PDF 25 MB - Sun International | Investor Centre

SUN INTERNATIONAL ANNUAL REPORT ’10
INTRODUCTION
B-BBEE is an integrated and coherent socio-economic process that directly
contributes to the economic transformation of South Africa and brings
about significant increases in the number of black people that manage,
own and control the country’s economy as well as significant decreases in
income inequalities. Sun International supports and participates in B-BBEE
as an inclusive and integrated approach.
The DTI codes of good practice for B-BBEE is the framework on which
government policy is being rolled out. In this regard, targets have been
set for the group in terms of contribution levels, with the target for the
end of 2012 to be a level 3 contributor and a level 2 contributor in 2015.
A formal verification will be conducted by the group by the first quarter
of 2011. In the meantime, a self assessment using the Top Empowerment
Companies/Financial Mail survey gives an indication of progress made by
Sun International on B-BBEE, which indicates that the targeted level 4
contribution status was achieved.
In order to achieve Sun International’s Transformation Vision, policies have
been crafted which serve as guidelines and directives to all our units. The
policies are intended to give direction on the various pillars and to enable
achievement of the targets that have been set for B-BBEE.
OWNERSHIP
The group’s overall BEE shareholding is estimated at 43% using the
methodologies suggested by the codes. The BEE ownership of the Sun
International group is calculated by adding the BEE ownership of the
underlying South African subsidiaries of the group and the BEE ownership
directly in Sun International Limited, which is then divided by the aggregate
value of all of the group’s South African operations. The direct BEE
ownership in Sun International is calculated excluding the 40% mandated
investments allowable in terms of the BEE codes.
Share options
In terms of the various casino licence bid undertakings, the group had
granted share options over the respective casino company shares to its
empowerment partners. The options enable the empowerment partners
to increase their economic interest in the appropriate company after the
initial capital subscription.
76
The table below sets out the group’s economic interest and amount of
that interest that is still subject to dilution:
Category
%
economic
interest
%
under
option
Teemane 75.1 27.8
Mangaung 70.0 9.0
Boardwalk licence
SISA has agreed to dispose of a 15% interest in Emfuleni to a local BEE
Trust and to provide the Trust with vendor funding. In addition, Afrisun
Leisure will dispose of 14.3% of its current shareholding in Zonwabise in
order to further increase the Eastern Cape based BEE participation in
Emfuleni. Following the above two disposals, which will be based on a
DCF valuation of Emfuleni, the group’s effective interest in Emfuleni will
decrease from 78% to 62%.
Dinokana shareholding in Sun International
As at 30 June 2010, Dinokana owned 6 989 759 ordinary shares in Sun
International (a 7% interest). During the year, Dinokana sold 1 395 677
shares in Sun International in order to reduce its debt to the maximum
allowed in terms of its funding agreements with Nedbank. In addition to
the reduction in debt and as approved by shareholders, Sun International
provided Nedbank a R60 million guarantee in respect of Dinokana’s
obligations to Nedbank.
Nedbank’s funding of Dinokana is due to be repaid in December 2010,
while the Dinokana lock-in structure only expires in December 2014. Nedbank
has, however, offered to extend their financing to the end of the lock in
period on the agreement that Dinokana reduces its debt to R436 million by
1 December 2010, maintains a minimum share cover ratio of 1.4 and that
Sun International shareholders agree to provide a R60 million guarantee
in support of the structure. Post year end Dinokana sold 270 000 Sun
International shares in order to reduce its debt to below R436 million.