Corporate governance overview

Our vision is to be an international healthcare provider delivering measurable clinical quality through a diversified offering and people-centred approach. To support this vision, we have solid and embedded governance structures in place. Life Healthcare's established governance framework embodies the King IV principles and outcomes that continue to stand us in good stead.

Corporate governance philosophy

The governing body (the Board) remains Life Healthcare's overall custodian of sound corporate governance. The Board strives to entrench sound corporate governance principles and adhere to high levels of ethical standards and effective leadership throughout the business. This sets the tone for our organisation as a whole and reinforces our ability to generate and deliver long-term sustainable value to our stakeholders. 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.

King IV

Life Healthcare endorses and endeavours to adhere to the guidelines and principles of King IV. The Group also embraces the achievement of King IV's governance outcomes, namely: an ethical culture, good performance, effective control and legitimacy, as depicted below. A King IV Implementation Report is available on the Group's website

Corporate governance outcomes

The Board is instrumental in ensuring that the Group achieves its governance outcomes, in order to realise our vision, mission and purpose. This is attained through the Board's wealth of knowledge, oversight, monitoring and guidance.

Group governance framework

The Group's governance framework was formulated to ensure effective and sustainable delivery of our overall strategy. This framework provides a structure within which the business is properly managed and the interests of our stakeholders are protected. The framework has been especially useful as we navigate our way through the impact of COVID-19; to provide clear and concise guidance on the most effective and pragmatic manner of governing the organisation.

Role of the Board

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 Group Chief Executive (GCE) to manage the day-to-day affairs of the Group who, in turn, is supported by the Group executive committee.

The Group Operating Committee, comprising the Group Chief Executive and the top 26 senior leaders in the organisation, reviews and monitors policies and frameworks prior to Board approval. This committee is structured in a manner that strives to ensure an appropriate balance of diversity, knowledge, skills and experience.

Key Board focus areas in 2021	Governance outcome	Strategic objective addressed	Material matters addressed
Ongoing response to the COVID‑19 pandemic	Good performance
Driving quality and efficiency	Legitimacy
Growth and innovation	Good performance
Reviewing long-term strategy	Good performance
Strengthening our ESG framework and reporting	Good performance Legitimacy
Policies/frameworks reviewed in 2021
Anti-bribery and corruption policy	Ethical culture
Treasury distribution policy	Good performance
Combined assurance framework	Legitimacy
Key Board focus areas for 2022
Retention of key people	Good performance
Focus on IT technology stability, security and capability	Good performance
Growth initiatives (SA imaging, LMI and Community Diagnostic Centres)	Good performance

Delegation of authority

Life Healthcare's operations span across a number of geographies. The business is capital-intensive and the strategy, operating and investment budget and plans are approved by the Board. To facilitate effective control of trading activities, it is the Board's philosophy that authority and responsibility be delegated, and management is expected to always act in accordance with the Group values and code of conduct.

The Group delegation of authority includes fundamental elements such as:

• An authority matrix for the Board, GCE and management in the different geographies
• Corporate, finance, governance and HR matters reserved for the Board
• Processes for the approval or amendment of the Group's business plan and annual budget
• Acquisitions and disposals
• Salary mandate

Roles of the Chairman, Lead Independent Director and GCE

The roles of Chairman, Lead Independent Director and GCE are separate, and there is a clearly outlined division of responsibilities as tabled below.

Chairman's responsibilities	Lead independent director responsibilities
Provides Board leadership and oversees ethical conduct	Provides support and advice to the Chairman as a trusted confidante
Oversees the Group's strategy, Board succession and performance	Chairs Board discussions and decision-making where the Chairman has a conflict of interest or is unavailable
Manages any conflicts of interest	Leads discussions at Board and committee meetings regarding the Board Chairman's performance appraisal and remuneration
Engages with the GCE and ensures positive stakeholder relations are maintained

Group Chief Executive's responsibilities
Manages the business according to the Board approved strategy	Implements the policies and strategies adopted by the Board
Ensures appropriate internal control mechanisms are in place to safeguard assets and maintains compliance with all relevant laws and best practice	Guides and evaluates executive management's performance against strategic objectives
Delegates the appropriate authority to the executive management within defined levels of authority and retains accountability to the Board

The Board delegates its authority to the GCE who is supported by an executive team. The Board is kept apprised of developments through regular quarterly meetings and ad hoc meetings when material matters arise. Senior executives attend Board meetings as and when necessary to apprise the directors of important events and share strategy. This encourages communication and co-operation between the directors and executive management.

In accordance with the Board Charter, collegiality is encouraged amongst the directors without inhibiting candid debate and create tension among directors. Directors are encouraged to play a full and constructive role in the affairs of the Group; this ensures that there is no unfettered power in relation to decision making.

The Board ensures that shareholder interests are protected and considers whether there is an appropriate balance of knowledge, expertise and diversity among the non-executive directors. In doing so, the Board is satisfied that the non-executive directors have a mix of the required skills and experience to have objective judgement on matters of strategy, operational performance, resources, diversity and inclusion, employment equity, standards of conduct, evaluation of results, economic, social and environmental policies.

When required, directors are entitled to seek independent professional advice to further their duties and the cost will be covered by the Company. 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.

Board composition

Board Independence

The majority of the Group's Board members are independent directors, which complies with King IV and global best-practice.

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 its non-executive directors met its independence criteria for the 2021 financial year.

Board Diversity

Board diversity has been a focus area for the Company as it is an important dynamic for ensuring that the Company looks to richer conversation with a diversity of views and is important for remaining relevant and sustainable from both a South African and international perspective. The Board's 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 ensure that diversity indicators are considered in relation to any proposed appointments to the Board.

Diversity at Board level

During 2021 we appointed two female independent non-executive Board members, and Mustaq Brey retired as Chairman. Consequently, the Board increased to 13 members (2020: 12).

Board Demographics

The Group's nominations and governance committee will make recommendations to the Board based 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. This was evidenced by the appointment of two women this year.

Diverse skills and experience at Board level

Life Healthcare's Board has a broad range of skills and experience, which we believe enhances and promotes debate and helps create value in the interests of all stakeholders.

Board members' skills and expertise includes: financial and business acumen; investments, mergers and acquisitions; remuneration and human resources; healthcare and clinical; corporate governance and leadership; strategy and legal expertise; and information technology experience.

Board appointments will continue to introduce a diverse mix of skills, with a focus on increasing healthcare and multi-national corporate experience.

Board tenure and age

Maintaining a balance of experience and new ideas at Board level ensures continuity, sustainability and refreshment of thinking and debate.

Rotation of directors

Life Healthcare's 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.

At the upcoming AGM, the following directors will stand for re-election: Royden Vice, Marian Jacobs, Garth Solomon, Malefetsane Ngatane, Peter Golesworthy and Joel Netshitenzhe. The appointment of the two new directors, Caroline Henry and Cindy Hess, will be confirmed.

Board processes

Induction and training of directors			Key focus areas	Progress in 2021
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 must 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. During the year under review, the following training was conducted: JSE Listings Requirements Risk, tolerance and appetite Companies Act Directors have full and unrestricted access to management and information when required, and they are entitled to seek independent professional advice in support of their duties at the Group's expense.			Enhanced engagement with relevant stakeholders within the healthcare industry.	Meetings with HASA, government departments and leaders in healthcare
			A firm focus on ensuring the efficacy and sustainability of the IT systems and infrastructure.	Risk Committee mandate extended to include IT governance and cyber security
			A key focus on continued implementation of the Board succession strategy.	Two new Board members appointed to the Board
			Transformation and diversity.	Two new women appointed: one white female and one ACI female candidate

Board and committee evaluations

Board succession

Appointments and rotation

Internal controls

Board and Board committees' activities

	Audit	Board	Investment	Nominations and governance	Human resources and remuneration	Risk, compliance and IT governance	Social, ethics and transformation	Clinical
MA Brey1		1/1		1/1
PJ Golesworthy2	5/5	4/4	6/6	5/5		4/4
CM Henry3
CJ Hess3
ME Jacobs		4/4				4/4	2/2	4/4
VL Litlhakanyane4		4/4	6/6	4/4				4/4
AM Mothupi	5/5	4/4				4/4	2/2
JK Netshitenzhe		4/4				4/4	2/2
MP Ngatane		4/4		5/5			2/2	4/4
M Sello5		3/4		2/2	3/4	4/4
GC Solomon6	5/5	4/4	6/6		4/4			4/4
PP van der Westhuizen		4/4	4/4			4/4
RT Vice	5/5	4/4	6/6		4/4
PG Wharton-Hood		4/4	5/6			4/4	2/2	4/4

1	Mustaq Brey retired from the Board on 27 January 2021
2	Peter Golesworthy stepped down as Chairman of the Nominations and Governance Committee on 27 January 2021
3	Cindy Hess and Caroline Henry were both appointed to the Board effective 1 September 2021
4	Dr Victor Litlhakanyane was appointed as Chairman of the Board effective 27 January 2021 and was appointed as Chairman of the Nominations and Governance Committee on 27 January 2021
5	Adv Mahlape Sello was appointed a member of the Nominations and Governance Committee on 17 June 2021
6	Garth Solomon stepped down from the Audit Committee effective 31 August 2021

Audit committee					Chair: P Golesworthy
Role		Key focus areas during 2021			Members
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: Assist the Board in discharging its responsibilities relating to the safeguarding of assets, and the operation of adequate and effective systems and control processes Ensure that the preparation of both the integrated report and fairly presented financial statements are in compliance with all applicable legal and regulatory requirements and accounting standards		Continued oversight of finance systems across the operations Oversight of the newly appointed internal auditors and the delivery of the internal audit plan Continued evaluation of the key risks, related controls and mitigations in respect of the IT infrastructure and project implementation Overseeing the accounting for the disposal of Scanmed and the subsequent disclosures related thereto Continuous focus on the Group's reporting processes and financial controls The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			A Mothupi, R Vice, G Solomon (resigned 31 Aug 2021), C Hess and C Henry (both appointed 1 Sept 2021) INDEPENDENCE 100% ATTENDANCE RATE 100%

Outlook

Risk, compliance and IT governance committee					Chair: J Netshitenzhe
Role		Key focus areas during 2021			Members
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 also oversees and directs 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 these on the achievement of the Company's strategic objectives.		Group-wide focus on risk management Clinical risk and responsibility of the committee against a backdrop of the global COVID-19 pandemic Risk maturity assessment Group privacy compliance IT risk and mitigation including the improvement of IT systems Implementation of the Group's compliance framework and policy The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			P Golesworthy, Prof M Jacobs, A Mothupi, Adv M Sello, P van der Westhuizen and P Wharton-Hood INDEPENDENCE 71% ATTENDANCE RATE 100%

Outlook

Investment committee					Chair: G Solomon
Role		Key focus areas during 2021			Members
The overall functions of the committee are to: Ensure material matters that could affect the Group's strategy, financial health and/or shareholder value are identified and discussed and, where appropriate or required, recommendations on these matters are made to the Board Provide a level of comfort to the Board that the Group's overarching approach to the consideration of investment opportunities acquisitions, disposals and capital expenditure is aligned to the Group's strategy and monitor that the benefits are realised		Consideration of the Group's 2021 budget SA Imaging strategy in South Africa Radiopharmacy in LMI Review of material property investments and disposals Community diagnostic centres Post-investment reviews The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			Dr V Litlhakanyane, P Golesworthy, R Vice, P Wharton-Hood, P van der Westhuizen INDEPENDENCE 67% ATTENDANCE RATE 97%

Outlook

Human resources and remuneration committee					Chair: R Vice
Role		Key focus areas during 2021			Members
The overall functions of the committee are to assist the Board in ensuring that: The Group has a clearly articulated remuneration philosophy policy and HR strategy that supports the strategic objectives of the Group The Group's performance in HR development and retention against internal transformation targets on legislative imperatives are appropriate		Reviewing the collective responsibilities of the committee against a backdrop of the global pandemic Consideration of the Group's remuneration policy, overall reward framework and implementation report and ensuring adequate disclosure in this regard Review of the short and long-term incentive plans as a retention mechanism Succession planning for executive management throughout the Group Approval of executive remuneration Approval of the Group-wide salary mandate The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			C Hess, Adv M Sello, G Solomon INDEPENDENCE 100% ATTENDANCE RATE 92%

Outlook

Social, ethics and transformation committee					Chair: A Mothupi
Role		Key focus areas during 2021			Members
The social, ethics and transformation committee is constituted as a statutory committee in terms of section 72(4)(a) of the Companies Act. The committee monitors matters in relation to: Ethics and business integrity Social and economic development Good corporate citizenship Environment, health, patient and public safety Consumer relationships Labour and employment practices The social, ethics and transformation committee's report.		Environmental, social and governance imperatives Employment equity, diversity and inclusion across our operations Consideration of the Group's B-BBEE strategy and progress against the B-BBEE scorecard Health policy and related legislation Support to government in relation to the roll-out of vaccines CSI and support to our communities The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			C Henry, Prof M Jacobs, J Netshitenzhe, Dr M Ngatane, P Wharton-Hood INDEPENDENCE 83% ATTENDANCE RATE 100%

Outlook

Clinical committee					Chair: Prof M Jacobs
Role		Key focus areas during 2021			Members
The overall functions of the committee are to assist the Board in: Ensuring that external oversight of the Group's clinical governance arrangements and country-specific regulatory compliance is in place Providing assurance that there are appropriate measures in place to monitor clinical quality, patient safety and patient experience throughout the Group Ensuring that the quality of services provided to patients is continuously improved, the highest standards of care are safeguarded, and an environment is created in which clinical efficiency and excellence is promoted, and innovation and research rewarded Ensuring that an accurate reflection of existing clinical risks, key controls, assurances, and action plans exist, as well as the plans to address such risks The Group's Quality report.		Continued application of the Group clinical governance framework Standardising clinical governance processes by geography Review of quality accreditation systems The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			Dr M Ngatane, Dr V Litlhakanyane, G Solomon, P Wharton-Hood INDEPENDENCE 100% ATTENDANCE RATE 100%

Outlook

Nominations and governance committee					Chair: Dr V Litlhakanyane
Role		Key focus areas during 2021			Members
The overall functions of the committee are to assist the Board in: Driving the effectiveness of all Board processes and deliverables The nomination of directors in line with an approved diversity policy Ensuring a comprehensive induction of new directors Ensuring that ongoing training and development of directors takes place Ensuring that a formal Board succession plan is in place, with specific emphasis on succession planning for the Chairman, executive directors and Group Company Secretary		Approval of the Board succession strategy for the short to medium term Recruitment of independent non-executive directors in line with the Board diversity policy Ensuring that the Board remained apprised of changes to legislation and best practice Overseeing a complete review of the terms of reference for all committees Overseeing a review of the Board charter The committee is satisfied that it executed its duties in accordance with its terms of reference during the financial year.			P Golesworthy, Dr M Ngatane, Adv M Sello INDEPENDENCE 100% ATTENDANCE RATE 100%

Outlook

Ethical leadership

The Group recognises that ethical leadership starts at the top, and the Board subscribes to the Group's code of conduct. In so doing it ensures fairness and ethical behaviour in all its business dealings and processes. The Board sets the values by which the Group abides and a culture of ethical conduct throughout the company.

GROUP COMPANY SECRETARY

Joshila Ranchhod was appointed as the Group Company Secretary, with effect from 1 March 2021, following the resignation of Avanthi Parboosing, with effect from 28 February 2021. Her primary role is to ensure that the Board is cognisant of its fiduciary duties and responsibilities. The Group 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 Group Company Secretary include overseeing the induction of new directors, and ongoing education of directors.

An assessment of the Group Company Secretary was carried out for the year under the auspices of the nominations and governance committee. The Board confirms that the Group Company Secretary has the requisite experience and qualifications to carry out the role, and that she maintains an arms-length relationship with the Board.

IT GOVERNANCE

The Board is responsible for the governance of technology and information within the Group. It provides direction and oversight of the Group's IT strategy to ensure alignment with the achievement of the Group's strategic objectives. The Board's risk, compliance and IT governance committee supports the Board in discharging its technology and information oversight duties. At a management level, the IT management forum ensures that relevant IT policies are developed, approved and embedded within the organisation. This committee also ensures that technology is leveraged to enhance our service offering to patients and to provide accurate data and analytics for the Group to make informed decisions.

Key focus areas in 2021 included improving the security of our data and systems while at the same time starting the process of upgrading our IT platform and phasing out legacy systems. In addition, a dedicated cyber security function was set up.

Going forward the Group will continue to focus on the modernisation of our IT platform along with migration of systems and data into the cloud. This will facilitate improved security whilst also building a platform on which to build a digitally enabled healthcare ecosystem which will enhance our data and analytic capabilities.

GOOD CORPORATE CITIZENSHIP

The Board is responsible for ensuring that the Group is and is seen to be a responsible corporate citizen that includes economic growth, environmental stewardship and social progress. The Board's social, ethics and transformation committee supports the Board in fulfilling this duty. At management level, the sustainable development committee continues to oversee the Group's sustainability journey and ensures that relevant policies and frameworks are in place to achieve the Group's strategic objectives. The Group's social, ethics and transformation committee's report provides details on the focus areas for 2021 as well as the Group's focus going forward, as its sustainability journey evolves.

STAKEHOLDER RELATIONS

The Board acknowledges that the Group's sustainability depends on fostering positive relationships with our key stakeholders. While stakeholder engagement takes place at various levels within the organisation, the messaging is consistent Group-wide. The Group has adopted a stakeholder-inclusive approach to stakeholder engagement that considers the needs of our key stakeholders, at each point of our value chain, and responds appropriately so that we can consistently create value in the short, medium and long term.

CODES, REGULATIONS AND COMPLIANCE

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. Oversight 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.

GOING CONCERN

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.

MATERIAL LITIGATION

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.