Audit Committee report

for the year ended 30 September 2009

This report is issued in compliance with section 270A(1)(f) of the Companies Act of South Africa as amended by the Corporate Laws Amendment Act (Companies Act).

Committee structure and functioning

The Netcare Audit Committee was appointed by the Board of directors during the financial year ended 30 September 2008, to hold office in respect of the financial year ended 30 September 2009.

The members of the Audit Committee holding office in respect of the financial year ended 30 September 2009 were: HR Levin (Chair), APH Jammine, KD Moroka and MI Sacks, each of whom satisfied the membership requirements of the Companies Act.

The Netcare Audit Committee resolved that it will perform the functions required under section 270A(1) on behalf of all the relevant subsidiary companies of Netcare.

In respect of the audit cycle relating to the financial year ended 30 September 2009, the Audit Committee met on 19 November 2008, 13  May 2009 and 22 September 2009.

The head of Netcare Group internal audit as well as Grant Thornton, in their capacity as auditors to Netcare and its South African subsidiaries (the Group), attended and reported at all meetings of the Audit Committee. The Group risk management function was also presented. Executive directors and relevant senior managers attended meetings by invitation.

In the United Kingdom, General Healthcare Group (GHG) operates an independent Audit Committee that reports through the Group Audit Committee. The GHG Audit Committee is chaired by Sir Peter Gershon and has three members, all non-executive directors.

Committee functions

In respect of the audit cycle relating to the financial year ended 30 September 2009, the Audit Committee performed, inter alia, the following functions:

• reviewed and recommended for approval, interim and annual financial statements and related SENS and press announcements;
• monitored and reviewed the effectiveness of internal control systems;
• monitored and reviewed the staffing, work plan, resources and activities of the internal audit function;
• reviewed and evaluated the effectiveness of the internal audit, financial risk management and compliance functions;
• reviewed and evaluated reports relating to findings of internal audit investigations and whistleblowing arrangements;
• reviewed developments in corporate governance in relation to the Audit Committee’s functions;
• reviewed and, where appropriate, updated the Audit Committee’s own terms of reference; and
• assessed the effectiveness of the external audit process following the end of the audit cycle.

External auditors

Pursuant to section 270A of the Companies Act, the Audit Committee:

• nominated for appointment as auditor of the Group and Company under section 270, in respect of the year ended 30 September 2009, the firm of auditors and accountants Grant Thornton, with its audit partner, EFG Dreyer, as designated registered auditor;
• satisfied itself that both the audit firm and audit partner are independent of the Group and the Company;
• ensured that the appointment of Grant Thornton and the designated auditor complies with the Companies Act and any other legislation relating to the appointment of auditors;
• determined the fees of R9 million to be paid to Grant Thornton as well as their terms of engagement in respect of the year ended 30 September 2009;
• determined the nature and extent of non-audit services which Grant Thornton were permitted to provide to Netcare, amounting to R1 million for the year ended 30 September 2009; and
• pre-approved, where relevant, proposed contracts with Grant Thornton for the provision of non-audit services to the Company in respect of the financial year ended 30 September 2009.

On 18 November 2009, the Audit Committee resolved that:

• It has no objection to Grant Thornton and the designated registered audit partner, EFG Dreyer, being re-appointed as the Group and Company’s auditor for the financial year ending 30 September 2010, and that it has satisfied itself that both the audit firm and audit partner are independent of the Group and Company.
• Non-audit services to be rendered by Grant Thornton relating to tax advice, technical accounting advice, audit certification required in respect of commercial paper transactions and other audit certifications as may be required from time to time by regulatory authorities, are pre-approved on the basis that this authority will be reviewed at each Audit Committee meeting.

Deloitte LLP has been appointed as the auditors of GHG. The fees paid to Deloitte for the financial year ended 30 September 2009 amounted to R5 million for audit services and R2 million for other services.

Approval of the report

The Audit Committee considers that it has discharged its functions in terms of its charter and as required by the Companies Act of South Africa.

This report of the Netcare Audit Committee in respect of the financial year ended 30 September 2009 was approved by the Board of directors on 20  November 2009.

HR Levin
Chairman: Audit Committee