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 (King Code).
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 Reunert board is satisfied that the group has in all material respects complied with the provisions and the spirit of the King Code. 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 currently consists of 11 directors, seven of whom are non-executive, independent directors as defined in the King Code. It is the policy of the board to have due regard to considerations of diversity and the appropriate balance of executive, non-executive and independent directors when making or recommending appointments to the board. The directors bring a wide range of experience, wisdom and professional skills to the board. The composition of the board with brief curriculum vitae of each director is listed on pages 5 to 7.
Declaration of interests
Several of the non-executive, independent directors hold various directorships in other listed companies. Full details of these directorships are given on pages 6 and 7. Whenever it is felt that there is a conflict of interest the director will recuse him/herself from discussion at board or board committee meetings when such business is tabled.
The Reunert board has adopted a board charter. The salient features thereof are:
- the demarcation of the roles, functions, responsibilities and powers of the board;
- the terms of reference of the various board committees;
- matters reserved for decision making by the board; and
- the policies and practices of the board in respect of matters such
as corporate governance, board meetings and documentation, disclosure
of conflicts of interests and trading by the directors in the securities
of the company.
Roles and responsibilities
The roles of the chairman and the chief executive are separate. The chairman of the board is elected by members of the board. The chairman has no executive or management responsibilities and acts also as chairman of meetings of shareholders.
The chief executive is appointed by the board on recommendation of the nomination committee. The duration of his appointment, terms of appointment and compensation are determined by the board on recommendation of the remuneration committee.
The non-executive directors are not appointed under service contracts and their remuneration is not tied to the groups financial performance. There is a clear division of board responsibilities and no one individual has unfettered powers of decision making.
Directors are jointly accountable for decisions of the board. Directors have a legal obligation to act in the best interest of the company, to act with due care in discharging their duties as directors, to declare and avoid conflicts of interests with the company and the group and to account to the company for any advantages gained in discharging their duties on behalf of the company.
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
and management performance;
- sets criteria and approves business plans;
- determines the groups 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
The board meets quarterly and at such additional ad hoc times as may be required. Members of senior management can be invited to attend board meetings to facilitate communication between executive management and non-executive board members. All of the directors attended the meetings held in 2004/5 except for the instances indicated in the table below.
|During the past financial year the board has met five times on the|
|15 November 2004||Board|
|7 February 2005||Board and AGM||BP Gallagher|
|2 March 2005||Special||BP Connellan|
|9 May 2005||Board|
|29 August 2005||Board||KC Morolo|
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 companys articles of association. The board charter is considered to be an integral part of the conditions of appointment of all directors. Procedures for appointments are formal and transparent and a matter for the board as a whole.
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.
The chairman Mr DE Cooper has resigned as non-executive director and chairman from the board with effect from 31 May 2005. Derek has for some time conveyed to the Reunert board that as chairman of a major South African bank and in the interest of good corporate governance it was not appropriate for him to remain on Reunert's board. Mr MJ Shaw, chairman of the audit and risk committee was appointed as chairman effective 31 May 2005. Mr KS Fuller was appointed as non-executive director on 1 June 2005. In terms of the companys articles of association, Mr Fuller is required to retire at the next annual general meeting. Mr Fuller has made himself available for re-election.
Messrs BP Gallagher, DJ Rawlinson and JC van der Horst retire by rotation in accordance with the companys articles of association at the forthcoming annual general meeting. The nomination committee has recommended that they be re-elected and they have offered themselves for re-election at this meeting.
Details of remuneration, fees or other benefits earned by directors in the past year are given in note 26 to the consolidated annual financial statements.
In terms of the articles of association the board has the power to appoint board committees and to delegate powers to such board committees. The board has four subcommittees: the audit and risk committee, the remuneration committee, the nomination committee and the group executive and risk 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. All of these committees have adopted charters which have been approved by the Reunert board. The committees are directly responsible to the board.
|Audit and risk committee||The remuneration philosophy is to ensure that the companys|
|KS Fuller (chairman), BP Connellan, SD Jagoe, G Pretorius,||executive directors and other senior executives are appropriately|
|DJ Rawlinson||rewarded for their individual and joint contributions to the groups|
|overall performance, while also having due regard to market|
|The audit and risk committee, chaired by an independent non-||practices, the interests of the shareholders and to the financial and|
|executive director and comprising a majority of independent non-||commercial well-being of the group.|
|executive directors, meets at least twice a year. The committee|
|reviews the groups internal and external audit reports and agrees||Nomination committee|
|on the scope of the audits. Furthermore, the committee operates in||MJ Shaw (chairman), SD Jagoe, JC van der Horst|
|terms of its charter and reviews audit, accounting and financial|
|This committee comprises independent non-executive directors|
|reporting issues and ensures an effective internal control|
|only and meets at least annually to make recommendations to the|
|environment exists in the group. The committee reports biannually|
|board on the composition of the board and identifying and|
|to the board on the effectiveness of the risk controls and|
|nominating candidates to fill any vacancies. In addition, the|
|management within the group.|
|committee is tasked to advise the board on succession planning.|
|The committee met twice with full attendance.|
|On 29 August 2005 Mr MJ Shaw resigned from the audit and risk|
|committee and Mr KS Fuller was appointed chairman in his stead.|
|During the year the following meetings took place with full attendance:||7 February 2005|
|29 August 2005|
|12 November 2004||Regular|
|Group executive and risk management committee|
|20 April 2005||Special||G Pretorius (chairman), BP Gallagher, GJ Oosthuizen,|
|6 May 2005||Regular|
Remuneration and nomination committees
In line with guidelines set out by the King Code, the remuneration and nomination committee was split into two committees, each with its own chairman.
SD Jagoe (chairman), MJ Shaw, 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. In the past financial year the remuneration committee met twice, with full attendance.
The group executive and risk management committee comprises executive directors only and is constituted to assist the chief executive to manage the group. Executive directors and senior executives meet regularly to guide and control the overall direction of the group and to identify potential risk areas. The internal audit department assists the board and management in the monitoring of the risk management process.
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 secretarial commitments effectively.
The company has appointed Rand Merchant Bank (RMB) as its sponsor. RMBs services include advising the board on the interpretation of, and compliance with, the listing requirements of the JSE Limited (JSE) and reviewing all notices required in terms of its statutes and the JSE rules and regulations.
7 February 2005
29 August 2005
The board has appointed Messrs Deloitte & Touche to perform an independent and objective audit on the groups 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 has considered the use made of non-audit related services provided by the external auditors and is satisfied that the independence of the external auditors is not compromised.
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 that 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 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 and risk 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 groups businesses, risks it is facing and their performance.
The board has not been informed by executive management or internal audit 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 based on the scope of work performed that they are not aware of any matters relating to Reunerts 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.
Comprehensive internal controls have been instituted to assist management and the directors in fulfilling their responsibility for the preparation of the annual financial statements, safeguarding of 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 reports biannually to the audit and risk committee and has unrestricted access to the chairman of the board.
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 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,mentoring and training programmes exist within the group. An in-depth review on Reunerts focus on people development appears on pages 16 to 21.
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, and a corporate website (http://www.reunert.com) with up-to-date information on the company and its subsidiary companies.
Dealing in the companys shares and closed periods
Employees are restricted from dealing either directly or indirectly in the companys shares on the basis of privileged price-sensitive information before it has been publicly announced 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 companys shares.
The group operates a closed period prior to the publication of its interim and preliminary results.
During these periods, the groups directors, officers and members of the senior management team may not deal in the shares of the company, nor may they discuss the companys financial prospects with any outside party. Additional closed periods are enforced as required in terms of any corporate activity.