MINUTES OF THE 19TH ANNUAL GENERAL MEETING (“AGM”) OF THE RAND WATERMEDICAL SCHEME (RWMS) HELD AT THE ZWARTKOPJES CRICKET CLUB,

KROMVLEI ROAD, ALBERTON, ON 28 JUNE 2018 AT 09H19

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MEMBERS PRESENT

923 (Nine hundred and twenty-three) Members present in person as per theattendance register and no proxies were received.

EMPLOYER TRUSTEES

Mss S Molokoane-Machika (Deputy Chairperson)NGJ Mbileni

MEMBER TRUSTEES

Mss M Madisha (Chairperson)N Bangani

Messrs M Kgwale (Member Trustee)G Pierce

IN ATTENDANCE

Mss M Nyembe (Principal Officer)Messrs B Mahlangu (Acting Manager Secretariat Services) -

Minutes SecretaryL Ncobela (Funding Manager)

APOLOGIES

Mss BC Bam (Employer Trustee)E Maartens (Member Trustee)W Mohamed (Employer Trustee)NSN Sithole (Employer Trustee)

1 . OPENING AND WELCOME

The Chairperson WELCOMED all present and declared the meeting officiallyopen at 09h19.

2 . APOLOGIES

Apologies from Mss Bam, Maartens, Mohamed and Sithole were NOTED.

3 . NOTICE OF THE MEETING

It was noted that a notice of the AGM was issued to all Members 21 days beforethe date of the AGM in terms of Rule 28.1.2 of the RWMS.

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4 . QUORUM

The Chairperson declared the AGM duly constituted and a quorum was confirmedin accordance with the Rules of the RWMS.

5 . EVACUATION ROUTE

The evacuation route procedure was NOTED.

6 . ANNUAL GENERAL MEETING

It was noted that a notice of the AGM, comprising the agenda, Annual FinancialStatements of the RWMS including the reports of the BOT, Audit Committee andthe auditors was circulated to all the Members 21 days before the date of theAGM in terms of Rule 28.1.2 of the RWMS Rules.

6 . 1 . Adoption of the minutes of the AGM held on 23 June 2017

Ordinary resolution Number 1:

It was noted that the minutes of the AGM held on 23 June 2017 were circulated toall the Members for review and comments.

The Chairperson proposed a motion to adopt the minutes of the AGM held on23 June 2018.

The motion was adopted as follows:

Proposed: Ms B Hlatshwayo

Seconded: Ms M Francis

IT WAS RESOLVED THAT the minutes of the AGM held on 23 June 2017 be andare hereby ADOPTED as a true reflection of the proceedings subject to thefollowing amendments:

Page 08: Under responses to questions:o On the fourth bullet point, the word “rather” should be inserted between

the words “Practitioners” and “than”; ando on the fifth bullet point, the word “with” should be inserted between the

words “engage” and “Medical”.

The resolution was duly passed.

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6 . 2 . To receive and adopt the RWMS audited Annual Financial Statements (AFS),including the reports of the Board of Trustees (BOT), Audit Committee andthe auditors for the year ended 31 December 2017Ordinary resolution Number 2:

The purpose of the report was to request Members to consider and adopt theaudited AFS of the RWMS including the reports of the BOT, Audit Committee andthe auditors for the year ended 31 December 2017.

The following salient points were noted:

In accordance with Rule 28.1.1 of the RWMS Rules, the AGM must be heldnot later than 30 June of each year on a date which may be shown to permitreasonable attendance by the members of the RWMS to receive and considerthe audited AFS including the reports of the BOT, the Audit Committee andthe auditors;

the AFS comply with the requirements from the Council for Medical Schemesand the International Financial Reporting Standards (IFRS) as required bySection 37 (4) of the Medical Schemes Act, No.131 of 1998;

the AFS fairly present the state of affairs of the RWMS and the results thereofas well as the descriptive report;

the AFS are accompanied by the Management Accounts in respect of everybenefit option offered to the members of the RWMS indicating the financialperformance and the number of members enrolled per option;

the AFS were reviewed by External Auditors and the RWMS received anunqualified audit report; and

the AFS were reviewed by the Audit Committee and subsequently approvedby the BOT at its meeting held on 23 April 2018.

The Chairperson proposed a motion to adopt the audited AFS of the RWMSincluding the reports of the BOT, the Audit Committee and the External Auditorsfor the year ended 31 December 2017.

The motion was adopted as follows:

Proposed: Mr D Maepa

Seconded: Mr G Pierce

IT WAS RESOLVED THAT the audited AFS of the RWMS including the reportsof the BOT, the Audit Committee and the External Auditors for the year ended31 December 2017 be and are hereby ADOPTED.

The resolution was duly passed.

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6 . 3 . Ordinary resolution Number 3: To appoint auditors for the ensuing year

Ordinary resolution Number 3:

The purpose of the report was to request the Members to consider and adopt theappointment of external auditors for the ensuing year.

The following salient points were noted:

According to Rule 27.1 of the RWMS Rules, the auditors, who must beappointed in terms of Section 36 of the Medical Scheme Act, No.131 of 1998,must be approved by a resolution of the members at the AGM to hold officeuntil the next AGM;

the role of external auditors is to examine the accounting records and the AFSin accordance with the South African Auditing Standards; satisfy themselvesthat the accounting records comply with requirements from the Council forMedical Schemes and the provisions of the Medical Schemes Act, No.131 of1998 and that the AFS are in accordance with the accounting records andproperly drawn up to fairly present the financials as required by theInternational Financial Reporting Standards;

the contract with PricewaterhouseCoopers (PwC) as external auditors of theRWMS was extended on a month-to-month basis at the last AGM until thefinalisation of the supply chain management process; and

PwC was subsequently replaced by Ngubane & Co. Incorporated, the currentexternal auditors of the RWMS.

Members requested clarification on the following matters:

An indication of whether there had been a change of external auditors fromthe previous financial year; and

an indication of whether the current auditors, namely Ngubane & Co.Incorporated, were a credible organisation.

In response to the above, the following points were highlighted:

The previous external auditors, namely PwC, had been replaced by Ngubane& Co. Incorporated, which appointment required adoption by members of theRWMS at this meeting; and

auditors of medical schemes in South Africa are required to register with theCouncil for Medical Schemes (“the Council”). The appointment of externalauditors followed a stringent process, part of which required that auditorsshould be registered with the Council. The appointment of Ngubane & Co.Incorporated complied with all requirements. Furthermore, these auditorswere registered with the Council for Medical Schemes. The appointment ofauditors was for a period of three (3) years.

In seeking to address the credibility concerns relating to the appointment ofexternal auditors, the PO highlighted the following:

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The selection and appointment of external auditors was regulated by theCouncil for Medical Schemes;

following the appointment of an external auditor, the Council would verify thevalidity and compliance requirements relating to the proposed auditor;

following that verification process, the Council would then send a letter toRand Water confirming the validity of the auditor and that the auditor complieswith all requirements for appointment;

on receipt of the letter of confirmation from the Council, Rand Water would beproceed with the appointment process; and

the Scheme had embarked on a process of rotating auditors; this was the firstyear that Ngubane & Co. Incorporated would audit the RWMS.

In view of the above, Members indicated that they would continue to hold theBoard of Trustees accountable for any decisions they make concerning theScheme.

The Chairperson proposed that Members move for the adoption of a motion toconfirm the appointment of Ngubane & Co. Incorporated as external auditors ofthe Rand Water Medical Scheme.

The motion was adopted as follows:

Proposed: Ms T Tlowana

Seconded: Mr M Mothoko

IT WAS RESOLVED THAT the appointment of Ngubane & Co. Incorporated asexternal auditors of the Rand Water Medical Scheme be and is herebyADOPTED.

The resolution was duly passed.

6 . 4 . To authorise the BOT to fix the remuneration of the auditors

Ordinary resolution Number 4:

The purpose of the report was to request the Members to authorise the Board ofTrustees to fix the remuneration of the auditors of the Rand Water MedicalScheme.

The following salient points were noted:

The BOT has a role to determine the remuneration of the auditors, which mustbe adopted by members of the RWMS at the AGM; and

the RWMS was requesting a budget of R452, 625.00 (four hundred and fifty-two thousand, six hundred and twenty-five rand only) to cover audit expensesfor the year ending 31 December 2018.

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Members requested clarification on the following matters:

In light of the proposed remuneration, an indication of whether memberswould be required to increase their monthly contributions;

an indication of whether the proposed remuneration was an annual amountfixed for the duration of the contract; and

an indication of how accessible information about the Scheme was tomembers.

In response to the above, the following points were highlighted:

There would be no additional contributions from members for theremuneration of the auditors; current funds would be used to remunerate theauditors;

the auditors conduct the audit of the Scheme’s financial statements on anannual basis after the financial year-end in December. Following thefinalisation of the audit, the auditors report their audit findings to the Councilfor Medical Schemes; and

the purpose of the AGM was to provide members of the Scheme withinformation about how funds of the Scheme were utilised during the financialyear. Legislation also enabled members to access information about theScheme. Furthermore, Rand Water had a Policy and guidelines in place forrequesting information about the Scheme. However, in the interest ofaccountability, not all information at the disposal of the Board of Trusteescould be made available to all members of the Scheme; for instance, personalinformation of members was confidential and would thus not be shared.

The Chairperson proposed a motion to authorise the Board of Trustees to allocatea total budget of R452, 625.00 (four hundred and fifty-two thousand, six hundredand twenty-five rand only) for the annual audit fees until the next scheduled AGM.

The motion was adopted as follows:

Proposed: Ms L Masigo

Seconded: Ms N Xotshwa

IT WAS RESOLVED THAT the Board of Trustees of the Rand Water MedicalScheme be and is hereby AUTHORISED to allocate a total budget ofR452, 625.00 (four hundred and fifty-two thousand, six hundred and twenty-fiverand only) for the remuneration of auditors until the next AGM.

The resolution was duly passed.

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6 . 5 . To elect the Board of Trustees of the RWMS

Ordinary resolution Number 5:

The purpose of the report was to request the Members to elect the Board ofTrustees of the Rand Water Medical Scheme (RWMS).

The following salient points were noted:

According to Section 57 of the Medical Scheme Act, No.131 of 1998, theRWMS must have a BOT consisting of persons who are fit and proper tomanage the affairs and business of the RWMS;

Rule 20.2 of the RWMS Rules provides that five (05) Trustees must beelected by the members of the RWMS from amongst themselves referred toas the “Member Trustees” and the other five (05) Trustees must be appointedby the Board of Rand Water as the employer representative referred to as the“Employer Trustees”;

the term of office of the BOT is set for a period of three (03) years accordingto Rule 20.3 of the RWMS Rules;

the term of office of the following Employer Trustees lapsed on 13 June 2017:o Ms BC Bam;o Ms NGJ Mbileni;o Ms S Molokoane-Machika;o Ms NSN Sithole; ando Ms W Mohamed;

in compliance with the abovementioned Rules of RWMS, the Board of RandWater re-appointed these Members to serve in the BOT of the RWMS asEmployer Trustees effective 22 June 2017 until 31 March 2018. Theappointment was aligned with the term of office of Rand Water BoardMembers;

upon the expiry of the term of office of the Rand Water Board on31 March 2018, the Minister of Water and Sanitation further extended theterm until 30 June 2018;

in line with the latter extension by the Minister, the BOT of the RWMSresolved to extend the term of office of Mss Sithole and Mohamed, who arecurrently full-time employees of Rand Water, to 30 June 2018;

at the AGM held on 23 June 2017, the following Member Trustees werere-appointed to hold office until the next scheduled AGM:o Ms Madisha (Chairperson);o Mr Kgwale;o Ms Maartens;o Ms Bangani; ando Mr Pierce;

in accordance with Rule 20.2 of the RWMS Rules, the RWMS embarked on aprocess of electing new Member Trustees as the term of office of the currentMember Trustees listed above was expiring on 29 June 2018;

furthermore, Rule 20.18 stipulates that “A person so appointed must retire at

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the first ensuing Annual General Meeting and that meeting must fill thevacancy for the unexpired period of office of the vacating member of theBoard”, and clause 20.6 stipulates that “Retiring members of the Board areeligible for re-election provided no person shall serve more than twoconsecutive terms and no more than a total of three terms”.

following the election process, a report on trustee election results for MemberTrustees and their Alternates was considered by the BoT at its meeting heldon 09 March 2018; and

it was then resolved that trustee election results for members and theiralternates for the RWMS be recommended to the AGM to be held in June2018 for confirmation.

The Chairperson proposed a motion to appoint the following Member Trusteesand their Alternates elected in accordance with Rule 20.2 to hold office until thenext AGM and confirm the re-appointment of Employer Trustees: Member Trustees:

o Sihle Magaga (Alternate: Deon Reynolds);o Vincent Mello (Alternate: Modidi Lazarus Kgwale);o Anil Harrypurshad (Alternate: Fhulufhelo Radzilani);o Mduduzi Gift Buthelezi (Alternate: Denise Minnie); ando John Henry Arnold (retired trustee) (Alternate: John Clarence Geldenhuys)

Employer Trustees:o Ms S Molokoane-Machika (Deputy Chairperson);o Ms BC Bam;o Ms NGJ Mbileni;o Ms W Mohamed; ando Ms NSN Sithole.

The motion was adopted as follows:

Proposed: Ms T Ndlovu

Seconded: Ms N Matlanyane

IT WAS RESOLVED THAT the aforementioned Trustees be and are herebyELECTED to hold office until the next AGM.

The resolution was duly passed.

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7 . ANY OTHER BUSINESS TO TRANSACT

7 . 1 . Financial Results Presentation

The purpose of the report was to present the financial results of the RWMS for thefinancial year ended 31 December 2018.

The following salient points were noted:

Average membership during the three-year period increased by 149 membersand 368 beneficiaries. This was largely due to the take on of formerBushbuckridge Local Municipality (BBR) employees;

contributions had increased by 22% from R172m to R209m. This increasewas due to membership growth and annual contribution increases over thepast three years;

accumulated funds of the Scheme had increased by 36% from R160m toR218m over the three-year period;

the solvency ratio had increased by 13% from 92.9 to 104 at the end of 2017; an increase in the Gross healthcare result from R18.8m to R31.1m in 2017

was driven by the significant increase in contributions; an increase in the Net healthcare result from R10.8m in 2015 to R22.6m was

driven by the significant increase in contributions; there was an increase in investment income by 46% from R9.6m to R14.1m.

This was largely due to a build of accumulated funds over three years. Theinvestment return improved from 5.9 % to 6.9% during the three year period;

a review of contracts with current service providers indicated the following:o Sanlam Health – the contract was extended until June 2019 with three

months’ notice;o Sanlam IT – the contract was open ended (tender issued to the market);o Netcare 911 – the contract was extended until December 2019;o Actuaries – the contract with Alexander Forbes would expire in 2019; ando ShS – the contract would expire in June 2019;

new service providers were the following:o New Transactional Banking: RMB/FNB – contract to expire in 2021;o new auditors: Ngubane & Co. Incorporated – contract to expire in June

2021; the following tenders were pending:

o Hospital Benefit Utilisation & IT Administration System;o Pharmacy Management Service; ando Dental Management Service;

key matters that required attention included the following:o monitoring identified risks and mitigation actions related thereto;o benefit offering review, which included new generation options (e.g.

introduction of medical savings);o migration to a digital environment;o measures to improve customer experience;o addressing non-compliance matters relating to the Medical Schemes Act;o industry consolidation, which included:

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benefit options; and Scheme consolidation – driven by the Council for Medical Schemes

through the National Health Insurance (NHI);o regulatory changes – such as legislation, the NHI and Medical Schemes

Act; the external auditors identified the following audit findings which required

attention going forward:o in terms of Section 26(7) of the Medical Schemes Act, contributions must

be paid over to the Scheme within 3 days after becoming due. Somemember pensioners did not adhere to the prescriptions of the Act;

o in terms of Section 59 (2) of the Medical Schemes Act, accounts must bepaid within 30 days after the day on which the claims were received.There were instances of long outstanding claims not yet paid to theservice providers. These were due to inaccurate banking details by theservice providers, resulting in claims being rejected, long term cases -Specialist submit claims; and

o in terms of the Medical Schemes Act and Regulations thereto, a medicalscheme shall not invest any of its assets in the business of itsadministrator. During the year, the Scheme had pooled investments withexposure to the medical scheme’s administrators – Sanlam’s request foran exception to CMS was granted.

The Members NOTED the report.

7 . 2 . BERICO MODEL (Benefits Richness and Competitiveness) – alexanderForbesThe purpose of the report was to provide an industry update to the Members ofthe RWMS for noting.

The following salient points were noted:

The report contained information relating to the 2017 key indicators, benefitoffering, awareness, competitiveness of the RWMS against the overallMedical Services in the industry;

the RWMS had two options, namely Option A and Option B Plus; the number of beneficiaries in 2017 was 8 545 and 405 for Option A and

Option B Plus respectively; the average age of RWMS beneficiaries was 31 years in 2017; with regard to contributions and claims, the risk claims ratio was at 85%; in terms of financial performance of the RWMS, the net healthcare for 2017

was R22 million while the net surplus for the year amounted to R36 million; as at the financial year ended 31 December 2017, the solvency ratio was at

104 from 92.9 in 2015; with regard to the benefit offering, the following should be noted:

o Option A: 100% reimbursement rate for hospital expenses limited to

R1, 837, 000 per family i.e. scheme rate;

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day-to-day benefits subject to specific sub-limits; 26 PMB chronic conditions, 26 PMB’s with 270 Diagnostic Treatment

Pairs (DTP) and 26 Non PMB chronic conditions; ando Option B Plus:

100% reimbursement for hospital expenses limited to R899, 000 perfamily;

limited to day-to-day benefits subject to specific sub-limits; 26 PMB chronic conditions;

the industry update indicated the following:o with regard to the NHI, it should be noted that:

the revised White Paper was published in June 2017; the industry was still awaiting recommendations from the Davis Tax

Committee regarding funding; it would not be feasible to fund the NHI by removing medical aid tax

credits; lower than inflationary increases were applied to medical aid tax

credits in 2018 budgets; and R4.2 billion had been allocated to the NHI fund over the next three (3)

years;o the status of the Competition Commission’s Health Market Inquiry was as

follows: in February 2016, public hearings commenced with presentations from

state departments, international organisations, healthcare providers,consumers, schemes and administrators;

in December 2016, the final report and recommendations were to bepublished; however, the report was postponed to December 2017;

preliminary reports containing analyses of prescribed minimumbenefits, supplier-induced demand, and the profitability of privatehealth facilities had been delayed; and

initial reports on cost drivers were published in December 2017;o with regard to industry consolidation, the following should be noted:

the industry consolidation process was initiated in the year 2000; the White Paper on the NHI was gazetted on 30 June 2017; at the Board of Healthcare Funders (BHF) of Southern Africa, the

Council for Medical Schemes’ intention to “dissolve” all schemes withless than 6000 principal members irrespective of financial position,was announced; and

the Council issued a circular regarding a consultative process on theway forward.

Members requested clarification and raised concerns with regard to the followingmatters:

Reasons why the medical aid had not paid for a member’s blood tests; with regard to long-term investments, an indication of whether it was

appropriate to invest R4.9 million with Transnet;

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reasons why, in some instances, medical practitioners demanded upfrontpayment from patients;

reasons why it took long to reimburse members who claim from the Schemeafter having made upfront payments when consulting;

reasons why a member, who had been involved in a car accident, wasrequested to submit documents to Group Legal Services in order to recovertheir money;

an indication of whether the medical aid included international medical coverwith regard to members who may require medical attention while travellingabroad;

in instances wherein a member requires urgent medical attention and istransported to hospital by an ambulance, an indication of whether the costsassociated thereto, and which have to be partly honoured by the member,should be paid to the hospital or the ambulance service provider; and

an indication of reasons why some health facilities in Pretoria did notrecognise the Rand Water Medical Scheme.

In response to the above, the following points were highlighted:

The Rand Water Medical Scheme did allow the payment of pathologicalservices such as blood tests;

there were limits in place to regulate investments in bonds. Furthermore,Rand Water considers the credit rating of companies prior to making anyinvestment. Principles of prudential investment were also taken into accountwhen making a decision to invest;

the RWMS processed payments on a weekly basis. Aspects such as anincorrect doctor’s practice note and invalid bank account details oftencontributed to delayed payments;

different health facilities had different payment options, hence in some casespractitioners would request upfront payment while others did not;

when a person is injured in a car accident, a sum of money would normally bedue to that person. In the case of a person who belongs to a medical scheme,a portion of the total sum would be payable to the medical aid scheme; thispractice applied to all medical aid schemes in the country;

the RWMS did not have international medical cover. Members travellingabroad should consult the Rand Water Risk Advisory Department for anyadvice relating to emergencies which may occur while travelling abroad;

all costs associated with the Netcare 911 ambulance service for emergencieswere covered by the RWMS; as such, no payment should be made bymembers in this regard; and

the RWMS negotiated prices with health facilities at a central level. However,situations wherein members encounter challenges when consulting somehealth facilities would be followed up and addressed.

Comments by members are summarised as follows:

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It would be appropriate for the BoT to conduct roadshows aimed at educatingmembers more about the Scheme;

in the future, there should be clear communication with employees aboutarrangements pertaining to the AGM, particularly with regard to employeesbased at Rand Water sites; and

the starting time of the AGM caused an inconvenience to those members ofthe Scheme who had to execute their normal duties first prior to attending themeeting.

Management indicated the following with regard to the concerns raised bymembers:

The request to undertake roadshows was noted. These roadshows shouldaddress matters such as the NHI, the amalgamation of medical schemes andconcerns relating to some health facilities who do not allow members to buymedication with the medical aid;

with regard to improving communication, the Scheme would begin issuingmonthly newsletters to members in an effort to keep them abreast of anydevelopments relating to the scheme; and

the Scheme noted the concern relating to the starting time of the AGM andwould improve in this regard going forward in order to cater for all members’interests.

The Members NOTED the report.

8 . CLOSURE

Prior to the closure of the meeting, the PO was afforded an opportunity to bidfarewell to the Funding Manager (FM), Mr Lucky Ncobela.

The PO indicated that the FM had secured employment at another State-Owned Entity and that the 29th of June 2018 was the FM’s last day as aRand Water employee. The PO further indicated that the FM had beenwith Rand Water for the past eight (8) years and had contributedimmensely to the organisation during this period. On behalf of Rand Wateremployees, the PO wished the FM well in his new employment.

Furthermore, the PO welcomed the new Board of Trustees and wished them wellas Trustees of the Rand Water Medical Scheme.

Following the above, the Chairperson thanked all the members and the BoT fortheir attendance and contribution.

The meeting was declared closed at 12h32.

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_________________ ________________CHAIRPERSON DATE