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REUNERT LIMITED - Proposed broad-based black economic empowerment (BEE) transaction

Release Date: 23/11/2021 13:00
Code(s): RLO     PDF:  
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Proposed broad-based black economic empowerment (“BEE”) transaction

Reunert Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1913/004355/06
Share code: RLO
ISIN: ZAE000057428
(“Reunert” or the “Company”)

PROPOSED BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“BEE”) TRANSACTION

1.    INTRODUCTION

      Reunert shareholders (“Shareholders”) are advised that Reunert, Bargenel Investments
      Proprietary Limited (“Bargenel”), Rebatona Investment Holdings Proprietary Limited
      (“Rebatona”), Julopro Proprietary Limited (“Julopro”) and the Rebatona Educational Trust
      (“Rebatona Trust”), (collectively, the “Parties”) propose to enter into a transaction
      implementation agreement (“Implementation Agreement”) in terms of which, among others, the
      Original BEE Transaction (as defined in paragraph 2.1 below) is proposed to be restructured,
      extended and increased and an employee share ownership programme is proposed to be
      introduced (the “Proposed BEE Transaction”), as further detailed below.

2.    BACKGROUND AND RATIONALE FOR THE PROPOSED BEE TRANSACTION

      2.1.   In 2007, Reunert implemented a BEE transaction to introduce BEE shareholding at the
             Reunert level, which resulted in approximately 9.5% of the then issued Reunert ordinary
             shares (“Reunert Shares”) being indirectly held by the Bahedile Trust, the Cache Trust,
             the Neapaugra Trust and the Selemo Trust (collectively the “Peotona Parties”), which are
             the inter vivos trusts established for the benefit of Advocate Noluthando Orleyn, Cheryl
             Carolus, Wendy Lucas-Bull and the late Dolly Mokgatle and their respective families, and
             the Rebatona Trust (the “Original BEE Transaction”). The Peotona Parties and the
             Rebatona Trust hold their interests in Reunert through Rebatona, which holds all of the
             ordinary shares in Bargenel, which in turn holds the Reunert Shares. At present, Bargenel’s
             holding of Reunert Shares amounts to approximately 10% of the current Reunert Shares
             in issue.
      2.2.   In order to fund the Original BEE Transaction, Bargenel issued ‘A’ redeemable preference
             shares (“Bargenel A Preference Shares”) to Reunert. Bargenel was required to redeem
             the Bargenel A Preference Shares on or before the 11th anniversary of the Original BEE
             Transaction, which period was extended by Reunert for a further 4 years in 2018, in
             accordance with the terms of the Original BEE Transaction agreements. As a result of this
             extension, the Bargenel A Preference Shares are required to be redeemed on 6 March
             2022.
      2.3.   For further details regarding the Original BEE Transaction refer to the circular to
             Shareholders dated 13 December 2006 available on Reunert’s website
             (https://reunert.com/downloads/reports/2006/Circular-Dec-2006.pdf).
      2.4.   For a variety of reasons, including a lower than expected economic growth environment,
             the significant reduction by government in investment in electrical infrastructure over the
             past years and the material adverse impact of the COVID-19 pandemic on Reunert’s
             businesses, the envisaged value in relation to the Original BEE Transaction has not
             materialised. Accordingly, the current market value of the Reunert Shares held by
             Bargenel, pursuant to the Original BEE Transaction, is not sufficient to cover the
             outstanding redemption value of the Bargenel A Preference Shares. Additionally, the
             dividends received by Bargenel from its holding of Reunert Shares were not sufficient to
             pay all of the preference dividends payable to Reunert as the holder of the Bargenel A
             Preference Shares (“Bargenel A Preference Dividends”), giving rise to arrear preference
             dividends pursuant to the terms of the Bargenel A Preference Shares (“Bargenel Arrear
             Preference Dividends”). As a result, Bargenel does not have sufficient funds available to
             redeem the Bargenel A Preference Shares and to settle the Bargenel Arrear Preference
             Dividends.
      2.5.   With this in mind, Reunert wishes to implement the Proposed BEE Transaction (as
             contemplated in paragraph 4 below) for the following reasons:
             2.5.1.   to continue to embrace broad-based inclusive growth and empowerment by
                      providing qualifying Reunert employees with an opportunity to participate in the
                      value of Reunert, thereby strengthening the alignment of their economic interest with
                      those of other Reunert stakeholders and the future success of Reunert;
             2.5.2.   to continue, through its long-standing relationship with, and support of, the Rebatona
                      Trust, to empower black female youth to obtain a meaningful education and
                      subsequent employment and the relevant training and skills development to
                      succeed in business; and
             2.5.3.   to strengthen Reunert’s competitive position in its respective product and services
                      markets in South Africa.

3.   PEOTONA PARTIES EXIT

      3.1.   Pursuant to the Original BEE Transaction, the Peotona Parties hold an effective indirect
             interest of approximately 3% of the issued Reunert Shares, through their 30% holding of
             the issued ordinary shares in Rebatona (“Rebatona Shares”) and Rebatona’s 100%
             holding of ordinary shares in Bargenel.
      3.2.   Notwithstanding the long-term beneficial relationship between Reunert and the Peotona
             Parties since the implementation of the Original BEE Transaction in 2007, the Peotona
             Parties have confirmed that, for personal reasons, they do not wish to participate in the
             Proposed BEE Transaction.
      3.3.   In the circumstances, as a separate transaction from the Proposed BEE Transaction,
             Rebatona will, prior to the implementation of the Proposed BEE Transaction, repurchase
             all of the Rebatona Shares held by the Peotona Parties for a total consideration of
             R9.6 million, funded by Reunert, being 30% of the residual option value of the Original BEE
             Transaction at the date on which the terms of the transaction were agreed upon (the
             “Peotona Parties Exit”).
      3.4.   As described in paragraph 8.1 below, Rebatona is a related party to Reunert. However, the
             funding to Rebatona, pursuant to the Peotona Parties Exit, falls below the threshold for
             categorisation in terms of the JSE Limited Listings Requirements (“JSE Listings
             Requirements”) and therefore the implementation thereof is not subject to Shareholder
             approval.

4.   OVERVIEW OF THE PROPOSED BEE TRANSACTION STEPS

     It is envisaged that the Proposed BEE Transaction will be implemented, with effect from the first
     day of the month following the month in which the last of the suspensive conditions (as set out in
     paragraph 6 below) is fulfilled or, where applicable, waived (“Effective Date”), in accordance with
     the following steps:
     4.1.   Reunert will procure the registration and establishment of a trust, to be called The Reunert
            Employee Share Ownership Trust (“ESOP”). The objective of the ESOP is to, inter alia,
            facilitate broad-based and meaningful participation in the economy by providing qualifying
            Reunert employees with the opportunity to effectively participate in the growth of Reunert
            which will also serve to strengthen the alignment of their economic interest with those of
            other Reunert stakeholders and the future success of Reunert.
     4.2.   Bargenel will, inter alia, adopt a new memorandum of incorporation (“MOI”), which will,
            among other things, extend the term of the Bargenel A Preference Shares by a period of
            at least 10 years and provide for the payment of Bargenel A Preference Dividends equal
            to 90% of the Reunert ordinary cash dividends received by Bargenel by virtue of its
            shareholding in Reunert. This will allow for a trickle dividend equal to 10% of the Reunert
            ordinary cash dividends received by Bargenel to flow from Bargenel through Rebatona to
            the shareholders of Rebatona (being the Rebatona Trust and the ESOP, following the issue
            of Rebatona Shares to the ESOP as described in paragraph 4.7.1 below).
     4.3.   Reunert will waive its rights to receive the Bargenel Arrear Preference Dividends. It is
            estimated that, assuming that the Effective Date occurs on 1 March 2022 and the prime
            rate remains at 7.25%, the Bargenel Arrear Preference Dividends will be approximately
            R202 million. Bargenel does not have sufficient distributable reserves to satisfy the
            requirements of section 46 of the Companies Act, No. 71 of 2008 (“Companies Act”) and
            is therefore not legally able to pay the Bargenel Arrear Preference Dividends. As such,
            Reunert’s rights to receive the Bargenel Arrear Preference Dividends are currently not
            enforceable and the waiver contemplated in this step is a waiver of a conditional right.
     4.4.   Bargenel will repurchase 185 000 Bargenel A Preference Shares from Reunert, for an
            aggregate amount of R1 850 such that, following the repurchase of these Bargenel A
            Preference Shares and the waiver contemplated in paragraph 4.3 above, the face value of
            the remaining issued Bargenel A Preference Shares will approximate the value of the
            Reunert Shares held by Bargenel (based on a price per Reunert Share of R50.13, being
            the 30 trading day volume weighted average price (“30-day VWAP”) of a Reunert Share
            quoted on the securities exchange operated by the JSE Limited (the “JSE”) up to and
            including 5 November 2021 (“Agreed Transaction Price”)).
            The transaction steps contemplated in paragraphs 4.2, 4.3 and 4.4 are collectively
            hereinafter referred to as the “Restructure of the Original BEE Transaction”.
     4.5.   Julopro, a wholly owned subsidiary of Reunert, will sell to Bargenel approximately
            5.5 million Reunert Shares (which shares represent approximately 3% of the Reunert
            Shares in issue) for an aggregate amount of approximately R278.2 million (based on the
            Agreed Transaction Price) (“Specific Issue of Reunert Shares”). The Reunert Shares
            held by Julopro are classified as “treasury shares” for purposes of the JSE Listings
            Requirements, which means that the sale must comply with the JSE Listings Requirements
            as if it was a fresh issue of Reunert Shares.
     4.6.   Reunert will subscribe for 278 176 Bargenel A Preference Shares for an aggregate
            subscription amount of R278.2 million (representing a subscription price of R1 000 per
            Bargenel A Preference Share) (“Financial Assistance”) to fund the Specific Issue of
            Reunert Shares.
     4.7.   Reunert will:
            4.7.1.   as the founder of the ESOP, contribute R371 to the ESOP, which the ESOP will use
                     to subscribe for 371 Rebatona Shares, equating to a shareholding of approximately
                     34.6% in Rebatona following the issue of the Rebatona Shares. Through its
                     shareholding in Rebatona, the ESOP will indirectly hold approximately 8.3 million
                     (4.5%) of the Reunert Shares in issue; and
            4.7.2.   be entitled to contribute, or procure that employer companies of the ESOP
                     beneficiaries contribute, to the ESOP all or a portion of the funds required by the
                     ESOP to settle beneficiaries remaining at the end of the ESOP period,

            (the contributions referred to in paragraphs 4.7.1 and 4.7.2 are collectively hereinafter
            referred to as the “ESOP Contributions”).

     Following the implementation of the steps above, the Rebatona Trust and the ESOP will, in
     aggregate, indirectly hold approximately 24 million (13%) of the Reunert Shares in issue.

5.   DESCRIPTION OF THE PROPOSED BEE TRANSACTION

     5.1.   PRINCIPLES OF THE PROPOSED BEE TRANSACTION
            5.1.1.   Reunert, Bargenel, Rebatona, the ESOP and the Rebatona Trust will enter into a
                     relationship agreement, which will regulate the:
                     5.1.1.1. relationship between Reunert and Rebatona as preference and ordinary
                              shareholders of Bargenel;
                     5.1.1.2. protection of the BEE status of Rebatona and Bargenel; and
                     5.1.1.3. preservation and safeguarding of the status of the Rebatona Trust as a
                              broad-based black ownership scheme and the ESOP as an employee
                              share ownership programme in terms of the Codes of Good Practice on
                              BEE published by the Minister of Trade and Industry in terms of the Broad-
                              Based Black Economic Empowerment Act, No. 53 of 2003.
            5.1.2.   The Reunert Shares held by Bargenel will continue to carry full voting rights and full
                     rights to participate in dividends.
            5.1.3.   For as long as the ESOP holds Rebatona Shares and Rebatona holds ordinary
                     shares in Bargenel, the ESOP shall be entitled to appoint one director to each of the
                     boards of Rebatona and Bargenel. Furthermore, the ESOP will have the authority
                     and power to exercise, in Bargenel’s name all of the voting rights of its effective
                     shareholding in Reunert (through its shareholding in Rebatona), at any general
                     meeting of Reunert Shareholders at which they are exercisable.
            5.1.4.   The Rebatona Trust will not be entitled to encumber or dispose of its Rebatona
                     Shares for the period commencing on the Effective Date and terminating on the later
                     of the:
                     5.1.4.1. date on which the last of the Bargenel A Preference Shares is redeemed;
                              or
                     5.1.4.2. 10th anniversary of the Effective Date.
            5.1.5.   In order to provide the ESOP with the funds to settle the beneficiaries of the ESOP
                     at the end of the ESOP period as set out in paragraph 5.2.9 below, Rebatona will
                     repurchase the Rebatona Shares held by the ESOP at the end of the ESOP period
                     for a consideration equal to the total sum of the settlement values due to the
                     beneficiaries of the ESOP as calculated in terms of the ESOP trust deed. In turn
                     Bargenel will be entitled to dispose of sufficient Reunert Shares in order to provide
                     Rebatona with the necessary funds to pay the consideration for the repurchase of
                     the Rebatona Shares held by the ESOP.
            5.1.6.   Notwithstanding paragraph 5.1.5, Reunert will be entitled, in its sole discretion, to
                     contribute and/ or procure that employer companies of the ESOP beneficiaries
                     contribute, to the ESOP all or a portion of the funds required by the ESOP to settle
                     beneficiaries remaining at the end of the ESOP period, which will reduce the
                     repurchase consideration payable by Rebatona for the repurchase of the Rebatona
                     Shares held by the ESOP as contemplated in paragraph 5.1.5.
     5.2.   ESOP

            5.2.1.   The ESOP will create approximately 8.3 million units (“Units”), which will be
                     allocated equally with effect from the Effective Date in a once-off allocation to the
                     qualifying employees, being all full time, permanent employees of the Reunert
                     group, but specifically excluding:
                     5.2.1.1. non-executive directors;
                     5.2.1.2. all employees who are participating in any of the long-term incentive
                              schemes in place at the Reunert group;
                     5.2.1.3. executive directors and employees participating in any of the short-term
                              incentive schemes in place at the Reunert group; and
                     5.2.1.4. employees employed by any subsidiary of Reunert that is incorporated or
                              registered outside of South Africa and any company in which Reunert
                              directly or indirectly holds 50% or more of the issued shares, but is not
                              entitled (whether due to the provisions of the company’s memorandum of
                              incorporation, any shareholders’ agreement related to that company, or
                              otherwise) to appoint the majority of the directors of that company or
                              directors who are able to exercise the majority of the votes at meetings of
                              the directors of that company).
            5.2.2.   Following the allocation of the Units, all qualifying employees who do not reject the
                     allocation will become beneficiaries of the ESOP.
            5.2.3.   Units are notional and are not property of any nature and have no separate
                     existence. The Units are merely used as a mechanism to establish an ESOP
                     beneficiary’s interest/ rights in the ESOP and represent the vested rights of the
                     beneficiaries to the underlying benefits of the ESOP.
            5.2.4.   The beneficiaries are required to meet certain employment service requirements set
                     out in the ESOP trust deed. If a beneficiary fails to meet the employee service
                     requirements, then that beneficiary’s Units will lapse and be cancelled and
                     consequently forfeited for no consideration.
            5.2.5.   The board of trustees of the ESOP will consist of 4 trustees, of whom the
                     beneficiaries will be entitled to elect 2 from amongst themselves with Reunert being
                     entitled to appoint the remaining 2 trustees.
            5.2.6.   The beneficiaries will be entitled to give directions to the trustees of the ESOP to
                     exercise the ESOP’s voting rights in respect of the underlying portion of the Reunert
                     Shares held by the ESOP at any general meeting of Reunert.
            5.2.7.   Any dividends received by the ESOP from time to time are vested in the
                     beneficiaries in relation to, and will be distributed and paid to the existing
                     beneficiaries pro rata to, their holding of Units.
            5.2.8.   The ESOP is a cash settled scheme and beneficiaries will therefore not be entitled
                     to receive Rebatona Shares or Reunert Shares. The cash payment to remaining
                     beneficiaries at the end of the ESOP period will be determined in accordance with
                     a formula that provides for those beneficiaries to participate in the growth of the price
                     of the Reunert Share over the Agreed Transaction Price.
            5.2.9.   The ESOP will remain in place for a period of at least 5 years. If the value of a Unit
                     (being the 30-day VWAP of the Reunert Share price on the calculation date less the
                     Agreed Transaction Price) as calculated prior to the 5th anniversary of the Effective
                     Date is positive, then the period of the ESOP will terminate and the remaining
                     beneficiaries will be settled in accordance with the terms of the ESOP trust deed. If
                     the value of a Unit is zero or negative at such calculation date, the ESOP period will
                     be extended for another year and the calculation of the Unit value will be repeated.
                     This process will be repeated for a maximum of 3 years from the 5th anniversary of
                     the Effective Date. If the value of a Unit is still not positive at the end of the 8th
                     anniversary of the Effective Date, the ESOP period will expire and the remaining
                     beneficiaries will not be entitled to any payment.

6.   SUSPENSIVE CONDITIONS

     6.1.   The Proposed BEE Transaction is subject to the fulfilment or, where applicable, waiver of,
            inter alia, the following suspensive conditions:
            6.1.1.   the agreements pertaining to, inter alia, the Proposed BEE Transaction are entered
                     into and have become unconditional in accordance with their terms;
            6.1.2.   the ESOP is registered by the Master of the High Court and enters into a deed of
                     adherence in such form and on such terms as Reunert may reasonably require,
                     agreeing to become a party to the Implementation Agreement and to observe,
                     perform and be bound by all the terms and conditions of the Implementation
                     Agreement, to the extent applicable;
            6.1.3.   Rebatona, as the sole shareholder of Bargenel, passes the necessary special
                     resolutions, required for Bargenel to implement the transactions contemplated in the
                     Implementation Agreement;
            6.1.4.   the Rebatona Trust, as the sole shareholder of Rebatona, prior to the introduction
                     of the ESOP, passes the necessary special resolutions required for Rebatona to
                     implement the transactions contemplated in the Implementation Agreement;
            6.1.5.   any and all approvals required from the JSE in connection with the transactions
                     contemplated in the Implementation Agreement are obtained;
            6.1.6.   Shareholders:
                     6.1.6.1. approve the Specific Issue of Reunert Shares, in accordance with
                              paragraph 5.51(g) read with paragraph 5.75 of the JSE Listings
                              Requirements; and
                     6.1.6.2. to the extent necessary, approve, by a special resolution in terms of
                              section 44(3) of the Companies Act, the Financial Assistance; and
            6.1.7.   Reunert obtains an indicative certificate in relation to the Reunert’s BEE ownership,
                     from an accredited BEE verification agent, done as if the Implementation Agreement
                     has been fully implemented and such certificate is acceptable to Reunert in its sole
                     and absolute discretion.
     6.2.   The condition referred to in paragraph 6.1.7 above is for the benefit of Reunert and may
            therefore be waived by Reunert.

7. SPECIFIC ISSUE OF REUNERT SHARES

     7.1.   The Specific Issue of Reunert Shares will constitute a specific issue of shares, in terms of
            paragraph 5.51(g) read with paragraph 5.75 of the JSE Listings Requirements.
     7.2.   Implementation of the Specific Issue of Reunert Shares is subject to, inter alia,
            Shareholders adopting an ordinary resolution, passed by achieving a 75% majority of the
            votes cast on the resolution, excluding Bargenel and Julopro, in accordance with paragraph
            5.51(g) of the JSE Listings Requirements.
     7.3.   Furthermore, Bargenel is a material shareholder of Reunert, in terms of the JSE Listings
            Requirements, and is therefore deemed to be a related party to Reunert, in terms of
            paragraph 10.1(b)(i) of the JSE Listings Requirements. In terms of the JSE Guidance Letter
           (dated 11 November 2010), a fairness opinion is required in respect of the Specific Issue
           of Reunert Shares as a result of the Financial Assistance.

8. SMALL RELATED PARTY TRANSACTIONS

    8.1.   Rebatona, as the holding company of Bargenel is an associate of Bargenel as
           contemplated in the JSE Listings Requirements. Accordingly, in addition to Bargenel,
           Rebatona is also deemed to be a related party to Reunert in terms of paragraph 10.1(b)(vii)
           as read with 10.1(b)(i) of the JSE Listings Requirements.
    8.2.   The Restructure of the Original BEE Transaction pertain to a series of agreements to be
           entered into between Reunert and Bargenel as contemplated in paragraphs 4.2, 4.3 and
           4.4 above.
           8.2.1.   As described in paragraph 7.3 above, Bargenel is a related party to Reunert.
                     Accordingly, the Restructure of the Original BEE Transaction is considered to be a
                    transaction with a related party.
           8.2.2.   The aggregated percentage ratio of the Restructure of the Original BEE Transaction
                    is 3.2% (based on Reunert’s market capitalisation, including empowerment shares,
                    but excluding treasury shares, as at 18 November 2021, being R9 535.6 million).
                    Accordingly, the Restructure of the Original BEE Transaction is categorised as a
                    “small related party transaction”, in terms of paragraph 10.7 of the JSE Listings
                    Requirements. The categorisation calculation of the Restructure of the Original BEE
                    Transaction is based on an estimate of the applicable fair value of the embedded
                    option held by the Rebatona Trust as at 18 November 2021, being R309.8 million.
    8.3.   The ESOP Contributions pertain to a series of transactions to be entered into between
           Rebatona and Reunert.
           8.3.1.   As described in paragraph 8.1 above Rebatona is a related party to Reunert.
                    Accordingly, the agreements in respect of the ESOP Contributions are deemed to
                    be agreements with a related party.
           8.3.2.   As a result of the aggregation of Reunert’s funding to Rebatona pursuant to the
                    Peotona Parties’ Exit, together with the ESOP Contributions, the aggregated
                    percentage ratio of the ESOP Contributions is 1% (based on Reunert’s market
                    capitalisation, including empowerment shares, but excluding treasury shares, as at
                    18 November 2021, being R9 535.6 million). Accordingly, the ESOP Contributions
                    are categorised as a “small related party transaction”, in terms of paragraph 10.7 as
                    read with paragraph 10.8 of the JSE Listings Requirements. The categorisation
                    calculation of the ESOP Contributions is based on an estimate of the applicable fair
                    value of the embedded option held by the ESOP as at 18 November 2021, being
                    R99.3 million.
    8.4.   In terms of paragraph 10.7 of the JSE Listings Requirements, the Restructure of the
           Original BEE Transaction and the ESOP Contributions are not subject to Shareholder
           approval, provided that an independent professional expert confirms that the terms of these
           transactions are fair in so far as the Shareholders are concerned.

9. FAIRNESS OPINION

   9.1.   Reunert has appointed BDO Corporate Finance Proprietary Limited (“Independent
          Expert”) to opine on the fairness of the Specific Issue of Reunert Shares, the Restructure
          of the Original BEE Transaction and the ESOP Contributions. A copy of the Independent
          Expert’s report will be included in the Circular (as defined in paragraph 11 below).

10. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED BEE TRANSACTION

    10.1. The table below sets out the unreviewed and unaudited pro forma financial effects of the
          Proposed BEE Transaction on, inter alia, Reunert’s net asset value (“NAV”) per share,
          tangible NAV per share, basic earnings per share (“EPS”), diluted EPS, headline EPS
          (“HEPS”) and diluted HEPS based on the preliminary reviewed condensed consolidated
          financial statements of Reunert for the year ended 30 September 2021, as published on
          SENS on 23 November 2021.
    10.2. The unreviewed and unaudited pro forma financial effects have been presented for
          illustrative purposes only, to provide information on how the Proposed BEE Transaction
          may have affected the results and financial position of Reunert. Due to its nature, the
          unreviewed and unaudited pro forma financial effects may not fairly represent Reunert’s
          financial position, changes in equity, results of operations or cash flows post the
          implementation of the Proposed BEE Transaction.
    10.3. The unreviewed and unaudited pro forma financial effect on the EPS, diluted EPS, HEPS
          and diluted HEPS is presented as if the Proposed BEE Transaction was effective 1 October
          2020 and the unreviewed and unaudited pro forma financial effect on the NAV per share
          and tangible NAV per share is presented as if the Proposed BEE Transaction is effected
          as at 30 September 2021.
    10.4. The unreviewed and unaudited pro forma financial effects, including the assumptions on
          which they are based and the financial information from which they have been prepared, is
          the responsibility of the board of directors of Reunert and have not been reviewed or
          reported on by the independent reporting accountant or independent auditor.
    10.5. The unreviewed and unaudited pro forma financial effects have been prepared in
          accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial
          Information issued by SAICA and Reunert’s accounting policies, which are in compliance
          with the international financial reporting standards (IFRS).

PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED BEE TRANSACTION
                                                                                                        Specific Issue
                                                                                    Restructure of          of Reunert
                                                                                      the Original          Shares and
                                                                                               BEE           Financial               ESOP          Transaction       Proposed BEE
                                                                       Before          Transaction          Assistance      Contributions                Costs        Transaction              After
                                                                                               (A)                 (B)                (C)                 (D)     (A + B + C + D)
                                                                           (1)           (2,3,4,8)             (2,3,5)          (2,3,6,8)               (7,8)            (2 to 8)           (1 to 8)
EPS (cents) (9)                                                           483                  (2)                   -               (11)                 (6)                (19)                464
Diluted EPS (cents) (9)                                                   481                  (2)                   -               (11)                 (6)                (19)                462
HEPS (cents) (9)                                                          478                  (2)                   -               (11)                 (6)                (19)                459
Diluted HEPS (cents) (9)                                                  476                  (2)                   -               (11)                 (6)                (19)                457
NAV per share (cents) (10)                                              4 199                    -                   -                  -                 (6)                 (6)              4 193
Tangible NAV per share (cents) (11)                                     3 335                    -                   -                  -                 (6)                 (6)              3 329
Weighted average number of shares (million)                             160.7                    -                   -                  -                   -                   -              160.7
Weighted average diluted number of shares (million)                     161.4                    -                   -                  -                   -                   -              161.4
Net number of ordinary shares in issue (million) (5)                    159.4                    -                   -                  -                   -                   -              159.4

Notes:
1.     The "Before" column is based on the published preliminary reviewed condensed consolidated financial statements of Reunert for the year ended 30 September 2021, as released on
       SENS on 23 November 2021. There are no other material transactions subsequent to the financial year ended 30 September 2021, which require adjustment to the unreviewed and
       unaudited pro forma financial information.
2.     The Proposed BEE Transaction (as contemplated in the transaction steps described in paragraphs 4.1 to 4.7 above) entails, inter alia, (i) the Restructure of the Original BEE Transaction;
       (ii) the Specific Issue of Reunert Shares; (iii) the Financial Assistance; and (iv) the introduction of the ESOP. For purposes of determining the unreviewed and unaudited pro forma
       financial effects of the Proposed BEE Transaction, the Specific Issue of Reunert Shares and the Financial Assistance have been combined.
3.     It was concluded that Bargenel, Rebatona, the Rebatona Trust and the ESOP will be consolidated by Reunert based on the outcome of the assessment of control relating to the ESOP
       and reassessment of control in relation to Bargenel, Rebatona and Rebatona Trust performed in accordance with IFRS 10, Consolidated Financial Statements.
4.     Due to the Rebatona Trust being consolidated, any bursaries awarded by the Rebatona Trust are regarded as the cost of the Restructure of the Original BEE Transaction and are
       expensed. For purposes of the calculation of EPS, diluted EPS, HEPS and diluted HEPS, it was assumed that the total trickle dividend of R 4.1 million to be received by the Rebatona
       Trust will be awarded as bursaries and therefore expensed. The bursaries to be awarded by the Rebatona Trust (expenses) are conditional upon Reunert ordinary dividends being
       declared. These expenses have been assumed to be non-deductible for tax purposes. For purposes of the calculation of NAV per share and Tangible NAV per share, the Restructure
       of the Original BEE Transaction will have no impact on the consolidated Reunert financial position on the Effective Date (assumed for this purpose to be 30 September 2021).
5.     Due to Bargenel being consolidated by Reunert as described in note 3 above, the Specific Issue of Reunert Shares and Financial Assistance have no impact on the consolidated
       results of Reunert. The Reunert Shares held by Bargenel, including the Specific Issue of Reunert Shares, will continue to be classified as treasury shares for accounting purposes and
       will also be excluded from the weighted average number of shares in issue. The net number of ordinary shares in issue is net of empowerment and treasury shares.
6.     The ESOP is classified as a cash-settled share-based payment in terms of IFRS2: Share-based Payment. The share-based payment has been determined using the Monte Carlo
       technique. There will be an expense debited to the Statement of Comprehensive Income over the most probable period that services will be rendered by the beneficiaries of the ESOP
       (being qualifying employees) with a corresponding credit to the share-based payment liability on the Statement of Financial Position. The total IFRS2 charge in relation to the ESOP
       has been calculated at R89.7 million taking into consideration an estimated attrition rate of 8.41% per annum. The annual charge to the Reunert Statement of Comprehensive Income
       over a period of 5 years is estimated at R17.9 million per annum, which impacts the calculation of EPS, diluted EPS, HEPS and diluted HEPS. For purposes of the NAV per share and
       Tangible NAV per share, the ESOP Contributions will have no impact on the consolidated Reunert financial position on the Effective Date (assumed for this purpose to be 30 September
       2021).
7.     For purposes of the calculation of EPS, diluted EPS, HEPS, diluted HEPS, NAV per share and tangible NAV per share, the Transaction Costs are estimated at approximately R9.0 million
       and have, or will be, expensed in relation to the Proposed BEE Transaction and will result in a reduction of available cash resources. These costs are once-off and have been assumed
       to be non-deductible for tax purposes.
8.     The reduction in interest income, which is mainly due to the reduction in available cash resources as result of the transaction costs incurred and the trickle dividend flowing to the
       beneficiaries of the Rebatona Trust and the ESOP is not material (less than R1 million) for purposes of calculating the EPS, diluted EPS, HEPS and diluted HEPS. The reduction in
       interest was calculated using a rate of 4.3%, being the annual average money market rate. This reduction will have a continuing impact and is assumed to reduce taxable income. For
       purposes of the NAV per share and tangible NAV per share, the reduction of interest income will have no impact on the consolidated Reunert financial position on the Effective Date
       (assumed for this purpose to be 30 September 2021).
9.     The EPS, diluted EPS, HEPS and diluted HEPS "After" the Proposed BEE Transactions are based on the implementation of the Proposed BEE Transaction occurring on 1 October
       2020.
10.    NAV is calculated as equity attributable to the equity holders of Reunert. NAV per share is calculated as NAV divided by the net number of ordinary shares in issue. The NAV per share
       “After” is based on the implementation of the Proposed BEE Transaction occurring on 30 September 2021.
11.    Tangible NAV is calculated as equity attributable to the equity holders of Reunert less the value of goodwill and other intangible assets. Tangible NAV per share is calculated as tangible
       NAV divided by the net number of ordinary shares in issue. The tangible NAV per share “After” is based on the implementation of the Proposed BEE Transaction occurring on
       30 September 2021.


11. CIRCULAR

    A circular setting out the full terms and conditions of the Proposed BEE Transaction and including
    a notice convening a general meeting of Shareholders (“General Meeting”), (“Circular”) will be
    posted to Shareholders in due course.

12. GENERAL MEETING AND OTHER IMPORTANT INFORMATION

    The General Meeting is planned for 15 February 2022. Further details relating to the Proposed BEE
    Transaction and the General Meeting, and the related salient dates and times will be published on
    SENS in due course.




Johannesburg
23 November 2021


Financial Advisor:
Investec Bank Limited


JSE Equity Sponsor:
One Capital Sponsor Services Proprietary Limited


Legal Advisor to Reunert:
Bowman Gilfillan Inc.


Independent Expert:
BDO Corporate Finance Proprietary Limited


Independent Reporting Accountant and Independent Auditor
Deloitte & Touche

Date: 23-11-2021 01:00:00
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