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“Our vision is to be a global, people-centred, diversified healthcare organisation and to support this vision, we continue to ensure that we have solid and entrenched governance structures in place. We maintain that without a proper governance framework in place, reacting to and managing crises and uncertainty becomes a challenge in itself”.
Entrenching sound corporate governance principles and adhering to the highest levels of ethical standards throughout the business sets the tone for our organisation as a whole and reinforces our ability to generate and deliver long-term sustainable value to all our stakeholders. The Board remains Life Healthcare’s overall custodian of sound corporate governance. We continue to ensure that we grow and evolve in this role through ongoing review of and improvement to our processes and policies. The Board is satisfied that it has fulfilled its responsibilities in accordance with its charter and with all other applicable legislation for the year under review.
The Group’s governance framework was formulated to ensure effective and sustainable delivery of our overall strategy. This framework intends to provide a structure within which the business is properly managed and the interests of its stakeholders are protected. The framework has been especially useful during these challenging times to provide clear and concise guidance on the most effective and pragmatic manner of governing the organisation.
Proactive and resilient corporate governance has become increasingly relevant and required, now more than ever. In times of crisis such as the current COVID-19 pandemic, governance matters and governance protects interests of our shareholders. A proper governance framework will continue to be crucial, both to the recovery of the business and to building a “new normal” once the crisis has passed.
The culture and inherent value system that is deeply entrenched into our business has played a material role in enabling the Board to guide the Group through the pandemic and the criminal cyber-attack. In addition, our governance framework contributed to the efficacy and resilience of our governance responses to these two crises, allowing the Board and senior management to focus on the significant challenges and agile decision-making required to respond appropriately, as and when required to do so.
Our governance framework and accompanying policies and processes also provided clarity during a very challenging time, and clearly delineated roles and areas of accountability, ensuring proper alignment across the Group and focused and informed decision-making at the appropriate levels across our various operational jurisdictions.
Provide direction and oversight on Group:
Strategy and investments | Policies | Operational performance
Risk management information technology | Audit-related
matters | Financial performance | Clinical quality and
compliance | Governance and ethics | Sustainability | Legal
(IT management forum, combined assurance forum,
compliance forum, clinical governance forum,
sustainable development committee)
Risk | Overall sustainability | Combined assurance Compliance | HR | Finance | Information technology Procurement | Clinical compliance/governance
The Board confirms the Group’s compliance with the Companies Act, 71 of 2008 (Companies Act) and the Company’s memorandum of incorporation for the reporting period.
Life Healthcare has a unitary Board of directors that is supported in delivering its mandate through various Board committees, as well as a formal charter that clearly defines its role and responsibilities.
The Board sets the overall strategic objectives of the Group, determines investment policy and performance criteria, and delegates the detailed planning and implementation of policies to management within the appropriate risk parameters. The Board monitors compliance with policies and performance against objectives by holding management accountable for its activities through quarterly performance reporting and budget updates.
The Board considers matters of strategic direction, significant acquisitions and disposals, and approves major capital expenditure, financial statements and other material matters. Board members are encouraged to debate and challenge matters in an atmosphere of mutual respect and cooperation. While retaining overall accountability, the Board has delegated authority to the CEO to manage the day-to-day affairs of the Group who, in turn, is supported by the Group executive committee.
During the year under review, the CEO, with the support of the executive team, constituted a Group operating committee, comprising the top 21 senior leaders in the organisation. The committee is structured in a manner that strives to ensure an appropriate balance of diversity, knowledge, skills and experience.
The following policies were reviewed by the Board and its committees during the year under review:
Please refer to Our leadership for information on our Board leadership and Group executive committee.
The committee is constituted as a statutory committee in terms of section 94 of the Companies Act. It has an independent role and is accountable to the Board and shareholders.
The overall functions of the committee are to:
Peter Golesworthy
Audrey Mothupi
Garth Solomon
Royden Vice
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The role of the committee is to assist the Board to set the direction for the manner in which risk is managed and addressed, compliance is embedded into the organisation and IT governance is implemented. This is all executed while adopting a stakeholder-inclusive approach. The committee must also oversee and direct that the Company has implemented an effective policy and plan for risk management and compliance encompassing the opportunities and associated risks to be considered when developing strategy and the potential positive and negative effects of the same risks on the achievement of the Company's strategic objectives.
Joel Netshitenzhe
Peter Golesworthy
Marian Jacobs
Audrey Mothupi
Mahlape Sello
Pieter van der Westhuizen
Peter Wharton-Hood
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The overall functions of the committee are to:
Garth Solomon
Peter Golesworthy
Royden Vice
Victor Litlhakanyane
Pieter van der Westhuizen
Peter Wharton-Hood
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The overall functions of the committee are to assist the Board in ensuring that:
Royden Vice
Mahlape Sello
Garth Solomon
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The social, ethics and transformation committee is constituted as a statutory committee in terms of section 72(4)(a) of the Companies Act. Its main purpose is to ensure that:
The social, ethics and transformation committee’s report is detailed in the Social ethics and transformation committee report.
Audrey Mothupi
Marian Jacobs
Joel Netshitenzhe
Malefetsane Ngatane
Peter Wharton-Hood
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The overall functions of the committee are to assist the Board in:
Marian Jacobs
Malefetsane Ngatane
Victor Litlhakanyane
Garth Solomon
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
The overall functions of the committee are to assist the Board in:
Peter Golesworthy
Mustaq Brey
Malefetsane Ngatane
The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.
As at 30 September 2020
| Members | Date appointed | Tenure | ||
| MA Brey1* | 10 June 2010 | 10 years | ||
| GC Solomon2* | 10 June 2010 | 10 years | ||
| MP Ngatane3* | 10 June 2010 | 10 years | ||
| PJ Golesworthy | 10 June 2010 | 10 years | ||
| JK Netshitenzhe | 30 November 2010 | 10 years | ||
| RT Vice | 1 January 2014 | 6 years | ||
| ME Jacobs | 1 January 2014 | 6 years | ||
| M Sello | 3 July 2017 | 3 years | ||
| VL Litlhakanyane | 15 April 2020 | < 1 year | ||
| AM Mothupi | 3 July 2017 | 3 years | ||
| PP van der Westhuizen | 1 June 2013 | 7 years | ||
| PG Wharton-Hood | 1 September 2020 | < 1 year | ||
| 1 | Mr Brey joined the Board in November 2003, while the Company was under private ownership, seven years prior to listing. |
| 2 | Mr Solomon joined the Board in March 2005, while the Company was under private ownership, five years prior to listing. |
| 3 | Dr Ngatane joined the Board in July 2007, while the Company was under private ownership, three years prior to listing. |
| * | Messrs Brey, Solomon and Ngatane's tenure is calculated with effect from the date of listing, being 10 June 2010. The Board is nevertheless satisfied that these directors continue to display objective, unfettered judgement in the execution of their role, despite their long association with the Company prior to listing. |
Brief biographies of all directors outlining their qualifications and skills are included on our website
Mustaq Brey, a non-executive director, is the Chairman of the Board. In accordance with King IV, Peter Golesworthy is the lead independent non-executive director. His roles include acting as a sounding Board for the Chairman, chairing Board meetings in the absence of the Chairman, and leading the performance appraisal of the Chairman.
During the year under review, Mustaq Brey indicated to the Company, his intention to step down from his role as Chairman at an appropriate time. The Board began with a process to identify a suitable successor and announced the appointment of Victor Litlhakanyane, a current independent non- executive director, as Chairman-designate. Mustaq will remain with the Company until the conclusion of the Company's annual general meeting ("AGM") in 2021, whereafter Victor will assume the role.
During the year under review, Shrey Viranna resigned as the CEO. Pieter van der Westhuizen, the CFO acted as the interim CEO until the appointment of Peter Wharton-Hood on 1 September 2020.
The roles of Chairman and CEO are separate, and there is a clearly outlined division of responsibilities.
Effective control is exercised through the CEO, who is accountable to the Board through regular reports. Senior executives attend Board meetings as and when necessary to apprise the directors of important events, and to develop and implement strategy. This encourages communication and co-operation between the directors and executive management.
The Board ensures that no individual has unfettered powers of decision making and authority, and that shareholder interests are protected at all times. The Board considered whether there is an appropriate balance of knowledge, expertise and collective experience among the non-executive directors. In doing so, the Board is satisfied that the non-executive directors have the required skills and experience to have objective judgement on matters of strategy, operational performance, resources, transformation, diversity and employment equity, standards of conduct, evaluation of results and economic, and social and environmental policies.
At the Group's expense, directors are entitled to seek independent professional advice to further their duties. All directors have access to the Group Company Secretary, who is responsible for ensuring Group compliance with applicable legislation and procedures. In compliance with JSE Listings Requirements, non-executive directors do not participate in any share incentive or option scheme of the Group.
Life Healthcare has an international, capital intensive business. The strategy, operating and investment budget and plans are approved by the Board. To control trading activities, it is the Board's philosophy that authority and responsibility be delegated to the lowest prudent level, and management is expected to always act in accordance with the Group values, both formally and informally.
The Group delegation of authority includes fundamental elements such as:
The Board meets quarterly and on an ad hoc basis to consider specific matters as needed. The Board and management meet annually to review the Group's strategy and agree on future focus areas. Where directors are unable to attend Board meetings for any reason, every effort is made to table their comments regarding the agenda and general items, at the meeting.
| Audit | Board | Investment | Nominations and governance |
Human resources and remuneration |
Risk, compliance and IT |
Social, ethics and transfor- mation |
Clinical | |
| Members | ||||||||
| MA Brey | 5/5 | 2/3 | 4/4 | |||||
| PJ Golesworthy | 6/6 | 5/5 | 5/5 | 4/4 | 2/3* | 1/1 | ||
| ME Jacobs | 5/5 | 3/3 | 2/2 | 4/4 | ||||
| VL Litlhakanyane | 3/3 | 2/2 | 3/3 | |||||
| AM Mothupi | 6/6 | 5/5 | 3/3 | 3/3 | ||||
| JK Netshitenzhe | 5/5 | 3/3 | 2/2 | |||||
| MP Ngatane | 5/5 | 4/4 | 3/3 | 4/4 | ||||
| M Sello | 4/5 | 2/3 | 2/3 | |||||
| GC Solomon | 6/6 | 5/5 | 5/5 | 3/3 | 1/1 | |||
| PP van der Westhuizen | 5/5 | 3/3 | 3/3 | 2/2 | 3/3 | |||
| RT Vice | 6/6 | 5/5 | 5/5 | 3/3 | ||||
| SB Viranna | 1/1 | 1/1 | 0/1 | |||||
| PG Wharton-Hood | 1/1 | 1/1 | 1/1 |
* Not in attendance due to request from the Chairman to attend to a confidential and urgent matter.
In living our values, the Group has earned a reputation for fairness and ethical behaviour in all its business dealings and processes. The Board is responsible for ensuring that management embeds a culture of ethical conduct throughout Life Healthcare, and sets the values by which the Group abides. Guidance for appropriate behaviour throughout the Group is based on the Code of Conduct (the code).
The code sets out policies and procedures to be followed in all aspects of professional, clinical and business dealings, and establishes a set of standards. It guides employees in their behaviour towards supporting healthcare professionals, patients, customers, suppliers, shareholders, co-workers, and the communities in which the Group operates. The code also extends to safety, health, security, conflicts of interest, environmental matters and human rights. While common sense, good judgement and conscience apply in managing a difficult or uncertain situation, the code assists in detailing the standards and priorities within the Group. New employees are familiarised with the code as part of their induction.
A confidential guidance and support hotline, operated by an international auditing firm, provides an independent facility for employees and suppliers to report fraud or any form of malpractice. A policy of non-retaliation protects and encourages people wishing to share their concerns. The Group maintains a zero-tolerance approach to fraud. Executives and line management are responsible for implementing procedures against fraud and corruption. Professional employees across the Group are encouraged to become members of their respective professional associations.
Employees, doctors and suppliers can report suspected irregularities anonymously to an independent service provider. Reported incidents are independently assessed and, where relevant, independently investigated. These incidents are also reported to the audit, and social, ethics and transformation committees. During the year under review, 36 tip-offs were received. Of the 36 tip-offs received in the year, 28 cases have been closed and eight currently remain under investigation.
We maintain accounting records, and developed systems designed to provide reasonable assurance as to the integrity and reliability of the financial statements. The Board delegates responsibility for the adequacy and operation of these systems to the CEO. These records and systems are designed to safeguard assets and minimise fraud. The systems of internal control are based on established organisational structures, such as written policies and procedures, which include budgeting and forecasting disciplines and the comparison of actual results against these budgets and forecasts. The Group has a key operational process checklist, and has assigned responsibilities for controls in the processes to relevant employees. Compliance is tested by internal and external audit reviews.
It is important that directors are kept up to date with their duties, as well as changes in the Group. On appointment, new directors are briefed on their fiduciary duties and responsibilities by the Group Company Secretary. The nominations and governance committee has approved an induction policy which includes the requisite reading material and the required exposure to the business. The policy is reviewed annually by the nominations and governance committee. In addition, new directors receive information on JSE Listings Requirements, King IV, the Companies Act and obligations they have to comply with. The Group Company Secretary assists the Chairman with the induction of directors. Directors are informed of relevant new legislation and changing commercial risks that affect the Group. Directors have full and unrestricted access to management and information when required and are entitled to seek independent professional advice in support of their duties at the Group's expense.
The Group's nominations and governance committee is responsible for assessing the independence of the Group's directors on an annual basis. Independence is determined according to the Companies Act, JSE Listings Requirements and the recommendations in King IV, which takes into account, among others, the number of years a director has served on the Board.
The Board was satisfied that all its independent non-executive directors met its independence criteria for the 2020 financial year.
| Non-executive director | Directors’ external interests | |
| Mustaq Brey | Mr Brey owns shares in the Company, the value of which is material to his personal wealth, and he can therefore not be considered independent. However, the nominations and governance committee and Board remain satisfied that Mustaq displays objective, unfettered judgement in decision making and that his objectivity has not been compromised by virtue of his shareholding. |
The Board, supported by the nominations and governance committee, ensures that the Board succession strategy is structured and implemented in a manner that ensures continuity and sustainability of corporate and Board performance and effectiveness. The strategy continues to focus on the critical elements of Board independence, refreshment, engagement, competence, integrity, transparency and inclusiveness. A skills matrix has been developed that maps out the profile of competencies and demographics that need to guide new appointments to the Board.
Directors are required to avoid a situation where they may have a direct or indirect interest that conflicts with the Group's interests. Directors disclose conflicts of interest at every meeting in terms of section 75 of the Companies Act. Directors present an updated list of their directorships and interests to the Group Company Secretary annually, and the comprehensive list is tabled at the Board meeting in July of each year.
Any new appointment to the Board involves a formal and transparent process and is a matter of consideration for the full Board, assisted by the nominations and governance committee.
The Board diversity policy applies to the appointment of new directors and has been taken into account for purposes of succession planning for the Board. The nominations and governance committee will make the Board appointment recommendations on merit and will consider candidates against objective criteria with due regard to the benefits of international diversity, including gender and race, and the contribution that the candidate will bring to the Board. There is an ongoing commitment from the Board to strengthen female representation, and preference will be given to female candidates who meet the criteria.
The memorandum of incorporation (MOI) stipulates that one-third of the Board members will retire from office at the AGM and will be eligible for re-election. The directors to retire are those who have been in office longest since their last election or who were appointed during the year. Executive directors are included in determining the rotation of retiring directors.
As per Life Healthcare's MOI, directors who have reached or exceeded the age of 70 years are also required to stand for annual re-election, upon recommendation by the Board.
The Company conducts an external and independent review of Board and committee effectiveness every third year, and with the last external evaluation done in 2017, conducted an independent process now again in 2020.
The independent evaluator report confirmed that the Board was meeting all of the required expectations of a listed entity, in alignment with King IV.
The key focus areas emanating from the report related to the following:
The nominations and governance committee will lead the focus of these listed imperatives on behalf of the Board.
Avanthi Parboosing is the Group Company Secretary. Her primary role is to ensure that the Board is cognisant of its fiduciary duties and responsibilities. The Company Secretary plays a key role in providing guidance to the Board members on the execution of their duties, keeping the Board aware of relevant changes in legislation and corporate governance best practice and emerging trends. Other key performance areas of the Company Secretary include overseeing the induction of new directors, and ongoing education of directors.
Avanthi Parboosing's role has also been expanded to include executive oversight over other areas, including Group Sustainability, Transformation, Diversity and Inclusion, Group Insurance, Business Integrity and Ethics, Group Privacy and Group Communications and Marketing.
An assessment of the Company Secretary was carried out for the year under the auspices of the nominations and governance committee. The Board confirms that the Company Secretary has the requisite experience and qualifications to carry out the role, and that she maintains an arms-length relationship with the Board.
The Board is responsible for the Group's compliance with applicable laws, rules, codes and standards. The enforcement of compliance principles is incorporated into the Group's global code of conduct and the Group considers compliance an integral part of the Group's culture in ensuring the achievement and sustainability of its strategic goals.
The Board has delegated the implementation of an effective compliance framework to management. Supervision of compliance risk management is delegated to the risk, compliance and IT governance committee, which reviews and approves the arrangements in place to monitor compliance. The Group complies with various codes and regulations such as the Companies Act, the JSE Listings Requirements and King IV.
There were no material or repeated regulatory penalties, sanctions or fines for contraventions of, or non- compliance with, statutory obligations or environmental laws.
Life Healthcare endorses and endeavours to adhere to the guidelines and principles of King IV.
A King IV Implementation Report and gap analysis is available on the Group’s website.
Life Healthcare observes a closed period from the end of the accounting period to the announcement of the interim or annual results, and when otherwise required in terms of the JSE Listings Requirements. During this time, no employee or director who might be in possession of unpublished price-sensitive information may deal, either directly or indirectly, in the shares of the Company. Comprehensive guidelines on how to comply with insider-trading restrictions and how to deal with analysts are provided in the insider-trading policy.
The Board considers and assesses the Group's going concern basis in the preparation of the annual and interim financial statements. In addition, the solvency and liquidity requirements per the Companies Act are considered. The Board is satisfied that the Group will continue as a going concern into the foreseeable future.
During the financial year, the Group was not involved in any material litigation or arbitration proceedings, nor were the directors aware of any pending or threatened legal issues which may have a material impact on the Group's financial position. Institutions in the healthcare sector are subject to patient lawsuits and the directors are of the opinion that the Group has sufficient insurance to mitigate financial risk.
In line with the code of conduct, employees may not make any direct or indirect political contribution on behalf of the Group unless authorised by the Board. This includes contributions to candidates, office holders and political parties.