ANNUAL GENERAL MEETING 2014

Transcription

1 ANNUAL GENERAL MEETING 2014

2

3 KEYHEALTH ANNUAL GENERAL MEETING ANNUAL GENERAL MEETING 2014 Dear KeyHealth member, th NOTICE 7 ANNUAL GENERAL MEETING: FRIDAY, 29 AUGUST 2014 th Notice is hereby given of the 7 Annual General Meeting of KeyHealth Medical Scheme to be held at 11:00 on Friday, 29 August at the Golden Pipit Conference Centre, End Street 241, Centurion. Agenda for the meeting 1. Welcome and quorum 2. Apologies 3. Adoption of the agenda th 4. Confirmation of the Minutes of the 6 Annual General Meeting of KeyHealth held on 26 July 2013 in Kempton Park 5. Chairperson's review 6. Tabling and acceptance of the annual financial statements 7. Governance 7.1 Appointment of auditors 8. Announcement of newly elected Trustees Electoral Officer 9. Acknowledgements 10. Closure The 2013 Audited Financial Statements and Trustees' report will be available on our website A proxy form is attached should you not be able to attend the Annual General Meeting on 29 August 2014 and wish to assign your vote to a representative to act on your behalf. As a control measure your completed proxy form must reach the Scheme before or on Friday, 15 August The forms can either be faxed to (012) or delivered by hand at the offices situated at 86 Koranna Avenue, Doringkloof, Centurion. (Kindly note that incomplete forms will be regarded as invalid and no proxy forms will be accepted at the Annual General Meeting.) Trust that you will have a pleasant meeting. J.H. GREYLING CHAIRPERSON KEYHEALTH MEDICAL SCHEME Many members are not afforded the opportunity of attending the KeyHealth Annual General Meeting. In an effort to provide members with the opportunity to make input into that meeting, preagm meetings will be held around the country in various centers. At this meeting the full agenda of the Annual General Meeting will be discussed. This will provide members that cannot attend the AGM the opportunity to become part of the process. Please note the following dates and venues for these preagm meetings Date Venue Time 5 August 2014 Boksburg Town Hall, Trichardts Road, Boksburg 14:00 7 August 2014 Protea Bloemfontein Central Hotel, Bloem Plaza, East Burger Street, Bloemfontein (GPS: , ) 14:00 8 August 2014 Protea Hotel Victoria Junction, corner Somerset Road and Ebenezer Road, Cape Town (GPS: , ) 10:00 13 August 2014 The Beach Hotel, Marine Drive, Summerstrand, Port Elizabeth 14:00 22 August 2014 Protea Hotel Edward, 149 OR Tambo Parade, North Beach, Durban (GPS: , ) 14:00

4 02 KEYHEALTH ANNUAL GENERAL MEETING 2014 MINUTES OF THE SIXTH ANNUAL GENERAL MEETING OF KEYHEALTH MEDICAL SCHEME HELD ON 26 JULY 2013 IN KEMPTON PARK AT 10:00 1. REGISTRATION 2. WELCOME AND QUORUM 3. APOLOGIES 5. CONFIRMATION OF THE MINUTES OF THE 5th ANNUAL GENERAL MEETING OF KEYHEALTH HELD ON 20 JULY 2012 IN PORT ELIZABETH RESOLVED: 6. CHAIRPERSON'S REVIEW 2

5 KEYHEALTH ANNUAL GENERAL MEETING ACCEPTANCE OF THE ANNUAL FINANCIAL STATEMENTS 10. Acknowledgments RESOLVED: 8. REAPPOINTMENT OF AUDITORS FOR THE YEAR ENDING 31 DECEMBER 2013 RESOLVED: 9. GENERAL 11. Closure

6 04 KEYHEALTH ANNUAL GENERAL MEETING 2014 CHAIRPERSON'S REVIEW My coboard Members, our CEO Mr Kruger and Scheme Officials and staff, Service Providers, Brokers and Scheme Members welcome to the Annual General Meeting of KeyHealth for The year under review has been a water shed in more ways than one. We obtained a solvency level of 29.4% at the end of It is the first time in the past decade that we exceeded the 25% required in terms of the Medical Schemes Act. Our achievement has been referred to as one of the Industry's success stories of the past year by the Offices of the Registrar of Medical Schemes. This was achieved with effective planning, the implementation of programmes that were aimed at addressing and managing the risks of the Scheme and pure hard work. The fact that KeyHealth previously did not comply with legislation was used against the Scheme with a result that prospective members were hesitant to join the Scheme. As the solvency of the Scheme improved over the past couple of years more members joined the Scheme. This can clearly be seen from the graph below. The current status of the Scheme's solvency now enables our distribution network, under the watchful eye of Ms Brenda van Wyk, to grow our Scheme which will ensure that we are around for another 100 years. 35.0% Solvency 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Statutory Funding Ratio Business Plan 2010 < Statutory requirement 6000 Members Resigned vs. New 5000 New members Resigned members Ave. Age Ave. Age Ave. Age Ave. Age Ave. Age Ave. Age Ave. Age Ave. Age We introduced a first in the Medical Scheme Industry; our innovative Easy ER program offers free access to ER facilities to all our members' child dependants (up to the age of 27). We simplified access to benefits and established rules that are easy to follow. Gegewe die unieke ouderdomsprofiel van ons Skema se begunstigdes, is een van die grootste uitdagings om die eise ten opsigte van voordele, optimaal te bestuur. Dit gesê, kan ek u verseker dat die Skema nie daarin glo om die koste deur middel van inperkings op voordele te bestuur nie, maar eerder by wyse van voorkomende maatreëls. Ons glo daarin dat indien lede se moontlike inperking van gesondheid vroegtydig geïdentifiseer en volgens bewese protokolle bestuur word, dit eerstens 'n beter lewenskwaliteit vir lede kan verseker en tweedens ernstige en onomkeerbare gevolge kan voorkom wat groot besparings vir die Skema en sy lede tot gevolg sal hê. Dit lewer beslis 'n bydrae tot ons pogings om die Skema bekostigbaar en meer kosteeffektief te hou. KeyHealth het tans n lidmaatskap van waarvan 34% voortgesette lede is. Dit is hierdie lede wat help bou het aan 'n Skema met 'n geskiedenis wat ongeveer 'n 100 jaar terug dateer.

7 KEYHEALTH ANNUAL GENERAL MEETING (R) Total Scheme (2013) Age Profile of Members 5,000 4,500 4, Claims pbpm 2013 Risk Conts pbpm 3, ,500 2,000 1,500 1, Age The achievements of the year under review were made possible through the dedicated efforts of the entire Board of Trustees, the KeyHealth Management and staff, our Administrator PMSA and our many Service Providers. Allow me the opportunity to introduce to you the current Board of Trustees: Jan Greyling Chairperson Peter Sharman Deputy Chairperson Pieter Bennett Hans Deetlefs Dauw Kruger Pieter Gouws Johan Grobbelaar Ockie Mulder Jan van Zyl Etienne Vermaak Andre Young In the new dispensation emphasis has been placed on the fiduciary responsibility and accountability of Trustees. I am satisfied that the Trustees fully and wholly embraced the King III Code of corporate governance to the extent that we have our own governance policies that regulate our behaviour. We are accountable to our members and to the Regulator. The current Board of Trustees have served their term of office and with effect from the 2014 AGM a new Board will be in place. I would be erring if I did not pay homage to my fellow Trustees for their unselfish efforts and guidance of the scheme. Thank you for your support and time devoted to the Scheme. The new Board has a tremendous task ahead ensuring that KeyHealth grows responsibly to the benefit of the present and future members and retains its position as one of the leading Medical Schemes in South Africa. The finances of the scheme are in good order thanks to the efforts of our Head: Finance, Mr Arni van Rensburg and his dedicated and capable staff. Their part in having achieved our financial target two years ahead of schedule are testament to the quality of their work. Thank you for a great effort. Our Marketing department under the leadership of Mr Morne Louw has done great work and continues to do so. Members need to know that their Scheme is on the go and good marketing and advertising make this possible. Fraud is always a concern but thanks to the watchfuleye of our internal audit and fraud department led by Ms Rene van Linden we have managed to save the Scheme a considerable amount. Our Administrators, Professional Medical Scheme Administrators, (PMSA) have done us proud and have restored top class service to our members. To Dr Herc Hoffman and his dedicated team of managers and staff a very special word of thanks. Our members appreciate your efforts. To Ms Brenda van Wyk, our Broker Network and service providers, we couldn't have done it without you. To our CEO, Mr Barry Kruger, well done and thank you for creating and maintaining an environment conducive of meeting all challenges. In closing I would like to express my special thanks to all who have been involved in the success of KeyHealth. Most important are our members who have managed their medical aid needs responsibly. This does not go unnoticed. Ladies and gentlemen thank you.

8 06 KEYHEALTH ANNUAL GENERAL MEETING 2014 KEYHEALTH MEDICAL SCHEME EXTRACTS FROM THE ANNUAL REPORT for the year ended 31 December 2013 CONTENTS Description of Medical Scheme Management Investment strategy Operational statistics per beneficiary option Solvency ratio Statement of financial position Statement of comprehensive income Statement of changes in funds and reserves Summary of investments Surplus/deficit from operations per benefit options Noncompliance with Medical Scheme's Act 131 of 1998 and regulations PAGE

9 KEYHEALTH ANNUAL GENERAL MEETING DESCRIPTION OF THE MEDICAL SCHEME 1 Terms of registration KeyHealth Medical Scheme (the Scheme) is a notforprofit open medical scheme registered on 6 October 1998, Registration number 1087 in terms of the Medical Schemes Act, 131 of 1998 as amended. 2 Benefit options within KeyHealth Medical Scheme The Scheme offered five benefit options for the financial year under review. The options are: Platinum Gold Silver Equilibrium Essence Origin Origin is the new benefit option with effect from 1 January The benefit option is capitated. 3 Savings plan In order to provide a facility for members to set funds aside to meet future healthcare costs not covered in a benefit option, the Trustees have made savings plan options available to meet this objective. The Scheme's rules changed with effect 1 January 2011 whereby savings allocated during 2011 will be utilised in total before a member claim could access the risk portion. Members belonging to the Gold and Equilibrium options pay an agreed sum of 10% and 7% of their gross contributions respectively into a savings account so as to help pay for the member's portion of healthcare costs up to a prescribed threshold. Unexpended savings amounts are accumulated for the longterm benefit of the member. Interest is calculated monthly on the respective member's positive balances, and will be reflected on the monthly statements. The liability to the members in respect of the savings plan is reflected as a financial liability in the financial statements, repayable in terms of Regulation 10 of the Medical Schemes Act, 131 of 1998 as amended. In terms of the rules of the Medical Scheme, any advances on savings contributions are funded from the Scheme's funds, and the risk of impairment is carried by the Scheme. Savings balances are refunded when a member leaves the Scheme or transfers to another benefit option within the Scheme which does not have a savings option. The money will be transferred to the member after five months of date of the resignation/change. Savings funds are invested in a separate call and current account with ABSA bank. Interest generated on the funds in the call and current accounts is allocated net of investment costs, to positive savings balances. 4 Risk transfer arrangements Premiums/fee paid Denis Netcare 911 Primecure Claims recovered in respect of risk transfer arrangements Denis Netcare Primecure Loss/(profit) share on risk transfer arrangements Denis Netcare 67,101 56,308 6,375 4,418 (60,704) (51,217) (6,906) (2,581) 1,235 1,235 7,632 68,661 62,232 6,429 (58,085) (50,669) (7,416) (2,507) (4,707) 2,200 8,069 In addition to the dental (Denis) and emergency transport (Netcare) services capitation agreements (providing benefits to members on benefit options other than Origin), the Scheme entered into a third capitation agreement with Primecure (with effect from 1 January 2013) to provide a full capitation service which includes doctors, hospitals, specialists and medicines on the Origin benefit option. The capitation agreements are in substance, the same as nonproportional commercial reinsurance contracts.

10 08 KEYHEALTH ANNUAL GENERAL MEETING 2014 MANAGEMENT 1 Board of Trustees in office during the year under review and to the date of this report JH Greyling (Chairperson) EP Sharman (Vice Chairperson) DPJ Kruger Adv. EW Vermaak AD Young P Bennett JP Deetlefs JS van Zyl OJH Mulder JH Grobbelaar PJS Gouws All of the above Trustees were elected in terms of the Rules of the Scheme. The Board convened twelve times, inclusive of strategic sessions, during 2013 (2012 : sixteen times). 2 Principal Officer BJ Kruger KeyHealth Building 86 Koranna Avenue Doringkloof Centurion 0157 PO Box Lyttelton 0149 Tel: (012) Fax: (012) Registered office address and postal address KeyHealth Building 86 Koranna Avenue Doringkloof Centurion 0157 PO Box Lyttelton Medical Scheme Administrators during the year Professional Medical Scheme Administrators (PMSA) 269 Von Willich Avenue 66 Corporate Park, Block D Die Hoewes Centurion 0157 Private Bag X1031 Lyttelton 0140 Accreditation number: Admin 37 The Scheme adopted a new model whereby certain primary management functions were incorporated within the Scheme under the direct control of the Board of Trustees. The functions include: Financial accounting and reporting; Independent internal audit department within the Scheme; New business; Broker commission administration and calculation; Marketing; Underwriting; and Distribution The core administrative functions were outsourced to a third party administrator.

11 KEYHEALTH ANNUAL GENERAL MEETING Investment Consultant during the year IFG Africa Public Sector (Pty) Ltd 47 Dely Road Hazelwood 0081 Private Bag X04 Waterkloof 0145 Registration no: 2000/025174/07 FSB No Actuary during the year Cipla Consult Unit 111, Block 2 The Cliffs Tyger Valley 7530 P O Box 3213 Tyger Valley External auditor Deloitte & Touche Deloitte Place, The Woodlands, Building 8, First floor, 20 Woodlands Drive Woodmead 2052 Deloitte & Touche Private Bag X6 Gallo Manor 2052 Audit Committee TF Meyer (Chairperson) JJ Jacobs (Deputy Chairperson) J Moonsamy JH Grobbelaar P Bennett Independent member Independent member Independent member Trustee Trustee INVESTMENT STRATEGY OF THE SCHEME The Scheme s investment objectives are to maximise the return on its investments on a long term basis at appropriate risk. The investment strategy takes into consideration both constraints imposed by legislation and those imposed by the Board of Trustees. The mandate of the Board is to ensure that: The Scheme remains liquid; Investments are placed at minimum risk and the best possible rate of return; Investments made are in compliance with the Regulations of the Act supported by a declaration by the investment consultant; and A risk assessment is performed with feedback to the Board of Trustees with recommendations on the risks identified. The Scheme invested in cash instruments, insurance policies and collective investment schemes during The investment policy is reviewed annually, taking into consideration compliance with the Act, the risk and returns of the various investment instruments and the surplus of funds available. The Scheme s activities expose it to a variety of financial risks, including the effects of changes in the equity market prices and interest rates. The Scheme s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potentially adverse effects on the financial performance of the investments, which the Scheme holds to meet its obligation to its members. The Scheme makes use of an investment consultant. The advisor s primary mandate is to comply with prevailing legislative constraints and to ensure value retention while still ensuring growth. The Board's investment strategy with regards to savings funds is to invest such funds in a cash instrument to limit the risks to interest rate risk and to ensure that the Member's funds are readily available.

12 010 KEYHEALTH ANNUAL GENERAL MEETING 2014 OPERATIONAL STATISTICS PER BENEFIT OPTION 2013 Platinum Gold Silver Equilibrium Essence Origin Total Scheme a. Number of members at the end of the accounting period 4,941 19,292 5,301 4,071 1, ,019 b. Average number of members for the accounting period 5,056 19,618 5,421 3,686 1, ,097 c. Number of beneficiaries at the end of the accounting period 8,131 41,990 12,710 8,615 4, ,738 d. Average number of beneficiaries for the accounting period 8,367 42,909 12,982 7,709 4, ,052 e. Dependant ratio at year end f. Average net contribution per member per month 6,344 3,857 3,194 1,693 1, ,729 g. Average net contribution per beneficiary per month 3,833 1,763 1, ,765 h. Relevant healthcare expenditure as a percentage of gross contribution 89% 73% 84% 90% 102% 85% 79% I. Relevant nonhealthcare expenditure as a percentage of gross contribution 8% 9% 11% 14% 15% 13% 9% j. Return on investments as a percentage of investments 9% 9% 9% 9% 9% 9% 9% k. Relevant healthcare expenditure per average beneficiary per month 3,417 1,430 1, ,477 l. Nonhealthcare expenditure per average beneficiary per month m. Average age per beneficiary n. Pensioners ratio 46% 24% 17% 12% 12% 0% 23% o. Chronic profile 72% 42% 29% 18% 18% 0% 39% SOLVENCY RATIO Total Member s Funds and reserves per the statement of financial position Less: Cumulative net gains on remeasurement to fair value of financial instruments and investment properties included in the accumulated funds and revaluation reserve ,403 (39,889) ,893 (29,325) Accumulated funds per Regulation 29 of the Medical Schemes Act, 131 of 1998 as amended Gross contributions Accumulated funds ratio 508,514 1,722, % 387,568 1,680, %

13 KEYHEALTH ANNUAL GENERAL MEETING KEYHEALTH MEDICAL SCHEME STATEMENT OF FINANCIAL POSITION at 31 December 2013 KEYHEALTH MEDICAL SCHME STATEMENT OF COMPREHENSIVE INCOME for year ended 31 December 2013 ASSETS Noncurrent assets 440, ,980 Risk contribution income 1,615,185 1,576,394 Property, plant and equipment Heldtomaturity investments Availableforsale financial assets Financial assets at fair value through profit or loss Current assets 17,960 17, , ,625 14,422 45, ,162 51, ,333 Relevant healthcare expenditure Net claims incurred Claims incurred Third party recovery (1,365,971) (1,358,339) (1,362,701) 4,362 (1,332,900) (1,324,831) (1,328,959) 4,128 Heldtomaturity investments Trade and other receivables Cash and cash equivalents Scheme Personal medical savings account trust monies invested Total assets FUNDS, RESERVES AND LIABILITIES Accumulated funds Revaluation reserve Noncurrent liabilities Post employment medical benefits Current liabilities Savings plan liability Trade and other payables Outstanding claims provision Total funds and liabilities 31,120 80, , ,956 57, , ,222 26,181 4,068 4, ,912 61,972 95,416 57, ,383 15,000 72, , , , , ,082 10,811 4,486 4, ,934 64,892 75,296 55, ,313 Net (expense) on risk transfer arrangements Risk transfer arrangement fees Recoveries from risk transfer arrangements (Deficit)/profit sharing arising from risk transfer arrangements Gross healthcare result Managed care: management services Broker service fees Administration expenditure Net impairment (loss)/gain on healthcare receivables Net healthcare results Investment income Scheme Return on personal medical savings account trust monies invested Other income Asset management fees Net fair value gains on financial assets Interest paid on savings account balances (7,632) (67,101) 60,704 (1,235) 249,214 (28,175) (21,824) (109,809) (498) 88,908 17,683 15,211 2, (2,168) 13,887 (2,472) (8,069) (68,661) 58,085 2, ,494 (27,521) (22,816) (110,870) 10,904 93,191 18,647 17,325 1, (2,322) 28,738 (1,322) Net profit for the year 116, ,895 Other comprehensive income/(loss) 15,370 (1,615) Land and buildings revaluation Fair value adjustment on availableforsale investments 2,979 12,391 (388) (1,227) Total comprehensive income for the year 131, ,280

14 012 KEYHEALTH ANNUAL GENERAL MEETING 2014 KEYHEALTH MEDICAL SCHEME STATEMENT OF CHANGES IN FUND AND RESERVES for the year ended 31 December 2013 KEYHEALTH MEDICAL SCHEME SUMMARY OF INVESTMENTS HELD AT YEAR END: Revaluation Reserve* Balance as at 31 December 2011 Fair value movement on availableforsale Revaluation on land and building Accumulated Funds Market to Market Reserve Revaluation Revaluation reserve: reserve: Buildings Buildings 268,187 11,314 (1,227) 1,112 (388) 280,613 (1,227) (388) Heldtomaturity financial assets Heldtomaturity financial assets are made up of the following: Cadiz Fixed term interest bearing investment ( Cadiz top 40 index) insurance contract Metropolitan Share linked investment insurance contract Metropolitan Money Market linked investment insurance contract As at 31 December ,120 17,630 As at 31 December ,954 15,000 16,055 Net profit for the year 137, ,895 Total 48,750 60,009 Balance as at 31 December 2012 Fair value movement on availableforsale Revaluation on land and building Net profit for the year 406, ,140 10,087 12, , ,893 12,391 2, ,140 Financial assets held at fair value through profit or loss Financial assets held at fair value through profit or loss are made up of the following: Global Allan Gray Domestic Stable Med Insurance contract As at 31 December 2013 As at 31 December ,387 Balance as at 31 December ,222 22,478 3, ,403 Total 51,387 *Enhanced disclosure of revaluation reserve Available for sale financial assets Available for sale financial assets are made up of the following: As at 31 December 2013 Prudential Insurance contract 87,612 Coronation Insurance contract 81,594 Liberty Insurance contract Investec High Income Fund 112,387 Stanlib Property collective investment scheme 16,177 Stanlib Medical collective investment scheme 50,099 Sanlam Money market collective investment scheme 1,294 Sanlam Absolute return insurance contract 56, ,168 As at 31 December ,681 68,982 13,616 29,642 1, ,162

15 KEYHEALTH ANNUAL GENERAL MEETING KEYHEALTH MEDICAL SCHEME SURPLUS/(DEFICIT) FROM OPERATIONS PER BENEFIT OPTION for year ended 31 December 2013 The scheme offered six benefit options for the financial year under review. Platinum option Gold option Silver option Equilibrium Essence Origin PLATINUM GOLD SILVER EQUILIBRIUM ESSENCE ORIGIN TOTAL SCHEME 2013 Risk contributions Less: Savings 384,868 1,008,900 (101,005) 207,776 80,743 (5,885) 34,416 5,372 1,722,075 (106,890) Risk contribution income Net claims incurred 384,868 (342,608) 907,895 (732,542) 207,776 (173,955) 74,858 (72,073) 34,416 (34,579) 5,372 (2,582) 1,615,185 (1,358,339) Gross claims paid and reported Less: Savings plan claims paid Less: Discounts received on claims (Increase)/decrease in outstanding claims provision (330,056) 694 (13,246) (810,270) 103,422 1,208 (26,902) (168,191) 311 (6,075) (75,932) 6, (2,336) (32,680) 58 (1,957) (2,323) (259) (1,419,452) 109,457 2,431 (50,775) Risk transfer arrangements (458) (3,610) (861) (452) (415) (1,836) (7,632) Risk Transfer fees paid Recoveries from Risk Transfer Arrangements (Loss)/Profit Sharing (10,591) 10,362 (229) (39,563) 36,670 (717) (7,704) 7,010 (167) (3,106) 2,740 (86) (1,719) 1,340 (36) (4,418) 2,582 (67,101) 60,704 (1,235) Relevant healthcare result 41, ,743 32,960 2,333 (578) ,214 Less: Administration expenditure Less: Managed Care: Management Services Less: Broker service fee Less: Impairment loss on healthcare receivables (20,408) (5,108) (4,218) (562) (62,960) (16,292) (11,225) 286 (14,555) (3,850) (3,718) 103 (7,723) (2,041) (1,694) (252) (3,628) (884) (812) (69) (535) (157) (4) (109,809) (28,175) (21,824) (498) Net Healthcare results 11,506 81,552 10,940 (9,377) (5,971) ,908 Investment income Savings interest paid Other Income Asset management fees Net realised and unrealised gains/(losses) on financial assets 2,122 9 (305) 1,947 10,659 (2,414) 264 (1,179) 7,554 2, (326) 2,088 1,642 (58) 2 (220) 1, (109) (29) ,683 (2,472) 302 (2,168) 13,887 Net surplus/(deficit) 15,279 96,436 15,000 (6,599) (4,595) ,140 Number of members at end of period 4,941 19,292 5,301 4,071 1, ,019 Basis of allocation: All relevant healthcare income and expenses, including Administration expenses, Broker commission and Managed care services, are directly allocated to benefit options based on actual amounts. The impairment of insurance receivables is allocated based on actual savings advances impaired, contribution income per option and average membership per option.

16 014 KEYHEALTH ANNUAL GENERAL MEETING 2014 NONCOMPLIANCE WITH MEDICAL SCHEMES ACT 131 OF 1998 AND REGULATIONS 1 Sustainability of benefit options In terms of Section 33(2) of the Medical Schemes Act 131 of 1998, as amended, each option shall be selfsupporting in terms of membership and financial performance. The Equilibrium and Essence benefit options were not self sustaining during 2013 based on net healthcare results. The Scheme appointed actuaries are actively involved in the annual design and continued monitoring of the Scheme's benefit options. The benefit design changes were derived with the following in mind; Continuing to allow for reasonable increases of the right profile members; Redesigning benefits options in order to influence claims patterns and subsequently increase the solvency levels and competitiveness of the Scheme; Improving the overall membership profile of the Scheme; Reducing claims expenses of the Scheme through effective case managements; and Implementation of an investment policy to improve the return on investments. 2 Contributions received three days after payment becomes due Section 26(7), of the Medical Schemes Act, stipulates the following: All subscriptions or contributions shall be paid directly to a medical scheme not later than three days after payment thereof becoming due. Contributions of members belonging to certain employer groups will only be suspended once the contributions received are allocated to the specific member records. It is also the policy of some of these groups to only pay their contributions on the 7th of the month, following the month that payment is due. Provision of the Scheme Rules requires that these members should only be suspended after 30 days of the contributions becoming due. The majority of the Scheme's employer group business is with Local Authorities. The SALGBC (South African Local Government Bargaining Council) resolved that contributions for employees in Local Government be paid in arrears and confirmed this by including it as part of the accreditation requirement for participating medical schemes. This decision and the tendency to pay contributions only by the 7th of a month resulted in a major portion of the Scheme s monthly contributions, from the various Local Authorities, being received outside the time limit as set out in the Act. Processes are in place to ensure that these groups are monitored closely, so as to minimise any potential financial losses to the Scheme. 3 Payment of benefit within 30 days of lodging of claim In terms of Section 59 of the Medical Schemes Act 131 of 1998, as amended, claims should be paid within 30 days after the day on which the claim was received. Instances were noted where claims were paid 30 days after notification was received. Although certain claims are paid after the 30 day period, this is in line with the normal business process of the Scheme as the Scheme rules stipulate that a member has 6 months to dispute a claim that is not paid. 4 Payment of stale claims Regulation 6 (Chapter 2 to the Regulations of the Medical Schemes Act) states the following: Manner of payment of benefits. (1) A medical scheme must not in its rules or in any other manner in respect of any benefit to which a member or former member of such medical scheme or a dependant of such member is entitled, limit, exclude, retain or withhold, as the case may be, any payment to such member or supplier of service as a result of the late submission or late resubmission of an account or statement, before the end of the fourth month (a) from the last date of the service rendered as stated on the account, statement or claim; or (b) during which such account, statement or claim was returned for correction. Instances were identified where claims were accepted for payment more than four months after the treatment date. The Scheme has taken into account incidents such as the recent strikes at the South African Postal Service when deciding whether to process stale claims and has, in certain scenarios paid benefits with respects to such claims.

17 KEYHEALTH ANNUAL GENERAL MEETING Accumulated Funds ratio Regulation 29(2) of the Medical Schemes Act 181, of 1998 stipulates the following:...medical scheme must at any time maintain accumulated funds, expressed as a percentage of gross annual contributions for the accounting period under review of not less than 25%. At year end, the accumulated funds, expressed as a percentage of gross annual contributions, amounted to 29.5% (2012: 23.1%). The 5 year business plan as approved by the Council for Medical Schemes indicated below: YEAR Required solvency ratio at period end ,1% 12.1% ,5% 15.6% ,1% ,4% ,4% Achieved solvency ratio at period end 23.1% 29.5% APPOINTMENT OF AUDITORS It is proposed to the Annual General Meeting That Deloitte & Touche be reappointed as the external auditors for the 2014 financial year, in accordance with legislation. ANNOUNCEMENT OF NEWLY ELECTED TRUSTEES The electoral officer, Ms Lee Thompson will present the names of the newly elected trustees to the meeting. ACKNOWLEDGEMENTS CLOSURE

18 016 KEYHEALTH ANNUAL GENERAL MEETING 2014 NOTES KeyHealth Medical Scheme 86 Koranna Ave, Doringkloof, Centurion, PO Box 14145, Lyttelton, 0140, ShareCall , Fax

19 KEYHEALTH ANNUAL GENERAL MEETING PROXY FORM I, THE UNDERSIGNED (KeyHealth member) NAME MEMBERSHIP NUMBER ID NUMBER HEREBY GRANT MY PROXY TO: (name of the person who will attend the meeting on behalf of the member): NAME MEMBERSHIP NUMBER ID NUMBER OR FAILING HIM OR HER, THE CHAIRPERSON OF THE MEETING TO BE PRESENT, AND SPEAK, AND VOTE th FOR ME AND ON MY BEHALF ON MATTERS ON THE AGENDA OF THE 7 ANNUAL GENERAL MEETING OF KEYHEALTH TO BE HELD ON 29 AUGUST 2014 IN CENTURION AT 11:00. Indicate instruction to proxy by way of a cross in the space provided below for the matters on the agenda: Extracts from the Annual Financial statements for the year ended 31 December 2013 Details In favour of Against Abstain Reappointment of Auditors for the 2014 financial year SIGNED AT ON THIS DAY OF MEMBER SIGNATURE AS WITNESSES: FULL NAME SIGNATURE FULL NAME SIGNATURE PROXY SIGNATURE AS WITNESSES: FULL NAME FULL NAME SIGNATURE SIGNATURE

20