LENMED AIR 2019.pdf

+ Gave guidance on the accounting treatment of significant matters, specifically: (a) The valuation of the Group properties and accounting therefor (b) Revised standards of accounting for leases which was adopted in 2018 (c) Revised standards of accounting for financial instruments and revenues which have been introduced in 2019 + Expressed itssatisfactionwiththecompetenceandeffectiveness of the Financial Director, Vaughan Firman. + Expressed its satisfaction with the competence of the finance function that supports the Financial Director. + Reviewed the performance of the company against its loan covenants. + Transitioned the committee activities from compliance with King III to King IV™. + Monitored the performance of the committee against the requirements of King IV™ and recommended actions to close any gaps identified. + Approved all announcements to shareholders. + Concurred with the views of management that the adoption of the going concern premise in the preparation of the financial results is appropriate. + Approved the results forthe 2019 financial year and recommended them for acceptance by the Board. + Conducted an assessment of the committee through the external and internal auditors in the previous year and received a satisfactory result. This process is completed every second year. Matters of importance addressed by the committee included: + External Audit rotation: Described above. + Accounting for revenue: The new standard introduced by IFRS 15 has not had a significant impact on the company as a consequence of the relatively short-term nature of the services provided by the company. The full consequences are outlined in the report of the CFO in this Annual Integrated Report. + Accounting for Financial Instruments IFRS 9: TheAudit Committee supported the adoption of the new accounting standard for financial instruments as well as the decision of the company to avail itself of the transition option of the standard, which ensured that a restatement of prior years was not required. The full effects of this change in standards has been included in the reports of the CFO in the AFS and the AIR. + Change in accounting policy for valuation of Properties: The valuation of properties has been a cause of concern as the accepted valuation methodology adopted by third-party, independent valuers is based on the performance of the hospital and its ability to pay a notional rental. During the year, it was agreed to avoid some of the volatility in values that this methodologycausedandtoreturntooriginalcost.Consequently, properties have been valued at cost. Where properties have been acquired as part of the assets of a business combination, these have to be determined at fair value in terms of the accounting standards and this value is deemed to be the cost of such property to the Group. The effect of this change is clearly set out in the AFS and the AIR and the 2018 results have been restated to accommodate this change. The effect of the change is fairly nominal on the income statement but the effect on equity, assets and deferred tax, while significant, should have no effect on shareholders. + King IV™ gap analysis: The committee does not consider it necessary to recommend the appointment of third-party consultants to advise the Board of the sustainability of the company. The Group is aware of the risks to its sustainability and makes plans to combat these through regular strategic planning sessions of executive management and the Board. + The committee has recommended to the Board that an external evaluation of the Internal Audit function is not required as the internal audit function is outsourced to PWC. RISK COMMITTEE The committee plays an oversight role in respect of Risk Management: At each strategic planning meeting, the Board and senior management consider risk as a separate matter by debating factors which might prevent the company from achieving its vision. Action plans are developed to eliminate these factors and to pursue opportunities that could arise from the identification of risk factors. These factors are introduced into the risk register to ensure proper management and control of the risks on an ongoing basis. The several most important risks are recorded in the company risk register, which is debated at the management Executive Committee, while the top ten are debated by the Risk Committee and the Board quarterly, with a view to managing their elimination. The Chief Medical Officer in conjunction with the Clinical Risk Committee has significantly improved the clinical controls in the Group. This has led to improved communication of clinical outcomes and claims made against the company with the insurers. Adequate provision has been made for these claims while the report on clinical outcomes and risks is dealt with in the report of the Clinical Risk Committee. The first matter on the Risk Committee agendas at most meetings is a wide-ranging discussion on factors that have arisen or changed since the previous meeting which would have an impact on the company now or in the future, whether as a risk which needs to be eliminated or as an opportunity that might arise from that risk. The company identifies risks under the headings of: + Enterprise risk + Operational risk + Financial risk + Reputational risk The company has an appetite for risk which is consistent with the operation of private hospitals in the healthcare industry in which it operates in South Africa, Mozambique and Botswana. It manages that risk by remaining compliant with legislation and statutory requirements such as the terms under which its licences are granted. The company has zero tolerance for risk to the enterprise LENMED ANNUAL INTEGRATED REPORT 2019 73