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Highlights Accounting policies
Letter to shareholders Income statements
Board and governance structure Balance sheets
Group overview Cash flow statements
Building and developing people Notes to the cash flow statements
Corporate governance Statement of changes in equity
Value added statement Notes to the annual financial statements
Segmental analysis Principal subsidiaries
Five-year financial review Share ownership analysis
Summary of statistics Shareholders' diary
Definitions Corporate administration and information
Directors' responsibility Notice of annual general meeting
Report of the independent auditors Currency conversion table
Secretaries' certification Proxy form
Statutory information

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 groupís 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 groupís 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 groupís 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 companyís 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 companyís 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 groupís control systems. The committee reviews the groupís 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.

26 November 2002

11 February 2003

9 September 2003

The remuneration philosophy is to ensure that the companyís executive directors and other senior executives are appropriately rewarded for their individual and joint contributions to the groupís 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.

The company has appointed Rand Merchant Bank (RMB) as its sponsor. RMBís 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 groupís 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 groupís 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 Reunertís 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 auditorís 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 Reunertís 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 companyís shares and closed periods
Employees are restricted from dealing either directly or indirectly in the companyís 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 companyís shares.

The group operates a closed period prior to the publication of its interim and preliminary results.

During these periods, the groupís directors, officers and members of the senior management team may not deal in the shares of the company, nor may they discuss the companyís 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 companyís 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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