Deliver to our beneficiaries
The nature of the shareholders of the group is important in a highly visible and regulated industry such as gaming. Popular misconceptions about the industry make it a target for attacks through excessive taxation and regulation. While the group spends signiﬁcant money and time on engaging with stakeholders to ensure that the true facts around issues such as problem gaming are presented, the strongest protection for the business is to ensure that a signiﬁcant portion of the economic beneﬁts of ownership ﬂow to community, charitable or socially beneﬁcial organisations. This is achieved through meaningful CSI programmes and also through direct and indirect equity ownership and employment.
Key performance indicators
|Value added contribution to black economically empowered businesses, PDIs and government||R8.1 billion||R7.7 billion|
|BBBEE level||Level 2||Level 2|
|CSI outcomes||Tsogo Sun Sports,
Arts and Learning
39 751 learners
|Tsogo Sun Sports,
Arts and Learning
35 967 learners
As mentioned in the group overview the nature of the HCI shareholding is of particular importance as it provides the bulk of the 79.3% broad-based empowered ownership at group level. HCI has provided a stable shareholder base for a number of years that has allowed the group to grow and take advantage of opportunities.
The sale by SABMiller of its shares during the year has allowed a more diverse shareholder base.
Tsogo Sun is committed to the upliftment and development of local communities. We are further committed to leveraging our resources, experience and geographic spread within the hospitality and entertainment industry to provide the foundation for initiatives that achieve lasting results in the communities where we are present. A portion of our proﬁts is spent annually on social investment and, through our Tsogo Sun Citizenship programme, we are able to deliver effective social initiatives that seek to create shared value with the broader society. Tsogo Sun Citizenship comprises three areas, being community development, entrepreneurial development and the natural environment.
During the year, the group’s combined social investment in community development amounted to R154 million. Of this, veriﬁed spend on BBBEE socio-economic development amounted to R153 million which is the equivalent of 8.97% of net proﬁt after tax and represents 7.97% more than the DTI’s target.
While our casinos and hotels provide substantial support towards a wide range of projects and initiatives designed to uplift people in their local communities, Tsogo Sun’s national community development takes place through the Tsogo Sun Sports, Arts and Learning Academies, which collectively reach approximately 40 000 learners who participate in our full-year programmes.
|Tsogo Sun Sports Academy||123||1 027||23 053||56|
|– Soccer||35||42||1 026||7|
|– Chess||57||535||21 369||20|
|Tsogo Sun Arts Academy||14||24||520||9|
|Tsogo Sun Learning Academy||676||472||16 178||1 150|
|Total||813||1 523||39 751||1 215|
Tsogo Sun Sports Academy
We share the Departments of Education and Sport’s vision to nurture school environments that promote healthy living and responsible attitudes to foster the development of successful young South Africans. The Tsogo Sun Sports Academy uses sport as a medium to deliver life skills, leadership and healthcare training, as well as to reinforce the importance of education to young learners, with the ultimate goal of nurturing children’s wellbeing. To achieve this, Tsogo Sun has partnered with relevant local government departments, sporting industry bodies, associated school sports bodies and schools in local communities.
During the year, the Tsogo Sun Sports Academy continued to deliver on previous projects including soccer, rugby and athletics through the support of 1 684 South African children and youths between the ages of 7 and 17. In addition, training and accreditation is also provided to the coaches, trainers, mentors and referees in these programmes.
The Tsogo Sun Moves For Life national chess programme has continued to successfully expand within the foundation phase at schools across South Africa. The programme reaches 21 369 learners and 535 educators across 57 schools, with the objective of improving maths, science and literacy skills through the medium of chess. During the year, a three-year research study commenced with the University of Johannesburg to document the impact of chess in maths education.
Tsogo Sun Citizenship
Click the below image to view a larger version
Tsogo Sun Arts Academy
Our Arts Academy develops the artistic talent of learners from underprivileged backgrounds to provide them with essential life skills development. The programme enables learners to participate in a curriculum that uses the arts as a catalyst to give young people in our communities a chance to bring about change in their lives. The programmes vary in their offerings across disciplines within the arts, including theatre, drama, singing, poetry, creative arts and literature and make use of the Teatro at Montecasino, the Gold Reef City Lyric Theatre and arts studio at Hemingways Casino to support 520 learners from 14 schools in Diepsloot, Mayfair, Nelspruit and East London.
Tsogo Sun Learning Academy
The Tsogo Sun Learning Academy provides peer-driven leadership programmes, early childhood educator support, school visits to the Apartheid Museum, various types of bursaries and learnerships and venues at our properties for events hosted by schools. During the year, Tsogo Sun contributed to more than 670 schools across the country, through ad hoc or fundraising assistance and the group’s community academies.
The Olwazini Discovery Science Centre in Pietermaritzburg is Golden Horse Casino’s onsite science and computer centre. The science centre attracts more than 15 000 learners per annum from 200 schools and the computer centre facilitates computer literacy courses for over 1 000 learners and adults per year.
The group contributes more than R5 million per annum to the upkeep of the Apartheid Museum, which is situated on the greater Gold Reef City precinct. In addition, the group takes an active role on the board and assists with the operation of the museum. R33 million has been made available for the expansion of the museum during the 2016 financial year.
The group paid an amount of R100 million to the KwaZulu-Natal Gaming and Betting Board to be spent on charitable or social infrastructural developments in the KwaZulu-Natal province which is being utilised for educational purposes.
Caring across communities
In addition to Tsogo Sun’s national programmes, our casinos and hotels are involved in a wide range of caring initiatives and they provide substantial support towards various projects designed to uplift people in their local communities. Our hotels contribute furniture and equipment to non-profit organisations such as the community chest, local rotary clubs, shelters and children’s homes. Our casinos contribute financially to numerous welfare organisations in support of children, the elderly and animals, and the Gold Reef City Theme Park and the Montecasino Bird Park provide free entrance to children from orphanages, shelters and primary school learners who otherwise would not have the opportunity to experience these parks.
Tsogo Sun is committed to the development of small businesses in South Africa with a speciﬁc focus on skills-based entrepreneurial development and the provision of preferential procurement opportunities to black-owned qualifying small enterprises and emerging micro-enterprises. The group’s spend on enterprise development for the year is R122 million or 7.1% of net proﬁt after tax, which is 4.1pp above the DTI’s BBBEE target.
The enterprise development projects supported by the group include various black-owned tenants at the group’s casinos. Our tenant philosophy is connected to our enterprise development and, through the provision of preferential rental fees and start-up allowances where warranted, in certain instances we provide support to tenants that are black owned or have a majority black shareholding in their businesses. The group also supports a range of black-owned small, medium and micro-enterprises (‘SMMEs’) throughout the organisation.
Tsogo Sun EntrepreneursTsogo Sun’s national enterprise and supplier development takes place through ‘Tsogo Sun Entrepreneurs’, a business benefit and development programme that supports various clusters of entrepreneurs within the value chain of the Tsogo Sun group and within the broader tourism industry in South Africa, including:
- housekeeping and laundry SMMEs;
- participating Sun1 operators (independent SMMEs);
- existing qualifying suppliers and micro-enterprises that display the potential to become suppliers to the group; and
- the Tsogo Sun Book-a-Guesthouse cluster, which supports 98 independently owned and operated B&Bs in six provinces across South Africa.
- skills transfer (business development, coaching and mentorship);
- value-added benefits (endorsement, memberships, marketing and publicity);
- shared services (extranet, call centre, preferential discounts and business support);
- business tools (risk assessment and recommendations, software systems and equipment);
- an integrated supply chain (market access and networking opportunities); and
- recognition (entrepreneur rewards, certification and awards).
Tsogo Sun Book-a-Guesthouse
Tsogo Sun Book-a-Guesthouse, now in its 10th successful year, is endorsed by government and regional tourism agencies. As part of our sustainability in tourism plan, Book-a-Guesthouse harnesses decades of the group’s experience and expertise in the hospitality industry and delivers this to small business owners through the support of our management and staff in the provinces. As the only programme of its kind in South Africa, 92% of the entrepreneurs developed by Book-a-Guesthouse are black South African women.
The guesthouses range between two and 30 rooms. Eighty percent of the entrepreneurs have graduated to the Alumni phase and have undergone training to become mentors to the new entrepreneurs that enter the programme and 21 entrepreneurs were inducted into the programme during the year. A total of 38 guesthouses in the Alumni phase have expanded their operations as a result of the programme, and each guesthouse employs between one and 15 staff and reaches up to 30 people in the value chain. A total of 87 entrepreneurs have successfully completed the UCT Guesthouse Management Course funded by the programme, with 16 having done so during the last year.
Tsogo Sun has always been a pioneer in transformation and the organisation continues to be a leader in the empowerment of previously disadvantaged people, businesses and communities in South Africa. The group currently holds a level 2 BBBEE contributor status, with 79.3% broad-based black empowerment ownership, measured against the DTI’s generic scorecard, and complies with guidelines outlined in the BBBEE Codes of Good Practice. The group’s casinos are in addition individually measured against the same scorecard and Tsogo Sun hotels is measured against the tourism scorecard. The formal veriﬁcation audits are performed annually by Empowerdex (an accredited economic empowerment rating agency), covering the year ended 31 March, with the results being as follows:
There has been no change of significance to the group’s overall BBBEE result. Tsogo Sun has once again received the maximum available points for ownership, enterprise development and socio-economic development, which are discussed in this section. Both employment equity and skills development are discussed in the human resources section. Preferential procurement once again reﬂected an improvement and is discussed in the suppliers section.
Tsogo Sun operates a BBBEE council as one of the group’s governance structures whose purpose is to ensure that the priority of empowerment is consistently managed and monitored. The BBBEE council sets BBBEE strategy and direction for the group. It ensures that the group is compliant with legislation and it monitors group-wide performance measured against the DTI’s generic scorecard. It sets internal targets and oversees the annual ratings process for the group. The bi-annual BBBEE council meetings are chaired by the group Human Resources Director and are attended by the group’s senior leadership, including the Chief Executive Ofﬁcer and Chief Financial Officer.
Tsogo Sun acknowledges that gambling can be an issue of concern for some people in communities where we operate. We engage these concerns by educating our employees and customers about responsible gaming and seek to avoid the misuse of gambling. Tsogo Sun contributes to, and actively promotes, the National Responsible Gambling Programme.To ensure an environment of responsible gambling, close attention is paid to the exclusion of:
- underaged persons from gambling areas in accordance with legislation;
- visibly intoxicated people from gambling according to legislation;
- problem gamblers from gambling areas – by executing Tsogo Sun’s self-exclusion policies;
- money lenders from gambling areas; and
- criminal elements and persons prone to bad behaviour.
The group monitors and manages the number of complaints and code violations.
Tsogo Sun participates actively in industry bodies such as the TBCSA, the SATB, Fedhasa and the CASA through the provision of time, effort and intellectual contributions from management. It also forms close relationships with national and regional gaming and tourism associations.
The delivery of quality hospitality, gaming, dining and entertainment experiences is important to retaining footfall at our properties and satisfying our customers’ diverse requirements. The delivery of these experiences is through a combination of owned and outsourced businesses to provide our customers with a range of differentiated products and services.
With a total of 330 tenants across Tsogo Sun’s various properties, tenanting is one of the group’s core focus areas to ensure that our consumers have access to the best restaurant and entertainment-related outlets. In addition to the retail tenanting, the group also owns 32 000 m2 of ofﬁce space, which it partially self-occupies and rents the balance to third parties.
Our group’s real estate department manages this important element of our business, as well as ensuring that our buildings are appropriately tenanted, maintained, refurbished, upgraded and renovated on an ongoing basis to ensure that our offerings remain fresh and current. Our philosophy with regard to selecting tenanting partners is centred on owner-run outlets that will deliver the required experiences at appropriate prices.
The group has developed long-term, mutually beneﬁcial relationships with our suppliers of goods and services. Through these supplier relationships many more indirect jobs are created and wealth is generated in the economy. A growing portion of our procurement is centrally managed which allows for enhanced consistency in standards and pricing and closer relationships with our suppliers. We ensure that, as far as is practically and commercially possible, our hotels and casinos procure products from vendors who are located in the areas where they are situated.
Tsogo Sun encourages diversity within its commercial associations, particularly through the involvement of previously disadvantaged persons and local businesses where it operates. The group supports black businesses in South Africa through a focused procurement strategy. Veriﬁed total procurement spend on black economically empowered businesses amounted to R3.6 billion during the year. The group’s BBBEE score for preferential procurement is 18.9 out of 20. Procurement from black women-owned businesses and further opportunities to establish and support enterprise and supplier development initiatives through procurement are focus areas of the group.
An additional procurement consideration is the environmental performance of our suppliers, which is taken into account as part of our procurement criteria during the supplier selection process.
The group leases hotel properties and manages hotel businesses on behalf of third-party owners where it is not possible to own the property or the business. The most signiﬁcant relationship is with Liberty for whom Tsogo Sun manages five hotel properties and with whom Tsogo Sun jointly owns an additional eight hotel properties and from whom the group leases the Sandton Convention Centre. Most of these lease and management contracts have been in place for many years and the group values the long-term relationships that have been built. The relationships are mutually beneﬁcial with ﬁnancial returns and access to additional properties for Tsogo Sun and enhanced returns to the owners through our skills and distribution.
While our main business activities pose limited risk to the environment, environmental management practices have been integrated as part of our operations. Tsogo Sun has made the commitment to reduce the impact that the business has on the environment and to encourage guests to embrace greener behaviour for the wellbeing of the environment.Our efforts to manage our business sustainably serves the interests of our business and the community and in achieving this our stated policy and commitment is to:
- ensure that at all times, we identify, evaluate and comply with local, regional or national environmental laws and regulations applicable to our operations within the areas where we conduct business;
- continually evaluate and manage our environmental risks, targets and objectives;
- actively seek to minimise pollution, emissions and efﬂuents emanating from our operations;
- work towards minimising waste by reducing, reusing and recycling programmes and adopting a ‘zero waste’ policy;
- strive to reduce consumption of natural resources by the responsible use of energy, gas and water and the identiﬁcation and implementation of sustainable energy solutions;
- manage biodiversity through the protection of ﬂora, fauna and land associated with, or impacted by, our operations;
- communicate our policies and achievements openly and transparently to our stakeholders;
- collaborate with our suppliers and business partners to actively reduce the environmental impact of our business activities;
- continually improve and innovate on our environmental performance standards;
- report annually on our environmental performance; and
- provide support for the sustainable development of our communities.
To ensure the objectives of our environmental programme are met, a property-speciﬁc environmental management system has been developed at all of our casinos and hotels aimed speciﬁcally at energy, water, waste management and responsible procurement.
The environmental programme that was in place for the past four years in partnership with Heritage successfully steered the business towards an awareness of the environment and our need to manage related processes and performance. The programme has now been simplified and integrated into the business where it is managed holistically as part of the in-house Organisational Resilience Management Standard audit process and is veriﬁed by the German quality body, DQS-UL Group.
Scope and boundaries of measurement
The scope and boundaries of measurement were changed during the year to align with HCI’s formal disclosure to the Carbon Disclosure Project (‘CDP’). Tsogo Sun reports to the CDP as a subsidiary of HCI. Previously consumption was reported for all businesses located at properties owned or leased by the group in South Africa and offshore. The scope has been changed to report scope 1 and scope 2 emissions at all owned businesses located at properties owned or leased by the group in South Africa and offshore, excluding emissions relating to tenants. Tenant emissions at owned or leased properties, emissions at properties not owned but managed by the group, emissions from outside laundry services provided to the group and business travel emissions, which were not previously measured, are now reported in scope 3. Fugitive emissions, mainly from refrigerants, have not been measured as they are not significant and there are no other emissions that are considered material. All comparatives have been restated to ensure consistent reporting.
|Total emissions (tCO2e)||2015||2014||%
|Scope 1||5 443||4 610||18|
|Petrol and diesel (owned company vehicles)||476||477||–|
|Diesel consumed (owned businesses)||2 419||1 653||46|
|LPG and natural gas usage (owned businesses)||2 548||2 480||3|
|Scope 2||209 937||204 974||2|
|Energy consumed (owned businesses)||209 937||204 974||2|
|Scope 3||83 452||92 413||(10)|
|Energy consumed (tenants)||25 810||28 322||(9)|
|Energy consumed (managed properties)||25 729||33 416||(23)|
|Laundry services (outsourced)||29 454||28 427||4|
|Business travel||2 459||2 248||9|
|Total emissions (tCO2e)||298 832||301 997||(1)|
Ninety seven percent of scope 1 and 2 emissions arise through the consumption of electricity and thus demand-side management of electrical consumption remains the area of focus for the group in reducing emissions. Ninety eight percent of the scope 3 emissions arising from tenants at group properties and at properties managed by the group also arise from the consumption of electricity.
Scope 2 emissions from electricity consumption at the group’s owned properties increased during the year by 2% to 209 937 tCO2e mainly due to the acquisitions of four, previously managed, hotels from Liberty and the casino complex expansions at Emnotweni and Silverstar offset by savings from ongoing energy-saving initiatives and to a lesser extent reduced electricity consumption due to load shedding. The installation of energy-efﬁcient equipment continues where practical, although much has been done since 2006, and the majority of the consumption reductions are as a result of consumption measurement and behavioural change initiatives at the units.
LPG and natural gas
LPG and natural gas are primarily used for cooking with limited space heating and water heating at three properties. Scope 1 emissions from the consumption of LPG and natural gas increased by 3% to 2 548 tCO2e due to the acquisitions of four, previously managed, hotels from Liberty, the opening of new owned restaurants at Gold Reef City, Silverstar and Golden Horse casinos and the conversion of kitchen equipment from electrical supply at Southern Sun Maputo.
Diesel is utilised for back-up electrical generation. Scope 1 emissions from the consumption of diesel increased by 46% to 2 419 tCO2e due mainly to running generators to generate electricity during load shedding.
Scope 3 emissions
The 9% reduction in scope 3 emissions from tenants at group properties is mainly due to the closure of outsourced restaurants during the expansion of casino properties and conversion of some restaurants from outsourced to owned operations. The 23% reduction in scope 3 emissions from properties managed by the group is due mainly to the acquisitions of four previously managed hotels from Liberty offset by the opening of the Southern Sun Abu Dhabi during the year. The group utilises outsourced laundries at the majority of its owned and managed properties and the 4% increase in scope 3 emissions from laundry services is due to volume increases and the opening of Southern Sun Abu Dhabi.
Although supply interruptions due to poor municipal infrastructure are increasing and medium-term water shortages are possible the group does not have company-specific water risks. The majority of our properties are in urban areas and use potable water provided by local municipalities (90% of consumption). Two resort properties utilise surface water for irrigation, two resort properties are fully reliant on river water, one property primarily utilises ground water due to continuous supply problems from the local municipality and the Gold Reef City Theme Park utilises cleaned mine water for the water rides. Water consumption at the group’s owned properties increased during the year by 3% to 2.6 million kilolitres due mainly to the acquisitions of four previously managed hotels from Liberty offset by ongoing conservation and reduction measures at all properties.
Recycling initiatives are in place at many properties although the efforts differ depending on the infrastructure available to support recycling. Waste management information is being collated throughout the group and there are plans to standardise recycling systems and volume monitoring methods across our properties.
The majority of our properties are in urban areas and are thus not in close proximity to sensitive environments. There are four resort properties in rural environments where management of biodiversity is more important and no new facilities were developed at these properties during the year. Where applicable the properties have programmes in place to replace alien vegetation with indigenous plants.
As part of our commitment to the upliftment and development of communities through Tsogo Sun Citizenship, we strive to create awareness in local communities to encourage a responsible attitude towards the use of electricity and water and the management of waste. We also champion opportunities to educate people about reducing their impact on the environment through tree planting, food security and conserving our natural heritage. Towards this end, Tsogo Sun partners with Generation Earth and the Miss Earth SA leadership development programme, both of which instil awareness and provide education about environmental issues among young South Africans.
The Tsogo Sun community development programmes continue to grow both in reach, as well as in the level of development that they provide. Our focus is to create scaleable and replicable models that can either be done by ourselves or in collaboration with other corporates, civil society or government.
Monitoring and evaluation have become increasingly important to enable us to measure our impact. An internal information system has been introduced to comprehensively track and manage all contributions made by the group, including that of financial, in-kind and volunteering of employees.
We actively monitor the participation, attendance and involvement of learners, educators and community stakeholders. During the year ahead, a tool will be developed to determine the impact on our beneficiaries and how we are positively inﬂuencing the lives of the people we support, where we need to apply more attention to achieve our intended results and how these results are addressing the needs of the communities.
We continue to emphasise and enhance the offering of life-readiness and career guidance skills and tools. Skills such as first-aid training, workshops on self-confidence and public speaking, writing skills and leadership will be added to what is already being offered, namely wellbeing, ﬁnancial literacy and talent development.
The provision of bursaries and community learnerships will be aligned and formalised across the group in the coming year.
The group is introducing a structured strategy to manage the volunteering efforts made by employees across the group.
Enterprise and supplier development
Tsogo Sun is developing a long-term plan that will be implemented via the Tsogo Sun Entrepreneurs programme over the next five years. The impact on the beneficiaries (the businesses supported by Tsogo Sun Entrepreneurs) will be monitored and evaluated, and adjustments will be made to the model where necessary as the plan unfolds. Presently in phase one of implementation, the plan is designed to enable the group’s hotels and casinos to support their local entrepreneurs, in order to address the need for wealth creation and employment in South Africa.
The Revised Broad-Based Black Economic Empowerment (‘BBBEE’) Codes of Good Practice became effective on 1 May 2015. Alignment of the group’s practices with the requirements of the revised codes is being undertaken as far as possible, in order to prepare for the measurement of the group’s performance against these codes in 2016.
The revised BBBEE codes present numerous challenges. In an effort to address these, the group has focused attention on internal strategic planning, systems and processes, and on participating in industry forums and working with empowerment specialists to try to proactively resolve issues related to the numerous flaws contained within the revised codes framework and the unintended consequences that these create.
The area of supplier development is complex and requires the development of a coherent plan that connects emerging black-owned enterprises into the procurement pipeline, supports existing black-owned EMEs and qualifying small enterprises (‘QSEs’) who are suppliers to the group and at the same time ensures that the group’s procurement requirements are not compromised. While the supplier development performance measure is purely financial (2% NPAT – combined with 1% NPAT for enterprise development), the work is actually social in nature and requires time to implement effectively. Supplier development needs to be undertaken in a manner that really makes a change. It is not just about spending money without achieving actual results for the beneficiaries being supported or the businesses they are supplying. This is one of the challenges presented by the revised BBBEE codes: the plan will take time to develop, implement and yield results, yet the Revised Codes require immediate performance against the financial target.
To address this and other areas of concern surrounding the Revised BBBEE Codes, Tsogo Sun’s internal strategies have included the establishment of an Enterprise and Supplier Development (‘ESD’) plan to enable the group to meet the target by supporting, developing and procuring from South African black-owned and black women-owned EMEs and QSEs.
Another area of change is that of preferential procurement, which forms part of ESD in the revised codes. South African companies expect to receive significantly lower BBBEE results under the revised codes. The performance of other companies affects Tsogo Sun’s ability to achieve good BBBEE results, as many are suppliers to the group.
In the coming year, the company will continue to focus on managing a growing portion of its procurement centrally to allow for enhanced consistency in standards and pricing and closer relationships with our suppliers. In addition, processes will be aligned, as far as is practical, to meet the requirements of the Revised BBBEE Codes of Good Practice.
The procurement function will work closely with the ESD function within the group to synchronise the two strategies, identify qualifying suppliers and potential suppliers for development, and achieve positive results.
The focus during the year will be to ensure that the environmental programme which is part of the in-house Organisational Resilience Management Standard is embedded throughout the business and to ensure that the energy and water consumption management programmes remain in place with the objective of continuously reducing consumption year on year.