Chairman’s statement

Life Healthcare has been operating hospitals for 27 years and 2010 marked the Group’s re-listing on the JSE as Life Healthcare Group Holdings Limited. It therefore gives me pleasure to report that the Group recorded a strong performance over the last 12 months. These results bear testimony to the Company’s emphasis on operational excellence, achieved through a focus on growth, quality, efficiency and sustainability in all its endeavours.

The initial public offering (IPO) that preceded Life Healthcare’s listing resulted in 37.35% of the Company’s total issued share capital changing hands. Shares were offered to selected institutional investors, and qualified institutional buyers. Life Healthcare management, staff and supporting doctors subscribed to shares worth R134 million. Offshore investors showed a keen interest and took up 40% of the IPO despite volatile markets preceding the listing.

On 10 June 2010, Life Healthcare listed on the JSE in the Health Care Providers sector. The listing provided selling shareholders with the opportunity to unlock value for their shareholders through the disposal of a portion of their investment in the Group.

One of the most pleasing aspects of the listing was the participation of permanent South African employees in the success of the Group through the Life Healthcare employee trust. This trust enabled these employees to benefit from the Group’s growth. Employee trust participation was based on length of service from 2005 and not seniority, thus ensuring fair and equitable reward for the number of years with the Company. Seventy percent of the approximately R470 million was paid out in June 2010 with the balance being paid to employees once the six month lock-in period expires in December. Of the approximately 12 700 employees who are eligible, 61% are historically disadvantaged individuals excluding white women (94% including white women).

Although primarily a provider of acute care, high technology, private hospital services to the medically insured population, our group has demonstrated, through Life Esidimeni, that public/private partnership (PPP) models are highly effective in addressing some of the country’s healthcare challenges. It is imperative to improve access to critical health services including hospital care. Partnerships between government and the private hospital sector with its valuable management expertise, clinical skills and assets could make a significant impact in this respect. We welcome participation with the public sector in establishing parameters which will enable us to participate in addressing healthcare challenges, and are encouraged by recent developments in which the government appears to be more willing to collaborate meaningfully with the private sector. In this regard we look forward to engaging with government on the national health insurance (NHI) proposal recently released by the ANC.

Good corporate governance and sustainability are pivotal to our success. Governance and sustainability have become more complex and regulated with changes to the Companies Act. This report is not only our maiden communication to our shareholders as a public company, but also our first attempt bearing King III requirements in mind. Over the next year Life Healthcare will concentrate on aspects that have been identified as requiring improvement to achieve optimum sustainability levels.

In June, we welcomed three new independent directors to the board – Louisa Mojela, Peter Golesworthy and Trevor Munday, who is the lead independent nonexecutive director. Richard Laubscher, Eutychus Mbuthia and Neo Mokhesi stepped down from the board. I would like to thank them for their valuable contribution as directors of Life Healthcare.

Life Healthcare has a dedicated executive management team with a depth of experience. The team’s entrepreneurial approach has been instrumental in expanding the group to the R15 billion organisation it is today. Life Healthcare’s reputation for quality healthcare, ethics and integrity in its business dealings is in large measure due to the calibre of its managers. While successfully managing its hospitals and other operations as businesses, Life Healthcare does not compromise the quality of medical care for its patients. Its status as a world class healthcare provider has been earned through the consistent delivery of quality in all its endeavours.

South African healthcare is at a crossroads and Life Healthcare has boldly adapted to the challenges of the past year with flexibility and flair. I am deeply appreciative of the efforts of my fellow directors, the executive team under Michael Flemming’s strong leadership, and all the employees, as well as of the support of our other stakeholders. You are responsible for the continued enhancement of this dynamic group and have helped to secure this set of impressive results.

Professor Jakes Gerwel
Chairman