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Annual integrated report 2011


Transformation report

The creation of a more equitable and just society requires ongoing effort from all South Africans.

Introduction

Netcare continues to drive transformation initiatives aimed at a more representative profile and promoting activities and business practices that impact positively on broader society.

We recognise the Broad-based Black Economic Empowerment (B-BBEE) framework as a means to redress the persistent exclusions and imbalances due to the legacy of apartheid. We also see this framework as a key contributor to SA’s sustainable growth into the future.

Managing transformation

The Transformation Committee is responsible for developing Netcare’s transformation strategy and policy, as well as monitoring its implementation. It seeks to ensure that management embraces transformation across the business and oversees the Operational Transformation Committee.

106 Refer to the Corporate governance report for the committee’s terms of reference.

We are pleased to announce our new Level 2 (AAA) rating in accordance with the Department of Trade and Industry (dti) B-BBEE Codes of Good Practice. Rated by external verification agency Empowerdex in November 2011, this represents an improvement on our previous rating as a Level 3 (AA) contributor.

The Empowerdex rating was based on data for the year ended 30 September 2011, excluding skills development which used data for the period 1 April 2010 to 31 March 2011.

Netcare’s B-BBEE Empowerdex scorecard

% Weighting   2011   2010
Ownership 20   19.16   18.78
Management and control 10   8.81   6.78
Employment equity 15   9.18   8.54
Skills development 15   12.51   12.22
Preferential procurement 20   15.51   16.07
Enterprise development 15   15.00   15.00
Socio-economic development 5   5.00   5.00
  100   85.17   82.39

Our efforts have resulted in slightly improved results in the areas of management control, employment equity and skills development. We have maintained solid performances in enterprise development and socioeconomic development. The application of a ruling received from Empowerdex has improved our ownership score.

Ownership

Taking onto account the black economic empowerment (BEE) retail and company holdings, Netcare’s BEE share ownership is 43.4% (2010: 40.5%) with black women
owning at 15.1% (2010: 15.6%) of votable shares at 30 September 2011.

Netcare’s BEE shareholding, verified by Empowerdex, comprises:

  • 52.1 million shares allocated to black beneficiaries under the Health Partners for Life (HPFL) BEE transaction;
  • On average 7 million shares held by black retail investors;
  • 37.7 million shares held by institutional investors with verified B-BBEE ownership ratings; and
  • 593 901 shares held by Community Healthcare Holdings, a black-owned company.

At 30 September 2011, 71.5 million of the 160 million HPFL shares had been allocated, of which 48.5 million shares (67.9%) were allocated to black beneficiaries.

Management control

For the period under review, the Netcare Board comprised 11 directors, five of whom are black, including two black women. Four of the six independent non-executive directors are black. Netcare’s Nomination Committee aims to increase the level of black participation on the Board as members retire in the future. For the period under review, the South African executive committee of 13 employees included two black men and two black women.

Employment equity

Netcare SA is committed to achieving the 2014 Health Charter targets.

Black representation continued to improve slightly in our SA employee base at 67.4% (2010: 65.9%), and representation of black women indicated a similar trend at 54.6% (2010: 53.4%). Netcare’s black representation in senior, middle and junior management was 28.0% (2010: 24.0%), 31.0% (2010: 28.9%) and 51.7% (2010: 50.4%) respectively. The cumulative score of 9.2 against dti targets improved from the previous year’s score of 8.5.

Employee profile by race

  2011   2010
% ACI   White   ACI   White
Executive 33   67   25   75
Management 39   61   36   64
Professional 55   45   54   46
Enrolled nursing and support 77   23   76   24

Skills development

Netcare continues to invest significantly in employee development and the provision of training for members of the public and employees of the public sector. Training interventions are aimed at clinical, nursing, paramedic and management development. For further details on our overall training and development efforts, refer to the report on Our people on page 74.

The overall value of Netcare’s skills development spend on black employees was R446 million (2010: R387 million) in the training year ended 31 March 2011. This value has been calculated in accordance with the dti B-BBEE Codes and the enhanced recognition criteria of the Adult Basic Education and Training (ABET) programmes. The total value of training initiatives for black employees after the adjustment for gender is 8.4% (2010: 8.1%) of leviable payroll, ahead of the dti target of 5%.

Specific initiatives were aimed at increasing the number of learnerships secured through various sector education and training authorities, and the development of people with disabilities.

Preferential procurement

Netcare improved its preferential procurement during the year. Netcare’s BEE procurement spend from all suppliers with a recognition level in accordance with the dti B-BBEE Codes was R6 703 million (2010: R5 506 million), or 84.0% (2010: 77.2%) of the total measured procurement spend of R8 002 million (2010: R7 129 million). This compares very favourably with the dti target of 50%.

Our preferential procurement focus continues to be on increasing the money spent with black-owned and black women-owned suppliers. This will be achieved through the identification of new suppliers and guiding existing suppliers on meeting these requirements.

Enterprise development

Netcare is committed to developing black-owned or controlled enterprises, especially in the private healthcare sector and its suppliers.

Netcare’s cumulative enterprise development spend for the five years ended 30 September 2011 was R406 million (2010: R301 million). This represents 7.3% (2010: 7.2%) of the cumulative South African net profit after taxation for the five-year period. This is well above the dti target of 3% of net profit after taxation.

Socio-economic development

Netcare’s cumulative socio-economic development spend over the last five years represents 2.5% (2010: 2.4%) of the cumulative South African net profit after taxation for the five years ended 30 September 2011. This exceeds the dti’s target of 1.0%.

For further details on our socioeconomic contribution, refer to the Corporate social investment report on page 77.