Chairman’s Presentation: Special General Meeting 27 May 2019
Contents • Welcome • Introduction of New Board • Overview - Status of the Board Following the 2018 AGM - Filling Vacancies on the Board - Nomination and Profile of Candidates - Appointment of Executive Directors - Independenceof the Non-Executive Directors - Board Committees - Non-Executive Director’s Remuneration • Questions? • Main Agenda: Voting on Resolutions _________________________________________________________ Pg. 2
Welcome Welcome to the Special General Meeting(SGM) of Ellies Holdings Limited convened on Monday, 27 May 2019 at 11h00. The SGM will specifically deal with only the resolutions in the Notice of General Meeting Our transfer secretaries, Computershare will assist with the facilitation of the voting process, counting of votes and voting results I will give a brief overview on the resolutions presented here today to shareholders,to assistyou our valued shareholders in exercising your vote _________________________________________________________ Pg. 3
Introduction • We would like to introduce to you the new Board: - Timothy Fearnhead (Tim) Tim is a newly appointed INED and Chair of the Board as from 4 April 2019. Tim is an experienced Chartered Accountant with over 30 years experience. Please see page 8 of the circular for an abridged version of Tim’s resume - Edward Raff (Eddie) Eddie is a newly appointed INED to the Board as from 4 April 2019 Eddie is an experienced financial and commercial advisor with over 10 years experience. Please see page 8 of the circular for an abridged version of Eddie’s resume _________________________________________________________ Pg. 4
Introduction Continues… - Francois Olivier (Francois) Francois has been appointed as an INED from 4 April 2019. Francois is a seasoned Chartered Accountant with over 20 years experience and currently serves as a portfolio manager at Mazi Asset Management Proprietary Limited Please see page 8 of the circular for an abridged version of Chris’s resume - Martin Kuscus (Martin) Martin has been an INED with the Companysince 1 June 2015 Martin is a seasoned director with over 30 years experience. Please see page 9 of the circular for an abridged version of Martin’s resume _____________________________________________________ Pg. 5
Introduction Continues… - Dr. Shaun Prithivirajh (Shaun) Shaun has been the Group CEO from 1 August 2018 and on 4 April 2019 was re-appointed as executive director on the Board, in compliance with JSE LR Shaun is a highly qualified and experienced Business Strategist with over 20 years experience in strategic business management Please see page 9 of the circular for an abridged version of Shaun’s resume - Christiaan Booyens (Chris) Chris has been the interim CFO since October 2018 and his appointment as fulltime CFO and executive financialdirector was confirmed on 4 April 2019. Chris is a seasoned Chartered Accountant with over 30 years experience. Please see page 9 of the circular for an abridged version of Chris’s resume ________________________________________________________ Pg. 6
Introduction Continues… - Elliot Ralph Salkow (Ellie) Ellie needs no introduction. Ellie is the name behind the brand Ellies. - Over 40 years ago Ellie founded Ellies Group from small beginnings, starting off with selling aerials and small scale electronic products from the boot of a car and growing into a JSE Listed entity with potential to grow even greater. - Ellie has served as Founder and Executive Chairman of the Company since its listing in 2007. - Ellie retired as executive chairman during November 2018 and as executive director during April 2019. - Ellie will continue to serve on the Board as a non-executive director. ________________________________________________________ Pg. 7
STATUS OF THE BOARD POST 2018 AGM A dispute arose relating to membership of the Board, pursuantto the December 2018 AGM results. Three non-executive directors subsequently resigned on 14 & 18 January 2019, respectively, leaving the Board with three vacancies and only two directors, of which only one was an IndependentNon-Executive Director(INED). Consequently, the Audit and Risk Committee(ARC) was left with two vacancies. ________________________________________________________ Pg. 8
FILLING VACANCIES ON THE BOARD The Companies Act [S66(2)(b)] requires that the company must have a minimum number of 3 directors. The Company’s MOI (clause24.1) requires that the Company must have a minimum number of 4 directors. Section 94(4) of the Act requires that 3 of the directors must be Independent Non- Executive Directors(INED) for purposes of constituting an Audit Committee and that the Board must fill the vacancies in ARC within 40 business days of the vacancy arising. The MOI (clause 24.14) stipulates that the remaining Board members must fill the vacancies in the Board within 90 calendar days from the date the Board composition fell below the statutory required 3 directors. The remaining members consequently filled the vacancies on the Board on 4 April 2019 and the vacancies in ARC on 23 April 2019. You are required to vote on these new appointments. Pg. 9
Nomination of Candidates & Appointment of Executive Directors In terms of the Board Charter and JSE Listing Requirements(Regulation 3.84) and King IV Report the Board must appoint two executive directors, being the CEO and CFO. The board subsequently appointed the CEO and CFO as executive directors on 4 April 2019. In terms of the Nominations Committee(NOMCO) Charter the Committee must identify and recommend candidates to the Board for appointment. The remaining two members of the Board were also members of the NOMCO. They then identified candidates from commerce, finance, and the business community and made recommendations to the Board to appoint. The Board then considered the resumes of the candidates and appointed the three most suitable candidates as INEDs on 4 April 2019. The Board also confirmed the ceasing of Mr. Andrew Hannington as alternate director Pg. 10 to Mr. Salkow on 4 April 2019.
INDEPENDENCE OF NON-EXECUTIVE DIRECTORS The sponsors of the company indicated their concerns regarding the independence of the newly appointed NEDs, more particularly Francois Olivier, as he is an employee of a major shareholder, Mazi Capital. Mr. Olivier was appointed to the Board due to his long experience with Ellies. The Board then appointed independent governance consultants, EmpowerMobile (Pty) Ltd, to assess and provide an independence report on all NEDs, with the exception of Mr. Salkow(“the Report”) . The Report concluded that all appointed NEDs are independent, based on the Companies Act, JSE Listing Requirements and King IV criteria for determining independence. Pg. 11
INDEPENDENCE OF NON-EXECUTIVE DIRECTORS CONTINUES… The Board, in consideration of the Report, unanimously agree that Mr. Olivier is indeed independent, as he has displayed independence of mind in his decision-making on the Board since his appointment on 4 April 2019. Mr. Olivier also considers himself as independent. It is within the Board’s right, in addition to its fiduciary duty under the Act, to expect Mr. Olivier to act in the best interest of the Company and not just that of the shareholderhe is employed by. I haveevery confidence that he will act in such manner. Pg. 12
BOARD COMMITTEES In terms of the MOI read with Section 94(4) of the Act the Board must appoint an Audit and Risk Committee (ARC). Consequently the Board appointed the ARC on 23 April 2019, on which appointment you are required to vote. Pg. 13
NON-EXECUTIVE DIRECTORS REMUNERATION: The Board undertook an assessment of the remuneration payable to non- executive directors and found that the Company currently remunerates NEDs far below market related levels, which hinders attraction and retention of suitably qualified and experienced NEDs on the Board. The Board’s assessment was conducted in line with the Practice and Fees Trends Report issued annually by Price Waterhouse Cooper(PWC). In applying the PWC Report it shows that the Company’s NEDs are paid in the lowest quartile. The recommendation was to move the fees to the 50th percentile, given the small size of the Board. These fees are as presented in the Circular(p10) on which you are required to vote. Pg. 14
QUESTIONS?
MAIN AGENDA: VOTING
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