Material risks and opportunities

 

      Specific risks we face   Potential impact   Risk responses     Associated strategic
priorities
 
     
  • Growth negatively affected by macro-economic factors
  • Concentration of operations in South Africa
  • Increased funding costs due to ratings downgrade
  • Constrained growth in government travel
  • Resources cycle in offshore operations
 
  • Lower revenue growth and profitability
  • Increased funding costs
 
  • Revised strategic priorities
  • Review organisational structures
  • Further focus on cost reduction
  • Renewed and focused marketing and promotions
  • Reward programmes
   
  • Financial strength and durability

  • Organic growth


     
  • Additional casino licences or relocation of existing casino licences
  • Policy uncertainty
  • Smoking legislation
  • Changes in casino licensing conditions
  • Changing BBBEE requirements
  • Increased complexity of compliance, e.g. POPI, CPA and FICA
  • Visa regulations
  • Loss of casino licences
 
  • Lower revenue, higher costs and reduced profitability
  • Uncertain operating environment resulting in frozen investment spend
 
  • Engage authorities, including gambling boards
  • Submit comments to law makers through formal comment structures
  • Robust compliance procedures
  • Engage law makers through employer and industry bodies
  • Litigate where required
  • Comprehensive BBBEE programme
   
  • Deliver to our beneficiaries

  • Regulatory compliance


     
  • Potential increased national and provincial gaming taxes
  • Possible VAT increases
  • Aggressive tax authorities
  • Increased rates and property taxes
 
  • Reduced profitability
  • Uncertain operating environment resulting in frozen investment spend
  • Increased cost of compliance
 
  • Lobby government through CASA
  • Educate legislators regarding gaming impact through direct lobbying
  • Lodge of appeals on assessments and property valuations
  • Robust compliance procedures
   
  • Deliver to our beneficiaries

  • Regulatory compliance

  • Organic growth




     
  • Product relevance in target markets
  • Increase in maximum bet and maximum payout limits at limited payout machine sites
  • Lack of maintenance leading to obsolete product
  • Customers choose other leisure options
  • Technology and social trends
 
  • Reduced income and profitability
  • Obsolete hotel stock
  • Reduced footfall and customers and thus gaming win
  • Disruption to operations and reduced profitability
 
  • Overview of markets
  • Interaction with local authorities
  • Investment in facilities and maintenance capex to ensure relevance
  • Market research to timeously spot trends
  • Partnerships with other leisure suppliers
  • Social media interaction
   
  • Product relevance to customer

    experience
  • Organic growth


     
  • Fixed cost nature of the business
  • Trading disruption during construction
  • Casino capacity constraints
  • Hotels oversupply in certain markets
  • Online travel agents including Airbnb
 
  • Lower revenue growth and profitability
 
  • Review organisational structures
  • Further focus on cost reduction
  • Interaction with gambling boards and city officials
  • Monitoring returns on new businesses
   
  • Organic growth
     
  • New gaming opportunities
  • Investments in expansion not yielding expected returns
  • Hotels opportunities, local and offshore
  • Ineffective integration of acquired businesses
 
  • Lower revenue growth and profitability
  • Missed revenue opportunities
  • Wasted investment
 
  • Proper and robust evaluation of all new opportunities
  • Non-financial due diligence of opportunities
  • Monitoring returns on new businesses
   
  • Organic growth

  • Inorganic growth


     
  • Employment equity challenges at senior levels
  • Changes in labour legislation
  • Unrealistic expectations, social pressure and/or unresolved industrial relations issues leading to violent strikes and unrest
  • Limited pool of qualified, trained and talented staff
  • Lifestyle diseases, including HIV/Aids, hypertension and diabetes
 
  • Failure to meet BBBEE targets
  • Reduced customer satisfaction, disruption to operations and reduced profitability
  • Work stoppages, reduced profitability and reputational impacts
 
  • Retention of staff through appropriate remuneration structures
  • Engage with and empower staff
  • Fast track and develop talented staff
  • Performance-driven culture
  • Focused employment equity strategy
  • Labour rate parity
   
  • Human resources

  • Deliver to our beneficiaries


     
  • Unreliable electrical supply
  • Unreliable water supplies
  • Rise in electricity and water costs
  • Increased diesel usage during load shedding
 
  • Disruption to operations and reduced profitability
  • Machinery breakdown
 
  • Demand-side management programmes to reduce consumption
  • Water handling/storage capacity for emergency supply
  • Self-reliance on generators for emergency electricity supply
  • Audits of the status of switchgear
   
  • Product relevance to customer
    experience

  • Organic growth


     
  • Casino and hotel robberies
  • Major violent incidents
  • Fraud by employees
  • Fraud from external sources
  • Follow home robberies
 
  • Lower revenues, increased cost and lower profitability
  • Reputational risk
 
  • Physical security and surveillance procedures
  • Coordination with the South African Police Service
  • Crime intelligence
  • Internal control frameworks
  • Internal audit procedures
   
  • Regulatory compliance

  • Organic growth


     
  • Hacking and hacktivism
  • Sub-optimal online transacting
  • Payment Card Industry Data Security Standards
  • POPI legislation
  • Loss of information
 
  • Reputational risk
  • Fines and penalties
  • Reduced income and profitability
 
  • IT security
  • Payment card industry standard compliance
  • Appointment of Information Officer
  • Review of online transaction opportunities
  • Increased IT auditing and assurance
  • Website rewrite
   
  • Regulatory compliance

  • Organic growth