide approach to managing our carbon footprint.
 
Sun International is increasingly driven by a desire to develop a better understanding of its customers’ needs and their perceptions of the business in order to continuously improve their interactions and experiences. To this end we have identified several key customer objectives, including:

1

To structure, formalise and execute our customer strategy.

2

To align all our properties’ initiatives and efforts with the customer strategy.

3

To create unique and positive customer experiences.
To deliver the above objectives, we have revisited our basis for customer segmentation and are in the process of developing customer value propositions for all our properties. This includes aligning our marketing, sales and service strategies with the segments identified. Consistency of the customer experience is vital, and appropriate measures of customer satisfaction are being developed.

Customer Relationship Management (CRM) technology is a key enabler of our customer management processes and is being optimised, together with continuous improvement of our data quality. The capability and service levels of our Customer Contact Centre are being improved, as is our competence in the generation of relevant and actionable customer insights.