Chairman’s statement


This year, we are proud to celebrate Reunert's 125-year anniversary. In a world that has changed so much over this time, this is an amazing achievement and one which is both humbling and worthy of reflection.

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Our anniversary talks to the successful extent to which the leadership and people of Reunert during these years have embraced change through many economic cycles, including some very serious downturns, as well as major shifts in the socio-political and regulatory environment.

For today’s leadership of the group, this milestone also amplifies the ongoing responsibility we have to make decisions that will steer the group forward with confidence, and deliver value for all our stakeholders into the future.


In my statement in the 2012 Integrated Report, I referred to the challenging business environment in South Africa. I said it was difficult to speak with confidence of prospects improving in the year ahead, and that an acceptable measure of economic, social, political and regulatory stability was required for a thriving and investment-active business sector.

Our financial performance this past year has been somewhat disappointing and, to an extent, has reflected the concerns I expressed. Performance in the first half of the year was notably below our expectations. Fortunately, we achieved some improvement in the second half and are doing all we can to extend this more positive trend into the new financial year.

Dave Rawlinson, in his CEO’s report, covers the specific challenges in our various businesses. I will confine my review of the year to some general observations with respect to the environment in which we operate.

Unfortunately, the various large national infrastructure projects in which we seek to participate have been delayed following the exciting announcements made about them last year. These delays, which impact on the overall economy, need to be considered in relation to the other dynamics playing out in our country. Whereas the issues may seem to be unrelated, I believe they are combining to create inertia in decision-making at critical levels, which South Africa can ill afford.

The National Development Plan (NDP) was prepared in a participative manner by accomplished people from many constituencies, and has sought to integrate various disparate industrial and economic development policies. Regrettably, the apparent lack of resolve by various stakeholders to unite behind and proceed with the implementation of the NDP has caused confidence in our social development and economic growth prospects to wane.

It is appreciated that the NDP was formulated as a blueprint to be implemented systematically in a similarly participative manner. But the aggressive and disparaging protests against it without strong reply or convincing alternatives being offered have tarnished the initially positive local and international reaction to it. Unfortunately, this situation is dampening investor confidence and is possibly also contributing to the decisionmaking inertia in our country to which I have referred.

Furthermore, the often dramatic and well-publicised service delivery protests we have seen, and the unfortunate tendency of legitimate industrial action to turn violent, remains deeply concerning. This is especially so when there seems to be insufficient concerted effort to address, in a sustainable manner, the root causes of this discord. At present, trade unionism is also seemingly in conflict with itself. These compounding dynamics cast a shadow on our socio-political image and erode investor and business confidence. This, in turn, creates hesitancy in executing investment plans.

It is a blessing that South Africans are a positive and resilient people. This positivity resonates strongly in the business community, despite the prevalent concerns. We have a marvellous country with much potential. We have people from various walks of life who in their vast majority are kind, law-abiding and generous in their human spirit, in spite of the poverty so many of them sadly endure. These admirable qualities surely need to be recognised, respected and mobilised by all leaders towards the national good and not squandered through fractious argument or in pursuit of disruptive agendas.

Perhaps, in addition to convening the often called-for economic codessa, a key addendum to our constitution, ‘The Values of South Africa’, should be developed through participative means. Perhaps, specifying what we collectively and individually believe in, and agreeing on the behaviours that support our national values, will provide a meaningful rallying point for our citizens now and in the generations ahead.


In our own small way we seek, at Reunert, to make a positive contribution to South Africa Incorporated. We understand we have a responsibility to create shared value and to drive positive progress. Our stakeholders can be assured that the board and management are not only cognisant of this responsibility, but that it underpins our decision-making processes and the way in which we run our businesses.

I hope our integrated reporting journey, and the improvements we have made in accounting to our stakeholders, reflects our sincerity in this regard. Over the past three years, integrated reporting has been an enlightening process for us and we have sought to make our report a clear and candid reflection of the way in which we operate. Where we get it right, we say so with humility. Where we don’t, we say so with a promise to improve.

The board continued to work effectively during the year under review. Our committees followed their agreed terms of reference and discharged their responsibilities fully. In this respect, I am grateful for the skills and experience that members of the board bring to our deliberations. Our attendance records are good and our debates are lively and interactive.

Again this past year we held a valuable group-wide strategy review and various key decisions were provisionally made subject to conditions and certain expectations materialising.

These decisions will play out during the months and years ahead and stakeholders are assured that due diligence will be exercised, whether we are acquiring or disposing of businesses, or taking any other key operating decisions. Furthermore, the way in which we implement our decisions will continue to reflect due care and respect for our people, customers, communities and operating environment.

Our risk management philosophy is ingrained in our management processes and is serving the group well. It was further enhanced during the year under review, as was our combined assurance process. Both the risk and audit committees worked in tandem to ensure the integrity and effectiveness of risk management, as well as of our financial control and reporting activities.

As reported previously, in terms of transformation we are pleased with the significant progress we have made at junior management levels and the exciting pipeline of talent we now have into our senior ranks. However, we remain dissatisfied with the pace of progress in transforming the senior ranks throughout the group, notwithstanding various pleasing appointments towards the end of the financial year. Some patience is required if we are to ensure that internal candidates are developed and suitably equipped with the experience and skills required at more senior levels.

We are fortunate at Reunert to have relatively low turnover of staff. We value experience and committed service and embrace the benefits they bring. Inevitably, however, low turnover can affect opportunities for people to advance. As such, to accelerate the process, the board approved management’s proposal to create selected supernumerary positions. We thought it prudent to create space in this manner without unduly affecting the content of existing roles. We have linked success in this regard to our short-term bonus scheme. We expect these interventions to improve our transformation credentials at senior levels in the next year or two.


We are seeing ‘green shoots’ in our businesses and are encouraged that the year ahead looks more positive than the past year. In most general election years, however, there is a lethargy that creeps into our economy. Like all South Africans, we hope the elections will be conducted with dignity. As South Africa returns to ‘business as usual’ following the elections, our most fervent hope is that the concerns I have raised are decisively addressed. This being the case, and if overseas economies continue on their gradual recovery paths, we may see our economy returning to stronger growth rates. Again, however, it is difficult to predict our prospects with any certainty.

As I said last year, we will continue to act with prudence and foresight. We will continue to uphold the fine standards that underpin Reunert and we shall, of course, pursue and plan for earnings growth.


Particular mention is necessary with respect to the significant contribution of chief executive officer Dave Rawlinson, our chief financial officer Manuela Krog, members of our group executive committee and the senior leadership group have made to the group during the year. We thank you.

During the year, Yolanda Cuba resigned from the board after being invited to join the board of Vodacom. We enjoyed Yolanda’s sharp mind and business acumen. She is a rising star in our business community and we appreciated the telling contribution she made to the board’s activities. We wish her a successful future.

Louisa Mojela joined our board during the year. Regrettably, because of growing commitments Louisa feels obliged to stand down at the 2014 annual general meeting (AGM) and, therefore, will not be available for re-election. She is a capable director and an endearing personality and we regret her departure. We wish her well going forward.

At the 2014 AGM, Dr Johannes van der Horst retires and will not be available for re-election. Johannes joined the board in 1993 and has served for 20 years as a non-executive director. In all these years, his independence has never been doubted and we thank our shareholders for sharing our confidence in Johannes throughout his term. He has consistently added value and interesting perspectives to our deliberations and decisions. He has been highly committed and, in our view, epitomises the highest standards of board membership. He will be sorely missed. We thank him for his extraordinary contribution and wish him and Eleonore a well-earned retirement.

Notwithstanding these farewells, thankfully we have many directors who have served on the board for a number of years. We have a suitable degree of stability, experience and institutional memory to stand us in good stead.

As signalled in my statement last year, our chief executive, Dave Rawlinson, will retire in 2014. After a lengthy and distinguished term as group financial director, Dave stepped into his position about two years ago at a time when Reunert required a steady and experienced hand to stabilise the group after a disruptive period. At the time, he was on the verge of well-deserved retirement and yet, in demonstrating his commitment to Reunert, he agreed to assume the formidable role of chief executive for a period of two-to-three years. His mission is approaching completion and we thank him in advance of his retirement in 2014 for his sacrifice and the exemplary manner in which he has stabilised and led the group. Dave’s knowledge of our operations is much-admired and respected. His integrity is legendary. In due course, we will wish him and Sue a healthy and happy retirement.

Thankfully, as I also signalled last year, we have capable internal candidates for senior executive positions rising out of our succession management processes. As a consequence and after due process, we announced in November 2013 the appointment of Alan Dickson and Mark Taylor as executive directors of the group. Their appointment will strengthen the core executive leadership team of Reunert in line with our declared intention to do this, as also mentioned in my statement last year.

I thank the board for their much-appreciated wisdom and sound counsel. I am grateful to them for their diligence and commitment to Reunert. In my position, one cannot ask for more.

On behalf of the board, I thank all the employees of Reunert for their efforts this past year. They represent the true value of Reunert and we salute them. In turn, on behalf of the board and our people, I thank our customers for their ongoing support. We assure them of our determination to meet their requirements with solutions that add competitive value. Finally, we thank our many partners and suppliers for sharing in Reunert’s pursuit of lasting and sustainable value, which I hope will continue for at least another 125 years!
Sandton, 20 November 2013