for the year ended 30 September 2011

Directors' report


Authorised and issued capital

The authorised capital of the company remained unchanged.

Options exercised in terms of the Reunert 1985 and 2006 share option schemes accounted for the shares issued during the current year as tabled below:

    Number of shares  
Issue price per share     2011     2010  
R15,99     38 400     51 900  
R39,30     482 000     92 000  
R41,90     682 100     485 400  
R59,55     39 600     –  
R53,50     24 900     –  
R71,30     4 300     –  
R57,50     100 000     –  
R15,80     53 700     –  
R14,10     51 800     –  
R17,70     –     10 000  

Commencing in August 2010, a subsidiary company purchased Reunert shares on the open market. During the current financial year, until the beginning of the closed period on 30 September 2011, 17 053 117 (2010: 2 123 372) ordinary shares were bought at an average price of R66,14 (2010: R59,18) per share.

Review of operations and results

Revenue for the year has remained relatively constant, with an increase of 2% from R10,7 billion to R10,9 billion. Operating profit reflected an increase of 10% to R1,4 billion.

The CBI-electric group of companies recorded a strong performance during 2011. All operations performed well in the difficult environment that has persisted over the past few years. Revenue increased by 13% to R3,3 billion and operating profit improved by 14% to R592,1 million.

Nashua performed to expectation in a quiet market. A number of acquisitions were made in the segment which added to revenue, enabling marginal growth of 1% to be achieved. These acquisitions, which included four franchises and ECN, together with substantial increases in the contributions from Quince and Nashua Electronics, resulted in operating profit growth of 21% to R794,2 million.

Disclosure of Quince Capital has been condensed in respect of the income statement and balance sheet. For a number of years we provided more information on the business to provide users with a better understanding of Quince’s activities and the results thereof. Based on recent feedback from various sources we no longer believe it is beneficial to users to continue this disclosure.

Details of the changes and comparatives before the restatements are explained in note 17 of the financial summary.

Reutech revenue for the year decreased by 19% to R639,3 million, while operating profit decreased 20% to R48,7 million.

Cash dividends

An interim ordinary cash dividend No 170 of 77 cents (2010: No 168 of 67 cents) per share was declared on 17 May 2011, and a final ordinary cash dividend No 171 of 253 cents (2010: No 169 of 220 cents) per share was declared on 14 November 2011.

A total distribution of 330 cents (2010: 287 cents) per ordinary share was declared relating to the 2011 financial year.

An interim 5,5% cumulative preference dividend No 52 was declared on 17 May 2011 and a final dividend No 53 will be declared on 31 December 2011.

Subsidiary companies

Annexure B to this report sets out the principal subsidiaries of the company.

The directors are of the opinion that the publication of information on all the company’s subsidiaries in this report would entail expense out of proportion to the value to shareholders.

Special resolutions of subsidiaries

During this financial year, as required by section 8.63(i) of the JSE Listings Requirements, the following special resolutions were passed by subsidiaries of Reunert: CBI-electric Aberdare ATC Telecom Cables (Pty) Ltd amended its articles of association and made changes to its capital structure, ATC (Pty) Ltd amended its articles of association and Bridoon Trade and Invest 197 (Pty) Ltd had a transfer of shareholding. Full details of these resolutions may be viewed at the company’s registered office.

Financial assistance to related or inter-related companies or other legal entities

At a general meeting held on 1 July 2011, pursuant to the requirements of Section 45 of the Companies Act, 2008, shareholders passed a special resolution authorising the directors, by way of general authority, to allow the company to provide direct or indirect financial assistance to any company or other legal entity which is related or inter-related to the company, subject to the relevant provisions of Section 45.

Directorate and company secretary

Directors are subject to retirement by rotation and re-election by shareholders at an annual general meeting (AGM) at least once every three years in terms of the company’s Memorandum of Incorporation (MOI). The board charter is an integral part of the conditions of appointment of all directors. Procedures for appointments are formal and transparent, and are considered by the board as a whole.

Non-executive directors retire at the next AGM, after reaching the age of 70.

Ms YZ Cuba and Mr SG Pretorius joined the board on 1 January 2011 and 22 February 2011 respectively. Messrs BP Connellan and KJ Makwetla retired from the board at the AGM on 8 February 2011 after reaching the mandatory retirement age of 70 for non-executive directors.

Mr NC Wentzel was appointed as chief executive from 1 August 2010. On 21 September 2011 the group announced that a separation by mutual agreement was reached and that Mr NC Wentzel would leave the group with immediate effect. Mr DJ Rawlinson was appointed as chief executive and Ms MC Krog as financial director. With effect from 14 October 2011, Mr GJ Oosthuizen resigned from the board after 14 years of service.

Mr SG Pretorius, having been appointed to the board during the year, is required to retire at the next AGM but, being eligible, offers himself for re-election. In terms of the company’s MOI Mr DJ Rawlinson, who was appointed chief executive of the group on 21 Septemer 2011, is required to retire and being eligible, offers himself for election.

At least one-third of directors shall retire at the AGM. Appointments are not for a fixed term and directors are re-elected by shareholders as required by rotation. Ms MC Krog, Ms KW Mzondeki and Mr R van Rooyen retire by rotation at the next AGM. The nomination committee, at its meeting on 14 November 2011, recommended that they be re-elected and they have offered themselves for re-election.

The names of the directors in office at the date of this report are set out here.

Reunert Management Services Limited fulfilled the role of company secretary until 31 March 2011. Ms Natasha Camhee was appointed as company secretary effective 1 April 2011.

Remuneration of non-executive directors

At a general meeting held on 1 July 2011:

  • In terms of the JSE Listings Requirements and King III, shareholders were requested to pass a non-binding advisory vote, approving the remuneration payable to non-executive directors
  • Pursuant to the requirements of Section 66(9) of the Companies Act, shareholders were requested to pass
    a special resolution to approve increases in the fees payable to non-executive directors with effect from 1 March 2011. Furthermore, at the AGM to be held on 15 February 2012, shareholders will be requested to approve increases in fees payable to non-executive directors with effect from 1 March 2012. The approved fees for 2011 and the proposed fees for 2012 are outlined in the table below:
Fee per  
Fee per  

Number of  

  Fee per  
  Fee per  
Chairman     R720 0001     R775 0001   4     R30 0002     R32 0002  
Non-executive directors     R132 000     R150 000   4     R15 0002     R17 0002  
Audit committee chairman     R150 000     R161 000   3     R15 0003     R16 0003  
Audit committee member     R86 000     R92 500   3     R15 0003     R16 0003  
Remuneration committee chairman     R75 000     R80 500   2     R15 0004     R16 0004  
Remuneration committee member     R55 000     R59 000   2     R15 0004     R16 0004  
Nomination committee chairman     R63 000     R67 500   2     R15 0005     R16 0005  
Nomination committee member     R55 000     R59 000   2     R15 0005     R16 0005  
Risk committee chairman     R63 000     R67 500   2     R15 0006     R16 0006  
Risk committee member     R55 000     R59 000   2     R15 0006     R16 0006  
Social, ethics and transformation committee chairman     R63 000     R67 500   2     R15 0007     R16 0007  
Social, ethics and transformation
committee member  
  R55 000     R59 000   2     R15 0007     R16 0007  
Investment committee chairman and members     R0     R0   Ad hoc     R15 0008     R16 0008  
1 The chairman is a member, or attends by invitation, all committee meetings. However, the fee is based on four board meetings per annum.
2 Only for an additional board meeting.
3 Only for an additional audit committee meeting.
4 Only for an additional remuneration committee meeting.
5 Only for an additional nomination committee meeting.
6 Only for an additional risk committee meeting.
7 Only for an additional social, ethics and transformation committee meeting.
8 Only for ad-hoc meetings of the investment committee.  

Interests of directors

At the reporting date, fully paid ordinary Reunert shares were held directly and indirectly by the directors as indicated in the table below:

    Direct beneficial     Indirect beneficial     Held by associates     Total  
    2011     2010     2011     2010     2011     2010     2011     2010  
BP Connellan     –     30 523     –     9 000     –     –     –     39 523  
BP Gallagher     381 713     331 713     –     –     –     –     381 713     331 713  
KJ Makwetla     –     –     –     –     –     150     –     150  
GJ Oosthuizen1     –     66 700     –     –     –     –     –     66 700  
NDB Orleyn2     –     –     –     –     1 554 000     1 554 000     1 554 000     1 554 000  
DJ Rawlinson     418 520     358 520     –     –     –     –     418 520     358 520  
NC Wentzel3     –     –     –     7 500     –     –     –     7 500  
    800 233     787 456     –     16 500     1 554 000     1 554 150     2 354 233     2 358 106  
1 Mr GJ Oosthuizen resigned from the board with effect from 14 October 2011.

2 These shares are held indirectly through Bargenel’s investment in Reunert which relates to the BEE deal concluded in 2007.
3 Mr NC Wentzel resigned from the board with effect from 21 September 2011.  

These holdings have remained unchanged from 30 September 2011 up to 14 November 2011.

At the reporting date, executive directors of the company held unexercised options to subscribe for 195 000 (2010: 350 000) ordinary shares in terms of the Reunert 2006 Share Option Scheme. An amount of 100 000 of these options are due to expire on 18 June 2019, and 95 000 on 17 February 2021. In the prior year, executive directors of the company also held unexercised options to subscribe for 160 000 ordinary shares in terms of the Reunert 1985 Share Option Scheme and were exercised during the year. These options were due to expire on 29 August 2015.

The directors have no financial interest in contracts entered into by the group during the year. For further information on directors’ share options, refer to note 24 of the annual financial statements.


During the financial year there was an apparent breach of corporate governance. The board took immediate and appropriate action to investigate the matter, which actions included the appointment of Deloitte, our external auditors, to review the circumstances that gave rise to this apparent breach. Deloitte subsequently reported an irregularity relating to delegated authority levels to the Independent Regulatory Board for Auditors as required by the Auditing Professions Act. This has resulted in an annotation to their audit opinion.

Arising from the board’s investigation, Reunert has taken the following action:

  • all delegated authority levels have been reviewed
  • all existing employees have been reminded of the delegated authority levels, the necessity of respecting these levels and the consequences of breaching delegated authority levels; and
  • all new employment contracts will reflect the consequences of any breach of delegated authority.

We take our governance responsibilities seriously and can assure stakeholders that we are confident that our corporate governance has been enhanced by the actions taken.

Subsequent events

The directors are not aware of any matters or circumstances arising between the end of the financial year and the date of these financial statements, which materially affect the financial position or results of the company or group.

Attributable interest

The attributable interest of the company in the profits and losses of its consolidated subsidiaries for the year ended 30 September 2011 is as follows:



In the aggregate net income     744,1     638,2  
In the aggregate net losses     (6,9)    (8,6) 
    737,2     629,6  

Going concern

The directors confirm that the group and company have adequate resources to operate for the foreseeable future and will remain a viable going concern in the year ahead.