Directors’ report

FOR THE YEAR ENDED 30 SEPTEMBER 2013

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AUTHORISED AND ISSUED CAPITAL

The authorised capital of the company remained unchanged except for the authorised shares being converted to shares with no par value in terms of the new Memorandum of Incorporation. In terms of the SENS announcement on 5 June 2013, all of Reunert’s 350 000 5,5% cumulative preference shares were redeemed at R2,10 per share on 1 July 2013.

Options exercised in terms of the Reunert 1985 and 2006 Share Option Schemes accounted for the shares issued during the current year as tabled below:
Number of shares
Issue price per share 2013 2012
R15,99
97 500
2 500
R39,30
703 900
529 000
R41,90
45 000
341 800
R59,55
104 000
48 000
R53,50
26 600
60 700
R71,30
4 400
16 800
R17,70
10 000
R57,50
16 600
R60,80
100 000
Total
1 098 000
1 008 800
 

REVIEW OF OPERATIONS AND RESULTS

Normalised headline earnings per share declined by 12% from 644 cents to 569 cents. Revenue reduced by 3% to R11 351 million. Operating profit decreased by 13% to R1 330 million.

The delay in the expected rollout of infrastructure projects, challenging labour conditions and reduced capital expansion in the mining industry led to the CBI-electric group of companies experiencing a slower year. This resulted in revenue decreasing by 4% to R3 506 million and operating profit decreasing by 15% to R506 million.

Nashua faced a challenging year. The telecommunication race for customers, declining business confidence and the impact of the weaker rand affected Nashua’s performance. Revenue was down 6% to R6 812 million, while operating profit declined by 24% to R636 million.

Reutech recorded a stellar performance, increasing revenue by 27% to R1 020 million. Significant export orders and a weaker rand boosted operating profits by 38% to R207 million.
 

CASH DIVIDENDS

An interim ordinary cash dividend No 174 of 95 cents (2012: No 172 of 95 cents) per share was declared on 20 May 2013, and a final ordinary cash dividend No 175 of 275 cents (2012: No 173 of 275 cents) per share was declared on 20 November 2013.

A total distribution of 370 cents (2012: 370 cents) per ordinary share was declared relating to the 2013 financial year.

A final 5,5% cumulative preference dividend No 56 was declared on 5 June 2013 and paid on 1 July 2013. The preference shares were delisted from the JSE Limited on 2 July 2013.
 

SUBSIDIARY COMPANIES

Annexure A to the annual financial statements sets out the principal subsidiaries of the company.

The directors are of the opinion that the publication of information on individual subsidiaries in this report would entail expense out of proportion to the value to shareholders.
 

SPECIAL RESOLUTIONS OF SUBSIDIARIES

During this financial year, as required by section 8.63(i) of the JSE Listings Requirements, the following special resolutions were passed by subsidiaries of Reunert:
African Cables Limited, Circuit Breaker Industries Limited, Heinemann Holdings Limited, Nashua Limited, NPC (Electronics) Limited, Pansolutions Holdings Limited, Quince Capital Holdings Limited, Reunert Finance Company Limited, Reunert Management Services Limited and Reutech Limited converted from public companies to private companies.

Reunert Limited and Reutech Limited adopted new MOI replacing their existing Memorandum and Articles of Association and converted their existing authorised shares to shares with no par value. All the shares still rank pari passu and no other terms of the shares were affected by the conversion.

Kopano Copier Company (Pty) Ltd changed its name to Kopano Solutions Company (Pty) Ltd.

Full details of these resolutions may be viewed at the company’s registered office.
 

DIRECTORATE AND SECRETARIAT

Directors are subject to retirement by rotation at least once every three years in terms of the MOI and, if available, may be re-elected by the shareholders at an annual general meeting. Appointments are not for a fixed term. SD Jagoe, NDB Orleyn and SG Pretorius retire by rotation at the next AGM. The Nomination Committee, at its meeting on 19 November 2013, recommended that they be re-elected and they have offered themselves for re-election. The board charter is an integral part of the conditions of appointment of all directors. Procedures for appointments are formal and transparent, and are considered by the Board as a whole.

Non-executive directors retire at the next AGM, after reaching the age of 70.

BP Gallagher retired from the Board on 28 March 2013 after 20 years of service. The company thanks him for his enormous contribution to the group and wishes him well for the future.

LM Mojela was appointed to the Board on 1 April 2013.

YZ Cuba resigned from the Board on 17 May 2013 after serving two years as independent non-executive director.

The names of the directors in office at the date of this report are set out here.
 

REMUNERATION OF NON-EXECUTIVE DIRECTORS

At the AGM held on 12 February 2013:
In terms of the JSE Listings Requirements and King III, shareholders were requested to pass a non-binding advisory vote, approving the remuneration payable to
non-executive directors
Pursuant to the requirements of Section 66(9) of the Companies Act, 2008, shareholders were requested to pass a special resolution to approve increases in the fees payable to non-executive directors with effect from 1 March 2013. Furthermore, at the AGM to be held on 17 February 2014, shareholders will be requested to approve increases in fees payable to non-executive directors with effect from 1 March 2014. The approved fees for 2013 and the proposed fees for 2014 (still to be finalised) are outlined in the table below:
 
2013
Fee per
annum

2014
Fee per
annum


Number of
meetings
Fee per
additional
meeting
2013
Fee per
additional
meeting
2014
Chairman1
R825 000
R1 100 000 4
R35 000
R37 250
Non-executive directors
R162 000
R172 400 4
R18 000
R19 200
Audit Committee chairman
R175 000
R186 200 3
R17 000
R18 100
Audit Committee member
R100 000
R106 400 3
R17 000
R18 100
Remuneration Committee chairman
R112 000
R119 200 2
R17 000
R18 100
Remuneration Committee member
R64 000
R68 100 2
R17 000
R18 100
Nomination Committee chairman2
2
R17 000
R18 100
Nomination Committee member
R64 000
R68 100 2
R17 000
R18 100
Risk Committee chairman
R80 000
R102 150 2
R17 000
R18 100
Risk Committee member
R64 000
R68 100 2
R17 000
R18 100
Social, Ethics and Transformation Committee chairman
R96 000
R119 200 2
R17 000
R18 100
Social, Ethics and Transformation Committee member
R64 000
R68 100 2
R17 000
R18 100
Investment Committee chairman and members
Ad hoc
R17 000
R18 100
1 The chairman’s fee is on an all-inclusive basis, including attendance at all scheduled Board and Committee meetings.
2 The chairman of the Board is also the chairman of the Nomination Committee and therefore no additional fees are payable to the chairman of the Nomination Committee.
 

INTERESTS OF DIRECTORS

At the reporting date, fully paid ordinary Reunert shares were held directly and indirectly by the directors as indicated in the table below:
Direct beneficial
Indirect beneficial
Held by associates
Total
  2013 2012 2013 2012 2013 2012 2013 2012
NDB Orleyn1
1 554 000
1 554 000
1 554 000
1 554 000
DJ Rawlinson
398 191
418 520
398 191
418 520
 
398 191
418 520
1 554 000
1 554 000
1 952 191
1 972 520
1 These shares are held indirectly through Bargenel’s investment in Reunert, which relates to the empowerment deal concluded in 2007.
 
These holdings have remained unchanged from 30 September 2013 to 20 November 2013.

At the reporting date, executive directors of the company held unexercised options to subscribe for 497 000 (2012: 678 400) ordinary shares in terms of the Reunert 2006 Share Option Scheme. An amount of 50 000 of these options are due to expire on 18 June 2019, 47 000 on 17 February 2021 and 400 000 on 15 November 2021.

In terms of the Conditional Share Plan introduced during the current financial year, at the reporting date, executive directors of the company held unvested options for 153 435 ordinary shares.

The directors have no financial interest in contracts entered into by the group during the year. For further information on directors’ share options, refer to note 19 of the annual financial statements.
 

SUBSEQUENT EVENTS

The directors are not aware of any matters or circumstances arising between the end of the financial year and the date of these financial statements, which materially affect the financial position or results of the company or group.
 

ATTRIBUTABLE INTEREST

The attributable interest of the company in the profits and losses of its consolidated subsidiaries for the year ended 30 September 2013 is as follows:
Rm 2013 2012
In the aggregate net income
627,8
779,5
In the aggregate net losses
(11,4)
(13,1)
 
616,4
766,4
 

GOING CONCERN

The directors confirm that the group and company have adequate resources to operate for the foreseeable future and will remain a viable going concern in the year ahead.