Integrated Annual Report

Contents

Reporting overview 2

Organisational overview 3Benefit options 4

Our organisation and key relationships 4

Principal third-party service providers 6

Risk-transfer arrangements 6

Five-year review 7

Performance highlights 8

Principal Officer's report 10Review of 2018 10

Review of activities 10

Future Prospects 11

Strategy and resource allocation 12Mission 12

Objective 12

Strategic imperatives 12

How strategy is determined 13

Chairman's report 14Introduction 14

King IV assessment 14

External environment and operating context 14

Conclusion 16

Stakeholders 16Introduction 16

Engagement framework 16

Annual General Meetings 16

Principles of engagement 17

Stakeholder identification 17

Responsibility 20

Materiality and risk 21Introduction 21

Management of insurance risk 21

The Enterprise Risk Management Framework 21

Risks identified during year under review 22

Combined assurance 22

Value creation 24Business model 24

Key elements 25

Governance 26Governance activities 26

Matters of non-compliance 28

Board of Trustees 30

Committees of the Board of Trustees 32

Remuneration policies 35

Trustee and Committee meeting attendance 35

Financials 36Statement of responsibility by the Board of Trustees 37

Report of the Audit Committee 38

Independent Auditor’s Report 40

Audited Annual Financial Statements 43

Momentum Health Reporting overview

Reporting overview

The Board of Trustees (We/the Board), on behalf of Momentum Health (the Scheme), take pleasure in presenting our Integrated Report for the year ended 31 December 2018. In doing so, we fully acknowledge our statutory obligations, the importance of continued sustainability of the Scheme and access to cost effective healthcare for the well-being of Members.

Scope, boundary and reporting cycle -

Reporting principles -

Target audience and materiality -

Momentum Health's 2018 Integrated Report is the first integrated report presented by the Scheme. It provides material information relating to our strategy and business model, operating context, material risks, stakeholder interests, performance, prospects and governance.

Unless otherwise stated, all performance information is for the 12-month period ended 31 December 2018, and relates to all of the Scheme's activities. We endeavour to illustrate a comprehensive view of the business by analysing our performance against our strategic objectives and highlighting successes and challenges experienced over that period.

Momentum Health has applied the principles contained in the International Financial Reporting Standards (IFRS), the King Report on Corporate Governance 2016 (King IV), and the Medical Schemes Act [No. 131 of 1998]. The report has been developed in accordance with the International Integrated Reporting (<IR>) Framework of the International Integrated Reporting Council (IIRC).

This report has been prepared primarily for current and prospective Momentum Health Members, for regulators and for legislators. The report is also relevant for any other stakeholder who has an interest in the Scheme's performance and prospects against our core purpose.

This report focuses on those matters that we see as being most material to our capacity to create value for Members, and to deliver on our core purpose. Our approach to managing these material matters is reflected in our strategic objectives and risk-management processes. These objectives and processes have been identified based on an assessment of how we create value, the impact of the external operating context on value creation, the material interests of stakeholders, and the principal risks facing the Scheme.

External audit and assurance -

Statement of the Board of Trustees on Momentum Health's 2018 Integrated Report -

Forward-looking statements -

An independent audit of Momentum Health's annual financial statements was performed by Deloitte and Touche (Deloitte). Other information reported is derived from the Scheme's own internal records and from information available in the public domain.

In the Board’s opinion, Momentum Health's 2018 Integrated Report provides a fair and balanced account of the Scheme's performance on those material matters that have been assessed as having a bearing on the Scheme's capacity to create value for its Members.

We recognise that integrated reporting is a journey and welcome any feedback on this report. Please address any queries or comments to the Scheme's Principal Officer.

This report contains certain forward-looking views with respect to Momentum Health's financial position, results and operations. These statements and forecasts involve risk and uncertainty as they relate to events and depend on circumstances that occur in the future. There are various factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements.

2

Organisational Overview Momentum Health

Organisational overview

Momentum Health, Registration number 1167, is a not-for-profit open medical scheme that exists for the sole benefit of its Members, registered in terms of the Medical Schemes Act 131 of 1998, as amended (the Act). Momentum Health was established in 1963 as a mutual entity with an absolute goal – to provide sustainable healthcare benefits for its growing pool of Members. It is important to note that the Scheme's obligation is to balance the needs of the combined membership with those of individual Members.

Ser

vice

Innovation Fairness Integrity Compassion

We will achieve our Vision, Mission and

Objectives through the rigorous application of

our values

Vision-

To be the open scheme of choice for all consumers of healthcare in South Africa.

Mission-

Momentum Health exists for one reason – to ensure sustainable access to appropriate cost-effective healthcare for our growing pool of Members.

Objective-

Our primary objective is to offer an exceptional value proposition to our Members, which also protects the long-term sustainability of the Scheme.

3

Momentum Health Organisational Overview

Purpose See more

Our MembersOur core purpose and primary objective is to offer an exceptional value proposition to our Members

On page 16 (Stakeholders)

On page 8 (Membership highlights)

MMI Health (Pty) LtdOutsourced operational management

Operational managementOn page 16 (Stakeholders)

Principal Officer and the Momentum Health Management Team

The Principal Officer is responsible for the management of the Scheme and accountable to the Board. The Management Team supports the Principal Officer in the day to day management and oversight of delivery, and collaboration, with the Administrator/Managed Healthcare providers

On pages 10 - 11 (Performance Against Strategy)

Committees of the BoardAudit

Clinical Risk and GovernanceGovernance and Remuneration

InvestmentRisk Management

Oversight responsibilities delegated by the Board

On pages 32 - 34 (Committees of the Board)

Momentum Health Board of TrusteesSets strategic direction

On page 12 (Strategy)

Benefit options-

Our organisation and key relationships-

In 2018, Momentum Health offered six registered options. These were:

Ingwe

Impact

Custom

Incentive

Extender

Summit

These six registered options were subdivided into 23 benefit options based on provider choice.

Personal Medical Savings accounts

In order to provide a facility for Members to set aside funds to meet healthcare costs not covered by their chosen benefit option, the Scheme has made Personal Medical Savings accounts available to Members belonging to the Incentive and Extender options. Unexpended medical savings are accumulated for the long-term benefit of the Member and are reflected as a liability in the financial statements, repayable in terms of Regulation 10 of the Act.

Momentum Health carries the risk associated with the advance of monies in excess of Members’ savings contributions received, and in the event of Members leaving the Scheme, these advances are recovered directly from the Members. Momentum Health does not charge interest on negative Personal Medical Savings account balances.

In terms of the Act, the Board of Trustees is responsible for managing the affairs of Momentum Health. The Board is required to appoint a Principal Officer, who is responsible for day-to-day management of the operational activities listed below.

As is the case with most medical schemes, Momentum Health itself has limited operational resources, and outsources its operational activities to external service providers. The majority of services (administration, managed healthcare, actuarial services, benefit design and distribution) are outsourced to MMI Health (Pty) Ltd, a wholly owned subsidiary of MMI (the Administrator). This outsourcing arrangement is part of a strategic relationship as evidenced in the Scheme’s use of MMI’s client facing brand name "Momentum".

Outsourcing, as a business model, was agreed to for multiple strategic reasons that extend well beyond cost savings and include factors that support sustainable business growth, access to expertise and capability, and maximising business-model flexibility.

It is therefore important that the Scheme and the Administrator, through its client-facing Momentum brand, share complementary visions and objectives and that the relationship between Momentum Health and the various MMI divisions is mutually beneficial.

Complementary products

Members can choose to make use of additional Momentum branded products available from MMI Holdings Limited (MMI), to enhance their medical scheme benefits.

These voluntary complementary products range from a world-class wellness and rewards programme, Multiply, to the innovative HealthReturns solution.

The complementary products are not medical scheme benefits as these Momentum branded products are not provided by the Scheme, but by a separate entity. Members of Momentum Health are not obliged to take any of the complementary products that MMI offers.

4

Organisational Overview Momentum Health

Purpose See more

Our MembersOur core purpose and primary objective is to offer an exceptional value proposition to our Members

On page 16 (Stakeholders)

On page 8 (Membership highlights)

MMI Health (Pty) LtdOutsourced operational management

Operational managementOn page 16 (Stakeholders)

Principal Officer and the Momentum Health Management Team

The Principal Officer is responsible for the management of the Scheme and accountable to the Board. The Management Team supports the Principal Officer in the day to day management and oversight of delivery, and collaboration, with the Administrator/Managed Healthcare providers

On pages 10 - 11 (Performance Against Strategy)

Committees of the BoardAudit

Clinical Risk and GovernanceGovernance and Remuneration

InvestmentRisk Management

Oversight responsibilities delegated by the Board

On pages 32 - 34 (Committees of the Board)

Momentum Health Board of TrusteesSets strategic direction

On page 12 (Strategy)

5

Momentum Health Organisational Overview

Principal third-party service providers -

Administrator and Managed Healthcare provider

MMI Health (Pty) Ltd, a wholly-owned subsidiary of MMI Holdings Limited 201 uMhlanga Ridge Boulevard Cornubia 4339 Administration accreditation number: ADMIN 13 Managed Healthcare accreditation number: MCO 59

Asset managers

Momentum Asset Management (Pty) Ltd 4 Merchant Place 1 Fredman Drive Sandton 2196 Financial Service Provider number: 623

Prudential Investment Managers (South Africa) (Pty) Ltd 7th Floor Protea Place 40 Dreyer Street Claremont 7708 Financial Service Provider number: 45199

Sanlam Life Insurance Ltd (Sanlam Investment Managers) 55 Willie van Schoor Drive Cape Town 7532 Financial Service Provider number: 2759

Principal bankers

First National Bank, a division of FirstRand Bank Limited 6th Floor FNB Bank City Cnr Simmonds and Pritchard Streets Johannesburg Gauteng South Africa 2001 Financial Service Provider number: 3071

Actuarial services

Momentum Health utilises the expertise of the Administrator’s actuarial team for actuarial support. These actuaries analyse claiming patterns, monitor the timing and severity of claims and advise on the determination of contributions and benefit levels.

Auditors

Deloitte & Touche Deloitte Place 2 Pencarrow Crescent Pencarrow Park La Lucia Ridge Office Estate La Lucia 4051

Attorneys

Cox Yeats Attorneys 21 Richefond Circle Ridgeside Office Park Umhlanga Ridge Durban 4320

Risk-transfer arrangements-

The following risk-transfer arrangements were in place during the year under review:

Organisation Services

MMI Health (Pty) Ltd Provided primary healthcare services at healthcare centres and through contracted network service providers for Members on the Ingwe and Impact options.

MMI Health (Pty) Ltd Provided Chronic Care Benefits for the 26 Prescribed Minimum Benefits (PMB) Chronic Disease List (CDL) conditions for Members on all options except Ingwe and Impact options.

Netcare Hospitals (Pty) Ltd (Trading as Netcare 911) Provided emergency transport services and other ambulance services for Members on all options.

6

Five-year review Momentum Health

Five-year review for the year ended 31 December 2018

Membership (as at 31 December)2018 2017 2016 2015 2014

Members No. 156 555 154 181 138 109 128 681 116 147 Dependants No. 142 611 139 606 128 097 119 491 110 340

Beneficiaries No. 299 166 293 787 266 206 248 172 226 487

Average dependants per member No. 0.91 0.91 0.93 0.93 0.95 Average beneficiaries per member No. 1.91 1.91 1.93 1.93 1.95

Average age (principal members) Years 42.2 41.9 42.1 42.0 42.4 Average age (beneficiaries) Years 32.9 32.8 32.7 32.7 32.9

Gross contributions R’000 4 776 389 4 337 636 3 693 625 3 311 027 2 932 069 - Per member Rands 30 509 28 133 26 744 25 731 25 244 - Per beneficiary Rands 15 966 14 765 13 875 13 342 12 946

Risk contribution income R’000 4 496 199 4 060 472 3 431 285 3 061 735 2 691 675 - Per member Rands 28 720 26 336 24 845 23 793 23 175 - Per beneficiary Rands 15 029 13 821 12 890 12 337 11 884

Relevant healthcare expenditure (*) R’000 3 926 224 3 492 189 3 024 387 2 638 358 2 269 794 - Per member Rands 25 079 22 650 21 899 20 503 19 542 - Per beneficiary Rands 13 124 11 887 11 361 10 631 10 022 - As a % of risk contributions % 87.3% 86.0% 88.1% 86.2% 84.3%

Administration expenditure (A) R’000 437 374 386 162 325 445 287 136 257 039 - Per member Rands 2 794 2 505 2 356 2 231 2 213 - Per beneficiary Rands 1 462 1 314 1 223 1 157 1 135 - As a % of gross contributions % 9.2% 8.9% 8.8% 8.7% 8.8%- As a % of risk contributions % 9.7% 9.5% 9.5% 9.4% 9.5%

Acquisition, marketing and distribution costs (B) R’000 222 579 198 805 167 026 146 922 126 640 - Per member Rands 1 422 1 289 1 209 1 142 1 090 - Per beneficiary Rands 744 677 627 592 559 - As a % of gross contributions % 4.7% 4.6% 4.5% 4.4% 4.3%- As a % of risk contributions % 5.0% 4.9% 4.9% 4.8% 4.7%

Net impairment losses on healthcare receivables (C) R’000 2 089 1 770 1 954 1 540 1 716 - Per member Rands 13 11 14 12 15 - Per beneficiary Rands 7 6 7 6 8 - As a % of gross contributions % 0.04% 0.04% 0.1% 0.0% 0.1%- As a % of risk contributions % 0.05% 0.04% 0.1% 0.1% 0.1%

Total non-healthcare costs (*) (A + B + C) R’000 662 042 586 737 494 425 435 598 385 395 - Per member Rands 4 229 3 806 3 580 3 385 3 318 - Per beneficiary Rands 2 213 1 997 1 857 1 755 1 702 - As a % of gross contributions % 13.9% 13.5% 13.4% 13.2% 13.1%- As a % of risk contributions % 14.7% 14.4% 14.4% 14.2% 14.3%

Investment income, net of asset management fees R’000 55 493 170 393 113 140 65 398 51 319

Net (deficit)/surplus for the year R’000 (41 460) 145 938 19 300 48 632 86 391

Total members’ funds R’000 1 196 925 1 238 385 992 012 972 712 924 080 - Per member Rands 7 645 8 032 7 183 7 559 7 956 - Per beneficiary Rands 4 001 4 215 3 726 3 920 4 080 - As a % of gross contributions (#) % 23.9% 25.7% 25.6% 29.3% 31.5%- As a % of risk contributions (#) % 25.4% 27.5% 27.5% 31.7% 34.3%

Claims cover (members' funds / claims per month) Months 3.7 4.3 3.9 4.4 4.9

# Members funds as a % of risk and gross contributions are reflected excluding the unrealised gains on financial instruments. * Council for Medical Schemes Circular 56 of 2015: Accounting for accredited managed care services resulted in a reclassification of accredited managed care services from non-healthcare expenditure to healthcare benefits in 2015.

7

Momentum Health Performance highlights

Performance highlights

156 555 members

Momentum Health experienced a net increase in membership of 2 374 Members during 2018, bringing the total number of Members to 156 555. Student membership was 29 746 and non-student membership was 126 809. Membership increases occurred on the Ingwe and Custom options. The Custom option continued to grow more rapidly than the other options during 2018 and remains the Scheme’s largest option, accounting for 44.6% of the Scheme’s membership.

7.5% average growth

in membership per annum over the last 10 years

Over the past ten years, the Scheme has experienced a 92% membership growth, an average of 7.5% growth per year for the period despite the strong competitive environment, stagnant medical scheme membership and challenging economy.

42.17 average age

of membership

The average age of Principal Members increased from 41.9 in 2017 to 42.2 in 2018. It is important to note that over the past ten years the Scheme’s average age has reduced by 1.3 years. In order for the Scheme to counter the effect of the natural ageing of existing members, the average age of new members needed to be at minimum 32.3 years in 2018.

The Membership distribution across the various provinces remains in line with that of prior years

8 9

Performance highlights Momentum Health

R4.8 billion contribution income

The gross contribution income for the year ending December 2018 was R4.8 billion, which equated to an average contribution of R2 542 per member per month (pmpm).

Non-healthcare costs

As a percentage of gross contribution income, non-healthcare costs were 13.9% in 2018, having remained relatively constant over the past five years. When comparing the absolute rand value of the non-healthcare costs pmpm, the Scheme has lower costs than competitors while providing similar or better value to members.

R41 million net deficit

The Scheme experienced a net deficit of R41.4 million, compared to the budgeted surplus of R73.5 million.

R63.06 million

investment incomeThe Scheme achieved a positive investment return of R63.06 million. This return included R65.9 million unrealised losses in the current year.

Members’ fundsMembers’ funds decreased from R1.238 billion at the end of 2017 to R1.197 billion at the end of 2018. This equates to R7 645 per Member and 3.7 claims months.

Claims experience

Despite medical inflation being estimated at approximately 8% for 2018, Momentum Health’s claims (i.e. excluding managed healthcare and risk transfer costs) increased by 6.4% resulting in claims incurred of R3.9 billion. Although this is a positive result in relation to medical inflation, the lower-than-budgeted membership impacted on the expected utilisation decrease, resulting in a more-than-budgeted claims experience of R20.7 million; and R34pmpm more than budget at a per member level.

This adverse claims experience resulted in an increase in the Scheme’s claims as a percentage of gross contributions ratio from 86% in 2017 to 87.3% in 2018.

Solvency ratio of

23.9% excluding unrealised gains

The Scheme has seen a decrease in its statutory solvency ratio in 2018. The Scheme is in a secure financial position, and although at year end the solvency level was below the legislated requirement, it is well above its capital-based adequacy requirement.

8 9

Momentum Health Principal Officer's report

Review of 2018-

2018 proved to be yet another challenging year for South Africans as the country’s economy remained sluggish with poor economic growth, low gross domestic product and high unemployment rates. The economy fell into its first recession since the 2009 global financial crisis in the second quarter, shrinking by 0.5% following a 2.7% contraction in the first quarter.

Although the economy grew 2.6% in the third quarter, and 1.4% in the fourth, the overall growth rate for the year was 0.8%. As a result, South Africans continued to experience cash-flow pressure, which is evident in our lower-than-expected membership growth. On a positive note, the Scheme still managed to achieve positive membership growth of the desired profile.

The South African equity markets produced disappointing returns in 2018, with many investors experiencing losses due to volatility. Although the Scheme’s investment performance was significantly lower than budgeted, it still achieved positive investment returns amidst such volatility; a testament to the effectiveness of its investment strategy.

The industry continues to experience high healthcare costs, which persistently increase at a higher rate than consumer price index excluding mortgage costs (CPIX). This is as a result of factors including an ageing population, a growing burden of disease (particularly lifestyle diseases), more costly technology and provider-induced utilisation. In order to ensure that Momentum Health can manage this growing demand, various evidence-based managed healthcare initiatives aimed at ensuring quality, efficiency, effectiveness and appropriateness of healthcare services have been implemented over the past years.

These initiatives, together with Momentum Health’s patient-centric approach to keeping its Members healthy and supporting those that are unwell on their wellness journey, has not only placed our Members at the centre of all we do, but has kept healthcare costs and health outcomes at an acceptable level.

The strategic imperative to attract Members whose profile counters the natural ageing of the existing membership, has thus far also been successful in containing costs, and the Scheme aims to continue this focus.

Review of activities-

Membership

The Scheme experienced a 1.54% growth in membership during the year under review.

Membership as at 31 December 2018: 156 555 (2017: 154 181)

Lives covered as at 31 December 2018: 299 166 (2017: 293 787)

Average age of membership: 42.2 years (2017: 41.9 years)

Average age of new Members joining in 2018: 31.4 years (2017: 32.4 years)

Average age of new Beneficiaries joining in 2018: 27 years (2017: 27.4 years)

The total membership per benefit option was as follows:

Benefit OptionPrincipal Members 31 December 2018

Beneficiaries 31 December 2018

Principal Members 31 December 2017

Beneficiaries 31 December 2017

Ingwe 46 493 54 782 45 277 53 405Impact 1 721 3 172 2 330 4 448Custom 69 792 158 199 65 812 147 728Incentive 33 637 73 272 35 126 76 750Extender 4 386 8 918 4 991 10 419Summit 526 823 645 1 037Total 156 555 299 166 154 181 293 787

The Board, in conjunction with the Principal Officer, Administrator and advisers, continues to focus on the holistic product offering provided to Members in order to ensure the continued and sustainable growth of the Scheme’s membership.

Principal Officer's Report

10

Principal Officer's report Momentum Health

Financial performance

The Scheme incurred a net deficit, after investment returns, of R41.4 million (2017: Net surplus R145.9 million).

The Scheme continued to focus on optimal health risk management and sustainable growth during 2018. The competitive pricing strategy implemented over the previous years in order to attract the appropriate Members resulted in the Scheme being able to counter the natural ageing of its membership which ensured only a marginal increase in the average age of Members.

Some of the key indicators to consider for the year under review are as follows:

Description 2018 2017 % change

Gross contribution income R4 776m R4 338m 10.10%Gross contribution income per Member per month R2 542 R2 344 8.45%Gross contribution income per Beneficiary* per month R1 330 R1 230 8.13%Risk contribution income per Member per month R2 393 R2 195 9.02%Risk contribution income per Beneficiary per month R1 252 R1 152 8.68%Relevant healthcare expenditure per Member per month R2 090 R1 887 10.76%Relevant healthcare expenditure per Beneficiary per month R1 094 R991 10.39%Claims ratio based upon risk contributions 87.30% 86.00% 1.3%Non-healthcare costs per Member per month R352 R317 11.04%Non-healthcare costs per Beneficiary per month R184 R166 10.84%Non-healthcare costs as percentage of gross contribution income 13.90% 13.53% 0.37%Total Members’ funds R1 197m R1 238m -3.31%Accumulated funds ratio (excluding unrealised gains) 23.92% 25.70% -1.78%

The operational statistics for each option are provided in Note 27 of the Annual Financial Statements (page 68).

* Beneficiaries refer to lives covered, i.e. Principal Members as well as Dependants.

Sustainability

As at 31 December 2018, the Scheme’s accumulated funds ratio was 23.92%. The Board continues to consider Momentum Health’s future risk-based capital requirements, and the Scheme’s actuaries have assessed the Scheme’s capital adequacy requirement in order to provide the Board with comfort that Momentum Health remains sustainable. The result of the 31 December 2018 assessment has once again confirmed the Scheme’s strong capital position.

The Board has re-emphasised that the Scheme’s sustainability is its primary focus. Although the Scheme statutory solvency ratio is below the statutory requirement, it will continue to monitor experience against the sustainability strategy and business plan and will continue to develop initiatives to ensure that the Scheme remains sustainable into the future.

The accumulated funds ratio is calculated on the following basis:

2018 2017

R'000 R'000

Total Members' funds per statement of financial position including unrealised gains

1 196 925 1 238 285

Less: Cumulative net unrealised gain on re-measurement to fair value of investments

54 261 122 078

1 142 664 1 116 207

Gross contribution income 4 776 389 4 337 636

Members' funds / Gross annual contribution income x 100%

including unrealised gains 25.1% 28.5%

excluding unrealised gains 23.9% 25.7%

Future Prospects-

The Scheme is in advanced stages of finalising an amalgamation of a small restricted medical scheme with Momentum Health, which subject to various legislative requirements and the approval of the Council for Medical Schemes, will contribute to Momentum Health’s reserves and positively affect the Scheme’s solvency ratio in line with the Statutory requirement by the end of 2019.

In 2018 the Global Credit Rating Company (GCR) affirmed the national claims paying ability rating assigned to Momentum Health of AA. This rating is evidence of the Scheme’s continued sustainability as it denotes very high claims-paying ability, strong protection factors and modest risk.

TJ van den Bergh Principal Officer

25 April 2019

11

Momentum Health Strategy and resource allocation

Strategy and resource allocation

Medical schemes have a simple strategic imperative: to offer long-term value to their members, effectively in perpetuity. The only way to achieve this objective is to ensure the long-term sustainability of the Scheme. This consideration orients and informs all strategic planning and review, and has done so since Momentum Health's establishment in 1963.

Mission-

Momentum Health exists for one reason – to ensure sustainable access to appropriate cost-effective healthcare for our growing pool of Members.

Objective-

Our primary objective is to offer an exceptional value proposition to our Members, which also protects the long-term sustainability of the Scheme.

Strategic imperatives-

In order to meet our overarching strategic objective of long-term sustainability, the following are the key strategic priorities:

1. A sustainable, competitive product offering;

2. Sustainable organic growth at an affordable price with the right mix of members creating a positive margin;

3. A credible consumer brand;

4. Consumer-centric service excellence; and

5. Relevant and competent Information Technology (IT) software platform and support structure.

Timeframe

The Scheme conducts annual strategic planning sessions, at which the existing strategic imperatives are reviewed and their applicability confirmed, and progress on each imperative considered quarterly.

For the purposes of strategic planning and risk management, the following timeframes apply:

Short term: six months.

Medium term: one year.

Long term: three to five years, and beyond.

Risk management reviews take place on a biannual basis (See page 21).

Responsibility

All of Momentum Health's strategic objectives and imperatives, and the monitoring of the implementation of those objectives and imperatives, are the preserve of the Board of Trustees.

12

Strategy and resource allocation Momentum Health

In facilitating the above process, the Principal Officer and her management team ensure that:

These steps are followed at each annual strategy-planning session:

Role of Principal Officer

1

Engage with stakeholders(see page 16)

The Board gathers relevant information and views from the Council for Medical Schemes, appropriate industry experts on the South African healthcare sector, the South African private healthcare funding industry and any other matter on which the Board requires information.

The Board also gathers relevant information and views from the Administrator on its assessment of the private healthcare funding industry, strategic execution plan to ensure sustainability and competitive advantage. This includes identified strategic opportunities, risk and related imperatives with key focus areas to implement during a fixed period.

Members communicate extensively with the Scheme, directly, through brokers, and through the Council for Medical Schemes, and this information is compiled and considered.

2

Ask "Where are we now?"The Board considers the Scheme's SWOT (strengths, weaknesses, opportunities and threats) and PEST (political, economic, social and technological) analyses, which are revised annually. Any potential opportunities in the identified risks arising through the Enterprise Risk Management Framework (see page 22) are incorporated into this consideration. .

3k

Ask "Where are we going?"The Board agrees on strategic direction by defining the Scheme's Mission, Vision, Values and Objectives.

4k

Agree on strategic imperativesThis is a list of up to ten key priorities required to be met in order to meet the Scheme's strategic objectives.

5

Ask "How will we execute the strategy?"The Board considers research and innovative solutions provided by the Administrator and other experts.

The Board, having challenged and interrogated the proposals so as to satisfy themselves as to the appropriateness and reasonableness of the proposals, approve and mandate the execution of those proposals, i.e. they become directives.

Based on those directives, resources are allocated to allow the strategy to be executed.

The responsibility for achieving the desired outcomes is assigned to relevant parties.

The Board agrees on monitoring metrics to measure performance and determine whether outcomes are being met and aligned to strategy.

Service providers must execute those directives in line with agreed parameters.

The Board considers whether the Scheme's business model can continue to deliver on the agreed strategic imperatives.

6

Ask "How will we manage the plan?"The Scheme's agreed strategy is communicated to the Administrator for comment, and the Administrator's strategy is similarly reviewed for alignment with the roles and responsibilities mandated through the Medical Schemes Act.

The processes and performance of the Administrator and other service providers are continuously reviewed for effectiveness and alignment with their mandates through monthly reporting and enterprise risk management.

Regular feedback to the Board allows it to monitor the progress and performance in the execution of the directives, and to reassess the strategic imperatives and/or directives if necessary.

The strategic plans are documented and proposals are presented to the Board;

After approval, proposals are converted to plans and directives;

Plans are implemented through the Scheme's service providers;

The risks identified during the strategic discussions are managed through the risk-management process, and any risks relevant to setting of strategic goals are highlighted during the strategic discussions; and

The Board is provided with the information it requires to allow it to monitor progress and performance.

How strategy is determined-

In terms of the Regulations to the Medical Schemes Act, the Board of Trustees is required to show evidence of a clear strategic plan that makes sense, ensures the financial health of the scheme and is being implemented. Momentum Health’s plan is developed according to a Strategic Framework, which is reviewed annually as part of the Scheme’s planning process.

These steps are followed at each annual strategy-planning session:

13

Momentum Health Chairman's report

Introduction-

As a South African medical scheme operating in support of the country’s imperative of social solidarity, Momentum Health's sole purpose is to create and sustain value for its Members.

Our ability to do so is affected both by the quality of our internal operations and by the external environment in which we operate. This environment has posed challenges during the year under review, but this is not without precedent. Our ability to predict and to weather those challenges posing the most material risks to our ability to deliver on our mandate has been tested and once again found sufficient during the 2018 financial year.

King IV assessment-

We believe that in order to create value for our Members an ethical culture is paramount. While we have applied the principles of the various King codes in the past, the Board agreed that it would also adopt the King IV Report, applicable to the Scheme from January 2018. To this end, the Scheme commissioned a comprehensive assessment of its application of the King IV principles by an independent third party, and I am delighted that our governance practices were found to be of a high standard. More information on the analysis can be found on page 26.

External environment and operating context-

Health Policy and Medical Scheme Regulatory Developments

During 2018, the South African healthcare environment was faced with a number of legislative developments. Importantly, on 21 June 2018, the Minister of Health gazetted two bills aimed at supporting government’s priority of implementing the South African universal healthcare system, namely the National Health Insurance (NHI) Bill and the Medical Schemes Amendment Bill. The following provides insight into some of the key health developments included in these bills.

National Health Insurance Bill

The much anticipated NHI Bill was published on 21 June 2018, calling for comment within three months. When enacted, it will become the NHI Act.

The NHI Bill, and related legislative changes, are important aspects of Phase Two of the implementation of NHI (2017–2022) and aim to encompass amendments to twelve pieces of legislation, including the National Health Act and the Mental Health Act. This second phase is focused on NHI legislation, institutional development and the purchasing of services for vulnerable groups.

The primary aim of the legislation is to achieve sustainable and affordable access to healthcare services by establishing and maintaining an efficient fund through the consolidation of revenue to protect users against financial risk; serving as the single purchaser of health services to ensure equitable and fair distribution and use of healthcare services; ensuring sustainability of funding for healthcare services; and providing for equity and efficiency in funding by actively purchasing healthcare services, medicine, and health related products from certified, accredited and contracted service providers.

Following the release of the Bill, it became evident that there were conflicting views from Treasury and the Ministry of Health. Treasury raised a number of concerns, including around the contracted role of medical schemes. The bill came before cabinet on 5 December 2018 but was not approved for submission to Parliament.

Importantly, in October 2018, President Ramaphosa hosted the first-ever Presidential Health Summit highlighting the importance placed on achieving universal healthcare coverage. The aim of the summit was to provide stakeholders from government departments, labour, civil society, patient advocacy groups, academia and health professionals from diverse fields in the public and private sectors to collaborate on planning towards a Quality Health Improvement Plan to accompany the implementation of the NHI, and in this way to achieve the implementation of sustainable NHI coverage.

Chairman's report

14

Chairman's report Momentum Health

After the summit, the Presidency established a number of task teams, representing the various sectors, to develop a Health Compact on identified solutions and implementation plan. This agreement between stakeholders will capture a pledge and commitment by all signatories to improve the quality of the health services in South Africa. The Compact was due to be finalised by 15 April 2019. It is likely that the Compact will guide the immediate activities in health systems reform.

The NHI Bill will only be introduced to the new parliament by the Minister of Health after the May 2019 elections. The NHI Bill will also be debated at NEDLAC before Parliament starts the public consultation process.

Medical Schemes Amendment Bill

This bill aims to align the Medical Schemes Act with the NHI White Paper and the Draft NHI Bill. The bill seeks, amongst other things, to improve the regulation of the medical schemes industry and to align the regulatory framework to the changes that have taken place over the past decade in the sector. In addition, the bill seeks to ensure that medical scheme beneficiaries are better protected and promotes improved access to private health funding.

The Medical Schemes Amendment Bill includes the following proposed amendments:

Redefinition of the benefits package that all medical schemes are mandated to cover.

Revision of certain medical scheme governance requirements:

Allowing joint membership of a medical scheme and the NHI Fund.

The definition of "dependant" extended to include other family relationships and legal and factual dependants.

The Registrar may restrict medical schemes from providing cover that is provided by the NHI Fund, and to only provide cover in addition to that provided by the NHI Fund.

The Medical Schemes Amendment Bill will be revised once consideration has been given to public comments on the Bill, but this will only happen after the Health Market Enquiry recommendations have been finalised in September 2019.

Market inquiry into the private healthcare sector

The Competition Commission (Commission) embarked on its Health Market Inquiry (HMI) into the private healthcare sector in terms of the Competition Act No 89 of 1998, on 1 August 2014. The HMI was initiated because the Minister of Health had reason to believe that there were features of the sector that prevented, distorted or restricted competition.

Following extensive investigation, in July 2018 the HMI released its provisional report and provisional recommendations for public comment. The main concerns raised in the report were supply-induced demand; ineffective competition in the funder market; and lack of effective competition in the provider environment. Recommendations included changes to the way medical scheme options are structured to increase comparability between schemes and increase competition in that market; a system to increase transparency on health outcomes to allow for value purchasing; and a set of interventions to improve competition in the market through a supply side regulator.

Notwithstanding the date for publication of the final report having been set for August 2018, early in 2019 the HMI notified stakeholders that the publication of the final report had been delayed. The final report is now expected on 30 September 2019.

Momentum Health has participated in the process and awaits the final outcome.

Medical Scheme Beneficiary Registry and the Protection of Personal Information

In July 2016, the CMS advised medical schemes that the Minister of Health had issued a directive which tasked the CMS with the responsibility to collect medical scheme beneficiary information for the purpose of monitoring the impact of current health policies and identifying medical scheme members who access services in the public sector.

Based on legal opinion received, Momentum Health and a number of other medical schemes raised concern regarding the approach to the beneficiary registry and the legality of disclosing medical scheme members’ personal information, without member consent. The CMS has confirmed that the Beneficiary Registry remains a strategic initiative and has indicated that it has received legal opinions showing that the CMS is empowered to establish such a registry and that it is not unconstitutional to do so. Many medical schemes remain concerned about the required disclosures and discussions with the Health Funders Association (HFA) and other stakeholders are ongoing.

In an attempt to find a solution that would meet the requirements of the directive, while protecting medical scheme members’ personal information, the HFA proposed to the CMS the development of a central switch housed by the CMS. In the meantime, CareConnect, a not for profit company, has been established by three hospital groups and three large administrators. CareConnect will establish a secure Health Information Exchange for all South Africans that will offer a medical scheme membership validation function from the outset and will later expand to make a full electronic health record available to all healthcare providers (public and private). CareConnect will ensure that full consent is obtained from all appropriate parties before such information is shared. The first pilot test whereby the membership validation function is tested with manufactured data is due to be completed by July 2019. This functionality will negate the need for a beneficiary registry held by the CMS.

Prescribed Minimum Benefit review

In December 2016 the CMS published a consultation document that began the Prescribed Minimum Benefit (PMB) review process, and after considering public comments, a PMB Review advisory committee was established in October 2017.

A number of meetings were held in 2018, and a priority setting process and a number of principles were established for the review. The terms of reference of the advisory committee are to review the PMBs, with a stronger primary care focus, and the development of a package for a low cost benefit option.

Progress has been slow, and it is unlikely that a revised PMB package will be introduced before 2021.

Health Funders Association

Momentum Health continues to participate as a member of the industry representative body, the Health Funders Association (HFA). The HFA aims to provide a vehicle for stakeholders to support the long-term sustainability and development of the private healthcare funding industry in South Africa. Its primary objective is to represent the best interests of medical scheme beneficiaries in an ethical, inclusive, impartial, proactive, effective and efficient way.

Over the past two years the HFA has represented its members effectively, providing valuable comment to the legislative and regulatory bodies on all relevant industry developments.

15

Momentum Health Stakeholders

Introduction-

Momentum Health has many stakeholders with diverse and sometimes conflicting interests and concerns.

Fundamentally though, all stakeholder engagement is carried out in service of the Scheme's primary accountability: to create and sustain value for its Members. As such, all relationships are evaluated according to their ability to sustain and increase that value.

Engagement framework-

Momentum Health is committed to engaging with all of its stakeholders in an open and transparent manner, informed by its values of service, innovation, fairness, integrity and compassion.

The Scheme's Stakeholder Engagement Policy outlines Momentum Health’s approach and principles to be applied when engaging with its stakeholders, and is in place to ensure that these principles are consistently applied.

Annual General Meetings-

The Scheme encourages Member attendance of the Scheme’s Annual General Meeting (AGM) by following an extensive process of informing Members of the scheduled AGM by advertising in three Sunday newspapers, sending Member notices to every Member and circulating AGM reminders on the Member statements. The 2018 AGM was held after business hours in order to attract greater participation by Members.

Stakeholders

Conclusion-

Momentum Health, originally established as Natal Medical Plan in 1963, has through successive strategic sustainability strategies, stood the test of time. We attribute this to our ability to adapt to changing member needs, economic uncertainties and a multitude of legislative changes, all while continuously placing our Members first and living our values of excellent service, innovation, fairness, integrity and compassion.

The Board is constantly confronted with a broad range of matters that need to be deliberated and considered and on which decisions need to be taken in the interest of our Members. This task is ably fulfilled by individuals with a diversified background which includes legal, human resources, accounting, economics, clinical and medical, investments and business acumen. I want to thank the Principal Officer and her staff as well as my colleagues on the Board and its various Committees for their invaluable input during the year.

A Robberts Chairman

25 April 2019

16

Stakeholders Momentum Health

Principles of engagement-

All stakeholder engagement is conducted in line with the following principles:

Member value

Momentum Health is established for the sole purpose of providing healthcare funding for its Members. All engagement shall be based on this guiding principle.

ConfidentialityMomentum Health respects stakeholder confidentiality and the protection of personal information is paramount in all engagement.

IntegrityMomentum Health’s values shall govern all engagement, which shall always be conducted in a transparent and honest manner.

Responsiveness Whether re-active or pro-active, all engagement shall be timeous and effective.

Compassion

Momentum Health recognises that its stakeholders’ needs and desires may differ from one another, as well as its own, and stakeholders shall always be treated with compassion.

RespectAll stakeholder engagement shall be conducted in a respectful manner with due regard for the stakeholder’s dignity.

DiversityMomentum Health appreciates the diversity of the South African population and is committed to honouring this diversity in all engagements.

CollaborationMomentum Health seeks to establish meaningful vested relationships with stakeholders that have aligned values and goals.

Accountability

Momentum Health’s stakeholder engagement is not limited to a single group, and the management of relationships is spread between Scheme employees and various divisions within its Administrator and managed healthcare providers, who are all held to the same level of accountability through contractual arrangements.

Stakeholder identification-

Stakeholders are those individuals, groups or organisations that affect or could be affected by Momentum Health’s activities, benefits or services and associated performance, and which impact the Scheme's ability to create and sustain value over time.

Key stakeholders are determined according to the extent to which they affect, or are affected by, the activities, outputs and outcomes of the organisation, and by their ability to affect the Scheme's ability to create value over time.

Momentum Health has identified the following individuals and groups as being its key stakeholders:

Members and Member employee groups

Healthcare providers

Intermediaries (brokers)

Third-party service providers, particularly the Administrator

Government and regulatory bodies, particularly the Council for Medical Schemes (CMS)

Healthcare provider professional associations

Employees

Legislators and industry representative bodies

Media

17

Momentum Health Stakeholders

Of those, the five most material stakeholders in terms of their impact on the Scheme's ability to create and sustain value over time are described in more detail in the table below.

Stakeholder

Members and Member employer

groups

Healthcare providers

Methods of engagement

Regular proactive communication via email, post, website, app and SMS

Call centres

Quarterly Scheme magazine

AGM

Claims and billing statements

Patient advocacy communication

For employer groups – year end launch, financial roadshow, corporate wellness

days, presentations, on-boarding for new groups, face-to-face visits

Direct engagement

Administrator tasked with provider network management engagement

Call-centre engagement

Indirect via healthcare providers professional bodies

Quarterly forums

Statements, SMS, email, provider website, face-to-face, conferences and call centre

How is the quality of communication

determined?

Surveys

Council for Medical Schemes feedback

Surveys

Customer satisfaction index to rate calls

Concerns

Increase in healthcare costs and impact to Members in terms of shortfalls/out of

pocket expenses

Medical inflation and impact on contributions

Impact of unbudgeted VAT increase on medical scheme industry

Their high professional indemnity cover contributions

Economic strain

Loss of qualified medical/clinical professionals to emigration, resulting in

higher remuneration to retain staff

Responses

Scheme negotiates with providers and also contracts with network providers to

minimise impact

An industry challenge, but negotiations and networks in place to minimise impact

Members not immediately impacted as Scheme absorbed costs at the time of the

interim increase

Scheme acknowledges the concern and the need for the fees, but not all should be

absorbed by schemes

Scheme acknowledges the concern and the need to pay higher remuneration, but not all should be absorbed by schemes

to prevent the industry becoming unsustainable

Fees based on outcomes

Quality of relationship* 4 4

How is the quality of relationship determined?

Surveys

Brand Recognition Surveys e.g. Sunday Times Award

Client satisfaction index

Surveys

* 1. No meaningful existing

relationship

2. Relationship established, but work needs to be done to make it meaningful

3. Relationship established and value-producing, but room for improvement

4. Good-quality, mutually beneficial relationship, with some room for improvement

5. Strong relationship of mutual benefit

18

Stakeholders Momentum Health

Stakeholder

Intermediaries (brokers)

Third-party service providers

(especially the Administrator)

Government and regulatory bodies (especially CMS)

Methods of engagement

Annual year-end contributions and benefits launch

Annual financial roadshow

Ongoing broker training and accreditation

Health Alerts are used to communicate ad hoc pertinent information

Quarterly regional meetings to discuss operational matters

Board meetings, sub-committee meetings

Regular and ongoing engagement with the Scheme’s Management Team

Engagement via video, telephone, face-to-face, email

Direct engagement with various units at Council for Medical Schemes

CMS educational sessions

On-site Scheme visits and meetings

HMI inquiry submissions

Engagement with Department of Health in relation to state contracting

Face-to-face, email, telephonic

Ongoing CMS circular updates

Rules submissions

Statutory reporting

CMS complaints responded to via email

Participation in industry bodies' interaction with regulatory bodies

How is the quality of communication

determined?

Surveys Provided by the Board, Sub-Committees and Scheme office and monitored via SLAs

Direct feedback from the regulator

General industry feedback from the legislator and regulator

Concerns

State of the economy and impact on growth in the industry

Uncertainty of regulatory changes faced by the industry

Wellness of members

Increasing cost of healthcare and impact on affordability and sustainability

Membership growth

Regulator

Financial soundness of medical schemes

Consolidation of medical schemes and benefit options

Growing burden of disease

Prescribed Minimum Benefits

Government

Distortion or restriction of competition

Responses

Products are designed to be flexible, catering to both healthcare needs and affordability. This is achieved through benefit design, provider networks and

managed healthcare initiatives

Ongoing interaction with the regulator and collaborative engagement with the

legislator

Focus on wellness is entrenched into overall benefit design and health-risk management

strategy

Negotiations and provider networks are key to minimise costs

Specific focus and ongoing monitoring of growth

See commentary in Chairman's Report (page 14)

Quality of relationship* 5 5 4

How is the quality of relationship determined?

Membership growth through the broker channel and retention of this business

Surveys such as PMR

Delivery of SLA commitments which builds trust and relationships

Nature of feedback and general comment

Stakeholder

Members and Member employer

groups

Healthcare providers

Methods of engagement

Regular proactive communication via email, post, website, app and SMS

Call centres

Quarterly Scheme magazine

AGM

Claims and billing statements

Patient advocacy communication

For employer groups – year end launch, financial roadshow, corporate wellness

days, presentations, on-boarding for new groups, face-to-face visits

Direct engagement

Administrator tasked with provider network management engagement

Call-centre engagement

Indirect via healthcare providers professional bodies

Quarterly forums

Statements, SMS, email, provider website, face-to-face, conferences and call centre

How is the quality of communication

determined?

Surveys

Council for Medical Schemes feedback

Surveys

Customer satisfaction index to rate calls

Concerns

Increase in healthcare costs and impact to Members in terms of shortfalls/out of

pocket expenses

Medical inflation and impact on contributions

Impact of unbudgeted VAT increase on medical scheme industry

Their high professional indemnity cover contributions

Economic strain

Loss of qualified medical/clinical professionals to emigration, resulting in

higher remuneration to retain staff

Responses

Scheme negotiates with providers and also contracts with network providers to

minimise impact

An industry challenge, but negotiations and networks in place to minimise impact

Members not immediately impacted as Scheme absorbed costs at the time of the

interim increase

Scheme acknowledges the concern and the need for the fees, but not all should be

absorbed by schemes

Scheme acknowledges the concern and the need to pay higher remuneration, but not all should be absorbed by schemes

to prevent the industry becoming unsustainable

Fees based on outcomes

Quality of relationship* 4 4

How is the quality of relationship determined?

Surveys

Brand Recognition Surveys e.g. Sunday Times Award

Client satisfaction index

Surveys

19

Momentum Health Stakeholders

Responsibility-

The Board is responsible for:

Approving the Stakeholder Engagement Policy

Approving the annual disclosures

Stakeholder engagement fundamentally

The Scheme’s Administrator and managed healthcare providers are responsible for:

The majority of planning, preparation, implementation, review and communication with stakeholders on behalf of the Scheme

Bi-monthly reporting to the Principal Officer on stakeholder engagement and compliance with this policy

Annual briefs to the Board of Trustees on stakeholder relationships, needs, interests and expectations

The Governance and Remuneration Committee is responsible for:

Developing and reviewing the policy for stakeholder engagement

The quarterly consideration of compliance with the Stakeholder Engagement Policy

Ensuring that the relevant disclosures are included in the Scheme's Integrated Annual Report

Considering complaints in terms of the Policy for Complaints and Disputes

The Clinical Risk and Governance Committee is responsible for:

Considering complaints in terms of the Policy for Complaints and Disputes

The Principal Officer is:

Mandated by the Board with the responsibility for oversight of stakeholder engagement

Responsible for reporting to the Governance and Remuneration Committee on stakeholder engagement

Complaint procedures

Should a stakeholder not be satisfied with an engagement with a Momentum Health representative, they may either:

Follow the procedure laid out in the Scheme’s Complaints and Disputes Policy (if the Stakeholder is a Member or Provider);

Contact the Principal Officer or the Chairman of the Board (if the Stakeholder is not a Member or Provider); or

Contact Tip-Offs Anonymous (call 0800 000 438 or email MomentumMedicalScheme@tip-offs.com).

20

Materiality and risk Momentum Health

Introduction-

Momentum Health’s risk-management processes aim to ensure that all risks that may have an impact on the Scheme's ability to create and sustain value for our Members are identified and assessed; that all precautionary steps to manage and curb those risks are taken; and that where there is an inherent opportunity in a risk, that such an opportunity is identified.

Risk management is not designed to eliminate risk-taking by the Scheme. Instead the risk-management process ensures that risks are identified, analysed, evaluated, treated, monitored and reported appropriately, and managed within the Scheme’s risk appetite.

Momentum Health aims to have a fully integrated approach to risk management. Scheme Management constantly monitors identified risks and continually aims to identify any new risks.

Management of insurance risk-

The primary insurance activity carried out by the Scheme is that of assuming the risk for certain claims costs from Members and their dependants as these relate to their health. As such the Scheme is exposed to the risk of uncertainty surrounding the timing and severity of claims.

The Scheme manages its insurance risk through approval procedures for claims that involve pricing guidelines, pre-authorisation, case management, benefit limits and sub-limits, service provider profiling, centralised management of risk transfer arrangements and the monitoring of issues that may impact on risk.

The Scheme uses several methods to assess and monitor insurance risk exposures both for individual types of risks insured and overall risks. These methods include internal risk management models, sensitivity analyses and scenario analyses. The theory of probability is applied to the pricing and provisioning for the timing and severity of claims costs within the portfolio of insurance contracts. The principal risk is that the frequency and severity of claims are greater than expected.

Insurance events are by their nature random, and the actual number and size of events during any one year may vary from those estimated by using statistical techniques. There are no changes to assumptions used to measure insurance assets and liabilities that have a material effect on the annual financial statements and there are no terms and conditions of insurance contracts that have a material effect on the amount, timing and uncertainty of the Scheme's cash flow.

Who is responsible for managing risk?

The Board is ultimately responsible for the Scheme’s total risk-management system and internal controls. It decides on the Scheme’s tolerance for risk and ensures that the Scheme has implemented an effective ongoing process to identify risk, measure potential impact against assumptions and proactively manage risk.

The Risk Management Committee and Principal Officer are accountable to the Board for designing, implementing and monitoring the process of risk management and internal controls, and for integrating it into the day-to-day activities of the Scheme, with continuous report back to the Board. For more detail on the work of the Risk Management Committee, see page 34.

The Audit Committee is responsible for reviewing the risk-management process and the implementation of the Combined Assurance Model. For more detail on the work of the Audit Committee, see page 32.

How often are risk-management processes reviewed?

The Scheme conducts an extensive risk-identification and assessment exercise twice a year. The identified risks are stratified and appropriate action plans are accordingly developed.

Risks are monitored by Scheme Management on an ongoing basis and reported quarterly to the Board and relevant committees.

The Enterprise Risk Management Framework-

Momentum Health has adopted an Enterprise Risk Management Framework which provides the structure of the risk-management process as follows:

Risks are identified and the likelihood of such risk arising, without any control activities being in place, determined

The impact, or potential consequences, of risk events arising, is established

The inherent risk is then concluded by combining the likelihood and impact scores

The adequacy of the control activities in place to address the risk, are evaluated and the residual risk, based on the impact of the control activity, is determined

The Scheme's response to the residual risk is allocated

Any potential opportunities in the identified risks are determined. These are fed back to the Management Committee (see page 32) and are considered when setting the Scheme’s strategy

Materiality and risk

21

Momentum Health Materiality and risk

Combined assurance-

In terms of King IV, “a Combined Assurance Model (CAM) incorporates and optimises all assurance services and functions so that, taken as a whole, these enable an effective control environment; support the integrity of information used for internal decision-making by management, the governing body and its committees; and support the integrity of the organisation’s external reports”.

The Scheme’s CAM is applied to provide a coordinated approach to all assurance activities by incorporating and optimising all assurance services and functions so that, taken as whole, it enables an effective control environment. The CAM aims to inform on the effectiveness and adequacy of the assurances obtained on the Scheme’s risk areas from the assurance providers in order to:

Maximise governance, risk oversight and control efficiencies;

Optimise the overall assurance;

Avoid unnecessary duplication and promote stakeholder inclusivity;

Identify and address assurance gaps and assurance conclusions on the outcomes of planned activities; and

Provide an insightful view of all reporting and the outcomes of assurances via one platform

Risks identified during year under review-

During the year under review no undue, unexpected or unusual risks were taken or transpired, and no risks were taken outside of risk-tolerance levels. There are currently no catastrophic risks identified.

The following table describes identified risks of high importance – those that have a material impact on our ability to create and sustain value should they materialise, and with a non-nominal chance of occurring – per risk category.

Financial-

management risks

Financial-management risks are those risks associated with finances, including the effect of changes in the markets, foreign-currency exchange rates and interest rates that can have a negative impact on financial wellbeing and the solvency position of the Scheme.

Medical insurance

risk (Claims)

Economic risk

Capital adequacy

riskInvestment

The risk of the uncertainty surrounding the timing and severity of claims. This risk also includes the risk of having inappropriate product prices/fee structures, as contributions are set in advance of actual experience and the risk of costs cost continuing to increase faster than inflation due to the increased demand of an ageing population and supply-induced demand.

The risk of the negative impact of poor economic conditions resulting in Members' inability to afford contributions and/or selecting inappropriate benefit options based on affordability.

The risk that there are insufficient reserves to provide for adverse variations on future investment values and claims experience.

The risk that relates to the unpredictability of financial markets and seeks to minimise potentially adverse effects on the financial performance of the investments that the Scheme holds to meet its obligations to its Members. The impact of investment performance relative to benchmarks on assets is also included in this category.

ControlMomentum Health manages its claims through risk-management policies and procedures such as pricing guidelines, pre-authorisation, case management, benefit limits and sub-limits, service provider profiling, centralised management of risk transfer arrangements and the monitoring of issues that may impact on risk.

Momentum Health endeavours to offer products that are designed to be flexible, catering to both healthcare needs and affordability. This is achieved through benefit design, provider networks and managed healthcare initiatives.

The Scheme manages its capital in an attempt to ensure that it will be able to continue as a going concern as well as meet the Statutory Solvency Ratio of 25%.

Sustainability is the Board’s primary focus. We constantly monitor experience against the sustainability strategy and business plan, and have put into place a number of initiatives to ensure that the Scheme remains sustainable into the future. The Board accepts the need to comply with the statutory accumulated funds ratio requirement, but takes into consideration that the basis of calculating the required ratio is prudent and therefore the Scheme’s actuarial team continues to assess its future risk-based capital requirement in order to provide the Board with comfort that Momentum Health remains sustainable.

The Scheme has adopted an Investment Policy aimed at enabling the Scheme to meet its fiduciary duties and responsibilities to the Members of Momentum Health when managing and investing the Scheme’s assets. The Investment Committee is tasked with ongoing monitoring of the Scheme’s investments and continuous assessment of its asset allocation modelling, taking into account specific unique circumstances of the Scheme, such as size, liquidity needs, general economic conditions and demographic trends and patterns.

22

Materiality and risk Momentum Health

Operations

risksOperations risks are the risks associated with potential losses arising from inadequate or failed internal processes, people, and/or systems.

Fraud risk

Information security

The risk of paying claims to which the member or provider is not entitled. This encompasses fraud, waste and abuse.

The risk of data leakage, or loss, as a result of a breach of information security and the preservation and protection of information from events such as cyber-attacks/crimes.

ControlThe Administrator’s Fraud Risk Management team performs ad hoc trawling to identify any possible fraud, waste and abuse (FWA). Where analysis is found to be beneficial, Key Risk Indicator System reports and other forensic processes are implemented, and continuously run, to identify any potential FWA.

The Fraud Risk Management team also collaborates with other industry parties where information is shared between the parties to assist in identifying potential FWA. Momentum Health also has a fraud hotline through Deloitte (see back page for contact details) for any stakeholder to report FWA.

Momentum Health prioritises the protection of its Members' personal information, and monitors information security through ongoing control testing and planning by the combined Administrator and Scheme IT Forum.

Strategic

risks

Strategic risks are the risks of impact on earnings or capital arising from an inability to implement appropriate business plans, strategies, decisions, improper implementation of decisions, or lack of responsiveness to industry changes.

Reputational risk

New business risk

The risk of losses resulting from damages to the Scheme’s reputation arising from adverse perception of the image of the Scheme on the part of Members or regulators.

The risk of the impact on healthcare costs of not achieving new business targets.

ControlMany consumers are turning to social media to voice their grievances regarding products and services. The Scheme’s priority is to ensure that its Members are treated fairly in the first instance, and to equip our social media team to timeously and effectively deal with queries.

Furthermore, we continue to educate our Members on social media regulations so as to ensure that they are aware that posting libellous content will leave them open to prosecution.

The Scheme requires adequate growth of a younger, healthier member profile to counter the impact of the natural ageing of the existing membership, and therefore an increasing claims profile. Momentum Health’s benefit design endeavours to offer products that are designed to be flexible, catering for the healthcare needs of all possible consumers of healthcare. Many of the complementary products offered by the Scheme’s Administrator are attractive to the desired population, and Momentum Health has benefited from its Members and potential Members utilising these products.

Compliance

and legal risksCompliance and legal risks are the risks of legal or regulatory sanctions, material financial loss or loss of reputation that the Scheme may suffer as a result of its failure to comply with applicable legislation, regulations, rules, related self-regulatory standards or codes of conduct applicable to the activities of the Scheme.

Regulatory Compliance

The risk of new regulation or regulatory changes that have a negative impact on Momentum Health's ability to provide a sustainable benefit offering to Members, including the implementation of a National Health Insurance (NHI) system that is not sustainable.

The risk of legal or regulatory sanctions, material financial loss or loss of reputation that the Scheme may suffer as a result of its failure to comply with applicable legislation, regulations, rules, related self-regulatory organisation standards or codes of conduct applicable to the activities of the Scheme.

ControlOngoing interaction with the regulator and collaborative engagement with the legislator. Participation in industry representative bodies such as the Health Funders Association.

We operate within a governance framework which enforces strict controls, policies and codes to ensure compliance with legislation and general sound governance. Such activities fall within the responsibilities of the Audit and Governance and Remuneration Committees.

23

Momentum Health Value creation

Business model-

The business model described below focuses on those value-transformation activities performed by the Momentum Health Management Team, as distinct to those performed by the Scheme's Administrator. [See page 3 – Organisational Overview]

Momentum Health's Principal Officer, supported by the Management Team, is responsible for the day-to-day management and oversight of delivery and collaboration with the Administrator and Managed healthcare providers.

Out of consideration for concision and applicability, we have reported the way in which our activities have impacted the most material four of the six capitals identified in the Integrated Reporting Framework. Our impact on the remaining two (manufactured and natural capital) is considerably less, given the nature of our business, and are considered by the Board and management when appropriate.

Value creation

Principal Officer and Management Team (left to right): Britt Thevadasan (PA), Toni van den Bergh (PO), Anuschka Coovadia (Clinical Risk) and Lenny Mariemuthu (Operations).

Values

The rigorous application of the Scheme's values – Service; Innovation; Fairness; Integrity and Compassion – are what differentiate it from its competitors and allows it to consistently achieve its strategic objectives.

24

Value creation Momentum Health

Financial capital

Intellectual capital

Human capital

Social and Relationship

capital

InputsMember

contributions

Investment

returns

The Momentum Health

Software Platform – operational computer application software

owned by Momentum Health that supports and is critical to the

Scheme's operations

Experience and expertise of Trustees

and the Scheme’s Management team

The strength of our relationships with our

stakeholders

Value-transformation

activities

Expenditure through managed healthcare

interventions; policies and protocols; provider

networks

Investment performance achieved by asset

managers in terms of the investment policy mandate and strategy

Ongoing system maintenance and

development; Upgrades to support Oracle

updates

Ongoing training including executive

coaching

Began process to restructure Scheme's office to focus on the depth and breadth of skill within the office from a continuity and succession planning perspective –Board approved structure.

Plans made to employ an Executive: Clinical Governance, and an Executive: Audit and

Risk Management

Job roles were evaluated against the PwC REMeasure® and salaries for those roles benchmarked against

the PwC REMchannel®

See stakeholder engagement section on

page 16

Relevant body

Board; Risk Management Committee; Audit

Committee; Clinical Risk and Governance

Committee

Investment Committee

Board; IT Forum; Risk Management

Committee

Board; Governance and Remuneration

Committee; external HR consultant

Risk Management Committee; Board;

Administrator

Outcomes

Long-term (effectively in perpetuity)

sustainability

Enhanced IT security and capacity

Ensures strength of leadership capacity

Ensure continuity and succession planning

Further ensure appropriate Scheme spend, effective risk management and

ongoing sustainability

Provide clarity on roles and remuneration; instil

ethic of fairness

Improved relationships and engagement

mechanisms with all key stakeholders, allowing us to create mutually beneficial value and

deliver on our strategic objective

Relevant strategic

imperatives

[See page 12]

1 ; 2 5 1; 2; 3; 4; 5 1; 3

Key Elements-

25

Momentum Health Governance

Governance Momentum Health is committed to effective corporate governance, and the Board remains committed to practising the highest ethical standards in all of its activities.

Remuneration

All Trustees and Committee members are entitled to remuneration for their attendance at meetings and reimbursement for any reasonable expense incurred in attending such meetings.

The Board annually considers the Trustees’ and Committee members’ remuneration in terms of the Scheme’s Remuneration Policy, and submits a proposal to the Members at the Annual General Meeting (AGM) for consideration and approval.

Trustee induction

All newly elected Trustees are provided with an induction pack which incorporates material that aims to give the new Trustees an in-depth understanding of the regulatory, statutory and governance frameworks, and their fiduciary responsibilities. Induction includes meetings with Scheme Management, visits to the Administrator’s operation centres and access to training conducted by various industry bodies including the Council for Medical Schemes.

Conflicts of interest

The Board is mindful of the potential impact of any conflicts of interest on the Scheme’s governance, and for this reason Trustees and Committee members are required to complete a Declaration of Interest Questionnaire annually. Furthermore, each Board and Committee

meeting agenda has a standing agenda item that calls for any new interests, or interests relative to a specific agenda item, to be declared.

Governance evaluation

In line with the recommendations of King IV, directors should evaluate their performance on a regular basis, and as part of the Board’s commitment to rigorous governance, the Principal Officer facilitates a detailed formal evaluation of the effectiveness of Board of Trustees’ and Committees’ processes and procedures on an annual basis.

The evaluations conducted during 2018 included focused evaluation of the Fit and Proper status of Trustees and Committee members.

The Board was satisfied with its performance and that of its Committees, the overall outcome of the evaluations and that the evaluation process advances its performance and effectiveness.

Skills evaluation

The Board annually assesses its skills so as to review its composition and balance thereof. A Trustee Skills Questionnaire has been formulated based on guidance from the Council for Medical Schemes. Immediately after the AGM each year, all Trustees are required to complete the questionnaire, and the responses are collated to evaluate the necessity to appoint additional skills required by the Board, in the form of appointed Trustees or external consultants.

The high level outcomes of the King IV Assessment,

updated after the conclusion of this IAR, are

as follows:

Application of the Principles of King

The Board supports the principles contained in the King Code on Corporate Governance. In the past the principles of King III were practised and in 2018 the Board contracted the services of an independent organisation, Kilgetty Statutory Services (Pty) Ltd (Kilgetty) to assess the Scheme’s application of the principles contained in King IV.

Kilgetty undertook a comprehensive King IV management review of Momentum Health’s governance practices. The process comprised of assessing all of King IV recommended practices in relation to the seventeen principles of the King IV Code, using The Governance Instrument (GI) software platform, which is a digitally mature product facilitating the management of an organisation’s governance from the collated information and publishing of the related reports.

The process of the assessment commenced with an information exchange to outline and provide a snapshot of Momentum Health’s governance process. The next step was a review of the Board and Committee charters, work-plans, policies and frameworks, codes of conduct and other related documentation relevant to the analysis. Research was undertaken in the form of personal interviews and written communication to gain further insights into the organisation’s governance practices and provide clarification on any matters.

Based on the information and evidence gathered, each practice was categorised on the GI according to satisfactorily applied, not applied or not applicable. Furthermore, commentary was provided to reconcile the status of the respective practice. The outcome of the assessment, in the form of a comprehensive management report, established to what extent principle and practices of King were in place in order to achieve the desired outcomes of King IV. In instances where the current practices were incomplete, as set out in King IV, this was identified as a gap and certain recommendations proposed. We were pleased that the majority of the gaps identified in assessment related to disclosures that have now been addressed as part of this Integrated Report.

The Board is comfortable with the outcomes of this assessment.

Governance activities-

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Governance Momentum Health

Compliance with legislation

In line with its commitment to uphold the principles of good corporate governance, and recognising its responsibility to its stakeholders in this regard, Momentum Health continually tracks and monitors its compliance with its rules and applicable legislation.

It is the role of the Principal Officer to ensure that at all times the Scheme remains compliant with all applicable statutory requirements. The Principal Officer will advise the Board if, in her view, the Board is not compliant with its own policies, legal and/or regulatory requirements.

The Governance and Remuneration Committee is responsible for the oversight of compliance with the Scheme’s Codes of Conduct, and any rules, regulations or guidelines promulgated by regulatory authorities relating to corporate governance.

The Internal Auditors, External Auditors (within the context of what is required from a statutory audit perspective) and the Council for Medical Schemes serve as external assurance providers that provide independent, objective assurance on the management of key risks, confirm the level of assurance that has been achieved, and whether appropriate.

Through its various Committees, the Principal Officer, experts and advisers, the Board will continue to keep abreast of changes and developments in the regulatory environment to ensure the continuous monitoring thereof, and where necessary appropriate associated responses.

Accumulated funds

Movements in the Accumulated Funds are set out in the Statement of Changes in Funds and Reserves as reflected in the Annual Financial Statements on page 45.

Outstanding claims

Movements in the outstanding claims provision are set out in Note 7 to the Annual Financial Statements on page 53.

Subsequent events

No material events have occurred subsequent to the end of the accounting period to the date of this report that affect the Annual Financial Statements which the Trustees consider should be brought to the attention of the Members of the Scheme.

Related party transactions

Refer to related parties and Trustee remuneration disclosures in Note 19 and 20 to the Annual Financial Statements on page 58 and 59.

Loans to Members of the Scheme and other related parties

Consistent with the Act, other than advances to Members’ Personal Medical Savings accounts registered in terms of the Act, the Scheme does not grant loans to Members or any related parties, and confirms that no such loans have been granted.

Liability insurance

Adequate Trustee, Committee member and Officers Liability Insurance is in place, and is reviewed annually by the Audit and the Governance and Remuneration Committees.

Annual General Meetings

The Board requires that the Chairmen of all its Committees attend the AGM.

Ethics and values

The Scheme’s essential objective is to uphold the highest standards of ethical conduct in all of its activities. This means that all business shall be conducted in a transparent manner, consistent with the values of honesty, integrity, fairness, respect and responsibility. Furthermore, it aims to comply with all applicable laws and regulations.

To this end a Trustee Code of Conduct, Committee Member Code of Conduct and an Employee and Representative Code of Conduct have been formulated to strengthen the Scheme’s ethical behaviour by establishing its responsibility for ethical conduct, outlining specific obligations, providing guidance to recognise and deal with ethical issues, and establishing mechanisms to report unethical conduct.

These codes of conduct are signed each year by the relevant individuals. Their applicability is also agreed to by the relevant parties, and agreed annually by the Audit Committee and the Governance and Remuneration Committee.

Every Trustee, Committee Member, employee and representative of the Scheme, has a responsibility to understand and comply fully with the relevant Code of Conduct and all other policies of the Scheme.

The codes themselves include the manner in which any irregularity is to be reported to the Governance and Remuneration Committee, and should it pertain to the Governance and Remuneration Committee, to the Board.

Ethical behaviour in general is monitored on a continual basis by Scheme Management in order to mitigate risk and uphold Momentum Health's values (see page 3).

No irregularities or contraventions of the various codes of conduct transpired over the year under review.

Fraud management

Fraud Risks are viewed as the risk of losses due to acts of a type intended to defraud, misappropriate property or circumvent regulations, the law or company policy, excluding diversity/discrimination events, which involves both internal and external parties.

The Scheme’s administrator is tasked with running fraud identification trawling tools in order to identify potential fraud; and feedback is provided to Scheme Management on the identification of any potential fraud. Fraud is continually considered, identified and monitored as an integral part of managing the Scheme, and fraud prevention mechanisms and controls implemented. Quarterly fraud risk management reporting is provided to the Scheme Committees.

Participation in, and collaboration with, other industry parties to ensure sharing of knowledge of fraudulent activity trends is also considered important and Momentum Health participates in the activities of the Board of Healthcare Funders’ Forensic Management Unit (HFMU).

The Scheme has a fraud hotline which also aids in potential fraud identification.

Delegation of authority

To ensure that the various roles and responsibilities within the Scheme are clear, roles and responsibilities are clearly defined in the Scheme’s Board and Committees Charters, Employment contracts and Delegation of Responsibility Framework.

The Delegation of Authority Framework is considered annually to ensure continued effectiveness and clarity.

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Momentum Health Governance

Information and technology governance

The Scheme has formulated an Information and Technology Governance Policy which sets out the governance approach to IT for Momentum Health and describes the desired governance protocols for the effective management and oversight of technology services sourced by the Scheme. The policy provides strategic direction on matters of IT governance required by the Scheme, and outlines the Board’s requirements for governance over the Scheme’s IT interests and assets.

The Policy establishes an IT governing body in the form of an IT Forum, constituted with representation from the Scheme, the Administrator and MMI. The key areas of focus during 2018 included:

Governance of information assets pertaining to:

Data security and privacy

Intellectual Property (IP) protection with specific focus on IP drainage and IP dependency

Data Quality

Governance of technology assets pertaining to:

IT Projects and programmes

Cybersecurity and hardware protection

Technology risk

Business continuity and disaster recovery

These will remain the areas of key focus in the anticipated future.

Matters of non-compliance-

In the year under review the following matters of non-compliance with the Medical Schemes Act were identified. The nature, cause, and remedial action taken in each instance are described below.

Nature and impact Causes Corrective action

Sustainability of Benefit Options

In terms of section 33(2) of the Act, each option shall be self-supporting in terms of membership and financial performance and be financially sound. As at 31 December 2018 the consolidated Ingwe, Incentive and Extender options did not meet this requirement.

Membership in these options did not grow to the extent that was anticipated in the budget, which in turn impacted the demographic profile. This, coupled with low investment returns, has resulted in the deficits incurred.

The Board of Trustees continues to monitor the potential risk and impact to the Scheme of buy-downs to less costly options due to affordability resulting from high increases and/or significant benefit cuts which would have to be introduced to eliminate the operational deficits experienced on these options. The Board regularly reviews the appropriateness of the Scheme’s investment strategy for the purposes of managing investment risk while optimising investment returns within acceptable risk parameters.

Adequacy of Accumulated

Funds

The Act requires all medical schemes to hold accumulated funds, expressed as a percentage of gross annual contributions, of 25%. The Scheme’s accumulated funds ratio, also known as the Statutory Solvency Ratio, was 23.9% as at 31 December 2018 (2017: 25.7%). Refer to page 11 for further information.

The main reason for the deterioration in the Scheme's reserves was the tough local economic environment, which impacted the Scheme's ability to achieve its membership growth targets and the resultant assumptions not materialising, and the fluctuating investment markets yielding negative returns, these losses being reflected in the solvency ratio whereas the longer-term gains have not. In addition, the 1% increase in VAT announced in the budget speech in February 2018 (effective 1 April 2018) created an unanticipated additional cost which put further strain on the solvency level.

Higher contribution increases for 2019 were implemented to allow for the VAT increase and to rebuild solvency levels. Renewed effort has been made to reignite sustainable growth for the Scheme. The Scheme will also continue to improve efficiencies in managing the claims experience through the Scheme's managed-care provider.

Although the Scheme could disinvest its investments in order to realise the gains with the objective of meeting the solvency requirement, there are a number of factors that the Scheme needs to consider in making this decision so as to ensure that such disinvestment would be in the best interest of Scheme members, as opposed to merely disinvesting for the purpose of attaining the statutory resolving requirements.

While the Board aims to re-attain the 25% statutory solvency requirement, it continues to consider Momentum Health's future risk-based capital requirements and the Scheme's actuaries have assessed the Scheme's capital adequacy requirement and confirmed that Momentum Health remains sustainable and in a strong capital position.

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Governance Momentum Health

Nature and impact Causes Corrective action

Investment in an employer group or administrator

In terms of Section 35 (8) of the Act, a medical scheme shall not invest any of its assets in any medical scheme Administrator or a holding company of a medical scheme administrator or an employer who participates in the medical scheme. The Scheme’s asset managers, Sanlam Life Insurance Ltd (Sanlam Asset Managers) and Prudential Investment Managers (South Africa) (Pty) Limited, invest a portion of the Scheme’s assets in medical-scheme-administrator holding companies and Scheme employer groups.

As a consequence of the investment decisions within the asset managers’ portfolios, the Scheme currently has investments in contravention of Section 35 (8). The Scheme has no influence over the investment decisions of the independent asset managers regarding which assets they invest the Scheme’s funds into, or the size of that asset holding. The investment decisions are made entirely at the asset manager’s discretion.

The Scheme made application to the Council for Medical Schemes for an exemption from this section of the Act and received such exemption.

Payment of Member claims

In terms of Section 59 (2) of the Act, a medical scheme shall pay a Member or supplier of service any benefit owing to that Member or supplier within 30 days after the day on which the claim was received.

Of the total 1 327 746 claims received for the year, 66 (0.005%) claims received were not paid within 30 days of receipt due to certain procedures to validate claims, such as clinical auditing.

The claims paid outside of 30 days are investigated by the Scheme in conjunction with the Administrator to ensure effective management. The Trustees consider this to be unavoidable, given the large number of claims processed and the need for validation of all claims.

Collection of contributions

In terms of Section 26 (7) of the Act, Member contributions must be received within three days after payment thereof becoming due. There are instances where the Scheme received contributions after three days of becoming due. However, there are no contracts in place condoning this practice.

The Scheme continues to maintain its debit order strike facility which is in line with legislation. The Scheme, however, has a large number of Members who pay via EFT or cash deposits. For these Members, the Scheme has no control over the timing of the receipt of contributions.

This financial risk is mitigated by the Scheme’s stringent credit control policy and processes which minimise the risk of non-recoverability. The management of the contributions collections is an ongoing process involving interaction with the employer groups, brokers and Members.

Prescribed Minimum

Benefit (PMB) paid from

savings instead of risk benefits

In terms of Regulation 10(6) of the Medical Schemes Act, medical schemes are required to fund claims for valid PMB conditions from risk benefits and not from Member savings accounts. Following a comprehensive audit of claim payments, it was established there were a small number of claims for which the Scheme was responsible to pay from risk benefits that had been paid from Member savings accounts.

The primary reason for these originally incorrect payments was that at the time of originally processing these claims, the Scheme did not have sufficient information to identify the claims as PMB claims.

On receipt of information that confirms a previously paid claim to be for a PMB condition, the original claims are reprocessed and payment reversed from the Member savings account payment and repaid from risk benefit.

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Momentum Health Governance

Board of Trustees-

EP Dorkin 44 years

Elton Dorkin holds an MBChB and MBA. He also holds post-graduate qualifications in Occupational Health, Business Management, HIV/AIDS, Travel Medicine, Emergency Medicine and Disability Assessment.

He has in the past managed employer based healthcare operations for various commercial organisations.

He currently runs a consultancy focussed on clinical decision making in healthcare financing and services.

T Jobson 59 years

Tim Jobson holds a BSc Honours degree.

He worked in the IT industry for 35 years before retiring in 2016.

He has been in leadership of a number of voluntary organisations, and is currently a director of the Two Oceans Marathon NPC, Chairman of Friends of Rondebosch Common, and environmental representative on his local Ward Committee (City of Cape Town).

T Mahuma

57 years

Teboho Mahuma holds a BA Honours degree in Social Work as well as an M.Phil (Ethics) degree.

She has for many years served in executive and board roles in not-for-profit and private-sector organisations, and is currently an independent consultant providing advisory and technical services primarily in social development.

PL Naidoo

56 years

Lawson Naidoo holds an LLM degree

He has a broad range of experience in the political, parliamentary, legal and business sectors.

He is the executive secretary of the Council for the Advancement of the South African Constitution and a founding partner of The Paternoster Group: African Political Insight.

Board of Trustees left to right: Lawson Naidoo, Francois Swanepoel, Teboho Mahuma, Elton Dorkin, Tim Johnson, André Robberts (Chairman) and Toni van den Bergh (PO). Absent from photo: Gert Steyn

30

Governance Momentum Health

The Board retains overall responsibility and accountability for the Scheme. The Principal Officer has been delegated the day-to-day management of the Scheme and the Board is kept apprised through regular reporting on the operations of the Scheme. In addition, Trustees attend Management Committee meetings in rotation, and have access to the minutes thereof. Any decisions outside of delegated powers of the Principal Officer are referred to the Board for consideration and approval.

In terms of the Scheme Rules, the Board shall consist of a minimum of six and a maximum of twelve Trustees to oversee the affairs of the Scheme. Not more than eight Trustees shall be nominated and elected by the Members of the Scheme, and these nominated and elected Trustees are entitled to appoint up to four additional Trustees annually where additional skills are required to ensure optimal oversight in the best interest of Members. Such appointments must be made in line with the Scheme’s Policy and Procedures for the Appointment of Trustees.

As at 31 December 2018, the Board comprised seven Trustees, all of whom were elected.

The skills and experience of the current Trustees are outlined below:

A Robberts

59 years

André Robberts holds a BCom Honours degree and is a Chartered Accountant (SA).

He is a businessman and director of various companies and is also actively involved in the accounting profession as a Partner in The Ashton CA (SA) Group.

CF Swanepoel

57 years

Francois Swanepoel holds an MBChB degree.

He is the Chief Executive Officer and Founder of Thandile Health Risk Management, specialising in Health Risk Management, Absenteeism and Ill Health Retirement.

G Steyn 42 years

Gert Steyn holds a BCom degree and an MBL.

He is currently employed as the Managing Director of the South African Veterinary Association (SAVA).

Prior to joining SAVA, he was the General Manager (Executive) of the South African Medical Association.

Principal Officer-

Toni van den Bergh

Toni van den Bergh has served as the Chief Executive and Principal Officer of Momentum Health since 1 August 2005.

Toni has worked in the healthcare funding industry for the past twenty years. During this time she has worked in both medical scheme administration and financing, and has gained a number of post-graduate qualifications in health financing, benefit planning and managed healthcare, both locally and abroad.

She has served on numerous boards and committees in the past, including the previously constituted Financial Planning Institute of South Africa, Sovereign Health Pension Fund, Board of Healthcare Funders (BHF) and Health Quality Association (HQA). She is currently a Director of the Health Funders Association (HFA).

The Principal Officer is a full-time employee of the Scheme, with an employment contract in place which requires a three-month notice of the intent to terminate such contract. Given the environment within which the Scheme currently operates, it is difficult to put a succession plan into place, and the Board has agreed an effective continuity plan.

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Momentum Health Governance

Fit and proper

The Act requires that all Trustees are effectively independent and have no direct or indirect interest in the affairs of the Scheme or any of its service providers. Each Trustee’s and Committee Member’s suitability to hold office is assessed in terms of the Scheme’s Fit and Proper Policy, which necessitates, amongst other things, an independence check, a criminal history check, a credit history check, an employment and reference check, and evidence of relevant qualifications and professional memberships.

Each Trustee possesses not only independence but the appropriate qualifications, knowledge, skills, experience, competence, diligence, sound judgement, conscientiousness, fairness, honesty and integrity to be entrusted with the responsibilities to be discharged by a medical scheme trustee, and to contribute effectively to the deliberations of the Board.

Detail of the role and responsibilities of the Board is contained in a formal Board Charter which is reviewed annually. All Trustees subscribe to a Code of Conduct which outlines the principles and values which Trustees are required to uphold, as described on page 3. The Trustees meet regularly and monitor the performance of the Scheme and its service providers. They address a range of key issues and ensure that discussion of items of policy, strategy and performance is critical, informed and constructive.

In order to assist in the performance of their duties, the Trustees receive actuarial, legal and strategic advice from suitably qualified consultants and all Trustees have access to the advice and services of the Principal Officer and where appropriate, may seek independent professional advice at the expense of the Scheme in terms of the Scheme’s Professional Advice Policy.

Board Meetings -

In terms of the Board’s Charter, a minimum of four Board meetings are required to be held annually. In the year under review the Board decided that it was prudent to meet more frequently and therefore scheduled six meetings, and an additional meeting to focus on strategic issues and direction. Trustees are required to make every effort to attend meetings and to prepare thoroughly for such meetings. Trustees are expected to actively participate, openly and constructively in discussions, and to bring the benefit of their particular knowledge and expertise to the meetings.

The Board elects its Chairman annually and in the absence of the Chairman, whether by apology for the full duration of a meeting or for a portion of the meeting as a result of a conflict of interest, the Chairman of the Governance and Remuneration Committee will temporarily assume the Chair.

Attendance at meetings is reported on page 35 of this report.

The Board carried out all duties as set out in its Charter.

Committees of the Board of Trustees-

To assist in the governance of the Scheme, the Board has established various Committees, which for 2018 were:

Audit

Clinical Risk and Governance

Governance and Remuneration

Investment

Risk management

All Committees meet regularly and consist of members who have been appointed for their skills relating to the responsibilities of each Committee. Each Committee is mandated by the Board by means of a written Charter as to its membership, authority and duties. The Principal Officer attends all Committee meetings.

In addition to these Committees, a Management Committee, comprising Scheme Management and Trustees in rotation, meets bimonthly and is responsible for monitoring operational issues and risk management. Management Committee meetings are also attended by representatives from the Administrator, managed healthcare provider and other third-party providers by invitation.

Audit Committee

The Audit Committee is established in accordance with the provisions of the Act. The Audit Committee has five members, two Trustees and three non-Trustees. In terms of the Act, the Chairman must be a non-Trustee.

The main responsibility of the Committee as set out in its Charter is to assist the Board in fulfilling its responsibilities by ensuring that there are adequate and effective:

Accounting policies

External audit processes

Internal audit and assurance processes

Internal control systems

Financial reporting standards

Risk-management processes

As at 31 December 2018, the Committee members were:

M Mia (Independent non-trustee member) – Chairman

Mac Mia has vast experience in banking and finance and, prior to retiring, was Managing Director and CEO of New Republic Bank. He currently serves on the boards and committees of a number of entities, including Mutual & Federal Insurance and Mutual & Federal Risk Financing Limited.

MS Paruk (Independent non-trustee member)

MS Paruk is a qualified Chartered Accountant. He is currently a Senior Partner and board member of Desai Jadwat Incorporated Accountants, and a board member and member of various committees of Albaraka Bank, National Bioproducts Institute and IQRAA Trust SA.

A Robberts (Trustee member)

Refer to page 31 for CV.

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Governance Momentum Health

G Steyn (Trustee Member)

Refer to page 31 for CV.

GP Wayne (Independent non-trustee member)

Guy Wayne is a Chartered Accountant (SA). He was the Technical Audit Partner, and subsequently National Director of Audit at a major South African accounting firm until he retired. He is an honourary life member of the South African Institute of Chartered Accountants. He currently serves on a number of audit committees.

The Principal Officer, the internal auditors (of the Administrator) and the Scheme’s external auditors, by invitation, attended all Audit Committee meetings and have unrestricted access to the Chairman of the Audit Committee. Meetings are held with both the external and internal auditors on a regular basis to ensure that matters are considered without undue influence.

The Audit Committee has brought no item or event to the attention of the Trustees that indicates any material breakdown in the functioning of the key internal controls and systems during the year under review.

The Audit Committee met four times during the year. The details of Committee member meeting attendance is set out on page 35 of this report.

During 2018, in addition to its ongoing responsibilities, the Audit Committee focussed on the finalisation of a Combined Assurance Framework and the successful compilation of the Scheme’s first IAR. Based on a review of management, and audit reports, appropriate discussion and enquiry by the members, the Committee carried out all duties set out in its Charter.

Clinical Risk and Governance Committee

The overall objective of the Clinical Risk and Governance Committee is to assist the Board in discharging its duties relating to ensuring continuous improvement in the quality of clinical care, which includes the oversight responsibility regarding:

Key strategic and operating issues pertaining to the quality of clinical care

Development and implementation of a clinical governance strategy for the Scheme

Assessment and evaluation of the execution of the clinical governance strategy and implementation plan by the managed healthcare provider

Confirmation that clinical governance principles and service level agreements are inherent in all relevant contracts with providers, including designated service providers

Identification and implementation of suitable “best-practice” interventions taking cognisance of the necessity to manage risk at all times

As at 31 December 2018, the Committee members were:

CF Swanepoel (Trustee member) – Chairman

Refer to page 31 for CV.

EP Dorkin (Trustee member)

Refer to page 30 for CV.

A Turner (Independent non-trustee member)

Astrid Turner holds a MBChB, a Fellowship of Public Health Medicine and Master of Medicine in Public Health, as well as a certificate in Advanced Health Management and a post-graduate diploma in Health Economics.

She has a background in operational and strategic health practice, including disease-management programmes, health-impact assessments and health-system-strengthening interventions. She is currently a Public Health Medicine Specialist and Lecturer at the School of Health Systems and Public Health of the University of Pretoria.

The Clinical Risk and Governance Committee met four times during the year. The details of Committee member meeting attendance is set out on page 35 of this report.

During 2018, in addition to its ongoing responsibilities, the Clinical Risk and Governance Committee focused on the assessment and monitoring of new and existing managed healthcare initiatives and interventions, to ensure that Momentum Health can manage its growing demand, while ensuring quality, efficiency, effectiveness and appropriateness of healthcare services.

The Committee carried out all duties set out in its Charter.

Governance and Remuneration Committee

The Governance and Remuneration Committee is mandated by the Board to provide guidance to the Board in all matters relating to its stewardship of the Scheme, proposals as to Board size and composition, the compensation of Trustees and Committee members and the evaluation of the performance and the remuneration of the Principal Officer.

The overall objective of the Governance and Remuneration Committee is to assist the Board in fulfilling its responsibilities relating to:

Corporate governance in general, by ensuring the Board has appropriate policies and procedures for Trustees to carry out their duties with due diligence and in compliance with all legal and regulatory requirements

The establishment, composition and responsibilities of Board Committees

Procedures for effective Board and Committee meetings to ensure that the Board functions independently of management and without conflicts of interest

As at 31 December 2018, the Committee members were:

PL Naidoo (Trustee member) - Chairman

T Mahuma (Trustee member)

A Robberts (Trustee member)

Refer to page 30 for CVs.

The Governance and Remuneration Committee met four times during the year. The details of Committee member meeting attendance is set out on page 35 of this report.

During 2018, in addition to its ongoing responsibilities, the Governance and Remuneration Committee oversaw the process to restructure the Scheme's office to ensure appropriate continuity and succession planning, and the finalisation of an Employee Remuneration Policy. The Committee carried out all duties set out in its Charter.

33

Momentum Health Governance

Investment Committee

The Investment Committee’s primary responsibility is oversight of the management of the Scheme’s funds, ensuring that they are managed in an efficient and economical manner, with due consideration of risk appetite, as it seeks to earn a consistent rate of return in excess of the rate of inflation over time. The investment strategy considers both the assets available for investment and the Scheme’s obligation to meet its liabilities, while taking into consideration the constraints imposed by legislation within the mandate approved by the Board.

The overall objective of the Investment Committee is to assist the Board to fulfil its responsibilities relating to the:

Preparation, continuous review and evaluation of the strategy for investing the Scheme’s assets taking into consideration the surplus funds available

Identification and appointment of investment professionals to whom investment functions will be outsourced

Review and assessment of the risks and returns of investment opportunities

Monitoring of investment performance against established benchmarks

Monitoring of compliance with all relevant investment regulations

As at 31 December 2018, the Committee members were:

P Davis (Independent non-trustee member) – Chairman

Pieter Davis holds a bachelor’s degree in Business Economics from the University of South Africa, an honours in Business and Administration and an MBA from the University of Stellenbosch. He was also examined and awarded membership by the Association for Investment Management and Research, now the Chartered Financial Analyst Institute. He is currently the CEO of Edge Capital.

T Jobson (Trustee member)

Refer to page 30 for CV

A Robberts (Trustee member)

Refer to page 31 for CV

During 2018 the Scheme maintained its strategy which, for the purposes of managing investment risk while optimising investment returns within acceptable risk parameters, segments assets into working capital and long-term reserve allocations.

Prudential Investment Managers and Sanlam Investment Managers continued managing the Scheme’s long-term assets within the Scheme’s Absolute Return Mandate. The assets segmented as long-term reserves were allocated equally between these two managers, and both Absolute Return portfolios underperformed the benchmark for 2018, with a combined return of 1.24% for the year.

The Scheme continued to use the services of Momentum Asset Management (Pty) Ltd as the Scheme’s cash asset managers, which yielded returns for 2018 of 9.97% in excess of the benchmark.

The management of cash and cash equivalents other than those held by the asset managers was managed by the Scheme’s Administrator during 2018.

The Investment Committee met three times during the year. The details of individual membership and attendance are set out on page 35 of this report.

The Committee carried out all duties set out in its Charter.

Risk Management Committee

The Risk Management Committee has been established by the Board of Trustees to assist it in fulfilling its risk-management responsibilities in accordance with applicable legislation and the principles of good governance.

The Risk Management Committee’s primary responsibilities and duties are to:

Review the ongoing effectiveness of the Scheme’s risk-management systems, practices and procedures, and provide recommendations thereon to the Board by, as far as possible:

Ensuring risks that may have an impact on the Scheme’s ability to meet its obligations to its Members are identified and assessed

Taking precautionary steps to manage and mitigate those risks and, where there is an inherent opportunity in a risk, identifying such opportunity

Ensuring that risks are identified, analysed, evaluated, treated, monitored and reported appropriately and managed within the Scheme’s risk appetite

Monitoring risks periodically and when appropriate, communicating them to all relevant stakeholders

Ensuring the integration and embedding of risk management in the business activities and culture of the Scheme

Ensuring that risk-management processes are in line with best practice. The Scheme has adopted ISO 31 000, which is a standard that provides principles and generic guidelines on the practice of Risk Management. The Scheme has also adopted the principles of King IV as they relate to the governance of risk where applicable

Provide the Board with periodic assurance on the effectiveness of risk management

The Risk Management Committee met twice during 2018. The details of Committee members meeting attendance is set out on page 35 of this report.

As at 31 December 2018, the Committee members were:

T Mahuma (Trustee member) - Chairman

EP Dorkin (Trustee member)

A Robberts (Trustee member)

Refer to page 30 for CVs.

During 2018, the Risk Management Committee continued its focus on improving its risk management maturity and culture. The Committee carried out all duties set out in its Charter.

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Governance Momentum Health

A Robberts (Chairman)

25 April 2019

L Naidoo (Trustee)

TJ van den Bergh (Principal Officer)

Remuneration policies-

The Board is responsible for the Scheme’s remuneration policy and has delegated the responsibility of overseeing the Scheme’s remuneration practices to its Governance and Remuneration Committee. On recommendation from the Governance and Remuneration Committee, the Board has established remuneration policies for employees, Trustees and Committee Members.

Remuneration policy for Trustees and Committee Members

This policy aims to ensure that the Scheme is able to attract the services of those whom the Board believes will best contribute to the Scheme’s strategic objectives, provide the input of skills and experience that will create a balanced Board, and will integrate with the other Trustees and Committee Members so as to constitute a strong and effective team; and that Trustees and Committee Members will be fairly remunerated, commensurate with their skills and experience, and in line with fees paid to similar persons by similar organisations.

The policy is approved by Members at an AGM, and a copy available at every AGM for inspection by interested Members of the Scheme. Should circumstances arise whereby the policy needs to be revised, the revised policy is made available for inspection and approval by Members at the next AGM. The current Remuneration Policy for Trustees and Committee Members was considered and approved by Members at the Scheme’s 2018 AGM.

In terms of the policy, the Governance and Remuneration Committee shall annually investigate remuneration practices in similar or equivalent enterprises so as to establish market rates for positions that can be regarded as similar to those of Scheme Board and Committee members. To this end the Governance and Remuneration Committee shall use as its benchmark the data published periodically by reputable sources. The Board considers the recommendations of the Governance and Remuneration Committee, and tables proposals at the next AGM for Members' approval.

Remuneration policy for Scheme employees

The Board of Trustees has established a remuneration policy for Scheme employees which is aligned to Momentum Health’s overall business strategy, objectives and values without being detrimental to the interests of its Members. The aim of the policy is to ensure competitive remuneration practices to attract and retain appropriately skilled employees, as fair and market related remuneration is the hallmark of ethical and responsible corporate citizenship.

In terms of the policy, and in line with the requirements of Employment Equity legislation, all positions have been evaluated and classified using the REMeasure® job evaluation and classification tool, and salaries benchmarked using the REMchannel® salary benchmarking tool. The Principal Officer is responsible for undertaking the salary benchmarking exercise every three years as contemplated, and annual salary adjustments determined based on the results of each employee’s annual performance appraisal.

The Governance and Remuneration Committee has confirmed that the remuneration policies have been complied with and have achieved their objectives.

Trustee and Committee meeting attendance-

Attendance at meetings

First elected / appointed

Most recently elected / appointed Date resigned

Board of TrusteesMr A Robberts: Chairman (^) 7 of 7 31-Jul-06 20-Jun-18Dr EP Dorkin 7 of 7 26-Jun-14 22-Jun-17Mr T Jobson 5 of 5 20-Jun-18 20-Jun-18Ms CJ Kennedy 2 of 3 25-Jun-15 22-Jun-17 30-Jun-18Ms T Mahuma 6 of 7 31-Jul-06 22-Jun-17Mr PL Naidoo 7 of 7 25-Aug-05 22-Jun-17Mr G Steyn 5 of 5 20-Jun-18 20-Jun-18Dr CF Swanepoel 6 of 7 26-Jun-08 20-Jun-18

Audit CommitteeMr M Mia: Chairman 4 of 4 19-Apr-05 20-Jun-18

Ms T Abdool-Samad 2 of 2 25-Jun-15 22-Jun-17 20-Jun-18

Ms CJ Kennedy 2 of 2 01-Oct-11 22-Jun-17 20-Jun-18

Mr MS Paruk 1 of 2 20-Jun-18 20-Jun-18

Mr A Robberts 4 of 4 08-Aug-06 20-Jun-18

Mr G Steyn 2 of 2 20-Jun-18 20-Jun-18

Mr GP Wayne 3 of 4 24-Aug-05 20-Jun-18

Clinical Risk and Governance CommitteeDr CF Swanepoel: Chairman 4 of 4 26-Jun-08 20-Jun-18

Dr EP Dorkin 4 of 4 26-Jun-14 20-Jun-18

Dr A Turner 3 of 4 26-Jun-14 20-Jun-18

Governance and Remuneration CommitteeMr PL Naidoo: Chairman

4 of 4 26-Oct-05 20-Jun-18

Ms T Mahuma 4 of 4 28-Jun-07 20-Jun-18

Mr A Robberts 4 of 4 01-Jan-18 20-Jun-18

Investment CommitteeMr P Davis: Chairman 3 of 3 01-Oct-13 20-Jun-18

Mr RA Burger 0 of 2 01-Jan-16 22-Jun-17 20-Jun-18

Mr T Jobson 2 of 2 20-Jun-18 20-Jun-18

Mr A Robberts 3 of 3 28-Jun-07 20-Jun-18

Risk Management CommitteeMs T Mahuma: Chairman 2 of 2 23-Jun-16 20-Jun-18

Ms CJ Kennedy 1 of 1 22-Jun-17 22-Jun-17 20-Jun-18

Dr EP Dorkin 1 of 1 20-Jun-18 20-Jun-18

Mr A Robberts 2 of 2 23-Jun-16 20-Jun-18

^ The Chairman is elected annually by the Board at its first meeting after the Annual General Meeting.

Note: Committee Members and Chairmen thereof are appointed annually by the Board.

35

Momentum Health Reporting overview

Financials

36

Statement of responsibility by the Board of Trustees Momentum Health

The Board of Trustees (The Board) is responsible for ensuring that adequate accounting records are maintained and for the preparation, integrity and fair presentation of the Annual Financial Statements of Momentum Health (the Scheme). The Annual Financial Statements presented on pages 43 to 71, comprise of the Statement of Financial Position as at 31 December 2018, and the Statements of Comprehensive Income, Changes in Funds and Reserves and Cash Flows for the year then ended, and the Notes, comprising a summary of significant accounting policies and other explanatory information. The Annual Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Medical Schemes Act 131 of 1998, as amended, (the Act), and include amounts based on judgements and estimates made by management.

The Board considers that in preparing the Annual Financial Statements it has used the most appropriate accounting policies, consistently applied and that all applicable IFRS standards have been followed and supported by reasonable and prudent judgements and estimates.

The Board is responsible for ensuring that proper accounting records are kept. The accounting records disclose with reasonable accuracy the financial position of the Scheme which enables the Board to ensure that the Annual Financial Statements comply with the relevant legislation.

The Scheme operates in a well-established control environment, which is fully documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute assurance that assets are safeguarded and the risks facing the business are being controlled. An effective system of internal control therefore aims to provide reasonable assurance with respect to the reliability of financial information and, in particular, the presentation of Annual Financial Statements. No item/event has come to the attention of the Board that indicates any material breakdown in the operation of the key internal controls and systems during the year under review.

Based on the Audit Committee’s assessment of the results of the formally documented review of the Scheme's system of internal controls and risk management, including the design, implementation, effectiveness of internal financial controls conducted by the internal audit function during the 2018 year, the information and explanations given by management, and discussions with the external auditor on the results of their review of the controls to support their audit from

a statutory audit perspective, no events have come to the Board’s attention that indicate that the Scheme's system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable Annual Financial Statements. The Board's opinion is supported by the Audit Committee.

The Board has reviewed the Scheme’s budget for the year ending 31 December 2019. Based on this review, and in the light of current financial forecasts and available cash resources, the Board has no reason to believe that the Scheme will not be a going concern in the foreseeable future. As such the going concern basis has been adopted in preparing the Annual Financial Statements and these Annual Financial Statements support the viability of the Scheme.

The Board is satisfied that the information contained in the Annual Financial Statements fairly presents the results of operations and cash flows for the year and the financial position of the Scheme at the year end. The Board has also reviewed other information included in the Integrated Report and is responsible for both its accuracy and consistency with the Annual Financial Statements.

The Scheme’s external auditors, Deloitte & Touche, is responsible for auditing the Annual Financial Statements in terms of International Standards on Auditing and their report is presented on pages 40-42.

The Annual Financial Statements were approved by the Board on 25 April 2019 and are signed on its behalf by:

A Robberts L Naidoo Chairman Trustee

25 April 2019

Statement of responsibility by the Board of Trustees

37

Momentum Health Report of the Audit Committee

Report of the Audit Committee

We are pleased to present to the members of Momentum Health this Audit Committee Report for the Scheme’s financial year ended 31 December 2018.

Audit Committee terms of reference-

The Audit Committee (the Committee) is constituted as a Committee of the Board and is answerable and reports to the Board. The Committee is an independent oversight committee. More information on the Committee’s responsibilities, composition and meeting attendance can be found on pages 32 and 35.

External audit-

Appointment and independence

The Audit Committee annually considers the appointment of the Scheme’s external auditor and in 2018 recommended the re-appointment of Deloitte. This recommendation was put to the members of Momentum Health at the Scheme's Annual General Meeting held in June 2018, and Deloitte was re-appointed as the Scheme’s external auditor for the financial year ended 31 December 2018.

Deloitte have been external auditors in excess of 15 years.

The Committee has satisfied itself that Deloitte was independent of Momentum Health, and in so doing gained assurance from Deloitte in this regard.

In addition, the Committee monitors the rotation, independence and expertise of the lead engagement partner of the external auditor.

External audit plan

The Audit Committee meets with the external auditor prior to the annual audit to review and approve the audit plan and ensure that it is consistent with the audit engagement. The quality of the external audit is assessed during and after the audit is completed.

The external auditor is invited to attend all Audit Committee meetings and the Annual General Meeting, and has met with the Audit Committee in the absence of Management.

The external auditor has access to the Chairman of the Audit Committee and there is an open avenue of communication between external audit, internal audit and the Board.

Non-audit services

Any non-audit services provided by the external auditor are considered for approval by the Audit Committee prior to engagement. During the year under review the external auditor provided non-audit services in respect of the audit of the AGM, nomination and election process in order to determine whether the process was free and fair in terms of the Scheme’s Rules.

38

Report of the Audit Committee Momentum Health

Internal audit-

The internal audit functionality is provided by the Administrator’s internal audit function, through a co-sourced arrangement with KPMG.

The internal audit function reports to the Audit Committee. The Audit Committee has the responsibility for approving the internal audit plan, ensuring that the internal audit function is subject to an independent quality review, reviewing and commenting on the internal audit charter, and ensuring that internal audit is effective and able to perform its duties in accordance with appropriate professional standards for internal audit.

The MMI Chief Audit Executive is invited to attend all Audit Committee meetings.

Internal financial controls-

The Audit Committee is responsible for assessing the adequacy, maintenance and effectiveness of internal financial controls of the Scheme’s systems of internal control, which are designed to provide reasonable, but not absolute, assurance against inaccurate internal financial information and other irregularities. The Audit Committee has reviewed the effectiveness of the systems of internal financial control and has been satisfied that a system of controls and procedures of a high standard have been established to ensure the accuracy and integrity of the accounting records. No incidents were brought to the attention of the Committee that would indicate any material breakdown in these internal controls during the year.

Based on its assessment that assurance can be placed on the internal financial controls, appropriate recommendations were made to the Board in this regard.

Financial management-

The Scheme’s finance management, while overseen by the Principal Officer, is outsourced to the Administrator. The Committee is satisfied with the effectiveness and expertise of the Administrator’s Head of Scheme Finance, and the finance function provided by the Administrator.

Risk management and combined assurance-

The Audit Committee has reviewed the adequacy and effectiveness of internal controls and risk management processes, and the Committee is satisfied that these controls and processes are effective.

The Committee has assessed the Scheme’s Combined Assurance Model and is comfortable that it provides a co-ordinated approach to assurance actives.

As part of the Committee’s annual work plan it is responsible for reviewing the annual Combined Assurance Plan, approved by the Risk Management Committee, and progress against the plan.

Going concern-

The Audit Committee considered the Principal Officer’s written representation on the Going Concern Assumption relative to Momentum Health for the 2019 financial year which included the following:

Solvency:

While the Scheme’s Statutory Solvency Ratio was below the legislative requirement at the end of 2018, a large portion of the Scheme’s investments being unrealised was not taken into account in the Statutory Solvency Ratio calculation.

The assessment of a scheme’s future risk-based capital requirement was meaningful in determining sustainability and had confirmed the Scheme’s sound capital adequacy.

The adequacy of liquidity reinforced by the immediate access to a “current” portion of the Scheme’s “non-current” investments.

There are no material contingent liabilities.

Continuity of Key Management

There were no material events having occurred subsequent to 31 December 2018.

Based on the above, and its own review of the Scheme’s financial position as at 31 December 2018 and the business plan for 2019, the Committee is of the opinion that there is no reason to believe that the Scheme will not continue as a going concern for the year ending 31 December 2019, and therefore recommended to the Board that the going-concern basis of preparation of the annual financial statements was appropriate.

M Mia Chairman of the Audit Committee 

39

Momentum Health Independent Auditor’s Report

Opinion-

We have audited the financial statements of Momentum Health (the Scheme), set out on pages 43 to 71, which comprise the statement of financial position as at 31 December 2018, and the statement of profit or loss and other comprehensive income, the statement of changes in members' funds and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of Momentum Health (the Scheme) as at 31 December 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Medical Schemes Act of South Africa.

Basis for opinion-

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Scheme in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independent Auditor’s Report

1

1

To the Members of Momentum Health

Report on the Financial Statements

40

Independent Auditor’s Report Momentum Health

Other Information -

The Scheme's trustees are responsible for the other information. The other information comprises the Integrated Annual Report, (which includes commentary by the Board of Trustees, the Statement of responsibility by the Board of Trustees and commentary on corporate governance as required by the Act), which we obtained prior to the date of this Auditors' report. The other information does not include the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Scheme's Trustees for the Financial Statements -

The Scheme's trustees are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and the requirements of the Medical Schemes Act of South Africa, and for such internal control as the Scheme's trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Scheme's trustees are responsible for assessing the Scheme's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Scheme's trustees either intend to liquidate the Scheme or to cease operations, or have no realistic alternative but to do so.

Key Audit Matter How the matter was addressed in the audit

The outstanding claims provision represents a provision for future claims to be paid by the scheme which were incurred by members before year end. As disclosed in note 7 this amounts to R298 747 000 (2017: R244 747 000) and constitutes 7.8% (2017: 7.3%) of annual claims incurred. The determination of this provision is complex as it involves actuarial calculations and assumptions as well as reliance on past trends based on historical data. In addition, this is impacted by the expected volatility of overall health conditions of the Scheme’s members. Due to the various assumptions and complexity involved in determining the provision it has been noted as a key audit matter.

We assessed the competence and reputation of the expert used by the scheme's trustees to perform the calculation. We assessed the design and implementation of key controls within the outstanding claims provision process.

We performed a retrospective review of the Scheme's current year run-off model and balance to the prior year, to ensure that the provision was consistently calculated.

We performed tests of detail on the current year provision including testing actual claims experienced subsequent to year-end and as close as possible to audit completion date. We performed an independent estimate of the provision using historical claims data and trends and used this estimate as a basis of assessing the reasonableness of the provision.

We further performed audit tests to ensure that the underlying data used to calculate the outstanding claims provision was accurate and complete.

We reviewed the disclosure in the financial statements in conformity with International Financial Reporting Standards. Consequently, we are satisfied with the disclosures of the outstanding claims provision in the financial statements. Based on the audit procedures performed, we are satisfied with the assumptions applied and consequently with the measurement of the provision at 31 December 2018.

Key Audit Matters-

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

41

Momentum Health Independent Auditor’s Report

Auditor's Responsibilities for the Audit of the Financial Statements -

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit.

We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Scheme's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Scheme's trustees.

Conclude on the appropriateness of the Scheme's trustees' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists in relation to events or conditions that may cast significant doubt on the Scheme's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Scheme to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Scheme's trustees regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the matters communicated with the Scheme's trustees, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements-

Non-compliance with the Medical Schemes Act of South Africa

As required by the Council for Medical Schemes, we report that material instances of non-compliance with the requirements of the Medical Schemes Act of South Africa as amended have come to our attention during the course of our audit. These have been fully disclosed in note 23 to the financial statements.

Audit tenure

As required by the Council for Medical Schemes' Circular 38 of 2018, Audit Tenure, we report that Deloitte has been the auditor of Momentum Health in excess of 15 years.

The engagement partner, Kumeshnee Singh, has been responsible for Momentum Health's audit for 3 years.

Deloitte & Touche Registered Auditor

Per: Kumeshnee Singh CA (SA), RA Partner

26 April 2019

42

Annual Financial Statements Momentum Health

Notes 2018 2017

R’000 R’000Assets

Non-current assets 1 280 524 1 271 574

Investments held at fair value through profit or loss 2 1 280 524 1 271 574

Current assets 536 656 514 310 Investments held at fair value through profit or loss 2 417 501 358 510

Trade and other receivables 3 48 694 62 424

Cash and cash equivalents 4 70 461 93 376

Total assets 1 817 180 1 785 884

Funds and Liabilities

Members’ funds 1 196 925 1 238 385

Accumulated funds 1 196 925 1 238 385

Current liabilities 620 255 547 499

Personal medical savings account liability 5 137 629 129 443

Trade and other payables 6 183 879 173 309

Outstanding claims provision 7 298 747 244 747

Total funds and liabilities 1 817 180 1 785 884

Statement of Financial Position at 31 December 2018

43

Momentum Health Annual Financial Statements

Notes 2018 2017

R’000 R’000

Risk contribution income 8 4 496 199 4 060 472

Relevant healthcare expenditure (3 926 224) (3 492 189)

Net claims incurred 9 (3 845 557) (3 434 599)

Risk claims incurred (3 736 714) (3 354 927)

Third party claim recoveries 12 605 29 148

Accredited managed healthcare services 11 (121 448) (108 820)

Net expense on risk transfer arrangements 10 (80 667) (57 590)

Risk transfer arrangements fees/premiums paid (429 933) (377 962)

Profit share from risk transfer arrangements - 584

Recoveries from risk transfer arrangements 349 266 319 788

Gross healthcare result 569 975 568 283

Administration expenditure 12 (437 374) (386 162)

Acquisition, marketing and distribution costs 13 (222 579) (198 805)

Net impairment losses on healthcare receivables 14 (2 089) (1 770)

Net healthcare result (92 067) (18 454)

Other income 66 963 181 114

Investment income 15 63 058 177 621

Sundry income 3 905 3 493

Other expenditure (16 356) (16 722)

Asset management fees (7 565) (7 228)

Interest paid on personal medical savings accounts 5 (8 791) (9 494)

Net (deficit)/surplus for the year (41 460) 145 938

Other comprehensive income - -

Total comprehensive (loss)/income for the year (41 460) 145 938

Statement of Comprehensive Income for the year ended 31 December 2018

44

Annual Financial Statements Momentum Health

Accumulated Funds

R’000

Balance at 1 January 2017 992 012

Total comprehensive income for the year 145 938

Transfer of funds and reserves from Metropolitan Medical Scheme 100 435

Balance at 31 December 2017 1 238 385

Total comprehensive loss for the year (41 460)

Balance at 31 December 2018 1 196 925

Statement of Changes in Funds and Reserves for the year ended 31 December 2018

Notes 2018 2017

R’000 R’000

Cash flows from operating activities

Cash flows from operations before working capital changes 16 (88 162) (14 961)

Working capital changes

• Decrease/(Increase) in trade and other receivables 13 731 (4 951)

• Increase in personal medical savings account liability 8 186 10 204

• Increase in trade and other payables 10 570 3 292

• Increase in outstanding claims provision 53 999 41 269

Cash (used in)/generated from operations (1 676) 34 853

Interest paid on personal medical savings accounts (8 791) (9 494)

Net cash (used in)/generated from operating activities (10 467) 25 359

Cash flows from investing activities

Purchase of investments 2 (2 267 784) (2 445 739)

Proceeds on disposal of investments 2 2 144 998 2 220 672

Interest income 15 92 818 91 909

Dividend income 15 25 085 17 870

Asset management fees (7 565) (7 228)

Net cash used in investing activities (12 448) (122 516)

Cash flows from transfer of schemes

Cash and investments acquired - Transfer of Metropolitan Medical Scheme - 109 666 Net (decrease)/increase in cash and cash equivalents (22 915) 12 509 Cash and cash equivalents at the beginning of the year 93 376 80 867

Cash and cash equivalents at the end of the year 4 70 461 93 376

Statement of Cash Flows for the year ended 31 December 2018

45

Momentum Health Annual Financial Statements

1. Principal Accounting Policies and Definitions

These Annual Financial Statements have been prepared on the going concern basis in conformity with International Financial Reporting Standards (IFRS) and in the manner required by the Medical Schemes Act 131 of 1998, as amended (the Act). The following are the principal accounting policies used by the Scheme, and are consistent with those of the previous year, except where otherwise stated.

1.1 Basis of Preparation

The preparation of Annual Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Scheme’s accounting policies.

The annual financial statements are prepared on the historical cost convention with the exception of:

• Investments classified at fair value through profit or loss and

• Cash and cash equivalents which are carried at fair value.

All monetary information and figures presented in these financial statements are stated in thousands of rand (R’000), unless otherwise stated.

1.1.1 Principal accounting policies

The Scheme has assessed the impact of the new accounting standards that became effective from 1 January 2018.

IFRS 15 - Revenue from Contracts with Customers:

IFRS 15 replaces IAS 11 Contruction Contracts, IAS 8 Revenue and related interpretations. IFRS 15 deals with revenue recognition and establishes a five-step principle model to be applied to all contracts with customers about the nature, amount, timing and any uncertainty of revenue and cash flows if applicable.

The Scheme assessed the implementation of IFRS 15 and concluded that the impact is immaterial.

IFRS 9 - Financial Instruments:

IFRS 4 provides a temporary exemption that permits Schemes to continue to apply IAS 39 rather than IFRS 9 for periods beginning before January 2021. The temporary exemption permits schemes whose activities are predominantly connected with insurance and if they have not previously applied any version of IFRS 9 to defer the application of IFRS 9.

The Scheme applied the temporary exemption from IFRS 9 as permitted by the amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts issued in September 2016 until the adoption of IFRS 17. As such the Scheme has continued with applying IAS 39 during this period and has provided additional disclosures to enable users of financial statements to make comparisons with schemes applying IFRS 9.

The Scheme applied IFRS 4 to derive a conclusion that it qualifies for the temporary exemption from IFRS 9;

Qualification for temporary exemption from IFRS 9: The temporary exemption from IFRS 9 is applicable if the insurer has not previously applied IFRS 9 and the activities of the insurer are predominantly connected with insurance. The assessment is performed on the following basis:

i. The insurer has a significant amount of liabilities arising from contracts within the scope of IFRS 4; and

ii. the percentage of the insurer’s liabilities connected with insurance business relative to all its liabilities meets the specified threshold.

The percentage of the Scheme's liabilities connected with insurance relative to its total amount of liabilities should be:

i. greater than 90 per cent; or

ii. less than or equal to 90 per cent but greater than 80 per cent, and the Scheme should not engage in a significant activity unconnected with insurance.

The majority of the Scheme's liabilities have been incurred as a result of fulfilling its obligation in the carrying out of insurance business.

To assess whether the Scheme's activities are predominantly connected with insurance business at its annual reporting date, the Scheme has used 31 December 2015 financial liabilities in accordance with IFRS 4 to determine the percentage of the Scheme's liabilities. The Scheme has further reassessed the percentage of its liabilities using the 31 December 2018 financial information.

Notes 2015 2018

R’000 R’000

Personal medical savings account liability 5 108 474 137 629

Trade and other payables * 6 74 476 183 515

Outstanding claims provision 7 204 904 298 747

Liabilities arising from insurance contracts within IFRS 4

387 854 619 891

Total liabilities 389 898 620 255

IFRS 4 liabilities % 99.5% 99.9%

* Excludes sundry and accruals balances as they do not form part of insurance liabilities

As at 31 December 2015, the Scheme's gross liabilities arising from the insurance contracts represents 99.5% of the total carrying amount of its liabilities. The Scheme has not previously applied for the temporary exemption from IFRS 9 and there have been no changes in the activities of the Scheme since 2015.

The adoption of IFRS 9 from 1 January 2018 would have resulted in no impact to the classification and measurement of the financial instruments held by the Scheme, with the exception of the impairment of accounts receivables. Under the new impairment approach, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Instead an entity accounts for expected credit losses (ECL), and changes in those expected credited losses. The calculation of the new impairment under IFRS 9 would not have had a material impact to the financial statements. Refer to note 22 for further disclosure.

Notes to the Annual Financial Statements for the year ended 31 December 2018

46

Annual Financial Statements Momentum Health

1.2 Financial Instruments

Financial assets and liabilities are recognised on the Scheme’s Statement of Financial Position when the Scheme becomes a party to the contractual provisions of the instrument.The Scheme classifies its financial instruments into the following categories: financial assets at at fair value through profit or loss, and liabilities and receivables.The classification depends on the nature and the purpose of the financial instruments and is determined at the time of initial recognition.

Measurement

Financial instruments are initially measured at fair value plus, in the case of financial assets and liabilities not at fair value through profit or loss, transaction costs that are directly attributable to acquisition or issue of the financial asset or liability. The fair value of financial instruments is determined by reference to published indices on the Bond Exchange of South Africa and the Johannesburg Securities Exchange (JSE) Ltd.

Impairment

Impairments of financial instruments are recognised in the Statement of Comprehensive Income in the year in which the impairment arose.

Investments

All purchases and sales of investments are recognised on the trade date, which is the date that the Scheme commits to purchase or sell the asset. Cost of purchases includes transaction costs. Investments held at fair value through profit or loss are subsequently carried at fair value. Realised and unrealised gains and losses arising from changes in the fair value of investments held at fair value through profit or loss are included in the Statement of Comprehensive in the period in which they arise.

Trade and other receivables

Trade and other receivables originated by the Scheme are measured at amortised cost less an appropriate impairment for estimated irrecoverable amounts. Impairment is recognised in the Statement of Comprehensive Income when there is objective evidence that the asset is impaired.

Cash and cash equivalents

Cash and cash equivalents are measured at cost which approximates fair value and comprise current bank accounts, deposits held on call with banks, and other short-term liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of change in value and bank overdrafts.

Financial liabilities

Financial liabilities are recognised at amortised cost, namely original debt less principal payments and amortisations.

Gains and losses on disposal of investments

On disposal of an investment, the difference between the net disposal proceeds and carrying amount is recognised in the Statement of Comprehensive Income.

Offset

Where a legally enforceable right of offset exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously or to settle on a net basis, all related financial effects are offset.

Derecognition of financial assets and liabilities

The Scheme derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Scheme neither transfers nor retains substantially all the risks and the rewards of ownership and continues to control the transferred asset, the Scheme recognises its retained interest in the asset and an associated liability for amounts it may have to pay. Where the risks and rewards of ownership of the financial asset are substantially retained, the financial asset continues to be recognised. The Scheme derecognises a financial liability when the contractual obligation is discharged or expires.

1.3 Personal medical savings account liability

The savings plan liability represents funds held by the Scheme on behalf of its members. The savings liability plan is recognised in accordance with IAS 39 and is initially measured at fair value and subsequently at amortised cost using the effective interest rate method. The savings plan facility assists members in managing the cash flows for costs to be borne by them during the year, meeting provider service expenses not covered in the Scheme's approved benefits and meeting or self funding member co-payments for provider services rendered. Savings plan contributions are credited on the accrual basis and withdrawals are debited on a cash basis, i.e. no provision is made for outstanding claims at the year end. In terms of the requirements of the Council for Medical Schemes Circular 56 of 2017, interest on the positive personal medical savings balances is paid to members in accordance with the Scheme rules.

Unexpended savings at the year end are carried forward to meet future expenses for which the members are responsible. In terms of the Act, balances standing to the credit of members are only refundable in terms of Regulation 10 of the Act.

In accordance with the rules of the Scheme, the risk of impairment of savings plan advances is underwritten by the Scheme.

1.4 Provisions

Provisions are recognised when the Scheme has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The outstanding claims provision is a provision for the estimated cost of healthcare benefits that have occurred before the statement of financial position date, but have not been reported to the Scheme at the reporting date. This provision is determined as accurately as possible based on a number of factors, which include previous experience in claims patterns, claims settlement patterns, changes in the nature and number of members according to gender and age, trends in claims frequency, changes in the claims processing cycle, and variations in the nature and average cost incurred per claim. The outstanding claims provision is reduced by the estimated recoveries from members for co-payments, and savings plan accounts. The Scheme does not discount its provision for outstanding risk claims, since the effect of the time value of money is not considered material.

1.5 Medical insurance contracts and liability adequacy test

Contracts under which the Scheme accepts significant medical insurance risk from another party (the member) by agreeing to compensate the member or their beneficiary if a specified uncertain future event (the insured event) adversely affects the member or their beneficiary are classified as medical insurance contracts. The liability for medical insurance contracts is tested for adequacy by discounting current estimates of all future contractual cash flows and comparing this amount to the carrying value of the liability net of

47

Momentum Health Annual Financial Statements

any related assets (if any). For the liability relating to potential future claims which have already been incurred at the year end, but which the Scheme has not yet received (Incurred But Not Received (IBNR)), tests are performed to ensure that the liability is sufficient to cover historical run-off profiles.

1.6 Contribution income

Contributions on member insurance contracts are accounted for monthly when their collection in terms of the insurance contract is reasonably certain. Risk contributions represent the gross contributions after deducting savings contributions. The earned portion of risk contributions received is recognised as revenue on the accrual basis. Risk contributions are earned from the date of attachment of risk, over the indemnity period on a straight-line basis. Risk contributions are shown before the deduction of broker service fees and other acquisition costs.

1.7 Relevant healthcare expenditure

Relevant healthcare expenditure consists of net claims incurred, accredited managed healthcare services and net income or expense from risk transfer arrangements.

1.8 Accredited managed healthcare services

Accredited managed healthcare services comprises of amounts paid or payable to third party administrators, related parties and other third parties for managing the utilisation, costs and quality of healthcare services to the Scheme. These expenses are recognised as an expense in the year incurred.

1.9 Claims Incurred

Gross claims incurred comprises of the the total estimated cost of all claims arising from healthcare events that have occurred in the year and for which the Scheme is responsible, whether or not reported by the end of the year.

The net claims incurred comprises:

• claims already submitted plus the provision for outstanding claims in respect of services rendered during the year, net of recoveries from members co-payments, net recoveries from third parties, discounts received from service providers and from savings plan accounts;

• claims for services rendered during the previous year not included in the outstanding claims provision for that year, net of recoveries from members for co-payments, net recoveries from third parties, discounts received from service providers and savings plan accounts;

• Under/ (over) provision of the prior year provision for outstanding claims; and

• claims settled in terms of risk transfer arrangements.

1.10 Risk transfer arrangements

Contracts entered into by the Scheme with third party service providers under which the Scheme is compensated for losses/claims (through the provision of services to members) on one or more contracts issued by the Scheme and that meet the classification requirements of insurance contracts are classified as risk transfer arrangements. Only contracts that give rise to a significant transfer of medical insurance risk are accounted for as risk transfer arrangements. Risk transfer fees/premiums are recognised as an expense over the indemnity period on a straight-line basis. An appropriate portion of risk transfer fees/premiums is treated as a prepayment. Risk transfer fees/premiums and benefits reimbursed are presented in the Statement of

Comprehensive Income and Statement of Financial Position on a gross basis. Amounts recoverable under such contracts are recognised in the same year as the related claim.

Amounts recoverable under risk transfer arrangements are estimated in a manner consistent with the outstanding claims provisions, claims reported not yet paid and settled claims associated with the risk transfer arrangement.

Amounts recoverable under risk transfer arrangements are assessed for impairment at each financial year end. Such assets are deemed impaired if there is objective evidence, as a result of an event that occurred after its initial recognition, that the Scheme may not recover all amounts due and that the event has a reliably measurable impact on the amounts that the Scheme will receive under the risk transfer arrangement.

1.11 Impairment gains and losses

The carrying amounts of the Scheme's assets are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated and an allowance account to record impairment losses is created.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income in the period in which the adjustment is made to the estimate of the carrying amount.

Calculation of recoverable amount

The recoverable amount of the trade and other receivables balances carried at amortised cost are calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted.

Reversals of impairment

An impairment loss in respect of trade and other receivables balances carried at amortised cost is reversed if the subsequent increase in the recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of amortisation, if no impairment loss had been recognised.

1.12 Road Accident Fund Recoveries

Recoveries from the Road Accident Fund are recognised on a receipt basis and are netted off against claims expenditure. To the extent that the asset cannot be reliably measured, the Scheme discloses this amount as a contingent asset, refer to note 17

1.13 Investment income

Investment Income comprises of interest income and dividend accrued from investments held at fair value through profit or loss and interest income from cash and cash equivalents, as well as net realised/unrealised gains or losses on investments held at fair value through profit or loss. Interest income is recognised using the effective interest method, taking into account the principal amount outstanding and the effective interest rate over the period to maturity, when it is determined that such income will accrue to the Scheme.

48

Annual Financial Statements Momentum Health

1.14 Accounting standards and interpretations not yet effective

The following new accounting standards and interpretations applicable to the Scheme are in issue, but not yet effective. None of these standards have been early adopted by the Scheme. The Scheme is in the process of assessing the impact thereof.

Standard Subject Effective date*

IFRS 16 Leases IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. A lessee measures right of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. IFRS 16 contains expanded disclosure requirements for lessees. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. IFRS 16 has no material impact to the Scheme.

1-Jan-19

IFRS 17 Insurance Contracts

IFRS 17 will impact the measurement of the contracts with members in the Scheme’s financial statements. The Sheme will qualify for the premium allocation approach which requires the Scheme to recognize a liability for remaining coverage (with reference to the premiums received) and a liability for incurred claims (calculated as the expected cash outflows and a risk adjustment). The Scheme expects that the boundary of the contracts with members will be one year. The Scheme will be required to assess for onerous contracts at the point members elect the benefit option for the following year.

1-Jan-21

* Annual periods commencing on or after.

1.15 Allocation of income and expenditure to benefit options

The following items are directly allocated to benefit options:

• Contribution income;

• Claims incurred;

• Net income/ (expense) on risk transfer arrangement;

• Accredited managed healthcare service fees;

• Administration expenditure; and

• Acquisition, marketing and distribution costs

The remaining items are apportioned based on the risk contributions on each option:

• Other administration expenditure;

• Investment income;

• Net impairment losses on healthcare receivables;

• Other income; and

• Other expenditure

49

Momentum Health Annual Financial Statements

2. Investments held at fair value through profit or loss

2018 2017

R’000 R’000

Fair value at the beginning of the year 1 630 084 1 337 175

Additions 2 267 784 2 445 739

Disposals (2 144 998) (2 220 672)

Net (losses)/gain on financial assets at fair value through profit or loss (refer note 15) (54 845) 67 842

Fair value at the end of the year 1 698 025 1 630 084

Non-current portion 1 280 524 1 271 574

Current portion 417 501 358 510

1 698 025 1 630 084

The investments included above represent investments in:

Cash, Deposits and Money Market instruments 726 844 679 635

Bills, Bonds and Securities 438 603 356 778

Property 85 710 126 995

Equity 446 868 466 676

1 698 025 1 630 084

The funds above are held at the following asset managers:

Prudential Investment Managers (South Africa) (Pty) Ltd 627 611 632 232

Sanlam Life Insurance Limited 652 913 639 342

Momentum Asset Management (Pty) Ltd 417 501 358 510

1 698 025 1 630 084

At the end of the year cumulative unrealised gains amounted to R54.2m (2017: R 122.1m).

A register of investments is available for inspection at the registered office of the Scheme.

3. Trade and other receivables

2018 2017

R’000 R’000

Insurance receivables

Contributions outstanding 24 222 21 548

Amounts due from members* 2 342 2 394

Amounts due from suppliers 1 888 21 858

Personal medical savings account liability (refer note 5) 6 731 6 342

35 183 52 142

Less: Impairment of receivables (4 729) (4 202)

30 454 47 940

Financial assets

Accrued interest 467 546

Other sundry accounts receivable 59 59

Share of outstanding claims provision covered by risk transfer arrangements (refer note 7) 17 714 13 879

48 694 62 424

* Amounts due from members include those that have left the Scheme and have amounts owing for outstanding contributions, savings advances and claims debts. Interest is not charged on overdue balances. The estimated future cash flow receipts have not been discounted as the effect would be immaterial.

50

Annual Financial Statements Momentum Health

The movement in the provision for impairment during the year was as follows:

2018Contribution Debt

Member Debt

Supplier Debt

Savings Plan Account

Advances Total

R’000 R’000 R’000 R’000 R’000

Balance as at 1 January 505 2 234 335 1 128 4 202

Amount recognised in the Statement of Comprehensive Income for the period (refer note 14)

Additional provisions made in the period 163 1 433 321 172 2 089

Amounts utilised during the period 1 (1 550) (13) - (1 562)

Balance as at 31 December 669 2 117 643 1 300 4 729

2017Contribution Debt

Member Debt

Supplier Debt

Savings Plan Account

Advances Total

R’000 R’000 R’000 R’000 R’000

Balance as at 1 January 505 2 258 255 964 3 982

Amount recognised in the Statement of Comprehensive Income for the period (note 14)

Additional provisions made in the period - 1 521 85 164 1 770

Amounts utilised during the period - (1 545) (5) - (1 550)

Balance as at 31 December 505 2 234 335 1 128 4 202

At year end the carrying amounts of trade and other receivables approximate their fair values due to the short-term maturities of these assets.

4. Cash and Cash Equivalents

2018 2017

R’000 R’000

Current accounts 70 461 93 376

70 461 93 376

The overall weighted average effective interest rate on cash and cash equivalents at year end was 7.13% (2017: 5.87%) which includes the overnight call rate earned on the current accounts.

At year end the carrying amounts of cash and cash equivalents approximate their fair values due to the short-term maturities of these assets.

51

Momentum Health Annual Financial Statements

5. Personal medical savings account liability

2018 2017

R’000 R’000

Balance on personal medical savings account liability at beginning of the year 129 443 119 239

Less: Advances on personal medical savings accounts at the beginning of the year (6 342) (5 591)

Net balance on personal medical savings account liability at the beginning of the year

123 101 113 648

Add: Savings plan account contributions received or receivable

286 532 282 755

For the current year (refer note 8) 280 190 277 164

Allocated to settle prior year advances 6 342 5 591

Interest paid on personal medical savings account balances 8 791 9 494

Less:

Transfers to other Schemes and repayments on death or resignation (8 469) (9 173)

Claims paid on behalf of members (refer note 9) (279 057) (273 623)

130 898 123 101

Add:

Advances on savings plan accounts included in trade and other receivables at the end of the year (refer note 3) 6 731 6 342

Net balance on personal medical savings account liability at end of the year 137 629 129 443

The personal medical savings account liability represents funds held on behalf of members by the Scheme. The savings plan facility assists members in managing the cash flows for costs to be borne by them during the year, meeting provider service expenses not covered in the Scheme's approved benefits and meeting or self funding member co-payments for provider services rendered.

Unexpended savings at the year end are carried forward to meet future expenses for which the members are responsible. In terms of the Act , balances standing to the credit of members are only refundable in terms of Regulation 10 of the Regulations to the Act. In accordance with the rules of the Scheme, the bad debt risk of savings plans advances is underwritten by the Scheme.

Advances on personal medical savings accounts are funded by the Scheme and are included in trade and other receivables (refer note 3). The Scheme does not charge interest on advances on personal medical savings accounts.

It is estimated that claims to be paid out of members' savings accounts in respect of claims incurred in 2018 but not recorded will amount to R10.7 million (2017: R10.1 million) (refer note 7).

Interest on the members’ personal medical savings accounts is calculated and allocated on a monthly basis in accordance with the Scheme's rules.

At year end the carrying amounts of the members' personal medical savings accounts approximate their fair values due to the short-term maturities of these liabilities.

Circular 56 of 2017 issued by the Council for Medical Schemes removed the requirement for members savings funds to be held separately effective 06 June 2017.

6. Trade and other payables

2018 2017

R’000 R’000

Insurance liabilities

Contributions received in advance 43 470 52 998

Credit balances in accounts receivable 26 995 12 101

Amounts due to members 8 124 10 506

Amounts due to service providers 104 427 96 113

183 016 171 718

Financial Liabilities

Provision for leave pay 499 361

Sundry accounts payable 364 1 230

183 879 173 309

52

Annual Financial Statements Momentum Health

At the year end the carrying amount of trade and other payables approximate their fair values due to the short-term maturities of these liabilities.

7. Outstanding claims provision

2018 2017

R’000 R’000

Not covered by risk transfer arrangements

Provision for outstanding claims 281 033 230 868

281 033 230 868

Analysed as follows

Provision for outstanding claims

Estimated gross claims 291 771 240 915

Less: Estimated recoveries from savings plan accounts (10 738) (10 047)

281 033 230 868

Analysis of movements in outstanding claims

Balance at the beginning of the year 230 868 186 151

Estimated gross claims 240 915 194 499

Less: Estimated recoveries from savings plan accounts (10 047) (8 348)

Payments in respect of prior year (236 197) (186 354)

Reversal of prior year under provision (refer note 9) 5 329 203

Current year movement in the outstanding claims provision 281 033 230 868

Balance at the end of the year 281 033 230 868

Covered by risk transfer arrangements

Provision for outstanding claims 17 714 13 879

17 714 13 879

Analysis of movements in outstanding claims

Balance at the beginning of the year 13 879 13 003

Payments in respect of prior year (13 879) (13 003)

Current year movement in the outstanding claims provision (refer note 9) 17 714 13 879

Balance at the end of the year 17 714 13 879

Total outstanding claims provision at the end of the year 298 747 244 747

Basis for determination of the outstanding claims provision

The outstanding claims provision is the estimated cost of healthcare benefits that have occurred before the year end but have not been reported to the Scheme by that date. The provision is determined as accurately as possible based on a number of assumptions which are outlined below.

Process used to determine the assumptions

The process used to determine the assumptions is intended to result in neutral estimates of the most likely or expected outcome. The sources of data used as inputs for the assumptions are internal, using detailed studies that are carried out on a regular basis. There is more emphasis on current trends and where there is insufficient information to make a reliable best estimate of claims development, prudent assumptions are used.

The actual method or blend of methods used varies by category of claims and observed historical claims development. To the extent that the historical claims development method is used, it is assumed that the historical pattern will occur again in the future. There are reasons why this may not be the case, which, insofar as they can be identified, have been allowed for by modifying the methods. Such reasons may inter alia include:

• changes in processes that affect the development or recording of claims paid and incurred (such as changes in claims submission mechanisms);

• changes in composition of members and their dependants;

• variations in the nature and average cost incurred per claim;

• legislative changes (e.g. expansion of the definition of a Prescribed Minimum Benefit (PMB) / Chronic Disease List (CDL) condition); and

• random fluctuations.

53

Momentum Health Annual Financial Statements

The provision is a best estimate based on the most recent information available. However, the ultimate liabilities may vary as a result of subsequent developments. The impact of many of the items affecting the ultimate costs is difficult to estimate. The provision estimation difficulties also differ by category of claims (i.e. hospital (major medical benefit), chronic, day-to-day and above threshold benefits) due to differences in the underlying insurance contract, claim complexity, the volume of claims, the individual severity of claims, determining the occurrence date of a claim, and reporting lags.

Assumptions

The assumptions that have the greatest effect on the measurement on the outstanding claims provision are the expected claims ratios for the most recent benefit years for the hospital, chronic, day-to-day and above threshold categories of claims. The expected claims ratio assumed for the benefit year 2018 is 98.7% (2017: 98.5%) for hospital, 0.3% (2017: 0.3%) for chronic and 1.0% (2017: 1.2%) for above threshold benefits.

Changes in assumptions

The table below outlines the sensitivity of insured liability estimates to particular movements in assumptions used in the estimation process. It should be noted that this is a deterministic approach with no correlations between the key variables.

Where variables are considered to be immaterial, no impact has been assessed for changes to these variables. Particular variables may not be considered material at present. However, should the materiality level of an individual variable change, assessment of changes to that variable in the future may be required.

An analysis of sensitivity around various scenarios for the general medical insurance business provides an indication of the adequacy of the estimation process. The Board believe that the liability for claims reported in the Statement of Financial Position is adequate. However, they recognise that the process of estimation is based upon certain variables and assumptions which could differ when claims arise. Consequently, if for example the estimates of the unreceived portion of claims costs was 5% inaccurate, the impact on the net surplus of the Scheme would be as follows:

Impact on total comprehensive income and accumulated funds for the year due to changes in key variables

Change in variable 2018 2017

% R’000 R’000

Hospital (major medical benefit) claims ratio 5% 1 227 673

Chronic claims ratio 5% 3 2

Above threshold benefit claims ratio 5% 13 8

This analysis has been prepared for a change in a specified variable with other assumptions remaining constant.

The sensitivity of the estimation process is reduced by the value of the claims paid subsequent to the year end as detailed in the table below: :

Outstanding claims provision (not covered by risk transfer arrangements) 281 033 230 868

Portion of outstanding claims provision paid to 15 March 2019 (2017: 16 March 2018) (257 362) (217 968)

Residual estimate of claims incurred but not paid 23 671 12 900

8. Risk contribution income2018 2017

R’000 R’000

Gross contributions 4 776 389 4 337 636

Less: Savings contributions (refer note 5)* (280 190) (277 164)

Risk contribution income per Statement of Comprehensive Income 4 496 199 4 060 472

* The savings contributions are received by the Scheme in terms of Regulation 10(1) and the Schemes registered rules and held on behalf of its members. Refer to note 5 for more details on how these monies were utilised.

54

Annual Financial Statements Momentum Health

9. Net Claims Incurred2018 2017

R’000 R’000

Gross claims paid

Current year claims 3 376 970 3 069 303

Movement in outstanding claims provision 286 362 231 071

Under provision of the prior year balance (refer note 7) 5 329 203

Provision for current year (refer note 7) 281 033 230 868

Less:

Claims paid from personal medical savings accounts (refer note 5) (279 057) (273 623)

Discounts received on claims (9 432) (20 760)

Managed care: healthcare benefits (refer note 11) 121 448 108 820

3 496 291 3 114 811

Claims incurred in respect of risk transfer arrangements (refer note 10) 349 266 319 788

Current year claims 331 552 305 909

Movement in outstanding claims provision (refer note 7) 17 714 13 879

3 845 557 3 434 599

10. Net Expense on Risk Transfer Arrangements2018 2017

R’000 R’000

MMI Health (Pty) Ltd: Primary Care Network 142 223 128 279

MMI Health (Pty) Ltd: Wellness Compliance 266 463 230 697

Netcare Hospitals (Pty) Ltd t/a Netcare 911 21 247 18 986

429 933 377 962

Profit sharing arrangement

Netcare Hospitals (Pty) Ltd Netcare 911 - (584)

- (584)

Recoveries under risk transfer arrangements

MMI Health (Pty) Ltd: Primary Care Network (125 215) (109 553)

MMI Health (Pty) Ltd: Wellness Compliance (204 191) (189 367)

Netcare Hospitals (Pty) Ltd t/a Netcare 911 (19 859) (20 868)

(349 266) (319 788)

Net expense/(recovery) on risk transfer arrangements

MMI Health (Pty) Ltd: Primary Care Network 17 008 18 726

MMI Health (Pty) Ltd: Wellness Compliance 62 272 41 330

Netcare Hospitals (Pty) Ltd t/a Netcare 911 1 388 (2 466)

80 667 57 590

MMI Health (Pty) Ltd provided primary care to members on the Ingwe and Impact options of the Scheme at healthcare centres and through contracted network service providers nationwide. MMI Health (Pty) Ltd also provided chronic care benefits for the 26 Prescribed Minimum Benefit Chronic Disease List conditions for Members on all options except Ingwe and Impact options through the Wellness Compliance capitation arrangement.

Netcare Hospitals (Pty) Ltd t/a Netcare 911 provided a capitated ambulance service for Members on all options.

55

Momentum Health Annual Financial Statements

11. Accredited managed healthcare services2018 2017

R’000 R’000

Hospital benefit management services 43 430 38 430

Pharmacy benefit management services 21 763 19 731

Active disease risk management services 30 038 28 801

Dental benefit management services 8 332 6 129

Managed care network management services and risk management 17 885 15 729

121 448 108 820

12. Administration Expenditure

2018 2017

R’000 R’000

Administrator's fees 414 919 365 263

Amalgamation expenses 26 714

Auditor's remuneration 1 199 1 100

Audit fees - current year 1 192 1 097

Audit fees - prior year under provision 7 -

Fees for other services - 3

Board of Healthcare Funders (BHF) subscriptions 319 268

Consultants fees and expenses 44 -

Debt collection fees 204 143

Fidelity and professional indemnity 295 293

Global Credit rating fees 489 128

Health Funders Association fees 448 816

Current year 448 435

Prior year - 381

International travel benefit administration fees 1 302 1 068

Jump magazine 5 347 4 781

Legal fees - 69

Principal Officer remuneration and related expenses 2 481 2 362

Publication costs 69 65

Registrar's levies 5 581 4 694

Scheme office remuneration 1 618 1 644

Total trustees’ and committee members’ remuneration and consideration expenses (refer note 20) 2 442 2 208

Remuneration 2 012 1 836

Travelling, accommodation and disbursements 430 372

Other expenses 591 546

437 374 386 162

13. Acquisition, Marketing and Distribution Costs2018 2017

R’000 R’000

Brokers’ service fees 109 541 97 182

Distribution and marketing fees paid 113 038 101 623

222 579 198 805

56

Annual Financial Statements Momentum Health

14. Net impairment losses on healthcare receivables

2018 2017

R’000 R’000

Amounts from outstanding contributions 163 -

Amounts due from members* 1 433 1 521

Service providers' portions 321 85

Advances from savings plan accounts 172 164

2 089 1 770

Refer also to note 21 for further details on the methodology of calculating these impairment provisions.

* Amounts due from members is relevant to members who have left the Scheme and have amounts owing for outstanding contributions, savings advances and claims debts.

15. Investment income2018 2017

R’000 R’000

Investments held at fair value through profit or loss

Interest income 87 381 87 770

Dividend Income 25 085 17 870

Cash and cash equivalents interest income

Interest Income 5 437 4 139

Net gains or (losses) on investments held at fair value through profit or loss

Realised gains/(losses) 11 073 (6 416)

Unrealised (losses)/gains (65 918) 74 258

63 058 177 621

16. Cash flows from operations before working capital changes

2018 2017

R’000 R’000

Reconciliation of net (deficit)/surplus for the year to cash flows from operations before working capital changes

Net(deficit)/surplus for the year (41 460) 145 938

Adjustments for:

Items separately disclosed

Interest and dividend income (refer note 15) (117 903) (109 779)

Asset management fees 7 565 7 228

Interest paid on personal medical savings accounts 8 791 9 494

Net realised and unrealised losses/ (gains) on financial instruments (refer note 15)

54 845 (67 842)

Cash flows from operations before working capital changes (88 162) (14 961)

57

Momentum Health Annual Financial Statements

17. Contingent assets

The Scheme has potential recoveries from the Road Accident Fund of approximately R 81.8million (2017: R 71.7 million) for claims that have been lodged with the fund. The general likelihood of recovery of these amounts is not considered certain, and the Board have elected not to recognise a debtor on the Statement of Financial Position as any future recoveries are highly contingent on a multitude of factors. The Board considers, based on past experience and the current financial stability of the Road Accident Fund, that the receivable, were it to be recognised, would be fully impaired.

18. Contingent liabilities

The Scheme has potential exposure on a legal matter by a member claiming damages for the alleged unilateral termination of his contract of approximately R9 million plus interest and costs. In the opinion of the Scheme's legal team, the general likelihood of the claim materialising is considered doubtful and the Trustees have therefore elected not to recognise a creditor on the Statement of Financial Position in this regard.

19. Related party transactions

The following transactions were entered into with individuals or entities who are considered to be related parties in terms of the definition or in the nature of their relationship with the Scheme.

2018 2017

Related Party Transaction Type R’000 R’000

MMI Health (Pty) Ltd and its employees

• Net contribution income received 56 134 45 986

• Net claims paid 49 322 37 857

MMI Health (Pty) Ltd • Administration fees paid 414 919 365 263

• Managed care fees paid 120 359 112 576

• Distribution and marketing fees paid 113 038 101 623

• Risk transfer fees 408 686 358 976

Momentum Asset Management (Pty) Ltd

• Investments held at fair value through profit or loss 417 501 358 510

Trustees and Scheme management

• Net contribution income received 442 453

• Net claims paid 545 105

• Trustees remuneration and consideration expenses

2 139 1 898

• Principal officer and Scheme management remuneration and expenses paid 4 099 3 558

Contributions receivable from and claims paid in respect of employees of MMI Health (Pty) Ltd and the Trustees, Principal Officer and Scheme management during the period, were in accordance with the rules of the Scheme and the provisions of the Act. Accordingly, all such individuals were treated in the same manner by the Scheme as would any member have been, at arms length.

The amounts reflected as owed by related parties are inclusive of outstanding contribution income, amounts held as member savings account balances and commissions outstanding.

Amounts owed to related parties at year end 2018 2017

R’000 R’000

MMI Health (Pty) Ltd 76 214 74 010

Trustees, Principal officer and Scheme management 15 17

76 229 74 027

58

Annual Financial Statements Momentum Health

20. Trustees and Committee Members’ remuneration and consideration expenses

As at 31 December 2018

Name Fees for Attendance at MeetingsAccommodation

travelling and other Total

2018 2018 2018

R R R

Dr EP Dorkin (§)($) 273 610 24 345 297 955

Ms CJ Kennedy (resigned in 2018) 108 920 10 431 119 351

Ms T Mahuma (^)($) 193 790 51 108 244 898

Mr PL Naidoo (^ - Chairman) 237 750 64 624 302 374 Mr A Robberts: Chairman (%)(+)(#)($)(^) 409 520 93 759 503 279

Dr CF Swanepoel (§- Chairman) 207 640 87 582 295 222

Mr T Jobson(+) 148 120 37 204 185 324

Mr G Steyn (%) 148 120 42 488 190 608

Total - Trustees 1 727 470 411 540 2 139 010

Mr P Davis (+) 58 430 2 550 60 980

Ms T Abdool-Samad (resigned in 2018) 31 120 1 700 32 820

Mr M Mia (% - Chairman) 83 064 3 400 86 464

Dr A Turner (nee Dearham) (§) 47 690 7 064 54 754 Mr GP Wayne (%) 47 690 2 550 50 240 Mr MS Paruk (%) 16 570 850 17 420

Total - Committee members 284 564 18 114 302 678

Total 2 012 034 429 654 2 441 688

As at 31 December 2017

Name Fees for Attendance at MeetingsAccommodation

travelling and other Total

2017 2017 2017R R R

Dr EP Dorkin (§) 196 580 28 728 225 308

Ms CJ Kennedy (%)($) 213 090 27 213 240 303

Ms T Mahuma (^)($) 181 020 38 631 219 651

Mr PL Naidoo (^ - Chairman) 239 760 58 227 297 987

Mr A Robberts: Chairman (%)(+)(#)($) 386 760 68 378 455 138

Mr MS Sikhakhane - 4 241 4 241

Dr CF Swanepoel (§- Chairman) 177 520 64 533 242 053

Prof BPS van Eck (^) 181 970 31 814 213 784

Total - Trustees 1 576 700 321 766 1 898 466

Mr P Davis (+) 36 200 15 081 51 281

Ms T Abdool-Samad (%) 60 340 7 340 67 680

Mr M Mia (% - Chairman) (&) 72 400 7 298 79 698 Dr A Turner (nee Dearham) (§) 45 730 12 779 58 509 Mr GP Wayne (%) (&) 44 780 7 419 52 199

Total - Committee members 259 450 49 917 309 367

Total 1 836 150 371 683 2 207 833

(%) Audit Committee (§) Clinical Risk and Governance Committee (^) Governance and Remuneration Committee (+) Investment Committee ($) Risk Management Committee

# The Chairman of the Board of Trustees is remunerated for attendance at Committee meetings of which he is not a member in addition to other meetings attended on behalf of the Scheme.

The travel expenses above relate to the costs incurred in travelling to Board and Committee meetings. These were paid or reimbursed directly by the Scheme to the relevant provider or the individuals.

59

Momentum Health Annual Financial Statements

21. Critical accounting judgements and areas of key sources of estimation uncertainty

In the process of applying the Scheme’s accounting policies, the Trustees have made the following judgements that have the most significant effect on the amounts recognised in the financial statements:

Provision for outstanding claims

The provision for outstanding claims is an estimate of the potential liability at year end for claims that have been incurred by members but not yet received by the Scheme. Refer to note 7 for detailed information used in the development of the major assumptions used in the computation of the provision.

Net impairment losses - accounts receivable

An historical experience basis has been applied to the current contribution billings to determine a reasonable estimate of potential future reversals of premiums already billed. In addition, outstanding contribution debtors have been assessed on an individual basis for possible impairment, and specific impairment provisions raised where applicable.

Accounts receivable from off benefit members are impaired fully. Accounts receivable from on benefit (i.e. current) members are not impaired.

Service providers with accounts outstanding longer than 60 days are fully impaired on a case by case basis.

Net impairment losses - advances from personal medical savings accounts

Advances from savings plan accounts for off benefit members are impaired where the account is outstanding longer than 60 days. Additional impairment is also raised for advances from savings plan accounts for certain on benefit members where the likliehood of recovery is low.

Estimates

There are no key areas of estimation uncertainty at the year end, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year.

22. Management of financial risks

22.1 Capital risk management

The Scheme defines its capital as accumulated funds as detailed in the Statement of Changes in Funds and Reserves. The Scheme manages its capital in an attempt to ensure that it will be able to continue as a going concern as well as meet the accumulated funds ratio of 25%, as regulated in the Act. For the year ended 31 December 2018, the Scheme's accumulated funds ratio is 23.9% (2017: 25.7%). Further information on capital risk management is contained in the Materiality and Risk section of the Integrated Report. The disclosures in the integrated report are not audited.

22.2 Medical insurance risk management

Risk management objectives and policies for mitigating medical insurance risk

The primary medical insurance activity carried out by the Scheme assumes the risk of loss from members and their dependents that are directly subject to the risk. These risks relate to the health of the Scheme members. As such the Scheme is exposed to the uncertainty surrounding the timing and severity of claims under the contract. The Scheme also has exposure to market risk through its medical insurance and investment activities.

The Board maintains a schedule of identified risks to the Scheme and have evaluated both the likelihood and impact of these risks. This list is reviewed on an ongoing basis and remedial action is taken as and when is necessary.

The Scheme manages its medical insurance risk through benefit limits and sub-limits, approval procedures for transactions that involve pricing guidelines, pre-authorisation and case management, service provider profiling, centralised management of risk transfer arrangements as well as the monitoring of emerging issues.

The Scheme uses several methods to assess and monitor medical insurance risk exposures both for individual types of risks insured and overall risks. These methods include internal risk measurement models, sensitivity analyses, scenario analyses and stress testing. The theory of probability is applied to the pricing for a portfolio of medical insurance contracts. The principal risk is that the frequency and severity of claims is greater than expected.

The Scheme’s strategy seeks diversity to ensure a balanced portfolio and is based on a large portfolio of similar risks over a number of years and, as such, it is believed that this reduces the variability of the outcome. The strategy is set out in the annual business plan, which specifies the benefits to be provided by each option, the preferred target market and demographic split thereof.

All the contracts are annual in nature and the Scheme has the right to change the terms and conditions of the contract at renewal. Management information including contribution income and claims ratios by option, target market and demographic split, is reviewed monthly. There is also a program that regularly reviews contractual premium and benefit data to ensure compliance with the Scheme’s objectives.

Medical insurance events are, by their nature, random, and the actual number and size of events during any one year may vary from those estimated.

60

Annual Financial Statements Momentum Health

Concentration of medical insurance risk

Hospital (major medical) benefits cover all costs incurred by members whilst they are in hospital receiving preauthorised treatment for certain medical conditions. Chronic benefits cover the cost of certain prescribed medicines consumed by members for chronic conditions/diseases, such as high blood pressure, cholesterol and asthma. Day-to-day benefits cover the cost of out-of-hospital medical attention, such as visits to general practitioners and dentists as well as prescribed non-chronic medicines.

2018

Age grouping (in years)

Major Medical Chronic Day-to-Day Benefits TotalPMB

R’000Non-PMB

R’000PMB

R’000Non-PMB

R’000PMB

R’000Non-PMB

R’000 R’000

< 26 325 068 161 625 187 1 697 803 4 440 493 820

26 - 35 302 150 98 358 90 254 425 1 391 402 667

36 - 50 413 154 152 067 466 534 1 320 5 174 572 714

51 - 65 552 117 161 609 1 498 759 1 478 6 678 724 140

> 65 733 402 161 142 1 946 1 145 2 756 8 189 908 580

Total amount 2 325 891 734 800 4 187 4 390 6 782 25 871 3 101 921

2017

Age grouping (in years)

Major Medical Chronic Day-to-Day Benefits TotalPMB

R’000Non-PMB

R’000PMB

R’000Non-PMB

R’000PMB

R’000Non-PMB

R’000 R’000

< 26 287 559 151 487 104 1 940 744 4 577 446 411

26 - 35 268 290 92 843 66 331 399 1 829 363 758

36 - 50 379 542 140 643 241 756 1 067 5 297 527 546

51 - 65 484 464 148 941 745 1 853 1 477 6 390 643 870

> 65 647 271 161 364 856 2 532 2 813 8 040 822 876

Total amount 2 067 126 695 278 2 012 7 412 6 500 26 133 2 804 461

Reconciliation of net claims to current year claims paid in note 9 2018 2017

R’000 R’000

Total net claims as above 3 101 921 2 804 461

Road Accident Fund claims recoveries (3 173) (8 388)

Claims adjustments (835) (393)

Claims paid from personal medical savings accounts 279 057 273 623

Current year claims paid 3 376 970 3 069 303

Claims development

Claims development tables are not presented since the uncertainty regarding the amount and timing of claim payments is typically resolved within one year.

Risk transfer arrangements

The Scheme has entered into capitation agreements which are, in substance, the same as a non-proportional reinsurance treaty which aim to reduce the net exposure to the Scheme to medical insurance risk.

The Scheme cedes medical insurance risk to limit exposure to underwriting losses under various agreements that cover individual risks and defined blocks of business, on a co-insurance, yearly renewable term. These risk transfer arrangements spread the risk and minimise the effect of losses. The amount of each risk retained depends on the Scheme’s evaluation of the specific risk, subject in certain circumstances, to maximum limits based on characteristics of coverage. According to the terms of the capitation agreements, the suppliers provide certain minimum benefits to Scheme members on various benefit options, as and when required by the members. The Scheme does, however, remain liable to its members if any capitation provider fails to meet the obligations it assumes. When selecting a capitation provider the Scheme considers its stability from publicly available information and investigations.

22.3 Financial risk management

The Scheme's activities expose it to a variety of financial risks, including the effects of changes in bond and equity market prices, foreign currency exchange rates and interest rates. The Scheme's overall investment risk management programme focuses on the unpredictability of financial markets and seeks to minimise potentially adverse effects on the financial performance of the investments that the Scheme holds to meet its obligations to its members.

Investment risk management and investment decisions are carried out by the Investment Committee, under the guidance and policies approved by the Board. The Investment Committee identifies, evaluates and economically hedges, where appropriate, financial risk associated with the Scheme's investment portfolio. The Investment Committee provides written policies for overall investment risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and investing excess liquidity. The Board of Trustees approves all of the written investment policies.

61

Momentum Health Annual Financial Statements

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Interest rate risk is the exposure that the Scheme has to changes in interest rates. The main exposure to the Scheme would be a reduction in interest income on investments if interest rates were to decrease. In order to reduce the impact of any potential interest rate changes, the Scheme holds a diversified portfolio of investments.

The Scheme's investments in interest bearing instruments constitute a significant portion of the Scheme's total investments, and are exposed to interest rate risk. These funds are placed at both fixed and floating interest rates. The risk is managed by maintaining an appropriate mix between fixed and floating rate placings within market expectations.

The table below summarises, where applicable, the Scheme’s exposure to interest rate risk. Included in the table are the Scheme's investments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.

As at 31 December 2018

Up to 1 month

1 - 3 months

3 - 12 months Total

R’000 R’000 R’000 R’000

Investments held at fair value through profit or loss 1 251 156 - - 1 251 156 Cash, Deposits and Money Market instruments 726 844 - - 726 844 Bills, Bonds and Securities 438 603 - - 438 603Property 85 710 - - 85 710

Cash and cash equivalents 70 461 - - 70 461 Total 1 321 617 - - 1 321 617

As at 31 December 2017

Up to 1 month

1 - 3 months

3 - 12 months Total

R’000 R’000 R’000 R’000

Investments held at fair value through profit or loss 1 163 408 - - 1 163 408 Cash, Deposits and Money Market instruments 679 635 - - 679 635 Bills, Bonds and Securities 356 778 - - 356 778 Property 126 995 - - 126 995

Cash and cash equivalents 93 376 - - 93 376

Total 1 256 784 - - 1 256 784

If interest rates changed by 1%, assuming all other variables remain constant, and the recent past is predictive of the future, the impact to the return on investment and the resulting impact on the net surplus of the Scheme is illustrated below:

2018 2017

R’000 R’000

Cash and cash equivalents 1 308 819

If interest rates increased by 1%, assuming all other variables remain constant, and the recent past is predictive of the future, the impact on the fair value of the investment is illustrated below:

Investment held at fair value through profit or loss (9 019) (11 395)

Money market portfolio - Momentum Asset Management (Pty) Ltd 4 879 4 140

Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Scheme operates in South Africa and its cash flows are denominated in South African Rand (ZAR). The Scheme is not directly exposed to currency risk in relation to investments as all are denominated in South African Rand, and the diversified investment strategy currently precludes any direct foreign investments.

The Scheme is indirectly exposed to foreign currency risk to the extent that certain underlying healthcare service provider costs charged to the Scheme in Rand’s are impacted by the changes in foreign currency. The Scheme is also exposed to the changes in foreign currency in its international travel benefit where the costs of claims are affected by changes in foreign currency.

62

Annual Financial Statements Momentum Health

Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in the market place.

Equities are reflected at market values, which are susceptible to fluctuations. The Scheme manages its equity risk by employing the following procedures:

• mandating a specialist fund manager to invest in equities, where there is an active market and where access is gained to a broad spectrum of financial information relating to the companies invested in;

• diversifying across many securities to reduce risk. Diversification is guided by the Medical Schemes Act; and

• considering the risk-reward profile of holding equities and bearing the risk in order to obtain higher expected returns on assets.

Should the South African equities market change by 10%, assuming all other variables remain constant and the recent past is predictive of the future, the impact on the market value of the Scheme’s investments would be as follows:

% SA market movement

2018 2017

R’000 R’000

Investments held at fair value through profit or loss

Equities 10% 40 321 46 401

Credit risk

Credit risk is the risk of loss arising from the inability of a counter party to service their debt obligations.

The Scheme’s principal financial assets are cash and cash equivalents, accounts receivables and investments. The Scheme's credit risk is attributable primarily to trade and other receivables and fixed interest or bond investments. The amounts presented in the Statement of Financial Position are net of allowances for doubtful receivables (i.e. impairment losses), which have been estimated by the Board based on prior experience and the current economic environment. The credit risk on derivative instruments and cash transactions in liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Scheme has a policy of limiting the amount of credit exposure to any one financial institution to ensure that there are no significant concentrations of credit risk, with exposure spread over a large number of counterparties and members. This is in line with Annexure B of the regulations to the Act.

The Scheme's maximum exposure to credit risk at the reporting date is represented by its trade receivables, cash and investment holdings to the value of R1 817 million (2017: R1 786 million). None of the terms of the Scheme's financial assets have been renegotiated.

Trade and other receivables 2018 2017

R’000 R’000

Fully performing 40 097 57 312

Past due but not impaired 8 596 5 113

Past due and impaired 4 729 4 202

53 423 66 625

Provision for impairment of trade and other receivables (4 729) (4 202)

Trade and other receivables (refer note 3) 48 694 62 424

Trade and other receivables are impaired once they have exceeded 90 days past due. In addition, outstanding contribution debtors have been assessed on an individual basis for possible impairment, and specific impairment provisions raised where applicable. Other balances older than 90 days which were received in subsequent payments were not impaired. In order to further mitigate this risk, there is a formal policy in place for the treatment of any debt that becomes past due.

Age analysis of past due but not impaired 2018 2017

R’000 R’000

< 30 days 7 148 4 379

Between 30 and 60 days 972 697

Between 61 and 90 days 263 20

Greater than 90 days 214 16

8 596 5 113

The table below presents an analysis of the fair value of classes of financial assets as at the end of the reporting period, as well as corresponding indication that there would have been no material changes in fair value for the 2018 financial statements if the Scheme has applied of IFRS 9.

63

Momentum Health Annual Financial Statements

As at 31 December 2018 Fair value Fair value change

R’000 R’000

Assets

Investments held at fair value through profit or loss 1 698 025 -

Trade and other receivables 48 694 -

Cash and cash equivalents 70 461 -

1 817 180 -

The fair value of the Scheme's financial assets would have not significantly changed with the adoption of IFRS 9.

The Scheme does not report any of its financial assets by credit rating.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to meet liabilities when due. By monitoring the availability of funding through liquid holding cash positions with various financial institutions, the Trustees ensure that the Scheme has the ability to fund its day-to-day operations. Liquidity is further managed by monitoring forecast cash flows to ensure that the Scheme has adequate cash resources to meet its short term commitments. Whilst the investment portfolios at Sanlam Investment Managers and Prudential Investment Managers are classified as non-current assets due to the intention to hold them for a longer term, they can be liquidated within 24 hours. These investments have therefore been included as current assets for the purposes of calculating the liquidity ratio. The Scheme's liquidity ratio at 31 December 2018 was 2.9 (2017: 3.2).

The table below analyses the assets and liabilities of the Scheme into relevant maturity groupings based on the remaining period at Statement of Financial Position date to the contractual maturity date. The table is based on discounted amounts adjusted for interest to reconcile to the value per the Statement of Financial Position.

As at 31 December 2018

Up to 1 month

1 - 3 months

3 - 12 months

Discounting adjustment Total

R’000 R’000 R’000 R’000 R’000

Non-current assets 1 280 524 - - - 1 280 524

Investments held at fair value through profit or loss 1 280 524 - - - 1 280 524

Current assets 536 656 - - - 536 656

Trade and other receivables 48 694 - - - 48 694

Investments held at fair value through profit or loss 417 501 - - - 417 501

Cash and cash equivalents 70 461 - - - 70 461

Current liabilities 383 352 105 912 138 878 (7 167) 620 255

Savings plan liability* 27 475 49 674 67 647 (7 167) 137 629

Trade and other payables 183 879 - - - 183 879

Outstanding claims provision 171 998 55 518 71 230 - 298 747

Net positive liquidity 1 433 828 (105 192) (138 878) 7 167 1 196 925

* Interest to be paid on savings plan liability is based on the 2019 budget.

64

Annual Financial Statements Momentum Health

As at 31 December 2017

Up to 1 month

1 - 3 months

3 - 12 months

Discounting adjustment Total

R’000 R’000 R’000 R’000 R’000

Non-current assets 1 271 574 - - - 1 271 574

Investments held at fair value through profit or loss 1 271 574 - - - 1 271 574

Current assets 514 310 - - - 514 310

Trade and other receivables 62 424 - - - 62 424

Investments held at fair value through profit or loss 358 510 - - - 358 510

Cash and cash equivalents 93 376 - - - 93 376

Current liabilities 359 375 157 088 39 525 (8 490) 547 499

Savings plan liability 32 098 87 367 18 464 (8 490) 129 443

Trade and other payables 173 309 - - - 173 309

Outstanding claims provision 153 966 69 721 21 058 - 244 747

Net positive liquidity 1 426 508 (157 088) (39 525) 8 490 1 238 385

Breakdown of investments

The investments are split between held at fair value through profit or loss and cash and cash equivalents in the annual financial statements. To understand the liquidity risk associated with the current investment portfolio, the following disclosure is presented under each category:

2018 2017

R’000 R’000

Investments held at fair value through profit or loss (refer note 2) 1 698 025 1 630 084

Cash and cash equivalents (refer note 4) 70 461 93 376

Fair value estimation

The fair value of publicly traded financial instruments held at fair value through profit or loss is based on quoted market prices, which fluctuate on a daily basis. The face values less any estimated impairment adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.

2018 2017

Carrying amount Fair Value Carrying amount Fair Value

R’000 R’000 R’000 R’000

Financial AssetsTrade and other receivables 48 694 48 694 62 424 62 424

Investments held at fair value through profit or loss 1 698 025 1 698 025 1 630 084 1 630 084

Cash and cash equivalents 70 461 70 461 93 376 93 376

Financial LiabilitiesSavings plan liability 137 629 137 629 129 443 129 443

Trade and other payables 183 879 183 879 173 309 173 309

Fair value of financial assets and liabilities by hierachy level

The fair value of publicly traded financial instruments held as investments held at fair value through profit or loss, is based on quoted market prices at the statement of financial position date. Instruments classified as held at fair value through profit or loss in the statement of financial position are held at fair value.

65

Momentum Health Annual Financial Statements

Financial assets measured at fair value

Level 1

2018 2017R’000 R’000

Investments held at fair value through profit or loss (refer note 2)

1 698 025 1 630 084

Level 1 - Financial assets whose fair value is determined directly by reference to published price quotations in an active market.

Capital adequacy risk

This represents the risk that there are insufficient reserves to provide for adverse variations on future investment values and claims experience.

The Scheme has R 1 197 million (2017: R1 238 million) of members' funds at 31 December 2018, which translated to an accumulated funds ratio per the Council for Medical Schemes method of calculation of 23.9% (2017: 25.7%). The level of accumulated funds would have covered 3.7 months (2017: 4.3 months) of the claims costs incurred for the year.

Liability insurance

The Scheme participated in an exclusive liability insurance policy from Santam Ltd for an amount of R250 million (2017: R250 million).

23. Non-compliance with the Medical Schemes Act

The Council for Medical Schemes issued Circular 11 of 2006 (the Circular) dealing with issues to be addressed in the Annual Financial Statements of medical schemes. The Circular requires that all non-compliance matters noted should be disclosed in the Annual Financial Statements, irrespective of whether the matter is considered to be material or immaterial.

The compliance matters listed below cover all of the non-compliance matters for the 2018 financial year.

23.1 Sustainability of Benefit Options

Nature and impact

In terms of section 33(2) of the Act, each option shall be self-supporting in terms of membership and financial performance and be financially sound. As at 31 December 2018 the consolidated Ingwe, Incentive and Extender options did not meet this requirement.

Causes

Membership on these options did not grow to the extent that was anticipated in the budget, which in turn impacted the demographic profile. This, coupled with low investment returns, has resulted in the deficits incurred.

Corrective action

The Board of Trustees continues to monitor the potential risk and the impact to the Scheme of buy-downs to less costly options due to affordability resulting from high increases and/or significant benefit cuts which would have to be introduced to eliminate the operational deficits experienced on these three options. The Board regularly reviews the appropriateness of the Scheme's investment strategy for the purposes of managing investment risk while optimising investment returns within acceptable risk parameters.

23.2 Adequacy of Accumulated Funds

Nature and impact

The Act requires all medical schemes to hold accumulated funds, expressed as a percentage of gross annual contributions, of 25%. The Scheme’s accumulated funds ratio was 23.9% as at 31 December 2018 (2017: 25.7%)

Causes

The main reason for the deterioration in the Scheme’s reserves was the tough local economic environment which impacted the Scheme’s ability to achieve its membership growth targets and the resultant assumptions not materialising, and the fluctuating investment markets yielding negative returns, these losses being reflected in the solvency ratio whereas the longer term gains have not. In addition, the 1% increase in VAT announced in the budget speech in February 2018 (effective 1 April 2018) created an unanticipated additional cost which put further strain on the solvency level.

Corrective action

Higher contribution increases for 2019 were implemented to allow for the VAT increase and rebuild solvency levels. Renewed focus has been put to reignite sustainable growth for the Scheme. The Scheme will also continue to improve efficiencies in managing the claims experience through the Scheme’s managed care provider. Although the Scheme could disinvest its investments in order to realise the gains with the objective of meeting the Regulation 29 solvency requirement, there are a number of factors that the Scheme needs to consider in making this decision so as to ensure that such disinvestment would be in the best interest of Scheme members, as opposed to merely disinvesting for the purpose of attaining the statutory solvency requirements. While the Board plans to re-attain the 25% statutory solvency requirement, The Board continues to consider Momentum Health’s future Risk Based Capital requirements and the Scheme’s actuaries have assessed the Scheme’s capital adequacy requirement and confirmed that Momentum Health remains sustainable and in a strong capital position.

23.3 Investment in an employer group or administrator

Nature and impact

In terms of Section 35 (8) of the Act, a medical scheme shall not invest any of its assets in any medical scheme administrator or a holding company of a medical scheme administrator or an employer who participates in the medical scheme. The Scheme’s asset managers, Sanlam Life Insurance Ltd (Sanlam Asset Managers) and Prudential Investment Managers (South Africa) (Pty) Limited, invest a portion of the Scheme’s assets in medical scheme administrator holding companies and Scheme employer groups.

Causes

As a consequence of the investment decisions within the asset managers’ portfolios, the Scheme currently has investments in contravention of Section 35 (8). The Scheme has no influence over the investment decisions of the independent asset managers regarding what assets they invest the Scheme’s funds into, or the size of that asset holding. The investment decisions are made entirely at the asset manager’s discretion.

Corrective action

The Scheme made application to the Council for Medical Schemes for an exemption from this section of the Act and received such exemption.

66

Annual Financial Statements Momentum Health

23.4 Payment of Member claims

Nature and impact

In terms of Section 59 (2) of the Act, a medical scheme shall pay a member or supplier of service, any benefit owing to that member or supplier within 30 days after the day on which the claim was received.

Causes

Of the total 1 327 746 claims received for the year, 66 ( 0.005%) claims received were not paid within 30 days of receipt due to certain procedures to validate claims such as clinical auditing.

Corrective action

The claims paid outside of 30 days are investigated by the Scheme in conjunction with the Administrator to ensure effective management. The Trustees consider this to be unavoidable, given the large number of claims processed and the need for validation of all claims.

23.5 Collection of contributions

Nature and impact

In terms of Section 26 (7) of the Act, member contributions must be received within 3 days after payment thereof becoming due. There are instances where the Scheme received contributions after three days of becoming due. However, there are no contracts in place condoning this practice.

Causes

The Scheme continues to maintain its debit order strike facility which is in line with legislation. The Scheme has a large number of members who pay via EFT or cash deposits. For these Members, the Scheme has no control over the timing of the receipt of contributions.

Corrective action

The financial risk is mitigated by the Scheme’s stringent credit control policy and processes which minimises the risk of non-recoverability. The management of the contributions collections is an on-going process involving interaction with the employer groups, brokers and Members.

23.6 Prescribed Minimum Benefits (PMB) paid from savings instead of risk benefits

Nature and impact

In terms of Regulation 10(6) of the Act, medical schemes are required to fund claims for valid prescribed minimum benefit (PMB) conditions from risk benefits and not from Member savings accounts. Following a comprehensive audit of claim payments, it was established there were a small number of claims for which the Scheme was responsible to pay from risk benefits that had been paid from member savings accounts.

Causes

The primary reason for these originally incorrect payments was that at the time of originally processing these claims, the Scheme did not have sufficient information to identify the claims as PMB claims.

Corrective action

On receipt of information that confirms a previously paid claim to be for a PMB condition, the original claims are reprocessed and payment reversed from the member savings account and re-paid from risk benefit.

24. Administration software

In terms of the current agreement, the Scheme has granted MMI Holdings Limited an exclusive licence, to utilise the software initially developed by the Scheme for the purposes of carrying on the business of providing administration and managed care services. In return MMI Holdings Limited is required to incur all necessary costs associated with the maintenance, support and development of the software.

Should the relationship between the two parties be terminated, both parties shall be entitled to a copy of the software and related documentation existing at that date.

25. Subsequent events

No material events have occurred subsequent to the end of the accounting period to the date of signing that affect the annual financial report, and that the Board believes should be brought to the attention of the Members of the Scheme.

26. Going concern

The Board believes that the Scheme has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis. The Board have satisfied themselves that the Scheme is in a sound financial position to meet its foreseeable cash requirements. The Board are not aware of any new material changes that may adversely impact the Scheme. The Board are also not aware of any material non-compliance with statutory or regulatory requirements or any pending changes to legislation, which may affect the Scheme.

67

Momentum Health Annual Financial Statements

27. Comprehensive Income/(Loss) per Benefit Option

Ingwe* Impact Custom Incentive* Extender* Summit TOTAL

2018Ingwe Primary

Care State Hospital

Ingwe Primary Care

Associated Hospital

Ingwe Primary Care Any Hospital

Total

Custom State Associated

HospitalCustom State Any Hospital

Custom Any GP/

Pharmacy Any Hospital

Custom Any GP/Pharmacy

Associated Hospital

Custom Associated

GP/Pharmacy Any Hospital

Custom Associated

GP/Pharmacy Associated

Hospital

Total

Incentive State

Associated Hospital

Incentive State Any

Hospital

Incentive Any GP/

Pharmacy Any

Hospital

Incentive Any GP/

Pharmacy Associated

Hospital

Incentive Associated

GP/Pharmacy

Any Hospital

Incentive Associated

GP/Pharmacy

Associated Hospital Total

Extender State

Associated Hospital

Extender State Any

Hospital

Extender Any GP/

Pharmacy Any

Hospital

Extender Any GP/

Pharmacy Associated

Hospital

Extender Associated

GP/Pharmacy

Any Hospital

Extender Associated

GP/Pharmacy

Associated Hospital Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Risk contributions 17 161 215 689 159 695 392 545 65 025 1 429 801 225 624 122 102 120 205 35 551 189 564 2 122 847 432 155 340 206 443 616 112 949 69 575 92 892 1 491 393 22 947 63 632 194 914 37 232 11 488 17 911 348 124 76 265 4 496 199

Relevant healthcare expenditure (7 399) (206 082) (129 299) (342 780) (48 911) (1 046 602) (182 310) (138 318) (153 487) (39 528) (193 737) (1 753 982) (330 441) (251 304) (510 870) (115 123) (77 713) (103 729) (1 389 180) (15 200) (35 361) (202 078) (44 376) (8 704) (18 053) (323 772) (67 599) (3 926 224)

Net claims incurred (6 726) (199 369) (121 009) (327 104) (47 147) (922 174) (167 783) (147 370) (169 906) (40 620) (203 684) (1 651 537) (300 194) (232 298) (550 952) (129 630) (80 265) (107 651) (1 400 990) (14 308) (33 268) (221 277) (48 271) (9 107) (19 241) (345 472) (73 307) (3 845 557)Net (expense) / income on risk transfer arrangements (673) (6 713) (8 290) (15 676) (1 764) (124 428) (14 527) 9 052 16 419 1 092 9 947 (102 445) (30 247) (19 006) 40 082 14 507 2 552 3 922 11 810 (892) (2 093) 19 199 3 895 403 1 188 21 700 5 708 (80 667)

Recovery on risk transfer arrangements 5 054 50 262 63 026 118 342 13 103 8 579 1 020 15 915 24 367 3 219 23 427 76 527 2 074 1 306 61 521 20 349 6 245 9 234 100 729 56 127 25 283 5 279 820 1 881 33 446 7 119 349 266 Risk transfer arrangement expenses (5 727) (56 975) (71 316) (134 018) (14 867) (133 007) (15 547) (6 863) (7 948) (2 127) (13 480) (178 972) (32 321) (20 312) (21 439) (5 842) (3 693) (5 312) (88 919) (948) (2 220) (6 084) (1 384) (417) (693) (11 746) (1 411) (429 933)

Gross healthcare result 9 762 9 607 30 396 49 765 16 114 383 199 43 314 (16 216) (33 282) (3 977) (4 173) 368 865 101 714 88 902 (67 254) (2 174) (8 138) (10 837) 102 213 7 747 28 271 (7 164) (7 144) 2 784 (144) 24 352 8 665 569 975

Acquisition, marketing and servicing costs (1 038) (10 207) (11 000) (22 245) (2 762) (84 750) (10 707) (4 622) (5 343) (1 459) (9 050) (115 931) (25 383) (15 998) (16 426) (4 719) (3 065) (4 250) (69 841) (898) (2 071) (5 368) (1 239) (377) (621) (10 574) (1 226) (222 579)Administration expenses (1 875) (15 665) (22 830) (40 370) (4 609) (162 800) (19 231) (8 568) (9 848) (2 648) (16 653) (219 748) (52 322) (33 119) (35 251) (9 578) (6 049) (8 677) (144 996) (1 934) (4 560) (12 572) (2 836) (854) (1 418) (24 174) (3 477) (437 374)Net impairment losses on healthcare receivables (4) (130) (95) (229) (35) (160) (18) (8) (9) (2) (26) (223) (889) (190) (62) (35) (63) (135) (1 374) (53) (6) (18) (52) (26) (16) (171) (57) (2 089)

Net healthcare result 6 845 (16 395) (3 529) (13 079) 8 708 135 489 13 358 (29 414) (48 482) (8 086) (29 902) 32 963 23 120 39 595 (118 993) (16 506) (17 315) (23 899) (113 998) 4 862 21 634 (25 122) (11 271) 1 527 (2 197) (10 567) 3 906 (92 067)

Other income 290 3 418 3 264 6 972 954 21 327 3 297 1 764 1 752 515 2 775 31 430 6 346 4 930 6 365 1 625 1 002 1 344 21 612 327 902 2 753 529 163 256 4 930 1 065 66 963 Other expenditure (37) (364) (272) (673) (109) (2 538) (438) (254) (228) (70) (344) (3 872) (1 892) (1 811) (1 924) (354) (257) (302) (6 540) (435) (1 183) (2 656) (470) (107) (168) (5 019) (143) (16 356)

Surplus / (Deficit) for the year 7 098 (13 341) (537) (6 780) 9 553 154 278 16 217 (27 904) (46 958) (7 641) (27 471) 60 521 27 574 42 714 (114 552) (15 235) (16 570) (22 857) (98 926) 4 754 21 353 (25 025) (11 212) 1 583 (2 109) (10 656) 4 828 (41 460)

Other comprehensive income - - - - - - - - - - - - - - - - - - - - - - - - - - -

Total comprehensive income / (loss) for the year 7 098 (13 341) (537) (6 780) 9 553 154 278 16 217 (27 904) (46 958) (7 641) (27 471) 60 521 27 574 42 714 (114 552) (15 235) (16 570) (22 857) (98 926) 4 754 21 353 (25 025) (11 212) 1 583 (2 109) (10 656) 4 828 (41 460)

Number of members 858 14 231 31 404 46 493 1 721 52 202 5 979 2 597 3 036 817 5 161 69 792 12 292 7 697 8 037 2 209 1 389 2 013 33 637 355 827 2 279 513 153 259 4 386 526 156 555

Average number of principals 1 603 13 651 32 029 47 284 1 836 50 875 5 960 2 628 3 049 814 5 163 68 488 12 375 7 797 8 232 2 244 1 414 2 034 34 097 364 853 2 338 532 160 266 4 513 542 156 761 Average number of dependants 253 6 486 1 265 8 005 1 589 64 623 8 738 2 830 3 348 965 6 013 86 517 16 235 10 507 7 488 2 352 1 480 2 120 40 182 501 1 206 2 194 420 134 250 4 705 313 141 310

Average number of beneficiaries 1 857 20 137 33 295 55 288 3 425 115 498 14 698 5 458 6 397 1 779 11 175 155 005 28 609 18 304 15 721 4 597 2 895 4 154 74 279 865 2 060 4 532 952 294 517 9 218 855 298 071

Number of principals at the end of the period 858 14 231 31 404 46 493 1 721 52 202 5 979 2 597 3 036 817 5 161 69 792 12 292 7 697 8 037 2 209 1 389 2 013 33 637 355 827 2 279 513 153 259 4 386 526 156 555 Number of beneficiaries at the end of the period 1 109 20 937 32 736 54 782 3 172 118 955 14 702 5 329 6 316 1 756 11 141 158 199 28 525 18 068 15 274 4 505 2 824 4 076 73 272 838 1 986 4 398 910 284 502 8 918 823 299 166

Average age of beneficiaries 31.19 31.68 24.15 27.17 33.02 29.82 29.12 43.43 45.17 39.54 40.23 31.67 31.50 33.42 49.90 47.83 42.88 43.70 37.9 36.35 34.51 51.02 55.95 48.62 50.69 0.27 63.09 32.92

Beneficiaries >65 years (%) 0.54% 8.38% 0.57% 3.55% 8.9% 3.5% 3.5% 20.5% 21.8% 15.3% 16.1% 5.9% 0.06% 0.08% 0.32% 0.28% 0.22% 0.2%1 14.65% 12% 8% 35% 41% 30% 35% 27% 58.93% 8.41%

Dependant ratio 0.16 0.48 0.04 0.17 0.87 1.27 1.47 1.08 1.10 1.19 1.16 1.26 1.31 1.35 0.91 1.05 1.05 1.04 1.18 1.38 1.41 0.94 0.79 0.83 0.94 1.04 0.58 0.90

Risk contributionsPer average member per month (Rands) 892 1 317 415 692 2 951 2 342 3 155 3 872 3 285 3 637 3 060 2 583 2 910 3 636 4 491 4 194 4 099 3 805 3 645 5 255 6 215 6 947 5 836 5 983 5 602 6 428 11 722 2 390 Per average beneficiary per month (Rands) 770 893 400 592 1 582 1 032 1 279 1 864 1 566 1 665 1 414 1 141 1 259 1 549 2 352 2 048 2 003 1 864 1 673 2 210 2 575 3 584 3 260 3 261 2 890 3 147 7 436 1 257

Relevant healthcare expenditure Per average member per month (Rands) 385 1 258 336 604 2 219 1 714 2 549 4 386 4 195 4 046 3 127 2 134 2 225 2 686 5 171 4 275 4 579 4 249 3 395 3 481 3 454 7 203 6 955 4 533 5 647 5 978 10 390 2 087 Per average beneficiary per month (Rands) 332 853 324 517 1 190 755 1 034 2 112 1 999 1 852 1 444 942 963 1 144 2 708 2 087 2 237 2 081 1 558 1 464 1 431 3 716 3 885 2 471 2 913 2 926 6 591 1 098

Total relevant healthcare expenditure as % of gross contributions 43% 96% 81% 87% 75% 73% 81% 113% 128% 111% 102% 83% 76% 74% 115% 102% 112% 112% 93% 66% 56% 104% 119% 76% 101% 93% 89% 87%

Non-healthcare expenditure Per average member per month (Rands) 152 159 88 111 336 406 419 418 415 420 415 409 529 527 524 532 541 535 528 661 648 640 647 655 642 645 731 352 Per average beneficiary per month (Rands) 131 108 85 95 180 179 170 202 198 192 192 181 229 224 274 260 264 262 243 278 269 330 361 357 331 316 464 185

Non-healthcare expenses as a % of risk contributions 17% 12% 21% 16% 11% 17% 13% 11% 13% 12% 14% 16% 18% 14% 12% 13% 13% 14% 14% 13% 10% 9% 11% 11% 11% 10% 6% 15%

Return on investments as a % of investments 3.4%

Average accumulated funds per member at 31 December 2018 7.6

* The consolidated Ingwe, Incentive and Extender benefit options incurred an operational deficit for the year.

68

Annual Financial Statements Momentum Health

27. Comprehensive Income/(Loss) per Benefit Option

Ingwe* Impact Custom Incentive* Extender* Summit TOTAL

2018Ingwe Primary

Care State Hospital

Ingwe Primary Care

Associated Hospital

Ingwe Primary Care Any Hospital

Total

Custom State Associated

HospitalCustom State Any Hospital

Custom Any GP/

Pharmacy Any Hospital

Custom Any GP/Pharmacy

Associated Hospital

Custom Associated

GP/Pharmacy Any Hospital

Custom Associated

GP/Pharmacy Associated

Hospital

Total

Incentive State

Associated Hospital

Incentive State Any

Hospital

Incentive Any GP/

Pharmacy Any

Hospital

Incentive Any GP/

Pharmacy Associated

Hospital

Incentive Associated

GP/Pharmacy

Any Hospital

Incentive Associated

GP/Pharmacy

Associated Hospital Total

Extender State

Associated Hospital

Extender State Any

Hospital

Extender Any GP/

Pharmacy Any

Hospital

Extender Any GP/

Pharmacy Associated

Hospital

Extender Associated

GP/Pharmacy

Any Hospital

Extender Associated

GP/Pharmacy

Associated Hospital Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Risk contributions 17 161 215 689 159 695 392 545 65 025 1 429 801 225 624 122 102 120 205 35 551 189 564 2 122 847 432 155 340 206 443 616 112 949 69 575 92 892 1 491 393 22 947 63 632 194 914 37 232 11 488 17 911 348 124 76 265 4 496 199

Relevant healthcare expenditure (7 399) (206 082) (129 299) (342 780) (48 911) (1 046 602) (182 310) (138 318) (153 487) (39 528) (193 737) (1 753 982) (330 441) (251 304) (510 870) (115 123) (77 713) (103 729) (1 389 180) (15 200) (35 361) (202 078) (44 376) (8 704) (18 053) (323 772) (67 599) (3 926 224)

Net claims incurred (6 726) (199 369) (121 009) (327 104) (47 147) (922 174) (167 783) (147 370) (169 906) (40 620) (203 684) (1 651 537) (300 194) (232 298) (550 952) (129 630) (80 265) (107 651) (1 400 990) (14 308) (33 268) (221 277) (48 271) (9 107) (19 241) (345 472) (73 307) (3 845 557)Net (expense) / income on risk transfer arrangements (673) (6 713) (8 290) (15 676) (1 764) (124 428) (14 527) 9 052 16 419 1 092 9 947 (102 445) (30 247) (19 006) 40 082 14 507 2 552 3 922 11 810 (892) (2 093) 19 199 3 895 403 1 188 21 700 5 708 (80 667)

Recovery on risk transfer arrangements 5 054 50 262 63 026 118 342 13 103 8 579 1 020 15 915 24 367 3 219 23 427 76 527 2 074 1 306 61 521 20 349 6 245 9 234 100 729 56 127 25 283 5 279 820 1 881 33 446 7 119 349 266 Risk transfer arrangement expenses (5 727) (56 975) (71 316) (134 018) (14 867) (133 007) (15 547) (6 863) (7 948) (2 127) (13 480) (178 972) (32 321) (20 312) (21 439) (5 842) (3 693) (5 312) (88 919) (948) (2 220) (6 084) (1 384) (417) (693) (11 746) (1 411) (429 933)

Gross healthcare result 9 762 9 607 30 396 49 765 16 114 383 199 43 314 (16 216) (33 282) (3 977) (4 173) 368 865 101 714 88 902 (67 254) (2 174) (8 138) (10 837) 102 213 7 747 28 271 (7 164) (7 144) 2 784 (144) 24 352 8 665 569 975

Acquisition, marketing and servicing costs (1 038) (10 207) (11 000) (22 245) (2 762) (84 750) (10 707) (4 622) (5 343) (1 459) (9 050) (115 931) (25 383) (15 998) (16 426) (4 719) (3 065) (4 250) (69 841) (898) (2 071) (5 368) (1 239) (377) (621) (10 574) (1 226) (222 579)Administration expenses (1 875) (15 665) (22 830) (40 370) (4 609) (162 800) (19 231) (8 568) (9 848) (2 648) (16 653) (219 748) (52 322) (33 119) (35 251) (9 578) (6 049) (8 677) (144 996) (1 934) (4 560) (12 572) (2 836) (854) (1 418) (24 174) (3 477) (437 374)Net impairment losses on healthcare receivables (4) (130) (95) (229) (35) (160) (18) (8) (9) (2) (26) (223) (889) (190) (62) (35) (63) (135) (1 374) (53) (6) (18) (52) (26) (16) (171) (57) (2 089)

Net healthcare result 6 845 (16 395) (3 529) (13 079) 8 708 135 489 13 358 (29 414) (48 482) (8 086) (29 902) 32 963 23 120 39 595 (118 993) (16 506) (17 315) (23 899) (113 998) 4 862 21 634 (25 122) (11 271) 1 527 (2 197) (10 567) 3 906 (92 067)

Other income 290 3 418 3 264 6 972 954 21 327 3 297 1 764 1 752 515 2 775 31 430 6 346 4 930 6 365 1 625 1 002 1 344 21 612 327 902 2 753 529 163 256 4 930 1 065 66 963 Other expenditure (37) (364) (272) (673) (109) (2 538) (438) (254) (228) (70) (344) (3 872) (1 892) (1 811) (1 924) (354) (257) (302) (6 540) (435) (1 183) (2 656) (470) (107) (168) (5 019) (143) (16 356)

Surplus / (Deficit) for the year 7 098 (13 341) (537) (6 780) 9 553 154 278 16 217 (27 904) (46 958) (7 641) (27 471) 60 521 27 574 42 714 (114 552) (15 235) (16 570) (22 857) (98 926) 4 754 21 353 (25 025) (11 212) 1 583 (2 109) (10 656) 4 828 (41 460)

Other comprehensive income - - - - - - - - - - - - - - - - - - - - - - - - - - -

Total comprehensive income / (loss) for the year 7 098 (13 341) (537) (6 780) 9 553 154 278 16 217 (27 904) (46 958) (7 641) (27 471) 60 521 27 574 42 714 (114 552) (15 235) (16 570) (22 857) (98 926) 4 754 21 353 (25 025) (11 212) 1 583 (2 109) (10 656) 4 828 (41 460)

Number of members 858 14 231 31 404 46 493 1 721 52 202 5 979 2 597 3 036 817 5 161 69 792 12 292 7 697 8 037 2 209 1 389 2 013 33 637 355 827 2 279 513 153 259 4 386 526 156 555

Average number of principals 1 603 13 651 32 029 47 284 1 836 50 875 5 960 2 628 3 049 814 5 163 68 488 12 375 7 797 8 232 2 244 1 414 2 034 34 097 364 853 2 338 532 160 266 4 513 542 156 761 Average number of dependants 253 6 486 1 265 8 005 1 589 64 623 8 738 2 830 3 348 965 6 013 86 517 16 235 10 507 7 488 2 352 1 480 2 120 40 182 501 1 206 2 194 420 134 250 4 705 313 141 310

Average number of beneficiaries 1 857 20 137 33 295 55 288 3 425 115 498 14 698 5 458 6 397 1 779 11 175 155 005 28 609 18 304 15 721 4 597 2 895 4 154 74 279 865 2 060 4 532 952 294 517 9 218 855 298 071

Number of principals at the end of the period 858 14 231 31 404 46 493 1 721 52 202 5 979 2 597 3 036 817 5 161 69 792 12 292 7 697 8 037 2 209 1 389 2 013 33 637 355 827 2 279 513 153 259 4 386 526 156 555 Number of beneficiaries at the end of the period 1 109 20 937 32 736 54 782 3 172 118 955 14 702 5 329 6 316 1 756 11 141 158 199 28 525 18 068 15 274 4 505 2 824 4 076 73 272 838 1 986 4 398 910 284 502 8 918 823 299 166

Average age of beneficiaries 31.19 31.68 24.15 27.17 33.02 29.82 29.12 43.43 45.17 39.54 40.23 31.67 31.50 33.42 49.90 47.83 42.88 43.70 37.9 36.35 34.51 51.02 55.95 48.62 50.69 0.27 63.09 32.92

Beneficiaries >65 years (%) 0.54% 8.38% 0.57% 3.55% 8.9% 3.5% 3.5% 20.5% 21.8% 15.3% 16.1% 5.9% 0.06% 0.08% 0.32% 0.28% 0.22% 0.2%1 14.65% 12% 8% 35% 41% 30% 35% 27% 58.93% 8.41%

Dependant ratio 0.16 0.48 0.04 0.17 0.87 1.27 1.47 1.08 1.10 1.19 1.16 1.26 1.31 1.35 0.91 1.05 1.05 1.04 1.18 1.38 1.41 0.94 0.79 0.83 0.94 1.04 0.58 0.90

Risk contributionsPer average member per month (Rands) 892 1 317 415 692 2 951 2 342 3 155 3 872 3 285 3 637 3 060 2 583 2 910 3 636 4 491 4 194 4 099 3 805 3 645 5 255 6 215 6 947 5 836 5 983 5 602 6 428 11 722 2 390 Per average beneficiary per month (Rands) 770 893 400 592 1 582 1 032 1 279 1 864 1 566 1 665 1 414 1 141 1 259 1 549 2 352 2 048 2 003 1 864 1 673 2 210 2 575 3 584 3 260 3 261 2 890 3 147 7 436 1 257

Relevant healthcare expenditure Per average member per month (Rands) 385 1 258 336 604 2 219 1 714 2 549 4 386 4 195 4 046 3 127 2 134 2 225 2 686 5 171 4 275 4 579 4 249 3 395 3 481 3 454 7 203 6 955 4 533 5 647 5 978 10 390 2 087 Per average beneficiary per month (Rands) 332 853 324 517 1 190 755 1 034 2 112 1 999 1 852 1 444 942 963 1 144 2 708 2 087 2 237 2 081 1 558 1 464 1 431 3 716 3 885 2 471 2 913 2 926 6 591 1 098

Total relevant healthcare expenditure as % of gross contributions 43% 96% 81% 87% 75% 73% 81% 113% 128% 111% 102% 83% 76% 74% 115% 102% 112% 112% 93% 66% 56% 104% 119% 76% 101% 93% 89% 87%

Non-healthcare expenditure Per average member per month (Rands) 152 159 88 111 336 406 419 418 415 420 415 409 529 527 524 532 541 535 528 661 648 640 647 655 642 645 731 352 Per average beneficiary per month (Rands) 131 108 85 95 180 179 170 202 198 192 192 181 229 224 274 260 264 262 243 278 269 330 361 357 331 316 464 185

Non-healthcare expenses as a % of risk contributions 17% 12% 21% 16% 11% 17% 13% 11% 13% 12% 14% 16% 18% 14% 12% 13% 13% 14% 14% 13% 10% 9% 11% 11% 11% 10% 6% 15%

Return on investments as a % of investments 3.4%

Average accumulated funds per member at 31 December 2018 7.6

* The consolidated Ingwe, Incentive and Extender benefit options incurred an operational deficit for the year.

69

Momentum Health Annual Financial Statements

27. Comprehensive Income/(Loss) per Benefit Option

Ingwe* Impact Custom Incentive* Extender Summit TOTAL

2017Ingwe Primary

Care State Hospital

Ingwe Primary Care

Associated Hospital

Ingwe Primary Care Any Hospital

Ingwe Total

Custom State Associated

HospitalCustom State Any Hospital

Custom Any GP/

Pharmacy Any Hospital

Custom Any GP/Pharmacy

Associated Hospital

Custom Associated

GP/Pharmacy Any Hospital

Custom Associated

GP/Pharmacy Associated

Hospital

Total

Incentive State

Associated Hospital

Incentive State Any

Hospital

Incentive Any GP/

Pharmacy Any

Hospital

Incentive Any GP/

Pharmacy Associated

Hospital

Incentive Associated

GP/Pharmacy

Any Hospital

Incentive Associated

GP/Pharmacy

Associated Hospital Total

Extender State

Associated Hospital

Extender State Any

Hospital

Extender Any GP/

Pharmacy Any

Hospital

Extender Any GP/

Pharmacy Associated

Hospital

Extender Associated

GP/Pharmacy

Any Hospital

Extender Associated

GP/Pharmacy

Associated Hospital Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Risk contributions 16 643 189 125 135 287 341 055 79 094 1 173 589 195 008 111 780 105 979 29 884 157 096 1 773 336 403 625 328 447 435 733 106 510 56 940 84 812 1 416 067 24 928 70 092 200 691 39 526 11 821 17 326 364 384 86 536 4 060 472

Relevant healthcare expenditure (6 360) (175 539) (120 145) (302 044) (58 913) (836 439) (138 507) (121 619) (124 383) (31 275) (172 186) (1 424 409) (304 030) (231 873) (487 061) (107 046) (73 336) (93 750) (1 297 096) (15 519) (36 482) (207 559) (39 552) (12 403) (15 516) (327 031) (82 696) (3 492 189)

Net claims incurred (5 678) (168 809) (112 337) (286 824) (56 398) (736 725) (126 167) (129 724) (138 867) (32 243) (179 235) (1 342 961) (276 451) (214 119) (527 926) (119 438) (75 537) (97 372) (1 310 843) (14 591) (34 242) (226 235) (43 133) (12 932) (16 660) (347 793) (89 780) (3 434 599)Net (expense) / income on risk transfer arrangements (682) (6 730) (7 808) (15 220) (2 515) (99 714) (12 340) 8 105 14 484 968 7 049 (81 448) (27 579) (17 754) 40 865 12 392 2 201 3 622 13 747 (928) (2 240) 18 676 3 581 529 1 144 20 762 7 084 (57 590)

Recovery on risk transfer arrangements 4 626 43 031 53 137 100 794 15 546 8 254 1 003 14 256 21 283 2 699 18 282 65 777 2 211 1 404 61 467 17 718 5 101 8 302 96 203 71 169 24 830 5 009 945 1 799 32 823 8 646 319 789 Risk transfer arrangement expenses (5 308) (49 761) (60 945) (116 014) (18 061) (107 968) (13 343) (6 151) (6 799) (1 731) (11 233) (147 225) (29 790) (19 158) (20 602) (5 326) (2 900) (4 680) (82 456) (999) (2 409) (6 154) (1 428) (416) (655) (12 061) (1 562) (377 379)

Gross healthcare result 10 283 13 586 15 142 39 011 20 181 337 150 56 501 (9 839) (18 404) (1 391) (15 090) 348 927 99 595 96 574 (51 328) (536) (16 396) (8 938) 118 971 9 409 33 610 (6 868) (26) (582) 1 810 37 353 3 840 568 283

Acquisition marketing and servicing costs (991) (8 974) (9 466) (19 431) (3 361) (70 024) (9 367) (4 237) (4 684) (1 206) (7 705) (97 223) (23 958) (15 453) (16 120) (4 408) (2 447) (3 858) (66 244) (970) (2 321) (5 561) (1 312) (385) (609) (11 158) (1 388) (198 805)Administration expenses (1 741) (13 665) (19 332) (34 738) (5 502) (132 779) (16 594) (7 730) (8 480) (2 170) (13 942) (181 695) (48 497) (31 440) (34 117) (8 796) (4 785) (7 696) (135 331) (2 052) (4 986) (12 819) (2 947) (859) (1 349) (25 012) (3 884) (386 162)Net impairment losses on healthcare receivables - (120) (18) (138) (43) (30) (4) (2) (2) - (15) (53) (878) (125) (41) (50) (29) (154) (1 277) (46) (5) (12) (74) (31) (14) (182) (77) (1 770)

Net healthcare result 7 551 (9 173) (13 674) (15 296) 11 275 134 317 30 536 (21 808) (31 570) (4 767) (36 752) 69 956 26 262 49 556 (101 606) (13 790) (23 657) (20 646) (83 881) 6 341 26 298 (25 260) (4 359) (1 857) (162) 1 001 (1 509) (18 454)

Other income 772 8 597 6 709 16 078 3 514 52 402 8 657 4 946 4 700 1 323 6 980 79 008 17 943 14 545 19 241 4 708 2 517 3 753 62 707 1 098 3 085 8 825 1 740 521 762 16 031 3 776 181 114 Other expenditure (38) (341) (243) (622) (141) (2 233) (419) (241) (224) (61) (301) (3 479) (1 944) (1 923) (2 032) (379) (221) (305) (6 804) (484) (1 380) (2 864) (478) (119) (177) (5 502) (174) (16 722)

Surplus / (Deficit) for the year 8 285 (917) (7 208) 160 14 648 184 486 38 774 (17 103) (27 094) (3 505) (30 073) 145 485 42 261 62 178 (84 397) (9 461) (21 361) (17 198) (27 978) 6 955 28 003 (19 299) (3 097) (1 455) 423 11 530 2 093 145 938

Other comprehensive income - - - - - - - - - - - - - - - - - - - - - - - - - - -

Total comprehensive income / (loss) for the year 8 285 (917) (7 208) 160 14 648 184 486 38 774 (17 103) (27 094) (3 505) (30 073) 145 485 42 261 62 178 (84 397) (9 461) (21 361) (17 198) (27 978) 6 955 28 003 (19 299) (3 097) (1 455) 423 11 530 2 093 145 938

Number of members 1 866 13 826 29 585 45 277 2 330 48 686 5 847 2 643 2 913 761 4 962 65 812 12 652 8 058 8 645 2 301 1 447 2 017 35 125 417 985 2 546 593 173 277 4 991 645 154 181

Average number of principals 1 697 12 992 30 057 44 746 2 393 45 456 5 638 2 605 2 878 731 4 744 62 051 12 653 8 113 8 726 2 255 1 222 1 977 34 857 423 1 020 2 608 604 176 277 5 107 661 149 816 Average number of dependants 260 6 185 1 360 7 805 2 887 56 475 8 091 2 887 3 266 913 5 566 77 197 16 219 10 920 8 216 2 468 1 407 2 170 41 401 631 1 489 2 520 512 157 269 5 577 408 135 276

Average number of beneficiaries 1 957 19 177 31 417 52 551 5 280 101 931 13 729 5 492 6 144 1 644 10 309 139 248 28 782 19 034 16 942 4 723 2 629 4 148 76 259 1 053 2 508 5 127 1 116 333 546 10 684 1 070 285 092

Number of principals at the end of the period 1 866 13 826 29 585 45 277 2 330 48 686 5 847 2 643 2 913 761 4 962 65 812 12 652 8 058 8 645 2 307 1 447 2 017 35 126 417 985 2 546 593 173 277 4 991 645 154 181 Number of beneficiaries at the end of the period 2 131 20 292 30 982 53 405 4 448 109 274 14 243 5 552 6 201 1 697 10 761 147 728 29 125 18 923 16 682 4 801 3 004 4 215 76 750 1 028 2 417 5 016 1 087 329 542 10 419 1 037 293 787

Average age of beneficiaries 35.05 31.69 24.18 27.51 31.46 29.48 28.81 42.27 43.93 37.95 39.27 31.38 30.94 32.84 48.81 46.66 41.87 42.13 37.40 34.42 33.08 49.86 53.32 47.81 49.34 44.84 61.48 32.77

Beneficiaries >65 years (%) 0.33% 8.00% 0.43% 2.92% 7.22% 3.25% 3.35% 18.91% 19.51% 13.14% 14.41% 5.19% 5.26% 7.16% 30.48% 25.06% 20.24% 19.05% 12.04% 9.82% 6.62% 32.89% 37.07% 28.57% 31.55% 21.28% 48.05% 8.13%

Dependant ratio 0.15 0.48 0.05 0.17 1.21 1.24 1.44 1.11 1.14 1.25 1.17 1.24 1.29 1.35 0.94 1.09 1.15 1.10 1.19 1.49 1.46 0.97 0.85 0.89 0.97 1.09 0.62 0.90

Risk contributionsPer average member per month (Rands) 817 1 213 375 635 2 754 2 152 2 882 3 576 3 069 3 405 2 760 2 382 2 677 3 374 4 161 3 936 3 883 3 574 3 385 4 917 5 728 6 413 5 453 5 592 5 208 5 945 10 907 2 259 Per average beneficiary per month (Rands) 709 822 359 541 1 248 959 1 184 1 696 1 437 1 515 1 270 1 061 1 169 1 438 2 143 1 879 1 805 1 704 1 547 1 972 2 329 3 262 2 952 2 955 2 644 2 842 6 743 1 187

Relevant healthcare expenditure Per average member per month (Rands) 312 1 126 333 563 2 052 1 533 2 047 3 891 3 602 3 565 3 025 1 913 2 017 2 382 4 651 3 956 5 001 3 951 3 101 3 061 2 982 6 633 5 456 5 867 4 664 5 336 10 423 1 942 Per average beneficiary per month (Rands) 271 763 319 479 930 684 841 1 845 1 687 1 586 1 391 851 880 1 015 2 396 1 889 2 324 1 884 1 416 1 228 1 212 3 373 2 954 3 101 2 368 2 550 6 444 1 021

Total relevant healthcare expenditure as % of gross contributions 38% 93% 89% 89% 74% 71% 71% 109% 117% 105% 110% 80% 68% 64% 101% 91% 116% 100% 83% 47% 39% 78% 75% 79% 67% 67% 96% 81%

Non-healthcare expenditure Per average member per month (Rands) 134 146 80 101 310 372 384 383 381 385 381 375 486 483 480 490 495 493 485 605 598 588 598 603 593 593 674 326 Per average beneficiary per month (Rands) 116 99 76 86 141 166 158 182 179 171 175 167 212 206 247 234 230 235 222 243 243 299 324 319 301 284 417 172

Non-healthcare expenses as a % of risk contributions 16% 12% 21% 16% 11% 17% 13% 11% 12% 11% 14% 16% 18% 14% 12% 12% 13% 14% 14% 12% 10% 9% 11% 11% 11% 10% 6% 14%

Return on investments as a % of investments 10.6%

Average accumulated funds per member at 31 December 2017 8.0

* The consolidated Ingwe and Incentive benefit options incurred an operational deficit for the year.

70

Annual Financial Statements Momentum Health

27. Comprehensive Income/(Loss) per Benefit Option

Ingwe* Impact Custom Incentive* Extender Summit TOTAL

2017Ingwe Primary

Care State Hospital

Ingwe Primary Care

Associated Hospital

Ingwe Primary Care Any Hospital

Ingwe Total

Custom State Associated

HospitalCustom State Any Hospital

Custom Any GP/

Pharmacy Any Hospital

Custom Any GP/Pharmacy

Associated Hospital

Custom Associated

GP/Pharmacy Any Hospital

Custom Associated

GP/Pharmacy Associated

Hospital

Total

Incentive State

Associated Hospital

Incentive State Any

Hospital

Incentive Any GP/

Pharmacy Any

Hospital

Incentive Any GP/

Pharmacy Associated

Hospital

Incentive Associated

GP/Pharmacy

Any Hospital

Incentive Associated

GP/Pharmacy

Associated Hospital Total

Extender State

Associated Hospital

Extender State Any

Hospital

Extender Any GP/

Pharmacy Any

Hospital

Extender Any GP/

Pharmacy Associated

Hospital

Extender Associated

GP/Pharmacy

Any Hospital

Extender Associated

GP/Pharmacy

Associated Hospital Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Risk contributions 16 643 189 125 135 287 341 055 79 094 1 173 589 195 008 111 780 105 979 29 884 157 096 1 773 336 403 625 328 447 435 733 106 510 56 940 84 812 1 416 067 24 928 70 092 200 691 39 526 11 821 17 326 364 384 86 536 4 060 472

Relevant healthcare expenditure (6 360) (175 539) (120 145) (302 044) (58 913) (836 439) (138 507) (121 619) (124 383) (31 275) (172 186) (1 424 409) (304 030) (231 873) (487 061) (107 046) (73 336) (93 750) (1 297 096) (15 519) (36 482) (207 559) (39 552) (12 403) (15 516) (327 031) (82 696) (3 492 189)

Net claims incurred (5 678) (168 809) (112 337) (286 824) (56 398) (736 725) (126 167) (129 724) (138 867) (32 243) (179 235) (1 342 961) (276 451) (214 119) (527 926) (119 438) (75 537) (97 372) (1 310 843) (14 591) (34 242) (226 235) (43 133) (12 932) (16 660) (347 793) (89 780) (3 434 599)Net (expense) / income on risk transfer arrangements (682) (6 730) (7 808) (15 220) (2 515) (99 714) (12 340) 8 105 14 484 968 7 049 (81 448) (27 579) (17 754) 40 865 12 392 2 201 3 622 13 747 (928) (2 240) 18 676 3 581 529 1 144 20 762 7 084 (57 590)

Recovery on risk transfer arrangements 4 626 43 031 53 137 100 794 15 546 8 254 1 003 14 256 21 283 2 699 18 282 65 777 2 211 1 404 61 467 17 718 5 101 8 302 96 203 71 169 24 830 5 009 945 1 799 32 823 8 646 319 789 Risk transfer arrangement expenses (5 308) (49 761) (60 945) (116 014) (18 061) (107 968) (13 343) (6 151) (6 799) (1 731) (11 233) (147 225) (29 790) (19 158) (20 602) (5 326) (2 900) (4 680) (82 456) (999) (2 409) (6 154) (1 428) (416) (655) (12 061) (1 562) (377 379)

Gross healthcare result 10 283 13 586 15 142 39 011 20 181 337 150 56 501 (9 839) (18 404) (1 391) (15 090) 348 927 99 595 96 574 (51 328) (536) (16 396) (8 938) 118 971 9 409 33 610 (6 868) (26) (582) 1 810 37 353 3 840 568 283

Acquisition marketing and servicing costs (991) (8 974) (9 466) (19 431) (3 361) (70 024) (9 367) (4 237) (4 684) (1 206) (7 705) (97 223) (23 958) (15 453) (16 120) (4 408) (2 447) (3 858) (66 244) (970) (2 321) (5 561) (1 312) (385) (609) (11 158) (1 388) (198 805)Administration expenses (1 741) (13 665) (19 332) (34 738) (5 502) (132 779) (16 594) (7 730) (8 480) (2 170) (13 942) (181 695) (48 497) (31 440) (34 117) (8 796) (4 785) (7 696) (135 331) (2 052) (4 986) (12 819) (2 947) (859) (1 349) (25 012) (3 884) (386 162)Net impairment losses on healthcare receivables - (120) (18) (138) (43) (30) (4) (2) (2) - (15) (53) (878) (125) (41) (50) (29) (154) (1 277) (46) (5) (12) (74) (31) (14) (182) (77) (1 770)

Net healthcare result 7 551 (9 173) (13 674) (15 296) 11 275 134 317 30 536 (21 808) (31 570) (4 767) (36 752) 69 956 26 262 49 556 (101 606) (13 790) (23 657) (20 646) (83 881) 6 341 26 298 (25 260) (4 359) (1 857) (162) 1 001 (1 509) (18 454)

Other income 772 8 597 6 709 16 078 3 514 52 402 8 657 4 946 4 700 1 323 6 980 79 008 17 943 14 545 19 241 4 708 2 517 3 753 62 707 1 098 3 085 8 825 1 740 521 762 16 031 3 776 181 114 Other expenditure (38) (341) (243) (622) (141) (2 233) (419) (241) (224) (61) (301) (3 479) (1 944) (1 923) (2 032) (379) (221) (305) (6 804) (484) (1 380) (2 864) (478) (119) (177) (5 502) (174) (16 722)

Surplus / (Deficit) for the year 8 285 (917) (7 208) 160 14 648 184 486 38 774 (17 103) (27 094) (3 505) (30 073) 145 485 42 261 62 178 (84 397) (9 461) (21 361) (17 198) (27 978) 6 955 28 003 (19 299) (3 097) (1 455) 423 11 530 2 093 145 938

Other comprehensive income - - - - - - - - - - - - - - - - - - - - - - - - - - -

Total comprehensive income / (loss) for the year 8 285 (917) (7 208) 160 14 648 184 486 38 774 (17 103) (27 094) (3 505) (30 073) 145 485 42 261 62 178 (84 397) (9 461) (21 361) (17 198) (27 978) 6 955 28 003 (19 299) (3 097) (1 455) 423 11 530 2 093 145 938

Number of members 1 866 13 826 29 585 45 277 2 330 48 686 5 847 2 643 2 913 761 4 962 65 812 12 652 8 058 8 645 2 301 1 447 2 017 35 125 417 985 2 546 593 173 277 4 991 645 154 181

Average number of principals 1 697 12 992 30 057 44 746 2 393 45 456 5 638 2 605 2 878 731 4 744 62 051 12 653 8 113 8 726 2 255 1 222 1 977 34 857 423 1 020 2 608 604 176 277 5 107 661 149 816 Average number of dependants 260 6 185 1 360 7 805 2 887 56 475 8 091 2 887 3 266 913 5 566 77 197 16 219 10 920 8 216 2 468 1 407 2 170 41 401 631 1 489 2 520 512 157 269 5 577 408 135 276

Average number of beneficiaries 1 957 19 177 31 417 52 551 5 280 101 931 13 729 5 492 6 144 1 644 10 309 139 248 28 782 19 034 16 942 4 723 2 629 4 148 76 259 1 053 2 508 5 127 1 116 333 546 10 684 1 070 285 092

Number of principals at the end of the period 1 866 13 826 29 585 45 277 2 330 48 686 5 847 2 643 2 913 761 4 962 65 812 12 652 8 058 8 645 2 307 1 447 2 017 35 126 417 985 2 546 593 173 277 4 991 645 154 181 Number of beneficiaries at the end of the period 2 131 20 292 30 982 53 405 4 448 109 274 14 243 5 552 6 201 1 697 10 761 147 728 29 125 18 923 16 682 4 801 3 004 4 215 76 750 1 028 2 417 5 016 1 087 329 542 10 419 1 037 293 787

Average age of beneficiaries 35.05 31.69 24.18 27.51 31.46 29.48 28.81 42.27 43.93 37.95 39.27 31.38 30.94 32.84 48.81 46.66 41.87 42.13 37.40 34.42 33.08 49.86 53.32 47.81 49.34 44.84 61.48 32.77

Beneficiaries >65 years (%) 0.33% 8.00% 0.43% 2.92% 7.22% 3.25% 3.35% 18.91% 19.51% 13.14% 14.41% 5.19% 5.26% 7.16% 30.48% 25.06% 20.24% 19.05% 12.04% 9.82% 6.62% 32.89% 37.07% 28.57% 31.55% 21.28% 48.05% 8.13%

Dependant ratio 0.15 0.48 0.05 0.17 1.21 1.24 1.44 1.11 1.14 1.25 1.17 1.24 1.29 1.35 0.94 1.09 1.15 1.10 1.19 1.49 1.46 0.97 0.85 0.89 0.97 1.09 0.62 0.90

Risk contributionsPer average member per month (Rands) 817 1 213 375 635 2 754 2 152 2 882 3 576 3 069 3 405 2 760 2 382 2 677 3 374 4 161 3 936 3 883 3 574 3 385 4 917 5 728 6 413 5 453 5 592 5 208 5 945 10 907 2 259 Per average beneficiary per month (Rands) 709 822 359 541 1 248 959 1 184 1 696 1 437 1 515 1 270 1 061 1 169 1 438 2 143 1 879 1 805 1 704 1 547 1 972 2 329 3 262 2 952 2 955 2 644 2 842 6 743 1 187

Relevant healthcare expenditure Per average member per month (Rands) 312 1 126 333 563 2 052 1 533 2 047 3 891 3 602 3 565 3 025 1 913 2 017 2 382 4 651 3 956 5 001 3 951 3 101 3 061 2 982 6 633 5 456 5 867 4 664 5 336 10 423 1 942 Per average beneficiary per month (Rands) 271 763 319 479 930 684 841 1 845 1 687 1 586 1 391 851 880 1 015 2 396 1 889 2 324 1 884 1 416 1 228 1 212 3 373 2 954 3 101 2 368 2 550 6 444 1 021

Total relevant healthcare expenditure as % of gross contributions 38% 93% 89% 89% 74% 71% 71% 109% 117% 105% 110% 80% 68% 64% 101% 91% 116% 100% 83% 47% 39% 78% 75% 79% 67% 67% 96% 81%

Non-healthcare expenditure Per average member per month (Rands) 134 146 80 101 310 372 384 383 381 385 381 375 486 483 480 490 495 493 485 605 598 588 598 603 593 593 674 326 Per average beneficiary per month (Rands) 116 99 76 86 141 166 158 182 179 171 175 167 212 206 247 234 230 235 222 243 243 299 324 319 301 284 417 172

Non-healthcare expenses as a % of risk contributions 16% 12% 21% 16% 11% 17% 13% 11% 12% 11% 14% 16% 18% 14% 12% 12% 13% 14% 14% 12% 10% 9% 11% 11% 11% 10% 6% 14%

Return on investments as a % of investments 10.6%

Average accumulated funds per member at 31 December 2017 8.0

* The consolidated Ingwe and Incentive benefit options incurred an operational deficit for the year.

71

Vers

ion

2019

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