Netcare recognises that a company’s corporate governance policies form an integral part of its overall strategy. Sound corporate governance principles are embedded in Netcare’s business structure, values, policies, processes and systems, and are not viewed in isolation as peripheral guidelines on which a company must report to meet regulatory obligations. These principles encompass:

• Compliance with the law and adherence to commercial legitimacy;
• Fair treatment of employees and business partners;
• A responsibility to the communities and environment in which we operate; and
• Probity, integrity and business ethics in operational activities.

Netcare strives to balance conformance and the creation of value as a key driver in corporate performance. In addition, corporate governance standards are incorporated into our overall balanced scorecard framework which informs the Group’s performance appraisal process.

The Group subscribes to the highest standards in its corporate governance structure, processes and behaviour. We are committed to complying with the recommendations contained in the Code of Corporate Practices and Conduct (the Code) as set out in the second King Report on Corporate Governance for South Africa 2002 (King II), most elements of which are either formally or informally in place. We recognise the pragmatic flexibility inherent in the “comply or explain” approach and have adopted this in our application of the King Code.

We deliberately avoid a “tick-box” approach in assessing our corporate governance processes. In particular, Netcare endorses the sentiments of paragraph 8.1 of the code which states that the quality of information communicated must be based on the principles of openness and substance over form, as well as addressing material matters of significant interest and concern to all stakeholders. Certain features of the Board structure, although technically non-compliant with certain elements of the King Code, remain in force because we believe that they are aligned with the best interests of Netcare.

Netcare complied with King II during the year ended 30 September 2009, except for the following:

• The Audit Committee does not have a majority of independent non-executive directors and is chaired by a non-executive director who is the senior partner of the Group’s external legal advisers and is therefore not independent;
• The Audit Committee Chairman also chairs the Remuneration Committee;
• The Risk Committee does not have a majority of independent non-executive directors; and
• The Nominations Committee is not chaired by the Board Chairman but by an independent non-executive director. This situation has prevailed since the committee was established; at that time the Board Chairman was not independent.

As indicated last year, the Board initiated a process for formal Board evaluation during the year under review and is currently considering the steps necessary to enhance the independence of certain Board committees.

Netcare supports the principles embodied in the revised code, set out in the third King Report on Governance Principles for South Africa (King lll), released on 1 September 2009. The Board intends to apply these principles insofar as is practicable, when relevant and appropriate.

Joel Wolpert
Company Secretary

The Group’s values are core to its business philosophy and guide the way the Group conducts its business and interacts with all stakeholders.