Page 94 - Gondwana Value Creation Report 2020

HOW WE GOVERN GONDWANA AUDIT, RISK AND Our eyes are on the future The short-term insurance claim with our insurer was a key focus for management. If

successful, the payout would put Gondwana on a very different trajectory in comparison
Risk identification mitigation and control have become more important than ever before.
to peers, both local and regional. The committee urged management to ensure that the
OPPORTUNITY
Gondwana’s financial statements display prudence and scope for additional capital raises
intangible assets on the balance sheet were sound, specifically goodwill, as any potential
if needed. Our gearing ratio is less than 50%. Management established risk mitigating
impairment would possibly have an impact on profitability. Establishing a robust risk control
measures which could have a material impact on our ability to take advantage of various
matrix was a key goal for management and the committee.
COMMITTEE
opportunities on the horizons. Our decision not to lay off employees during the initial
Risk management focus in 2020
shutdowns has resulted in a nimble and robust entity that was ready to pounce on any
operational and strategic opportunities. The risk of staying open for business was shared
James Mnyupe
grounded. Given that local tourism made up a small portion of the industry, there was
of Ubuntu (togetherness) was unprecedented and provided a great example to our children
immense pressure on revenue. Because the pandemic muted domestic economic activity,
of what is possible when we hold hands and are resolute in our ambition to move the
Focus on opportunities across all key stakeholders, including employees, capital providers and the state – this level In the wake of the pandemic, tourism was brought to an abrupt halt as planes were
government had a limited ability to deploy stimulus packages, with the final amount hovering
proverbial mountain.
slightly above 4% of GDP, in comparison to more developed nations whose packages were
without overshadowing risk Opportunities to create long-term wealth for shareholders will reveal themselves as we closer to 10%. This limited debtors’ ability to meet their obligations to Gondwana, and some
explore the potential of our new IT investments, reap the benefits of our risk mitigating
suppliers had to limit their output and delivery capabilities as well.
initiatives and explore the possibility of partnering with the public sector to unlock the
2020 has been a unique and relentless stress test on the backbone potential of the Namibian tourism industry – a critical prerequisite of building a resilient The committee also focused on the appropriate accounting treatment of leaseholds and
their possible impact on the statement of comprehensive income, goodwill and profitability
of Gondwana and indeed of Namibia and the world at large. Our nation post the destructive scourge of the global pandemic. as a whole, following the adoption of IFRS 16. The committee will continue paying close
country’s GDP was estimated to have contracted by 7.8% and our attention to the matter, and Gondwana will engage government on the possibility of
deficit ballooned from 4% to more than 10%. Gondwana’s revenue Our goals for the coming year include: amending legislation to unlock the economic potential of communal land.
shrank by 66% and operating profit by 219%. However, we did not ○ An audit to affirm the strength of our balance sheet and provide a strong foundation for
shed any employees during this trying time – a decision that will management to pursue strategic objectives Government lockdowns were unpredictable and could not be prepared for well in advance.
likely be the subject of many a case study for years to come. Cost reductions and pursuing insurance cover became the primary methods to mitigate losses.
○ Documenting a holistic risk control matrix in light of the continued dynamism of the risk
We have always acknowledged that risk is multifaceted and ever portfolio at hand for the sector All this accentuated our risk profile, as multiple high-level risks materialised simultaneously.
changing and, therefore, we needed to construct resilient and robust ○ Finalising the Bond Programme and engaging government on potential partnerships for We needed to reduce our operational footprint and remain nimble enough to take advantage
mechanisms to ensure that the future of the company is safeguarded. informal land tenure and possible partnerships for maximising the potential of state- of strategic or operational opportunities that arose from an unpredictable situation. We hired
2020 provided undisputed evidence that the management team owned tourism assets a CIO to bolster our strength in terms of IT-related risks and opportunities.
and employees are up to the task and have prepared this ship to
sail through stormy weathers. The beauty of this year is that it will Our approach to risk management
produce many skilled sailors who will further entrench the probability Committee overview
that Gondwana will indeed become a 1 000-year-old Namibian giant 2020 presented fundamental learning curves around traditional risk management. Stress The audit, risk and opportunity committee (the committee) reviews Gondwana’s
on the African continent! testing and scenario analyses became essential supplements to standard practices. They external environment to ensure the TLC adequately manages risks and implements
assisted in anticipating unlikely risks’ impacts and better informing risk assessment, negation strategies that take advantage of opportunities.
What we did in 2020 mitigation and/or transfer and expectations if these measures failed. They also provided
the quantifiable results for qualified risk statements to lay out a plan to address particular Reviewing and updating our risk register is a standing agenda item at committee
We reviewed the financial statements and considered the robustness scenarios as they unfolded. Scenarios were regularly re-evaluated to reflect on what did and meetings. Gondwana’s risks, as identified in our risk register, are ranked according
of the assets, and in particular the intangible assets, on the balance did not go according to plan, and to improve our risk management muscle. to potential impact and grouped categories. These risks are managed to reduce the
sheet, given the evolving contractionary environment that the likelihood of occurrence and to lessen their potential impact.
tourism sector globally found itself in. We undertook various scenario Therefore, Gondwana’s risk management approach began transitioning from rigid rules- The committee was chaired by James Mnyupe and attended by external expert,
planning exercises and considered alternative strategic outcomes based methodologies to a more flexible, real-time, risk-based approach, which requires the Marlene Hailwax, an independent regulatory compliance consultant with specialised
that may be necessitated by the outcomes of the scenarios. To integration of strategy, resilience and risk management. The company’s risk management experience of compliance in the banking industry.
augment Gondwana’s ability to weather this dynamic and ever- framework, methodologies and systems will be aligned to guide us into the new future,
evolving storm, leadership instituted unprecedented cost cutting with more emerging risk analyses soon to be amplified by simulated stress testing as a rule,
measures, with senior management bearing the brunt of this always accounting for risks and opportunities.
intervention – exhibiting leadership that was inspiring for all of Strategy, risk management and business continuity enjoy key focus status and are integrated
Namibia to see. While we continued to focus on risk mitigation, a into our approach to risk management. All of this is underpinned by a sound approach to
keen eye was also kept on opportunities that were bound to appear corporate governance in accordance with King IV.
as various peers closed operations, laid off workers and as the state
sought to embark on a journey of recovery for the tourism sector
and the broader economy as a whole.

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