A N N U A L   R E P O R T   –   2 0 0 2 
Financial highlights Statutory information
Letter to the shareholders Accounting policies
Board of directors Income statements
Group operations Balance sheets
Developing people Cash flow statements
Corporate governance Notes to the cash flow statements
Value added statement Statements of changes in equity
Segmental analysis Principal subsidiaries
Five-year financial review Share ownership analysis
Summary of statistics Shareholders’ diary
Definitions Administration
Directors’ responsibility Notice of annual general meeting
Report of the independent auditors Currency conversion table
Secretaries’ certification Board, Director and Committes

B O A R D ,  D I R E C T O R S  A N D  C O M M I T T E E S
 

Composition of the board

  The Reunert board consists of 11 directors, seven of whom are non-executive directors. The composition of the board is listed on pages 6 and 7. The directors bring a wide range of experience, wisdom and professional skills to the board.
   
 

Independence of the board

  The roles of the chairman and the chief executive are separate. The non-executive directors are not appointed under service contracts and their remuneration is not tied to the group's financial performance. The board meets at least once a quarter.
   
 

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 directors.

Board members make every effort to attend the annual general meeting.

   
 

Appointment and re-election of directors

  Directors are subject to retirement by rotation at least once every three years and re-election by shareholders in accordance with the company's articles of association.
   
 

Board committees

 

The board has three subcommittees: the audit committee, the remuneration committee and the executive management 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 on their activities.

   
 

Audit committee

  The group audit committee, chaired by a non-executive director and comprising both executive and non-executive 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. The names of the audit committee's members are listed on page 7.
   
   
 

Remuneration committee

 

The remuneration committee comprises non-executive directors only. The names of the remuneration committee's members are listed on page 7. This committee meets periodically to make recommendations to the board on the framework of executive remuneration, including the granting of share options in terms of the Reunert Share Option Scheme. The chief executive attends these meetings by invitation.

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, having due regard to the interests of the shareholders and to the financial and commerical well-being of the group.

   
 

Executive management committee

  The executive management committee comprises executive directors only. The committee usually meets weekly to attend to and oversee group matters. Senior managers of the group also attend meetings periodically by invitation.
   
 

Company secretary

  The board has access to the advice and services of Reunert Management Services Limited (RMS), which fulfils the role of company secretary. 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. Its 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 auditing

 

The board has appointed Deloitte & Touche to perform an independent and objective audit of 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 the responsibility for ensuring that the group implements and monitors the effectiveness of systems of internal, financial and operating controls. The board has 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 controls

 

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 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 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 auditors' report.

   
 

Internal audit

 

Comprehensive internal controls have been instituted to assist management and directors on 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.

The internal audit department responds to these requirements by performing independent evaluations of the adequacy and effectiveness of all controls, financial reporting structures and the integrity of all information systems and records.

The internal audit department has a comprehensive internal audit and financial review plan, which entails performing detailed internal audit randomly at business units and supervising the internal audit function in the group. This department 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 audit committee meetings.

   
 

Risk management

 

The board is responsible for the total process of risk management and its effectiveness. 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 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 recognises Reunert's contribution as a socially responsible company through its approval of Reunert as a stock to be held in its portfolios.

   
 

Employment equity

  The group supports employment equity and is committed to providing equal opportunities for all group employees. All business units have affirmative action programmes and have implemented skills development and training programmes. An in-depth review on Reunert's focus on people development appears on page 18.
   
 

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 are 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.

   
 

Closed period

  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 senior management may not deal in the shares of the company nor discuss the company's financial position with any outside third party. Additional closed periods are enforced as required in terms of any corporate activity.


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