Governance report

Add / View notes
X

Add Notes

My Notes

Add / View bookmarks
X

My Bookmarks

  • This is your briecase. You can add pages as you go and create a PDF of the pages you select. Click add page below to add this page to your briefcase.

 
Reunert follows an integrated approach to the social, economic and environmental elements of its operations.
img For full CVs go to Board and executive management
img For group policies go to www.reunert.co.za
The Reunert code of ethics is central to the governance of all aspects of its operations.
The implementation of the code of ethics is supported by various detailed group and company-specific policies.
 
img
 

KING III CODE

Reunert applies the principles of the King III Code, unless otherwise disclosed.
Reunert complies with all the principles that are obligatory in terms of the JSE Listings Requirements.
In respect of the King III Code, the board charter provides that:
  » The board considers itself bound to and is responsible for the implementation of the principles in the King III Code.
  » The duties and responsibilities of the board, its committees, executive management and the company secretary as contemplated in the principles of King III apply to the board (unless indicated otherwise) and are binding on the board and its individual members.
  » The board prefers to follow the recommended practices of the King III Code, but is not bound by them.
  » The board is responsible for publishing a narrative statement, at least annually, on the company’s application of the King III principles.
 
The results of an internally conducted maturity assessment on how Reunert applies the principles of the King III Code are depicted in the diagram below.
 

OVERALL SCORE

 
img
 
The group complies with all the principles and in numerous instances exceeds the prescribed compliance level. The group makes a continuous effort to enhance the application of the principles.
 

EXPLANATION OF RATINGS

EXPLAINED AND COMPENSATED FOR

Rating relates to Chapter 3, paragraph 11 of King III (recommended practice):

The chairman of the Reunert board was appointed as a member of the audit committee on 7 December 2012.
The audit committee, in consultation with the nomination committee, appointed the chairman of the board to the audit committee on the strength of his extensive experience and insight in financial reporting.
The board chairman’s membership of the audit committee is periodically re-evaluated by the nomination committee to ensure that it continues to serve Reunert’s interests.
The board chairman’s membership of the audit committee is subject to annual shareholder approval.
The chairman of the board does not chair the audit committee.
 

Rating relates to Chapter 9, principle 9.3 of King III:

External independent assurance is not provided over sustainability information.
Instead, internal audit has performed appropriate procedures to assess the completeness and accuracy of non-financial information presented in the integrated report.
BBBEE levels for all group operating entities are externally verified by rating agencies.
The board is satisfied that this internal oversight is sufficient to provide the required level of comfort as to the reliability of the information presented.
The requirement for external assurance is periodically re-assessed.
 

NEEDS IMPROVEMENT

Rating relates to Chapter 5, principle 5.2, 5.3 and 5.6 of King III:
A detailed review of all aspects of information technology (IT) governance and performance was conducted by an external service provider at selected operations during the 2013 financial year. The results of the review were reported to the board.
The board concluded that the group should improve the formalisation of IT governance and the synchronisation of IT policies and procedures throughout the group and has tasked management to oversee this process.
 

BOARD AND BOARD COMMITTEES

BOARD

The composition of the board and the capacity of each director (whether executive, non-executive and independent) as on 1 December 2013, is set out under Board and executive management.
A short curriculum vitae of each director is published in the annual financial statements under Board and executive management.
The board conducts itself in accordance with its charter:
  » The charter is reviewed annually.
  » In addition to the King III-related requirements, the charter requires that each of the directors undertakes to conduct him- or herself, both professionally and personally, with integrity and in accordance with the ethics and values of the company and the laws of South Africa.
The board has formal policies in place regarding, amongst others:
  » Balance of power and authority on the board.
  » Formal appointment and induction procedures for new board members.
  » Non-executive directors’ fees and reimbursement of expenses.
 
Attendance of board meetings is set out below:
Board meetings
  19 Nov
2012
12 Feb
2013
20 May
2013
29 Aug
2013
Members
TS Munday img img img img
YZ Cuba img Apology
BP Gallagher img img
SD Jagoe img img img img
MC Krog img Apology img img
LM Mojela img img
TJ Motsohi img img img img
KW Mzondeki Apology
NDB Orleyn img img img img
SG Pretorius img img img img
DJ Rawlinson img img img img
Dr JC van der Horst img img img img
R van Rooyen img img img img
Note: Shaded cells in the table indicate meetings of the board prior to a director’s appointment or after a director’s resignation.
 

BOARD COMMITTEES

The board is assisted by various committees, as set out under Governance framework.
The committees are governed in accordance with the principles of the King III Code, including, amongst others:
  » Circulation of committee minutes to the entire board.
  » All committees have formalised terms of reference that are reviewed annually.
  » All committees, other than the risk committee, comprise exclusively of non-executive directors, the majority of whom are independent.
  » Evaluation of the performance of board committees and chairmen are conducted annually.
  » Board committees are entitled to take independent professional advice within the scope of their respective mandates.
  » Board members are entitled to attend any meeting of a board committee, irrespective of whether they are a member thereof.
The non-executive members of the board conducted a formal process to assess the aggregate skills and experience. The results of the assessment indicated that the aggregate skills and experience of the non-executive board members are appropriate to the mandate of the board. However, the board identified industrial and telecommunications sector knowledge as the two areas where the depth of skills should be enhanced.
 
 

Audit committee

In execution of its statutory duties during the past financial year and pursuant to the provisions of the JSE Listings Requirements, the audit committee:
Confirmed the appointment of both Deloitte & Touche (Deloitte) as the independent external auditors and Mr Patrick Smit as the designated audit partner.
Confirmed that Deloitte and the designated audit partner are accredited by the JSE.
Approved the Deloitte engagement letter, the audit plan and the budgeted audit fees payable to Deloitte.
Obtained a statement from Deloitte confirming that its independence was not impaired.
Pre-approved the non-audit services provided by Deloitte in terms of an approved policy.
Satisfied itself of the appropriateness of the expertise and experience of the chief financial officer and the expertise, resources and experience of the finance function.
Recommended to the board, which in turn has recommended to the shareholders for consideration at the next annual general meeting, the appointment of Deloitte as external auditors for the financial year ending 30 September 2014.
 
The audit committee report provides a comprehensive overview of the committee’s role and responsibilities in terms of the
Interim and annual financial statements
Effectiveness of external audit function
Internal control and internal audit
Financial risk management and information technology
Legal and regulatory compliance
Sustainability information
 
Attendance of the audit committee meetings is set out below:
Audit committee meetings
  13 Nov
2012
8 May
2013
1 Oct
2013
Members
R van Rooyen img img img
YZ Cuba img img  
SD Jagoe img img img
LM Mojela   img img
TS Munday   img img
KW Mzondeki img    
Note: Shaded cells in the table indicate meetings of the committee prior to a director’s appointment to or after a director’s resignation from the committee.
 
 

Investment committee

The committee is a standing committee of the board which meets on an ad hoc basis.
The committee has a dual role:
  » The committee assists and advises executive management on opportunities identified by management and any other envisaged material transactions that are not in the ordinary course of business.
  » The committee makes recommendations to the board and monitors on the board’s behalf, all material acquisition, merger, or disposal opportunities, nonroutine material transactions and matters related thereto.
 
Attendance of investment committee meetings is set out below:
Investment committee meetings
  4 Oct
2012
19 Nov
2012
18 Mar
2013
12 Aug
2013
Members
TS Munday img img img img
YZ Cuba img img    
SD Jagoe img img img img
SG Pretorius img img img img
R van Rooyen img img img img
Note: Shaded cells in the table indicate meetings of the board after the director’s resignation.
 
 

Remuneration committee

The remuneration committee is appointed by the board to ensure that Reunert’s remuneration philosophy and practices support the strategic objectives of the group and enable the attraction, retention and motivation of high calibre employees, senior executives and scarce skills, while remaining compliant with the requirements of regulatory and governance bodies.

The committee is tasked with ensuring executives and other employees are remunerated fairly and responsibly, and that remuneration practices deliver shareholder value. The remuneration committee has final authority on all remuneration matters of the company, subject only to the approval of the board. In the case of non-executive director fees, however, management proposes the fees which are subject to approval by shareholders.
The remuneration committee consists of four non-executive directors.
The chief executive officer attends all meetings, and other executives attend meetings where appropriate and upon invitation.
A minimum of two meetings are held a year and, when required, special meetings are held.
 
Roles and responsibility
The committee reviews executive remuneration trends across the company annually.
The committee agrees on behalf of the board, all aspects of executive directors’ and senior managers’ remuneration.
It agrees the remuneration strategy, direction and policy of the remuneration of other executives who have a significant influence over the company’s ability to meet its strategic objectives. In order to do this, the committee is provided with market trends and benchmarking information.
 
Each year, the committee:
Reviews the company’s remuneration policy for approval by the Reunert board and shareholders.
Reviews the compensation base and proposed average annual increase for the group’s employees.
Oversees any major changes in employee benefit structures throughout the company.
Reviews compensation-related matters in respect of senior management promotions, transfers, recruitments and terminations.
Approves the remuneration packages of executive directors, senior managers and other key executives of the group.
Approves the design of, and determines targets for, any performance related pay schemes operated by the company and approves the total annual payments made under such schemes.
Reviews the design of all share incentive plans for approval by the board and shareholders. For any such plans, the committee determines each year whether awards will be made and, if so, the overall amount of such awards, as well as the individual awards to executive directors, senior managers and other key executives; and the performance parameters and targets to be used.
 
Reporting responsibilities
The chairman reports formally to the board on proceedings after each meeting.
The committee makes recommendations to the board that it deems appropriate on any area within its remit, where action or improvement is needed.
An annual remuneration report of the company’s remuneration policy and practices forms part of the company’s annual reporting framework and is presented to shareholders for approval at the annual general meeting.
 
The attendance at meetings for this reporting period is set out below:
Remuneration committee meetings
  19 Nov
2012
12 Feb
2013
17 May
2013
29 Aug
2013
Members
SD Jagoe img img img img
TS Munday img img img img
NDB Orleyn img img img Apology*
Dr JC van der Horst img img img img
* A close friend and fellow board member of Ms Orleyn passed away unexpectedly and she was therefore not able to proceed with this meeting.
 
 

Risk committee

The responsibilities and functioning of the risk committee are governed by formal terms of reference approved by the board and reviewed annually.
The committee ensures that risk disclosure is comprehensive, timely and relevant and that effective policies and risk management plans are in place to allow the group to achieve its strategic objectives.
The committee includes at least three non-executive directors.
The chairman of the audit committee is an ex officio member.
The chief executive and chief financial officer are executive members.
The committee meets at least twice a year.
 
Attendance of the risk committee meetings is set out below:
Risk committee meetings
  8 May
2013
1 Oct
2013
Members
SG Pretorius img img
MC Krog img img
TS Munday img img
TJ Motsohi img img
DJ Rawlinson img img
R van Rooyen img img
 
 

Nomination committee

The nomination committee carried out the duties provided for in its terms of reference, with particular emphasis on CEO succession planning.
This committee plays an important role in the oversight of performance and independence assessment of the board, board committees, individual board members and the company secretary.
Following the performance and independence assessments, the nomination committee makes recommendations to the board on corrective action required, if any, and the appointment or reappointment of individuals to the board or board committees or to specific offices such as chairmen of committees.
During the 2014 financial year, the committee envisages that it will focus on support to the CEO and the appointment of other suitable individuals to the board. The committee recognises the requirement for certain skills identified during the self-assessment of non-executive directors.
 
Oversight of the secretarial function
Reunert Management Services Proprietary Limited is the company secretary of Reunert Limited.
The company secretary, through its employees, provides assistance to the board as contemplated in the JSE Listings Requirements and principle 2.21 of King III.
The secretarial team consists of K Louw (group company secretary and compliance manager), Y Osman (company secretarial assistant) and G Howroyd (who provides administrative support).
The board, assisted by the nomination committee, evaluated the competence, qualifications and experience of the company secretary:
  » The nomination committee completed an evaluation questionnaire for each of the competence, qualification and experience of the company secretary (which was done by considering each of the criteria in respect of the secretarial team and Ms Louw particularly).
  » The nomination committee considered, amongst others:
    Competence: Appropriate staffing of the company secretarial function.
    Experience: Ms Louw has 14 years’ post-article experience and Ms Osman has 13 years’ experience as company secretarial assistant.
    Qualifications: K Louw has the qualifications indicated in her CV under Board and executive management of the annual financial statements which the nomination committee considered to be appropriate for the office of company secretary.
  » The board, assisted by the nomination committee, evaluated whether the company secretary maintained an appropriate arms-length relationship with the board:
    The nomination committee completed an evaluation questionnaire on the independence of both the company secretary and K Louw.
 
Reunert Management Services Proprietary Limited
Each director of the company is cognisant of and subject to fiduciary duties to act in the best interests of this company and are obliged to abstain from any decision where a potential conflict of interest exists.
The Memorandum of Incorporation of this company is in the process of being amended to further strengthen the independence of the company.
 
K Louw
Is not a director of Reunert.
Has access to all of the board members at any time and is in regular contact with the chairman of the board and the chairmen of the committees.
Has access to and is advised on an ongoing basis by Reunert’s sponsors.
The nomination committee is responsible for her performance assessment and her remuneration package is determined by the remuneration committee.
The board considered the recommendations of the nomination committee and concluded that:
  » The competence, skills and experience of the company secretary as well as K Louw are appropriate for the company secretarial function of Reunert Limited.
  » Both Reunert Management Services Proprietary Limited as well as Ms Louw maintained an arms-length relationship with the board for the 2013 financial year.
 
Attendance of nomination committee meetings is set out below:
Nomination committee meeting
  19 Nov
2012
17 May
2013
29 Aug
2013
11 Sep
2013
Members
TS Munday img img img img
SD Jagoe img img img img
NDB Orleyn img img img img
Dr JC van der Horst img img img img
 
 

Social, ethics and transformation committee

This committee fulfils the statutory duties of the social and ethics committee as required in terms of section 72 of the Companies Act, 2008 and regulation 43 of the Companies Regulations.
Amongst others, the committee considered:
  » The results of an internal assessment of the organisation against the ten principles of the United Nations Global Compact.
  » Reports on the group’s corporate social investments (such as the Nashua Children’s Charity Foundation), sponsorships and donations. (More information on Reunert’s corporate social initiatives is contained in the social responsibility report.)
  » The effectiveness of the Reunert College in mitigating the shortage of technical skills experienced by the operations.
  » Transformation and the current and proposed broadbased black economic empowerment codes.
  » Reunert’s participation in the CDP climate change and water disclosure projects. (The response documents are available on our website.)
  » Numerous policies relating to its legislated mandate. (The Reunert group-wide policies are available on our website.)
  » The committee focuses particularly on transformation and employment equity in the group and as a result the achievement of pre-set objectives has been included in the KPIs of executive management in the group.
 
Attendance of social, ethics and transformation committee meetings is set out below:
Social, ethics and transformation committee meetings
  07 Nov
2012
17 May
2013
28 Aug
2013
Members
TJ Motsohi img img Apology*
TJ Motsohi     img
TS Munday img img img
DJ Rawlinson img img img
KW Mzondeki img    
SG Pretorius img img img
Note: Shaded cells in the table indicate meetings of the committee prior to a director’s appointment to or after a director’s resignation from the committee.
* A close friend and fellow board member of Ms Orleyn passed away unexpectedly and she was therefore not able to proceed with this meeting.
 

Executive committee

The executive committee comprises of the Reunert executive directors and executive management, as set out under Board and executive management.
The purpose of the committee is to:
  » Share and provide collective input on opportunities and risks faced by the operations in the group.
  » Harness the collective expertise and entrepreneurial drive of the senior executive.
  » Explore synergies and drive group-wide sustainable growth.
  » Executive committee meetings are minuted and the minutes are circulated to the board.