| CORPORATE
GOVERNANCE |
| |
The Reunert Limited
board of directors and group management remain firmly
committed to promoting sound corporate governance
and endorse the principles of fairness, responsibility,
accountability and transparency as set out in the
King Report on Corporate Governance in South Africa
of March 2002.
Reunert strives to comply fully with the recommendations
of this report, including the code of corporate practice
and conduct, and motivates its staff to conduct business
activities with integrity. The group endeavours to
incorporate into its actions the best possible mutual
interests of all stakeholders, including investors,
employees, suppliers, customers and the communities
in which it operates.
Board, directors and committees
Composition of the board
The Reunert board consists of 11 directors, seven
of whom are non-executive, independent directors.
Mr CL Valkin is a partner in a law firm that provides
professional advice to Reunert from time to time.
Mr MJ Shaw is past chief executive and past chairman
of the auditing firm Deloitte & Touche which firm
is conducting the group’s external audit. Messrs DE
Cooper, BP Connellan and MJ Shaw are directors of
SCMB and Absa which provide banking services to the
group.
The directors bring a wide range of experience, wisdom
and professional skills to the board. The composition
of the board with a brief curriculum vitae of each
director is listed on pages 6
and 7.
Independence of the board
The roles of the chairman and the chief executive
are separate. The independent non-executive directors
are not appointed under service contracts and their
remuneration is not tied to the group’s financial
performance. There is a clear division of board responsibilities
and no one individual has unfettered powers of decision
making.
The board meets at least once a quarter. All of the
directors attended the meetings held in 2003 personally
or by way of telephone conferencing, except for the
instances indicated in the table below.
During the past financial year the board has met five
times on the following dates: |
|
| Date |
|
|
|
Apologies
tendered |
|
| 26 November 2002 |
|
Board meeting |
|
CL Valkin |
|
| 11 February 2003 |
|
Board meeting
and AGM |
|
|
|
| 7 May 2003 |
|
Board meeting |
|
JC van der Horst |
|
| 18 July 2003 |
|
Special board
meeting |
|
MJ Shaw, SD Jagoe
and GJ Oosthuizen |
|
| 9 September 2003 |
|
Board meeting |
|
|
|
|
|
Role
and function of the board
The Reunert board of directors, among other functions:
- retains full and
effective control of the Reunert group;
- monitors and evaluates
the implementation of strategies, policies, management
performance
- criteria and business
plans;
- determines the
group’s purpose and values;
- ensures the group
complies with sound codes of business practice;
- has unrestricted
right of access to all company information, records,
documents and property;
- ensures a process
exists to identify key business risk areas and
key performance indicators; and
- guards the interests
of minorities through its independent, non-executive
directors.
All the directors attended the annual general meeting
held in February 2003.
Appointment and re-election of directors
Directors are subject to retirement by rotation
and re-election by shareholders at an annual general
meeting at least once every three years in accordance
with the company’s articles of association. The
curriculum vitae of the directors concerned will
be made available prior to re-election.
Non-executive directors retire after reaching the
age of 70 at the next annual general meeting. Executive
directors retire from the board at 63 years of age
at the next annual general meeting.
Mr CL Valkin will have reached retirement age at
the annual general meeting to be held on 10 February
2004 and will not be available for re-election.
Messrs SD Jagoe, KJ Makwetla and GJ Oosthuizen retire
by rotation in accordance with the company’s articles
of association at the forthcoming annual general
meeting. The remuneration committee has recommended
that they be re-elected and they have offered themselves
available for re-election at this meeting.
Detail of remuneration, fees or other benefits earned
by directors in the past year are given on page
69.
Board committees
The board has three subcommittees: the audit committee,
the remuneration committee and the executive management
and risk committee. Minutes are kept of all committee
meetings.
These committees can at their own discretion seek
independent, outside professional advice as and
when necessary. The committees are directly responsible
to the board.
Audit committee
MJ Shaw (chairman), BP Connellan, SD Jagoe, G Pretorius,
DJ Rawlinson
The group audit committee, chaired by an independent
non-executive director and comprising both executive
and independent nonexecutive directors, meets at
least twice a year to review the group’s control
systems. The committee reviews the group’s internal
and external audit reports and agrees on the scope
of the audits. Furthermore, the committee reviews
audit, accounting and financial reporting issues
and ensures an effective internal control environment
exists in the group. During the year the following
meetings took place:
|
|
| Date |
|
Apologies
tendered |
|
| 18 November 2002 |
|
|
|
| 1 April 2003 |
|
G Pretorius |
|
| 7 May 2003 |
|
|
|
|
|
Remuneration
committee
SD Jagoe (chairman), DE Cooper, JC van der Horst
This committee comprises independent non-executive
directors only and meets at least twice a year to
make recommendations to the board on the framework
of executive remuneration. These recommendations include
the granting of share options in terms of the Reunert
Share Option Scheme and performance-based incentives.
The chief executive attends these meetings by invitation.
The past financial year the remuneration committee
met three times. No apologies were tendered. |
|
| Date |
|
| 26 November 2002 |
|
| 11 February 2003 |
|
| 9 September 2003 |
|
|
|
The remuneration
philosophy is to ensure that the company’s executive
directors and other senior executives are appropriately
rewarded for their individual and joint contributions
to the group’s overall performance, while also having
due regard to the interests of the shareholders and
to the financial and commercial well-being of the
group.
The committee makes recommendations to the board on
the composition of the board and identifying and nominating
candidates to fill any vacancies. In addition, the
committee is tasked to advise the board on succession
planning.
Executive management and risk committee
G Pretorius (chairman), BP Gallagher, GJ Oosthuizen,
DJ Rawlinson
The executive management committee comprises executive
directors only. The committee usually meets weekly
to attend to and oversee all group matters. In total,
17 formal meetings were held during the past year
with executive directors and senior executives to
guide and control the overall direction of the group
and to identify potential risk areas.
Company secretary
The board has access to the advice and services of
Reunert Management Services Limited (RMS). RMS fulfils
the role of company secretary and administers the
share option scheme and all the statutory requirements
of the company. The board is of the opinion that the
management of RMS has the requisite attributes, experience
and qualifications to fulfil its company secretary
commitments effectively.
Sponsor
The company has appointed Rand Merchant Bank (RMB)
as its sponsor. RMB’s services include advising the
board on the interpretation of, and compliance with,
the listing requirements of the JSE Securities Exchange
South Africa (JSE) and reviewing all notices required
in terms of its statutes and the JSE rules and regulations.
External audit
The board has appointed Messrs Deloitte & Touche
to perform an independent and objective audit on the
group’s financial statements. The statements are prepared
in terms of South African Generally Accepted Accounting
Practice (GAAP). Interim reports to shareholders are
not audited, but are discussed with the auditors.
The board acknowledges its responsibility for ensuring
that management implements and monitors the effectiveness
of systems of internal, financial and operating controls.
The board, via the audit committee, receives regular
reviews from management on the effectiveness of established
controls and procedures to ensure the accuracy and
integrity of the accounting records and monitors the
group’s businesses and their performance.
Accounting and internal control
Accounting and internal controls focus on critical
risk areas. The controls are designed to provide reasonable
assurance that assets are safeguarded from loss or
unauthorised use and those financial records may be
relied upon for preparing the financial statements
and maintaining accountability for assets and liabilities.
The identification of risks and the implementation
and monitoring of adequate systems of internal, financial
and operating controls to manage such risks are delegated
to senior executive management. The audit committee
reviews these matters periodically. The controls are
designed to provide reasonable assurance regarding:
- safeguarding assets
against unauthorised use or disposition;
- compliance with
statutory laws and regulations;
- the maintenance
of proper accounting records; and
- the adequacy and
reliability of financial information.
The board has not been
informed by executive or internal audit management
of any issue that would constitute a material breakdown
in the functioning of these controls during the
financial year under review.
The external auditors have again confirmed they
are not aware of any matters relating to Reunert’s
control systems that would constitute a material
breakdown that could result in material losses,
contingencies or uncertainties that require disclosure
in the annual financial statements or the external
auditor’s report.
Internal audit
Comprehensive internal controls have been instituted
to assist management and the directors in fulfilling
their responsibility for the preparation of annual
financial statements, safeguarding assets and providing
answers on transactions that are executed and recorded
in terms of company policies and procedures.
Internal audit responds to these requirements by
performing periodic independent evaluations of the
adequacy and effectiveness of all controls, financial
reporting structures and the integrity of all information
systems and records.
Internal audit has an audit and financial review
plan, which entails performing periodic detailed
internal audits randomly at business units and supervising
the internal audit function in the group. It maintains
an appropriate degree of independence and has unrestricted
access to members of the audit committee. A detailed
plan of internal audit activities and summarised
audit reports are presented at all audit committee
meetings.
Risk management
The board is responsible for the total process of
risk management and its effectiveness. The executive
management and risk committee tables and discusses
all significant potential risks. Management is held
accountable for designing, implementing and monitoring
the risk management process and integrating it into
the daily activities of Reunert and its subsidiary
companies.
All group operations are required to regularly identify
all significant business risks. These risks are
discussed, monitored and updated at monthly management
meetings.
Non-financial matters
Reunert is committed to upholding and maintaining
best international practices in the social, ethical,
safety, health and environmental spheres of its
business and acknowledges the responsibility it
bears as a corporate citizen in society. The group
sets the highest level of ethical standards for
all its officers and employees in conducting business
and dealing with all stakeholders.
The Community Growth Fund has once again approved
Reunert as a socially responsible company.
Employment equity
The group supports employment equity and is committed
to providing equal opportunities for all group employees.
All business units have employment equity programmes
that comply with the objectives and requirements
of the legislation. Various skills development and
training programmes exist within the group. An in-depth
review on Reunert’s focus on people development
appears on pages 18
to 22.
Communications with stakeholders
Reunert is committed to ongoing and effective communication
with all stakeholders. It subscribes to a policy
of open, frank and timeous communication in line
with JSE guidelines and sound corporate governance
practice.
A wide range of channels is used to disseminate
information according to the preferences of the
intended target audiences. These include ongoing
dialogue with institutional investors, analysts
and the media, a corporate website (http://www.reunert.com)
with up-to-date information on the company and its
subsidiary companies.
Dealing in the company’s shares and closed periods
Employees are restricted from dealing either directly
or indirectly in the company’s shares on the basis
of privileged price-sensitive information before
it has been announced publicly to the market.
Senior executives have to obtain permission from
the chief executive before shares are purchased
or sold. All directors have to obtain permission
from the chairman before dealing in the company’s
shares.
The group operates a closed period prior to the
publication of its interim and preliminary results.
During these periods, the group’s directors, officers
and members of the senior management team may not
deal in the shares of the company, nor may they
discuss the company’s financial prospects with any
outside third party. Additional closed periods are
enforced as required in terms of any corporate activity.
Code of ethics
The board is involved in the process of discussing
and approving a formal code of ethics. In the meanwhile
employees are required to act within the guidelines
laid down in the company’s reserved matters.
The corporate code of ethics will include the ethical
standards to which the group subscribes, as well
as a code of conduct setting out policies, procedures
and rules relating to daily operational issues.
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| © Copyright
- Reunert - 2003 |
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