corporate governance

“We are positive that the group will maintain its resilience and continue to deliver positive results.” – Thinus Prinsloo, Group CEO

Governance overview and approach

Capricorn Group and its subsidiaries are committed to the principles of sound corporate governance, which are characterised by discipline, transparency, independence, accountability, responsibility, fairness and social responsibility. By subscribing to these principles, the group believes that all stakeholders’ interests are promoted, including the creation of long-term shareholder value.

The board and its committees are responsible for establishing effective leadership and ethical practices, and for ensuring the application of appropriate governance practices to deliver the desired outcomes. Following a decision by the Namibian Stock Exchange (NSX) in 2018 to allow listed entities to select compliance either with the NamCode or the King IV Report on Corporate Governance™ for South Africa, 2016 (King IV™), Capricorn Group resolved to adopt King IV™ in the current financial year.

The board supports the shift to an outcomes-based approach to governance, where the leadership tone is set from the top. The work done in embedding The Capricorn Way signals the emphasis on creating an ethical culture with behaviours based on a common set of values.

The board has also been setting the tone to create an ethical culture through a group risk appetite statement that includes elements specifically related to ethical risk. Operational risk priorities include building an effective risk culture to support dynamic risk management.

Board members and employees adhere to an updated Group Code of Ethics and Conduct Policy while the Procurement Policy was augmented with a Suppliers’ Code of Conduct. Since its inception, the board sustainability and ethics committee (BSEC) has been mandated to recommend policies and guidelines for addressing ethics issues to the board and escalate any ethics risks to the board audit, risk and compliance committee (BARC).

Dealing in shares is governed by a policy that sets out practices for approval requirements, disclosure principles and closed-period rules, among other things. Board members are required to observe section 242 of the Companies Act, which deals with disclosure of interests. Where appropriate, board members recuse themselves from discussions or decisions on matters of potential conflict of interest unless these matters are resolved otherwise by the chairman or by the remaining members of the board.

Key board practices and activities focus on:

  • Open and rigorous discussion
  • Active participation
  • Consensus in decision-making
  • Independent thinking and alternate views
  • Reliable and timely information

The board provides oversight and ensures sustainability by approving a clear strategy linked to performance objectives and targets. The operational risk management infrastructure has been enhanced to support the group’s strategy, which directs the evolution of the internal risk and control frameworks based on anticipated future operating dynamics. To achieve good performance as an outcome, the board evaluates its own performance, which includes the performance of the board committees, and ensures that remuneration throughout the group is linked to the achievement of performance targets.

Effective control is embedded in the governance structures in the group. The board follows a structured approach to meetings, supported by a timely flow of documents to ensure that the oversight responsibilities of the boards of subsidiaries, as well as the Group board and its board committees, are carried out effectively.

The board believes that the group earns legitimacy through consistent performance over time, a reputation for compliance, customer service, stakeholder-inclusiveness and by acting as a Connector of Positive Change.

Governance milestones for 2019

  • Implementation of King IV™, transition from NamCode
  • Appointment of a financial director, Jaco Esterhuyse, with effect from 1 September 2018
  • Appointment of two Government Institutions Pension Fund (GIPF) nominees, Mihe Gaomab II and Goms Menetté, as non-executive directors to the board with effect from August and November 2018, respectively
  • External evaluation of the boards, committees, directors and company secretaries of Capricorn Group and the three banks

Our King IV™ journey

King IV™ focuses on outcomes as opposed to inputs in respect of good governance. It defines corporate governance as the exercise of ethical and effective leadership by the board towards the achievement of four corporate governance outcomes, namely:

  • Ethical culture
  • Good performance (sustainable value creation)
  • Effective controls
  • Trust, a good reputation and the legitimacy of the company (its social licence to operate)

Furthermore, King IV™ contains 17 principles, stated in an outcomes-based manner, which should all be applied.

The executive leadership and the board of Capricorn Group, with the assistance of a governance expert, reviewed King IV™ with a view to:

  • ensure alignment in the understanding of the King IV™ philosophy, corporate governance outcomes, the 17 principles and how to apply the principles through supporting practices;
  • assess the appropriateness of current practices in support of the outcomes required by each of the 17 principles; and
  • identify proposed changes and enhancements to current practices to ensure the more effective application of the principles.

While no major gaps were found, management and the boards of each subsidiary company are in the process of finalising and implementing the proposed enhancements.

Capricorn Group board

The board plays a pivotal role in the group’s corporate governance system. An overriding commitment with regard to the board’s deliberations and approach to corporate governance is that of intellectual honesty.

The board, as constituted by the Companies Act, is governed by the board charter. The purpose of this charter is to regulate how business is conducted by the board. The charter also sets out the specific responsibilities to be discharged by the board members collectively and the Group CEO and Group chairman in their respective capacities.

Role of the board

An important role of the board is to define the vision and purpose of the group (including its strategic intent and choices) and its values (manifested by The Capricorn Way), which constitute its organisational culture, associated behaviours and norms to achieve its purpose. These are considered to be clear, concise and achievable. The group’s strategy is considered, evaluated and agreed upon every year before the annual budget is approved. Implementation is monitored quarterly at the board and executive meetings. Read more about the group’s purpose, strategy and The Capricorn Way.

The board also ensures that procedures and practices are in place that protect the group’s assets and reputation. The board is also responsible for establishing, reviewing and monitoring strategic choices, approving major acquisitions, disposals and capital expenditure and overseeing the group’s systems of internal control, governance and risk management. A schedule of matters reserved for the board’s decisions details key aspects of the group’s affairs that the board does not delegate, including the approval of business plans and budgets, material expenditure and alterations to share capital. This framework clarifies roles and ensures the effective exercise of authority and responsibilities.

Board leadership and composition

Capricorn Group has a unitary board, consisting of an appropriate mix of executive, non-executive and independent directors. The size of the board is dictated by the company’s articles of association that require a minimum of five directors. Currently, 11 members constitute the board at group level, with two executive directors, three non-executive and six independent non-executive directors. The nominations committee, which includes the lead independent director (LID), assessed the independence of the non-executive directors classified as independent and confirmed their continued classification as independent.

The board is satisfied that its composition reflects the appropriate mix of knowledge, skills, experience, diversity and independence.

Board member profiles

Chairman of the Group board nominations committee
Chairman of the Group board investment committee
Chairman of the board procurement committee
Member of the Group board remuneration committee

Appointed to the board in 1999

After joining Coopers & Lybrand (now PricewaterhouseCoopers) in 1980, Johan Swanepoel qualified as a chartered accountant in 1982. He was elected managing partner of the firm in Namibia in 1989. He was appointed as managing director of Bank Windhoek and a director of Capricorn Group on 1 July 1999. In 2005 he took up the position of the group managing director of Capricorn Investment Holdings. Upon his retirement from this position in 2017, he accepted the role of chairman of the boards of Capricorn Group and Bank Windhoek.

Johan is a director of a number of companies in the Capricorn Group, Capricorn Investment Holdings, Namibia Strategic Investments, Kuiseb Investments (Pty) Ltd, Infocare Healthcare Services (SA) (Pty) Ltd and Infocare International (Pty) Ltd.

Chairman of the Group board human resources committee
Member of the Group board nominations committee

Appointed to the board in 2007

Brian Black was the national chairman of the Hospitality Association of Namibia, chairman of NCCI Trade and Investment Advisory Committee, and board member of FENATA and PG Bison Namibia. Previous board memberships include the Namibian Employers Federation, the Namibian Tourism Board, Namibia Wildlife Resorts, Swakopmund Hotel & Entertainment Centre and Medicity Private Hospital. Brian was also the general manager of marketing and sales for TransNamib Holdings Ltd, managing director of Cernol Chemicals (Namibia) (Pty) Ltd and executive director of Swachem Namibia (Pty) Ltd and Spice and Scale World (Pty) Ltd. He was a member of the Labour Advisory Council.

Current board memberships include being the chairman of Ekango Salt Refiners (Pty) Ltd, AFS Group Namibia and the Namibian Manufacturers Association. He is also a board member of the Social Security Commission. Among his personal CSR projects is the Kappsfarm Community Police Station.

Member of the Group board investment committee
Member of the Group board nominations committee

Appointed to the board in 1996

Koos Brandt is a founding member of Bank Windhoek. He was appointed as chairman of the board of Bank Windhoek on 1 April 1982 and was chairman of Capricorn Group since its inception in 1996 until 30 June 2017. He practised as a commercial lawyer for more than 30 years at Dr Weder, Kruger and Hartmann (now Dr Weder, Kauta & Hoveka).

He is a director of a number of companies in the Capricorn Group, Capricorn Investment Holdings, Namibia Strategic Investments, Infocare Healthcare Services (SA) (Pty) Ltd and Infocare International (Pty) Ltd.

Member of the Group board investment committee
Member of the Group board IT committee
Member of the board procurement committee

Appointed to the board in 2018

Jaco Esterhuyse joined Capricorn Group in 2012 as Group Financial Controller after spending seven years in London, among others as associate director at Barclays. Jaco completed his BCompt (Hons) in 2001 and qualified as a chartered accountant (SA) in 2004. He was promoted to Group Chief Financial Officer in 2013 and is a director of numerous companies in the Capricorn Group, Nimbus Infrastructure Limited, Paratus Telecommunications (Pty) Ltd and Santam Namibia Ltd.

Chairman of the board audit, risk and compliance committee
Chairman of the Group board remuneration committee
Member of the Group board human resources committee
Member of the Group board nominations committee
Member of the Group board investment committee

Appointed to the board in 2015

Gerhard Fourie has 35 years’ experience as a chartered accountant. He was a partner with EY (formerly Ernst & Young) for 28 years until his retirement as managing partner of EY Namibia in June 2015. Gerhard completed a postgraduate management development programme at the University of Cape Town Business School and an advanced leadership programme at the Gordon Institute of Business Science (GIBS), and is a member of the ICAN Council. Other board memberships include Bank Windhoek Ltd and being the chairman of Namib Bou.

Member of the board audit, risk and compliance committee

Appointed to the board in 2018

Until June 2019, Mihe Gaomab was an executive director at the African Development Bank after serving as the CEO of the Namibian Competition Commission until 2016. He was a deputy director of the Southern African Customs Union until 2009. He was the chairman of the board of trustees of the GIPF from 2011 to 2016 and is the founding president of the Namibia Economic Society.

Member of the Group board sustainability and ethics committee

Appointed to the board in 2013

Esi Schimming-Chase was admitted as a barrister at law in England and was subsequently appointed legal officer in the office of the Attorney General of Namibia. She was senior manager: investment promotions at the Offshore Development Company (Pty) Ltd, where she promoted foreign investment in export processing zones in Namibia. She completed her articles at Koep & Partners and was admitted as a legal practitioner of the High Court of Namibia. She is currently a practising advocate of the High Court of Namibia and member of the Society of Advocates of Namibia. She has lectured part-time and acted as a judge of the High Court of Namibia in 2011, 2013 and 2015. In July 2017, Esi was awarded the status of senior counsel.

Her other board memberships include the Legal Assistance Centre.

Appointed to the board in 2018

Goms Menetté is the Deputy Auditor-General of Namibia. He was the deputy director for internal audit of the Ministry of Finance. He holds an MBA and a Diploma in Management Studies and is the chairman of the board of trustees of the GIPF. He is a member of the GIPF’s investment committee and its audit and risk committee. He served on the board of Air Namibia for seven years until 2012 and chaired the airline’s audit committee. He also served on the Road Fund Administration’s audit committee from 2001 to 2004.

Chairperson of the Group board sustainability committee
Member of the Group board IT committee

Appointed to the board in 2004

Gida Nakazibwe-Sekandi joined the banking industry in August 2000 when she was appointed as executive officer: marketing and corporate communication at Bank Windhoek. In 2008, she was appointed as executive director of Capricorn Investment Holdings Ltd. Gida is a founding member of the Public Relations Institute of Southern Africa (PRISA) Namibia. She has served in various executive roles, including as head of industrial relations and communications and head of corporate affairs at Rössing Uranium. She served in the Ministries of Justice in Uganda and Zimbabwe as state attorney and public prosecutor respectively.

Gida is a director of numerous companies in the Capricorn Group, Capricorn Investment Holdings and Welwitschia Insurance Brokers. She serves as the lead director of Allegrow Fund, a local unlisted private equity fund. She invests her time pro bono in various social institutions, including MSR and Women@Work.

Member of the Group board human resources committee
Member of the Group board investment committee
Member of the Group board sustainability and ethics committee
Member of the Group board IT committee
Member of the board procurement committee

Appointed to the board in 2013

Thinus Prinsloo joined Capricorn Investment Holdings in July 2011 and was appointed as managing director of Capricorn Group from 1 January 2016. Before joining the group, Thinus worked at Absa in South Africa where he held various positions, including the head of integration. Prior to that, he worked as a business strategy consultant at IBM and PricewaterhouseCoopers (PwC). Thinus qualified as a chartered accountant while working at PwC in South Africa and the corporate finance division in the UK. He completed a number of executive programmes at GIBS, the University of Cape Town Business School and, most recently, the Oxford Advanced Management and Leadership Programme at Saïd Business School.

He is a director on various boards in the Capricorn Group and the Sanlam Namibia group.

Member of the board audit, risk and compliance committee
Member of the group board IT committee

Appointed to the board in 2017

Dirk Reyneke was a partner at EY for 14 years, including the Gauteng Financial Services Group and Gauteng head of banking. In 2006 he joined Absa Retail Bank as CFO. Other positions at Absa included head of finance and operations and later Chief Operating Officer for Absa Retail and Business Bank. Since 2012 he has been employed by Telkom Group, where he is now the CFO for Openserve. Previous positions at Telkom included CFO for Gyro Group, Telkom’s property division, CFO for Telkom Mobile and head of integration tasked with the integration of Telkom Enterprise and Business Connexion. He is also a member of the boards of SBV Services, SWIFTNet SOC and Gyro Group Companies.

Chairman, lead independent director and Group CEO

The board chairman, Johan Swanepoel, is considered to be an independent non-executive director.

The board has appointed Gerhard Fourie as lead independent director. His role and responsibilities are set out in the board charter and include serving as a nexus between executive and non-executive directors where a more stringent observation of independence is required on particular matters requiring a board decision, especially in situations where the independence of the chairman may be questionable or impaired, including discussions dealing with the succession of the chairman and the chairman’s performance appraisal.

The Group CEO is appointed by the board, and his succession is attended to by the nominations committee.

The board is of the opinion that the governance structures and processes in place provide adequate challenge, review and balance, and mitigate undue influence by any particular director. Board decisions are robustly deliberated, and consensus driven.

Meeting attendance

Each board committee has an executive lead to coordinate meetings and meeting documentation. The board meets a minimum of four times a year, with board committee meetings normally held two weeks prior to board meetings.

Feedback reports from the committees to the board include feedback on key matters discussed, key decisions taken, and matters referred to the board.

The board audit, risk and compliance committee (BARC), in particular, has an oversight responsibility on behalf of the group regarding key audit, financial and risk matters dealt with by the BARCs of group subsidiaries. To assist the Group BARC in discharging this responsibility, the chairpersons of the BARCs, board audit committees (BACs) and board risk and compliance committees (BRCs) of group subsidiaries submit letters of representation to the group BARC chairman. The Group CEO also attends all the audit and risk committee meetings of subsidiaries. See the diagram below for details of this structure.

Attendance at meetings during the financial year was as follows:

Board appointments, induction and training

Procedures for appointment to the board are formal and transparent. Nominations for appointment as members of the board are recommended by the group board nominations committee (Nomco), which is chaired by the board chairman. The lead independent director is a member of the committee, and all members are non-executive.

Background and reference checks are performed before the nomination and appointment of new directors.

New board members hold office until the next annual general meeting, at which time they become available for re-election. Executive directors are engaged on employment contracts, subject to short-term notice periods unless longer periods are approved by the board.

On appointment, all directors attend an induction programme aimed at deepening their understanding of the group and the business environment and markets in which the group operates. This includes background material, meetings with senior management and visits to the group‘s facilities. All board members are expected to keep themselves abreast of changes and trends in the economic, political, social and legal landscape in which the group operates. Where appropriate, significant developments that impact the group and of which the board needs to be aware, are highlighted via the governance structures and process.

With the assistance of a governance expert, the directors reviewed King IV™ to ensure alignment in the understanding of its philosophy, outcomes and principles, assess the appropriateness of our current practices and identify proposed changes and enhancements to our current practices.

This year, the board received a presentation on the board’s responsibilities regarding anti-money laundering (AML) and the combating of terrorist financing (CTF) and a session on the Agile methodology.

Board evaluation

The nominations committee appointed the Institute of Directors of Southern Africa (IoD) to do an external evaluation of the boards, committees, directors and company secretaries of Capricorn Group and the three banks. Other subsidiaries participated in a process of self-evaluation. The appraisal included a review of the composition of the boards and committees, roles and responsibilities, relationships with management and other stakeholders, and board meetings, among other things. Following a review of the governance documentation, the IoD tailored appraisal questionnaires that were completed by the directors and company secretaries, after which the IoD interviewed them individually. The reports prepared by the IoD indicated a satisfactory outcome of the appraisal. Key strengths mentioned include that the board is highly functional, that members respect one another, work well together, have significant skills, experience and qualifications in finance and banking and that there are robust debate and discussion. The board identified a need for additional information technology skills. A comprehensive group governance framework has been developed over the years, and appropriate reporting and feedback channels have been established. The board is satisfied that the evaluation process is improving the board’s performance and effectiveness.

Access to independent advice

The company secretary is available to provide assistance and information on governance and corporate administration to the directors, as appropriate. The directors may also seek advice on these or other business-related matters directly from independent professional advisers should they so wish. This is in addition to the advice provided by independent advisers to the committees of the board. No requests for external professional advice were received during the year.

The board has unrestricted access to the executive management team of the group to discuss and ask advice about any matters on which they require additional information or clarification.

The board believes that these arrangements are effective for the optimal functioning of the board.

Board committees

The board as a whole remains responsible for the strategic direction of the group. To effectively discharge its responsibilities, it delegates certain functions to committees established by the board. All committees are properly constituted, chaired by a non-executive director and act within agreed, written terms of reference that meet best-practice standards authorised by the board.

Board audit, risk and compliance committee

Further disclosures

The audit committee is satisfied that the external auditor is independent of the organisation.

The committee has approved a non-audit services policy that is strictly adhered to. On a quarterly basis, management reports all payments made to the external auditor for audit and non-audit fees to the BARC. Prior BARC approval is required for assignments exceeding the policy threshold.

The external audit firm has audited the company since its incorporation in 1996. Audit firm rotation is envisaged as required by BID-10.

The designated external audit partner was rotated in 2017. During the external audit firm’s tenure, the finance team and all BARC members have low tenures, which mitigates the risk of familiarity between the external auditor and management.

The IFRS 9 provisions were a significant matter that the audit committee has considered in relation to the annual financial statements. This was addressed by the committee by engaging with professional advisers in each of the three countries where the group’s banks operate.

The audit committee’s views on the quality of the external audit is that the audit was executed in compliance with generally accepted audit standards.

As regards the audit committee’s views on the effectiveness of the chief audit executive and the arrangements for internal audit, the committee concurs with the opinion of the external quality assurance review, which allocated a “partially conforms” overall rating to the internal audit activity of the Capricorn Group. This means the evaluator has concluded that the activity is making good-faith efforts to comply with the requirements of the international internal audit standards. Actions identified by the quality assurance review were tracked at each BARC meeting and were fully addressed during the financial year.

The audit committee’s views on the effectiveness of the design and the implementation of internal financial controls are reflected in the statement of responsibility by the board of directors. During the year under review, there was no serious incident that would indicate a breakdown of controls. This, and the results of the internal audit report and the external audit report, confirm that material internal financial controls were effective.

Having assessed the effectiveness of the finance functions in the group as well as the finance director, the audit committee considered the overall finance function in the group to be competent, well capacitated and in compliance with benchmark standards and norms.

With regard to combined assurance, the outcome from assurance activities of management assurance services and internal audit are reported to the BARC. The annual audit activities of the external audit take into consideration and are coordinated with internal audit assignments. Other assurance role players, like group compliance and IT risk, were identified relevant to their envisaged contribution to combined assurance. However, the outcome of their assurance efforts must still be coordinated and collated in the reporting to the BARC.

Group board HR committee

Group board remuneration committee

Group board nominations committee

Group board investment committee

Group board sustainability and ethics committee

Group board information technology committee

Further disclosures

Technology and information are governed in a way that supports Capricorn Group in setting and achieving its strategic objectives. The GBITC is well established to fulfil the oversight required and meets quarterly. Oversight of IT is part of every GBITC agenda and IT policies are reviewed and approved by GBITC.

GBITC actively monitored the delivery against the priorities of the eight platforms. Platform owners provided progress updates at every GBITC meeting and specific actions were noted and tracked to completion. All other focus areas were reviewed and actioned.

The following policies are in place and approved by GBITC:

  • Capricorn Group IT policy
  • Capricorn Group IT service delivery policy
  • Capricorn Group IT change management policy
  • Capricorn Group information security policy
  • Capricorn Group IT disaster-recovery policy
  • Capricorn Group IT acceptable use policy
  • Capricorn Group technology risk framework

Planned areas of future focus are:

  • Further embedding Agile and platforms
  • Investing in the various platforms to support the group’s strategy
  • Oversight for expanding platform capacity in line with business demand and to enable delivery of the strategy
  • Continue reviews of the platform roadmaps and delivery against strategy

Board procurement committee

Audit and compliance report

Systems of internal control

The group maintains systems of internal control over financial reporting and the safeguarding of assets against unauthorised acquisition, use or disposition. These systems are designed to provide reasonable assurance to the group and each subsidiary’s management and board of directors about the reliable preparation of financial statements and safeguarding of the group’s assets.

The systems include a documented organisational structure and division of responsibility and established policies and procedures that are communicated throughout the group, and the proper training and development of its people.

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable, and not absolute, assurance with respect to the preparation of the financial statements and the safeguarding of assets. Furthermore, the effectiveness of an internal control system can change with circumstances.

The group continuously assesses its internal control systems in relation to effective internal control over financial reporting. Based on its assessment, the group believes that as at 30 June 2019, its systems of internal control over financial reporting and safeguarding of assets against unauthorised acquisitions, use or disposition were adequate.

The group internal audit services (GIAS) is an independent and objective review and consulting function created to improve the systems of internal control across the group. GIAS helps the group to achieve its objectives by systematically reviewing current processes by using a risk-based approach to establish whether design, controls, the risk management process, the management control process and the governance process are adequate, effective and appropriate.

GIAS reports to the BARC and has unrestricted access to the BARC chairman.

EY acts as co-source partner to GIAS, supporting the Head: GIAS, providing technical support and resource capability, and reporting to the BARC.

External auditor

The BARC approved the external auditor’s terms of engagement, scope of work and the 2019 annual audit strategy, and agreed on the applicable levels of materiality. Based on written reports submitted, the committee reviewed the findings of their work with the external auditor and confirmed that all significant matters had been satisfactorily resolved.

The committee has also assessed the external auditor’s independence and has concluded that the external auditor’s independence was not impaired during the reporting period and up to the date of signing the consolidated financial statements.

Non-audit services received, and fees paid by the group during the financial year are as follows:

It is the external auditor’s responsibility to report on whether the financial statements are fairly presented in all material respects in accordance with the applicable frameworks adopted by the group. Their audit opinion is included in the consolidated annual financial statements.

“We believe that by successfully implementing the AsOne2020 strategy, we can build a sustainable business that makes a difference to broader society.”