Media Releases

UNEXPECTED BONUS FOR REUNERT SHAREHOLDERS
Thursday, 12 August 2004

Reunert has shed more light on its proposed scheme of arrangement which will see investors surrender ten percent of all Reunert ordinary shares being held by them. The company today stated that a large portion of the equivalent of R25 per share to be received by some shareholders would be treated as a special dividend for tax purposes.

“We want to sensitise shareholders to the fact that a large portion of the R25 per share that investors will receive constitute a special dividend,” said Reunert chief executive Gerrit Pretorius. Reunert cautioned its shareholders on 29 June 2004 that it intends to acquire ten percent of the company’s ordinary shares in issue, net of the treasury shares held by its subsidiary Bargenel Investments, at the equivalent of R25 per share through a scheme of arrangement in terms of section 311 of the Companies Act.

“Every investor’s specific situations differ and should be considered individually and for that reason we advise shareholders to seek expert opinion. But, by way of illustration: consider an investor who bought 100 Reunert shares more than two years ago at a price of R15 per share. He now has to surrender ten percent of the shares he owns and will receive an equivalent of R25 per share. The intended R25 per share can be split into a special dividend portion of R13,36 and proceeds of R11,64,” Pretorius explained. By implication the shareholder would have made a capital loss of R1,54 and received a special dividend of R13,36 which is tax free. “Roughly this would equate to a special dividend of R1,20 per Reunert share calculated on the entire number of shares in issue,” Pretorius pointed out.

Nine of every ten shares will be acquired via Reunert and the tenth share via its subsidiary Bargenel. This tenth share would be subject to capital gains tax on R10 per share and can be offset against the loss on the other nine shares.

Reunert has a track record of excellent cash generation. In 1999 it returned a special dividend of R568 million to shareholders and in the past five years invested over one billion rand on acquisitions. In addition the company has maintained a steady flow of dividends with the dividend cover ranging between 1.9 and 1.5 times of headline earnings. “The past year has seen the company building up cash reserves in excess of its needs and the Reunert board has considered the best alternatives available to distribute this cash,” Pretorius said. “If we go ahead and implement this scheme all Reunert ordinary shareholders (other than Bargenel) will be treated equally and shareholders will maintain their proportionate percentage shareholding in Reunert relative to each other.”

An unaudited pro forma calculation indicates that the financial effect of acquiring the shares would have increased headline earnings by 3,6 percent per share from 136,9 cents per share to 141,8 cents per share for the six months ended 31 March 2004.

More details of the proposed scheme of arrangement, including salient dates of the scheme have been announced on the JSE’s Securities Exchange News Service today. A circular with all the details of the proposed scheme of arrangements including tax implications, will be mailed to shareholders on or about 12 August. Information will also be published on the Reunert website (www.reunert.com).

According to the timeframe the proposed scheme meeting and subsequent general meeting is scheduled for Friday 3 September 2004. The last date to trade Reunert ordinary shares on the JSE in order to participate in the scheme is set for 16 September. Shareholders are advised that if they are in any doubt as to actions they should take, to please consult their professional advisers.

For more information contact
Carina de Klerk
Tel: +27 11 517 9000/33
Mobile: +27 83 631 5743
E-mail: invest@reunert.co.za
Website: www.reunert.com