Page 99 - Gondwana Collection Namibia Value Creation Report 2021

ANA
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VERN GOND
HOW WE GOVERN GONDWANA
HO
W WE
AUDIT, RISK AND
OPPORTUNITY

COMMITTEE

James Mnyupe Our focus areas in 2021 Our future plans Risk management focus in 2021
The committee is the custodian of the company’s financial
engine. We specifically added the word ‘opportunity’ to ensure Determining the value of our assets: From an audit risk Our plans for 2022 include: The focus for the year was on the recovery of the business.
a forward-looking approach to identify ventures that can perspective, one of our biggest challenges was justifying the ○ Optimising our capital model including the ideal ratios of debt Gondwana had to balance not having sufficient cash flow to
unlock value for the business. This includes new sources of value of our assets, especially intangible assets and goodwill. This and equity, and the type of debt (pure debt, mezzanine and act on opportunities and a limited ability to raise capital from
revenue, opportunities to gain market share, acquisitions and means balancing the potential of goodwill with Covid-19 market preference) and how much burden is placed on the income external investors. At present, it would be difficult to justify the
new markets. conditions. Given the uncertainty in our environment, it is difficult attractiveness of an investment in a struggling tourism industry.
to reflect the company’s financial situation. With a low level of statement today and how much lies in the balance sheet of Gondwana had to work hard to maintain its properties with
A big part of our role is to forecast based on the vaccinations in Namibia, Covid-19 is not a transitory risk. This puts tomorrow limited funds to avoid compromising on its product offering.
probability of bookings and the likelihood of our future cash flows and our business evaluation at risk. ○ Relooking our risk mandate and ensuring that risk is This protects Gondwana’s ability to bounce back once the
cancellations. This is filtered through a cost base to adequately represented on the Board tourism industry recovers.
determine a profitability number. Forecasting is difficult Business interruption insurance claim: Our insurance claim and ○ Executing on opportunities in a lean and strategic manner
at the best of times. In Covid-19 times, this becomes the risk of a less-than-anticipated payout is a key risk. The Board and executive management weighed up liquidating
an absolute gamble. Unfortunately, due to new waves Managing our Covid-19 risk: We mitigated our Covid-19 risk by ○ Facilitating a shareholder information session to discuss our the business against the opportunity that a future-fit
and variants, our forecasts for 2021 had to be revised having 60% of our employees vaccinated by end-December. potential diversification strategy Gondwana, once recovered from the impact of Covid-19, would
downwards. This means that we require a significant This is a high percentage compared to the national average and Our approach to risk management exponentially expand its national and international footprint.
amount of prudence in estimating the value of the gives our guests some peace of mind. They chose to focus on the latter, using innovation to create
company and the value of future revenue. The Covid-19 pandemic has changed traditional risk a new future for Gondwana. This included responding to the
Losing key employees: Retaining employees was a challenge sudden influx of independent travellers choosing to explore
We are willing to take on more debt capital to with minimal financial resources. This meant motivating people management, elevating the importance of stress testing and Namibia through self-drive adventures.
cushion the business during an expected period of to stay, but being brave enough to allow them to leave. scenario planning. This assisted in anticipating risk impacts
volatility. The alternative to this is mothballing certain and better informing risk assessment and mitigation. Scenarios Our business interruption insurance claim was a key risk focus
operations, which is not in the best interest of our Bond Programme: We received NSX’s approval for our Bond were regularly re-evaluated to reflect on what did and did for Gondwana. If successful, the payout would put Gondwana
company, customers or employees. We are exploring Programme. We may issue bonds in 2022 if we need additional not go according to plan and improve our risk management on a very different trajectory than local and regional peers.
further debt funding through a Bond Programme and capital. capabilities. This claim demands management attention and legal advice.
possibly equity capital through preference shares. Employee share scheme: The committee considers how we Gondwana’s risk management has transitioned from rigid We believe that there is sufficient local and international legal
The latter would be less onerous over the short term. remunerate key people and, more broadly, how we share our rules-based methodologies to a flexible, real-time risk-based precedent to support our case.
Additional funding also implies additional risk, which wealth. The idea is to align the behaviour of management, approach. This requires the integration of strategy with risk
must be balanced against the underlying potential of the employees and shareholders. We provided our guidance on the management. The company’s risk management framework,
company. proposed employee share scheme before it went to the Board methodologies and systems have been aligned with this new Committee overview
for approval. approach. Strategy, risk management and business continuity
We believe that opportunities to acquire additional tourism The audit, risk and opportunity committee (the committee)
assets will emerge in the future. The challenge is finding Evaluating opportunities: While we focused on risk mitigation, are key focus areas. This is underpinned by a sound approach to reviews Gondwana’s external environment to ensure the TLC
capital providers willing to fund these opportunities. We we also kept an eye on opportunities. One of these was to corporate governance in line with King IV. adequately manages risks and implements strategies that
also see possibilities in transport, logistics, and even energy, build up our car fleet as other fleet owners were selling assets. take advantage of opportunities.
that could be well exploited by our team. This would further Another opportunity is the partnership agreement with Am Considering Gondwana’s risk environment is a standing
diversify our business, away from a pure tourism operation. Weinberg Boutique Hotel. We would be compensated for our agenda item at committee meetings. The identified risks are
These will be approached with caution as market conditions expertise through a proposed management agreement without prioritised and managed in proportion to their potential to
improve. owning the underlying asset. Another opportunity is developing prevent the company from realising its strategic objectives.
a property in Victoria Falls in Zimbabwe.
The committee is chaired by James Mnyupe and attended
by non-executive committee member Eino Emvula following
the resignation of Marlene Hailwax in March 2021. Eino is the
Managing Director (Africa ex-South Africa) of Ninety One, a
leading asset manager.

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VALUE CREATION REPORT 2021