Annual Report 2014/15 - National Health Laboratory Service · 2 NHLS ANNUAL REPORT 2014/15 Contents...

Annual Report 2014/15

About the NHLSThe National Health Laboratory Service (NHLS) is a public health laboratory service with over 300 laboratories across the nine provinces of South Africa and serves approximately 80% of the South African population.

VisionOur vision is to partner with the Department of Health to build a healthy nation through early detection, diagnosis and monitoring to prevent, manage and treat diseases to reduce the disease burden, and promote health and wellness, thereby ensuring a ‘long and healthy life for all South Africans’.

MissionTo partner with the Department of Health in:

• Delivering a responsive, quality, accessible, affordable and sustainable pathology service to enable clinical decisions in a seamless integrated clinical platform

• Appropriately training competent pathology professionals to deliver this service

• Delivering innovative translational research to ensure fulfilment of government’s vision of a ‘long and healthy life for all South Africans’.

ValuesFollowing a review and the modification of the NHLS 2010–2015 Strategic Plan, and in order to facilitate an organisational culture that reflects our small but fundamental shift in focus, we are committed to the following values:

• We value caring

Caring about the environment and society

This involves consideration for our impact on the environment and local communities, acting with concern and sensitivity. We are committed to behaving ethically and contributing to the economic development of the workforce, community and society at large. We give back to society and the environment and build capacity for a sustainable future.

• We value our employees united

Working together towards a common goal

Our employees are united by a common vision and support each other in contributing to a beneficial and safe working environment. Teamwork and cohesion are key and collaboration includes pooling resources and communicating about each other’s roles. We foster trust and honesty in interactions with colleagues and behave professionally. We value all contributions, treat everyone consistently and fairly, and capitalise on diverse viewpoints. We address and resolve conflicts effectively. We listen to others to fully understand and give clear, concise information when communicating feedback, expectations and accountabilities, and during coaching. We make NHLS goals a priority, use NHLS resources wisely and effectively and take responsibility for our work.

• We value service above self

Valuing a good work ethic and striving towards service excellence for customers

We are committed to working with customers and building good relationships with them by understanding their needs, responding quickly and providing appropriate solutions. We treat them with respect at all times; we are helpful, courteous, accessible, responsible and knowledgeable in our interactions. We understand that we have internal and external customers to whom we provide services and information. This information should be presented in a clear and concise manner, where the message is adapted to the audience.

• We value transformation

Looking forward to the future and growing together

This encompasses investing in the professional growth of staff by sharing knowledge and experience, peer networking, education through training and seeking opportunities to develop. It covers creative problem solving, informed risk-taking, learning from our mistakes and experiences and behaving professionally. We should adapt to change timeously and positively, address setbacks and ambiguity and adapt our thinking/approach as the situation changes. Ideas should be shared and implemented effectively. Leaders should develop innovative approaches and drive continuous improvement as well as effective and smooth change initiatives.

• We value who we are

Working with integrity and responsibility

We set and achieve goals, consistently delivering business results while complying with standards and meeting deadlines. We display commitment to organisational success; proactively identify ways to contribute; and take the initiative to address problems/opportunities.

Annual Report 2014/15

NHLS ANNUAL REPORT 2014/152

Contents

List of Abbreviations ....................................................................................................................................................................................... 3

Chapter 1 ................................................................................................................................. 6

Chairperson’s Foreword ................................................................................................................................................................................. 7

Chief Executive Officer’s Overview ............................................................................................................................................................ 9

Board of Directors ..........................................................................................................................................................................................12

NHLS Executive Committee ........................................................................................................................................................................14

Corporate ..........................................................................................................................................................................................................14

Surveillance ......................................................................................................................................................................................................15

Operations ........................................................................................................................................................................................................16

Highlights ..........................................................................................................................................................................................................17

Chapter 2 ............................................................................................................................... 19

Human Resources ..........................................................................................................................................................................................20

Information Technology ..............................................................................................................................................................................38

Communication, Marketing and Public Relations ..............................................................................................................................43

Academic Affairs, Research and Quality Assurance ...........................................................................................................................50

National Priority Programmes ...................................................................................................................................................................66

Chapter 3 ............................................................................................................................... 83

Eastern Cape ....................................................................................................................................................................................................84

Gauteng .............................................................................................................................................................................................................88

KwaZulu-Natal .................................................................................................................................................................................................93

Free State and North West ..........................................................................................................................................................................99

Limpopo and Mpumalanga ..................................................................................................................................................................... 104

Western and Northern Cape ................................................................................................................................................................... 111

NICD Director’s Overview ......................................................................................................................................................................... 117

NIOH Director’s Overview ........................................................................................................................................................................ 119

SAVP Director’s Overview ......................................................................................................................................................................... 121

Chapter 4 .............................................................................................................................122

Report of the Accounting Authority ..................................................................................................................................................... 123

Report of the Audit and Risk Committee ............................................................................................................................................ 133

Sustainability Report .................................................................................................................................................................................. 135

Corporate Governance .............................................................................................................................................................................. 141

Key Performance Indicators – Global Reporting Initiative ........................................................................................................... 150

Chief Financial Officer’s Report .............................................................................................................................................................. 160

Group salient information ........................................................................................................................................................................ 162

Group Annual Financial Statements ..................................................................................................................................................... 165

NHLS ANNUAL REPORT 2014/15 3

List of Abbreviations

AAR Academic Affairs and Research DNA Deoxyribonucleic Acid

AARQA Academic Affairs, Research and Quality Assurance DoH Department of Health

AAS African Academy of Sciences DR Drug Resistance

ACILT African Centre for Integrated Laboratory Training DSO Days’ Sales Outstanding

AET Adult Education and Training DUT Durban University of Technology

AHWP Asian Harmonisation Working Party EA Enterprise Architecture

AIF Africa Innovation Foundation EAP Employee Assistance Programme

APHL Association of Public Health Laboratories EC Eastern Cape

APP Android Application ECM Electronic Content Management

ART Anti-retroviral Therapy EE Employment Equity

ARV Anti-retroviral EGK Electronic Gate-Keeping

ASLM African Society for Laboratory Medicine EID Early Infant Diagnosis

B-BBEE Broad-based Black Economic Empowerment ELL Essential Laboratory List

CAPEX Capital Expenditure EPTB Extra-Pulmonary Tuberculosis

CCMA Commission for Conciliation Mediation and Arbitration

EQA External Quality Assurance/Assessment

CCMT Comprehensive Care Management and Treatment ERP Enterprise Resource Planning

CDC Centers for Disease Control and Prevention EXCO Executive Committee

CDW Corporate Data Warehouse FLLM Foundation of Laboratory Leadership Management

CEO Chief Executive Officer FNA Fine Needle Aspiration

CHBAH Chris Hani Baragwanath Academic Hospital GAP Gauteng Accelerator Programme

CHAI Clinton Health Access Initiative GEPF Government Employee Pension Fund

CLAT Cryptococcus Latex Antigen Test GLP Good Laboratory Practice

CM Cryptococcal Meningitis GSH Groote Schuur Hospital

CMJAH Charlotte Maxeke Johannesburg Academic Hospital

GXP GeneXpert

CMV Cytomegalovirus HAST HIV/AIDS, Sexually Transmitted Diseases and TB

CPD Continuing Professional Development HCT HIV Counselling and Testing

CPUT Cape Peninsula University of Technology HIE Health Information Exchange

CrAg Cryptococcal Antigen HIV/AIDS Human Immunodeficiency Virus /Acquired Immunodeficiency Syndrome

CSF Cerebrospinal Fluid HL7 Health Level 7

CSIR Council for Scientific and Industrial Research HMIS Health Management Information Systems

CU Comprehensive University HOD Head of Department

CUT Central University of Technology HPCSA Health Professions Council of South Africa

DBS Dried Blood Spot HR Human Resources

DCS Dried Culture Spot HTA Health Technology Assessment

Department of Correctional Services HWSETA Health and Welfare Sector Education and Training Authority

DGM Dr George Mukhari Hospital IATA International Air Transport Association


IALCH Inkosi Albert Luthuli Central Hospital NPV Negative Predictive Value

IAPC Institutional Academic Pathology Committee NRF National Research Foundation

ICSM Integrated Chronic Service Model OECD Organisation for Economic Co-operation and Development

ICT Information Communication Technology OH&S Occupational Health and Safety

ILO International Labour Organization PAHWP Pan African Harmonisation Working Party

INR International Normalised Ratio PCR Polymerase Chain Reaction

IPA Innovation Prize for Africa PEPFAR (US) President's Emergency Plan for AIDS Relief

ISO International Organization for Standardization PFMA Public Finance Management Act

ISS Instituto Superior Di Sanita PHC Primary Health Care

IT Information Technology PI Principal Investigator

ITSDM Integrated Tiered Service Delivery Model PLG PanLeucogated

IUTOX International Union of Toxicology PMC Pathology Management Committee

JHPIEGO Johns Hopkins Program for International Education in Gynecology and Obstetrics

PMO Project Management Office

KEH King Edward VIII Hospital PMMH Prince Mshiyeni Memorial Hospital

King III King Code of Governance Principles and the King Report on Governance

POCT Point-of-Care Testing

KSD King Sabata Dalindyebo Local Municipality POPI Protection of Personal Information

KZN KwaZulu-Natal PPP Public Private Partnerships

LFA Lateral Flow Assay PTS Proficiency Testing Schemes

LIS Laboratory Information System PTT Partial Thromboplastin Time

LTFU Loss-To-Follow-Up QA Quality Assurance

MDR-TB Multidrug-Resistant Tuberculosis QCA Quality Compliance Audit

MeCRU Medunsa Clinical Research Unit QMS Quality Management System

MGMH Mahatma Ghandi Memorial Hospital R&D Research and Development

mHealth Mobile Health RCE Regional Centre of Excellence

MPLS Multiprotocol Label Switching RDC Research and Development Committee

MRN Medical record number RDT Rapid Diagnostic Test

MTB/RIF Mycobacterium tuberculosis/Rifampicin Rif Rifampicin

MUT Mangosuthu University of Technology RPR Rapid Plasma Reagin

NAPC National Academic Pathology Committee R-R Rifampicin Resistant

NCR National Cancer Registry SABS South African Bureau of Standards

NHI National Health Insurance SADC Southern African Development Community

NHLS National Health Laboratory Service SAFETP SA Field Epidemiology and Laboratory Training Programme

NHRC National Health Research Committee SAIMR South African Institute for Medical Research

NICD National Institute for Communicable Diseases SAIOH South African Institute for Occupational Hygiene

NIH National Institutes of Health SALGA South African Local Government Association

NIOH National Institute for Occupational Health SAMA South African Medical Association

NMAL Nelson Mandela Academic Laboratory SAMHS SA Military Health Services

NMMU Nelson Mandela Metropolitan University SANAS South African National Accreditation System

NPP National Priority Programmes SANBS South African National Blood Service


SANC South African Nursing Council Wits University of the Witwatersrand

SAVP South African Vaccine Producers Limited WRHI Wits Reproductive Health and HIV Institute

SBAH Steve Biko Academic Hospital WSHVRU Walter Sisulu HIV Vaccine Research Unit

SCM Supply Chain Management WSP Workplace Skills Plan

SHBG Sex Hormone Binding Globulin WSU Walter Sisulu University

SLA Service Level Agreement XDR-TB Extensively Drug-Resistant Tuberculosis

SLIPTA Stepwise Laboratory Quality Improvement Process Towards Accreditation

ZiNQAP Zimbabwe National Quality Assurance Programme

SLMTA Strengthening Laboratory Management Towards Accreditation

SMLTSA Society for Medical Laboratory Technology of South Africa

SMME Small, Medium and Micro Enterprise

SMS Short messaging system

SMU Sefako Makgatho Health Sciences University

SNG SizweNtsaluba Gobodo

SOC Standard of Care

SOP Standard Operating Procedure

SPF Specified Pathogen Free

STI Sexually Transmitted Infection

TAT Turn-around time

TB Tuberculosis

TBH Tygerberg Hospital

ToR Terms of Reference

TPHA Treponema pallidum haemagglutination

TUT Tshwane University of Technology

UAL Universitas Academic Laboratories

UCT University of Cape Town

UFS University of the Free State

UJ University of Johannesburg

UKZN University of KwaZulu-Natal

UL University of Limpopo

Unisa University of South Africa

UP University of Pretoria

US University of Stellenbosch

UWC University of the Western Cape

VL Viral Load

VUT Vaal University of Technology

WAN Wide Area Network

WC Western Cape

WHO World Health Organization

WHO-AFRO World Health Organization African Regional Office

Chapter 1


Prof. Barry Schoub

It gives me great pleasure to present my report as the new Chairperson of the Board. It is indeed a great privilege and honour for me to have been invited by the Minister to return to the NHLS, this time as the Chairperson of its Board.

The year under review has been characterised by a number of transitional events – from the appointment of an interim CEO in November 2014, to the appointment of a new Board, with at least half of its members being newly appointed, in addition to a new Chairperson. I would like to extend my appreciation and gratitude to the former Chairperson of the Board, as well as the previous CEO for all they have done and achieved for the organisation. The stability, resilience and the excellence of the personnel of this organisation have been so amply demonstrated by the uninterrupted delivery on its mandate, despite the serious financial difficulties the organisation has been challenged with over the past year.

The new Board has indeed been faced with very significant challenges. Nevertheless the output and performance of the NHLS have remained consistently positive. The Minister of Health, the Director-General and Treasury, as well as the interim CEO and her executive team have been working vigorously to find amicable solutions to address cash flow challenges for the organisation. Furthermore, it gives me great pleasure to announce that the NHLS has received an unqualified audit for eight consecutive years.

The Board and the executive team are currently focusing a great deal of their attention on efforts to create the architectural plan for the NHLS structure to enable it to provide quality laboratory services to all sections of the population and to align its service delivery with that of the forthcoming National Health Insurance (NHI). At the same time, the NHLS continues to support world-class research and has been the custodian of teaching and training of laboratory medicine in order to produce the next generation of well-trained and competent pathologists, laboratory medical scientists, technologists and technicians. It also continues to be one of the world’s foremost participants in addressing formidable disease outbreaks on the African continent. The NICD received a special message of congratulation and appreciation from the Speaker of Parliament for its role in sending eight teams of specialists to Sierra Leone during the recent Ebola outbreak in West Africa. Comprehensive laboratory support for the priority programmes of HIV and tuberculosis (TB) have played a major role in the management of these diseases. Data recruited from the central data warehouse of the NHLS and analysed by the NICD demonstrated a gratifying decline of TB with

Chairperson’s Foreword

The new Board has indeed been faced with very

significant challenges. Nevertheless the output and

performance of the NHLS have remained

consistently positive.


(continued)1Chapter

the provision of anti-retrovirals. The NICD was also selected by the World Health Organization (WHO) to be one of its specialised international reference centres for diagnosing the Middle Eastern Respiratory Syndrome (MERS) coronavirus – another formidable infectious disease causing global concern.

In the year under review, the interim CEO and regional area managers devoted a great deal of energy to engaging stakeholders to ensure uncompromised service delivery. The team conducted quarterly and monthly meetings with provincial Departments of Health, hospital CEOs and other strategic partners with the aim of improving service delivery and client service.

We wish to express our gratitude to the Minister of Health, the honourable Dr Aaron Motsoaledi, for his outstanding help and support in assisting the organisation with these financial challenges over the past year. We are similarly indebted to the Director-General of Health, Ms Precious Matsoso, for her valued assistance during the reporting period. I personally am most appreciative of the confidence that they have shown in appointing me to this extremely important post at this juncture in the development of health services for the country. My Board and I are dedicated to creating an NHLS that will be one of the flagships in the coming NHI dispensation, by supplying life-saving laboratory support to the maintenance of a healthy South Africa.

Performance Information (continued)

Minister of Health Dr Aaron Motsoaledi with NHLS Board members


Ms Joyce Mogale

Chief Executive Officer’s Overview

IntroductionIn this past year, the NHLS celebrated 13 years of delivering world class, qualitative, affordable and sustainable laboratory services to the South African public, and participated in excellent research with our academic, international and continental counterparts.

In the same breath it would be fitting to say that 2014/15 was a challenging, but also ground-breaking financial year for the NHLS, and as the Interim Chief Executive Officer (CEO), I am particularly proud to present the report for this period. In addition, I would like to extend my praise to the executive management and employees of the NHLS for their commitment to excellence, resilience and relentless efforts, which contributed to a positive year end.

Our peopleAs a statutory body the NHLS, is controlled by 16 Board members led by the Board Chairperson, who in turn reports to the Minister of Health. The organisation is managed by an Executive Committee consisting of executive managers, reporting to the CEO, who in turn reports to the Board Chairperson. In the past year, the NHLS welcomed a new Executive Director for the National Institute for Occupational Health (NIOH); and also filled four key strategic vacancies, being Chief Financial Officer, Company Secretary, Head of the Learning Academy and Procurement Manager. In addition, the organisation improved on risk and legal compliance management by employing a Risk Manager and an interim Legal Manager.

As mentioned above during the reporting period, Dr Sophia Kisting was welcomed as the new Executive Director of the NIOH. She has a great deal of experience in OH&S locally, globally and has worked for many years for the International Labour Organization (ILO) in Geneva – a role that has engaged her with the different Occupational Health and Safety (OHS) systems of many countries around the globe. Under her stewardship the NIOH continues to build on the good foundations that were laid by her predecessors.

I am pleased to note that thus far the NHLS’ human resource matrix shows a healthy balance between resignations and intake of interns and newly qualified registrars compared to previous years.

Our stakeholdersThe NHLS continues to fulfil its mandate of teaching, training and research in collaboration with medical universities, universities of technology and comprehensive universities. Engagements to finalise academic bilateral agreements with these institutions continues. The teaching and training of medical technologists and technicians is supported through the Learning Academy, while the Academic Affairs Research and Quality Assurance (AARQA) office supports the registrar and intern medical scientists training and overall academic support.

It is pleasing to note that despite major

challenges involving increasing debtors, we

have remained resilient in delivering on our mandates and have continued to make

strides in our day-to-day business activities


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Focused support towards strengthening the diagnostic laboratory platform was received from the Centers for Diseases Control (CDC) and global funding in conjunction with the Department of Health (DoH). Substantial financial support for research activities was received from national and international grantors enabling our researchers to continue with their innovative research activities, as 624 peer-reviewed journal articles were published together with our academic partners. The NHLS continues to provide support to African countries by offering laboratory training courses towards improvement of laboratory services offered to African public populations. A healthy relationship has also been forged with the Southern African Development Community (SADC), in which the NHLS spearheads the development of training materials and provide laboratory training courses.

In order to position the NHLS as a strategic information hub for the public health sector, the Information Technology Department is embarking on a journey to develop interfaces with key stakeholders such as the DoH, the National Institute for Communicable Diseases (NICD) and the NIOH. The NHLS is also participating in the Health Information Exchange (HIE) platform with the DoH. The process for data enrichment is on track to ensure integrity between patient episodes and data.

The Learning Academy established a partnership with the American Association of Public Health Laboratories (APHL), through funding from the CDC. The funding enabled the Academy to provide a course in Foundation of Laboratory Leadership Management (FLLM) to 110 junior managers and supervisors within the NHLS.

The achievement of the NHLS’ strategic objectives and mandate rests largely on the formation of partnerships with key stakeholders. In the period, the NHLS continued to engage and strengthen relationships with the National Department and Provincial Departments of Health, in order to ensure adherence to service level agreements and payment for laboratory and related services.

Technological InnovationThrough partnering with the Council for Scientific and Industrial Research (CSIR), which is a power house of research, technology and engineering knowledge and expertise, whose mandate is to improve the lives of the people of the Republic, through building and implementing technologies that support health care delivery, such as diagnostic pathology services, the NHLS seeks to implement its mandate by embracing advances in technology platforms, to improve quality and access to diagnostic services. This partnership sees the two organisations leveraging on each other’s strengths, in order to deliver quality and accessible pathology services. The collaboration thus far, has delivered the following results:

• A national pathology database was initiated in 2014, aimed at teaching, training and outreach within the NHLS, in order to improve the accuracy and throughput of diagnoses related to diagnostic morphology.

• The database and associated technology infrastructure was permanently implemented at national scale with the NHLS as of February 2015 and has been utilised for the 2014 and 2015 editions of the NHLS' annual morphology training course.

This partnership is of extreme significance to the organisation, as the NHLS is uniquely positioned as South Africa’s and Africa's largest generator of expert pathology knowledge and the CSIR has designed technologies and workflows to structure and redistribute this information. The NHLS has, and continues to leverage this knowledge and related technology platforms, to improve its diagnostic performance, number of skilled staff and accuracy of service.

Our BusinessIt is pleasing to note that despite major challenges involving increasing debtors, we have remained resilient in delivering on our mandates and have continued to make strides in our day-to-day business activities . This is evident in the below mentioned activities.

The NHLS’ Corporate Data Warehouse (CDW) is the organisation’s gem and treasure as it holds laboratory tests and patient demographic data for all patients receiving their healthcare in the public sector, which amounts to approximately 80% of the total South African population. Consequently, the CDW is a vital source of public health information for the National and Provincial Departments of Health, as it monitors their health programmes and measures the outcome of health interventions.

The Prevention of Mother to Child Transmission (PMTCT) Programme is a priority health programme in the country with a target of achieving <2% transmission of HIV from mother to child by the end of 2015. Early infant diagnosis (EID) testing for HIV is central to this programme for identifying HIV-infected infants, to initiate HIV treatment and to monitor the efficacy of the PMTCT programme by measuring reductions in transmission rates. At the end of 2014, the NHLS CDW HIV PCR data was the first to demonstrate that the target had been exceeded, reporting the national early transmission rate of HIV at 1.8% and the national coverage rate of EID at 85%.

In the year under review, the NHLS was appointed by the DoH to provide services aimed at improving TB and HIV/AIDS management for vulnerable peri-mining communities in the six mining districts. The Global Fund made this possible through the provision of funds that enabled the NHLS to pilot six staffed GeneXpert (GXP) fitted mobile TB units within


communities to undertake Xpert MTB/RIF testing for TB. The programme was conducted in partnership with the Aurum Institute, which is responsible for screening, counselling and specimen collection.

It is satisfying to note that during the 2014/15 period, the demand from provinces for NHLS’ services showed an increase of 4.52% from 79 507 377 to 83 278 870 in test volumes, mainly driven by viral load and GeneXpert volumes.

The NHLS continued to fulfil its mandate of teaching and training through activities of the Learning Academy, which is housed at the Human Resources department. In the previous reporting period, increased emphasis was placed on the standardisation of all activities for the training of students; design and development of technical training material; up-skilling of the technical training resources; standardisation of reporting and information management; and review of policies procedures and workflow.

The Learning Academy has had to prioritise skills development through the analysis of employees’ most critical skills needs, through the implementation of the Workplace Skills Plan (WSP). I am proud to report that the NHLS fulfilled these objectives in the 2014/15 financial year, as a total of 1 946 employees attended technical and non technical learning programmes and conferences in the period.

Our FinancesOur finances took a dramatic turn for the better, during the last four months of the reporting period, and I am pleased to report that through increased collection of debtors, the NHLS has improved its financial status to meet its operational needs, although prior debt remains an area of concern. This could not have happened without the continuous support from the Honourable Minister of Health Dr Aaron Motsoaledi and the Director-General of Health Ms Precious Malebona Matsoso.

The aging profile of creditors drastically reduced from December 2014, with a sound payment plan in place. As of the end of March 2015, credit balances for all SMMEs were current, and those of all major suppliers were being proactively managed.

The organisation received yet another unqualified audit report from the Auditor General as represented by Sizwe Ntsaluba Gobodo for the financial year ended 31 March 2015. The audit opinion is the 8th consecutive unqualified report and demonstrates commitment by the NHLS management to promote ethical behaviour, accountability, sound internal controls and strict adherence to Generally Recognised Accounting Practice as is requirements by the PFMA.

This unqualified report and NHLS’ untarnished financial integrity are a result of principled financial management and budgetary resourcefulness. The company will endeavour to maintain and improve its systems and processes for best practices, which remain key to the organisation’s conduct and day-to-day operations.

A summary of the financial performance for the 2014/15 fiscal year is as follows:

• The company generated profit/surplus for the year amounting to R180 million compared to a loss or deficit of R152 million in the previous financial year.

• Revenue grew by 10% from R5.2 billion to R5.7 billion. Revenue from provincial hospitals amounted to 96% of the total revenue generated.

• Production costs including direct labour and material grew by 6% from R3.9 billion to R4.2 billion. The lower increase in production cost compared to revenue increase indicates higher productivity and efficiency.

• General or support expenses decreased by 5% from R1.8 billion to R1.7 billion in the financial year under review. This is mainly due to controlled expenditure in this area.

• Assets increased by 20% mainly as the result of a 17% increase in accounts receivables and 87% increase in the bank. The closing bank account balance ended at R651 million compared to R348 million in the previous financial year.

• The accounts receivable balance at year end constituted 68% of total assets compared to 71% in the previous financial year. This indicates an improvement in collection by year end.

• The current liabilities increased by 32% compared to the previous financial year. The balance at end of 2014/15 was R1.5 billion compared to R1.2 billion in 2013/14. The increase is mainly attributed to a 51% increase in trade and other payables. The trade and other payables grew from R714 million in 2013/14 to R1 billion in 2014/15. Other major liabilities included R126 million leave liability and R854 million employee benefits obligation.

In ConclusionThe NHLS remains a significant player in realising Government’s aim of ensuring that all South Africans have equitable access to healthcare. We are known in many circles to be leaders in our field and I have every confidence that this will continue as we make our way towards full recovery and revitalisation. As an organisation, we have remained resilient through our challenges and have not deviated from placing patient care first. I would like to extend my gratitude to the staff of the NHLS for their commitment, dedication and hard work during the year, and trust that the same positive attitude and energy will be exerted into the 2015/16 financial year and beyond.


(continued)1Chapter

Board of Directors

Prof. Barry Schoub Chairperson

Ms Joyce Mogale Interim CEO

Dr Jim McCulloch Mr Thamsanqa Stander

Dr Patrick Moonasar

Mr Michael Shingange


Ms Ntombi Mapukata Prof. Eric Buch Mr Stanley Harvey

Dr Tim Tucker Dr Thokozani Mhlongo Mr Andre Venter

Mr Lunga Ntshinga Mr Michael Manning Mr Ben Durham


(continued)1Chapter

NHLS Executive Committee

Corporate

Ms Joyce Mogale Interim CEO

Adv. Mpho Mphelo Company Secretary

Dr Johan van Heerden Academic Affairs, Research and Quality Assurance

Mr Sikhumbuzo Zulu Chief Financial Officer


Surveillance

Mr Shaun Grimett Acting Chief Information Officer

Ms Adrene Hall Acting Human Resources Executive

Prof. Shabir Madhi Director National Institute for Communicable Diseases (NICD)

Dr Sophia Kisting Director National Institute for Occupational Health (NIOH)

Ms Megan Saffer Managing Director South African Vaccine Producers (SAVP)


(continued)1Chapter

Mr Jacob Lebudi Limpopo and Mpumalanga Area Manager

Mr Sibulele Bandezi KwaZulu-Natal Area Manager

Ms Nasima Mohamed Western Cape and Northern Cape Area Manager

Operations

Ms Tabita Makula Eastern Cape Area Manager

Mr Abel Makuraj Free State and North West Acting Area Manager

Mr Bahule Motlonye Gauteng Acting Area Manager


Highlights

The NHLS is a national asset which forms the bedrock of the country’s healthcare system. As a world-class institution, driven by many talented and committed people, it is a national treasure which operated efficiently and professionally, despite severe austerity measures during the review period.

The NHLS is responsible for most HIV and TB tests, and plays a critical role in screening for cervical cancer in the public health system. HIV/AIDS and TB treatment depends on accurate and timely tests. Without the NHLS, TB, HIV and cancer patients would not have access to diagnostic testing, which means they would not be properly treated. The number of HIV viral load tests performed across the country increased from 2.4 million in 2013/14 to 2.9 million in 2014/15.

The NHLS entered into a collaboration with Roche Diagnostics and Abbott Molecular in a landmark programme to decrease the price of HIV viral load testing. The new pricing structure will benefit the 2.5 million South Africans on anti-retroviral treatment.

To rebuild and maintain its reputation, a concerted effort was made to strengthen relationships with the National and Provincial DoH and by March 2015 Gauteng and KwaZulu-Natal had begun to settle their outstanding fees.

Minister Nhlanhla Nene announced in his budget vote speech on 25 February 2015 that R1.5 billion will be shifted from provincial budgets to the DoH to enable the NICD to be directly funded. This will be offset by lower tariffs for services provided by the NHLS.

All accredited laboratories maintained their accreditation, and two new academic and five new regional laboratories were recommended for accreditation.

In playing its part in the international fight against the Ebola virus disease (EVD), the NHLS began running a diagnostic laboratory in Sierra Leone in August 2014, to assist with diagnosis. The laboratory was staffed by the NICD, with teams being rotated every five weeks.

With leadership being key to ensuring that the strategic goals of the organisation are met, it was pleasing to welcome the interim CEO, CFO, Head of the Learning Academy and Company Secretary.

In order to attract prospective employees from rural areas into a sector that faces scarce and critical skills shortages and to promote the NHLS as an employer of choice, 91 biomedical technology students from universities of technology were awarded study bursaries.

The Implementation of TrakCare was completed, among others, at Nelson Mandela Academic Hospital in the Eastern Cape, Charlotte Maxeke Johannesburg Academic Hospital (CMJAH) in Gauteng and Universitas Hospital in the Free State. This brings the number of laboratories successfully operating on TrakCare to 242 across the country.

The DoH, together with the NHLS, have been global leaders in rolling out Xpert MTB/RIF from March 2011, therein addressing the country’s high TB incidence rate, the frequency of TB/HIV co-infection, and the burden of multidrug-resistant TB. Since then, 309 GeneXpert instruments of varying sizes (GX4: 110; GX16: 190; GX48: 1; GX80: 8) have been installed at 216 sites–both urban and rural, including seven high-throughput ‘Infinity’ analysers that were installed in high volume laboratories to increase test capacity.

A total of 671 laboratory staff and 2 808 healthcare workers were trained between 1 April 2014 and 31 March 2015 by technical trainers, Puleng Marokane and Viwe Magida, as well as by Programme Manager, Sebaka Molapo and two clinical trainers, Sylvia Ntsimane and Nthabiseng Kekana, all from the NPP Unit.


(continued)1Chapter

Our people, our pride

NHLS staff members serve as brand ambassadors for the organisation, and in 2014/15 they continued to make the organisation proud. The following are some of the examples of employees who put the NHLS on the world map:

Prof. Mary Gulumian was invited to join the WHO Health Risk Assessment Committee for developing countries. She was nominated as a Director of the International Union of Toxicology’s (IUTOX) Executive Committee and was elected Vice-President of this committee. She was also invited to join the Committee on the Development of Protecting Workers from Potential Risks of Manufactured Nanomaterials by the WHO.

Ms Jeanneth Manganyi won an award from the South African Institute for Occupational Hygiene (SAIOH), for Hygienist of the Year.

Prof. Lucille Blumberg was awarded the 2014 World Small Animal Veterinary Association One Health Award.

Dr Boitumelo Kgarebe was elected as a member of the Governing Council of the African Academy of Sciences (AAS) representing the South African sub-region.

Prof. Lesley Erica Scott, Head of Research and Development for the National Priority Programmes (NPP) in the Department of Molecular Medicine and Haematology and Professor at the University of the Witwatersrand, together with the SmartSpot team, was awarded the Special Prize for Social Impact at the 2015 Innovation Prize for Africa ceremony in Morocco. The SmartSpot is a solution for verifying the accuracy of rapid molecular diagnosis devices used to test for tuberculosis.

The Parliament of South Africa congratulated eight teams from the NICD, under the leadership of Prof. Janusz Paweska Head of the Centre for Emerging and Zoonotic Diseases at the NICD, including two volunteers from the University of Pretoria, who were deployed to Sierra Leone from 16 August 2014–25 March 2015 to assist in combating the most devastating Ebola outbreak in medical history.

TEAM 1 – 16 August 2014 to 1 October 2014 TEAM 5 – 7 December 2014 to 10 January 2015 • Janus Paweska (Team leader)

• Petrus Jansen van Vuren

• Chantel le Roux

• Gunther Meier

• Cardia Fourie (Team leader)

• Nishi Prabdial-Sing

• Deidre Greyling

• Shayne Loubser

TEAM 2 – 20 September 2014 to 6 November 2014 TEAM 6 – 4 January 2015 to 10 February 2015• Alan Kemp (Team leader)

• Nadia Storm

• Phumza Lekhuleni

• Prabha Naidoo (Team leader)

• Mark Goosen

• Stewart McCulloch (University of Pretoria)

• Terence Scott (University of Pretoria)

TEAM 3 – 2 November 2014 to 17 December 2014 TEAM 7 – 1 February 2015 to 11 March 2015• Petrus Jansen van Vuren (Team leader)

• Busisiwe Mogodi

• Orienka Heliferscee

• Lisa Ming Sun

• Desiree du Plessis

• Serisha Naicker (Team leader)

• Wesley Dlamini

• Alexandra Moerdyk

TEAM 4 – 24 November 2014 to 23 December 2014 TEAM 8 – 26 February 2015 to 26 March 2015• Janusz Paweska (Team leader)

• Gunther Meier

• Janusz Paweska (Team leader)

• Petrus Jansen van Vuren

Floyd Olsen, Project Manager, HIV/AIDS projects at the NPP, received an opportunity to visit Sierra Leone to assist at the time when the Ebola virus outbreak was at its worst on 8 December, and returned to South Africa on 21 December 2014. He returned to Sierra Leone from 5–31 January to further assist with:

• Sample logistics

• Developing and implementing National Ebola Case Investigation Request Forms

• Implementing laboratory results Short Messaging System (SMS) Printer

• Developing back office software to electronically record patient results.

He also served on the National Ebola Response Committee.

Chapter 2


Human ResourcesActing Human Resources Executive: Ms Adrene Hall

Human ResourcesTotal Value Proposition

OperationsHR Information

Systems

Recruitment and

Selection

Organisational Development

and Reward

Employee Relations

NHLS AcademyTransformation

Benefits and

Administration

HR Audit and

Compliance

IntroductionOrganisations are dynamic in nature and human resources (HR) plays an integral role in partnering with business to ensure that we attract and retain top talent and become an employer of choice.

The roll-out of the Reward and Recognition Project is one of the interventions that reflects the NHLS’ commitment to its employees.


The focus on customisation and the ability to develop solutions in real time emphasises the business’ need for agility in analysing ideas and measures. The introduction of the workforce model will play a vital role in HR planning to meet the organisation’s mandate.

Whilst technology may lighten the load and streamline processes, highly developed human input will still be needed in order to be effective and efficient. Training is one of the mandates of the NHLS and provides a pipeline of talented professionals for the NHLS and South Africa as a whole.

The NHLS' HR Department is divided into various disciplines, including Recruitment and Selection, Organisational Development, Employee Relations, HR Information Systems, HR Audit and Compliance, Transformation and Employment Equity (EE), Employee Benefits and Administration, as well as the Learning Academy, to ensure the best service delivery to employees and the organisation. People remain the number one priority at the NHLS, since an organisation is only as good as its people.

Recruitment and selection

The Recruitment and Selection Division is responsible for providing a professional, prompt and effective recruitment service, which enables line managers to acquire the required number of competent staff. The division is driven by the belief that it is only when the most competent persons available are selected within the parameters of legislation, that the NHLS can be provided with the skills required to fulfil its mandate.

As a result, attracting top talent remains a key driver of the HR agenda. Recruitment and selection form a core part of the central activities underlying HR management, namely the attraction, development and retention of employees. The effectiveness of recruitment and selection is in itself dependent on the quality of workforce planning, accurate job descriptions and staffing requirements.

Executive management

Leadership is key in ensuring that the strategic goals of the organisation are met. During this financial year, a number of executive contracts came to an end and new executive members were welcomed. This included the Interim CEO who is supported by a team of experts from the DoH, as well as the Company Secretary and the Chief Financial Officer.

Workforce

The total NHLS headcount as at 31 March 2015 was 6 704.

Did you know?Attracting top talent

remains a key driver of the HR agenda

Eastern Cape Free State and

North West

Gauteng KwaZulu- Natal

TotalMpumalanga and Limpopo

Western Cape and

Northern Cape

7 000

6 000

5 000

4 000

3 000

2 000

1 000

0

626 555

2 857

1 346860

6 704

460

Figure 1: Number of staff within the NHLS per region


(continued)2Chapter

Gauteng staff breakdown

Oracle i-Recruitment

Phase 2 of i-Recruitment, an automated Oracle application, was launched in February 2014, to manage all recruitment activities using a single self-service interface. This was a necessary move in a rapidly growing environment where technology is used by many companies to gain a competitive edge by having access to the best talent in the market.

All employees have been encouraged to embrace this new way of applying for vacant posts by registering their personal details on i-Recruitment.

Student recruitment

As part of fulfilling the NHLS mandate of teaching and training, HR recruits students who form part of the NHLS’ core staff, such as registrars, medical technicians, medical technologists and intern medical scientists.

Figure 3: Student categories and their numbers as at 31 March 2015

Assistant Laboratory (Student)

Biotechnologist–Student

Experiential Student

Medical Scientist – Intern

Medical Technician – Student

Medical Technologist – Student

Registrar – Junior

Phlebotomy Technique – Student

Registrar – Senior

1%0%

7%2%

20%

38%

3%

14%

3%

15%

Figure 2: Gauteng Headcount – as at 31 March 2015

Corporate

Laboratory staff and lab support

Other support

DMP

NICD

Total staff- Gauteng Region

NIOH

130399

27 100

1 670

531

2 857


New engagements

There were a total of 1 187 new engagements during the period.

AprilMay

June

July

August

September

October

November

December

January

February

March

85

4559

161

7158

140

6752

83

238

128

Figure 4: New engagements by month for the reporting period

Medical Scientist Pathologists TotalRegistrars

3 4

1 1 2 1

14

37

2717

23

43

2013 2014 2015

Figure 5: AARQA New engagements


(continued)2Chapter

Eastern Cape Region

Free State and North West Region

Gauteng Region

KZN Region

Western Cape and Northern Cape Region

Total

82

9

30

89

40

Figure 6: AARQA New recruits – April 2013 to March 2015

Medical Scientist

Pathologists

Registrars

Total

11

29

27

Figure 7: AARQA 2015 New recruits


Organisational Development and RewardsOrganisational Development consistently strives to position HR to deliver on the strategic objectives of the organisation, and to create a culture of employee-centricity and overall excellence in all it does. Several focus areas are contained within this unit, concentrating on a number of interventions, such as job evaluation, performance management, as well as rewards and remuneration.

The NHLS believes that its reward system has a significant impact on the behaviour of its employees, balancing the needs of the organisation with those of the employee. The objectives of the NHLS reward strategy include the following:

• To attract, motivate and retain high calibre employees who have the skills, capabilities and values needed to implement the orginisation’s strategy and mandate

• To encourage the development of the full potential of all staff members

• To recognise and encourage exceptional and value-adding performances

• To achieve maximum motivational impact and desired behaviour through remuneration and reward programmes and practices that are competitive and appropriate

• To create and ensure long-term, sustainable employee satisfaction and engagement through appropriate reward strategies.

Performance Management

Performance Management supports employees in optimising their performance in their current roles and helps to ‘unleash’ their full potential by supporting their ongoing development and growth. Managers play a critical role in helping their employees to perform and grow, using the NHLS Performance Management System, which has been automated via the Oracle platform.

Employee relationsThe main function of Employee Relations is to ensure organisational compliance in terms of current labour legislation, company policies and maintaining a sound employment relations environment through the NHLS’ training, mentoring and advisory service. It also defends the interest of the NHLS against any possible labour-related disputes and ensures that employees are treated fairly in terms of company policies and the relevant labour legislation.

The unit plays an integral role in the following important functions within the NHLS:

• Advice regarding organisational restructuring

• Special case management

• Employee and Management education

• Legislative training

• Policy updates and management.

Disciplinary cases

The NHLS’ approach to disciplinary issues has always been progressive, with the intention of ensuring that discipline is used as a corrective measure, not as a punitive action against employees. In all disciplinary hearings, the NHLS ensures that the employees’ legislative rights are not compromised and that the NHLS policy is followed correctly. This is done for the purpose of strengthening employee relations.

During the current financial year, 156 disciplinary cases were received, and 144 were successfully concluded. This shows a remarkable improvement on turn-around time. It is noted that the majority of cases reported arose among African males followed by African females, and the most common misconduct remained absence without authorised leave.

During the year only 27 grievances were lodged, and 23 cases were successfully concluded. This shows a remarkable improvement in turn-around time.


(continued)2Chapter

Legislation update

The policy review process, in which new legislative amendments regarding labour were considered to ensure compliance, was completed. Training in this regard will be rolled out nationally.

Learning Academy

Mandate

The mission of the Learning Academy is to become a national leader in training and development in the field of laboratory management as a point of information, expertise, co-ordination and oversight for all training and learning activities within the organisation. Its strategic intent is to deliver on the mandate of technical and non-technical training as overarching functions that support service delivery and research within the NHLS.

The Learning Academy plays an essential role, which not only benefits the organisation, but also ensures that the skills shortages of our country are addressed.

The Learning Academy prioritised skills development through an analysis of employees’ most critical skills needs, as identified in the WSP. Multiple learning programmes were then offered in the form of short learning programmes, in-service conferences and congresses, as well as CPD programmes in compliance with legislation, to improve the quality of services and assist in the mitigation of risks.

Occupationally directed training programmes and professional qualifications

Emphasis was again placed on the standardisation of all activities for the training of students; design and development of technical training material; up-skilling of the technical training resources; standardisation of reporting and information management; and review of policies, procedures and workflow.

The Learning Academy was able to establish a partnership with the American Association of Public Health Laboratories (APHL), through the Centers for Disease Control and Prevention’s (CDC) funding, in order to provide a course in Foundation of Laboratory Leadership Management (FLLM) to 110 junior managers and supervisors within the NHLS. This course equips junior managers with the management and leadership skills necessary for the day-to-day management of laboratories.

Due to the success of the course, a second course on the Training of Trainers was offered to 14 NHLS employees who will be able to roll out the FLLM to the rest of the organisation across all six regions.

The NHLS is committed to empowering all levels of staff within the organisation, and enrolled numerous employees in the various categories of Adult Education and Training (AET). The organisation has enabled several employees to become AET facilitators, thereby building capacity for delivering the numeracy and literacy programme.

In total, 1 946 employees attended technical and non-technical short learning programmes and conferences in the 2014/15 period.

Bursaries

In order to attract prospective employees from rural areas into a sector that faces scarce and critical skills shortages and to promote the NHLS as an employer of choice, 91 biomedical technology students from universities of technology were awarded study bursaries.

Learnerships

To align the Learning Academy with the Health and Welfare Sector Education and Training Authority (HWSETA) accreditation and skills development requirements, a decision was taken to issue learnership agreements rather than employee contracts to all students enrolled on the training programmes. These include Bachelor of Health Sciences (BH Sc) students, intern medical technologists, student medical technicians, and students in phlebotomy technique.

Academic Platform

During 2014/15, the Learning Academy had an intake of 557 undergraduate students who were placed in Health Professions Council of South Africa (HPCSA) accredited training laboratories, located across all six regions, with the Gauteng and KwaZulu-Natal regions carrying the bulk of the students.


Figure 8: Total number of undergraduate students enrolled per region – 2014/15

Eastern Cape

Free State and North West

Gauteng

Limpopo and Mpumalanga

Western Cape and Northern Cape

KwaZulu-Natal

42

58

232

74

39

112

The students participated in three Board Examinations that were conducted by the Society for Medical Laboratory Technology of South Africa (SMLTSA), namely the March and September Board Examinations for intern medical technologists, of whom most were attempting the Board Examination for the second time; and the October Board Examinations for student medical technicians and the phlebotomy technique.

A total of 181 intern medical technologists were registered to write the March examinations, of whom 167 interns in fact wrote the examinations. The national pass rate was 58.7% (98 interns) of whom 6.0% (ten interns) of the total number who participated in the Board Examinations passed with distinction.

BH Sc

Intern Technologists

Student Technicians

Laboratory Assistants

Eastern Cape Free State and North West

Gauteng KwaZulu-Natal Mpumalanga and Limpopo

Western Cape and

Northern Cape

140

120

100

80

60

40

20

0

Figure 9: Students enrolled per professional category per region – 2014/15


(continued)2Chapter

Table 1: Student pass rate per discipline – March–October Board Examination 2014/15

March 2014/15 September 2014/15 October 2014/15

DisciplineTotal registered

Did not write Pass rate

Total registered


Total registered


Clinical Pathology 122 8 57.90% 72 3 46.40% 105 0 81.9%

Cytogenetics 2 0 50% 1 0 100% - - -Cytology 14 2 83.30% 4 1 66.70% 12 1 58%

Haematology 8 1 42.90% 3 0 0% 7 0 42.90%

Histopathology 11 0 18.20% 6 0 0% 19 0 58%

Immunology 2 0 100% - - - 2 1 100%

Microbiology 11 1 100% 1 0 0% 31 1 68%

Virology 9 2 42.90% 4 0 0% 7 0 71.40%

Chemical Pathology 2 0 0% - - - - - -Phlebotomy Technique - - - - - - 31 3 65%

TB - - - - - - 9 0 100%

Total 181 14 58.70% 91 4 67.30% 223 6 74.6%

Table 2: Student pass rate per region – March Board Examination 2014/15

Region TotalDid not write Pass rate

Free State and North West 20 2 55.60%

Western Cape 22 0 76.20%

KwaZulu-Natal 35 3 75.00%

Gauteng South and North 79 6 49.30%

Eastern Cape 20 1 57.90%

Limpopo and Mpumalanga 5 1 25.00%

Total 181 13 58.70%

KwaZulu-Natal Free State and North West


Gauteng Western Cape Eastern Cape

100

90

80

70

60

50

40

30

20

10

0

87.5

71.4

28.6

41.9 41.9

0

Figure 10: Medical technologist pass rate per region – September Board Examination 2014/15


TransformationTransformation in the context of the NHLS refers to a dynamic, continuous process of change and adjustment that impacts on all facets of the organisation and is integrated into policies, systems and practices that constitute day-to-day operations.

Transformation is a critical phenomenon for South Africa’s socio-economic progress. As a responsible organisation and leader in pathology services, the NHLS therefore acknowledges that to be a good corporate citizen, the principles and philosophy of transformation need to be embraced fully by implementing codes of good practice in EE, affirmative measures, creating a diverse workforce, empowering women, addressing challenges relating to people with disabilities, and embedding the principles and philosophies of Broad-based Black Economic Empowerment (B-BBEE).

Employment Equity, Skills Development and Transformation Committee

The NHLS has in place an EE, Skills Development and Transformation Committee, as mandated under Section 16 and 17 of the Employment Equity Act No. 55 of 1998. The committee is composed of labour representatives; representatives from elementary occupations; people with disabilities; HR managers; and representatives for registrars, pathologists, scientists, technicians and associate professionals.

The committee meets regularly and plays an important role in:

• Identifying barriers to the advancement of members from designated groups

• Tracking skills development-related activities

• Identifying strategic training objectives

• Making recommendations on skills development programmes

• Participating in the development, implementation, budgeting, and reporting related to the EE Plan and WSP

• Monitoring the implementation of WSP and reviewing the established targets

• Monitoring the application of personal development programmes within the NHLS

• Monitoring other EE-related strategies and initiatives within the NHLS, such as policy reviews

• Reporting back to constituencies on progress made.

Employment equity

EE legislation in South Africa promotes equal opportunity and universal fair treatment by eliminating discrimination and implementing affirmative action measures. In this way, through a unified approach, the NHLS seeks to redress the imbalances of the past and build a workforce that more realistically reflects the demographics of the country. Implementing EE in the organisation is important for the following reasons:

• An equitable representation of the workforce population with respect to race and gender is attained

• Discriminatory practices in all the affirmative action measures are eliminated or minimised

• People living with disabilities are taken into consideration

• Women are integrated into all the occupational levels with meaningful participation.

The EE Act requires that employee demographics reflect the economically active population (16–64 years) of South Africa with respect to race and gender. The NHLS recruitment targets are informed by the occupational levels that fall below compliance targets and also take into consideration under-represented groups.


(continued)2Chapter

The table below provides a comparison of the workforce profile between March 2014 and March 2015.

Table 3: EE compliance per occupational level target

Occupational level Compliance target 2014 2015

Top management 40% 77% 83%

Senior management 60% 64% 66%

Professionals 75% 74% 76%

Skilled 80% 93% 93%

Semiskilled 0% 93% 93%Unskilled 0% 100% 100%

Disabilities 2% 0.60% 0.50%

All the compliance targets according to occupational levels were met. Of note is the fact that the professional level target was met for the first time, increasing from 74% to 76%. This was due to a slight increase in African male and female employees.

Approximately 86% of the workforce is now Black, and distributed according to the table below:

Table 4: Race and gender across the NHLS

YearBlack male

Coloured male

Indian male

White male

Black female

Coloured female

Indian female

White female

March 2014 25% 3% 3% 3% 45% 6% 6% 11%March 2015 25% 3% 3% 3% 45% 6% 5% 11%

Disabilities

The representation of people with disabilities decreased by comparison with 2013/14. A survey questionnaire was completed by staff living with disabilities to establish what challenges they were facing and the extent that they were being accommodated. Efforts to integrate more people with disabilities are in the pipeline, such as partnering with the public service to source candidates who will best suite certain vacant positions where the organisation will be able to provide suitable accommodation.

Table 5: Disabilities by race and gender

YearBlack male

Coloured male

Indian male

White male

Black female

Coloured female

Indian female

White female Total

March 2014 6 2 1 1 14 4 1 6 35March 2015 5 2 1 1 12 3 1 5 30

Movements

Movements refers to the activities involved in on-boarding and off-boarding of staff, such as new appointments and terminations. These activities are important in transformation as they affect compliance targets.

New appointments

African females remain the highest appointed race and gender group in the organisation, mostly in the professional and skilled levels.

Terminations

The highest terminations occur mainly in the professionally qualified occupational level, comprising mainly African females. The semiskilled level is the second highest in terminations and the most affected are again African females.


Diversity management

Diversity needs to be understood and well managed, in order to improve the quality of work life and potential productivity of all. For this reason, the NHLS actively strives to cultivate a work environment that embraces and explores diversity.

Empowering individuals is the first crucial step in building a base for positive intercultural interaction in the organisation. Awareness on diversity is therefore generated through articles published in the NHLS newsletters and on the intranet. In the year ahead, a series of diversity workshops and dialogue sessions is planned for staff across the organisation to:

• Challenge staff to take ownership of workplace diversity

• Assist them to recognise and respect different worldviews and skills

• Encourage acceptance of the fact that all people are equal and entitled to fair treatment and respect.

Broad-based Black Economic Empowerment

B-BBEE is aimed at addressing inequalities resulting from the exclusion of the majority of South Africans from meaningful participation in the economy in the past. It is a tool to broaden the country’s economic base, accelerate growth, create jobs and eradicate poverty.

2014 saw fundamental changes introduced and gazetted to B-BBEE legislation, with revised generic codes of good practice and changes to the EE Act. The seven B-BBEE elements were reduced to five, with skills development, enterprise and supplier development and ownership designated as priority pillars.

The NHLS, as a generic entity, is required to meet the 40% sub-minimum threshold set in respect of each of the priority pillars, failing which it will be discounted by one level rating.

2014 NHLS B-BBEE rating

The organisation was awarded a Level 4 rating through the B-BBEE verification process, which was undertaken by a SANAS-accredited service provider. The table below compares the organisation’s ratings over the past four reporting periods.

Figure 11: Reasons for termination – April 2015 to March 2015

Resignation

Repudiation

Dismissal

Death

Retirement

Permanent Disability

499

116

2412

9717

765


(continued)2Chapter

Table 6: B-BBEE Score card ratings 2011–2014

YearCompliance targets 2011/12 2012/13 2013/14 2014/15

Management control 15 12 16 16 16

Employment equity 15 14 14 14 14

Skills development 20 5 16 16 16

Preferential procurement 20 5 12 15 17

Socio-economic development 15 0 0 4 5

Enterprise development 15 0 0 0 0

Total 100 36 58 65 68

Recognition level 8 5 4 4

The organisation has shown progressive improvement over the years, and exceeded the management control target for three years. Preferential procurement recorded a positive shift by two points, indicating an increase in spend on Black suppliers. Socio-economic development also improved due to the increase in spend on bursaries for Black students to study biomedical technology in South African universities of technology.

Gender equality

Gender equality is achieved when women and men enjoy the same rights and opportunities across all sectors of society, including economic participation, decision-making, and consideration for aspirations and needs.

The advancement towards gender equality is mandated by legislation, policies and conventions. The NHLS takes cognisance of the principles of gender equality in its employment practices and service delivery, and undertakes initiatives to redress gender inequality, as follows:

• Targets are set to increase female representation, especially at management level

• Strides have been made to ensure that there is equitable female representation in the critical and scarce skills areas

• Through the Learning Academy, the NHLS offers female employees the opportunity to enhance their skills and develop leadership potential through a variety of programmes

• NHLS policies and programmes emphasises equal and fair opportunities for all employees, zero tolerance for sexual harassment and the representation of women in all occupational categories, including Board participation. The NHLS treats both male and female employees (including potential employees, customers and external service providers) in a fair and just manner in terms of recruitment, selection, promotion, work allocation and development.

Gender differences will be addressed in the diversity management workshops, mentioned previously. The tables below indicate the profile of females in the organisation according to the different occupational levels.

Table 7: Female employees per occupational level

YearCompliance targets 2013/14 2014/15

Top management 40% 100% 100%

Senior management 60% 62% 61%

Professionals 75% 71% 73%

Skilled 80% 91% 91%

Semiskilled 0% 92% 91%

Unskilled 0% 100% 100%


Compliance Target March 2014 March 2015

Top management

Senior management

Professionals Skilled Semiskilled Unskilled

120%

100%

80%

60%

40%

20%

0%

Table 8: Female employees per race group

Year African Coloured Indian White

March 2014 67% 9% 8% 16%

March 2015 67% 9% 8% 16%

January 2014 January 2015

70%

60%

50%

40%

30%

20%

10%

0%

67% 67%

9% 9%8% 8%

16% 16%

African Female Coloured Female Indian Female White Female

Figure 12: Female employees per occupational level

Figure 13: Female employees per race group


(continued)2Chapter

Socio-economic development

The bulk of the NHLS’ socio-economic development activities are in the healthcare arena. Preference is given to initiatives that provide health science education, both at undergraduate and postgraduate level, to previously disadvantaged groups and support faculties relating to health sciences. During this review period such initiatives included:

• Education

- Educating Black undergraduates and providing new Black graduates with workplace experience- Implementing graduate development programmes which provide qualified but inexperienced graduates with

access to a structured programme comprising practical work experience and related classroom training- Providing bursaries to Black undergraduates registered to study medical technology and pathology.

• Take a Girl Child to Work Campaign

The NHLS joined the rest of South Africa in the Take a Girl Child to Work Campaign, launched by Cell C in 2003. The initiative provides girls in grades 10–12 with platforms to deepen their thinking and aspirations on their role in society and show them what opportunities are available for women in the workplace. The campaign aims ultimately to address the under-representation of women in the workplace.

• Mandela Day

Every year the NHLS joins the rest of the world in celebrating Mandela Day through initiatives in line with its strategic values of ‘caring’ and ‘uniting employees’. Support for this initiative enhances the lives of the disadvantaged and positions the organisation as a good corporate citizen. The 2014 Mandela Day drive saw every region and department go the extra mile by making donations of food, stationery, clothing, blankets and toys.

• Future interventions

It is envisaged that future interventions will include the provision of community health and welfare sponsorships, and the provision of training or mentoring to beneficiary communities, to be measured by quantifying the cost of time (excluding travel or commuting time) spent by staff or management.

Reporting and compliance

The NHLS successfully submitted its annual EE Report (EEA2) to the Department of Labour, with statistics on the current workforce, future workforce targets, and movements of people (promotions, terminations, new engagements and training). The Remuneration Report (EEA4) on salaries according to occupational groups and salary disparities and reasons therefore was also submitted as required.

Employee Benefits and Administration

Employee Assistance Programme (EAP)

The EAP has played a valuable role for employees and their immediate families during the challenging times which faced both the NHLS and South Africa during the review period. The support offered to managers, providing guidance and assistance in managing staff challenges, was well received.

Services offered include:

• Access to call centre (24/7/365 days a year)

• Telephonic counselling

• Trauma debriefing sessions (within 24 hours)

• Face-to-face counselling (where required)

• Legal advice

• Health advice

• Interactive website

• Promotional material (wallet cards, posters, electronic communication etc.).


Employees are encouraged, in the interests of achieving an improved work-life balance, to register on the e-care portal where they can source a wide range of information, including ‘ask the professional’.

Wellness days/events

Wellness days are open to all employees and participation is not reliant on medical aid membership.

Sandringham had the opportunity to pilot the ‘New Discovery Experience’ and 370 employees took part in this event, which provides an automated system for evaluating personal health aspects and hence a more accurate wellness report. One of the challenges with the new event is the size of the venue required, which limits the roll-out. The cost for non-medical aid members is also significantly higher for the NHLS to fund, than the traditional events.

Due to the late delivery of influenza vaccine into the country, the primary 2014/15 wellness events were rescheduled to commence in April 2015. Mobile wellness teams will visit 249 sites and seven Discovery events will be held.

The following are the tests/offerings that are provided at the events:

• Blood glucose

• Blood pressure

• Weight assessments

• Personal health review

• HIV testing

• Influenza vaccines.

Accidental exposure hotline

The purpose of this service is to ensure that all NHLS employees have access to confidential testing and treatment after accidental exposure, thereby greatly reducing the possibility of becoming HIV positive.

Retirement funds

The NHLS belongs to the Alexander Forbes Umbrella Fund and there are also employees on the Government Employee Pension Fund (GEPF), which is a closed fund. Financial planning is offered to all GEPF and Alexander Forbes Fund members at no cost to the employee.

Medical aids

The NHLS offers three medical schemes for eligible employees to choose from. This allows access to 26 different options to meet employee’s individual family requirements. Members may switch between medical schemes and change their options at the end of each year.

A value-added offering to all NHLS employees is access to special rates for short-term insurance through Alexander Forbes.

Health Professional Council of South Africa and South African Nursing Council Fees

The NHLS funded the annual professional fees for eligible employees for the HPCSA and the South African Nursing Council (SANC).

Long service awards

In line with the commitment of the NHLS towards staff, long service monitory awards were made to 243 recipients , to a total value of R2 630 000.


(continued)2Chapter

Table 9: Long Service Awards and recipients

Region Awards15 years R5000

20 years R8 000

25 years R10 000

30 years R12 000

35 years R14 000

40 years R20 000 Total

Eastern Cape 24 0 1 11 4 8 R278 000

Free State and North West 21 1 4 8 3 2 3 R241 000

Gauteng 97 14 20 30 12 15 6 R1 004 000

KZN 42 8 9 12 5 5 3 R422 000

Mpumalanga and Limpopo 13 0 3 4 2 4 R144 000

Western and Northern Cape 46 3 11 10 3 13 6 R541 000

Total 243 R130 000 R384 000 R750 000 R348 000 R658 000 R360 000 R2 630 000

Leave Management

Employees and managers are encouraged to ensure annual leave is scheduled and taken, to allow employees to rejuvenate and rest.

Table 10: Rand value of sick leave taken per region

RegionTotal employees

Sick leave instances

Total sick leave days

Average sick days per total employees Leave value

Eastern Cape 626 1 453 3 528.8125 5.64 R2 301 077

Free State and North West 555 1 021 2 738.625 4.93 R2 343 716

Gauteng 2 857 5 695 12 387.058 4.34 R12 336 246

KZN 1 346 4 121 8 807.684 6.54 R6 776 905

Mpumalanga and Limpopo 460 661 1 768.500 3.84 R1 133 590

Western and Northern Cape 860 2 657 5 484.018 6.38 R4 966 021

Total 6 704 15 608 34 714.70 5.18 R29 857 555

Sick leave

Sick leave is monitored on a monthly basis, with the annual sick leave value for 2014/15 being R29 857 556.

Disability management

There was an improvement in the reporting of potential disabilities nationally. However, it is important that an analysis of sick leave data is undertaken and that line management informs HR of potential disability cases. This is crucial in order to ensure that employees who are not able to perform in the workplace do not affect the running of the business units due to extended absences.

It is also important that employees understand their insured benefits and comply with reporting requirements in order to protect their benefits.


Audit and Compliance

Internal audits

HR completed a Total Quality Check exercise across all NHLS laboratories to audit headcount and the consistent application of HR processes, and ensure compliance across the NHLS. Annual and bi-annual audits were undertaken by both internal and external auditors.

Scam stop cases

The NHLS is committed to take all measures to ensure good governance and subscribe to confidential scam stop reporting system. The Audit and Compliance Office investigates cases reported via Scam Stop, which are related to HR matters within the organisation. The types of cases investigated related to alleged unfair labour practice and fraud and the response from NHLS staff was positive.

Human Resources Information System

The Human Resource Information System Oracle software is effectively used by the HR Department for management of all employee information. This includes:

• Reporting and analysis of employee information

• Benefits administration

• Organisational design and organisational management

• E-learning and development

• iRecruitment, applicant tracking as well as resumé management

• Performance management

• Employee self-services, including enrolment, status changes, and updating of personal information

• Consolidating and analysing HR information for presentation to Board and Executive Committee (EXCO) meetings to assist with business planning

• Complete integration with payroll and other company financial software and accounting systems.

The Oracle Time and Labour pilot was launched in the reporting period.

Payroll management

The Payroll Department was incorporated into the Human Resources Department in October 2014. Additional automated processes are being explored to enhance the payroll service.


Acting Chief Information Officer: Mr Shaun Grimett

Information Technology

Chief Information Officer

Personal Assistant

Secretary

Head: Application Support

and System Development

Head: Enterprise Architecture

and Information and Knowledge

Management

Head: IT Project Management

Office

Head: IT Governance and

Reporting

Head: ICT Operations

IntroductionFor organisational investment in information technology (IT) to be beneficial so that the IT Department delivers full value, there has to be full alignment with business strategies and direction; key risks have to be identified and controlled; and legislative and regulatory compliance must be demonstrated.

During the financial year, a number of initiatives were undertaken aimed at improving the effectiveness and efficiency of the NHLS, many of which occurred behind the scenes and may have gone largely unnoticed. These centred on three critical aspects, namely reorganising the IT Department to improve effectiveness and efficiency; continued improvements and roll-out of the Laboratory Information System (LIS), TrakCare; and improving IT service delivery. Our accomplishments in these areas have laid the groundwork for the future of IT at the NHLS.

StructureThe re-organisation of the IT Department resulted in the creation of six service units, namely Operations, IT Governance, Enterprise Architecture, Information and Knowledge Management, Application Support and System Development, and the Project Management Office. This structure was approved and is reflected as follows:


IT governance and reporting This unit was established in the last quarter of the financial year and has been tasked with:

• Capacitating the department, starting with:

– An assessment of the skills available– Motivation to seek external expertise

• Aligning IT risk management with the NHLS Risk Register

• Co-ordinating IT audits and following up on the audit action items from the previous financial year audit findings.

Most of the plans around the IT Governance Framework are in their initial stages and most of the work will be carried over to the new financial year.

Enterprise architecture, information and knowledge managementThe operational risk relating to a process cannot effectively be assessed without an understanding of how IT supports that process and which human resources are involved in the process. Similarly, the cost of a process cannot be managed or reduced (for example through automation) where there is limited understanding of how this cost optimisation will impact on availability and/or performance of the systems supporting the process.

Enterprise Architecture (EA) is a conceptual blueprint that facilitates the improvement of organisational efficiency in the short, medium and long term, and allows for the calculation of varying aspects in operational, cost and risk terms. By documenting the NHLS enterprise (i.e. the business, processes, information, applications and technology), we will gain a solid understanding of how they interrelate; their associated costs and risks; and their similarities and differences across the business units and across the various geographical locations.

To date, the Master Systems Plan has been developed and adopted to align the IT Strategy with the NHLS Strategy. This plan is the foundation for an effective way to execute IT Programmes.

To position the NHLS as a strategic information hub for the public health sector, the process of developing interfaces with external stakeholders, such as the Department of Health (DoH), private laboratories, non-governmental organisations, the National Institute for Communicable Diseases (NICD) and the National Institute for Occupational Health (NIOH), is ongoing. Through this, the NHLS is also participating in the Health Information Exchange Platform of the DoH. The process of data enrichment is on track to ensure integrity between patient data and episodes.

Application support and systems development

Laboratory information systems

TrakCare is the primary LIS used by the NHLS. The technical and functional benefits of this system allow for the integration of business processes, resulting in increased operational efficiency and improved service delivery. Functional improvements, such as a common patient database across all laboratories, a standardised approach to pathology testing, improved access to information, simplified referral processes and internet access for doctors and pathologists with countrywide results access, are expected.

Focus during the reporting period was on completing the implementation of TrakCare in all provinces other than the Western Cape, where the Disa Laboratory System is still in use. Implementation of TrakCare was completed, among others, at Nelson Mandela Academic Hospital in the Eastern Cape, Charlotte Maxeke Johannesburg Academic Hospital (CMJAH) in Gauteng and Universitas Hospital in the Free State. This brings the number of laboratories successfully operating TrakCare to 242 across the country (2013/14: 209).

The final leg of implementation in the Western Cape began at the end of the financial year and will continue into the first half of the new financial year.

We continue to use the Health Level 7 (HL7) standard for communication between the LIS and facilities where a hospital information system is used. During the period, the HL7 interface in the Free State was converted to interact with TrakCare.

Electronic gate-keeping (EGK) was extended to Frere Hospital in the Eastern Cape and Kimberley Hospital in the Northern Cape. The associated SMS service also evolved, with new functionality to provide alerts for EGK rejections and test results that are over critical limits.


(continued)2Chapter

Searches via the NHLS website increased by 20% compared to the previous financial year and the number of healthcare workers using the system increased by 23%. During March 2015 alone, 929 891 searches were recorded and this figure is expected to surpass 1 million per month in the next financial year.

Oracle

Day-to-day managing of processes is undertaken using the Oracle Enterprise Resource Planning (ERP) product family, including financial, supply chain, procurement, human resource, payroll and customer relationship management.

Despite huge resource constraints, the NHLS’ Oracle team worked closely and successfully with various business units in identifying their key challenges and determining whether these could be solved using the current investment in Oracle ERP. As a result, current ERP functionality was enhanced to meet business needs, among others, as follows:

• External Facing iRecruitment: Since the inception of iRecruitment, we exposed the functionality externally, making it accessible online. During the review period, a total of 15 357 applications were received through iRecruitment. Of these, 10 031 applications were from external users

• Oracle Time and Labour: As part of the cost to company project, we completed the Oracle Time and Labour configurations which allow for the automation of the time and attendance process. This helps to simplify the submission, review, tracking and approval of timecards. The solution is currently being piloted at CMJAH’s Chemical Pathology Laboratory

• Advanced collections and dunning letters: In a quest to boost the collection of monies owed to the organisation, we introduced advanced functionality of collection and dunning letters. The functionality allows users to identify past due and disputed transactions and to review customer accounts to determine whether dunning letters and scheduled calls to customers are required

• Pathology Research and Development Congress (PathRed): In conjunction with resources from NIOH and Academic Affairs, Research and Quality Assurance (AARQA), a web-based application was developed for PathRed for the registration of delegates and gathering presentation abstracts. Overall IT support was also provided to the congress

• Leased assets: A small but vital step was made in assisting with the integrated management of leased assets. The solution was introduced to address, among others, gaps in the operating lease Asset Item Register and to provide expiry notifications which are sent three months before the asset is about to expire. The solution is still in its early stages and will continue to be evolved in the next financial year.

Information Communication Technology (ICT) Operations

IT Service Management

As part of continuous service improvement initiatives, five best practice processes were introduced in line with the recommendations of the defined IT Information Library framework roadmap. The processes are:

• Incident management

• Request fulfilment

• Service level management

• Service catalogue management

• Business relationship management.

An agreed Service Level Agreement (SLA) was developed and signed between IT Service Management and the NHLS. This created a platform where business expectations were clearly articulated and has resulted in a narrowing of the gap in expectations between IT and business.

Measured against this new SLA, overall IT service to the NHLS declined slightly. Turn-around times were adjusted to improve IT performance and performance ended the year at 89%. The Customer Satisfaction Index survey, based on feedback obtained for every call closed, was at 89.89% from a response rate of just 2.70%. As a result, an automated real-time email notification capability was implemented to report all negative feedback on calls promptly to the responsible managers. This has significantly improved customer satisfaction, since escalations are reported and acted on promptly.


April 2014

May 2014

June 2014

July

2014

August 2014

September 2014

October 2

014

November 2

014

December 2

014

January

2015

February

2015

March 2015

95%

94%

93%

92%

92%

90%

89%

88%

87%

86%

89%

90%

91%

91%

92%

94%94%94%94%94%94%

IT Performance (YTD)

Figure 14: IT Service levels

Infrastructure Management

Infrastructure Management focuses on the management of design, implementation and maintenance, as well as the proactive management of availability, performance and capacity of the IT infrastructure of the NHLS. This infrastructure includes servers, the network and data centres at a high level and the hosting of various information technology systems, including the IT disaster recovery systems at Sandringham and Braamfontein, to ensure 99.99% availability.

The roll-out of the Multiprotocol Label Switching (MPLS) Project has been fully implemented in the Western Cape and North West, with 280 sites now active countrywide and 32 remaining. The MPLS is designed to improve the current NHLS Wide Area Network (WAN) infrastructure by addressing network problems affecting employees in their day-to-day functions and increasing the reliability of the core network infrastructure to enhance the end user experience. The roll-out is currently 80% complete and the remaining 20% will be completed as the new diagnostic mediums are identified.

IT Project Management OfficeResearch shows that there is a very high failure rate among information system projects. In most organisations, projects take longer to implement and cost more than originally anticipated, and in many instances the completed system does not offer the solution that was intended.

Against this background, the NHLS established an IT Project Management Office (PMO) during the review period, to create efficiencies in delivering IT projects. The view is to later transition this into an Enterprise Project Management Office, which will deal with enterprise-wide programmes and projects.

The PMO team spent time with executives and stakeholders, including senior managers and subject matter experts, to discuss the value of the PMO, its goals and its methodologies. Not all business units were initially keen on the approach since the fact that they can no longer launch a project independently is viewed as a constraint. However, the PMO team continues to work with these reluctant units to bridge that gap and help them realise the added strategic value of teaming with the project office.

Project standards and templates have been finalised and focus will be placed on resourcing the PMO through ongoing training of project managers and by encouraging them to take advantage of networking opportunities to improve their skill sets.


(continued)2Chapter

The following projects were addressed during the review period:

• TrakCare LIS Roll-out (Phase 3): TrakCare LIS roll-out was successfully completed at Umtata, Universitas and CMJAH. The roll-out to the Western Cape laboratories is under way

• Protection of Personal Information (POPI) Act, No. 4 of 2013: POPI regulates every step of data processing relating to personal information, from its original collection to its disposal. The Act will impact on the NHLS in every area where it processes information on individuals, irrespective of whether the individuals are employees, shareholders, suppliers or customers. A review of the implications for the NHLS was undertaken, revealing that almost all areas of the NHLS are likely to be affected and will therefore need to be dealt with

• Electronic Content Management (ECM): ECM is a formalised means of arranging and storing an organisation’s documents and other content that relates to its processes. The term encompasses strategies, methods, and tools used throughout the lifecycle of the content. In this regard, the digitisation of all Laboratory Request Forms and all employee files and integration with the LIS system is under way

• Asset Management Project: To ensure an accurate Asset Register, NHLS assets were identified, verified, tagged and allocated within the NHLS laboratories and various cost centres.


Communication, Marketing and Public RelationsIntroductionThe Communication, Marketing and Public Relations Department is the custodian of the NHLS brand. The department’s main objective is to build the NHLS' reputation and brand awareness through pro-active marketing, communication and information service to internal and external stakeholders, in order to support the organisation’s strategic objectives.

The increased dependency on the support and initiatives provided by the department resulted in a productive year. The NHLS brand equity increased throughout the country among internal and external stakeholders. The excellent quality and reliability of the outputs from the unit have become an expected norm. The department, which was created five years ago, has established itself as an important and much needed resource within the NHLS’ organisational structure.

Some key achievements in the year under review include a focused effort on building the NHLS brand through the initiatives listed below.

Campaigns

NHLS 13th birthday

The NHLS' 13th birthday campaign successfully celebrated the 13 years of the organisation's existence. Not only did it build organisational pride, but it created awareness for new staff to appreciate the remarkable achievements since the founding years.

The 13th Birthday Campaign included marketing activations, such as online banners, posters, birthday song recordings by stakeholders (NHLS Choir, Edenvale Hospital Choir), birthday quiz competitions, birthday party closing ceremony and an address by Mr Sagie Pillay, NHLS' CEO at that time.


(continued)2Chapter

20 Years of Democracy

The 20 Years of Democracy Campaign saw the NHLS join with other organisations to commemorate South Africa’s 20 years of democracy. The campaign reflected on the organisation’s contribution to the health sector, and included marketing activations (banners, online banners, email signature, posters, plenty twenty quiz competition, a video clip of the CEO’s message, which was broadcast on the NHLS intranet, a 20 year article and advert that were published in the NHLS internal newsletters, and decals for bathrooms). The ‘20 years’ brand, a shield with the South African flag and the NHLS logo and the campaign theme ‘Making a difference 13 years on...’ was developed.

NHLS Fridays

NHLS Fridays was initiated to build NHLS brand ambassadors and organisational pride. NHLS employees were encouraged to don NHLS branded T-shirts every Friday. The ‘Green fever’ spread throughout the organisation with rapid enthusiasm and success.

ConferencesThe NHLS participated in several important conferences where meaningful contributions were made by the organisation’s top scientists and researchers.

The 4th annual South African TB Conference was held in Durban from 10–13 June 2014 at the Durban International Convention Centre, where the focus was on Working together to eradicate TB. The NHLS participated as an exhibitor and


attendees received NHLS branded promotional merchandise to increase brand awareness. The Communication, Marketing and Public Relations Department managed the press room during the conference, and the organisation received positive public relations.

Unifying Pathology and Laboratory Medicine (UNIPATH), held in September 2014 in Pretoria, was the 54th International Congress of the Federation of South African Societies of Pathology. The conference was co-hosted by the University of Pretoria. The NHLS received brand exposure as a silver sponsor and exhibitor. A NHLS advertisement was placed in the conference programme and on the conference website. Dr Johan van Heerden, Executive Manager: AARQA, opened the conference, where he provided a broad overview of the NHLS and an interesting perspective on the academic future of pathology.

The 2nd International African Society for Laboratory Medicine 2014 (ASLM) Conference was held in November 2014 in Cape Town. This biennial conference is a platform where the African laboratory community share best practices, acquire knowledge and debate innovative approaches to tackling the major health challenges posed by HIV, TB, malaria, flu, neglected tropical diseases and emerging pathogens. The theme for ASLM 2014 was Innovation and Integration of Laboratory and Clinical Systems.

The NHLS played a significant role in the success of this conference. Former CEO, Mr Sagie Pillay, was the conference co-chairperson and the NHLS Communication Department formed a major part of the local organising committee. The NHLS participated as an exhibitor and received prominent brand exposure through the NHLS logo on the conference website, banner placement at the exhibition venue, and an advertisement in the conference book. Kaamini Reddy Executive Manager for Communication, Marketing and PR, managed and ran the press room and officiated as the master of ceremonies for the awards function. The NHLS ran laboratory tours for attendees to the NHLS’ Khayelitsha and Groote Schuur laboratories. This was most beneficial in showcasing NHLS best practice operations to the ASLM attendees who represented many African countries.

The Point-of-Care Testing Congress, held in February 2015 in Cape Town, highlighted the rapid changes as a result of improved systems becoming available. The congress was supported by the Faculty of Medicine and Health Sciences of Stellenbosch University. The theme for the congress was Promoting Quality Point-of-Care Testing for Optimal Patient Care in Africa. The NHLS participated as an exhibitor with a prime position for brand exposure. Attendees received NHLS branded promotional merchandise to increase brand awareness, and the NHLS logo was placed on the conference website, providing much awareness for the NHLS brand.

NHLS stand during the UNIPATH Congress


(continued)2Chapter

Editorial services

Advertorial support

The communication department provided advertorial support to the NICD’s SA Field Epidemiology and Laboratory Training Programme (SAFETP). A profile on field epidemiology was placed in the careers section of The Star newspaper and another was featured in the Municipal Focus magazine, aimed at attracting and educating aspiring epidemiologists.

Annual Report

The 2013/14 Annual Report was produced and published on the Intranet and Internet to meet the needs of stakeholders and shareholders, and was also the recipient of the SA Publications Forum Finalist Best Annual Report Award.

Collaborative initiatives

The communication department built strong relationships with key stakeholders through various collaborative initiatives, such as:

• Collaboration with the DoH in providing content for Ebola Awareness in South Africa

• A communication representative served as a committee member on the National Emergency Operating Centre (EOC) for Ebola Virus Disease and Other Infectious Disease Outbreaks

• A communication representative participated in the TrakCare implementation team and developed a robust communication plan for the smooth roll out of the project in the Western Cape Province and Charlotte Maxeke Academic Hospital

• Provision of content for the National and Provincial Departments of Health for World Aids Day and World TB Day.

Web management services

Intranet and Internet

The communication department encouraged other NHLS departments to develop web pages to showcase the organisation’s multifaceted offerings. A few significant contributions were made via the National Biobank website and the Information Technology and NHLS Library Intranet pages. In support of the NHLS PathRed Conference, the department developed and maintained the official PathRed Conference web page, which included basic conference information and online registrations.

The NHLS made significant improvements in its online presence, as depicted in the tables below. There was a 33.9% improvement in visitors to the website and a 28.3% increase in the use of the Intranet by internal users.


Table 11: Intranet use statistics

Year Unique visitors Number of visits Page Hits

2014/15 72 585 1 129 384 103 097 660 244 367 409

2013/14 62 816 809 371 71 252 346 164 955 165

Difference 9 769 320 013 31 845 314 79 412 244

Percentage 13.5 28.3 30.9 32.5

Table 12: Internet use statistics

Year Unique visitors Number of visits Page Hits

2014/15 214 268 415 582 1 402 278 12 466 517

2013/14 135 453 274 773 940 146 8 124 146

Difference 78 815 140 809 462 132 4 342 371

Percentage 36.8 33.9 33 34.83

Media Coverage

To improve brand exposure, the NHLS relies mainly on publicity through various mediums. Media attention received in 2014/15 nearly doubled, as illustrated in the graph below.

Overall, clip count for the NHLS went up between 1 April 2014 and 31 March 2015, compared to the previous financial year by 319 monitoring units, or as a 72% difference. 1 April 2014 to 31 March 2015’s individual service results shows that print has increased by 139 (81%) clippings to 311, broadcast is up by 34 (22%) to 188, and online increased by 146 units (124%) to 264. The total combined units for 1 April 2014 to 31 March 2015 was 763, up on the previous period of 444.

1 April 2014 to 31 March 2015's individual service results show that print Advertising Value Equivalency (AVE) has increased by R2 083 420 (21%) to R11 848 595, broadcast is up by R968 161 (7%) to R13 990 528, and online increased by R9 585 419 (170%) to R15 210 175.

The total combined AVE received by the NHLS for 1 April 2014 to 31 March 2015 was R41 049 298, up from the previous period's AVE of R28 412 298.

Broadcast 25%

Print 40%

Online 35%

Figure 15: Media coverage received in 2014/15


(continued)2Chapter

Clip Count

1 Apr 2014–31 Mar 2015’s individual service result shows that print increased by 139 (81%) clippings to 311, broadcast is up by 34 (22%)

to 188, and online increased by 146 units (124%) to 246. The total combined units for 1 Apr 2014–31 Mar 2015 was 763, up from the

previous period of 444.

AVE

1 Apr 2014–31 Mar 2015’s individual service results shows that print AVE increased by R2 083 420 (21%) to R11 848 595, broadcast is up

by R968 161 (7%) to R13 990 582, and online increased by R9 585 419 (170%) to R15 210 175. The total combined AVE for 1 Apr 2014–

31 Mar 2015 was R41 049 298, up from the previous period of R28 412 298.

1 Apr 2012–31 Mar 2013 1 Apr 2013–31 Mar 2014 1 Apr 2014–31 Mar 2015

350%

300%

250%

200%

150%

100%

50%

0

Clip count 1 Apr 1 Apr 1 Apr 2012- 2013- 2014- 31 Mar 31 Mar 31 Mar 2013 2014 2015 Print 0 172 311 81% 139 Broadcast 0 154 188 22% 34 Online 0 118 264 124% 146

444 763

National Health Laboratory Service

1 Apr 2013–31 Mar 2014 1 Apr 2014–31 Mar 2015

444 763

1 Apr 2012–31 Mar 2013 1 Apr 2013–31 Mar 2014 1 Apr 2014–31 Mar 2015

18 000 000

16 000 000

14 000 000

12 000 000

10 000 000

8 000 000

6 000 000

4 000 000

2 000 000

0

Clip count 1 Apr 1 Apr 1 Apr 2012- 2013- 2014- 31 Mar 31 Mar 31 Mar 2013 2014 2015 Print 0 9 765 175 11 848 595 21% 2 083 420 Broadcast 0 13 022 367 13 990 528 7% 968 161 Online 0 5 624 756 15 210 175 170% 9 585 419

28 412 298 763


ConclusionThe Communication, Marketing and PR Department has gained stature over the past five years and as new leadership comes on board, this growth will improve even further.

Through internal communication initiatives, employees have come to expect a high standard of delivery and the department has not disappointed its key stakeholders. Key areas of success have been the increased communication channels for staff through the new and improved Intranet, and also through regular and informative internal newsletters. The brand refresh and a unified corporate identity for the NHLS, NICD and NIOH have positioned the NHLS as slick and modern. This distinctive brand identity at conferences and exhibitions has firmly placed the organisation as a force to be reckoned with. The communication, PR and event support to internal departments has resulted in a unified approach to projects and general communications.

In this fiscal year, much of the groundwork has been completed to set the standards and ensure that the NHLS remains a visible and recognised brand.


Academic Affairs, Research and Quality Assurance

Executive Manager: Dr Johan van Heerden

OverviewThe functions of Academic Affairs, Research and Quality Assurance (AARQA) are carried through two core departments, Academic Affairs and Research (AAR) that recently merged with the Grants Office and Quality Assurance (QA).

Activities in AARQA focus on strategic support of the service platform through implementation, monitoring and evaluation of quality assurance activities across all the NHLS laboratories, and the strengthening of the NHLS mandate on research, teaching and training, with substantial contribution to service improvement. AARQA continues to benchmark quality assurance standards for the NHLS to ensure adherence to accreditation and compliance measures across all the laboratories. Through Health Technology Assessment (HTA), pre-evaluation of new in vitro diagnostic devices is conducted to facilitate effective and reliable introduction of technology advancement in the service platform.

Academic Affairs

Academic Stakeholder Relationships

With the official demerger of the University of Limpopo (UL) from the Sefako Makgatho Health Sciences University (SMU), the NHLS now has a relationship with all nine medical universities in the country, through their Faculties of Health Sciences and one dental university. The relationship with the six universities of technology (UoTs) and two comprehensive universities continues through their Faculties of Health and Biomedical Sciences, and one dental university (Table 13). Consultations with regard to the introduction of the NHLS’ teaching and research mandates are carried through close partnerships with all these institutions.


Table 13: Universities, universities of technology and comprehensive universities in collaboration with the NHLS

University University of technology

Sefako Makgatho Health Sciences University (SMU) Cape Peninsula University of Technology (CPUT)

University of Cape Town (UCT) Central University of Technology (CUT)

University of KwaZulu-Natal (UKZN) Durban University of Technology (DUT)

University of Limpopo (UL) Mangosuthu University of Technology (MUT)

University of Pretoria (UP) Tshwane University of Technology (TUT)

University of Stellenbosch (US) Vaal University of Technology (VUT)

University of the Free State (UFS) Comprehensive University (CU)

University of the Western Cape (UWC) Nelson Mandela Metropolitan University (NMMU)

University of the Witwatersrand (Wits) University of Johannesburg (UJ)

Walter Sisulu University (WSU)

A full overview of the NHLS’ Academic partnerships is provided in the Academic Review Report.

Carrying out the directive as per signed umbrella agreements, discussions on the bilateral agreements that will govern the relationship with each individual institution continued. Progress was made and finalisation of agreements with the remaining institutions is envisaged. Support was provided for the new Medical School at the UL in Polokwane and a relationship was developed.

The umbrella agreement with the six UoTs and two comprehensive universities was reviewed and an amendment was agreed upon to align the agreement with the new NHLS management structure and developments surrounding the introduction of the new BHSc degree. Legal approval from the institutional legal departments is awaited. A final meeting will be held with each UoT and comprehensive university to formalise the bilateral agreement as per the amended umbrella agreement once it has been endorsed.

Core professionals in training

During the 2014/15 financial year, there was a total of 245 registrars and intern scientists on the NHLS training platform. The pattern for the number of trainees on the platform is similar to that of the previous financial year, with a 6% drop noted in the number of registrars (Figure 16). A centralised recruitment process for intern medical scientists was introduced and the appointment of 50 interns approved. A delay in the placement of intern scientists was due to further financial constraints. To date, 20% of the interns have been placed and the remainder will be placed by September 2015. Figure 20 indicates the number of trainees who qualified. The number of registrars qualifying as pathologists increased from 19 to 37, which is an indication that the interventions, launched in 2013/14 to improve the number of those qualifying, is paying dividends, though targets are still not fully met. The number of qualifying medical scientists remained the same, with a higher completion rate in comparison to the other trainees. Measures to support the trainees and to improve the number of those qualifying in the different professional categories continue.

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

300

250

200

150

100

50

0

Figure 16: Registrars and interns scientist on the NHLS training platform: 2009/10–2014/15

Registrar Intern scientist

207214 225 234 242

225

65 6540

2918 20


(continued)2Chapter

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

50

45

40

35

30

25

20

15

10

5

0

Figure 17: Newly qualified registrars and intern scientists on the NHLS training platform: 2009/10–2014/15

Registrar Intern scientist

Figure 18 indicates a 9.3% drop in the placement of Black registrars from the previous financial year. Despite the slight increase in the number of intern scientists, as indicated in Figure 19, there remains a general need for intern scientists across all races, and it is crucial to increase the number of qualified Black scientists on the NHLS platform.

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

300

250

200

150

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Figure 18: Number of registrars by race on the NHLS training platform: 2009/10–2014/15

African Chinese Coloured Indian White

29

4

28

23

44

24

40

14

19

11 11

37


2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

70

60

50

40

30

20

10

0

Figure 19: Number of intern scientists by race on the NHLS training platform: 2009/10–2014/15

African Chinese Coloured Indian White

Academic support and development

The 2014/15 financial year was a challenging period for the organisation, with financial constraints limiting the number of research activities and support programmes towards research, teaching and training. Although funding for attendance of academic activities and congresses was limited, 149 staff members were supported through the AAR office (Figure 20). Current monetary restrictions led to fewer applications being funded from the Scientific Travel and Events Attendance budget, with the majority of the funding being provided from available grants or sponsored programmes (Figure 21). In addition, the NHLS-allocated funding for K Projects, which is intended to stimulate research by staff commencing their research activities. This was also affected leading to a decline in the number of applications received. In all, eight registrar applications were funded.

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

250

200

150

100

50

0

Figure 20: Number of funded scientific travel grant applications: 2008/09–2014/15

51

164

109

32

194

93

149


(continued)2Chapter

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

1 600 000

1 400 000

1 200 000

1 000 000

800 000

600 000

400 000

200 000

0

Figure 21: Total amount spent on scientific travel grant applications per university: 2008/09–2014/15

NHLS cost Grant/sponsored cost

Research and development

Driving the research agenda

A close collaboration with our academic partners, and a strong research foundation in the NIOH, NICD and NCR, ensures constructive contributions and better co-ordination of the NHLS research agenda. Research activities are conducted within the institutions and in NHLS laboratories. Figures 22 and 23 show the total number of peer reviewed journal articles published by discipline and institution. A total of 624 papers and ten book chapters were published together with academic partners. The majority of the publications were in the medical microbiology (including medical virology) and haematology disciplines. The University of Cape Town, followed by Wits University, published the majority of the papers (Figure 23).

Figure 22: Number of peer reviewed journal articles by pathology discipline: 2014/15

Anatomical Pathology

Chemical Pathology

Haematology

Human Genetics

Immunology

Medical Microbiology and Virology

64

109

5954

260

68


Figure 23: Number of peer reviewed journal articles by institution: 2014/15

Sefako Makgatho Health Sciences University

Stellenbosch University

University of Cape Town

University of KwaZulu-Natal

University of Pretoria

University of the Witwatersrand

University of the Free State

Walter Sisulu University

11 35

169

44

109

20

14581

Key developments have been realised which will ensure that the NHLS’ drive to establish a central research agenda is achieved and research activities are sustainable.

Several of the recommendations set out in the Report and Recommendations of the Inaugural NHLS Research Summit (2013) have been realised and have become operational:

• A Research and Development Committee (RDC) has been established and serves as a research advisory body to enhance research activities within the NHLS

• The Research Sub-committee of the National Academic Pathology Committee (NAPC) has been established and serves as a vehicle to ensure that the NHLS research mandate receives attention at Board level

• The Academic Affairs and Research Office has been expanded to include the Grants Office so as to enable more effective management and administration of grants

• Discussions and engagements with university partners are under way to facilitate better access to library resources nationally for NHLS staff

• A programme to advance research, development and training within the NHLS has been proposed and now awaits adoption and implementation

• A NHLS Intellectual Property Guideline is being developed.

The organisation of the inaugural Pathology Research and Development (PathReD) Congress, planned for 14–16 April 2015, was completed in the review period. This was the first NHLS PathRed Congress, themed ‘Enriching Health through Research: Paving the way for the Future’ and will serve as a national platform to showcase ongoing research within the NHLS and partnering institutions. Academic leads will be provided by national and international speakers.

Grant managementThe value of grants administered by the NHLS Grants Office decreased by 7% from R654 710 905 to R610 628 064 in the period under review. The reason for this decrease was that some of the long-term grant awards came to an end, while others are in the final phase and ending in the first quarter of 2015/16. Standard documentation and processes have been introduced to the administration process. The financial reports sent out to Principal Investigators (PI) on a monthly


(continued)2Chapter

basis continue to be a priority. The signed reports being returned to the Grants Office reflect the PI’s acceptance of the report status and this continues to improve, despite the fact that 171 new projects were added during the financial year. Electronic signing of reports was not activated as this requires additional systems for implementation. Figure 24 demonstrates grant funding received and administered by the NHLS over the past five years.

2010/11 2011/12 2012/13 2014/152013/14

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Figure 24: Grant funding administered by the NHLS: 2010/11–2014/15 (R'million)

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A total of 676 grant projects were administered in 2014/15. Of these, 171 were new projects awarded to the approximate value of R238 101 924. The value of each award varies according to the scope of the project undertaken and the funding opportunity the grantor has made available. Figure 25 represents the status of grant projects administered by the NHLS. Of the 676 grants administered, 45 (6.7%) were closed during the year and 241 (35.7%) are pending closure. The remainder (57.5%) are still actively managed. Those which are pending closure have been allocated inactive status to ensure further costs are not incurred. The system problems leading to this are being attended to and will be resolved in the next financial year.

2014/15 2013/14

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Figure 25: Status of grant projects administered by the NHLS: 2014/15

Approved Closed Pending closure

178

454475

655611

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More than 77% of grant funding administered by the NHLS was received from non-South African grantors, to the total value of R475 726 706. Funding received from South African institutions amounts to R134 901 357, which represents about 29% of the total funds received, as indicated in Figure 26.

Non-SA grantor South African grantor

Figure 26: Percentage distribution of grant projects administered by the NHLS by country: 2014/15

% funding 2014/15 % funding projects

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The most significant monetary contribution towards NHLS grant funding remains that from the Centers for Disease Control and Prevention (CDC), followed by the Department of Health (DoH). Figure 27 reflects the total funding received from the CDC, which amounts to approximately R446.2 million. R75.2 million was received from the DoH and R89.2 million from all the remaining grantors.

CDC Other grantorsDoH

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Figure 27: Percentage monetary contribution by the CDC, DoH and other grantors, 2010/12–2014/15

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The CDC Global Disease Detection agreement is in its fifth year of the non-research award and third year of the research award, effective from 30 September 2014 to 29 September 2015. Additional funding has been released for the continuation

77.9

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of these awards. The CDC PEPFAR agreement is also approaching its end and a new co-operative agreement, starting in September 2015, has been entered into. Funding, as contributed by the top ten funders following the CDC, Global Fund and DoH, is indicated in Figure 28.

Quality AssuranceThe Quality Assurance (QA) Department is responsible for the following portfolios in the NHLS

• Accreditation

• Document control

• Proficiency testing schemes

• Monitoring and compliance

• Implementation of ISO 9001 (Quality Management System) in support services

• Quality assurance-related projects

• Health technology assessment (Evaluation of new in vitro diagnostic devices).

Accreditation

All accredited laboratories maintained their accreditation. In addition, two new academic and five new regional laboratories were recommended for accreditation in the 2014/15 financial year. This increases the number of accredited laboratories to 89 as seen in figure 29 below. One accredited laboratory was closed during the reporting period and the NICD laboratories were restructured, thus changing the total number of accredited laboratories. The percentage of accredited Academic Laboratories is 91% and regional laboratories is 31%.

Figure 28: Percentage monetary contribution by top ten grantors following the CDC and the DoH, 2014/15

Other (e

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CDC and D

oH)NHLS

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New Accreditations Withdrawn Net Total

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Figure 29: Number of SANAS-accredited NHLS laboratories as at 31 March 2015

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Document control

The project to standardise the standard operating procedures at the NHLS, to ensure that laboratories comply with International Organization for Standardization (ISO) requirements, commenced in the reporting period. The department tightened up on the review of documents according to ISO requirements and documents not reviewed were deactivated. Although 1 422 new procedures were activated on the system, the total number of documents on Q-Pulse software reduced from 12 174 in April 2014 to 10 517 by the end of March 2015.

Proficiency Testing Schemes

The transfer of Microbiology Proficiency Testing Schemes (PTS) from NICD to the QA Department was completed. Training continued to equip the Microbiology and Chemistry PTS Managers with the demands of the job. Two new schemes were introduced during the financial year. These are GeneXpert Dried Culture Spot scheme, developed, created and run by the NHLS NPP team together with the University of the Witwatersrand and HIV Early Infant Diagnosis (EID) Polymerase Chain Reaction (PCR) PT scheme which has now been fully transferred from CDC Atlanta to the NHLS.

Accreditation of Proficiency Testing Schemes

The following schemes maintained their accreditation:

Blood gas Blood morphology Chemistry (routine)

Differential counts Endocrine Endocrinology

Erythrocyte sedimentation rate Flow cytometry Full blood count

Morphology Reticulocyte counts Therapeutic drug monitoring

The scope of accreditation of PTS increased by six schemes to include:

• Human Immunodeficiency Virus (HIV) serology

• Mycobacterium Tuberculosis (TB) microscopy

• Parasitology – Blood

• Parasitology – Stool

• Rapid Plasma Reagin (RPR)

• Treponema pallidum haemagglutination (TPHA).


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Performance of NHLS laboratories

Figure 30 shows the PTS performance of laboratories with a 70% NHLS target and Figure 34 shows the performance of laboratories with a 90% NHLS target. The international acceptable laboratory performance for PTS is 80%. Three of the19 schemes (16%) show performance below the 80% international target.

2012/13 2013/14 2014/15

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Figure 30: The performance score of NHLS laboratories in PT schemes measured at 70%: 2014/15

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Figure 31: The performance score of NHLS laboratories in PT schemes measured at 90%: 2014/15

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Enrolments

The number of countries enrolled on the NHLS PTS decreased from 26 to 22 compared to 2013/14. The number of enrolments from the NHLS laboratories, South African private sector and other countries decreased by 15% from 4 908 in 2013/14 to 4 164 in 2014/15. Table 20 shows the non-South African countries participating in the schemes.

Table 14: The 22 countries with laboratories enrolled in NHLS PT Schemes: 2014/15

No. Country No. Country

1. Angola 12. Malawi

2. Botswana 13. Mozambique

3. Burkina Faso 14. Namibia

4. Democratic Republic of Congo 15. Nigeria

5. Ethiopia 16. Rwanda

6. Gabon 17. Swaziland

7. Ghana 18. Tanzania

8. Guinea 19. Uganda

9. Ivory Coast 20. United States of America

10. Kenya 21. Zambia

11. Lesotho 22. Zimbabwe

Monitoring and compliance

Three different audit tools were used during the year due to the financial situation, travel restrictions and the fact that the department was operating with a reduced staff complement:

• The Quality Compliance Audit (QCA) tool was used to audit 198 of the 386 laboratories (51%). These are all peripheral laboratories and less than 20% are working towards accreditation at this stage. The overall performance of these laboratories showed a decrease from 88% in the previous financial year to 77% (Figure 32). The lower score remains in excess of the 75% score set for laboratories

• In order to comply with the ISO requirements, accredited laboratories were audited by internal teams

• Laboratories working towards accreditation were audited using the WHO Stepwise Laboratory Qualitative Improvement Process Towards Accreditation (SLIPTA) checklist.

2008/092007/08 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

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Figure 32: Quality Compliance Audit results


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ISO 9001 Quality Management System in support structures

The implementation of the ISO 9001 Quality Management System (QMS) in support structures commenced during the year, against the background of financial challenges and limited funds for training, and staff shortages. Nonetheless, representatives were selected in all departments, with the exception of three departments in Finance. Introduction and planning meetings were held with the nominated representatives to provide an overview of ISO 9001 and to discuss implementation plans. The representatives, in turn, organised meetings with their departmental staff members and various overview presentations were conducted. Gap assessments were conducted for HTA, Q-Pulse, IT Projects, IT Microsoft, LIS Database Development, and Statutory Finance and Reporting.

Training

• Three PTS Managers attended a GenoType MTBDRplus Version 2 Line Probe Assay course offered by Hain Lifescience in July 2014.

• One PTS Manager attended Abbott EID and Viral Load PCR training, offered by the African Centre for Integrated Laboratory Training (ACILT) in October 2014.

• Eight staff members attended Shipping Infectious Substance and Diagnostic Specimens training (based on International Air Transport Association (IATA) requirements) offered by Sandia National Laboratories, USA in November 2014.

• All QA staff attended Enterprise Content Management Essentials training offered by Datacentrix in January 2015.

• One staff member attended an Advanced Diagnostics course offered by bioMeriéux in France in September 2014.

• One staff member attended a TB Direct Susceptibility Testing course, presented by ACILT in July 2014.

• One staff member completed a Financial Management course with Unisa in October 2014.

• One staff member completed a Research Methodology course offered by Wits in February 2015.

Research/grant projects

Project title: Strengthening Laboratory Management Towards Accreditation (SLMTA) in South Africa

Investigator: Patience Dabula

Period: October 2012–September 2015

Funded by: PEPFAR CDC South Africa

Progress to date: Pilot completed. To date, 39 participants completed three workshops and six laboratory visits. A total of 18 laboratories are now enrolled in Cohort 2. Baseline audits were completed from September to October 2014 and the first workshop was held in November 2014. In total, 20 new trainers were trained and certified as SLMTA Trainers. Of the total of 36 trainers, four were certified as Master Trainers during training in Uganda and South Africa.

Project title: Development of a Laboratory Network and Society to Implement a Quality Systems improvement programme towards accreditation and Laboratory Management.

Investigator: Patience Dabula

Period: January 2014–September 2014 (period extended to March 2015)

Funded by: PEPFAR CDC South Africa, with African Society for Laboratory Medicine (ASLM) as an implementing partner

Progress to date: To date, 16 new staff members were trained and certified on the WHO SLIPTA checklist, bringing the total of NHLS SLIPTA auditors to 49. Of the 49, eight were certified as auditors for the ASLM and of those eight, two have become ASLM SLIPTA Auditor Master Trainers. The ASLM audited 14 laboratories in July 2014, with one of the NHLS’ laboratories becoming the second laboratory in 17 countries audited to achieve a 5-star score. Figures 36 and 37 show the ASLM results compared with the NHLS internal SLIPTA exit audits in laboratories using the NHLS tool and those on the SLMTA programme respectively.

A total of 12 QA officers were employed in laboratories working towards accreditation to assist with administration/clerical work.


Figure 33: ASLM results for laboratories on the NHLS tool

Figure 34: ASLM results for laboratories on the SLMTA tool

Project title: Health Technology Assessment (HTA)

Principal investigator: Sarvashni Moodliar

Period: May 2012–September 2015

Funded by: PEPFAR CDC South Africa

Dundee

Edenvale

Kimberley

Lebowakgomo

Northdale

Port Alfred

Stanger

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Progress to date: Policy and procedures were completed. A total of 48 projects were started during the reporting period of these 43 projects were completed with reports sent to suppliers. Benchmarking was done by two members in Brazil in November 2014. Three training workshops were conducted to make managers aware of the HTA Unit, its processes and role in the NHLS.

Project title: HIV/AIDS Prevention and Technical Assistance Collaboration for Public Health Laboratory Science

Principal investigator: Patience Dabula

Period: December 2013–September 2014 (period extended to March 2015)

Funded by: PEPFAR CDC South Africa and Global AIDS, with the APHL as an implementing partner

Progress to date: Three consultants were appointed and 21 national standardised standard operating procedures (SOPs) were completed. A total of 111 staff members were trained on Foundation of Laboratory Leadership and Management (FLLM), and 16 staff members were trained as FLLM Master Trainers. Three Handbook Technical Working Group meetings were held, the Laboratory User Handbook was finalised and 17 000 copies printed (Figure 35).

Figure 35: NHLS Laboratory User Handbook

Other projects

Mechanism and Capacity for Clinical Trial

The Programme to Support the Ministry of Health of South Africa in the Implementation of a National Programme of Global Response to HIV, implemented by the Italian Instituto Superior Di Sanita (ISS) and sponsored by the Italian Government, continued during the financial year. The Dr George Mukhari (DGM) Laboratory supports work conducted for the programme at the Medunsa Clinical Research Unit (MeCRU) and the Mthatha Laboratory performs work for the Walter Sisulu HIV Vaccine Research Unit (WSHVRU). One steering committee meeting was held in June 2014 in Cape Town to officially close the T0003 phase II trial and the project. No further activities took place at WSHVRU during this reporting period. Several meetings were held with Triclinium, DoH, ISS and MeCRU in preparation for an extended follow-up trial for participants who were enrolled in phase II. Only CD4 and viral load testing are required for this follow-up trial, and the study commenced in January 2015 and is expected to run until August 2015.

SADC Regional Centre of Excellence

South Africa and Zimbabwe have been selected as the QA Regional Centre of Excellence (RCE) countries for the Southern African Development Community (SADC). The South African RCE was audited by SADC in August 2014 and was found to still be upholding the standard required by SADC. The National QA Manager represented SADC in Zambia (Lusaka and Ndola) and Zimbabwe (Harare National Reference Laboratory and Zimbabwe National Quality Assurance Programme (ZiNQAP)) to conduct audits and assess the status of the laboratories.

Implementation of proficiency testing in South African Voluntary Counselling and Testing Sites

A QA Plan was finalised and adopted by the DoH office. Meetings were held with the PEPFAR Laboratory Technical Working Group to discuss the QA/Quality Indicator Plan in Cape Town; with national QA stakeholders to discuss Technical Working


Group nominations in Johannesburg; and with the Limpopo DoH staff to prepare for HIV Proficiency Testing implementation. Four of the staff members were involved in training PEPFAR implementing partners on HIV Serology Proficiency Testing and with Limpopo DoH on Internal Quality Control, HIV and CD4 Proficiency Testing (external quality assessment).

Pan African Harmonisation Working Party (PHWP)

The Pan African Harmonisation Working Party was formed to set up a standard for the introduction of medical diagnostic devices in African countries. One of its first priorities is in vitro diagnostic devices. South Africa is the Secretariat of the PAHWP and a member of the Asian Harmonisation Working Party (AHWP). During the reporting period, several meetings and training sessions were held in South Africa and Tanzania, where the NHLS was represented by the CEO and two QA Managers. The NHLS National Quality Manager served on a WHO Technical Working Group for Post Market Surveillance on behalf of the PAHWP, with two meetings held in June and October in Geneva, Switzerland. The Manager of QA Operations and Support attended a WHO Global Malaria Programme Consultation on malaria Rapid Diagnostic Test (RDT) harmonisation and implications for procurement recommendations in February 2015 in Geneva, Switzerland. The Executive Manager for AARQA represented South Africa at the 19th AHWP Annual Meeting in November 2014 in Seoul, Korea.

Conference presentations

Six conference presentations were made during the financial year compared to four in the previous financial year (Table 15).

Table 15: Presentations at congresses by QA staff: 2014/15

No. Presenter Title Meeting dateType of presentation Venue

1. Sarvashni Moodliar A Summary of the NHLS Health Technology Assessment Unit Performance Evaluation Projects for Diagnostic Tests

Developing Countries Interest Sub-group Forum, June 2014

Oral Washington, USA

2 Hazel Aggett Do Point-of-Care Analysers Perform Equally to standard CD4 Enumeration Platforms on the NHLS Immune Monitoring CD4 Proficiency Testing Scheme?

UNIPATH Congress, September 2014

Oral CSIR, South Africa

3 Hazel Aggett Does the manual reticulocyte count improve competency? Results from the NHLS Haematology Morphology Proficiency Testing Scheme

UNIPATH Congress, September 2014

Oral CSIR, South Africa

4 Patience Dabula South Africa's Country Programme: Comparing SLMTA vs Non-SLMTA Laboratories

SLMTA SLIPTA Symposium, November 2014

Oral Cape Town, South Africa

5 Patience Dabula Does Accreditation of Medical Laboratories Benefit Patients in South African Public Healthcare Facilities

ASLM Congress, December 2014


6 Sarvashni Moodliar How Health Technology Assessment is Used for Decision-making in Evaluating POC Testing

Point-of-Care Congress – Africa, February 2015


Publications

Patience Dabula is a collaborating author in a paper titled Evidence of 617 laboratories in 47 countries for SLMTA-driven improvement in quality management systems, published by K Yao and ET Luman, SLMTA collaborating authors. The paper was published in the African Journal of Laboratory Medicine 2014; 3(2): 35–44 (special SLMTA edition).

Awards

Patience Dabula and Janet Scholtz received an award on behalf of the South African SLMTA programme.


Executive Manager: Prof. Wendy Stevens Operations Manager: Dr Leigh Berrie

National Priority Programmes

OverviewThe National Priority Programmes (NPP) were established by the NHLS four years ago in order to specifically address the Minister of Health and the DoH’s strategic health priorities in terms of HIV and TB. The group consists of over 20 individuals (technologists, scientists and pathologists, working hand in hand with biomedical engineers, health economists and clinicians) to manage, co-ordinate and implement a number of national programmes.

The team is led by Prof. Wendy Stevens, with Dr Leigh Berrie as the Operations Manager, and includes HIV expertise in the fields of HIV viral load, CD4 testing, EID and HIV drug resistance. The NPP’s portfolio also includes TB expertise, and the team was paramount in the nationwide implementation of the GeneXpert technology as a replacement for smear microscopy as the initial test for TB diagnosis.

During 2014, the NPP expanded its activities into the correctional services, peri-mining communities and mHealth, with exciting projects aimed at increasing access to laboratory diagnostic testing and improved linkage into care. Other activities include Point-of-Care (POC) testing and participation in National Health Insurance (NHI) projects. The team’s activities include evaluation of new technologies, training and technical support, research and development, monitoring and evaluation, technical expertise for national task teams, input into the development of guidelines and policies as well as contributions towards national grant proposals such as the Global Fund Grant. In addition, the group conducts consultative work for organisations such as the WHO, Centers for Disease Control (CDC), the Bill and Melinda Gates Foundation and the Clinton Health Access Initiative (CHAI), among others.

NPP Units

CD4 Unit

Overview

The NPP CD4 Initiative, led by Prof. Debbie Glencross and supported by National CD4 Co-ordinator, Dr Lindi Coetzee, continued with on-site training and operational service interventions, assisted by two training officers, Sithembile Mojalefa and Sherry Drury. During 2014/15, ~3.9 million PLG CD4 tests were performed across 60 NHLS CD4 laboratories, located throughout South Africa.


Each CD4 laboratory is managed by individual laboratory managers and supported by business managers and area managers, who are also responsible for ensuring continuous service delivery across all disciplines of pathology (mainly basic haematology, chemistry and microbiology). The NPP CD4 team’s support to the network of 60 laboratories includes: site evaluation, equipment validation, audits, South African National Accreditation System (SANAS) accreditation support, equipment implementation and set-up, data management, full technical support, as well as training (on-site and workshop-based). All training initiatives serve to consolidate knowledge and expertise of staff across the NHLS and address skills required for day-to-day testing, such as the use of standardised PLG CD4 protocols, sample-to-sample and daily instrument quality control, review of external QA, instrument maintenance monitoring and extensive troubleshooting. All are covered in training materials and modules developed by the NPP CD4 team. Additional support relates to evaluation of all new CD4 equipment; development, updating and standardisation of SOPs; scientific input for tender review; real-time telephonic support; corrective action and intervention for the NHLS CD4 PT Scheme; evaluation, site-visits and assessment for rationalisation and strengthening of laboratories.

Training

No formal workshop training was conducted during 2014/15 due to financial constraints, however, training officers were able to travel to laboratories and the unit trained 35 staff members during site visits throughout the year (21 of 60 CD4 laboratories required a quality intervention and were visited by NPP CD4 training officers where training also took place).

Operational interventions

Four CD4 testing facilities were upgraded with equipment to ensure adequate testing capacity. A plan for ideal laboratory placement was developed to ensure full service coverage in each of the six NHLS regions.

Monitoring and evaluation

To assist laboratories, the NPP CD4 Unit monitors test volumes and turn-around times (TATs) daily to ensure minimum instrument downtime and impact of quality of results. In addition, the team monitors laboratory performance on external quality control programmes (NHLS EQA and Beckman Coulter 3-IQAP) and internal quality measures (flow count rates) to ensure ongoing excellence of service.

Research and development

The CD4 Unit reviews and validates new generation CD4 equipment (e.g. Beckman Coulter Aquios; BD Point-of-Care Presto and Partec CyFlow miniPOC). The team developed the Integrated Tiered Service Delivery Model (ITSDM) for universal ‘total service coverage’ and improved accessibility to CD4 service. This model has been adopted by the NHLS (concept and related costing of a CD4 test per tier was published in December 2014). Additional ITSDM proof-of-concept work has been undertaken in the De Aar Laboratory, where a new Tier-3 decentralised CD4 service was implemented in the existing Clinical Pathology Laboratory. Pre- and post-TAT analyses revealed that the mean Pre-Lab TAT reduced from 18 hrs (pre-implementation) to 1.83 hrs (post-implementation). This substantial improvement in CD4 service delivery efficiency also resulted in the volumes of CD4 tests requested in the district more than quadrupling, from just 1 000 tests to between 4 000 and 5 000 CD4 tests per month.

Additional research was undertaken to evaluate different platforms for testing for cryptococcal antigen (CrAg) other than the manual lateral flow assay (LFA), e.g. semi- or fully automated ELISA platforms and kits. A flow cytometric CrAg assay was developed in collaboration with the manufacturer, IMMY, and this product was CE-marked during 2014. Further research and development continues to enable full integration, ultimately into routine service.

Cryptococcal antigen screening

Cryptococcal meningitis (CM) is a common opportunistic infection with high mortality rates. Early screening for cryptococcal antigenaemia is essential in preventing the associated morbidity and mortality of CM. The DoH included CrAg screening as one of the priorities in its Strategic Plan on HIV/STIs and TB for 2012–2016 as part of sustained health and wellness. In collaboration with the NICD, screening of patient blood samples for CrAg is currently being performed using the IMMY™ LFA, with good sensitivity and specificity, in three successful pilot testing NHLS CD4 laboratories (CMJAH, Tambo Memorial and Welkom). This dipstick test method, performed using whole blood, is utilised as a reflex test on patients with a CD4 count of <100 cells/µl. An additional pilot site is currently being established in KwaZulu-Natal at Prince Mshyeni Hospital.


(continued)2Chapter

In order to accommodate CrAg testing nationally, the current and expected volume of tests that would require screening have been anticipated. Proposals for a national roll-out are under consideration and include the use of automated testing systems that could accommodate large-scale testing across a national programme.

HIV Viral Load Unit

Pathologist in charge: Dr Sergio Carmona

Project manager: Somayya Sarang

Overview

Approximately 2.9 million HIV viral load tests were performed across the country during 2014/15 compared to the 2.4 million viral load tests in the previous financial year, with test numbers increasing as more patients are being initiated onto anti-retroviral (ARV) treatment. In 2014, the NHLS HIV viral load tender was due for review and in October the NHLS Board approved the recommendation of the Finance and Technical Tender Sub-committees to award the tender, on a percentage split basis, to the suppliers Abbott and Roche. Currently, there are 17 HIV viral load laboratories nationwide, with nine laboratories utilising the Roche Cobas Ampliprep/Cobas TaqMan System and eight laboratories using the Abbott m2000 System. Based on the new tender award, five HIV viral load laboratories are to transition to the Roche testing platform. Plans are currently under way to transition four of the viral load laboratories (viz., Groote Schuur, Tygerberg, Inkosi Albert Luthuli and Madadeni) over to the Roche platform, whilst the fifth laboratory (Hlabisa) is to be consolidated into the Ngwelezane viral load laboratory.

The Roche P630 automated dilution protocol for viral load testing was introduced with the aim of improving turn-around time and was successfully validated at the Charlotte Maxeke Johannesburg Academic Hospital (CMJAH) PCR Laboratory in October 2014. Previously, manual dilutions were performed on insufficient samples (<1000ul plasma) and this proved cumbersome and time consuming. The automated protocol is now in use at the following laboratories: CMJAH, Ngwelezane, Rob Ferreira, Tshepong, Mankweng and Frere.

New developments

During 2014, Roche Molecular launched its new platforms for HIV viral load: the Cobas 6800 and 8800 Systems. These systems are designed to deliver increased automation and throughput with shorter time to results, providing users with greater flexibility to increase overall workflow efficiencies. Each system provides results for the first 96 tests in less than 3.5 hours, with the Cobas 6800 System delivering up to 384 results in an eight hour shift, and the Cobas 8800 System generating up to 960 results in the same amount of time. Both systems allow for simultaneous processing of multiple assays and are designed to enable up to eight hours (Cobas 6800) and four hours (Cobas 8800) of ‘walk-away’ time with minimal user interaction.

During 2014, the Cobas 8800 was evaluated at the CMJAH PCR Laboratory. Plans are under way to implement these new systems at certain Roche-supported viral load Laboratories over the next 12 to 18 months.

Figure 36: Cobas 8800 Analyser – The high throughput platform consists of a sample handling unit, extraction compartment and a separate isolated amplification compartment. Reagents are ready to use and can be stored on-board in a refrigerated unit for up to 30 days


Monitoring and support to ensure ongoing quality of service

The role of the NPP is to ensure ongoing support, integration and monitoring of the HIV viral load programme on a national scale. Monitoring is achieved through:

• Monthly meetings, which are held between the HIV viral load NPP team and suppliers to identify any problem areas and to monitor monthly turn-around times, stock control, instrument breakdowns and throughput

• Site monitoring, through the submission from all sites of a monthly indicator report detailing test volumes, errors and training needs and which is reviewed and actioned accordingly

• The use of the Abbott mView software for all HIV viral load laboratories utilising the Abbott platform. This software monitors the laboratory’s performance in real time in terms of errors, test volumes, calibrators and controls

• The use of remote connectivity software (Axeda) for all HIV viral load laboratories utilising the Roche platform. This allows for the supplier to have remote access to all Roche HIV viral load platforms nationwide in order to assist with troubleshooting and to reduce downtime experienced by the laboratories

• The use of an ARV dashboard for continuous monitoring of laboratory performance. This dashboard was developed together with the NHLS Central Data Warehouse, and generates monthly reports for both internal and external stakeholders in terms of test volumes and viral load result ranges from national and provincial down to district level

• Laboratory site visits in order to assist and prepare the laboratories for accreditation

• A Roche HIV viral load dashboard is also currently under development and the first phase of testing was successfully conducted on 9 March 2015.

Training initiatives

Throughout 2014, both suppliers provided on-site training for new staff as well as refresher training for existing staff. A successful advanced HIV viral load training course was also offered by Abbott for NHLS ‘super users’ from 13–14 May 2014. Due to austerity measures no further advanced training was held.

External quality assurance (EQA)

All HIV viral load testing laboratories are enrolled with the Quality Control for Molecular Diagnostics EQA Programme which is co-ordinated by the NHLS QA Department.

Early Infant Diagnosis Unit

Overview

The Early Infant Diagnosis (EID) Unit aims to assist in the delivery of quality HIV diagnostic services for infants and children, in collaboration with the National and Provincial Departments of Health and other partners. The unit accomplishes this through training, the provision of technical assistance, research, monitoring and advocacy. Sisters Tsakani Mhlongo and Nthabiseng Kekana undertook training on EID for doctors, nurses, counsellors and facility managers nationally during 2014/15. The training content extends from specimen collection to the interpretation of HIV Polymerase Chain Reaction (PCR) and rapid test results in children, with a view to ensuring that all identified HIV-infected infants have access to care. Training materials utilised for EID include the standard operating procedure for taking blood from infants for the HIV PCR test, as well as a poster describing the correct procedure for Dried Blood Spot (DBS) collection. These were developed by the EID Unit and are freely available on the NHLS website. Hard copies of these training aids are distributed nationally during training or on request.


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Figure 37: SOP for taking blood from infants for the HIV PCR test


Monitoring and evaluation of the National EID Programme is achieved in collaboration with the NHLS Central Data Warehouse. Two PCR reports are distributed monthly to managers ranging from national to facility level. The report details PCR tests performed against targets of exposed infants per province/district to measure EID coverage, proxies for early vertical transmission and the number of PCR-positive infants per facility who require tracking into care. The monitoring function is constantly being improved to assist in addressing challenges experienced in the field.

Review of laboratory services

EID testing is performed in nine laboratories across South Africa using the Roche Cobas Ampliprep/Cobas TaqMan analyser. The newly improved version 2 of the Roche HIV-1 qualitative assay in use by the NHLS was successfully rolled out to all nine testing laboratories by June 2014 and offers superior sensitivity over the previous assay. During this financial year, ±360 000 HIV PCR tests for EID were performed. With the review of the National Guidelines in 2015 to include PCR testing at birth and again at ten weeks of age (as opposed to the previous guideline of six weeks), test numbers are expected to increase. In addition, a second DBS specimen will now be used to confirm a positive HIV PCR result instead of a viral load, as was previously done. Training will be conducted during the course of the year for laboratory staff to ensure these changes are implemented accordingly.

Training and support to ensure ongoing quality of service

A successful DBS workshop was hosted by Roche and presented by the NPP at the 2nd meeting of the African Society of Laboratory Medicine (Cape Town, 2 December 2014). The objective of the workshop was to increase the awareness of, as well as the challenges relating to, DBS testing. Dr Leigh Berrie presented an insightful overview of the EID Programme in South Africa, Somayya Sarang focussed on the Laboratory Programme for EID testing and highlighted the challenges regarding DBS testing, and Tsakani Mhlongo presented a power-packed practical session on DBS collection.

External Quality Assurance (EQA)

All EID testing laboratories participate in the CDC DBS EQA Programme, with two submissions being received annually. Panels for the scheme were previously prepared in Atlanta, USA; however, the NHLS QA Department has now taken over this responsibility for the NHLS laboratories.


HIV Genotyping Unit

Review of existing services

HIV genotyping has now been included in the National HIV Guidelines for all patients failing second line treatment. The NHLS provides HIV Drug Resistance (DR) testing as a diagnostic service at two large centres, Tygerberg Hospital in Cape Town and CMJAH in Gauteng, with small numbers also being performed at the Inkosi Albert Luthuli Central Hospital in KwaZulu-Natal and Universitas Hospital in the Free State. In order to increase capacity, the two large centres received enhanced resources in 2014 through funding from the Global Fund grant (phase I). In phase 2 of the grant, three further laboratories at Dr George Mukhari Hospital (DGM), Universitas and Inkosi Albert Luthuli Central Hospital (IALCH) have been initiated to increase capacity even further. The team is evaluating various next generation sequencing platforms as an alternate option to the conventional sequencing platforms.

HIV DR Sub-committee

During 2014/15 this sub-committee achieved the following:

• Testing algorithms and HIV DR test methods between various laboratories were compared in order to investigate commonalities and to identify which processes could be aligned. It was agreed that three-step assays should be avoided due to their complexity and that enzymes with moderate to high fidelity should be used

• Request forms were compared in order to come up with a minimal requirement for HIV DR testing requests as well as for accurate data capture

• A model for a PCR laboratory with referral of PCR products for sequencing at a central facility is planned for a pilot later in 2015

• Training in HIV DR and interpretation is offered through Clinical Laboratory Services (Johannesburg).

TB GeneXpert Unit

Programme Manager: Mr Sebaka Molapo

Overview

The DoH, together with the NHLS, have been global leaders in rolling out Xpert MTB/RIF from March 2011, therein addressing the country’s high TB incidence rate, the frequency of TB/HIV co-infection, and the burden of multidrug-resistant TB. Since then, 309 GeneXpert instruments of varying sizes (GX4: 110; GX16: 190; GX48: 1; GX80: 8) have been installed at 216 sites, both urban and rural, including seven high-throughput ‘Infinity’ analysers that were installed in high volume laboratories to increase test capacity. From March 2011 through to March 2015, the NHLS performed 5 639 704 Xpert MTB/RIF tests in the public sector, accounting for more than 56% of the globally procured cartridges. The average national TB positivity rate among those tested was found to be 16% in the first year and 14% in the second year and has further decreased to 11.5%, 10.5% and 9.5% in the third, fourth and fifth years, respectively.

Table 16: National GeneXpert MTB results

Year MTB detected MTB not detected Test unsuccessful Total % MTB detected

2011 29 634 149 140 4 599 183 373 16.2

2012 93 197 543 470 16 971 653 638 14.3

2013 208 152 1 528 790 51 853 1 788 795 11.6

2014 247 219 2 050 670 61 891 2 359 780 10.5

2015 58 596 540 868 16 803 616 267 9.5

Total 636 798 4 812 938 152 117 5 601 853 11.4

The average Rifampicin (Rif ) resistance detection rates have remained constant at between 6–7% in all TB cases. Two percent of all tests have had error results while invalid results, which likely represent sample problems, have occurred in less than 1%. These results are being monitored regularly and corrective action has been implemented where necessary. In September 2014, the NHLS Microbiology Expert Committee, together with the NPP, commenced roll-out of protocols for testing extra-pulmonary and paediatric specimens using the Xpert® MTB/RIF assay, and this has now been implemented nationwide. During 2014/15, the programme expanded further to directly support high risk populations, such as those within correctional facilities and peri-mining communities.


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Training

A total of 671 laboratory staff and 2 808 healthcare workers were trained between 1 April 2014 and 31 March 2015 by technical trainers, Puleng Marokane and Viwe Magida, as well as by Programme Manager, Sebaka Molapo and two clinical trainers, Sylvia Ntsimane and Nthabiseng Kekana, all from the NPP Unit. Training is an ongoing process to support both the DoH training on clinical algorithms, as well as laboratory training on technical issues and good laboratory practice (GLP). In addition, three Advanced GeneXpert Training workshops were held in May, July and October 2014 in collaboration with the supplier, Cepheid. Participants from 88 GeneXpert testing laboratories within the NHLS and across all nine provinces attended this four-day training workshop which included the following topics:

• Regulatory compliance and adherence to GLP

• Personnel qualifications and responsibilities

• Establishment and verification of test performance specifications

• Preparation and processing of clinical molecular samples

• Quality control practices

• Proficiency testing and alternative performance assessment, test reports and quality management practices.

Table 17: Healthcare workers trained on GeneXpert from 1 April 2014 –31 March 2015

2014 2014 total

2015 2015 total

Grand totalApr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar

Eastern Cape - - - - - 56 304 214 - 574 - 25 - 25 599

Free State - - - - - - - - - - - - - - -

Gauteng 120 261 122 291 - 32 76 58 11 971 33 73 106 1 077

KwaZulu-Natal - 31 - - - - - 40 - 71 - 102 87 189 260

Mpumalanga - - - - - - - - - - - - 141 141 141

North West 25 - 22 - 382 207 - - - 636 39 - 43 82 718

Northern Cape - - - - - - - - 13 13 - - - - 13

Grand total 145 292 144 291 382 295 380 312 24 2 265 72 200 271 543 2 808

External Quality Assurance

In order to monitor ongoing quality of testing services, all NHLS Xpert MTB/RIF testing laboratories are enrolled in an EQA programme for GeneXpert using dried culture spots (DCS), which was developed by the NPP together with the University of the Witwatersrand. Three DCS panels were distributed in 2014 and one in March 2015 to all NHLS Xpert sites. Results from the panels are submitted and analysed online (www.tbgxmonitor.com) with adherence to strict submission deadlines.


All GeneXpert laboratories are monitored on a monthly basis in terms of test volumes, TB positivity rates, error rates, Rif resistant rates and in-laboratory turn-around times through data extracted from the Central Data Warehouse (CDW) and the development of a monthly operational dashboard. Reports for each of the six NHLS regions, relating to each laboratory’s performance, are compiled and distributed by the NPP on a monthly basis to the area and business managers to assist with continuous monitoring of the programme.

New ventures

New ventures for 2014/15 include the review of GeneXpert service coverage for improved cost-effectiveness and sustainability. In early 2015, the NPP team worked together with Cepheid to pilot their remote connectivity software, which will allow for improved monitoring of the programme’s performance. This software was subsequently launched and will be rolled out to all NHLS GeneXpert laboratories during the course of the year. Cepheid has also recently launched ‘Xpert Check’, a system which is to replace Xpert Calibration and which is envisaged to reduce the number of module failures due to calibration.


Correctional Services TB and HIV Programme

Overview

In order to improve TB control in all 242 correctional facilities in South Africa, the NHLS is working in partnership with the Department of Correctional Services (DCS), DoH, Aurum Institute, TB/HIV Care Association and Right-to-Care to ensure access to regular HIV- and TB-related screening, testing and treatment for up to 150 000 offenders through the Global Fund programme. The NHLS is providing GeneXpert MTB testing for all offenders screened and found to have any one or more symptoms of MTB, as per national guidelines, either at an on-site GeneXpert lab at the correctional facility or at the closest NHLS laboratory, in order to provide improved access to diagnosis and monitoring. During 2014 and following site inspections, GeneXpert NHLS laboratories were established at seven selected correctional facilities, namely:

• Kgoši Mampuru Management Area II

• Barberton Management Area

• Johannesburg Management Area

• Groenpunt Management Area

• Pollsmoor Management Area

• St Albans Management Area

• Durban-Westville Management Area.

Renovations were needed at certain sites before the laboratories could be set up. Technical staff was recruited for each of these sites in order to process the specimens collected by the various partners. All equipment and the consumables needed to perform GeneXpert testing were procured and installed. Quality systems were put in place such as SOPs and staff training and competency, safety and security were addressed. Various challenges were experienced with setting up the seven on-site laboratories in a non-laboratory environment; however the seven laboratories became fully operational from October 2014.


Monthly reports have been developed for monitoring of GeneXpert as well as CD4 data generated by the NHLS laboratories for the DCS. The establishment of the TB/HIV programme with partners has allowed for an increase in uptake by inmates having access to GeneXpert testing, as seen by the increase in the number of specimens tested from 2011 to 2014.

Table 18: GeneXpert MTB results for correctional services

Year MTB detected MTB not detected Test unsuccessful Total % MTB detected

2011 390 1 758 63 2 211 17.6

2012 936 5 613 180 6 729 13.9

2013 1 762 16 682 503 18 947 9.3

2014 2 805 42 791 804 46 400 6.0

Total 5 893 66 844 1 550 74 287 7.9

Since implementation of the programme, a Programme Manager, Andani Phaswana, and a Clinical Trainer, Nomvula Skhosana, have been employed through grant funding. Relationships have been successfully built with DCS and regular meetings are attended. The team also assisted with the establishment of the DCS National Task Team, for which they are currently the Secretariat, and chairs the Laboratory and Infection Control Working Group. The programme has been further expanded to include a Health Systems Strengthening’ component in partnership with the Aurum Institute and through funding from PEPFAR CDC. This component involves training healthcare workers at the correctional health facilities in the GeneXpert algorithm, specimen collection, result interpretation and quality control. To date, 168 DCS centres and 533 DCS officials have been trained.

In addition, 90 SMS printers have been procured and distributed to various DCS facilities nationwide in order to improve turn-around time of results. During phase 2 of the grant, the remainder of the facilities are to be equipped with SMS printers for national coverage. Over 100 DCS officials have also been given access to view the NHLS GeneXpert results through the web portal.


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New ventures

Future plans include the development of a comprehensive CD4 dashboard for correctional services, a review of current courier routes to the correctional facilities to ensure optimal service delivery, and roll-out of quality assurance for HIV rapid tests and other POC tests performed within the correctional health facilities.

Mines and Peri-mining Communities TB and HIV Programme

Overview

Through financial support from the Global Fund, the NHLS, together with the Aurum Institute, was appointed by the DoH to provide services aimed at improving TB and HIV/AIDS management for vulnerable peri-mining communities, estimated at around 600 000 people in six main mining districts. The NHLS is expected to test 106 560 people for TB in these districts. In addition, persons newly identified as HIV-infected through the clinical partner are staged for HIV-treatment using CD4 tests provided by the closest NHLS laboratory in the district.

The NPP has recently piloted six staffed and GeneXpert-equipped mobile TB units within the communities in order to undertake GeneXpert MTB/RIF testing for TB. The mobile units consist of vans equipped as mini-laboratories, including refrigeration facilities, water supply and generators for electricity supply to the GeneXpert instruments. Six drivers and six technologists have been employed through the Global Fund grant to carry out the necessary testing for the programme, and a Programme Manager (Thabo Taleng) has been appointed for overall co-ordination and programme monitoring. The six districts with a high proportion of mines in South Africa that were identified for focused attention are:

• Lejweleputswa in the Free State

• Dr Kenneth Kaunda and Bojanala Districts in the North West

• West Rand in Gauteng

• Waterberg and Sekhukhune in Limpopo.

The six mobile units were officially launched by the NHLS Executive Committee on 13 January 2015 and deployed into the field.

The Executive Committee at the launch of the mobile units

Progress

The mobile units commenced daily testing operations in the above-mentioned districts in mid-January 2015. Some of the areas covered include informal settlements, taxi ranks, farms and schools as well as some mines. Provincial and district health campaigns were supported by offering TB testing on site. The mobile laboratories have had to travel varying distances to get to the sites, and sometimes covered over 200 km in a single trip.

By 31 March 2015, a total of 9 300 GeneXpert MTB/RIF tests had been conducted for this programme, with 1 800 (1.5%) being processed in the mobile GeneXpert units themselves. A monthly increase in the number of tests processed has


been noted since the beginning of 2015, with the Greater Sekhukhune District contributing about 55% of those tests. The results of all the samples that were received and processed in the mobile units were released within 24 hours of receipt, and most of those referred to the parent laboratories were completed within 48 hours.

A mobile unit at Bayipeying informal settlement in Randfontein

Regular site visits by the Programme Manager, and meetings between mobile team members, parent laboratory managers, district DoH and Aurum Institute teams are frequently held to monitor progress and address challenges.

In addition to supporting peri-mining districts, NPP support has been extended to other provinces and districts, e.g. in the Northern Cape, the NHLS has been selected as the laboratory of choice by the DoH to provide HIV/TB-related testing services to the mines. The Programme Manager has developed an assessment checklist and assisted the Northern Cape Business Unit in assessing the readiness of the mines to provide laboratory-related services at their health centres. As part of the collaboration, nine clinical staff members from four mines have been trained on the NHLS request form and the NHLS WebView portal for access to patient results.

New ventures

GeneXpert data collected from the mobile laboratories is to be analysed in terms of any intra- and inter-modular variability that may arise from utilising the equipment in a mobile environment. Cost-effective analyses will also be performed.

mHealth and Linkage-to-Care

Programme Manager: Lynsey Stewart-Isherwood

Project Managers: Floyd Olsen and Portia Madumo

Overview

The mHealth Division of the NPP was established in March 2014 with the primary aim of developing and implementing comprehensive mobile health (mHealth) solutions, mainly driven by android applications (APPs) to improve both linkage and retention to care within priority disease areas such as HIV and tuberculosis (TB). The first two mHealth programmes have been designed and implemented for multi-drug resistant TB (MDR-TB), namely ‘emocha®’ and ‘Treat TB’.

First MDR-TB mHealth programmes

emocha® and Treat TB have been developed to rapidly link newly diagnosed Rifampicin resistant (R-R) patients, identified by GeneXpert MTB/RIF testing, to appropriate MDR-TB treatment. The programmes were initiated in response to an indicator of the DoH, National Strategic Plan 2012–2016, namely to reduce the turn-around time (TAT) from diagnosis of R-R to treatment within five days.


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emocha®

In response to the DoH’s efforts to decentralise treatment of MDR-TB and to reduce the time in which newly diagnosed R-R patients access treatment, the Global Fund is supporting a national mHealth programme called emocha®. emocha® has implemented its pilot study in three MDR-TB treatment facilities in the Ugu District, KwaZulu-Natal (Murchison Hospital, Kwa-Mbunde Gateway and Gamalakhe clinics). The NPP mHealth team was actively involved in the design, development, and training of the staff at these facilities and continues to conduct regular on-site monitoring visits. The first set of training, followed by the commencement of implementation, was held from 18–19 March 2015. The key partners in the programme include NPP mHealth team, JHPIEGO-SA (Mani Naicker), Johns Hopkins University (Prof. Jason Farley) and emocha Mobile Health inc. (Sebastian Seiguer and Jane McKenzie-White).

Lynsey Stewart-Isherwood conducting the first on-site emocha® APP training at Gamalakhe Clinic, Ugu District, KwaZulu-Natal, in March 2015

Floyd Olsen conducting pre-implementation training, together with Johns Hopkins University, JHPIEGO-SA and emocha® in the Ugu District, of KwaZulu-Natal, in March 2015


Treat TB

This APP was designed by Lynsey Stewart-Isherwood and Floyd Olsen, together with TLC Engineering. It was launched at CMJAH in December 2014, with a planned roll-out to six more facilities. Since implementation, three APP updates have been produced to accommodate user suggestions. A detailed training programme was drawn up, with the first training commencing on 4 May 2015. This programme has the full support of the Gauteng DoH Deputy MDR-TB Director, Dr Refilwe Mokgetle, and the NPP is working closely with her team of district and sub-district co-ordinators. Together, they have identified the next six MDR-TB treatment sites in Gauteng in which Treat TB will be implemented. It is envisaged that this programme will integrate into the national emocha® programme once it reaches Gauteng.

Projects in the pipeline

The NPP has subsequently collaborated with further stakeholders, such as the World Bank, Grand Challenges (Bill and Melinda Gates Foundation) and the Wits Reproductive Health and HIV Institute (WRHI) to develop two more mHealth projects involving issues such as gender inequality and women empowerment through a unique incentivisation programme; and retention to care in HIV patients. The vision of the NPP mHealth Division is to fully establish an ‘mHealth Hub’ to encourage the centralisation of all mHealth projects for priority diseases across South Africa. It is only in this way that mHealth projects can be streamlined and thus managed and monitored effectively. A positive spinoff would include non-replication of projects, potential integration of smaller projects into larger cohorts, increased collaboration and timeous and reliable reporting to the DoH describing the impact of the mHealth projects. The NPP is currently seeking support funding for the growth of its IT infrastructure to support a centralised ‘mHealth Hub’.

Research and Development (R&D) Group

Overview

The NPP R&D Group comprises a multidisciplinary team specialising in clinical microbiology, HIV and TB research, development and implementation of new diagnostic tests and quality management systems. The group’s focus, under the leadership of Prof. Lesley Scott, is applied science for problem-solving using molecular diagnostic technologies. Outputs contribute to improved services within the NHLS and specifically the transfer of knowledge to the NPP, policy development for the DoH and global quality management for several diagnostics.

Ensuring quality monitoring for the Xpert® MTB/RIF technology

This R&D team continues to provide a verification and EQA programme for the GeneXpert MTB/RIF platform. Since the inception of the Dried Culture Spot (DCS) Programme, the verification programme has been used to successfully verify over 200 GeneXpert instruments in the field to ensure that the modules are fit for clinical result reporting. The EQA programme is currently being supplied to 207 NHLS laboratories and 184 users in 20 different countries worldwide. This programme includes the development of TBGxMonitor®, a web-based software to automate EQA result reporting. TBGxMonitor® currently services 401 instruments in 391 GeneXpert centres (laboratories and research clinics) in 20 different countries (Australia, Botswana, Brazil, Ghana, Haiti, India, Kenya, Malawi, Mozambique, Namibia, Nigeria, Peru, Senegal, South Africa, Tanzania, Thailand, Uganda, USA, Zambia and Zimbabwe).

In 2014, the R&D team won the Gauteng Accelerator Programme (GAP) Bioscience Award through the Innovation Hub for the development of this product (now termed SMARTSPOT). The SMARTSPOT technology is also a top-ten finalist in the African Innovation Foundation Awards. The versatility of the DCS Programme has also recently been demonstrated by its use with another molecular assay, namely the Genotype MTBDRPlus (Hain Lifescience) line probe assay, which is used in the current algorithm for identification of drug susceptibility. Results of a small pilot were very successful and as a result the R&D team is looking to broaden the DCS Programme to the line probe assay. In addition, the R&D team is collaborating with Abbott Molecular to adapt the current DCS EQA Programme to their newly developed TB assay on the Abbott platform; a trial of the DCS EQA Programme is to be set-up with IPAQ (India in collaboration with CHAI) and will involve 20 sites. In collaboration with Bob Coombs (ACTG group), a trial is being set up to pilot the programme on all ACTG sites conducting the line probe assay (Hain Lifescience).

New developments for TB diagnosis using alternative specimen types

A study investigating protocols for testing extra-pulmonary specimen types, such as fine needle aspiration (FNA), pleural fluids, cerebrospinal fluid, ascites fluid, urine, gastric aspirates and tissue, was finalised. The Xpert MTB/RIF’s overall sensitivity was 59% and specificity was 92%, however sensitivities differed between specimens classified as having a thick (87%)


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versus a clear (watery) (48%) appearance. Results of this study have been incorporated into the national TB diagnostic algorithm for extra-pulmonary tuberculosis (EPTB) diagnosis. The NPP R&D team is also collaborating with FIND and Dr David Alland in a clinical trial to investigate the use of the Xpert MTB/RIF assay for diagnosing paediatric TB on stool specimens. This study is ongoing and will have important implications for shaping paediatric TB diagnosis in South Africa.

Validations of new diagnostic tests for HIV and TB

The R&D team is involved in performing evaluations of various new high-throughput and POC platforms for HIV and TB diagnosis. A clinical evaluation of the new Abbott Molecular MTB assay began in September 2014 and is still ongoing (to date, n=205/300 patients have been recruited into the study). For HIV diagnosis and monitoring, several new viral load (VL) POC platforms are being evaluated, such as the Alere q HIV-1/2 assay and the Cepheid HIV-1 Quant. A clinical validation of the IQuum Liat HIV VL whole blood assay on finger stick specimens, performed by POC nurses, has been completed and will soon be published. As an alternative to POC testing, much interest is being placed on the use of DBS for VL monitoring. To this end, the team is following a longitudinal cohort of HIV-positive patients receiving anti-retroviral therapy (ART). DBS specimens are being collected at baseline, followed up from week 4–60, and tested on the Abbott m2000 platform with comparison to predicate VL on plasma. To date n=100 patient samples have been collected from baseline to visit five and the study is ongoing until visit seven.

Investigating the feasibility and accuracy of multiple POC testing

A multiple POC implementation site has been established at the Helen Joseph Themba Lethu Clinic in collaboration with Prof. Ian Sanne’s (Right-to-Care) clinical team, to address nurse operation of POC testing versus routine laboratory testing (n=326). Results from this study, which are soon to be published, showed that nurse-operated POC testing performed on venepuncture-derived specimens was as accurate as laboratory predicate testing for CD4, Hb, ALT, creatinine and lactate.

The second phase of the project aimed to address the feasibility of using POC testing through a prospective trial in three HIV/ART clinics where subjects were randomised to either POC or standard of care (SOC) to establish safety, clinical and cost-effectiveness in initiating HIV-positive patients onto ART and TB treatment. This study had a number of important outcomes which may affect POC policy development in South Africa: (i) statistically significantly more patients are identified as eligible for ART using POC and are initiated on ART using POC, however there was no significant difference between POC and SOC in the numbers of patients that completed six months’ treatment or 12 months’ treatment. No difference in mortality was observed, but there was more Loss-to-Follow-Up (LTFU) among the POC participants. As far as costing, it was found that the cost per patient in care and responding at 12 months was 70% higher in the POC arm of the study. These results are being drafted for a manuscript.

Other studies

In addition to method development and evaluations, the team is also involved in a collaborative Xpert impact study with the University of North Carolina (Prof. Annelies van Rie). The study, which is National Institutes of Health (NIH) funded, is called the EXIT-Rif Study (Evaluating the Xpert impact on TB-Rif resistance) and commenced in February 2012 in Gauteng, Eastern Cape and the Free State. This is a prospective cohort study comparing Rif-resistant TB by Xpert MTB/RIF to culture-based susceptibility methods. The objectives are to assess whether rapid diagnosis of Rif resistance leads to improved TB treatment outcomes; to determine phenotypic and genotypic drug-resistance profile in patients diagnosed with Xpert-RIF-resistance; and to document management decisions and patient actions in 12 months following diagnosis of Xpert-RIF resistance. To date, 542 individuals are enrolled of whom >1:3 died. Xpert was shown to only reduce mortality from 38% to 34%. In addition, on the GeneXpert tested patients (n=278), 40% had no confirmatory test for Rif, and only 20% were assessed for extensively drug-resistant tuberculosis (XDR-TB).

Information Management and Special Projects Unit

The activities of the unit include generating routine aggregate data for programmatic monitoring as well as participation in special National Health Insurance (NHI) projects.

Information Management

Team members: Oriel Mahlatsi and Silence Ndlovu

The unit generates monthly and quarterly aggregate CD4, HIV viral load, HIV DNA PCR and Xpert MTB/RIF reports for both internal (NHLS) and external consumption. Many of these reports are prepared as Excel-based dashboards that


provide multiple, user-friendly views of sample-level laboratory data. The aggregate data is generated by the Laboratory Information System (LIS) used by each NHLS laboratory and extracted from the Central Data Warehouse (CDW). Examples of the reports generated include:

• Percentage of CD4 samples below 350 cells/µl

• Number of tests performed

• Laboratory workflow analysis

• Laboratory instrument capacity utilisation rates

• Laboratory turn-around times.

Special Projects

Team members: Shaidah Asmall (DoH), Ruth Lekalakala (University of Limpopo) and Naseem Cassim (NPP)

The unit was involved in multiple projects, the most notable being the Ideal Clinic process (NHI) and Operation Phakisa.

Ideal Clinic

Eleven clinics in the NHI pilot districts were selected as model or ‘ideal clinics’ that meet clear standards in terms of service provision, infrastructure and supply chain management (SCM), among other key domains. The Ideal Clinic dashboard was developed to track the clinics’ progression over time to ideal status. The components of the dashboard include administration, integrated clinical services management, pharmaceuticals and laboratory services, human resources for health, support services, infrastructure, health information management, communication, district health system support, and partners and stakeholders. Each of the above components is made up of a number of sub-components with specific elements. The lessons learnt from the 11 clinics will be applied to all 3 632 primary healthcare (PHC) clinics in South Africa. The role of the NHLS was to assist in the development of a PHC Laboratory Handbook, establish a PHC Essential Laboratory List (ELL) and determine the optimal clinic-laboratory processes.

Operation Phakisa

Operation Phakisa (Ideal Clinic) is an innovative, pioneering and inspiring approach that will enable South Africa to implement the Ideal Clinic concept better, faster and more effectively. Operation Phakisa utilises the ‘Big Fast Results’ Malaysian concept of a results-driven approach which involves setting clear plans and targets, ongoing monitoring of progress to targets and making these results public. The methodology consists of eight sequential steps. It focuses on bringing key stakeholders from the public and private sectors, academia as well as civil society organisations together to collaborate in detailed problem analysis, priority setting, intervention planning and delivery. These six-week long intensive collaboration sessions are called laboratories (labs). The results of the labs are detailed (three-foot) plans with ambitious targets as well as public commitment on the implementation of the plans by all stakeholders. The implementation of the plans will be rigorously monitored and reported on. Additionally, any implementation challenges will be actively managed for effective and efficient resolution. The aim of Operation Phakisa is to deliver Ideal Clinic to PHC clinics in South Africa. The NHLS’ role in this process has been to identify key issues that affect the laboratory service as well as initiatives to address them. The final step was to develop three-foot plans. The laboratory initiatives were integrated as sub-initiatives into the Integrated Chronic Service Model (ICSM) and the District Health Management Information Systems (HMIS) work streams. The ICSM initiatives were around the ELL and PHC Handbook while the HMIS was around order entry and data inter-operability.

National and provincial HCT/TB campaigns

The NPP takes part in various HIV Counselling and Testing (HCT) campaigns throughout the year, including World TB Day, World Aids Day and many more. For World Aids Day, the NPP collaborated with the DoH and other stakeholders to offer healthcare services on 1 December 2014. The event was held at Bronville Park Stadium, Welkom, Free State with the theme ‘Focus, Partner, Achieve: An AIDS-free Generation’. The National World TB Day event took place at the Mpheqeka Stadium, Matlosana Su-District, Dr Kenneth Kaunda District, North West. The focus was on the Global Fund initiatives in mines, peri-mining communities and correctional services and five GeneXpert mobile laboratories were made available for testing on the day of the event. Other campaigns attended during March included: Higher Education AIDS (HEAIDS) launch by the Minister of Health on 12 March 2015; Gauteng Provincial World TB Day on 23 March 2015, attended by the Premier/MEC; and Free State Provincial World TB Day on 25 March 2015, attended by the Premier/MEC.


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The NPP supporting World TB Day 2015 at the Mpheqeka Stadium, Matlosana Sub-District, Dr Kenneth Kaunda District, North West

NPP Publications and Congress PresentationsMoodley K, Shrimp E, Coetzee L, Glencross DK. Preliminary data on a new flow cytometry assay for the early detection of Cryptococcal Antigenaemia. 2nd Meeting of the African Society of Laboratory Medicine (ASLM); December 2014; Cape Town, South Africa.

Moodley K, Coetzee LM, Glencross DK. Testing platforms for early detection of Cryptococcal Antigenaeamia in high volume CD4 testing laboratories in South Africa. 8th International Workshop on HIV Treatment, Pathogenesis and Prevention Research in Resource-poor Settings; 5–9 May 2014; Lusaka, Zambia.

Govender N, Chetty V, Spencer D, Montoedi B, Clark DA, Chehab J, et al. Cryptococcal screening in Gauteng province, South Africa: Update from the first year of implementation, 2012–2013. XXI International AIDS Conference; July 2014; Sydney, Australia.

Glencross DK, Coetzee LM, Cassim N. An integrated tiered service delivery model (ITSDM) based on local CD4 testing demands can improve turn-around times and save costs whilst ensuring accessible and scalable CD4 services across a national programme. PLoS ONE. 2014; 9(12): e114727.

Coetzee LM, Moodley K, Glencross DK. BD FACSPrestoTM near patient CD4 counter: mini-validation against reference methodology (PLG/CD4) in South Africa. 8th International Workshop on HIV Treatment, Pathogenesis and Prevention Research in Resource-poor Settings; 5–9 May 2014; Lusaka, Zambia.

Coetzee L, Govender N, Cassim N, Moodley K, Glencross DK. Challenges for implementing a national early detection program for Cryptococcal Antigenaemia. Southern African HIV Clinicians Society 2nd Biennial Conference; 24–27 September 2014; Cape Town, South Africa.

Coetzee L, Glencross DK, editors. 2014 Phased roll-out of reflexed laboratory CrAg screening in CD4 laboratories in South Africa. Cape Town, South Africa.

Coetzee L, Cassim N, Glencross DK. Applying the integrated tiered service delivery model (ITSDM) in KwaZulu-Natal (KZN) province to identify optimal placement of CD4 testing facilities. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.


Cassim N, Coetzee LM, Schnippel K, Glencross DK. Estimating implementation and operational costs of an integrated tiered CD4 service including laboratory and point of care testing in a remote health district in South Africa. PLoS ONE. 2014; 9(12): e115420.

Cassim N, Coetzee LM, Moodley K, Schnippel K, Govender NP, Glencross DK. Incremental costs of implementing automated EIA for cryptococcal antigenaemia detection compared to a lateral flow assay at a high-volume public sector laboratory in South Africa. 8th International Workshop on HIV Treatment, Pathogenesis and Prevention Research in Resource-poor Settings; 5–9 May 2014; Lusaka, Zambia.

Cassim N, Coetzee L, Stevens W, Glencross DK. Assessing the impact of implementing a community CD4 laboratory in a rural health district in South Africa. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.

Cassim N, Coetzee L, Schnippel K, Glencross DK. Incremental costs of implementing semi-automated ELISA test for Cryptococcal antigenaemia compared to lateral flow assay at a high volume public-sector laboratory in South Africa. 9th

International Workshop on HIV Treatment, Pathogenesis and Prevention Research in Resource Poor Settings (INTEREST); 2014; Tanzania.

Cassim N, Coetzee L, Moodley K, Glencross DK. Using laboratory data to predict which districts to prioritize the implementation of cryptococcal antigenaemia detection using a combination of automated EIA and a manual lateral flow assay in South Africa. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.

Govender N, Zulu T, Lawrie D, Bosman N, Nana T, Govender N, et al. Detection of cryptococcal antigenaemia from whole blood specimens for rapid diagnosis of cryptococcal disease among HIV-infected adults in South Africa. International AIDS Society Conference on HIV Pathogenesis, Treatment and Prevention; 30 June–3 July 2013; Kuala Lumpur, Malaysia.

Coetzee L, Cassim N, Glencross DK. CrAg screening: A laboratory perspective in Session 9, Skills Building Workshop: Cryptococcosis: Preventing a deadly fungal disease. 6th SA AIDS Conference; 18–22 June 2013; Durban, South Africa.

Coetzee L, Cassim N, Glencross DK. A tiered laboratory approach to improve CD4 services: Is there a place for mobile and point-of-care (POC) testing? in Satellite session: Closing the loop: Access to laboratory services and test results. 6th SA AIDS Conference; 18–21 June 2013; Durban, South Africa.

Cassim N, Coetzee L, Motlonye B, Mpele N, Glencross DK. Piloting a national laboratory electronic programme status reporting system MedInfo; 2013; Copenhagen.

Cassim N, Coetzee L, Glencross DK. Accessing laboratory services: Current options for centralised laboratories using an LIS and showcasing applications; in Satellite session: Closing the loop: Access to laboratory services and test results. 6th SA AIDS Conference; 18–21 June 2013; Durban, South Africa.

Stevens W. South Africa’s ‘Reality Check’ >1 million Xpert tests. 6th GLI Partners Meeting, April 2014, Geneva, Switserland.

Stevens W. Achieving target. 4th SA TB Conference; 10–13 June 2014; Durban, South Africa.

Molapo S. Ensuring ongoing quality testing. 4th SA TB Conference; 10–13 June 2014; Durban, South Africa.

Magida V, Marokane P, Molapo S, Gous N, Cunningham B, Berrie L, Scott L, Stevens W. Monitoring newly implemented GeneXpert testing site performance through External Quality Assessment (EQA). 4th SA TB Conference; 10–13 June 2014; Durban, South Africa.

Molapo S. Module failure and similar operational considerations: Implementing HIV and TB Diagnostics in Resource-Limited Settings. 22–23 September; Cape Town.

Berrie L. Diagnostic Algorithms (TB&HIV): Implementing HIV and TB Diagnostics in Resource-Limited Settings; 22–23 September; Cape Town.

Molapo S. GeneXpert Module Failures: South Africa’s Xpert MTB/RIF national programme experience and impact on costs. 45th Union Conference on Lung Health, 28 October–01 November 2014; Barcelona, Spain.

Gous N, Isherwood LE, David A, Stevens WS, Scott LE. A pilot evaluation of external quality assessment of Genotype® MTBDRplus version 1 and 2 using dried culture spot material. Journal of Clinical Microbiology. Published online 21 January 2015. doi: 10.1128/JCM00702-10.


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Scott LE, Beylis N, Nicol M, Nkuna G, Molapo S, Berrie L, Duse A, Stevens WS. . Diagnostic accuracy of Xpert MTB/RIF for extrapulmonary tuberculosis specimens: establishing a laboratory testing algorithm for South Africa. J ClinMicrobiol. 2014; 52:1818–1823.

Scott LE, Gous N, Carmona S, Stevens WS. Evaluation of the Liat HIV Quant (IQuum) whole blood and plasma HIV-1 viral load assays for Point-of-Care testing in South Africa. Journal of Clinical Microbiology. Published online 4 March 2015 doi: 10.1128/JCM.03325-14.

Gous N, Scott LE, Potgieter J, Ntabeni L, SanneI, Stevens W. Implementing multiple point-of-care testing in two HIV anti-retroviral treatment clinics in South Africa. Submitted to BMC Medicine.

Berrie L, Schnippel K, Stevens W, Chedore P, Kik S, Pantoja A, Denkinger C, Pai M. Market Analysis of South African Tuberculosis Diagnostics in 2012. 45th Union Conference on Lung Health, 28 October–1 November; Barcelona, Spain.

Berrie L. South African Prevention of Mother to Child Transmission (PMTCT) national programme. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.

Berrie L. TB Market Intelligence. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.

Berrie L. The use of remote connectivity for quality monitoring of instrument-based Point-of-care testing. 2nd Meeting of the ASLM; December 2014; Cape Town, South Africa.

Berrie L. Strategic use of lab results. Southern African HIV Clinicians Society Conference; 24–27 September 2014; Cape Town, South Africa.

Berrie L. South Africa Achieving target. 4th SA TB Conference; 10–13 June 2014; Durban, South Africa.

Chapter 3


Area Manager: Ms Tabita Makula

IntroductionThe Eastern Cape Region continued to provide support and align its services with the mandate of the DoH. The region includes 39 laboratories and four depots in five business units, spread across eight health districts in the province. The region has eight CD4 count; three viral load; two HIV polymerase chain reaction (PCR); 35 GeneXpert and 29 TB Microscopy laboratories. All the laboratories are on the TrakCare laboratory information system, which has provided an effective referral system for those tests that cannot be performed in rural laboratories.

Dedicated and highly competent staff continued to deliver quality and patient-focused service despite the many challenges with which they are faced.

Diagnostic servicesThe Eastern Cape Region is proud to have achieved a significant 4.9% increase year-on-year from 8 132 527 tests performed in 2013/14 to 8 528 925 tests in the year under review. The volumes for gynaecological cases in the Eastern Cape increased by 28.7%, with individual laboratories contributing 13.1% for Port Elizabeth, 42.3% for East London and 28.7% for Mthatha. The increase in volumes can be attributed to the increase in viral loads due to the new anti-retroviral therapy (ART) guidelines.

Laboratories added new tests to the repertoire to reduce referrals, improve turn-around times (TAT) and make laboratory services accessible as follows:

Table 19: New laboratory tests made available in 2014/15

Laboratory New tests

Nelson Mandela Academic Laboratory Valproate/Epilim levels, Salicylates and Serum Folate

Livingstone Procalcitonin

Dora Nginza CMV viral load

Grahamstown Lithium

The Microbiology Laboratory at Umtata was upgraded and automated with a VITEK 2 System to perform identification and susceptibility of micro-organisms, reducing the requirement for manual testing.

To improve the quality of testing and TAT, BFTII coagulation analysers were placed in the 16 peripheral laboratories to automate international normalised ratio (INR) and partial thromboplastin time (PTT) testing.

Eastern Cape


Table 20: Laboratory offering INR and PTT testing on site

Business unit Laboratory

Southern Transkei Madwaleni, Zithulele, St Barnabas, Canzibe, All Saints, Dr Malizo Mpehle Memorial, Cofimvaba, Cala and Butterworth

Northern Transkei St Elizabeth, Taylor Bequest in Mt Fletcher and Mt Ayliff

Border Aliwal North, Empilisweni, Glen Grey and Victoria

Service deliveryClinic-to-clinic coverage of 100% on a daily basis has been maintained. To improve specimen and results tracking from clinic-to-laboratory and laboratory-to-laboratory, the region has budgeted for the procurement of electronic scanners in the new financial year.

The couriers at the Nelson Mandela Academic Laboratory collected daily from 32 King Sabata Dalindyebo Local Municipality (KSD) clinics and made two collections per day from health centres.

The Border Business Unit extended sample collection to weekends in some areas, with an additional laboratory-to-laboratory courier between Queenstown and East London on Sundays and a laboratory-to-laboratory sweeper route at night on weekdays. Border laboratories service more than 200 clinics, with samples being collected daily and twice daily in the larger Buffalo City health facilities.

The region has two fully operational public health testing laboratories in Port Elizabeth and the Nelson Mandela Academic Laboratory. These laboratories tested samples for a range of clients, including private clients and municipalities.

To meet the demand from the Eastern Cape DoH for after-hour services, peripheral laboratories in Southern Transkei, Ibhayi and Northern Transkei implemented an after-hours call service. In the Southern and Northern Transkei laboratories, this was made possible through the availability of staff accommodation on site.

Table 21: Laboratories offering an after-hours call service

Business unit Laboratory After-hours service

Southern Transkei Madwaleni, Zithulele St Barnabas and Dr Malizo Mpehle Memorial

On-call

Butterworth Night shift

Northern Transkei St Elizabeth, Mary Teresa, Matatiele, Taylor Bequest, St Patricks, Holy Cross

Night shift

Mt Ayliff On-call

Ibhayi Cradock, Graaff Reinet, Port Alfred, Grahamstown, Humansdorp, Somerset East

On-call

The laboratories continued to work hard in achieving better TATs for the emergency and high-volume NPP tests. In the year under review, the following TATs were achieved: CD4 count 88%; HIV PCR 87%; TB microscopy 91%; GeneXpert 88%; viral loads 78% and cervical smears 49%. Underperformance for cervical smears is attributed to a shortage of cytotechnologists in the three Cytology Laboratories and a 28.7% increase in work volumes during the financial year. The increase in volumes, compounded by challenges with staffing, contributed to the region not achieving set targets.

TB GeneXpert testing was introduced at the St Albans correctional facility to improve the TAT for TB diagnostics.

Usage reports for SMS printers were received from NPP weekly and shared with the EC DoH district laboratory co-ordinators to monitor functionality and improve TATs for anti-retroviral (ARV) tests.

An increase in the number of clinicians registered to access results on Webview was noted and district laboratory co-ordinators played a big role in making this work.

Notable achievements The Eastern Cape has worked determinedly to implement electronic gate-keeping (EGK) so as to reduce repeat testing and rationalise laboratory testing. Frere Hospital was the first and only tertiary hospital to achieve implementation in the period under review. Rules were drafted and tested on TrakCare with full implementation in February 2015. Collaboration between the laboratory and the hospital proved critical in making this work.

Livingstone Hospital is ready to implement EGK, however rules could not be tested before the end of the financial year. Implementation will take place early in the new financial year, supported by an HL7 interface to improve data integrity


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and medical record number (MRN) linking of patients. MRNs are unique to each patient, irrespective of where they have been tested. The EC DoH has appointed gate-keepers in all four hospitals lined up for EGK and is working diligently to make it work.

A bilateral agreement was signed between the NHLS and Walter Sisulu University in November 2014, and the Nelson Mandela Laboratory is now officially an academic centre. The NHLS takes pride in this achievement as this is the only Academic Laboratory in the Eastern Cape. Nelson Mandela Academic Laboratory (NMAL) is accredited for MMed in Anatomical Pathology and two posts for registrars have been advertised for training. Intake will be in the new financial year. This training will be the first of its kind in the region and we are looking forward to the intake for the first group of registrars.

Challenges were initially experienced with the implementation of TrakCare in the Referral Laboratory at NMAL. However, in October 2014, the system became operational and this has improved specimen referrals from the laboratories in Southern and Northern Transkei.

In terms of accreditation of laboratories, the following was achieved:

• NMAL maintained SANAS accreditation for its Chemistry, Microbiology, TB, Histology, Haematology and Virology laboratories

• East London Laboratory retained SANAS accreditation, despite postponement of the assessment planned for March 2015 due to unavailability of SANAS assessors. Re-assessment is planned for the first quarter of the new financial year

• Port Elizabeth Complex maintained its SANAS accreditation status with an exceptional performance and only two non-conformances raised against the new ISO 15189:2012 standard during its SANAS assessment in February 2014

• Diagnostic Media Products in Port Elizabeth was again certified by the South African Bureau of Standards (SABS) on the ISO 9001 standard in September 2014 with no non-conformances

• Dora Nginza Laboratory applied to SANAS for its initial accreditation and assessment is scheduled for the first quarter of the new financial year

• Port Alfred Laboratory was audited by the African Society for Laboratory Medicine (ASLM) on the Stepwise Laboratory Improvement Process towards Accreditation (SLIPTA) Programme and received a three-star rating

• Cecilia Makiwane Laboratory was identified as a pilot site for the SLMTA Programme in preparation for SANAS accreditation. The first baseline audit was completed in August 2014.

New laboratories and upgrading of facilitiesNo new laboratories were opened or upgraded in the review period, however two hospitals, St Elizabeth’s and St Patrick’s, are under construction in Northern Transkei and laboratory facilities are planned for these two sites.

The Cecilia Makiwane Hospital Laboratory is scheduled for new laboratory space in the new hospital building and construction is under way.

All other proposed upgrades for laboratories were put on hold due to austerity measures and will be revisited in the new financial year.

Technical skills and staffingDuring the reporting period, severe constraints were experienced due to a shortage of medical technologists in the laboratories, especially in rural areas. Positions were advertised but few applicants were attracted, despite the rural allowance offered by the NHLS.

The region lost pathologists in the referral laboratories and attracted a poor response to advertised posts. East London successfully recruited a locum anatomical pathologist in the latter part of 2014 to process the emergency cases from Frere Hospital. In the interim, until the posts can be filled, the region is receiving support from the Western Cape Academic Laboratories, to ensure service continuity.

TrainingA number of training initiatives were achieved in the review period as follows:

• First aid and basic firefighting and fire marshal training were conducted for all identified staff

• Laboratory staff from accredited sites received training on the new ISO 15189:2012 standard, in preparation for accreditation in the new financial year


• The region identified staff members to be involved in SLIPTA and SLMTA training, with successful staff members becoming SLIPTA assessors and SLMTA trainers. The aim is for these trainers to assist small laboratories in quality improvement

• In the Port Elizabeth Complex training using a ‘learning is fun’ approach was provided to support staff in the sample reception areas to familiarise them with relevant QMS procedures

• In further improving quality of GeneXpert testing and to equip staff with advanced knowledge of GeneXpert platforms, five laboratory staff attended Advanced GeneXpert training

• Training workshops for clinicians and laboratory staff processing TB samples in the 35 GeneXpert sites were held between September and November 2014 for the roll-out of GeneXpert on extra-pulmonary and paediatric samples. Thereafter tests were offered in all the laboratories. This was well received by the clinicians, especially in the district hospitals

• Livingstone and Frere Hospital staff were trained on the investigation, specimen handling and packaging of suspected Ebola cases by Prof. Duse. The region’s laboratories were provided with personal protective equipment to ensure compliance in the handling of suspected Ebola cases

• Staff from Port Elizabeth and East London attended training for IATA certification on dangerous goods packaging to improve the referral times of shipments

• Prof. C Wright continued the training of clinicians in the correct technique for fine needle aspiration biopsies

• Three laboratory supervisors from the Eastern Cape were nominated to attend Association of Public Health Laboratories (APHL) training to increase the pool of potential managers and make a meaningful contribution to the day-to-day running of the laboratories

• To support accreditation in the accredited laboratories, senior managers in the Eastern Cape attended training on ISO 15189:2012 in November 2014.

Stakeholder relations Managers were actively involved in stakeholder relations. Monthly and quarterly bilateral meetings took place between EC DoH managers and non-governmental organisations to discuss challenges and improvement strategies.

In November 2014 the EC DoH appointed eight district laboratory co-ordinators and three gate-keepers to manage and improve laboratory services for all the eight districts. Bilateral meetings were held quarterly to discuss strategic issues and compliance with the service level agreement (SLA). The district laboratory co-ordinators and the business managers met on a monthly basis to discuss operational issues. This resulted in the streamlining of communication between the NHLS and the EC DoH facilities.

In February 2014, the EC DoH hosted a three-day Laboratory Service Improvement Workshop and the NHLS was involved as a service provider for laboratory services.

Phlebotomy Workshops were held at the Port Elizabeth Complex in July and November 2014, with 58 attendees from both hospital and clinic facilities as part of ongoing education and to improve sample collection.

Prof. Wright was elected President of the Eastern Province Branch of the South African Medical Association (SAMA). She currently also serves as Branch Councillor.

The Haematopathology Department contributed to the Internal Medicine Academic Lecture Programme, providing a clinical liaison service to clinicians in the region and contributing to the weekly Haematology Grand Round. A similar service will be offered to the Paediatric Oncology Unit in the new financial year.

To increase the NHLS’ visibility, the region participated in the following provincial events:

• World AIDS Day on 1 December, held at Gompo Stadium in East London

• TB Day held in Malahleni sub-district in March 2014.

The NHLS laboratories in the Eastern Cape co-operated with the Provincial Finance Office in responding to an audit query from the Auditor-General. The Finance Office requested a sample of laboratory request forms dating back to 2011 and 2012, supporting charges for tests invoiced. The forms were retrieved, resulting in the removal of the qualification on expenditure which had been placed on the EC DoH.


Acting Area Manager: Mr Bahule Motlonye

Gauteng

IntroductionGauteng is the second largest region in the NHLS from a volume perspective, and conducted almost 23% of all the pathology tests for the public health sector during the 2014/15 financial year. This represents 1.25 million tests (0.5%) more than in the previous year.

The region has 27 NHLS laboratories within six business units that are distributed within the five districts namely: Ekurhuleni, City of Johannesburg, Tshwane, Sedibeng and West Rand.

These laboratories conduct pathology service for four academic (central) hospitals, three tertiary hospitals, eight regional hospitals, twelve district and five special hospitals across the province. As we are aware that primary healthcare is the backbone of our health system, we are servicing 376 facilities across the five districts. In addition, we provide service to the Correctional Service and the South African Military Health Service.

The region has seven CD4 count, two viral load, three HIVPCR (Polymerase Chain Reaction), three TB Culture, nineteen TB microscopy and nineteen GeneXpert laboratories.

The 2014/15 financial year was an extremely difficult period for the Gauteng Region due to a billing dispute with the Gauteng DoH. As a result, R1.36 billion in payments was outstanding at the end of March 2015. This necessitated the implementation of austerity measures throughout the organisation. However, as a testament to the incredible effort of all employees, the NHLS still managed to provide a virtually uninterrupted service to the province and its people.

Diagnostic servicesNotwithstanding the financial crisis, NHLS laboratories in Gauteng conducted over 19 million pathology tests in the 2014/15 financial year, denoting an increase of 7% over the previous year’s volumes of 17.8 million tests. This was achieved because of the dedication and commitment of staff.

The Ebola epidemic in Africa created further pressure on TATs, despite not one positive result being recorded at any of the NHLS’ Gauteng laboratories. This was because the testing protocols for suspected Ebola cases created a virtual shut down of the affected laboratory in order to prevent the spread of the disease. After the results were released, a compulsory decontamination of all equipment was completed before normal services could be resumed.


In support of the NPP, there was a 32.5% increase in GeneXpert testing from 257 549 in 2013/14 to 341 370 tests, which meant that 25% less TB microscopies, 13% fewer TB cultures and 20% less TB polymerase chain reaction (PCR) tests were done.A total of 794 441 CD4 counts were performed, representing a 2.8% decrease over the previous year, 631 547 HIV viral loads representing a 9.2% annual increase and HIV PCR tests escalated by 5.4% to 80 673.

In respect of gynaecological cytology testing, we noted a decrease of 4%, 258 895 cervical screens were completed in 2014/15, (2013/14: 269 676).

There is a critical shortage of anatomical pathologists at Steve Biko Academic Laboratories and Dr George Mukhari Academic Laboratories, necessitating that these laboratories redirect the work to other laboratories where there is capacity and outsource were necessary in order to maintain the service. This problem is not only restricted to Gauteng, as there is a national shortage of anatomical pathologists, which the organisation is working on strategies to resolve this challenge.

The Microbiology Laboratories were upgraded to Vitek instrument and this resulted in decreased time of processing and thus improving TAT of the samples tested.

Service delivery We maintained primary health facility coverage of 100% on a daily basis and to improve this we introduced specimen tracking for clinic-to-laboratory services, as well as, laboratory-to-laboratory on services at certain sites.

The courier collection extends to weekends at the requested sites and referral samples (specialised tests) are transported to the testing laboratories during the night to improve TATs. In a further effort to improve TATs and maintain service, we have 17 laboratories that render continuous services 24/7 and two call-out laboratories across the region.

As a testament to the calibre and character of NHLS employees in Gauteng, there was a negligible impact on service delivery, despite the obstacles that they faced. This was achieved by virtue of every single employee being prepared to go above and beyond the call of duty to get the job done.

Unfortunately staff shortages reached such critical proportions that one laboratory, Edenvale, had to be temporarily converted into a depot. In order to minimise the effect on service delivery, all work was referred to larger laboratories and extra courier routes were introduced. The Medical technologists were actively recruited to fill vacancies, with the result that the Edenvale Laboratory was returned to full operational functionality in March 2015.

The Steve Biko Academic Laboratory team continued to carry out outreach programmes in the region, including weekly outreach by Virology registrars to local clinics and visits by Haematology registrars and pathologists to Mpumalanga and North West (Rustenburg), in order to address clinicians and laboratory staff.

The Chris Hani Baragwanath Academic Laboratory had its own challenges, but despite this continued to perform outreach programmes to Tambo Memorial, Sebokeng and Carletonville hospitals, supporting the laboratories and also offered consultation services to clinicians.

At Dr George Mukhari (DGM) Academic Laboratory, service delivery was seriously affected by student unrests and strike action in August and September 2014 when the NHLS staff was locked out of the Clinical Pathology Building on the Sefako Makgatho Medical University campus. This compelled operations to be co-ordinated from the service centre within the main hospital building. Many NHLS staff members excelled during these two weeks, with one person actually locking himself in the laboratory in order to ensure service continuity.

Technical skills and staffingDuring the reporting period, the NHLS in Gauteng was staffed with 1 335 people, representing a shortage of 152 staff members. This serious state of affairs can be attributed to increased work pressures as a result of existing staff shortages, compounded by work volume increases. This caused a surge in overtime and sick leave as work pressures took its toll.

As a result, the resource-constrained smaller laboratories were depleted even further, resulting in increased workload pressure on the bigger laboratories. The net result is that experienced NHLS staff members are leaving for the private sector, however, the organisation is in the process of addressing the concerns identified.


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On a positive note, two Clinical Pathologists were appointed at the Tambo Memorial and Kalafong laboratories respectively, which brings much needed clinical diagnostic and consultation skills to these district laboratories.

TrainingThe NHLS’ core function as a laboratory service training provider also came under increased pressure due to low intakes of students and a high failure rate.

In order to address these shortcomings, operations and training are collaborating closely to ensure that students are trained under optimal circumstances, in order to deliver the high calibre of graduates needed by both the public and private sectors.

By the end of the 2014/15 financial year, 212 student technicians, technologists, phlebotomy technicians, biotechnologists, laboratory assistants and intern scientists were in training in Gauteng.

There were several training initiatives that took place and are as follows:

• Staff members were identified to be involved in SLIPTA and SMLTA training with successful staff members becoming SLIPTA assessors and SMLTA trainers. This was to improve quality systems in small to medium laboratories

• First aid and fire warden training for identified employees

• Quality Management System for the selected laboratory employees to improve on quality systems

• Dangerous goods training for all our NHLS drivers transporting specimens

• A total of 30 laboratory supervisors and managers were nominated to attend Association of Public Health Laboratories (APHL) training, to empower them with management skill; in order to execute the day-to-day tasks with ease and be effective.

AccreditationThe Charlotte Maxeke Academic Laboratories maintained SANAS in November 2014, with the exception of Histology, which was not assessed due to the non-unavailability of a technical assessor from SANAS.

The Chris Hani Baragwanath Academic Laboratories maintained SANAS accreditation. Histopathology was not assessed because of the unavailability of a SANAS technical assessor.

In January 2015, Dr George Mukhari Academic Laboratories continued SANAS accreditation against the new ISO 15189: 2012, and maintained SANAS accreditation for the Haematology, Microbiology and Virology laboratories. Chemical Pathology and Histology were not assessed in this cycle, as SANAS could not provide assessors to conduct the audits. Their accreditation status is however still valid until 2016.

The Steve Biko Academic Laboratories maintained SANAS accreditation for Anatomical Pathology, Immunology, Virology, Microbiology and Haematology against the new ISO 15189: 2012 standard in February 2015. All non-conformances raised during the visit were cleared, except those in the Department of Chemical Pathology where the seven non-conformances were cleared by the given deadline.

The Braamfontein Laboratories maintained SANAS accreditation for the Cytology, Immunology and TB Laboratories.

Diagnostic Media Product was certified again by SGS on ISO 9001:2008.

In order to assist smaller laboratories in preparing for their SANAS accreditation, the NHLS implemented the SLMTA Programme. This provides an alternative training approach to laboratory management, based on international clinical laboratory standards, to prepare laboratories for accreditation. Proof of the success of this initiative is Natalspruit Laboratory, which participated in the Stepwise Laboratory Improvement Process towards Accreditation (SLIPTA) Programme and improved from a one-star to a four-star rating in one year.


Information technologyThe Charlotte Maxeke Academic Laboratories completed its migration to the TrakCare LIS by the end of March 2015. All laboratories in Gauteng are now working on the same laboratory information platform, which will significantly speed up referrals to Charlotte Maxeke Academic Laboratories, with a reciprocal improvement in TATs.

A project was piloted in Gauteng to equip all laboratories with scanners to allow for the scanning and indexing of laboratory request forms, thereby facilitating the storage and recall of requisition forms with ease.

Stakeholder relationsGauteng’s business unit managers and laboratory managers held regular meetings with their respective hospital management teams. These meetings usually took place on a monthly basis, either through:

• Laboratory Users Committee, the district NHLS Working Group Meetings, the NHLS/South African National Blood Service (SANBS) hospital meetings or through Medical Advisory Committee meetings

• Further contact between the NHLS and provincial clients occurred throughout the year, with representation at, and reports to, the Hospital and Laboratory Operational meetings. Laboratory managers attended quarterly TB meetings with clinic staff as well as district TB meetings and conducted clinic visits.

Quarterly meetings were held between the NHLS area manager and the provincial co-ordinator. In addition, the area manager was invited to the Provincial Blood Users Committee and numerous ad hoc meetings were held to address urgent matters that arose, thereby fostering a spirit of communication and co-operation between the NHLS and the province to ensure uninterrupted service delivery.

We participated in numerous activities/events in the province in order to increase NHLS visibility, including:

• Provincial World TB Day held on the 18 March 2014, Saulsville, Pretoria, (NHLS provided services including CD4 Count and GeneXpert Testing)

• National World TB Day held on the 24 March 2014 at Kokosi, Foucheville, (NHLS provided services including CD4 Count and GeneXpert Testing)

• Provincial World TB Day held on the 24 March 2015 at Vosloorus Civic Centre, Boksburg, (Collected samples on site for GeneXpert testing and other tests requested).

New laboratories and laboratory upgradesThe ‘New’ Natalspruit Hospital was opened in August 2014, affording the NHLS team the opportunity to move into a new laboratory.

The Tambo Memorial Laboratory’s already impressive TB testing capacity was further boosted by the upgrade of its GeneXpert Analyser to a GX80 Infinity Analyser.

A new Emergency (STAT) Laboratory was established within the DGM Laboratory to provide 24/7 routine services to emergency units. The core laboratory will continue to run non-urgent samples from the hospital and deal with incoming referrals.

Renovations to a new HIV Resistance Testing Laboratory are under way, and a scientist was appointed to set up the laboratory.

Notable achievementsGauteng Region made several achievements worth noting:

• At Steve Biko Academic Laboratories–Microbiology Department introduced a new Pneumocystis jiroveci PCR test in February 2015 and the Request for Information first stage for the automation of the autoimmune laboratory was completed, with the instrument evaluation to commence in May 2015


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• The Charlotte Maxeke Academic Laboratories completed its migration to the TrakCare LIS March 2015. With all laboratories in Gauteng now standardised to the same laboratory information platform, TATs for the referral of samples and results between laboratories will significantly improve in the region

• The Natalspruit Laboratory was enrolled in the SLIPTA Programme and made a remarkable improvement from a one-star to a four-star rating within a year

• The DGM Laboratory collaborated with the NICD in the identification of complicated organisms that require further testing. The result was that the cause of the Candida krusei outbreak in DGM Hospital’s paediatric ward was determined

• DGM also participated in a collaborative study with the Italian Ministry of Foreign Affairs for Development Cooperation, which was concluded in November 2014. They are currently involved in the follow-up study, albeit with a smaller repertoire of tests

• Two clinical pathologists were appointed at the Tambo Memorial and Kalafong laboratories respectively, which brings much needed clinical diagnostic and consultation skills to these regional laboratories and hospitals.


Area Manager: Mr Sibulele Bandezi

IntroductionThe KwaZulu-Natal (KZN) Region prides itself by continuing to provide services and support according to the DoH and NHLS mandates. The region comprises of seven business units, which provide clinical laboratory services and access coverage across 11 health districts. Research and training mandates are provided through the academic business unit and training laboratories in the region.

The region has a highly decentralised service delivery model utilising 63 laboratories (of which nine are discipline-specific and based at Inkosi Albert Luthuli Central Hospital (IALCH) and King Edward VIII Hospital (KEH) plus 16 TB microscopy testing sites which perform TB microscopy and GeneXpert tests, bringing the total to 79 testing access coverage points.

Table 22: Laboratories per business unit

Academic complex

EThekwini North

EThekwini South Inland Midlands Zululand UMkhanyakude

IALCH Chemical Mahatma Gandhi

Addington Charles Johnson Appelsbosch Benedictine Bethesda

IALCH Cytology Kwamashu Clairwood Church of Scotland

Christ the King Ceza Hlabisa

IALCH Haematology

King DinuZulu Murchison Dundee Edendale Eshowe Manguzi

IALCH Histopathology

Osindisweni Prince Mshiyeni Ekhombe Greys Itshelejuba Mosvold

IALCH Microbiology

Stanger Port Shepstone Emmaus Greytown Mbongolwane Mseleni

IALCH Virology Umphumulo Public Health Estcourt Kokstad Nkandla

Untunjambili RK Khan Ladysmith Montebello Nkonjeni

KEH Chemical Catherine Booth Scottburgh Madadeni Northdale Vryheid

KEH Haematology

Ngwelezane St Andrews Newcastle St Appolinaris St Mary’s

KEH Microbiology

Empangeni Wentworth Rietvlei Dumbe

9 labs 10 labs 10 labs 9 labs 10 labs 10 labs 5 labs

KwaZulu-Natal


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Table 23: TB Microscopy Sites:

EThekwini North EThekwini South Inland Midlands Zululand UMkhanyakude

Inanda Prince Cyril Zulu Bergville Imbalenhle KwaMsane

Nseleni Kwadabeka Niemeyer Richmond

Verulam Hlengisizwe Pholela

Tongaat Turton

Sundumbili

Pine Town

6 sites 4 sites 2 sites 3 sites 1 sites

Included in these are 19 CD4 count testing laboratories (reduced from 22 in order to improve efficiencies), six viral load testing sites, one PCR for Early Infant Diagnosis (EID) testing, two anatomical pathology (cytology and histopathology) testing sites and one TB Culture Laboratory. The region also has one Public Health Laboratory which services the whole province, including the municipalities, Department of Agriculture and private sector for the testing of food and environmental samples.

Diagnostic services and new developments The KZN Region remained the largest NHLS region/area by test volumes. Despite challenges faced by the organisation, the region managed to perform 26 019 527 tests increased from 25 222 803 in 2013/14 reflecting an increase of 796 674 test codes, and an increase of just over 3.1% in test volumes year-on-year. This increase was mainly attributed to priority tests, GeneXpert tests increased by 206 928 or 49% from 420 550 tests to 627 478 and HIV tests increased by 133 387 tests or 6% from 2 196 878 tests to 2 330 265.

All laboratories at health district level provide routine clinical pathology tests. Specialised tests are performed at regional, tertiary and national central level. The NPP tests, are performed as follows:

• CD4 counts are done at some district health level laboratories to improve access coverage

• Viral load tests are performed at some regional level laboratories

• HIV PCR-EID are performed only at the IALCH Virology Department

• Anatomical Pathology tests are performed only at IALCH and Greys Hospital.

Turnover for the year increased by R110 million or 7.5% from R1.465 billion to R1.575 billion. The value of KZN DoH invoices increased by R118 million or 8% from R1.450 billion to R1.568 billion and payments increased by R225 million or 34% from R645 million to R870 million. The increase in turnover was mainly driven by increases in GeneXpert TB testing and in testing for HIV. Debtors’ days however, increased from 724 days to 826 days.

Overheads increased by R10 million or 2% from R503 million to R513 million. This is largely attributable to the outsourcing of Histology specimens. The cost of direct materials increased by R71 million or 17% from R418 million to R489 million. This is largely attributable to the cost of GeneXpert and viral load kits due to currency fluctuations.

Inventory value at the end of March 2015 was R19 million and the number of stock days was managed at 14 days.

The Academic Complex Business Unit’s Chemical Pathology Department introduced Ca199 and SHBG tests, the Haematology Department started a Mesenchymal Stem Cell Laboratory in collaboration with the University of Stockholm and UKZN, and the Virology Department set up on-site ARV drug resistance testing for the province.

During the reporting period, no new service access points were opened, although preparations to open three TB microscopy sites at community health centres (CHCs) are at an advanced stage. An additional SMS printer, installed at the Paediatric Unit at KEH, improved TATs and is functioning optimally and is being used to the benefit of patient care.


Service deliveryThe region maintained a 100% clinic-to-laboratory specimen collection coverage, and the optimisation of routes allowed for increased collection frequency from one collection per day to two collections per day, in order to cater for high throughput health facilities and to improve specimen integrity and TATs.

Optimisation and utilisation of existing resources was prioritised, resulting in the region undertaking more than 26 million tests, despite having a relatively small staff complement of 1 346 compared to other regions. This was achieved by the introduction of shifts to align service delivery with peak periods and the rationalisation of CD4 count testing from 22 sites to 19 sites. Addington CD4 count testing was moved to Prince Mshiyeni, Montobello moved to Edendale and Bethesda moved to Hlabisa. The new arrangement effectively reduced unnecessary duplication and staff members who resigned were not replaced at these facilities.

Notable achievementsThe KZN Region is proud to state the following achievements during the reporting period:

Accreditation and good laboratory practice

The region worked tirelessly towards Good Laboratory Practice (GLP) and accreditation as part of a regional strategic thrust and as such unprecedented success has been achieved. Four new laboratories were accredited by SANAS to the ISO 15189 standard. This brought the total number of SANAS-accredited laboratories to seven. All three existing accredited laboratories passed SANAS surveillance audits and two laboratories passed pre-SANAS audits.

These successes were made possible by the formation of a regional QA Focus Committee and through collaboration with the National QA Division.

Table 24: SANAS accreditation (ISO 15189) activities in KZN Region during 2014/15

Passed surveillance SANAS accreditation (new) Passed pre-SANAS

1. Addington 1. Public Health (Medical) 1. Northdale

2. IALCH Virology 2. Mahatma Gandhi 2. IALCH Microbiology

3. KEH Chemical Pathology 3. KEH Haematology

4 KEH Microbiology

Secondly, the region embraced the Strengthening Laboratory Management Towards Accreditation (SLMTA) Programme as an important vehicle to advance the objective of achieving SANAS accreditation.

Consequently, Northdale Laboratory passed the pre-SANAS audit and achieved a five-star rating for SLIPTA (first in South Africa and second in the world). Dundee achieved a two-star, and Stanger a three-star rating from the SLMTA audits.

Four laboratories were part of a control group which did not receive support from the SLMTA Programme, but were never-the-less assessed and received grading. The Prince Mshiyeni Memorial Hospital (PMMH), IALCH Cytology and IALCH Haematology achieved four-star ratings, while IALCH Histology attained a three-star rating.

Mahatma Ghandi Memorial Hospital (MGMH) excelled in the Microbiology Parasitology PTS Scheme that was concluded in the reporting period, and received an accolade from the national QA Division for constantly achieving 100%.

Turn-around time

Despite the challenges experienced, the region still managed to attain a 97% TAT for TB microscopy, TB-GeneXpert at 95% and CD4 count at 89.5%, all within the stipulated target between the DoH and the NHLS. Targets for the more specialised tests, which require highly trained/skilled staff, such as viral load at 77%, EID PCR at 52%, and cytology at 73%, were not met due to a shortage of skilled staff and difficulties in attracting and retaining these skills within the organisation.

Staff shortages further impacted on TATs for routine, urgent and priority programme tests in certain laboratories as well as on the accrual of backlogs in the Virology, Haematology (cytogenetics) and Cytology laboratories. The high attrition


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rate of histopathologists and the inability to recruit replacements not only affected TATs negatively, but resulted in 50% of the anatomical pathology workload having to be outsourced to a private laboratory during the financial year, which was not anticipated nor budgeted for. A total of 16 398 specimens was outsourced.

Table 25: TAT performance for NPP tests 2014/15

Business UnitTB microscopy in 40 hrs GXP in 24 hrs CD4 in 40 hrs

Viral Load in 96 hrs

HIV PCR in 96 hrs

Cervical Smears in 312 hrs

Targets 90% 90% 90% 90% 90% 75%

Academic complex 99.8% 99.4% 97.6% 59.0% 52.7% 76.6%

ETK North 100% 95% 93 89% n/a n/a

ETK South 97% 91% 94% n/a n/a n/a

Inland 96% 80% 80% 79% n/a n/a

Midlands 92% 82% 80% 79% n/a 70%

UMkhanyakude 97% 95% 90% n/a n/a n/a

Zululand 97% 95% 92% n/a n/a n/a

Regional 97% 91% 89.5% 77% 52.7% 73%

Proficiency scheme performance

Both proficiency scheme performance targets were met with the 90% scheme achieving 92%, which shows a 2% drop since the 2013/14 reporting period and the 75% scheme achieving 86%, which is 11% above the set target. The latter demonstrated no change compared to the previous financial year.

Table 26: Proficiency scheme performance

National targets 2013/14 cycle *2014/15 cycle

Target: 90% 94 92

Target: 75% 86 86

*The cycle for 2014/15 is based on 11 month’s results

Technical skills

The region continued to experience challenges in the recruitment of skilled personnel, especially in rural settings and this was compounded by the austerity measures both these factors contributed in a 7.3% reduction in total staff complement from 1 453 at the end of March 2014 to 1 346 at the end of March 2015 – a reduction of 107 staff members. This meant that KZN depended heavily on optimal use of existing resources by introducing shifts, as mentioned previously, and also including the use of over-time.

There was a greater decrease in direct service delivery staff from 1 143 to 970 (173 positions) translating to just over 15%. This net reduction in service delivery staff suggests that there was a moderate increase in other staff categories such as management, human resources, finance, etc.

Table 27: Comparison of critical skills: 2013/14 and 2014/15

Critical job categories including clerical laboratory staff (excluding management and HR)

Job category March 2014 March 2015 VariancePercentage variance

Clerk – Data input 55 53 (2) (3.6%)

Clerk – Laboratory 95 42 (53) (55.8%)

Clerk – Receiving 236 179 (57) (24.1%)

Medical Technologist 335 313 (22) (06.6%)

Medical Technician 269 237 (32) (11.9%)


Critical job categories including clerical laboratory staff (excluding management and HR)

Job category March 2014 March 2015 VariancePercentage variance

Pathologist 35 29 (6) (17.1%)

Medical Technologist – Student 66 71 5 7.5%

Medical Technician – Student 52 46 (6) (11%)

Net effect 1 143 970 173 15.1%

The NHLS remains challenged to attract and retain skilled staff in the rural business units. In particular UMkhanyakude and Zululand were severely affected, as well as some small rural laboratories in the Midlands, inland and at the EThekwini North laboratories.

TrainingThe region continued to take up-skilling and staff development very seriously, as a result external and internal training programmes were offered to 571 staff members in KZN to up-skill themselves with technical skills within their fields of expertise.

Further, the KZN Region was consistent in maintaining the highest pass rate in the country for intern medical technologists at 83%, and 88% for student medical technicians who passed their National Board Examinations on their first attempt. The KZN Region still maintains a strong collaboration with universities of technology, and participated in career fairs at the Durban University of Technology (DUT) and Mangosuthu University of Technology (MUT) and promoted the NHLS as an employer of choice.

Peripheral blood smear training was offered internally in collaboration with the IALCH Haematology Laboratory, predominantly for the rural business units like UMkhanyakude, Zululand and Midlands, to improve staff competency levels and the quality of test result. A noticeable improvement in proficiency testing in these business units was apparent after the training intervention.

In the Department of Microbiology, two registrars were successful in the FCPath Medical Microbiology College of Medicine examinations. One graduated with a PhD, four achieved MMed qualifications, one gained a Diploma in Biomedical Technology and two achieved MMed Sc degrees. The Department of Anatomical Pathology graduated two MMed candidates.

The Academic Business Unit was HPCSA-accredited for the training of registrars and intern medical scientists. A total of five post-graduates registered as PhD students, and the region is currently training 68 pathology registrars.

Information technologyProblems were experienced with connectivity at two laboratories, namely Appelsbosch and Rietvlei. In order to improve connectivity, 3G installations were made in these laboratories.

To mitigate the risk of LIS downtime, duel broadband connectivity was installed at Edendale and Greys laboratories.

New laboratories and upgrading of facilitiesA Virology HIV Drug Resistance Laboratory was set up during the financial year to perform on-site ARV drug resistance testing for KZN.

Collaboration with the University of Stockholm and UKZN Haematology Department resulted in the commissioning of a Mesenchymal Stem Cell Laboratory.

Smaller infrastructural renovations were performed at KEH, Addington, Port Shepstone, PMMH, RK Khan, the Mpangeni Laboratory and KwaMashu Community Health.


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Stakeholder relations The DoH Laboratory Co-ordinator was invited as a permanent member of the Regional Management Committee Meeting, which meets on monthly basis in order to improve relations and to discuss all laboratory issues for continuous improvement purpose.

Several meetings, workshops, training, advocacy campaigns, and commemoration events formed part of our continual stakeholder engagement and customer relations management. These interactions happened at all levels through laboratory managers attending hospital management meetings, business managers attending hospital and district health meetings, regional QA, regional TB and HIV co-ordinator meetings at district and provincial levels. The area manager attended meetings at provincial level and on invitation at health district level.

The senior management team, which comprises of the area manager, business managers and regional managers, attended designated national and provincial campaigns, events and commemorations such as World AIDS Day and TB Day. Provincial events included the KZN DoH/Eskom event at Ingula; the HCT event in Ladysmith, and the Health to Hostels Campaign and events.

Client relation meetings and training sessions at primary healthcare (PHC) level were held throughout the province as the need arose. All the health districts held workshops on Thusano and Webview and access was provided to billing and clinician staff to enable them to view results.

Intern orientation workshops were held in early January 2015, in order to orientate incoming medical interns on good laboratory practice and protocols. The medical interns were also given internet access to enable viewing of laboratory results.

Meetings between the NHLS and AME Africa focused on the optimisation of the Soarian Hospital Information System and its interface with TrakCare LAB. The Academic Complex super users, business manager, heads of department (HODs) and laboratory managers were represented at the Academic Complex NHLS-Trak LIS monthly meetings, which were chaired by NHLS IT and focused on optimising the efficiency and workflow of the LIS.

Meetings between the NHLS and Impilo Consortium focused on day-to-day operational issues, which involved ensuring compliance with regulations of the Department of Labour, municipality and with public-private partnerships (PPPs). Matters addressed included the equipment replacement cycle, structural changes, security, waste disposal and health and safety, amongst others.

UKZN School of Laboratory Medicine and Medical Sciences Board meetings were attended by HODs, acting HODs, the business manager and other jointly appointed staff. College of Health Sciences meetings with the NHLS academic staff were held and chaired by the deputy vice-chancellor and the dean and head of school of the college. Discussions revolved around motivating academics to pursue post-graduate studies (in particular PhD degrees), KPAs, the under-graduate curriculum, post-graduate support, the visual learning project, etc.

Institutional Academic Pathology Committee (IAPC) meetings were held to address operational and academic matters not resolved at Pathology Management Committee (PMC) level, as per the Umbrella Agreement. Several meetings were also held with UKZN to finalise the local Bilateral Agreement between UKZN and the NHLS Academic Complex. The dean/ head of school and operational manager attended PMC meetings by invitation, in order to ensure that academic challenges are resolved and that teaching, training and research platforms are optimised for delivery.


Acting Area Manager: Mr Abel Makuraj

Free State and North West

Free State Business Unit

Introduction

The Free State Business Unit consists of seven regional laboratories and the Universitas Academic Laboratories (UAL).The business unit also provides diagnostic laboratory service to five regional, 22 district hospitals and 225 primary healthcare facilities, including ten community health centres. Coverage is also extended to18 Correctional Services facilities in the province. The more esoteric tests are referred to UAL. An outreach haematology service is provided by the resident pathologist to all laboratories and their clients.

UAL has eight discipline-specific laboratories and serves the Universitas Academic Hospital, the National District Hospital, the Free State Psychiatric Hospital, the Three Military Hospital and the Free State Area Military Health Unit. The UAL consist of the following:

• Service Laboratory

• Microbiology

• Virology

• Histopathology

• Cytopathology

• Immunology

• Human Genetics

• National STAT Laboratory – which is a satellite ‘STAT’ laboratory, situated at the National District Hospital.

The Service Laboratory provides 24-hour chemical pathology and haematology services, whilst Microbiology and Tissue Typing are on-call laboratories. The UAL is also the main referral laboratory for all specimens referred from Free State regional laboratories, including Kimberley Laboratory in the Northern Cape Region. Referrals consist mainly of more specialised chemical pathology, haematology, virology and microbiology tests, as well as HIV viral loads, HIV/PCR, histology and cytology. Paternity tests are done at the Universitas Tissue Typing Laboratory.

In 2014/15, the province performed 2.7 million tests, which represent a 7% drop since 2013/14. This drop in work volume is partially attributable to the introduction of electronic gate-keeping introduced by the provincial DoH. The UAL was responsible for a total of 1.17 million of the tests performed in the province during the year.


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The NPP diagnostics continued effectively, with molecular ARV diagnostic tests showing significant growth. The TB microscopy samples dropped significantly due to the introduction of GeneXpert testing. CD4 tests also dropped by 8%, in line with expected changes to the DoH’s protocols. HIV viral loads continued the upward trend and increased by 18% year-on-year. TATs averaged at 88.6% below the target of 90%, due to lack of capacity and equipment breakdowns.

Financial performance

Capital expenditure (CAPEX) and operational expenditure (OPEX) increased by 8% and 16 % respectively, mainly due to increased turn over in materials and other operational costs. Overtime costs reduced by 6%.

Service delivery coverage

There was an increase in paternity testing for the Department of Home Affairs, which requires clients to prove parentage for birth certificates. The highly specialised Electron Microscopy Unit at Universitas Academic suffered a setback with repairs. These specimens were efficiently referred to Groote Schuur Hospital for electron microscopic analysis.

Notable achievements

SANAS accreditation was maintained at Universitas Academic Laboratories for all disciplines, save for part of genetics. UAL has now been accredited for more than five years.

A major, long-awaited milestone was reached with the successful implementation of TrakCare at UAL, closing the final part of the TrakCare Project implementation in all regions. The post-implementation and snag-resolution phase was the shortest at two weeks, and least problematic experienced in all TrakCare implementations at the NHLS. This showed the high quality of teamwork, dedication and experience that this Academic Laboratory unit was able to muster, together with the Trakcare implementation team from Health System Technologies. This last implementation enabled the improvement of all referral efficiencies between the Free State and other laboratories on TrakCare and UAL, because double registrations on DISA are no longer required.

Three laboratories in the Free State Business Unit have been engaged in intensive preparatory work towards SANAS accreditation. Kroonstad is at a 91% state of readiness for initial SANAS assessment, Pelonomi is at 79% and Welkom is at 79%.

Technical skills and staffing

The Free State maintained a headcount of 168, consisting of one pathologist, 52 medical technologists, 16 medical technicians, six laboratory assistants, three phlebotomists and 17 students.

Some progress was made at UAL, with all Histopathology’s posts filled, and Chemical Pathology, Virology and Haematology each gained a pathologist. Microbiology remained under severe strain, with no pathologists and only an HOD to undertake testing. The TB Laboratory also had strained labour capacity. New registrars were appointed at the Microbiology, Virology and Haematology laboratories, further bolstering the academic and service platforms at the UAL.

The resident haematopathologist in the Free State provided a series of Continuous Education Unit-accredited haematology lectures and practical sessions to peripheral laboratories under the outreach programme. This outreach training programme came about as an innovative alternative to centralised training, which required staff to travel and leave laboratories which are critically under-staffed. The programme has proved successful, as seen by increased early recognition of malignancies and referrals to UAL.

The intake of intern technologists and technicians has been severely affected by short staffing in the laboratories. Mentoring of trainees by experienced technologists also suffered as service delivery received priority. Despite these constraints, four of the eight student technologists and all technicians passed the Board Examinations, all in clinical pathology.

UAL Service Laboratory

• The manager attended an ISO15189 Workshop.

• Two technician students passed exams, one with distinction. Only one intern medical technologist of the five that wrote the Board Exam failed. Ten new interns were appointed.

• A QA Workshop was held in June 2014 for all staff members to improve QA within the laboratory.


UAL Histology Department

Two registrars, one medical technician and one laboratory assistant qualified in 2014.

UAL Microbiology Department

• The microbiology manager qualified as a SLIPTA auditor and SLMTA trainer.

• Two TB technician students passed exams with distinction.

• Training of staff on Occupational Health and Safety was conducted, with two health and safety officers, three fire wardens and four first aiders being certified.

• Two staff members attended a Mycology Workshop and one staff member was trained as a trainer in parasitology.

UAL Genetics Department

Currently there are three MMed Sc students and three intern medical scientists in training.

UAL Cytology Department

One intern medical technologist passed the Board Exams.

NNS Department

A laboratory clerk attended fire warden training.

Virology Department

Two new registrars were appointed.

Haematology Department

One MMed Sc student achieved her degree with distinction.

Training

Two refresher courses for intern technologists and two refresher courses for medical technicians were arranged in 2014. Further support for student learning was arranged through lecture blocks and student visits.

Training of technologists and pathologists continued, despite a significant lack of technical staff and pathologists. The pass rates were reasonably good, as a total of 13 intern technologists wrote exams and eight passed with a 62% pass rate. In addition, 21 student technicians wrote exams and 19 passed with a 90% pass rate.

Courses which were held on induction were those of fire warden, first aider, AU80, IQC, parasitology, refresher and HR, with between two and 19 staff attending the various courses and a total of 84 attendees. Course attendance was very low due to lack of staff and the priority given to maintaining service delivery.

Stakeholder relations

Meetings occurred regularly at various levels between the NHLS and the Free State DoH. Relations remained excellent, with numerous visits, including regular meetings with hospital CEOs and clinical heads, to discuss service delivery at hospitals. The session on electronic gate-keeping during the ASLM Conference in December, proved an excellent networking opportunity for various DoH representatives. High level introductory meetings between the NHLS CEO and heads of department or deputy director-generals in the provincial DoH were also held to emphasise and strengthen stakeholder relations.

The Free State Business Unit continues to successfully build support relationships with the provincial DoH on HIV/AIDS, other sexually transmitted diseases and TB. The national World TB Day event, held on 24 March 2015,was well supported and the NHLS showcased the mobile laboratories, providing on-site GeneXpert testing.

Relations were further strengthened through the NPP and the business units with various correctional services and some mines by supporting the placement of GeneXpert testing laboratories at correctional services sites and providing mobile laboratories to mines for TB testing. These initiatives were funded by the Global Fund grant awarded to the DoH.


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The main stakeholders at UAL are the Free State DoH, SA Military Health (SAMH) and the University of the Free State (UFS).Regular and ad hoc meetings were held with stakeholders to discuss service delivery. These meeting were held between IAPC, PMC, and with heads of clinical services at Universitas and national hospitals. Quarterly meetings were held with Three Military Hospital. The relations were generally very good with all stakeholders, with no major disputes arising. Relations with SAMH reached a stage of maturity, such that Three Military Hospital management proposed that meetings should be held only on an ad hoc basis as and when needed. Relations with the UFS remained excellent and amicably co-operative, as experienced with interactions with the dean, head of School of Medicine and at IAPC meetings.

New laboratories and laboratory upgrades

Sasolburg Laboratory operations were relocated into a park-home facility, with a larger working area and better organised space. However, two challenges remain, namely – the telephone system and the GeneXpert equipment that has not been put into use owing to a shortage of manpower.

The newly established Client Service Centre at Pelonomi will enhance laboratory support to the hospital and clinic facilities. The unit is ready to launch as soon as the telephone system is installed.

The UAL Microbiology Department received and commissioned a new Biomirieux Vitek System, replacing the older Siemens Microscan System. The laboratories were up graded with University funding, creating a more open-plan, work-flow oriented environment which provides for more effective, cost-efficient and consolidated diagnostics.

The UAL Service Laboratory received and commissioned two new Siemens Haematology Analysers, replacing the ageing Sysmex Systems.

North West Business Unit

Introduction

The North West Business Unit consists of 14 laboratories spread throughout the province. The Business Unit services 22 hospitals consisting of one tertiary hospital, two Regional hospitals,19 district hospitals, 15 prisons and 331clinics. There are four laboratories that operate a 24–hour service and 10 laboratories that provide call-out services. The tertiary Tshepong laboratory also provides TB cultures, viral loads and CD4 tests together with routine diagnostic tests. The collection of paternity testing samples are carried out at Rustenburg and Tshepong laboratories. It is pleasing to note that, the demand for paternity services in the North West has significantly increased.

Table 28: Service delivery and TAT: 2014/15

TB Micro TB GXP CD4 Viral load

Volumes 61 776 148 611 211 766 91 680

TAT 97% 91% 95% 88%

All the routes between facilities have 100% outsourced courier service coverage for specimen collections, delivery of consumables and the return of hard copy patient results. As indicated in the table above, North West continued to provide an acceptable TAT for its pathology service to the DoH.


Rustenburg’s Chemistry and Haematology Sections are SANAS-accredited. The Microbiology Section reached the required level according to QA/SLMTA/SLPTA scoring for accreditation and is scheduled for verification in June 2015. The preparations for Mahikeng and Tshepong for future accreditation continued unabated.

New laboratories and upgrading of facilities

NHLS laboratories have been accommodated in the modern, newly opened Moses Kotane Hospital, Brits Hospital and Joe Morolong Memorial Hospital.


The North West region has 170 employees made up of 48 laboratory clerks, 43 medical technicians, 37 medical technologists, 15 phlebotomists and other support staff. The recently established Learning Academy will ensure that all staff members


acquire the necessary skills and training via Regional Training Units. Technical staff members are also guided and supported to acquire all-important Continuing Professional Development (CPD) points as required by the HPCSA. The North West Business Unit have the challenge of losing qualified technical personnel to private laboratories.

Training

The Mahikeng, Tshepong and Rustenburg laboratories are the main training laboratories for the North West Business Unit and had a 100% pass rate among clinical pathology technicians and technologists for the 2014/15 reporting period. Each of these training laboratories are currently carrying three clinical pathology medical technology interns who should graduate in 2015/16.


The relationship with the North West DoH is driven by a provincial SLA. The NHLS is delivering a high standard of service that is in line with the DoH’s Ten-point Plan and the Millennium Development Goals.

The NHLS was well represented at all provincial health commemoration ceremonies, such as World AIDS Day, World TB Day and Cancer Campaigns.

The NHLS, in collaboration with the Global Fund, joined the fight against TB and HIV alongside government by implementing mobile laboratories attached to the Rustenburg and Potchefstroom Laboratories. Through these mobile laboratories, NHLS NPP and the Global Fund are intensifying the fight to combat the disease burden in peri-mining communities, and supporting HIV/AIDS, Sexually Transmitted Diseases and TB (HAST) Campaigns.

The mobile laboratories were successfully used during the build-up campaign leading to the World TB Day event that was held in Orkney on 24 March 2015. The joint efforts of the Global Fund, NHLS NPP and the North West Laboratories were brilliantly showcased at the occasion.

Sebaka Molapo (NHLS NPP) with Health Minister, Aaron Motsoaledi (centre), and Deputy President, Cyril Ramaphosa (right), at the NHLS mobile laboratory launch of TB testing on World TB Day in Orkney, North West


Limpopo Area Business Unit

Introduction

The Limpopo Mpumalanga region of the NHLS provides oversight to NHLS in Limpopo and Mpumalanga Provinces. In Limpopo Province there are 37 laboratories spread across two business units, namely Limpopo East and Limpopo West. There is an NHLS laboratory in each general hospital in the province and across all five districts. The service level of the laboratory is based on the size of the hospital attached to it, whether it is district, regional or provincial tertiary hospital.

All laboratories in the province provide a 24-hour service, seven days a week. This service is provided either through a call-out system or a shift system that ensures that technologists are available in the laboratories at all times every day.

The total NHLS staff complement in the province is 268 as at the end of March 2015, 20 less than same time last year.

The province managed to improve on service delivery by among other things, placement of fully automated haematology analysers to improve workflow, TATs and quality. These replaced analysers which were not user friendly and required a lot of manual intervention. Furthermore, two full-time pathologists were appointed in Microbiology and Haematology and are based in the Polokwane Laboratory.

Extra-pulmonary TB testing was introduced in the Province using the GeneXpert technology. The NHLS in the province achieved all set TAT targets for National Priority Programme tests (NPP).

Service delivery and coverage

A total of 5 690 442 tests were requested by the province during 2014/15. This is an increase of 9% when compared to 2013/14. These tests represent those requested by the hospitals and those collected from 484 clinics across the province by the NHLS courier service.

In total, 69 clinics receive a twice a day collection of specimen by the same courier service. In 2014/15, four new clinics were opened by the province and these were included in the specimen collection network which the NHLS provides.

The business unit continued its focused support to the NPP in the province. The following table indicates the volume of NPP tests done in 2014/15 as compared to 2013/14.

Area Manager: Mr Jacob Lebudi



Table 29: Test volumes 2013/14 to 2014/15

Test Volumes 2013/14 Volumes 2014/15 % difference

CD4 277 865 267 585 -4%

Viral load 171 884 208 145 21%

HIV DNA PCR 29 837 30 845 3%

GeneXpert 208 945 234 020 12%

All NPP tests, except CD4, showed a year-on-year increase. The set TAT targets for all NPP tests were achieved for the first time in the Limpopo Province, as follows:

• TB Microscopy: 97% of tests within 48 hours

• GeneXpert: 94% of tests within 48 hours

• Viral Load: 90% of tests within 72 hours

• CD4: 95% of tests within 72 hours

• Cervical Cancer Screening: 88 % within 13 days.

The Viral Load testing for the province is consolidated in one laboratory, namely Mankweng Laboratory which is SANAS-accredited.

Bi-directional SMS printers for printing of NPP results were installed in the beginning of 2014/15, replacing the old mono-directional printers. The advantage of the new printers for the DoH is that results can be requested from NHLS LIS and printed though the use of a barcode scanner attached to the printer. A further advantage is that the functionality of these SMS printers can be monitored off-site and allows for proactive corrective actions on malfunctioning units.

Over 30 new automated Haematology Analysers were placed in the province to replace the old ones, which were already over eight years old and problematic. The new analysers brought an improvement in the workflow thus improving TAT.

New semi automated Coagulation Analysers were installed in some Limpopo Laboratories to improved testing on INR and PTT tests. This move ensured that manual testing is minimised for better quality and TATs.

To improve service delivery in Microbiology, a new automated Microbiology Analyser, namely, Vitek 2 System was installed at the Polokwane Laboratory. The analyser is currently undergoing internal verification to ensure that it is fit for purpose.


The Limpopo Region is proud to state the following achievements during the reporting period:

Accreditation

The Mankweng Laboratory, the only SANAS-accredited laboratory in the province, maintained their accreditation status after an audit conducted in September 2014. Two other laboratories, namely Polokwane and Letaba are preparing for SANAS accreditation. To accelerate and facilitate this process, the laboratories have been enrolled on the Stepwise Laboratory Improvement Process Towards Accreditation (SLIPTA) Programme. The programme enables scheduled mentorship and support throughout their participation. This ensures that the laboratories are equipped with the skills to enable them to manage laboratory activities adequately and carry out continuous improvement projects.

Through this programme, the laboratories showed improvement on quality management system after they were audited by the African Society for Laboratory Medicine (ASLM) using the AFRO-WHO checklist. The Letaba and Lebowakgomo laboratories were audited and both obtained a two star rating.

Laboratory upgrades

Due to financial constraints, infrastructure upgrades projects were put on hold. However, in order to ensure compliance with Occupational Health and Safety with special attention to the safety of our employees, minor renovations to benches, extraction fans and electrical fittings were done in the Polokwane Laboratories.


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To ensure ambient temperature and environment, new air-conditioners were installed in numerous laboratories across the province.


The NHLS in the province still struggles to recruit and retain appropriately qualified technical staff in the laboratories. This affects our ability to increase our coverage in terms of service provision and adequately manage our laboratories.

The table below indicates the status of technical staff at the end of the financial year.

Job title Number

Laboratory Managers 22

Laboratory Supervisors 4

Medical Technologists 39

Medical Technicians 78

Pathologists 2

Total Technical Staff 145

Training

Despite some financial constraints experienced in the year, the NHLS managed to train some of its staff on selected and key areas of service delivery to ensure continuous improvement.

The nature of the courses provided and attendees are outlined in the table below.

Table 30: Staff training

Course Attendees Output

GeneXpert Advanced Training Medical Technicians and Technologists

To improve service delivery on GXP

ISO 15189 – New standard (2012) Medical Technologists To understand and improve quality management systems

SLMTA Training Laboratory Managers Framework that defines the tasks a laboratory manager must perform in order to deliver quality laboratory services

Extra-pulmonary TB Testing Medical Technologists/Technicians Provision of the new test in the province

CD4 Training Medical Technologists Improve quality of results

Parasitology Medical Technologists Ensure accurate reporting

SANAS Technical Assessor Laboratory Managers To improve the quality of our internal audits

Training on New Chemistry Analyser

Medical Technologists/Technicians Competency in operating the analysers

Training on New Haematology Analysers

Medical Technologists/Technicians Competency in operating the analysers


In Limpopo, stakeholder relations are managed through quarterly service review meetings with the laboratory co-ordinator and senior clinical managers from the hospitals.

These meetings seek to review the relations and service as prescribed in the SLA entered into between the NHLS and the Provincial Department of Health.

Furthermore, NHLS participated in provincial health commemoration days such as World TB Day and World AIDS Day. The TB and HIV campaigns were held at the Waterberg District at the Medupi Power Station in Lephalale in September 2014. The NHLS participated by collecting and testing of GeneXpert specimen. Over 50 patients were tested daily during the week of the campaign.


STI Condom Week was held in January 2015. The NHLS participated through collection of specimens for TB and HIV screening.

The NHLS made presentations in the provincial quarterly review of the TB and CCMT Programme, and in addition also partnered with the Provincial Department of Health in an orientation and induction programme of community service doctors deployed in the province. The executive members of the NHLS, accompanied by the area managers visited the PDoH to ensure maintenance of cordial relationships.

Mpumalanga Area Business Unit

Introduction

The Mpumalanga Business Unit of the NHLS is responsible for carrying out the organisation's pathology service mandate in the Mpumalanga Province. This is achieved through 21 NHLS laboratories spread throughout the province. The largest district in the province, namely Ehlanzeni, has nine laboratories, followed by Gert Sibande District with seven laboratories and then Nkangala District with five NHLS laboratories.

All the laboratories, except for Lydenburg Laboratory, provide a 24/7 service through either a call-out service or shift system.

The total NHLS staff complement in the province was 192 as at the end of March 2015, compared to 206 at the end of the last period.

In a bid to strengthen the NHLS support to the TB programme in the province, a new high capacity GeneXpert Analyser (the Infinity 80) was installed at the Nelspruit Laboratory. This is the eighth analyser of its type to be installed in the NHLS country-wide, and the first in the province.

Infinity 80 in Nelspruit Laboratory

Service delivery and coverage

The Mpumalanga Province requested a total of 5 128 179 tests in 2014/15. This is an increase of 6% when compared to 2013/14. The NHLS continued to support the primary health care service in the province by ensuring maintenance of 100% coverage of daily specimen collection from the clinics. In essence, the NHLS collects specimens daily from 311 clinics in the province, 25 of which receive twice a day collection. This year the Provincial Department of Health opened two new clinics, which were immediately incorporated into the specimen collection network of the NHLS.


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The business unit continued its focused support to the NPP in the province. The following table indicates the volume of NPP tests done in 2014/15 as compared to 2013/14.

Table 31: NPP test volumes

Test Volumes 2013/14 Volumes 2014/15 % difference

CD4 359 623 369 179 3%

Viral Load 221 208 265 886 20%

HIV DNA PCR 32 889 33 544 2%

GeneXpert 81 900 131 612 61%

The usage of GeneXpert technology has improved and shows a 61% increase in tests when compared to last year. This indicates the contribution which the NHLS has made to the fight against TB in the province.

Mpumalanga achieved the following TATs:

• TB Microscopy: 97% of tests within 48 hours

• GeneXpert: 94% of tests within 48 hours

• Viral Load: 76% of tests within 72 hours

• CD4: 78% of tests within 72 hours.

Viral Load and CD4 set TAT targets were not met, mainly due to analyser incapacity and failures as well as human resources challenges. These challenges are being addressed to ensure better performance in the new financial year.

Bi-directional SMS printers for printing of NPP results were installed in the beginning of 2014/15. These were installed in Gert Sibande and Ehlanzeni districts, replacing the old mono-directional printers. The advantage of the new printers for the DoH is that results can be requested from NHLS LIS and printed though the use of a barcode scanner attached to the printer. A further advantage is that the functionality of these SMS printers can be monitored off-site and allows for proactive corrective actions on malfunctioning units.

New Tests

All the laboratories in the province were trained for the implementation of the new test to test for extra-pulmonary TB. This test is now offered to the province by all laboratories with GeneXpert technology as and when requested by the clients.

Ermelo Laboratory, the only TB Culture Laboratory in the province, introduced first line drug susceptibility test using the MGIT Liquid Sensitivity method. This has brought improvement in the management of MDR patients in the province through improved TATs.

A new Coagulation Analyser was installed in Nelspruit, which allowed the introduction of the Quantitative D-Dimer test.

Vitek 2 Systems for automated microbiology were installed at Nelspruit and Witbank laboratories.


The Mpumalanga Region is proud to state the following achievements during the reporting period:

Accreditation

The Witbank Laboratory is the only SANAS-accredited laboratory in the province, and managed to maintain its accreditation status during an audit that was conducted in May 2014.

Two other laboratories, namely Nelspruit and Ermelo, are preparing for SANAS accreditation. To accelerate and facilitate this process, the laboratories have been enrolled on the SLIPTA Programme.

All the laboratories in the province were trained for the implementation of the new test to test for extra-pulmonary TB. This test is now offered to the province by all laboratories with GeneXpert technology.


Laboratory upgrades

To ensure the safety and comfort of our staff, as well as adequate infrastructure for the provision of laboratory services, the following minor renovation projects were undertaken.

• In Ermelo, two mobile containers for waste storage were procured and installed. This was to ensure compliance with Occupational Health and Safety regulations

• The Mapulaneng Laboratory was renovated to improve workflow in the receiving office and improve the storage facility

• In Evander, waterproofing to the roof was done to ensure safety of NHLS equipment.


The total number of staff in Mpumalanga, as at 31 March 2015, was 192. Only 45% of this number is employees with technical skills. These include laboratory managers and supervisors, medical technologists and technicians. Over 95% of vacant positions are of employees with technical skills. The NHLS in the province still struggles to recruit and retain appropriately qualified employees to most of the laboratories. The table below indicates the technical staff as at the end of March 2014.

Job title Number

Laboratory Managers 18

Laboratory Supervisors 3

Medical Technologists 18

Medical Technicians 35

Pathologists 0

Total Technical Staff 74

Training

Despite some financial constraints experienced in the year, the NHLS managed to train some of its staff on selected and key areas of service delivery to ensure continuous improvement.

The nature of the courses provided and attendees is shown in the table below.

Table 32: Training conducted: 2014/15

Course Attendees Output

GeneXpert Advanced Training Medical Technicians and Technologists To improve service delivery on GeneXpert

ISO 15189 – New Standard (2012) Medical Technologists To understand and improve quality management systems

Biosafety and Biosecurity Laboratory Managers Laboratory safety

SLMTA Training Laboratory Managers Framework that defines the tasks a laboratory manager must perform in order to deliver quality laboratory services

Extra-pulmonary TB Testing Medical Technologists Provision of the new test in the province


Stakeholder relations in the province were managed and maintained through quarterly meetings with the provincial and district laboratory co-ordinators. These meetings seek to review the relations and service as prescribed in the SLA entered into between the NHLS and the Mpumalanga Provincial Department of Health.

Furthermore, the NHLS participated in provincial health commemoration days such as World TB Day and World AIDS Day. The NHLS made presentations in the provincial quarterly review of the TB and CCMT Programme in the province.


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The NHLS participated in the Provincial HCT Blitz Campaign that was held in Gert Sibande District. On site GeneXpert testing was performed, as well as collection of specimens for CD4 testing.

The NHLS partnered with the Provincial Department of Health in an orientation and induction programme of community service doctors deployed in the province. The executive members of the NHLS accompanied by the area manager, visited the Provincial DoH to ensure maintenance of cordial relationships.

In January 2015 the Haematology Department of Charlotte Mexheke Academic Hospital extended its pathology coverage to the Rob Ferreira and Themba Hospitals doctors in the Ehlanzeni District. The aim was to discuss the efficient use of laboratory service with clinicians and to create relationships between hospital clinicians and NHLS pathologists.


Area Manager: Ms Nasima Mohamed

Western and Northern Cape

Western Cape (WC) Business Unit

Introduction

The Western and Northern Cape Region has two tertiary laboratories that link to and has a co-operative agreement with the universities of Cape Town, Western Cape and Stellenbosch. The Kimberley Laboratory is soon to become a tertiary laboratory and already links to and has a co-operative agreement with the University of the Witwatersrand. The total staff complement for the Western and Northern Cape Region is 875 staff members.

The two regions include 22 laboratories in five business units, which are spread across eleven health districts (WC – 6, NC – 5) within the respective provinces. Combined, the region has four CD4 count; four viral load; two HIV polymerase chain reaction (PCR); 19 GeneXpert and 17 TB Microscopy laboratories. All the laboratories in the Northern Cape Region are on TrakCare. The Western Cape has thirteen laboratories on the TrakCare LIS, with the remainder to be implemented by the end of October 2015.

Though short staffed, our staff members are dedicated, skilled and competent and continue to deliver quality and patient-focused service despite the many day-to-day challenges. Rationalisation of CD4 testing from five to three sites resulted in an improved TAT, and CD4 TATs which were within the target of 40 hours. The Western Cape average is 21 hours, and Northern Cape is performing exceptionally well on the NPP test TATs. The overall increase in volumes in the region year-on-year was 5.6%.

Diagnostic services

The region achieved a 4% increase year-on-year from 11 914 967 tests performed in 2013/14 to 12 392 971 tests in the year under review. Diagnostic services continued at Groote Schuur Hospital (GSH), with minor interruptions, mostly due to difficulties in filling staff vacancies and obtaining reagents timeously. The staffing crisis was mostly experienced in, but not confined to, Chemical Pathology, Laboratory Support and Histology. The GSH Chemical Pathology and Haematology volumes increased slightly, despite ongoing electronic gate-keeping (EGK).

Microbiology decreased due to increased gate-keeping of superficial swabs and inappropriate culture requests for genital swabs. This was instituted together with GSH clinicians, but electronic rules cannot be developed as there is not sufficient standardisation of completion of the forms. Tissue immunology volumes expanded significantly with the introduction of molecular tissue typing. Genetics volumes also increased due to increased requests from clinical geneticists for molecular cytogenetic testing. This indicates the relevance of the introduction of these testing methods.


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The net profit was higher than budgeted, largely because of unfilled vacancies, low capital expenditure (CAPEX) and unresolved queries with respect to the University of Cape Town’s claims for academic staff salaries. Increased revenue versus budget also contributed to this difference (budget too low). Direct materials expenditure met budget.

The Tygerberg unit experienced a 5.9% increase in volumes year-on-year. This was predominantly driven by significant increases in virology (26.2%) and immunology (9.9%). All other divisions demonstrated workload increases ranging from 1.4% to 5%. It was noted that fewer test parameters were requested per sample, demonstrating the effectiveness of gate-keeping and the cost-conscious use of the laboratory service. The number of samples handled appears to be more than the average volume increase due to this phenomenon and impacts significantly on the support services. Viral load and HIV PCR volumes increased by 13.2% and 18.2% respectively. CD4 test volumes increased by 4%. TB Directs increased by 4% and GeneXpert (GXP) testing increased by 9.3% year-on-year.

New chemistry analysers were installed in the Worcester and Paarl Laboratories and haematology analysers are being replaced in eight regional laboratories to improve efficiencies and TATs. The Mitchells Plain Laboratory is in the process of changing the cryptococcus latex antigen test (CLAT) for cerebrospinal fluid (CSF) to a lateral flow assay for the detection of cryptococcus. It is a rapid test (15 minutes) and will be done locally on CSF to improve TAT and efficiency. The WC regional laboratories showed an overall increase in volumes of 3.9%.

The WC has one of the biggest TB laboratories in the country with GXP volumes exceeding 250 000 tests per annum. Recently the testing of extra-pulmonary samples on the GXP was rolled out. This includes the testing of gastric washings in children as well as CSFs, fine needle aspiration (FNA) and purulent fluids in adults. TB testing is offered at 13 regional laboratories as well as the two academic centres, TBH and GSH. This includes GXP testing as well as smear testing. Currently laboratories follow the algorithm of the DoH with cultures being referred to the main laboratory at Greenpoint. The Greenpoint Laboratory offers further drug sensitivity testing using the Hain line probe PCR assay.

Service delivery

The GSH Chemical Pathology and Haematology laboratories validated and switched to major analysers, as did Chemical Pathology at the Red Cross Ware Memorial Children’s Hospital. TATs did not improve during the year. Priority programmes, with the exception of cervical screening, were within TAT targets, however cervical screening, staff shortages and process flow problems contributed to overall poor TATs. These have been improved and additional monitoring steps have ensured that backlogs are prevented or addressed early. Chemical Pathology TATs at GSH increased, with problems initially experienced with implementation of the new analyser, which are being addressed.

The Western Cape laboratories achieved the following average TATs for priority programme tests:

Priority test TAT

CD4 98.0%

HIV PCR 93.0%

Viral Loads 94.0%

Cervical Smears 90.0%

TB Directs 90.0%

GeneXpert 92.0%

The laboratories faced similar challenges to those which impacted on TAT in the previous year. Lack of adequate staffing, particularly in specimen reception, resulted in the ongoing review of shifts and careful management of workload in an attempt to prioritise work. This remains a critical area which impacts on TAT for all divisions, preventing the implementation of new systems and resulting in suboptimal service delivery. Anatomical Pathology provided support to Port Elizabeth and East London, which is reflected in workload increases in February and March for this unit.

Health facilities in the Western Cape have full coverage of specimen collections, with some facilities having more than one collection per day. TB testing is offered at 13 regional laboratories as well as the two academic centres, TBH and GSH. This includes GXP testing as well as smear testing. Currently laboratories follow the algorithm of the DoH, with cultures being referred to the main laboratory at Greenpoint. This laboratory offers further drug sensitivity testing using the Hain line probe PCR assay. Most of the laboratories' reports are within 90% of the target TAT of 24 hours for GXP testing. At least five laboratories are 100% within target.


A close working relationship with both the City of Cape Town and the Western Cape DoH, developed over many years, allows for research as well as operational decision-making. An example of this is the policy implemented by the Western Cape requiring two samples to be submitted when GeneXpert testing is requested. This has proved invaluable as the algorithm requires a second sample under certain circumstances, and the immediate availability of the second sample in the laboratory reduces waiting time for patients to receive results and importantly obviates the need for patients to return to the health facility to provide a second sample. The TB/HIV co-ordinator, laboratory manager and the pathologist are involved in regular training and teaching programmes for healthcare workers in the TB arena.


Managers attended regular stakeholder meetings with DoH, City of Cape Town, Stellenbosch University, University of Cape Town and University of the Western Cape. In addition, clinical meetings, bilateral and HAST meetings were attended to improve stakeholder relations, service delivery and to discuss compliance with the SLA. Outreach programmes through pathologist mediation were conducted with clinicians in regional facilities. In addition, we provided a phlebotomy service in support of the Area Military Health (substructure of the SANDF), which monitors Occupational Health and Safety for the military. Weekly operational meetings were implemented within the laboratories and are effective in addressing operational matters. Bilateral meetings were held quarterly to discuss strategic issues.

Various staff participated in the following events to ensure the NHLS’ visibility in the region:

• World AIDS Day on 1 December, held at Pollsmoor Prison in the Western Cape

• World TB Day held at the GreenPoint Complex in December 2014.

We have held meetings with NGO’s functioning in the region, and have assisted the DoH with its mandate to provide adequate healthcare. We have a good relationship with the TB/HIV Care Association following a good partnership with the Pollsmoor laboratory project. We have had meetings with the Right to Care at the Helderstroom prison as well as Japiego, and held a workshop with the SEAD.


The GSH Business Unit maintained service delivery, despite reagent constraints, and continued with teaching and training. Several new diagnostic tests were introduced. The annual SANAS inspection did not take place as expected due to scheduling problems experienced by SANAS. A strong contribution was made by the business unit towards National Priority Programmes (NPP) in the form of TrakCare workforce modelling and expert committees. Cytotechnologists attended the weekly breast clinic at Mitchell’s Plain. They have a designated area in the clinic and provide on-site diagnosis, enabling patients to be counselled. Further extension of coverage was thwarted by lack of funds for travel as well as staff shortages, which even precluded further assistance to laboratories within the metropole. Service provision at UCT Private Academic Hospital was retained, although this is continually under threat from other private pathology groups.

Tygerberg Virology was re-assessed in May 2014. Chemical Pathology, Haematology, Immunology, Microbiology and Anatomical Pathology underwent surveillance assessments in August 2014. All laboratories were granted unconditional accreditation.

The following laboratories in the Western Cape Region maintained ISO 15189 SANAS-accreditation status: George Laboratory, Greenpoint (Haematology, Chemical Pathology, Laboratory Support, and TB Laboratories). The Media Laboratory at Greenpoint also maintained its SABS ISO 9001 certification.


GSH: Skills development did not take place in line with the training needs analysis because of the cash-flow crisis. The staffing situation improved once recruitment was re-established. The conversion of pre-analytics contract positions to permanent ones was not addressed. The delay in receiving contracts from corporate HR exacerbated the staff shortage, although advertising to fill vacant posts improved.

Tygerberg: Austerity measures resulted in the majority of vacant posts not being filled. The unit identified critical posts for both academic and service platforms.


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Anatomical Pathology: A consultant continued with post-retirement sessions in Cytology. Two pathologists were transferred from the Eastern Cape to take up vacant posts in the division, one of whom qualified and was appointed in October 2014. A further three registrars qualified and were retained as consultants as part of the National Priority Retention Initiative for Anatomical Pathology. Two haematopathologists were appointed, one of whom was transferred to GSH.

Technical support staff: Six critical laboratory clerk posts were identified for the Core Receiving Office, but these posts have not been filled. Two critical laboratory clerk/dictaphone typist posts were identified for the Histology Support Office, but have not been filled. Three vacant posts for pathologists exist in the Western Cape Region and it is difficult to find candidates to fill these posts.

Technical: Six medical technologist posts, two laboratory assistant posts and two laboratory manager posts remain vacant. Locums for staff on maternity leave were also not supported. Staffing in the region was hampered by financial constraints and management had to appoint acting managers in four of the regional laboratories. These posts are still vacant due to a lack of suitable applicants.

Training

Training was difficult to maintain due to staff shortages. Congress and course attendances, other than attendance of the NHLS-organised PathRed Congress, were not supported due to the financial crisis.

Skills development did not take place in line with the training needs analysis for the same reason. However, ISO: 15189 training, organised by the National QA Division, was provided for laboratory and business managers. Journal clubs and Continuing Professional Development (CPD) talks continued in the various divisions. The laboratory training programme includes BHSc and diploma technologist students, technicians, intern scientists and registrars.

Three technologists from the Western Cape regional laboratories attended the Advanced GeneXpert Training Course that will allow them to describe and perform all aspects of GeneXpert installation, assay processing, maintenance, safety and troubleshooting at a level appropriate to train other staff members. This is a very useful skill to have in the regional laboratories.

Training was also offered on the new procedure for handling extra-pulmonary samples on the GXP that includes CSF as well as FNAs and purulent fluids.

The GXP Analyser was placed within the Department of Correctional Services at Pollsmor Prison and the Western Cape NHLS has been actively involved in TB protocol training, including sample collection and the correct procedure for filling in request forms. Training sessions have been held at Pollsmoor, Helderstroom and Malmesbury. With the introduction of the new courier tenders, training was offered to the drivers regarding good laboratory practice and sample collection.

In addition training initiatives were achieved in the review period as follows:

• First aid and basic firefighting and fire marshal training were conducted for all identified staff

• Laboratory staff and senior managers from accredited sites received training on the new ISO 15189:2012 standard, in preparation for accreditation in the new financial year

• The region identified staff members to be involved in SLIPTA and SLMTA training, with successful staff members becoming SLIPTA assessors and SLMTA trainers. The aim is for these trainers to assist small laboratories in quality improvement

• Western Cape regional hospital representatives from EMS, clinicians, nursing staff, laboratories, etc., were trained on the investigation, specimen handling and packaging of suspected Ebola cases by Prof. Duse from NICD. The region’s laboratories were provided with personal protective equipment to ensure compliance in the handling of suspected Ebola cases

• Staff from the Western Cape attended training for IATA certification on dangerous goods packaging to improve the referral times of shipments.


Emergency power was increased at Red Cross War Memorial Children’s Hospital Laboratories in response to the increased load shedding experienced. Alterations in GSH to accommodate the changed footprints of the new analysers were completed.


General upkeep was not maintained due to funding constraints, and CAPEX was limited in the reporting period. The effect on service delivery is being monitored as equipment breakdowns are increasing.

The Tygerberg Business Unit placed plans to upgrade facilities on hold due to austerity measures. This negatively impacted on workflow and staff morale. Key areas affected include Laboratory Support, which is severely space constrained and the Core Laboratory and Microbiology. Microbiology work in the region was consolidated two years ago and renovation requirements were identified at that time. None have been carried out, and this remains a challenge to optimising the workflow in this division. Failure to renovate is also hampering plans to consolidate support functions, reduce duplication and improve efficiencies.

The Knysna Laboratory will be moving to a larger space in the hospital. The Hermanus Laboratory received extra office space in the hospital and the dry walls were removed to improve workflow, subsequently improving TAT.

Northern Cape Business Unit

Introduction

The Northern Cape Business Unit experienced an overall increase of 5.5% in test volumes year-on-year. The individual laboratories demonstrated varying workload increases (Upington: 23.2%, Springbok: 13.8%, De Aar: 5.2%, Tshwarangano: 9.1% and Kimberley: 9.2%).

The De Aar Laboratory provides diagnostic services to the Pixley ka Seme District, which is the NHI site for the Northern Cape. Microbiology first line and urgent cerebrospinal fluid (CSF) testing, including Gram stain, cell counts and wet preparations, are done locally. Other Microbiology testing was centralised at the Kimberley Laboratory to improve quality and efficiency. Culture plates are inoculated and carefully transported to the Kimberley Laboratory for further testing. The old CD4 analyser was replaced in May 2014. New full blood count analysers, Sysmex XS, were introduced in July 2014 at the De Aar, Upington and Springbok laboratories. This had a positive impact in the operations and improved TATs. New analysers for Haematology, Chemistry and Microbiology were implemented at the Tshwarangano and Kimberley laboratories.

New tests to be validated and implemented at the Kimberley Laboratory are syphilis, nutritional studies, Amikacin, female hormones, vancomycin and Tropinin-I to improve diagnostic testing.

CD4 test volumes decreased by 9.8% from 69 872 in 2013/14 to 63 603 in 2014/15, due to two factors:

• In April 2013 the guidelines for the use of the anti-retroviral drugs for treating and preventing HIV infection changed. The patients are re-tested every 12 months, not every six months

• Point-of-care CD4 analysers, PIMA, were installed in 17 facilities in the Northern Cape.

TB Microscopy volumes decreased by 17.5% from 49 415 in 2013/14 to 42 036 in 2014/15. The decrease has been noted since the increase in the number of GeneXpert testing sites and improvement in the TB algorithm implementation. GeneXpert MTB/RIF volumes increased by 0.9%, from 70 966 in 2013/14 to 71 625 in 2014/15. All Northern Cape laboratories are testing for GeneXpert MTB/RIF.

Service delivery

Daily collection from the total of 240 healthcare facilities improved to 100%. New bidirectional SMS printers were installed in the facilities to improve TATs of priority programmes.

Two pathologists (a haematologist and anatomical pathologist) were appointed to support clinicians, train staff and improve service delivery. They are also involved in the CPD Programme and advise on technical issues. This has had a positive impact on the business unit, particularly in Morphology and Histology TATs, as the clinicians also consult as and when needed. The Northern Cape Business Unit achieved the following TATs for priority programme tests: CD4 98%, TB Directs 99% and GeneXpert 97.7%.


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Priority test TAT

CD4 98.0%

TB Direct 99.0%

GeneXpert 97.7%


The appointment of a client liaison officer in the Northern Cape improved stakeholder relationships, resulting in a reduction in the number of complaints due to time spent in the districts and the laboratories, assisting with service improvement issues and training. The officer also attended district meetings to ensure that matters were addressed at district level. Unfortunately, the incumbent resigned in December 2014, and a replacement is being sought.

The business unit collaborated with the Northern Cape DoH in extending its laboratory services to the mines. Services to four mines, namely Beeshoek, Khumani, Black Rock and AfriSam, commenced in November 2014. Courier services to these mines are also provided. Monthly partnership meetings are held between the NHLS, the mines and the Northern Cape DoH.

Stakeholder relationships significantly improved due to regular attendance of district and provincial meetings, resulting in improved payment of the Northern Cape account. The business unit actively participated in national campaigns like World TB Day and World AIDS Day, and was involved in the National DoH support visit in January 2015 to the John Taolo Gaetsewe (JTG) District.


The Northern Cape Region is proud to state the following achievements during the reporting period:

Accreditation

The business unit improved its performance, both in diagnostic and priority programmes. The Kimberley Laboratory achieved a three-star rating during its SLIPTA audit.


A considerable effort was made to ensure that training took place at all levels. Although a number of courses were cancelled due to unavailability of funds thus resulting in a total of 29 courses which were attended by 79 delegates. This includes training on different analysers that were placed in the business unit to improve quality and staff competency. Technical staff retention remains a challenge. Posts are advertised but attract either unsuitable or no candidates. This impacted on operations, especially the implementation of a sustainable shift system in the laboratories.

Training

The Kimberley Laboratory is the only training laboratory in the business unit. Four student technologists wrote their exams in March 2015, and are awaiting results. One microbiology student technician, who wrote in October 2014, passed. Two student technologists were appointed in February 2015. Training lectures provided by pathologists have had a positive impact in the students’ performance in that they are continuously assessed, and gaps and challenging areas are identified and actioned immediately.

The repudiation of contracts by students remains a problem and students who do stay for the duration of their contracts tend to leave immediately once their contracts come to an end. Challenges, like high accommodation costs, have been cited as the reason.


The new hospital at De Aar is still under construction and the laboratory is scheduled to move to this state-of-the-art hospital in 2015/16. This will address the current space constraints for the laboratory.


Executive Director: Prof. Shabir A Madhi

NICD Director’s Overview

2014/15 witnessed one of the most severe outbreaks of Ebola virus haemorrhagic fever ever recorded. In addition to the human toll which was exacted in the three most affected west-African countries, the economies of these countries and whatever healthcare services had existed were negatively affected. A major lesson from this outbreak, which many governments in low–middle income countries have ignored at their own peril, is the need for functional healthcare systems, adequate laboratory infrastructure and robust surveillance structures. Albeit, somewhat delayed, the mobilisation of resources by the global community eventually saw the Ebola outbreak brought under control. A key intervention in controlling the epidemic was the establishment of laboratory infrastructure to timeously detect cases to inform patient management and contact-tracing.

The NICD Centre for Emerging and Zoonotic Diseases, was among the first of any groups which deployed laboratory teams and laboratory equipment to assist in the control of the epidemic in Sierra Leone. This was achievable, largely because of the investment made in South Africa, despite it being at low risk for large outbreaks of viral haemorrhagic fever, in establishing adequate laboratory infrastructure, including the only fixed structure Biosafety Level 4 Laboratory facility in Africa. Notably, the funding of the expensive laboratory capabilities in South Africa is independent of donor funding, hence, ensuring its sustainability. The mission of the NICD in Sierra Leone also included capacity development and training of local staff, which eventually culminated in the hand-over of the laboratory facility established by the NICD to the people of Sierra Leone for their ongoing benefit.

The contribution of the NICD team to the people of Sierra Leone was acknowledged by the many visitors to the laboratory including government officials in the country, WHO representatives and the South African parliament itself. It is at times such as these, that the selflessness and dedication of the staff at the NICD is truly appreciated and deserves the recognition bestowed on them. Their efforts have further elevated the standing of the NICD as an important public health resource in South Africa and in support of other African countries.

The year saw a number of other positive developments at the NICD. Included among these was the announcement by the Minister of Finance and the Minister of Health that, effective from 2015/16, the NICD will be funded directly by the Department of Health, albeit remaining under the legal framework of the NHLS. Included in this funding is a clear mandate for the NICD to take on a greater role in contributing and safe-guarding the health of South Africans. To this effect, the NICD was tasked with developing the first Emergency Operation Centre in South Africa, which in future will serve as a focal point for the management of large and dangerous communicable disease outbreaks in South Africa. The secured funding from government also provides an opportunity for the NICD to continue evolving its surveillance activities and to be more pro-active in engaging and supporting the provincial CDC structures.


(continued)3Chapter

The public health-orientated research and surveillance undertaken by the NICD continues to inform policy and measure the investment being made in health in South Africa. This work by NICD staff was once again profiled in the highest ranking medical journals globally. Included among these was a feature in the journal Nature, which highlighted the NICD surveillance of pneumococcal disease in South Africa and how it has contributed to evaluating the effect of childhood pneumococcal conjugate vaccine immunisation against pneumococcal disease, including reducing the burden of antibiotic-resistant strains. This was followed by the results of this surveillance being published in the New England Journal of Medicine, which reported on pneumococcal conjugate vaccine immunisation of young South African children conferring direct protection to them, as well as indirectly protecting unvaccinated individuals against pneumococcal disease (a leading cause of death in children and adults). The surveillance activities at the NICD, reported in Lancet Infectious Diseases, showed reductions in all-cause diarrhoea hospitalisation (the second most common killer of children in the 1–59 months age group globally), since having introduced the rotavirus vaccine into the public immunisation programme. This work of the NICD in measuring and informing public health interventions was highlighted in the annual budget speech of the Minister of Health, Dr Aaron Motsoaledi, in parliament. In addition to the above, there continues to be a 10–15% year-on-year increase in publications in international peer-reviewed journals from NICD staff. Many of these are in the leading journals in the field of infectious disease globally, attesting to the quality of surveillance and research undertaken at the NICD.

The NICD continues evolving its mission to contribute to surveillance and the control of communicable diseases in South Africa. This success, however, is very much dependent on the goodwill of the many partners in the different provincial governments, being able to leverage upon the NHLS infrastructure and the collaboration of healthcare workers in the public and private sector. It is together, that the NICD looks forward to strengthening this relationship during the current year, as it expands its footprint from a core facility based in Gauteng to having an ever-increasing presence in each of the provinces to assist their provincial DoH in safeguarding the health of South Africans against communicable diseases.

A full overview of the institute is provided in the National Institute for Communicable Diseases’ Report.


Dr Sophia Kisting

NIOH Director’s Overview

In the third quarter of 2014 there were approximately 15 million people in employment in South Africa (Statistics South Africa, 2014). About 11 million of them were in non-agricultural formal employment, 690 000 in formal agricultural work, 2.3 million in non-agricultural informal jobs and 1.3 million working in private households (Statistics South Africa, 2014). The largest industrial sector employer was community and social services (3.5 million), followed by trade (3.2 million). About 1.7 million people worked in manufacturing and 1.2 million in construction. Mining employed about 0.5 million people based on Statistics South Africa’s Quarterly Employment Statistics of September 2014.

There is no recent and reliable research on occupational health service coverage for workers in South Africa. However, it is unlikely that coverage has changed substantially from that described by Jeebhay and Jacobs2 in 1999 and Adams3 et al. in 2007. About 11–18% of private sector employers, excluding mines, provided workplace-based services, with larger employers more likely to have these services. It is assumed that coverage in the agricultural and construction sectors is low and that informal economy workers have little if any access to services. Probably the most established services are at large mines, although preventive activities may be inadequate. The provision of occupational health services within the public sector is very largely confined to public servants, despite the intention in the mid-1990s to establish public sector occupational health services for under-served populations.

South Africa thus has large numbers of workers in many industrial sectors who are inadequately protected from workplace hazards. Aspects of occupational health and safety (OH&S) designed to prevent disease and injuries are likely to be especially lacking. Consequently, the need for OH&S services, including the specialised services of the NIOH, is substantial in many sectors. There are major gaps with regards to decent work, the pursuance of a greater preventive approach as well workplace gender concerns. In addition, there is very little policy coherence for workers perceived to be more vulnerable to workplace exposures. They include workers with disabilities, migrant workers, seasonal workers, domestic workers, workers in the informal economy and workers in non-standard forms of works e.g. subcontracted workers. Appropriately, the NIOH, along with partners in and out of government and the country, undertook a wide range of activities to address OH&S needs in many industrial sectors during the year. These activities covered policy advice and technical support to government departments, unions and employers; research and surveillance; teaching and training; information services; and the provision of specialised laboratory services.

Cancer is a large concern worldwide, even in low and middle-income countries with high burdens of other causes of morbidity. It is essential to establish the types of cancer, their distribution (geographically and by age and sex) and trends in incidence so that resources can be allocated appropriately, and so that interventions are targeted correctly. The National Cancer Registry’s (NCR) cancer statistics, which are the main source for the country, are thus very important. A large and sustained effort is being made by the NCR to produce these statistics. The NCR continues to conduct vital cancer research, much of it involving multi-country collaboration, and to contribute to knowledge on cancer in South Africa and internationally.


(continued)3Chapter

Two aspects of the NIOH’s work are highlighted in this report: research and specialised services.

Research The NIOH research aims to generate knowledge for preventive action and impact on key occupational health issues, especially those facing South Africa and the region. Taken together, the research projects of each division are testimony to the many occupational health issues requiring new knowledge, but also to the scope of the NIOH and NCR’s research efforts. Among the topics under investigation by the NIOH during the reporting period were:

• Lung disease in miners and control of dust in mining

• Work-related TB, including ultraviolet germicidal irradiation in controlling transmission, and TB in healthcare and mining

• Silica exposure in farming, and silica in mine waste dumps and platinum mine dust

• Occupational allergies among poultry workers

• Microbiological issues in the healthcare setting

• Occupational health and safety in the informal economy, including waste reclaimers

• The impact of a surveillance tool on occupational health practice

• Respirator fit testing

• Surveys in a number of industries.

It is notable that the research programme has developed over the past few years to include aspects of ‘modern’ working life that were not traditionally research areas of the NIOH. Examples are the influence of occupations on cancer in women (breast cancer specifically), the psychosocial and cultural determinants of musculoskeletal disorders, occupational stress (specifically the utility in South Africa of a widely used measurement tool), and a large programme on incidental and engineered nanoparticles – the toxicity of the particles and risk assessment approaches make up a substantial part of the programme. It is our fervent wish to increase our preventive research capacity to positively impact the working lives of women and men in the world of work. We believe that the creation of new knowledge through inclusive intervention research at workplaces will help inform policy coherence and result in greater workplace equity and a greater emphasis on prevention.

Specialised services

The NIOH provides laboratory-based, discipline-specific and information services to clients in many industrial sectors and government agencies. The institute’s laboratory services include asbestos identification and counting; diagnostic lung pathology; analytical chemistry (e.g. for biological monitoring specimens); the identification of components of dusts (respirable crystalline silica in particular); microbial air sampling; and allergy diagnostics. There are also a number of research laboratories, but these are not mentioned here. Among the discipline-specific services are occupational medicine, occupational hygiene, occupational toxicology, immunology and microbiology, and occupational epidemiology. Information services are a core service of many national institutes of health around the world, partly because there is a scarcity of sources of information elsewhere, as is the case in South Africa. The extent and diversity of information services offered by the NIOH, many of them of limited availability elsewhere in the country, is obvious from this report.

Looking to 2016 and beyond, the NIOH needs to contribute more to a number of aspects of OH&S. Among them are the need to build a stronger culture of prevention of disease and injury; gender and work; training and teaching (especially in ways that contribute to building a culture of prevention); and the development of OH&S within the National Health Insurance (NHI) system and the restructured primary healthcare system.

A full overview of the institute is provided in the National Institute for Occupational Health’s Report.


Managing Director: Ms Megan Saffer

SAVP Director’s Overview

The NHLS, is proud to have the South African Vaccine Producers Proprietary Limited (SAVP) as its subsidiary since it is the only manufacturer of anti-venom for the treatment of scorpion stings, snake and spider bites in the sub-Saharan Africa region.

During 2014/15, the financial challenges which faced the NHLS, together with staff shortages due to moratoriums and maintenance issues, caused many challenges in the production of anti-venom. Despite these obstacles, the SAVP achieved its mandate in supplying its customers with life/limb saving products. It is truly rewarding and gratifying that the SAVP continues to supply these strategic products to the country.

Small Animals UnitThe year under review was one of the most challenging years to date for the Small Animals Unit. Renovations to the Specified Pathogen Free (SPF2) Unit, as budgeted for, were placed on hold, putting its mandatory refurbishment requirement two years behind schedule.

Animal breeding has been negatively affected due to maintenance issues, which resulted in both internal and external orders not being supplied on time. The external clients most severely affected were the National Control Laboratories in Bloemfontein and the University of Cape Town. However, thanks to the dedication, initiative and expertise of the Small Animals Unit team, under the supervision of Ingrid Linnekugel, these obstacles were positively dealt with.

Animal Ethics CommitteeThere was one internal application from the Entomology Department, which is still awaiting approval. However, no external applications were received during the past 12 months.

Stables UnitThe Stables Unit was also affected by the NHLS’ financial situation.

The construction of the new stables area, which was sent out for tender in December 2013, did not commence. This led to the horses being relocated to temporary stable facilities, which is not ideal. The dedication and expertise of Gerit Maritz, Stables Supervisor, and the Stables team, however ensured that the care and wellbeing of the horses did not suffer.

The demand for normal horse blood used in the preparation of media products remained constant, with 517 bags of horse blood supplied to the NHLS laboratories and 1 160 bags of horse blood supplied to the private market.

Chapter 4


Report of the Accounting Authority

The Accounting Authority submits its report for the year ended 31 March 2015.

Statement of commitmentThe Accounting Authority is committed to business integrity, transparency and professionalism in all its activities. As part of this commitment, it supports the highest standards of corporate governance and the ongoing development of best practice.

Mandate of the BoardThe mandate of the Board is set out in the NHLS Act, No. 37 of 2000, and has been encapsulated in the Board Charter. The mandate of the Board, as set out in the Board Charter, is aligned with the requirements stipulated in the Protocol on Governance in Public Entities.

Independence of the BoardBoard members are appointed by the Minister of Health. The Board considers submissions and recommendations made by management and makes independent decisions based on their fiduciary responsibilities and the strategic direction of the NHLS.

The various Board committees meet independently and then report back to the Board. Each committee has a formal charter that clearly defines its roles and responsibilities.

The Audit and Risk Committee regularly meets individually with the external and internal auditors. Furthermore, the Board, its committees and individual Board members may engage independent counsel and advisors upon request and at the discretion of the Board.

Board compositionThe Accounting Authority is a unitary Board comprising a majority of non-executive members. The members of the Board are appointed by the Minister in accordance with section 7 of the NHLS Act. In terms of the Act, the Board should comprise 22 members including the CEO, chairperson and vice-chairperson. In terms of Section 9 of the NHLS Act, the Minister of Health must appoint a chairperson and a vice-chairperson.

The members of the Board during the year and at the date of this report were as follows:


(continued)4Chapter

Name Directorship AppointedChairmanship/position in company

Prof. Barry Schoub Chairperson – Representing Minister of Health

Non-executive Board Member and Chairperson of the Board

1 May 2015 Board

Dr Thokozani Mhlongo

Mpumalanga Province Non-executive Board Member 2 January 2015 (re-appointed)

Remuneration and Human Resources Committee

Prof. Eric Buch Council for Higher Education: Universities

Non-executive Board Member 30 April 2015 (re-appointed)

National Academic Pathology Committee (NAPC)

Mr Ben Durham Department of Science and Technology

Non-executive Board Member 1 November 2014

Dr Tim Tucker Public Nominee: Research Non-executive Board Member 1 January 2013 Research Committee

Mr Michael Manning

Western Cape Province Non-executive Board Member 30 April 2015 (re-appointed)

Information Technology Governance Committee

Mr Andre Venter National Department of Health

Non-executive Board Member 2 March 2015 (re-appointed)

Finance Committee

Dr Patrick Moonasar

National Department of Health

Non-executive Board Members

1 February 2015

Mr Lunga Ntshinga Public Nominee: Finance Non-executive Board Member 1 January 2013 Audit and Risk Committee

Mr Thamsanqa Stander

Free State Province Non-executive Board Member 1 February 2015 Governance, Social and Ethics Committee

Mr Stanley Harvey Northern Cape Province Non-executive Board Member 1 February 2015 Service Committee

Dr Jim McCulloch Gauteng Province Non-executive Board Member 1 February 2015

Ms Ntombi Mapukata

Eastern Cape Province Non-executive Board Member 1 February 2015

Mr Michael Shingange

Organised Labour Non-executive Board Member 1 February 2015

Ms Joyce Mogale Interim NHLS CEO Executive Board Member 1 December 2014 Interim CEO

Seven positions were still vacant.

Changes in Board membershipUpon the expiry of a member’s term of office on the Board, the member may be eligible for re-appointment for a further term of office, provided that no committee member may be appointed for more than two consecutive terms to serve in the same committee.

Name Constituency/representingDate of appointment/ *reappointment

Date of resignation/ *retirement

Prof. Algonda Perez Chairperson of the Board – Representing Minister of Health

1 January 2013 1 April 2015

Dr Fazel Randera Vice-Chairperson – Representing Minister of Health

1 January 2013 11 May 2015

Dr Frew Benson National Department of Health 1 January 2013 31 March 2015

Mr Andre Venter National Department of Health January 2012 *reappointed 2 March 2015

Mr Michael Manning Western Cape Province 1 May 2012 *reappointed 30 April 2015

Dr David Motau Free State Province 1 May 2013 31 August 2014

Dr Thokozani Mhlongo KwaZulu-Natal Province 1 January 2012 *reappointed 2 February 2015 representing Mpumalanga Province

Dr Tlou Semenya Mpumalanga Province April 2012 31 March 2015

Prof. Eric Buch Council for Higher Education: University of Technology

May 2012 * reappointed 30 April 2015

Adv. Lufuno Nevondwe Public Nominee: Legal 1 January 2013 31 March 2015

Board composition (continued)


Name Constituency/representingDate of appointment/ *reappointment

Date of resignation/ *retirement

Dr Herbert Basetse Department of Science and Technology

May 2012 1 November 2014

Ms Suraya Jawoodeen Organised Labour May 2012 8 May 2014

Dr Lucky Mapefane North West Province May 2012 31 January 2015

Prof. Koleka Mlisana Council for Higher Education: Universities

1 May 2012 1 May 2015

Mr Sagie Pillay NHLS CEO December 2008 31 October 2014

Committees of the BoardThe Board, as the Accounting Authority, takes full ownership of the overall decision-making across the entity to ensure it retains proper direction and control of the NHLS.

The Board has delegated certain powers to the CEO and to management, but has reserved certain powers exclusively for the Board and these are set out in the Board Charter.

The Board has also appointed several committees to help it meet these responsibilities. Delegating various functions and authorities to committees and management, however, does not absolve the Board and its directors of their duties and responsibilities.

The Board has delegated certain functions without abdicating its own responsibilities to the following committees:

• Audit and Risk Committee

• Remuneration and Human Resources Committee

• Service Committee

• Information Technology Governance Committee

• Governance, Social and Ethics Committee (ad hoc)

• Finance Committee

• National Academic and Pathology Committee

• Research Committee

• Executive Committee.

The various committees of the Board each have formal Terms of Reference (ToR) embodied into a charter which further defines their mandates, roles and responsibilities. The charters are reviewed and updated on an annual basis where required.

The NHLS Board is governed by the NHLS Act and the NHLS Rules made in terms of the Act supra. The Board also complies with the Public Finance Management Act, No. 1 of 1999 (PFMA). In addition, the NHLS Board also subscribes to the terms of the King Code of Governance Principles and the King Report on Governance (King III).

In the period under review, the Board complied with its ToR as detailed in the NHLS Rules. In addition, the Board has provided strategic direction to the organisation as required by King III.

Minutes of meetings were made and entered in the minute book as a true and accurate representation of what transpired at the meetings.

The majority of the Board members attended the meetings for the year. Board resolutions were captured in the Board Resolution File.

Board meeting attendanceThe NHLS Board is required to hold at least four meetings per year, and during the reporting period, the Board convened 19 times (including special meetings). Only members of the Board voted at its meetings and all its decisions were arrived at by consensus. In each of those meetings, the quorum of the meeting was met, and members were given the opportunity to declare any personal conflict of interest in order to be recused from the deliberation of the matter in which a member was involved.

The table that follows and accompanying legend illustrates meeting attendance of Board members during the financial year.


(continued)4Chapter

Mee

ting

date

Nam

es03

Apr

20

14

29 M

ay

2014

16

Jul

2014

29 Ju

l 20

14

14 A

ug

2014

Te

lcon

25 A

ug

2014

Te

lcon

15 S

ep

2014

Te

lcon

18

Sept

20

14

Telc

on

22

Sept

20

14

23

Sept

20

14

06 O

ct

2014

Te

lcon

30 O

ct

2014

06 N

ov

2014

24 N

ov

2014

(s

peci

al)

27 N

ov

2014

(s

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3 D

ec

2014

16 F

eb

2015

26

Feb

20

15

27 F

eb

2015

Prof

. Gon

da P

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Dr F

azel

Ran

dera

Dr T

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M

hlon

go

N

/MN

/MN

/M

Mr L

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Nts

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a

Dr F

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Ben

son

Adv.

Lufu

no

Nev

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Dr T

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Ms S

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a Ja

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N

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/MN

/MN

/MN

/MN

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/MN

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/MN

/MN

/MN

/MN

/MN

/MN

/MN

/MN

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Dr D

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N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

Dr L

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N

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/MN

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Mr A

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Mr M

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Prof

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Dr T

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Prof

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Dr H

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Mr B

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/MN

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/MN

/MN

/MN

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/MN

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Mr S

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RR

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/MN

/MN

/MN

/MN

/MN

/M

Ms J

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Mog

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N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

N/M

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Financial resultsThe 2015 operating results and state of affairs of the entity are set out in the Group Annual Financial Statements and do not in our opinion require any further comment.

Going concernThe NHLS was established and is managed according to the provisions of the NHLS Act, the NHLS Rules gazetted in July 2007, and the PFMA.

The NHLS is the main provider of clinical support services to the national, provincial and local Departments of Health (DoH) through its country-wide network of quality-assured diagnostic laboratories. It also provides surveillance support for communicable diseases, occupational health and cancer, and thus endeavours to align its strategy with both the DoH priorities and the national and regional burden of disease.

Given its significance in the public and private health sectors, and its ability to deliver affordable pathology health services to the South African public, the DoH has neither the intention, nor the need to liquidate or curtail materially the scale of the NHLS.

Management has considered a wide range of factors in determining whether the organisation is a going concern. These factors include its current and expected performance as a Schedule 3A public entity, its restructuring plans and the likelihood of future government funding.

Despite continued difficulty in receiving regular payments from the provinces for services rendered, it is anticipated that disputes, especially with the Gauteng and KwaZulu-Natal (KZN) Departments of Health, will be resolved shortly.

The Group Annual Financial Statements have therefore been prepared on the basis of accounting policies applicable to a going concern. In line with the applicable accounting standards, the basis presumes that funds will be available to finance future operations, and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. This specifically assumes that the debt owed by the provinces will be settled timeously.

Outstanding debt owed by provinces Collection of money from the provincial Departments of Health has been a problem for many years, and is worsening. A sharp increase in the day’s sales outstanding can mainly be attributed to the R4.842 billion combined debt owed by the KZN DoH (826 days) and Gauteng DoH (335 days).

The total outstanding debt owed by these two provinces constitutes 89% of trade receivables. Negotiations with the KZN DoH are ongoing to settle the overdue amounts owed.

Maintenance of financial control systems The Board acknowledges that it is ultimately responsible for the internal system of financial control established by the NHLS, and places considerable importance on maintaining a strong control environment.

Subsequent eventsThe Accounting Authority and management are currently engaging with partners in government to resolve and finalise the long-outstanding billing disputes with the KZN DoH and Gauteng DoH. However, the outcome of these negotiations remains uncertain. These circumstances have been dealt with in the Group Annual Financial Statements.

R679 million has been shifted from the DoH provincial budgets to directly fund the NICD and NIOH for the 2015/16 financial year. At the approval date of this report, the institutes have already received the first quarterly tranche of R170 million from the DoH.

The Accounting Authority is not aware of any other matter or circumstance arising since the end of the financial year, not otherwise dealt with in this report or the Group Annual Financial Statements, which may have a significant impact on the operations of the NHLS.


(continued)4Chapter

Stated capitalThere were no changes in the authorised or issued share capital during the year under review.

Borrowing limitationsIn terms of the NHLS Rules, the Board may exercise all the powers of the economic entity to borrow money, in accordance with the PFMA, as it considers appropriate. During the current financial year, the entity did not borrow funds to finance operations.

Non-compliance with legal and regulatory requirements

NHLS Act, Act No. 37 of 2000

At 31 March 2015, the ownership of land and buildings had not been transferred into the name of the NHLS as required by the Act. However, the Accounting Authority has taken all appropriate measures to ensure that the transfer process is effected by the Department of Public Works.

The vacancies on the NHLS Board are currently being filled by the Minister of Health, as regulated by the Act.

Treasury Regulations

Treasury Regulation 8.2.3 stipulates that payments due to creditors should be paid within 30 days from receipt of invoice. Efforts to comply with this regulation have been hampered by poor debt collection brought about by customers’ inability to honour their debts. The NHLS continues to engage with its customers to ensure that it meets its own financial obligations.

Key performance indicator definitionsThe NHLS set itself challenging targets and on the whole came close to matching these ,although the turnaround time still remains slower than desirable, creditors' payment days from NHLS remain low and SANAS accreditation also remains low.

Key performance indicator UOM Definition Report name Source Frequency

CSI–Service % % Score from Customer Satisfaction Survey

Customer Satisfaction Survey Report

Marketing Department

Annual

TAT–TB Microscopy % % of Tests completed within 40 hours in the laboratory from date of 1st registration to date of results being made available

Downloaded Excel Report

CDW Monthly

TAT–CD4 % % of Tests completed within 40 hours in the laboratory from date of 1st registration to date of results being made available


CDW Monthly

TAT–Viral Load % % of Tests completed within 96 hours in the laboratory from date of 1st registration to date of results being made available


CDW Monthly

TAT–HIV PCR % % of Tests completed within 96 hours in the laboratory from date of 1st registration to date of results being made available


CDW Monthly

TAT–Cervical Smear % % of Tests completed within 312 hours in the laboratory from date of 1st registration to date of results being made available


CDW Monthly

Proficiency Testing– Excl Paracytology + Morphology

% This tests accuracy of test results. % Score from independent quality check. EXCLUDING Paracytology + Morphology

Excel worksheet % score from National QA Department

Monthly in arrears

Proficiency Testing– Paracytology + Morphology

% This tests accuracy of test results. % Score from independent quality check. ONLY for Paracytology + Morphology

Excel worksheet % score from National QA Department

Monthly in arrears


Key performance indicator UOM Definition Report name Source Frequency

Turnover Rm Rm Invoiced value of sales as per policy Monthly Income Statement

Financial Accountant

Monthly

Overheads Rm Rm All Direct and Indirect Overheads– Direct Labour, Training Labour, Other Direct Expenses, Indirect Labour, Depreciation, Other Indirect Expenses)

Monthly Income Statement


Monthly

Material % of Turnover

% (YTD Materials) / (YTD Turnover) * 100 Monthly Income Statement


Monthly

Cash Received Rm Rm Cash Received from State Debtors Monthly Cash Flow Statement


Monthly

Creditor Days Days (Month-end Total Trade Creditors) /(Total Purchases Anualised) * 365

Excel worksheet Accounts Payables Manager

Monthly

Debtor Days Days (Month-end Total Trade Debtors) / [(YTD Turnover) / (Months in YTD) * 12] * 365

Summarised Debtors Report - Excel

Call Centre Manager

Monthly

ESI % % Score from Employee Satisfaction Survey

Employee Satisfaction Survey Report

HR Department Every Alternative Year

Staff Turnover Rate % [(No. of staff exiting NHLS YTD) * 12 / (No. of months in YTD)] / (Total No. of staff in payroll at month end) * 100. ONLY Permanent staff.

Excel worksheet HR Department Monthly

Vacancy Rate % [(No. of Staff vacancies YTD) *12 / (No. of months in YTD)] / (Total No. of budgeted staff at month end) * 100. ONLY Permanent staff.


EE % (Achievements) / (Planned achievements in EE Plan) * 100


Training % (Planned training courses attended / Total planned training courses for the year )*100


B-BBEE Procurement % (YTD Procurement from B-BBEE suppliers weighted as per formula) / (Total procurement) * 100. ONLY for Top 25 suppliers

Excel worksheet Procurement Manager

Monthly

B-BBEE Level Level Score from SANAS-Accredited B-BBEE Accreditation agency

B-BBEE Certificate HR Department Annual

Registrar Pass rate % (No. of registrars passing) / (Total No. of registrars writing exams) * 100

Excel worksheet AAQA Exec. Mngr.

Annual

SANAS Accreditation –Academic Laboratories including Institutes

% (No. of Academic Labs SANAS accreditation) / (Total No. of Academic Laboratories Planned for accreditation) * 100


Annual

SANAS Accreditation –Regional Laboratories

% (No. of Regional Labs SANAS accreditation) / (Total No. of Regional Laboratories Planned for Accreditation) * 100


Annual

Research Reports submitted to influence policy

No. No. of Peer-Reviewed Research Publications submitted to influence Policy


Annual

Research Reports translated into service

No. No. of Peer-Reviewed Research Publications translated into Service


Annual

Key performance indicator definitions (continued)


(continued)4Chapter

Key performance indicators

Vision Mission

100%

To be a leader in Pathology; services, surveillance and academic health sciences

To provide Quality, Affordable and Sustainable health laboratory services, train for health science education and undertake health research

Partner Perspective 40% Full year 2014/15

Strategic Objective

Strategic Driver

Key performance indicator

2012 Actual

2013 Actual

2014 Actual

2015 Target

2015 Weight

2014/15 Target

2014/15 Actual

Comments

C1. Improve Partner Satisfaction

1,2,6,7,8,9 CSI–Service 70% 78% 78% 76% 5.0% 76% n/a Survey was not done due to cash constraint.

C2. Improve Total Turnaround Times

2,3,4

TAT–TB Microscopy

94% 91% 92% 90% 5.0% 90% 92% Target achieved.

TAT–CD4 85% 87% 90% 90% 5.0% 90% 89% Target not achieved –Only one percent below the target due to shortage of staff in the laboratories.

TAT–Viral Load 87% 79% 86% 90% 5.0% 90% 81% Target not achieved due to shortage of staff in the laboratories.

TAT–HIV PCR 86% 76% 82% 90% 5.0% 90% 70% Target not achieved– Due to these tests being referred to centralised sites. The newly appointed logistics manager is reviewing the routes to improve efficiency.

TAT–Cervical Smear

57% 54% 63% 75% 5.0% 75% 57% Target not achieved–Due to these tests being referred to centralised sites. The newly appointed logistics manager is reviewing the routes to improve efficiency.

C3. Improve Quality of Tests

3

Proficiency Testing - Excl Paracytology + Morphology

93% 92% 90% 95% 5.0% 95% 91% Target not achieved due to shortage of staff in the laboratories.

Proficiency Testing - Paracytology + Morphology

88% 89% 98% 75% 5.0% 75% 95% Target achieved.


Strategic Objective

Strategic Driver


2012 Actual

2013 Actual

2014 Actual

2015 Target

2015 Weight

2014/15 Target

2014/15 Actual

Comments

Financial Perspective 10% Full year 2014/15

F1. Achieve budgeted Turnover

1 Turnover 3,947 4,551 5,208 5,036 0.0% 5,036 5,600 Target achieved.

F2. Spend Overheads as per budget

2, 10 Overheads 2,503 3,850 2,934 3,442 2.5% 3,442 3,690 Target not achieved– Due to debt impairment.

F3. Spend Materials as per budget

2 Material % of Sales

23.0% 25.7% 29.9% 30.5% 2.5% 30.5% 31.5% Target not achieved– Due to more expensive tests being conducted e.g. GenXpert & Viral Load.

F4. Minimum Cash Collection

1 Cash Received 3,547 4,645 4,597 5,060 0.0% 5,060 4,863 Target not achieved– Due to poor payments from provinces.

F5. Improve payment to creditors

1 Creditor Days 109 61 113 40 0.0% 40 125 Target not achieved– Due to poor payments from provinces.

F6. Improve collections from debtors

1 Debtors Days 160 185 277 45 5.0% 45 335 Target not achieved– Due to poor payments from provinces.

Strategic Objective

Strategic Driver


2012 Actual

2013 Actual

2014 Actual

2015 Target

2015 Weight

2014/15 Target

2014/15 Actual

Comments

Employee Perspective 10% Full year 2014/15

P1. Improve Employee Satisfaction

5 ESI - 2.62 3.30 2.90 5.0% 2.90 n/a Survey was not done due to cash constraint.

P2. Maintain low staff turnover rate

5 Staff Turnover Rate

9.8% 9.4% 8.0% 10.0% 5.0% 10% 9% Target achieved.

P3. Maintain low vacancy rate

5 Vacancy Rate 6.8% 4.7% 11.0% 5.0% 5.0% 5.0% 22% Target not achieved –Positions were put on hold resulting from unavailable cash resources. Only critical positions are filled.

P4. Improve EE profile

5 EE 83.3% 88.9% 94.0% 60.0% 5.0% 60% 82% Target achieved.

P5 Improve B-BBEE procurement

5 B-BBEE Procurement

56.0% 50.1% 60.0% 55.0% 2.5% 55% 57% Target achieved.

P6. Improve B-BBEE status

5 B-BBEE Level 5 4 4 3 2.5% 3 4 Target not Achieved –Delay in filling of vacancies and slow payments to suppliers negatively impacted on the rating due to poor cash resources.

P7. Maintain high registrar pass rate

5 Registrar Pass rate

94.0% 74.5% 75.0% 60.0% 5.0% 60% 55% "Target Not Achieved– The following reasons contributed to the poor performance: Lack of continuous assessment programme. Lack of curriculum standardisation. National challenges in terms of pathology colleges. Perceived reluctance by the medical universities to take responsibility for registrars. These matters have been identified and are being addressed."

Key performance indicators (continued)


(continued)4Chapter

Strategic Objective

Strategic Driver


2012 Actual

2013 Actual

2014 Actual

2015 Target

2015 Weight

2014/15 Target

2014/15 Actual

Comments

Internal Perspective 20% Full year 2014/15

11. Achieve Laboratory accreditation

3

SANAS Accreditation –Academic Laboratory

83% 88% 88% 100% 5.0% 100% 91% Target not achieved– Due to positions put on hold as a result of cash constrains.

SANAS Accreditation –Regional Laboratory

24% 25% 28% 100% 5.0% 100% 55% Target not achieved– Due to positions put on hold as a result of cash constrains.

12. Improve translation of research

7

Research Reports submitted to influence policy

23 45 4 5 5.0% 5 4 Target not achieved–Due to universities delayed in submitting the relevant evidence to support the inputs

Research Reports translated into service

35 52 9 5 5.0% 5 12 Target achieved.

Key performance indicators (continued)


Report of the Audit and Risk Committee

We are pleased to present our report for the financial year ended 31 March 2015.

Audit and Risk Committee members and attendanceThe Audit and Risk Committee consists of the members listed hereunder and should meet four times per annum as per its approved ToR. During the current year, five meetings were scheduled and held. The committee confirms that it discharged its responsibilities in terms of the NHLS Audit and Risk Committee Charter.

Names

Meeting date

22 May 2014 24 Jul 2014 23 Oct 2014 27 Jan 2015 19 Mar 2015

Mr Lunga Ntshinga

Adv. Lufuno Nevondwe N/M

Mr Malcom Brown

Mr Goolam Manack

Mr Andre Venter N/M

Legend: = Present = Absent with apology N/M = Not a member

There were no retirements or resignations from the committee during the financial year under review.

The composition of the committee is aligned with Section 77(a) of the PFMA and Treasury Regulation 27.1.

Audit and Risk Committee responsibilityThe committee reports that appropriate formal ToR have been adopted in its Charter, in line with the requirements of Section 55(1)(a) of the PFMA and Treasury Regulation 27.1. The committee further reports that it has conducted its affairs in compliance with this Charter.

The effectiveness of internal controlThe committee has reviewed various reports prepared by the internal and external auditors, on adequacy and effectiveness of internal control systems as well as on the Group Annual Financial Statements. The committee is satisfied that internal control systems and governance practices have been put in place.

The committee is satisfied with the content and quality of monthly and quarterly reports prepared and issued by the Accounting Authority of the economic entity during the year under review. The responsibility of risk management resides with management at all levels. Risk management is embedded throughout the organisation, from members of the Board to all employees. The approach followed by the NHLS is to ensure that significant risks are identified and managed.

The NHLS has a dedicated risk officer to co-ordinate the implementation of its risk management philosophy and strategy as approved by the Board. The Board continues to discharge this responsibility through the Audit and Risk Committee and ensures that risk management is a standing item for discussion at each scheduled Board meeting.

Evaluation of Group Annual Financial StatementsThe committee has:

• Reviewed and discussed the audited Group Annual Financial Statements to be included in the Annual Report, with SizweNtsalubaGobodo (SNG) and the Accounting Authority

• Reviewed SNG’s management report and management’s response thereto

• Reviewed changes in accounting policies and practices

• Reviewed the entity’s compliance with legal and regulatory provisions

• Reviewed significant adjustments resulting from the audit.


(continued)4Chapter

The committee concurs with and accepts the external auditors’ report on the Group Annual Financial Statements, and is of the opinion that the audited Group Annual Financial Statements should be accepted.

Competency of the Finance DepartmentIn compliance with King III’s governance principle 3.6, the committee is satisfied that there are sufficient expertise, resources and experience within the NHLS finance function.

Internal auditThe committee is satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the economic entity and its audits. The committee has reviewed internal audit reports and ensured that reported items are addressed effectively.

ConclusionThe committee agrees that the adoption of the going-concern premise is appropriate in preparing the Group Annual Financial Statements for the reporting period, provided that the non-payment of provincial debt in respect of services rendered is addressed. The committee has therefore recommended the adoption of the Group Annual Financial Statements by the NHLS Accounting Authority at its meeting held on 31 July 2015.

Lunga NtshingaChairperson: Audit and Risk Committee


Sustainability Report

Publication and contact informationThis report is available on the National Health Laboratory’s website at http://www.nhls.ac.za

Country of incorporation and domicile South Africa

Legal form of entity Schedule 3A public entity

Nature of business and principal activities Healthcare, research and training

Registered office 1 Modderfontein Road Rietfontein Sandringham Johannesburg, 2000

Postal address Private Bag x8 Johannesburg 2131

Independent auditors SizweNtsalubaGobodo Inc Chartered Accountants (SA) (SNG)

Preparer The 2014 Global Reporting Initiative Sustainability Report was internally compiled by: Ben Wikner Finance Reporting Accountant

Published 31 July 2015


(continued)4Chapter

GRI – Content Index – GRI Application Level C

Profile Disclosure Description Page

1. Strategy and Analysis

1.1 Statement from the most senior decision-maker of the organisation. 138-140

2. Organisational Profile

2.1 Name of the organisation. 141-149

2.2 Primary brands, products and/or services. 141-149

2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries, and joint ventures.

141-149

2.4 Location of organisation’s headquarters. 141-149

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

141-149

2.6 Nature of ownership and legal form. 141-149

2.7 Markets served (including geographic breakdown, sectors served, and types of customers/beneficiaries). 141-149

2.8 Scale of the reporting organisation. 141-149

2.8 Significant changes during the reporting period regarding size, structure, or ownership. 141-149

2.10 Awards received in the reporting period. 141-149

3. Report Parameters

3.1 Reporting period (e.g., fiscal/calendar year) for information provided. 138

3.2 Date of most recent previous report (if any). 138

3.3 Reporting cycle (annual, biennial, etc.) 138

3.4 Contact point for questions regarding the report or its contents. 138

3.5 Process for defining report content. 138

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance.

138

3.7 State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).

138

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organisations.

138

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and other entities that can significantly affect comparability from period to period and/or between organisations.

138

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report.

138

3.12 Table identifying the location of the Standard Disclosures in the report. 136

4. Governance, Commitments and Engagements

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

142

4.2 Indicate whether the Chair of the highest governance body is also an executive officer. 143

4.3 For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members.

142

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

143-149

4.14 List of stakeholder groups engaged by the organisation. 149

4.15 Basis for identification and selection of stakeholders with whom to engage. 149

GRI 3.12


Standard disclosures part II: Performance indicators

Report fully on 10 core and additional performance indicators – at least 1 from each dimension (economic, environmental, social)

GRI Indicator No. Description Page

Economic Dimension

Economic performance

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

150

EC4 Significant financial assistance received from government. 150-151

Indirect economic impacts

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

151-152

Environmental

Materials

EN1 Materials used by weight or volume. 152

EN5 Energy saved due to conservation and efficiency improvements. 153

Social: Labour Practices and Decent Work

Occupational health and safety

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.

153

Training and education

LA10 Average hours of training per year per employee by employee category. 153-154

LA12 Percentage of employees receiving regular performance and career development reviews. 155

Diversity and equal opportunity

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.

156-157

Product and service labelling

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. 158

Social: Society

SO08 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations.

158-159


(continued)4Chapter

IntroductionThe NHLS is proud to present its third Annual Sustainability Report to its stakeholders, which covers the period 1 April 2014–31 March 2015. This report follows on from the previous report published for the 12-month period ended 31 March 2014.

In partnership with the provincial and national Departments of Health, the NHLS wishes to report credible economic, social and environmental performance information to enhance responsible leadership and decision-making.

The report was prepared using the Global Reporting Initiative’s (GRI) Reporting Guidelines, which offer a series of principals and indicators that enable a company to measure and track its performance. The scope of this report was determined by GRI’s Application Level C requirements. NHLS staff collected, compiled and wrote the report. All information contained in this report has been reviewed and verified by management.

GRI is the most widely accepted sustainability reporting framework that promotes standardisation and transparency. The NHLS views sustainability reporting as a valuable tool for its customers, employees and other stakeholders to evaluate the performance and commitment of the NHLS to truly sustainable practices, which should be a competitive advantage.

The global outbreak of the Ebola epidemic during the reporting period necessitated the inclusion of an additional GRI performance indicator (EC4 – significant financial assistance received from government) which highlights the crucial interventions made by the South African Government in helping the NHLS combat the virus in West Africa. It also continues to highlight the significant contributions the NHLS makes not only in South Africa, but also on the continent as a whole.

In addition to this change, 2013/14 comparative information with respect to GRI performance indicator EC1 has been restated. The reason for this restatement was due to the inaccuracy of the information presented in the system-generated report from the prior year.

Due to the financial constraints experienced by the NHLS over the reporting period as well as the austerity measures that were implemented by management, the planned automation of sustainability reporting could not take place. The lack of sufficient funds also had a direct impact on the reporting of two indicators, EN5 and SO8. These indicators were deemed to be non-critical with respect to current operational requirements. Further comments regarding the scope of reporting on page 149.

The report incorporates data received from all nine provinces and is sourced from NHLS headquarters in Johannesburg, its regional offices around the country and over 260 laboratories countrywide. Data is also received from its specialist services and its sole subsidiary, the SAVP.

The NHLS welcomes stakeholder feedback and suggestions for improvement. Please direct all feedback or questions about this report to [email protected]

Strategy and analysis

As the leading pathology service provider in South Africa, the NHLS finds itself at the forefront of a healthcare industry which faces an era of change and transition. Following the global trend of rising populations, scarce resources and financial limitations, governments and healthcare providers are rapidly required to develop new approaches to current and future trends, risks and opportunities in healthcare.

Achievements and advances in health and healthcare are a major success story of the past two centuries. People live longer and more healthily. Life expectancy has improved worldwide in the past 200 years through a better understanding of health and disease, coupled with rising material prosperity and social stability.

The impact of population growth, wealth and urbanisation is being felt throughout South Africa. An emerging middle class has dramatically increased demand for health services, while at the same time the South African Government brings social services to remote and underserved populations, often for the first time.

South Africa’s pathology services, led by the NHLS, are coming under increasing pressure from rising costs, leading many within the health service to re-assess the value of sustainability within the health system. At the NHLS, we believe in doing the right thing for the economy, the communities we serve and the environment in which we work and live. Our research questions are carefully developed to deliver outcomes that drive innovation, find new diagnostic solutions, which in turn improve health services and finally health outcomes. Together with our partners in health, the NHLS is finding

GRI 3.1 to

GRI 3.11

GRI 1.1


better, cheaper and faster ways of delivering its mandate of diagnostic laboratory services. The mandate to produce the next generation of pathologists, technologists, scientists and technicians makes the above possible. The NHLS is the only organisation in the country that trains pathologists.

Highlights

Our fight against disease

The NHLS continues to lead the fight against the scourges of HIV/AIDS, TB, cancer and Ebola.

The NHLS is playing its part in the international fight against Ebola virus disease on a number of fronts – including diagnostic laboratory support in West Africa – in a multifaceted approach to ensure its citizens and visitors remain safe.

The NHLS established a diagnostic laboratory in Sierra Leone since August 2014 that assists with the diagnosis of Ebola. The laboratory was staffed by the NICD, with teams rotating every five weeks. This laboratory has since been handed over to our local counterparts.

In answering the Minister of Health’s call, the NHLS continues to employ GeneXpert Technology to combat TB in our communities. TB is one of the deadliest public health threats today, and the NHLS continues to devote all available resources to eradicating it.

Minister Aaron Motsoaledi addressed community members and said “The principles of our democracy are enshrined in our Constitution, which among other things enjoins the government to provide good healthcare to all citizens, thereby ensuring that citizens live long and healthy lives, even in the face of epidemics such as those caused by TB and HIV/AIDS.”

Research and development to improve sustainable healthcare systems

On the research and development front, the NHLS continued to perform ground-breaking work, and as a result it can significantly reposition itself to be more responsive to the demands placed on it by the burden of disease and the continuous quest for excellence towards customers, through attention to products and services.

The Pathology Research and Development (PathReD) Congress is an NHLS initiative to enforce the commitment of the organisation; promote science, research, teaching, and training; and strengthen the service platform. Through the PathReD 2015 Congress, the NHLS commenced the process of promoting sustainable collaborative initiatives across South Africa and in Africa.

Researchers shared and exchanged ideas and promoted sustainable collaborative initiatives. The congress demonstrated Africa’s research capacity and highlighted areas that required extensive support to sustain and improve health management systems and diagnostic technology. Furthermore, it provided a platform to further effect the recommendations of the 2013 event, allowing development of a sustainable research strategy and promoting the existing research capacity.

The second international African Society for Laboratory Medicine (ASLM) Conference was hosted in Cape Town from 30 November–4 December 2014. This biennial conference is a platform for the African laboratory community to share best practices, acquire knowledge and debate innovative approaches to tackling major health challenges posed by HIV, TB, malaria, flu, neglected tropical diseases and emerging pathogens. The conference was a success and a good platform to build the NHLS brand. It afforded the organisation an opportunity to interact with stakeholders and potential customers.

Greater financial stability and affordability of services

The Minister of Finance, Nhlanhla Nene, delivered the budget vote speech on 25 February 2015. In his address he mentioned that R1.5 billion will be shifted from provincial budgets to the DoH to enable the NICD to be directly funded. This will be offset by lower tariffs for services provided by the NHLS.

The NHLS has entered into a collaboration with Roche Diagnostics and Abbott Molecular in a landmark programme to decrease the price of HIV viral load testing. The new pricing structure is a massive step forward for the South African public health system and will benefit the 2.5 million South Africans currently on anti-retroviral treatment, as well as the millions more receiving anti-retroviral therapy across sub-Saharan Africa and beyond. South Africa is the largest purchaser of viral load tests in the world, and the NHLS provides the largest viral load programme on the continent. These exciting new price negotiations and benefits will see dramatic improvements to the healthcare agenda in South Africa, and is a huge victory for both the NHLS and the DoH.


(continued)4Chapter

Lowlights

The need for the financial sustainability of the NHLS has been brought into focus through the current fee-for-service re-imbursement model which has proven to be complex and unsustainable. A simpler, shared risk re-imbursement model is being explored. However, in the interim, critical projects to enhance healthcare have been shelved due to lack of cash resources. The continued tardiness in payment by the provinces for the services the NHLS renders threatens to undo the great strides that the organisation continues to make in the field of pathology.

A knock-on effect is felt in the attempt to fill critical vacancies, which has led to the increasing work burden being managed by already overstretched laboratory staff.

Despite these challenges, the NHLS’ focus continues to be on improved patient care through quality service, affordability and cost reduction.

The way forward

The Minister of Health’s focus is on improving services at the primary health care (PHC) level in order to prevent diseases before they occur. The NHLS will support this endeavour in projects like point of care testing as well Operation Phakisa. The NHLS has already started to prepare for the rollout of National Health Insurance (NHI) by supporting the pilot sites chosen by the DoH.

The NHLS will play a key role in the achievement of the National Development Plan (NDP) for health by 2030, which states:

“We envisage that in 2030, South Africa has a life expectancy rate of at least 70 years for men and women. The generation of under 20s is largely free of HIV. The quadruple burden of disease has been radically reduced compared to the two previous decades, with an infant mortality rate of less than 20 deaths per thousand live births and an under-five mortality rate of less than 30 per thousand. There has been an adequate shift in equity, efficiency, effectiveness and quality of healthcare provision. Universal coverage is available. The risks by social determinants of disease and adverse ecological factors have been reduced significantly.”

The shift from healthcare to health systems aims to answer society’s calls for better health services while easing the overwhelming demand for care. This is a part of our sustainability approach in ensuring that we continue to serve and benefit South Africans. I hope this report gives you a sense of the progress we are making in this regard.

Joyce Mogale

Interim Chief Executive Officer


Corporate Governance

Organisational profile

Business and operations

The NHLS is a national public entity established in terms of the National Health Laboratory Service Act, No. 37 of 2000, to provide quality, affordable and sustainable health laboratory and related public health services.

The NHLS is the main provider of clinical support services to the national, provincial and local DoH through its country-wide network of quality-assured diagnostic laboratories. The NHLS also provides surveillance support for communicable diseases, occupational health and cancer, and thus the endeavour to align its strategy with both the DoH priorities and the national and regional burden of disease.

The NHLS is managed according to the provisions of the NHLS Act, the NHLS Rules, and the PFMA. It is a state-owned organisation governed by a Board and a Chief Executive Officer. The NHLS has a clear organisational structure consisting of a head office in Sandringham, Johannesburg, six areas (Mpumalanga and Limpopo, KwaZulu-Natal, Eastern Cape, Western and Northern Cape, Free State and North West, Gauteng) and three Institutes (NICD, NIOH and the NCR). Each area is headed by a business area manager who reports directly to the Chief Executive Officer. The creation of six regions is designed to ensure that the NHLS plans, agrees budgets and monitors laboratory services jointly with provincial health partners to ensure that laboratory services are seen and accepted as part of the public health delivery system. Point of care testing (PoCT) is increasingly being used to speed up diagnosis within health facilities.

The NHLS delivers services throughout the public sector from PHC level to tertiary/quaternary hospitals. The level of complexity and sophistication of services increases from the peripheral laboratories to the central urban laboratories (with specialised surveillance infrastructure existing at isolated sites). The legacy of apartheid has left the health laboratory services in South Africa concentrated mainly in Gauteng, KwaZulu-Natal and the Western Cape, in line with the spread of the previously advantaged institutions of higher learning.

Public sector laboratories are situated within the health facilities owned by the DoH, and in some cases universities. Therefore, the condition of the infrastructure depends on the quality of the health facility in which the laboratory is located. Great disparities still exist between urban and rural facilities. Some central, urban facilities are currently undergoing upgrades through the Hospital Revitalisation Programme. However, many remote rural facilities still require access to basic services.

The NHLS employs 6 804 people and reports net revenues of R5.750 billion for the year ended 31 March 2015. It offers 1 174 tests which produced 85 million test results in 2014/15. Priority healthcare tests constitute 7% of the total number of tests performed.

SAVP is a wholly owned subsidiary of the NHLS and provides the following services:

• Manufactures anti-venom which includes:

- Polyvalent antivenom

- Echis antivenom

- Boomslang antivenom

- Spider antivenom

- Scorpion antivenom

• Safety testing for pharmaceutical companies

• Research on routine products authorised via the Animal Ethics Committee involving animals

• Preparation of horse and sheep serum

• Preparation and sampling of horse blood.

GRI 2.1 to

GRI 2.10


(continued)4Chapter

Significant changes in leadership took place during the review period. The terms of office of a number of non-executive members of the Board expired, the Chairperson of the Board resigned. Details of these changes as well as the appointments of new Board members are disclosed under the Report of the Accounting Authority. Furthermore, the CEO’s extended term of office came to an end. An interim CEO was appointed to ensure the financial stability of the organisation. In addition to this appointment, the CFO was appointed at the end of the reporting period following the resignation of the interim CFO.

Despite these changes in staff and under difficult financial circumstances, the NHLS continued to perform admirably within its spheres of influence. This is evidenced by the fact that students ranked 4th and 7th in the Health Sciences and Sciences Categories respectively, in the 2015 Universum Most Attractive Employer Awards 2014/15. The NHLS continues to strive towards becoming an employer of choice in the market.

Governance, commitment and stakeholder engagement

Introduction

The NHLS ensures that its processes and practices are reviewed on an ongoing basis to ensure compliance with legal obligations, use of funds in an economic, efficient and effective manner and adherence to good corporate governance practices. Processes and practices are characterised by reporting on economic, environmental and social responsibilities. Such reporting is underpinned by the principles of openness, integrity and accountability and is an inclusive approach that recognises the importance of all stakeholders with respect to the viability and sustainability of the NHLS.

Corporate governance is concerned with structures and processes for decision-making, accountability, control and behaviour beginning at the top level of the organisation. It sets the tone for behaviour down to the lowest levels.

Legislative and governance framework

The NHLS is required to comply with, inter alia, the following:

• The NHLS Act No. 37 of 2000

• General rules in terms of Section 27 of the NHLS Act

• The National Health Act, No. 61 of 2003

• The Companies Act, No. 71 of 2008

• Protocol on Good Corporate Governance in the Public Sector

• The Public Finance Management Act, No. 1 of 1999 as amended PFMA

• Treasury Regulations issued in terms of the PFMA

• The Preferential Procurement Framework Act, No. 5 of 2000

• Relevant legislation applicable to the health sector

• King III code on good corporate governance

• The Constitution of the Republic of South Africa, Act No.108 of 1996.

Role and function of the Accounting Authority

The Board is the Accounting Authority of the NHLS in terms of the NHLS Act and the PFMA.

The Board is scheduled to meet on a quarterly basis and is responsible for providing strategic direction and leadership, ensuring good corporate governance and ethics, determining policy, agreeing on performance criteria and delegating the detailed planning and implementation of policy to the Executive Committee (EXCO).

The Board should comprise 22 members including the CEO, chairperson and vice-chairperson (21 members are non-executive members and one member is an executive).

The Board evaluates and monitors management’s compliance with policy and achievements against objectives. A structured approached is followed for delegation, reporting and accountability, which includes reliance on various Board committees. The chairperson guides and monitors the input and contribution of the Board members.


The Board has unlimited access to professional advice on matters concerning the affairs of the NHLS, at the entity’s expense. The Board has approved a Code of Corporate Practice and Conduct which includes the ToR which provide guidance to Board members in discharging their duties and responsibilities.

The Board evaluates its effectiveness on an annual basis and formulates plans to mitigate any shortcomings identified by the evaluation process.

Chairperson and CEO

The Chairperson is a non-executive and independent director (as recommended by good corporate governance practices), and is a standing member of all committees of the Board.

The roles of chairperson and CEO are separate, with responsibilities divided between them so that no individual has unfettered powers of discretion.

Board Committees

Remuneration and Human Resources Committee

In terms of the NHLS Act, the Remuneration and Human Resources Committee (RHRC) serves to assist the Board with the performance of its functions and exercising of its powers. The committee reports on employment equity, employee turnover, skills development and labour relations.

As part of the continued professional development programme, the Board invites corporate governance experts as recommended by the Institute of Directors from time to time to present topical matters and latest developments in corporate governance practices.

In terms of good corporate governance practices, the RHRC met on four separate occasions during the financial year.

Names

Meeting date

8 Aug 2014 15 Jul 2014 9 Oct 2014 11 Feb 2015

Dr Lucky Mapefane

Dr Tlou Semenya

Adv. Lufuno Nevondwe

Dr Thokozani Mhlongo N/M

Dr Fazel Randera N/M

Dr Frew Benson N/M


Executive Management Committee

In terms of the NHLS Act, the Accounting Authority has appointed an Executive Management Committee (EXCO) which consists of:

• The CEO, who acts as chairperson

• Regional area managers and executive managers from support services.

The EXCO is responsible for the management of the NHLS in accordance with company policy and assists with the performance of the Accounting Authority’s functions and the exercise of its powers.

In terms of good corporate governance practices, EXCO met on a monthly basis during the financial year.

Finance Committee

The Finance Committee (FINCO) assists the Accounting Authority in fulfilling its oversight responsibilities on an ongoing basis for matters relating to the financial practices and condition of the NHLS by reviewing the entity’s financial policies and procedures; keeping informed of the entity’s financial conditions, requirements for funds, and access to liquidity; and considering and advising the Accounting Authority concerning the entity’s sources and uses of funds.


(continued)4Chapter

In terms of good corporate governance practices, FINCO met on ten separate occasions during the financial year. A further meeting was scheduled but subsequently cancelled.

Names

Meeting date

15 May 2014

2 Jul 2014 (Telcon)

10 Jul 2014

16 Sep 2014 (Special)

16 Oct 2014

5 Nov 2014 (Special)

20 Jan 2015

10 Mar 2015 (Special)

18 Mar 2015

27 Mar 2015

Mr Andre Venter N/M

Mr Michael Manning

Mr Lunga Ntshinga

Dr Thokozani Mhlongo

Dr Fazel Randera N/M N/M N/M

Mr Ben Durham N/M N/M N/M N/M N/M N/M N/M N/M N/M

Dr Tim Tucker N/M N/M N/M N/M N/M N/M


Audit and Risk Committee

In keeping with Treasury Regulation 27 of the PFMA, the Board appointed an Audit and Risk Committee to assist in the discharge of its duties by reviewing and reporting on the governance responsibilities of the Board and the NHLS. The ToR of the Audit and Risk Committee, its duties and functions, its composition and its modus operandi have been approved by the Board. Refer to page 133 for scheduled meetings and attendance.

National Academic and Pathology Committee

The National Academic and Pathology Committee (NAPC) met on three separate occasions during the financial year.

Names

Meeting date

6 May 2014 2 Oct 2014 5 Feb 2015

Mr Sagie Pillay R N/M

Prof. Koleka Mlisana

Prof. Eric Buch

Dr Tim Tucker

Legend: = Present = Absent with apology N/M = Not a member R = Recused

The functions of the committee are to facilitate education, by formulating policy with regard to:

• The conduct of basic research in association or partnership with any tertiary education institution

• Co-operation with persons and institutions undertaking basic research in South Africa and other countries, by the exchange of scientific knowledge and the provision of access to the resources and specimens available to the NHLS

• The participation in joint research operations with government, universities, universities of technology, colleges, museums, scientific institutions and other persons

• Co-operation with education authorities, scientific or technical societies, and industrial institutions representing employers or employees, for the promotion of the instruction and training of pathologists, technologists, technicians, scientists, researchers, technical experts and other supporting personnel in universities, universities of technology, and colleges

• Any other matter as may be referred to the committee from time to time by the Board.

The committee also monitors and manages the agreements entered into between the NHLS and tertiary education institutions, including:

• Developing policies and guidelines to determine the number of registrars for each discipline and the distribution of registrar posts between laboratories associated with each university’s health science faculty


• Developing policies and guidelines to determine the number of technologist training posts for each discipline and the distribution of these posts between the laboratories identified for this purpose

• Proposing guidelines relating to part-time, honorary and guest appointments of employees of the NHLS by tertiary education institutions

• Monitoring the guidelines for appointing consultants at tertiary education institutions in the NHLS as determined by the agreement between the NHLS and universities

• Ensuring that employees use the process of continuing professional development programmes provided by tertiary education institutions in the NHLS to comply with CPD requirements

• Reviewing and managing arrangements for research being undertaken by tertiary education institutions in NHLS laboratories

• Advising EXCO on matters relating to indemnity for employees or tertiary education institutions working between the facilities of both partners

• Advising EXCO on matters relating to discipline of employees or tertiary education institutions working between the facilities of both partners

• Advising EXCO on financial matters, such as subsidies, bursaries and payment for academic-related services

• Monitoring, evaluating and managing SLA and performance measures

• Advising, monitoring and evaluating the resolution of disputes should they arise

• Ensuring the integrity of the process of managing partnerships

• Ensuring that professional ethics are adhered to

• Ensuring that the NHLS complies with the requirements of the Health Professionals Council of South Africa in respect of registration requirements, ethics and conduct.

Information Technology Governance Committee

The Information Technology Governance Committee was established in terms of Section 12 of the NHLS Rules. It ensures that information technology (IT) is a regular item on the Accounting Authority’s agenda and that it is addressed in a structured manner. In addition, the committee ensures that the Accounting Authority has the information it needs to make informed decisions that are essential to achieve the ultimate objectives of IT governance, namely:

• The alignment of IT and business practices

• The delivery of IT value

• The sourcing and use of IT resources

• The management of IT-related risks

• The tracking, monitoring and measurement of IT performance.

The committee offers expert insight into and timely advice and direction on topics such as:

• The relevance of the latest developments in IT from a business perspective

• The alignment of IT with the business direction

• The formulation and achievement of strategic IT objectives

• The availability of suitable IT resources, skills and infrastructure to meet the strategic objectives

• Optimisation of IT costs

• The role and the value delivery of external IT sourcing

• Risk, return and competitive aspects of IT investments

• Progress on major IT projects

• The contribution of IT to the business (i.e. delivering the promised business value)

• Exposure to IT risks, including compliance risks

• Containment of risks of critical systems.


(continued)4Chapter

The committee met three times in the year and comprises a minimum of three non-executive directors. The chairperson is appointed by the Accounting Authority. The Board chairperson, chief financial officer and IT executive have a standing invitation to attend all meetings.

NamesMeeting date

21 May 2014 28 Oct 2014 20 Feb 2015

Mr Michael Manning

Dr Tlou Semenya

Dr Herbert Basetse N/M N/M


Dr Tim Tucker


Governance and Social Ethics Committee

The Governance and Social Ethics Committee was established to assist the Board in its oversight over corporate governance, social and ethical matters, and in ensuring that the NHLS is and remains a committed, socially responsible corporate citizen. The commitment to sustainable development involves ensuring that the organisation conducts its business in a manner that meets existing needs, without knowingly compromising the ability of future generations to meet their needs. The committee’s primary role is to supplement, support, advise and provide guidance on the effectiveness or otherwise of management’s efforts in respect of governance, social and ethics and sustainable development-related matters which include the following:

• Safety

• Health and wellness, including occupational hygiene

• Environmental management

• Climate change

• Ethics management

• Corporate social investment

• Mine community development

• Stakeholder engagement

• The protection of company assets.

The committee shall:

• Review and approve the policy, strategy, structure to manage governance, social and ethics issues in the organisation

• Oversee the monitoring, assessment and measurement of the organisation’s activities relating to social and economic development, including its standing in terms of the goals and purposes of:

- The ten principles set out in the United Nations Global Compact Principles - The OECD recommendations regarding corruption- The Employment Equity Act, No. 55 of 1998- The Broad-Based Black Economic Empowerment Act, No. 53 of 2003

• Oversee the monitoring, assessment and measurement of the organisation’s activities relating to good corporate citizenship, including its promotion of equality; prevention of unfair discrimination; addressing of corruption; contribution to development of the communities in which its activities are predominantly conducted or within which its services are predominantly marketed; and sponsorship, donations and charitable giving

• Oversee the monitoring, assessment and measurement of the organisation’s activities relating to the environment, health and public safety, including the impact of its activities and services on the environment

• Oversee the monitoring, assessment and measurement of the organisation’s stakeholder relationships, including its advertising, public relations and compliance with consumer protection laws, in order to ensure that it adheres to its values


• Oversee the monitoring of the organisation’s labour and employment, including its standing in terms of the International Labour Organization Protocol on Decent Work and Working Conditions, the organisation’s employment relationships, and its contribution toward the educational development of its employees

• Review the adequacy and effectiveness of the organisation’s engagement and interaction with its stakeholders

• Consider substantive national and international regulatory developments as well as practices in the fields of social and ethics management

• Review and approve the policy and strategy pertaining to the organisation’s programme of corporate social investment

• Determine clearly articulated ethical standards (Code of Ethics) and ensure that the organisation takes measures to achieve adherence to these in all aspects of its business, thus achieving a sustainable ethical corporate culture

• Monitor that management develops and implements programmes, guidelines and practices congruent with its social and ethics policies

• Review the material risks and liabilities relating to the provisions of the Code of Ethics, and ensure that such risks are managed as part of the risk management programme

• Obtain external assurance of the organisation’s ethics performance on an annual basis, and facilitate the inclusion of an assurance statement related to the ethics performance of the organisation in the Integrated Annual Report

• Ensure that management has allocated adequate resources to comply with social and ethics policies, codes of best practice and regulatory requirements.

The committee met twice in the review period.

Names

Meeting date

30 Jul 2014 15 Oct 2014


Dr Tlou Semenya

Mr Lunga Ntshinga

Dr Tim Tucker

Prof. Eric Buch

Adv. Lufuno Nevondwe

Mr Michael Manning

Mr Andre Venter


Service Committee

The Service Committee advises the NHLS Board on strategic matters that have an impact on the service the NHLS is mandated to provide in terms of the NHLS Act . The committee is scheduled to meet four times per year and comprises three members of the Board and any additional member as the Board may deem necessary. The terms of office of the members do not exceed three years, to coincide with the term of the Board. The Chief Operations Officer is a standing member of the committee.

The committee’s objectives include, but are not limited to, the following:

• To provide a governance and oversight mechanism on the NHLS service provision functions

• To assist the Board in establishing and evaluating the adequacy of SLA governing the relationship between the NHLS and the provinces

• To advise the Board on strategic matters relating to efficiency, equitability, affordability and quality pathology services, in line with the NHLS Act

• To advise the Board on adherence to and prioritisation of health and safety in the workplace in accordance with related legal requirements

• To provide strategic oversight to the Board over the service requirements necessary to respond to the NHI Programme

• To advise the Board on the prioritisation, adoption and impact of new diagnostic technology in keeping with changing trends in the industry in South Africa and abroad


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• To provide strategic oversight to the Board over a sustainable service delivery improvement programme for the NHLS

• To advise the Board on the strategic direction for the publication of an annual statement of service commitments which will set out the NHLS’ service standards that patients and customers can expect and which serve to explain how standards will be met by the NHLS.

During the 2014/15 financial year, the committee met three times, and its responsibilities included the following:

• Ensuring the alignment of service priorities with those of the country and adherence to these priorities

• Providing an oversight mechanism that ensures appropriate structuring, resource allocation and governance for continuous monitoring, evaluation and improvement of institutional service performance.

NamesMeeting Dates

20 Aug 2014 27 Oct 2014 23 Mar 2015


Dr Frew Benson N/M

Dr Tlou Semenya N/M N/M


Research Committee

The committee was established as a vehicle for ensuring that the NHLS’ research mandate receives attention at Board level. Members of the Research Committee may be called on from time to time to interact with external stakeholders and funding agencies.

The role of the Research Committee is to advise the NHLS Board and the National Academic and Pathology Committee (NAPC) on research policies, strategies, initiatives and innovation that promote the research interests of the organisation and that nurture and enable high quality research.

The objectives of the Research Committee are aligned with those stipulated in the South African Health Research Policy of 2001, the DoH Ten-point Plan and the National Health Research Committee (NHRC). This newly formed committee meets at least twice a year.

NamesMeeting Dates

5 May 2014 3 Feb 2015

Dr Tim Tucker

Dr Herbert Basetse N/M

Prof. Eric Buch


Independent Auditors

SizweNtsalubaGobodo (SNG) was formally re-appointed as auditors during the period under review, in consultation with the Auditor-General. SNG is available to continue in office in accordance with Section 25 of the Public Audit Act, No. 25 of 2004, and Section 23 of the NHLS Act.

Subsidiary

2014 2013 2014 2013

% % R RSouth African Vaccine Producers 100 100 100 100

The SAVP is a wholly-owned subsidiary of the NHLS that produces anti-venom. The NHLS acquired SAVP, which was a wholly-owned subsidiary of the South African Institute for Medical Research (SAIMR), on its date of incorporation. Details of the controlling entity’s interest in this subsidiary are set out in Note 19 of the Group Annual Financial Statements. The commercial viability of the SAVP has improved, as there is a possibility of profits in the foreseeable future. It continues to operate and fulfils a strategic role as the only producer of anti-venom in South Africa.


Risk management

The responsibility for risk management resides with management at all levels. Risk management is embedded throughout the organisation, from members of the Board to employees. The approach followed is to ensure that all significant risks are identified and managed. The NHLS has a dedicated risk officer to co-ordinate the implementation of the risk management philosophy and strategy, as approved by the Board. The Board continues to discharge its responsibility through the Audit and Risk Committee, and ensures that risk management is a standing item for discussion at each scheduled Board meeting.

NHLS values

The NHLS embarked on a process of establishing a set of values that all employees could identify with. During the review period, further steps were taken to embed these values and promote them through various initiatives.

The NHLS values are:

• Our employees, united – all working together towards a common goal

• Service above self – valuing good work ethic and striving towards service excellence for customers

• Who we are – working with integrity and responsibility

• Transformation – looking ahead to the future and growing together

• Caring – caring about our people, the environment and society.

Stakeholders

Significant events and projects during 2014/15 would not have been possible without the valued contribution of national and international partners in the healthcare industry, for example:

• The DoH• WHO• The United States Agency for International Development (USAID)• CDC• Namibian Institute of Pathology• Aurum Institute• SANBS• Federation of South African Societies of Pathologists (FSASP).

Scope of reporting

The NHLS realises that reporting on sustainability is an ongoing activity. Continual assessment against basic reporting principles is undertaken as well as an analysis of the NHLS’ current commitments and measurement capabilities. To this end, internal modifications are being implemented to enable improvement of current Level C reporting requirements. During the reporting period, progress was severely hampered by inadequate financial resources.


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Key Performance Indicators – Global Reporting Initiative

Economic indicators – aspect: Economic Performance

1. GRI EC1: Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and government

“Data on the creation and distribution of economic value provide a basic indication of how the organisation has created wealth for stakeholders” – GRI Guidelines

+ Economic value generated and distributed (EVG&D)

2015 2014R’000 R’000

Direct economic value generated 6 011 912 5 683 629Revenue 6 011 912 5 683 629

Economic value distributed 5 015 930 4 728 224

Operating cost 2 738 764 2 501 561Employee wages and benefits 2 277 137 2 220 640Payments to providers of capital 29 23++ Payments to government - 6 000Community investments - -

Economic value retained 995 982 955 405

+EVG&D data is presented on an accruals basis and presented at a national level.

++NHLS is classified as a Schedule 3A Public Entity according to the PFMA, and as such is exempted from paying company tax.

Schedule 3A public entities are normally extensions of a government department with the mandate to fulfil a specific economic or social responsibility of government. They rely on government funding and public money, either by means of a transfer from the Revenue Fund, or through statutory money. NHLS surpluses generated are re-invested to fund capital as well as operational requirements of the entity. The reinvestment of funds translates into better resourced laboratories which deliver a better standard of healthcare to South Africans.

Economic indicator – aspect: Economic Performance

2. GRI EC4: Significant financial assistance received from government

“This indicator provides a measure of host governments’ contributions to the reporting organisation. The significant financial assistance received from a government, in comparison with taxes paid, can be useful for developing a balanced picture of the transactions between the reporting organisation and government” – GRI Guidelines

The National Institute for Occupational Health (NIOH) provides services, training and research to enhance workers’ health in Southern Africa. This was achieved despite the resource constraints that the NHLS faced during the year under review.

The National Institute for Communicable Diseases (NICD) is internationally recognised as an important public-health resource in South Africa and is the only one of its kind in Africa.


Transfer payments from the DoH were allocated to the NICD and NIOH. In comparison to the prior financial year, the allocation was split equally (50:50) between the NIOH (R62 640 000) and the NICD (R62 640 000) in line with the reprioritisation of occupational health.

An increase in the allocation of funds from the DoH has allowed the NHLS to pass savings on to its own customers.

2015

Date Amount (R)

15 May 2014 31 320 000

1 July 2014 31 320 000

1 October 2014 31 320 000

1 January 2015 31 320 000

Total 125 280 000

Further funds were transferred to the NHLS to facilitate the mobilisation of resources by the NICD in response to the outbreak of Ebola in West Africa.

Date Amount (R)

3 September 2014 2 500 000

10 October 2014 2 500 000

3 December 2014 5 000 000

23 March 2015 15 738 000

Total 25 738 000

2014

The allocation was split between the NIOH (R44 416 826) and the NICD (R60 467 754) as noted in the table below:

Date Amount (R)

15 May 2013 26 221 145

1 July 2013 26 221 145

1 October 2013 26 221 145

1 January 2014 26 221 145

Total 104 884 580

Without the financial assistance of the South African Government, the NHLS and its divisions (NICD and NIOH) would not be able to operate effectively.

Economic indicator – aspect: Indirect Economic Impacts

3. GRI EC8: Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro-bono engagement

“As well as generating and distributing economic value, an organisation can affect the economy through its investments in infrastructure” – GRI Guidelines

On 24 March 2015, World TB Day marked the launch of the largest TB screening campaign yet seen in South Africa. On the day, the NHLS partnered with the DoH to assist in TB screening awareness campaigns and in taking forward innovative approaches in ensuring that everyone suffering from TB has access to diagnosis, treatment and cure.

As the largest diagnostic pathology laboratory service in South Africa, the NHLS plays a leading role in reducing the number of TB cases in South Africa with the GeneXpert technology system. All NHLS laboratories in the country are equipped with GeneXpert technology, and as a result South Africa conducts half of the global volume of tests. It is for this reason that the NHLS, together with the Aurum Institute, were appointed by the DoH through the Global Fund to provide six staffed, GeneXpert-equipped mobile TB units to undertake Xpert MTB/RIF testing for TB in six mining communities. These mobile units were unveiled at the launch of the TB Screening Awareness Campaign.


(continued)4Chapter

The formal launch of the screening campaign is a response to South Africa’s aim to achieve the WHO’s 2025 annual target of reducing TB incidence to less than 150 000 infections per year compared to the more than 400 000 which are currently recorded.

The Minister of Health, Dr Aaron Motsoaledi, spoke of South Africa’s current TB situation and the high rates of TB among miners, especially those digging for gold. The minister emphasised the need to screen miners, their families, and communities. He said, “At least 90% of South Africans must know their TB status, and it will be mandatory for all patients to undergo TB screening when visiting South Africa’s hospitals and clinics.”

The NHLS continues to assess the mining communities’ health needs through its surveillance activities and by staffing mobile facilities around the country, providing a public service for which it does not gain direct economic benefit.

Environmental indicator – aspect: Materials

4. GRI EN1: Materials used by weight or volume

“This indicator describes the reporting organisation’s contribution to the conservation of the global resource base and efforts to reduce the material intensity and increase the efficiency of the economy” – GRI Guidelines

Non-renewable materials used

Coal used

Month2015 2014

Tonnes TonnesApril 63.7200 48.3200May 78.2600 60.3800June 50.2800 63.6800July 38.2400 63.3200August 0.0000 32.2800September 50.1200 13.1600October 0.0000 68.2000November 12.5400 51.1000December 66.0600 69.6800January 13.8800 25.2200February 40.9200 40.0400March 0.0000 56.2000Total 414.0200 597.5800

Coal usage is restricted to the Sandringham Campus in Johannesburg. Coal is used to generate steam to clean the autoclaves used by both Diagnostic Media Products (DMP) and the SAVP.

Spikes in coal usage occur during the winter months as the boilers used to convert water in to steam are switched on two hours earlier, leading to higher coal usage.

Alternative sources of energy are being investigated, including electricity to power these autoclaves.

Environmental indicator – aspect: Energy

5. GRI EN5: Energy saved due to conservation and efficiency improvements

“This indicator demonstrates the results of proactive efforts to improve energy-efficiency through technological improvements of processes and other conservation initiatives” – GRI Guidelines

There are moves within the NHLS to become more energy efficient. Two notable initiatives that have already started are the replacement of electric light bulbs and the replacement of non-inverter air-conditioning units to inverter air-conditioning units.


Changing light bulbs

The NHLS head office has started the process of changing approximately 12 000 office, laboratory and outside light bulbs to more energy-efficient ones.

The project commenced during the course of 2010, and to date approximately 7 500 light bulbs have been replaced. The fluorescent tube light fixtures being replaced are 36 W, 30 W and 18 W bulbs.

The following table illustrates the percentage energy savings made per bulb:

Energy-efficient fixture Replaced fixture Input power Power consumption Energy saving

28 W 36 W 28 W 0.028 kWh 36%

21 W 30 W 21 W 0.021 kWh 43%

14 W 18 W 14 W 0.014 kWh 48%

Accurate energy savings will in future be calculated through the installation of power meters to measure power consumption.

Cooling offices and laboratories

By 2020, all non-inverter air-conditioning units should be replaced by more energy-efficient inverter air-conditioning units. At present, the more energy efficient units cost approximately 40% more to buy than its less energy-efficient counterpart, but offers 30% in electricity saving. It is envisaged that the price of these units will decrease over time. There are approximately 550 air-conditioning units, of which only 100 units have been converted to the inverter model.

Social indicator: labour practices and decent work – aspect: Training and ESocial indicator, labour practices and decent work – aspect: Training and Education

7. GRI LA 10 Average hours of training per year per employee by gender by employee category

“This indicator provides insight into the scale of the organisation’s investment in this area and the degree to which the investment is made across the entire employee base” – GRI Guidelines

Maintaining and improving human capital, particularly through training that expands the knowledge base of employees, is a key element in organisational development.

The mission of the Learning Academy is to become the national leader in training and development in the field of laboratory management, whereby the Academy will become a point of information, expertise, co-ordination and oversight for all training and learning activities within the NHLS.

The NHLS continues to fulfil its role of promoting and prioritising skills development through the analysis of its employees’ skills needs by implementing the Workplace Skills Plan.

The total number of employees was identified, by gender and in each employee category across the organisation’s operations at the end of the reporting year. The Learning Academy identified the total hours devoted to training personnel within each employee category. The table that follows reports the average number of hours of training per year per employee by employee category, using the following formula:

Total number of hours per employee categoryTotal number of employees per employee category

The table that follows identifies total hours devoted to training personnel per gender. Furthermore, the NHLS reports the average number of training hours per year per gender using the following formula:

Total number of hours by genderTotal number of employees by gender

The trend demonstrated below is that training hours per employee, irrespective of gender classification, has declined year-on-year. This has mainly been driven by the austerity measures that the NHLS put in place.


(continued)4Chapter

ReferenceMar 15 2.1

Mar 14 2.1

Mar 15 YTD 2.2 & 2.4

Mar 14 YTD 2.2 & 2.4

Formula 2.3 & 2.5

Formula 2.3 & 2.5

Row labelsCount of gender

Count of gender

Count of hours

Count of hours Formula Formula

Female 4 496 4 705 22 774 42 576 5.07 9.05Board Member 2 2 - - - -Corporate Support 332 359 1 446 7 271 4.36 20.25Executive Management 5 3 - 160 - 53.33Experiential Student 31 11 - 256 - 23.27Intern Scientist 11 12 10 24 0.91 2.00Laboratory Assistant 91 90 506 907 5.56 10.08Laboratory Assistant Student 6 10 104 16 17.33 1.6Laboratory Management 190 197 1 192 3 224 6.27 16.37Laboratory Support 1 488 1 562 5 373 5 098 3.61 3.26Medical Officer 13 16 70 -408 5.38 -25.50Medical Scientist 161 166 366 1 172 2.27 7.06Medical Technician 498 536 1 318 3 696 2.65 6.90Medical Technologist 983 1 021 4 606 8 020 4.69 7.86Pathologist 149 149 173 904 1.16 6.07Registrar 177 182 395 532 2.23 2.92Senior Management 26 26 276 528 10.62 20.31Student Medical Technician 110 139 2 751 3 264 25.01 23.48Student Medical Technologist 211 212 4 188 7 912 19.85 37.32Employees with no job description 12 12 - - -Male 2 207 2 329 10 412 23 160 4.72 9.94Board Member 7 9 0 0 - -Corporate Support 243 261 715 5 740 2.94 21.99Executive Management 6 9 0 24 - 2.67Experiential Student 20 12 0 360 - 30.00Intern Scientist 4 6 24 8 6.00 1.33Laboratory Assistant 38 47 203 424 5.34 9.02Laboratory Assistant Student 9 11 24 24 2.67 2.18Laboratory Management 115 131 735 2 196 6.39 16.76Laboratory Support 718 715 2 515 2 308 3.50 3.23Medical Officer 5 5 8 232 1.60 46.40Medical Scientist 51 50 104 180 2.04 3.60Medical Technician 278 298 677 1 760 2.44 5.91Medical Technologist 390 415 1 744 2 660 4.47 6.41Pathologist 72 78 75 304 1.04 3.90Registrar 55 59 32 224 0.58 3.80Senior Management 35 31 120 560 3.43 18.06Student Medical Technician 70 95 1 824 2 876 26.06 30.27Student Medical Technologist 87 92 1 612 3 280 18.53 35.65Employees with no job description 4 5 - -Grand Total 6 703 7 034 33 186 65 733 4.95 9.35

Social indicator,labour practices and decent work – aspect: Training and Education

8. GRI LA 12: Percentage of employees receiving regular performance and career development reviews by gender

“This indicator indirectly demonstrates how the reporting organisation works to monitor and maintain the skill sets of its employees” – GRI Guidelines


Performance management in the NHLS exists to support employees in optimising their performance in their current roles and to help people ‘unleash’ their full potential by supporting their ongoing development and growth. Managers play a critical role in helping their employees to perform and grow using the NHLS Performance Management System.

There is a major emphasis on the alignment between organisational objectives and operational objectives. Extensive coaching and training interventions are in place to assist line managers in the roll-out and the day-to-day management of performance. The NHLS is committed to building a culture of performance excellence, and hence this is an important driver of both development and reward.

2014/15 results

Male Female

Total agreements submitted per gender 1 205 2 509

% of agreements submitted per gender 55% 56%

Overall rating Total

1. Unacceptable performance 18

2. Not fully effective 568

3. Fully effective 2 001

4. Performance significantly above expectations 841

5. Outstanding performance 30

No overall rating 256

Grand total 3 714

2013/14 results

Male Female

Total agreements submitted per gender 1 539 3 146% of agreements submitted per gender 33% 67%

Performance management of staff is conducted through the day-to-day management of people. This involves a continuous cycle of review and development. The process culminates in a performance appraisals conducted once a year to evaluate performance.

Reasons for conducting performance management are as follows:

• Drive organisational performance by cascading objectives

• Employee development (training, coaching, improvement)

• Administrative purposes (deciding on rewards/promotions)

• Data for research (validate and evaluate success of initiatives)

• It helps staff feel more committed to attaining organisational objectives and experiencing more job satisfaction

• To create a shared understanding of what is to be achieved

• To manage behaviour that will encourage staff to behave in ways that allow and foster better working relationships

• To assist staff in understanding how they contribute to achieving organisational goals

• To identify poor performance and rectify it quickly

• To prioritise what gets done and ensure that enough resources are available to do it.


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Social indicator, labour practices and decent work – aspect: Diversity and Equal Opportunity

9. GRI LA13 Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group, minority group membership, and other indicators of diversity

“This indicator provides a quantitative measure of diversity within an organization and can be used in conjunction with sectoral or regional benchmarks” – GRI Guidelines

The NHLS, as a designated employer in terms of the Employment Equity Act, No. 55 of 1998, is required to develop an Employment Equity (EE) Plan as well as implement affirmative action measures. This is done through the EE Skills Development and Transformation Committee.

The NHLS remains firm in its support of the country’s Broad-based Black Economic Empowerment (B-BBEE) initiative, as embraced by the South African Government. Tenderers and companies dealing with the entity should have a workable plan aimed at empowering previously disadvantaged communities. The NHLS will achieve this without compromising the standards of the deliverables from its partners in business.

The total headcount for the NHLS as at end of March 2015 was 6 704 compared to 7 034 recorded at the end of March 2014.

Composition of the governance bodies and total workforce is as follows:

Governance bodies by gender, race and age

Board

In terms of the NHLS Act, the Minister of Health appoints members by taking into account, among other things, the appropriate representation of race, gender and disability.

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Variance

Race/Gender<30 years

<30 years

<30–50 years

<30–50 years

>50 years

>50 years

Total no.

Total no.

% Total

% Total % Total

AfricanMale 1 0 3 4 2 3 6 7 32 39 -7Female 0 0 1 1 2 1 3 2 16 11 5ColouredMale 0 0 0 0 0 0 - - 0 0 0Female 0 0 0 0 0 0 - - 0 0 0IndianMale 0 0 0 0 1 3 2 3 11 17 -6Female 0 0 0 0 1 2 1 2 5 11 -6ChineseMale 0 0 0 0 0 0 - - 0 0 0Female 0 0 0 0 0 0 - - 0 0 0WhiteMale 2 0 3 3 2 1 7 4 37 22 15Female 0 0 0 0 0 0 - - 0 0 0Total 3 - 7 8 8 10 19 18 101 100Male % 21 0 32 39 26 39 79 78 1Female % 0 0 5 6 16 17 21 22 -1

At the date of this report, the date-of-birth of four Board members could not be determined.


EXCO

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Variance


<30 years

<30–50 years

<30–50 years

>50 years

>50 years

Total no.

Total no.

% Total

% Total % Total

AfricanMale 0 0 2 1 0 0 2 1 25 11 13Female 0 0 1 1 1 0 2 1 25 13 4ColouredMale 0 0 0 0 0 0 - - 0 0 0

Female 0 0 0 0 0 0 - - 0 0 0

IndianMale 0 0 1 1 0 3 1 4 13 44 -17

Female 0 0 0 1 1 0 1 1 13 11 4

ChineseMale 0 0 0 0 0 0 - - 0 0 0

Female 0 0 0 0 0 0 - - 0 0 0

WhiteMale 0 0 1 1 0 0 1 2 13 22 -9

Female 0 0 0 0 1 0 1 - 13 0 0

Total - - 5 5 3 3 8 9 102 101Male % 0 0 50 33 0 44 50 78 0Female % 0 0 13 22 38 0 50 22 0

NHLS Employees

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Variance


<30 years

<30–50 years

<30–50 years

>50 years

>50 years

Total no.

Total no.

% Total

% Total % Total

AfricanMale 444 525 863 866 320 340 1 627 1 731 24 25 -1Female 908 1 051 1 748 1 708 409 435 3 065 3 194 46 45 1ColouredMale 32 44 86 86 52 52 170 182 3 3 0Female 84 100 212 207 66 73 362 380 5 5 0IndianMale 25 33 85 91 66 67 176 191 3 3 0Female 76 93 235 250 59 54 370 397 6 5 1ChineseMale 1 1 0 1 0 0 1 2 0 0 0Female 0 1 2 2 0 0 2 3 0 0 0WhiteMale 9 14 107 113 82 96 198 223 3 3 0Female 43 64 328 355 302 312 673 731 10 11 -1Total 1 622 1 926 3 666 3 679 1 356 1 429 6 644 7 034 100 100Male % 8 9 17 16 8 8 33 33 0Female % 17 19 38 36 13 12 67 67 0

At the date of this report, the date-of-birth of 60 employees could not be determined.


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Social indicator, product responsibility – aspect: Product and Service Labelling

10. GRI PR 5: Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

“In the context of sustainability, customer satisfaction provides insight into how the organization approaches its relationship with one stakeholder group (customers)” – GRI Guidelines

As an obligation to fulfil its mandate and mission to ‘provide quality, affordable and sustainable health laboratory and related public health services, in support of healthcare providers in their delivery of healthcare to the country’, the NHLS conducted its annual Customer Satisfaction Survey to measure the level of satisfaction of its customers.

A fundamental aspect to this mandate is for the NHLS to understand, at a detailed level, to what extent its customers, employees and stakeholders believe that it is delivering on its mandate. The NHLS has therefore, in the recent past, conducted two research studies to determine satisfaction of both its customers and employees.

In 2014/15, the Communication Department’s planned Customer Satisfaction Survey did not take place due to the severe financial constraints experienced by the NHLS. The NHLS has implemented austerity measures to scale back on overhead expenditure of which the survey formed a part.

Social indicator, society – aspect: Compliance11. GRI SO8: Monetary value of significant fines and total number of non-monetary sanctions for

non-compliance with laws and regulations

“This indicator is intended to reflect significant fines and non-monetary sanctions under laws and regulations not covered by EN28 and PR9, such as laws and regulations related to accounting fraud, workplace discrimination, corruption, etc.” – GRI Guidelines

The NHLS is mainly governed by, but not limited to, the following legislation:

Finance Human Resources Information Technology Quality Assurance

NHLS Act NHLS Act NHLS Act NHLS Act

General Rules in terms of Section 27 of the NHLS Act




PFMA PFMA Electronic Communications and Transactions Act, No. 25 of 2002

Companies Act, No. 71 of 2008

Companies Act Companies Act Companies Act All standards applicable to policy development

Treasury Regulations issued in terms of the PFMA

Labour Relations Act Promotion of Access to Information Act, No. 2 of 2000

The following non-compliance with laws and regulations was documented:

NHLS Act

At the date of this report, the ownership of land and buildings had not been transferred into the name of the NHLS, as required by the NHLS Act. The Board has taken all appropriate measures to ensure that the transfer process is effected by the Department of Public Works.

In respect of vacancies at Board level, these are in the process of being filled by the Minister of Health.


Treasury Regulation 8.2.3

Payments due to creditors should be made within 30 days from receipt of invoice. Efforts to comply with this regulation were hampered by challenges in debt collection. These challenges resulted from some NHLS customers being unable to honour their debts. The NHLS continues to engage with its customers to ensure that it has the ability to meet its own financial obligations.

No administrative or judicial sanctions were levied against the organisation for failure to comply with laws or regulations.

No fines of significant monetary value were reported for the period under review.

Treasury Regulation 9.1.5 and 28.2.1

With reference to the above regulations, irregular expenditure was incurred as a result of the NHLS procuring goods and services by means other than through competitive bids. A register of irregular expenditure has been maintained. A summary of this register is contained in Note 39 on page 216.

Declaration of intent

Good governance is about effective leadership. King III has broadened the scope of corporate governance in South Africa with its core philosophy revolving around leadership, sustainability and corporate citizenship.

A process of education began in 2012 to ensure that the issue of sustainability within NHLS is addressed. It is the intention of the entity to report within the framework of the GRI. This vision can only be realised once the necessary resources are developed to undertake this initiative.


Overview of resultsA summary of the financial performance for the 2014/15 fiscal year is as follows:

• The company generated surplus for the year amounting to R180m compared to a loss or deficit of R152m in the previous financial year.

• Revenue grew by 10% from R5.2 billion to R5.7 billion. Revenue from provincial hospitals amounted to 96% of the total revenue generated.

• Production costs including direct labour and material grew by 6% from R3.9 billion to R4.2 billion. The lower increase in production cost compared to revenue increase indicates higher productivity and efficiency.

• General or support expenses decreased by 5% from R1.8 billion to R1.7 billion in the financial year under review. This is mainly due to controlled expenditure in this area.

• Assets increased by 20% mainly as the result of a 17% increase in accounts receivables and 87% increase in the bank. The closing bank account balance ended at R651 million compared to R348 million in the previous financial year.

• The accounts receivable balance at year end constituted 68% of total assets compared to 71% in the previous financial year. This indicates an improvement in collection by year end.

• The current liabilities increased by 32% compared to the previous financial year. The balance at end of 2014/15 was R1.5 billion compared to R1.2 billion in 2013/14. The increase is mainly attributed to a 51% increase in trade and other payables. The trade and other payables grew from R714 million in 2013/14 to R1 billion in 2014/15. Other major liabilities include R126 million leave liability and R854 million employee benefits obligation.

The organisation has made significant strides toward business stability during the last financial year, followed by a positive year end of Long-Term Turnaround Strategy implementation.

Cash flowAs of 31 March 2015, the bank balance reflected an amount of R651 million which represents 1.5 months’ cash cover.

Cash generated from operating activities amounted to R389 million which represent an increase of 133% year- on-year. The improvement in cash is mainly due to a 23% improvement in accounts receivable collection year- on-year. Investment income grew by 43% year-on-year to R166 million (2013/14: R116 million) due to increase in the bank balance.

Total payments increased by 10% year-on-year from R4.2 billion in the previous financial year to R4.7 billion during the year under review. The increase is mainly attributable to an 18% supplier’s payments,driven by arrears payments and increase in supply of goods and services.

Mr Sikhumbuzo Zulu

Chief Financial Officer’s Report


Budget variance analysisThe total test revenue is 10.6% over budget with a rand value of R532 million. This positive revenue variance is mainly attributable to Viral Load and GeneXpert volumes being higher by 33% and 39% against budgeted volumes respectively. Viral Load revenue constituted 18% and GeneXpert constituted 7% of total revenue. Upward volumes are driving the increase in sales order.

Teaching income reflected a positive variance of 23% due to the use of an Educational Services Fee formula, which uses actual data received from universities at the end of their academic year to calculate the amount of revenue generated for teaching services.

Personnel costs are under budget by 4% due to vacancies that were not filled during the financial year.

General expenses relate to direct materials and other overheads. The deviation of actual expenses to budget in goods and services is as a result of an increase in revenue generated during the financial year. Year- on-year material consumption increased by 12,5% to R1.8 billion (2014: R1.6 billion).

The overall total material percentage to total turnover is realised at 33%,that exceeds the budget benchmark of 28.1% by 4.9% ,which is R262.2 million. This difference is attributable to a significant increase in the GeneXpert test, which has a material cost to selling price ratio of 95%.


(continued)4Chapter

Group salient information

Financial performance (R’000)12 months

201112 months

201212 months

201312 months

201412 months

2015Revenue 3 446 125 3 958 409 4 656 213 5 208 377 5 706 961Gross margin/(loss) 1 078 482 1 101 808 1 460 231 1 244 684 1 493 536Operating surplus/(deficit) 245 100 599 448 (105 900) (217 260) 16 347Net surplus/(deficit) 264 114 626 982 (64 082) (152 199) 180 915

Cash position (R’000)Net cash generated from operations 28 230 571 991 262 297 (157 987) 374 197Net increase/(decrease) in cash (83 209) 401 311 85 982 (316 762) 303 214Cash-on-hand available for NHLS operations 127 259 464 279 544 008 278 958 588 171Cash-on-hand available for grants held in trust 50 162 114 453 120 706 69 354 62 995Total reported cash-on-hand 177 421 578 732 664 714 347 952 651 166

Subsidies received from government (R’000)Government funding of national institutes 68 202 79 209 85 495 104 885 125 280

Teaching and research (R’000)Teaching income generated by universities 22 015 41 348 48 545 17 491 40 852

Investments in CAPEX activities (R’000)Capital expenditure 108 594 190 067 177 411 186 042 47 641CAPEX spend as % of turnover 3% 5% 1% 3% 1%

Liquidity ratio analysisCurrent ratio [current assets/current liabilities] 3.2 : 1 3.5 : 1 4.2 : 1 2.4 : 1 2.3 : 1Acid test ratio [current assets – inventory/current liabilities] 3.0 : 1 3.4 : 1 4.1 : 1 2.3 : 1 2.2 : 1

Other ratio analysisGrowth in revenue % 13% 15% 18% 12% 10%

Summary of salient information

Revenue increased by 66% on average at a rate of 13% over a period of five years. This resulted in a R2.3 billion increase since 2011 which is mainly due to the increase in consumption and technology changes in production.

The total net surplus generated over the last five years amounted to R859m, which allows the NHLS to ensure continued sustainability in investment in capital expenditure and maintenance.

Healthy liquidity ratios are continuously being maintained at a ratio of current liabilities being fully recovered by current assets.


General Information

Country of incorporation and domicile South Africa

Legal form of entity Schedule 3A public entity

Nature of business and principal activities Healthcare, research and training

Registered office 1 Modderfontein Road Rietfontein Sandringham Johannesburg 2000

Postal address Private Bag X 8 Johannesburg 2131

Controlling entity National Department of Health

Bankers First National Bank Ltd Rand Merchant Bank Ltd Investec Ltd Nedbank Ltd

External Auditors SizweNtsalubaGobodo Inc. Chartered Accountants (SA)

Internal Auditors Deloitte

Attorneys Shepstone & Wylie Attorneys Hogan Lovells Mncedisi Ndlovu Sedumisi Inc. Ramphele Attorneys Ranamane Mokolane

Level of assurance These audited Group Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act No. 71 of 2008.

Preparer The audited Group Annual Financial Statements were internally compiled by: Ben Wikner Finance Reporting Accountant

Published 31 July 2015

Website www.nhls.ac.za

Practice number PR5200296

Legislation governing NHLS operations The National Health Laboratory Service (NHLS) Act, No. 37 of 2000. The general rules issued ito Section 27 of the NHLS Act. The Public Finance Management (PFMA) Act, No.1 of 1999. National Treasury regulations issued in terms of the PFMA.

National Health Laboratory Services Audited Group Annual Financial Statements for the year ended 31 March 2015


(continued)4Chapter

Index

The reports and statements set out below comprise the audited Group Annual Financial Statements presented to the Board members:

Page

Statement of responsibility and approval of the financial statements 165– 166

Report of the Independent Auditors 167 - 170

Statement of Financial Position 171

Statement of Financial Performance 172

Statement of Changes in Net Assets 173 – 174

Statement of Cash Flows 175

Statement of Comparison of Budget and Actual Amounts 176 – 178

Accounting Policies 179 – 193

Notes to the Audited Group Annual Financial Statements 194 – 218

The following supplementary information does not form part of the unaudited Group Annual Financial Statements and is unaudited:

Detailed Statement of Financial Performance 219



Group Annual Financial Statements for the year ended 31 March 2015

Statement of responsibility and approval of the Financial Statements The Accounting Authority is required by the Public Finance Management Act (Act No. 1 of 1999) (as amended by Act No.29 of 1999)(PFMA), to maintain adequate accounting records and is responsible for the content and integrity of the audited Group Annual Financial Statements and related financial information included in this report. It is the responsibility of the Accounting Authority to ensure that the audited Group Annual Financial Statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to express an independent opinion on the audited Group Annual Financial Statements and were given unrestricted access to all financial records and related data.

The audited Group Annual Financial Statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board and International Financial Reporting Standards (IFRS) where statements of GRAP are not yet effective. The Group Annual Financial Statements have been prepared using the accrual basis of accounting.

The audited Group Annual Financial Statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The Board members acknowledge that they are ultimately responsible for the system of internal financial control established by the economic entity and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, the Accounting Authority sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the economic entity and all employees are required to maintain the highest ethical standards in ensuring the economic entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the economic entity is on identifying, assessing, managing and monitoring all known forms of risk across the economic entity. While operating risk cannot be fully eliminated, the economic entity endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Board members are of the opinion, based on the information and explanations given by management and by the entity’s internal and external auditors, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the audited Group Annual Financial Statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or error.

The Board members are committed to business integrity, transparency and professionalism in all its activities. As part of this commitment, the Accounting Authority supports the highest standards of corporate governance and the on-going development of best practice.

The Board members have reviewed the economic entity’s cash flow forecast for the year to 31 March 2016 and, in the light of this review and the current financial position, they are satisfied that the economic entity has or has access to adequate resources to continue in operational existence for the foreseeable future subject to the timeous settlement of debt by all public sector healthcare providers.

The entity is wholly dependent on all public healthcare providers for continued funding of operations. The audited Group Annual Financial Statements are prepared on the basis that the entity is a going concern and that the National Department of Health has neither the intention nor the need to liquidate or curtail materially the scale of the entity.



(continued)4Chapter

Approval of Group Annual Financial StatementsAlthough the Accounting Authority are primarily responsible for the financial affairs of the entity, they are supported by the economic entity’s external auditors. The external auditors are responsible for independently reviewing and reporting on the economic entity’s audited Group Annual Financial Statements. The audited Group Annual Financial Statements have been examined by the economic entity’s external auditors and their report is presented on pages 167 to 170.

The audited Group Annual Financial Statements set out on pages 171 to 220, which have been prepared on the going concern basis, were approved by the Accounting Authority in terms of section 51(1)(f ) of the PFMA on 31 July 2015 and were signed on its behalf by:

Barry Schoub Joyce Mogale

Chairperson: Accounting Authority Interim Chief Executive Officer



Report of the independent auditors to Parliament on the National Health Laboratory Service

Report of the consolidated and separate Financial Statements

Introduction

1. We have audited the consolidated and separate Financial Statements of the National Health Laboratory Service (NHLS), set out on pages 171 to 218, which comprise the consolidated and separate Statement of Financial Position as at 31 March 2015, the consolidated and separate Statement of Financial Performance , Statement of Changes in Net Assets, Statement of Cash Flows and Statement of Comparison of Budget Information with Actual Information for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

Accounting Authority’s responsibility for the consolidated and separate Financial Statements

2. The Board of Directors, which constitutes the Accounting Authority, is responsible for the preparation and fair presentation of these consolidated and separate Financial Statements in accordance with the South African Standards of Generally Recognised Accounting Practice (GRAP) and the requirements of the Public Finance Management Act, Act No. 1 of 1999 (PFMA), and for such internal control as the Accounting Authority determines necessary to enable the preparation of consolidated and separate Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

3. Our responsibility is to express an opinion on these consolidated and separate Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate Financial Statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and separate Financial Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated and separate Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated and separate Financial Statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and separate Financial Statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, the consolidated and separate Financial Statements present fairly, in all material respects, the financial position of the NHLS as at 31 March 2015 and their financial performance and cash flows for the year then ended, in accordance with South African Standards of GRAP and the requirements of the PFMA.



(continued)4Chapter

Emphasis of matters

7. We draw attention to the matters below. Our opinion is not modified in respect of these matters.

Restatement of corresponding figures

8. As disclosed in note 38 to the Financial Statements, the corresponding figures for 31 March 2014 have been restated as a result of errors discovered during 31 March 2015 in the Financial Statements of the NHLS, and for the year ended 31 March 2014.

Significant uncertainty of debtor collection

9. With reference to note 3 to the Financial Statements, the NHLS is subject to performance audits on its billing system in respect of two significant government debtors. The NHLS has presented additional information and is opposing the counter-claim of R1.7 billion. The ultimate outcome of the matter cannot presently be determined, and no provision for any liability that may result has been made in the Financial Statements.

Additional matter

10. We draw attention to the matter below. Our opinion is not modified in respect of this matter.

Unaudited supplementary information

11. The supplementary information, set out on pages 219 to 220 do not form part of the consolidated and separate Financial Statements and is presented as additional information. We have not audited these schedules and accordingly do not express an opinion thereon.

Report on other legal and regulatory requirements

12. In accordance with the Public Audit Act, Act No. 25 of 2004 (PAA), and the General Notice issued in terms thereof, we have a responsibility to report findings on the reported performance information against predetermined objectives for the selected programmes presented in the Annual Report, compliance with legislation and internal control. We performed tests to identify reportable findings, as described under each subheading, but not to gather evidence to express assurance on these matters. Accordingly, we do not express an opinion or conclusion on these matters.

Predetermined objectives13. We performed procedures to obtain evidence about the usefulness and reliability of the reported performance

information for the following selected programmes presented in the Annual Performance Report of the NHLS for the year ended 31 March 2015:

• Programme 1: Partner perspective on page 130

• Programme 3: Employee perspective on page 131

• Programme 4: Internal perspective on page 132.

14. We evaluated the reported performance information against the overall criteria of usefulness and reliability.

15. We evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned objectives. We further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time-bound and relevant, as required by National Treasury’s Framework for Managing Programme Performance Information (FMPPI).



16. We assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

17. We did not identify any material findings on the usefulness and reliability of the reported performance information for the following programmes:

• Programme 1: Partner perspective

• Programme 2: Employee perspective

• Programme 3: Internal perspective.

Additional matter

18. Although we identified no material findings on the usefulness and reliability of the reported performance information for the selected programmes, we draw attention to the following matter.

Achievement of planned targets

19. Refer to the Annual Performance Report on pages 130 to 132 for information on the achievement of the planned targets for the year.

Compliance with legislation20. We performed procedures to obtain evidence that the NHLS has complied with legislation regarding financial matters,

financial management and other related matters. Our findings on material non-compliance with specific matters in key legislation, as set out in the General Notice issued in terms of the PAA, are as follows:

Asset management

21. Non-compliance with the NHLS Act, Section 5(2), which imposes the requirement that the registrar of deeds must register the property referred to in the Act and make such entries or endorsements in any relevant register, title deed or other document. There are properties which have not yet been transferred into the name of the NHLS.

22. Proper control systems to safeguard and maintain assets were not implemented, as required by Sections 50(1) (a) and 51(1)(c) of the PFMA.

Annual Financial Statements

23. The Financial Statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by Sections 55(1)(a) and (b) of the PFMA.

24. Material misstatements of non-current assets, current assets, liabilities, expenditure and disclosure items identified by the auditors in the submitted Financial Statements were subsequently corrected and the supporting records were provided subsequently, resulting in the Financial Statements receiving an unqualified audit opinion.

Expenditure management

25. The Accounting Authority did not take effective steps to prevent irregular expenditure, as required by Section 51(1)(b)(ii) of the PFMA.



(continued)4Chapter

Internal control26. We considered internal control relevant to our audit of the Financial Statements, the Annual Performance Report and

compliance with legislation. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on non-compliance with legislation included in this report.

Financial and performance management

27. The NHLS did not implement controls over the daily and monthly processing and reconciling of transactions, resulting in the Financial Statements having to be corrected.

28. The NHLS did not prepare regular, accurate and complete financial and performance reports that are supported and evidenced by reliable information, as it did not have an adequate system for identifying and recognising all irregular expenditure.

29. The NHLS did not implement proper record-keeping in a timely manner to ensure that complete, relevant and accurate information is accessible and available to support financial reporting, as the fixed asset register obtained was not adequately maintained.

Other reports

Billing investigations

30. A performance audit was instituted by the National Department of Health (DoH) for the review of the billing system for the Gauteng and KwaZulu-Natal DoH. A further two reports have been issued in respect of the Gauteng DoH, and a second report was issued for the KwaZulu-Natal DoH in the current reporting period. A task team has been appointed by the NHLS Board, who responded to the findings of the initial Gauteng report. The report prepared by the Board was submitted and the entity is awaiting feedback thereon. No response has been forwarded for the reports issued in the current financial year.

L GovenderDirectorRegistered Auditor31 July 2015



Statement of Financial Positionas at 31 March 2015

Economic entity Controlling entity

20152014

Restated* 20152014

Restated*Note(s) R’000 R’000 R’000 R’000

AssetsCurrent AssetsInventories 2 88 970 81 042 85 017 78 184Trade and other receivables 3 2 808 307 2 394 582 2 806 320 2 392 281Receivables from non-exchange transactions 4 8 943 5 597 8 943 5 597Prepayments 72 8 427 72 8 432Cash and cash equivalents 5 651 166 347 952 648 725 346 927

3 557 458 2 837 600 3 549 077 2 831 421

Non-Current AssetsProperty, plant and equipment 6 260 703 268 369 258 594 266 323Intangible assets 8 90 735 112 224 90 735 112 224Heritage assets 9 170 456 170 456 170 029 170 029

521 894 551 049 519 358 548 576Total Assets 4 079 352 3 388 649 4 068 435 3 379 997

LiabilitiesCurrent LiabilitiesOther financial liabilities 10 3 820 27 486 3 820 27 486Finance lease obligation 11 - 137 - 137Trade and other payables 12 1 080 795 713 814 1 079 751 712 200Employee benefit obligation 15 22 317 18 525 22 317 18 525Deferred income 13 52 264 57 992 52 264 57 992Provisions 14 373 429 340 393 373 429 340 393

1 532 625 1 158 347 1 531 581 1 156 733

Non-Current LiabilitiesEmployee benefit obligation 15 854 140 718 630 854 140 718 630Total Liabilities 2 386 765 1 876 977 2 385 721 1 875 363Net Assets 1 692 587 1 511 672 1 682 714 1 504 634Stated capital 16 332 332 332 332Capital replacement reserve 17 - 8 000 - 8 000General reserve 18 - 34 505 - 31 206Accumulated surplus 1 692 255 1 468 835 1 682 382 1 465 096Total Net Assets 1 692 587 1 511 672 1 682 714 1 504 634

* See notes.



(continued)4Chapter

Statement of Financial Performancefor the year ended 31 March 2015


20152014

Restated* 20152014


Revenue 21 5 706 961 5 208 377 5 691 436 5 194 127Cost of sales 22 (4 213 425) (3 963 693) (4 202 100) (3 953 463)

Gross surplus 1 493 536 1 244 684 1 489 336 1 240 664Other income 23 250 043 357 243 250 042 357 238Operating expenses (1 727 232) (1 819 187) (1 725 866) (1 817 937)

Operating surplus/(deficit) 24 16 347 (217 260) 13 512 (220 035)Investment revenue 27 166 223 71 083 166 223 71 083Finance costs 28 (1 655) (6 022) (1 655) (6 022)

Surplus/(deficit) for the year 180 915 (152 199) 178 080 (154 974)

*See notes.



Statement of Changes in Net Assetsas at 31 March 2015

Stated capital

Capital replacement

reserveGeneral reserve

Accumulated surplus Total net assets

R’000 R’000 R’000 R’000 R’000

Economic entityOpening balance as previously reported 332 8 000 34 505 1 805 906 1 848 743AdjustmentsCorrection of errors - - - (184 872) (184 872)Balance at 01 April 2013 as restated* 332 8 000 34 505 1 621 034 1 663 871Changes in net assetsDeficit for the year - - - (152 199) (152 199)Total changes - - - (152 199) (152 199)Opening balance as previously reported 332 8 000 34 505 1 657 334 1 700 171AdjustmentsCorrection of errors - - - (188 499) (188 499)Restated* Balance at 01 April 2014 as restated* 332 8 000 34 505 1 468 835 1 511 672Changes in net assetsSurplus for the year - - - 180 915 180 915Transfer of general reserve to accumulated surplus - (8 000) - 8 000 -Transfer of capital replacement reserve to accumulated surplus - - (34 505) 34 505 -Total changes - (8 000) (34 505) 223 420 180 915Balance at 31 March 2015 332 - - 1 692 255 1 692 587Note(s) 16 17 18

*See notes.



(continued)4Chapter

Stated capital

Capital replacement

reserveGeneral reserve

Accumulated surplus Total net assets

R’000 R’000 R’000 R’000 R’000

Controlling entityOpening balance as previously reported 332 8 000 31 206 1 804 207 1 843 745AdjustmentsCorrection of errors - - - (184 137) (184 137)Balance at 01 April 2013 as restated* 332 8 000 31 206 1 620 070 1 659 608Changes in net assetsDeficit for the year - - - (154 974) (154 974)Total changes - - - (154 974) (154 974)Opening balance as previously reported 332 8 000 31 206 1 655 373 1 694 911AdjustmentsCorrection of errors - - - (190 277) (190 277)Restated* Balance at 01 April 2014 as restated* 332 8 000 31 206 1 465 096 1 504 634Changes in net assetsSurplus for the year - - - 178 080 178 080Transfer of general reserve to accumulated surplus - - (31 206) 31 206 -

- (8 000) - 8 000 -Total changes - (8 000) (31 206) 217 286 178 080Balance at 31 March 2015 332 - - 1 682 382 1 682 714Note(s) 16 17 18

*See notes.

Statement of Changes in Net Assets (continued)



Statement of Cash Flows


20152014

Restated* 20152014


Cash flows from operating activitiesReceiptsSale of goods and services 4 766 378 3 950 155 4 750 538 3 935 771Interest income 166 223 115 995 166 223 115 995

4 932 601 4 066 150 4 916 761 4 051 766

PaymentsEmployee costs (2 137 835) (2 132 986) (2 129 174) (2 124 598)Suppliers (2 418 914) (2 085 129) (2 413 617) (2 079 328)Finance costs (1 655) (6 022) (1 655) (6 022)

(4 558 404) (4 224 137) (4 544 446) (4 209 948)Net cash flows from operating activities 30 374 197 (157 987) 372 315 (158 182)

Cash flows from investing activitiesPurchase of property, plant and equipment 6 (47 386) (120 769) (46 920) (120 419)Proceeds from sale of property, plant and equipment 461 78 461 78Purchase of intangible assets 8 (255) (63 640) (255) (63 640)Purchases of heritage assets 9 - (1 633) - (1 605)Net cash flows from investing activities (47 180) (185 964) (46 714) (185 586)

Cash flows from financing activitiesRepayment of other financial liabilities (23 666) 27 486 (23 666) 27 486Finance lease payments (137) (297) (137) (297)Net cash flows from financing activities (23 803) 27 189 (23 803) 27 189

Net increase/(decrease) in cash and cash equivalents 303 214 (316 762) 301 798 (316 579)Cash and cash equivalents at the beginning of the year 347 952 664 714 346 927 663 506Cash and cash equivalents at the end of the year 5 651 166 347 952 648 725 346 927

*See notes.



(continued)4Chapter

Statement of Comparison of Budget and Actual AmountsBudget on Accrual Basis

Controlling entity

Approved budget Adjustments Final budget

Actual amounts on comparable

basis

Difference between

final budget and actual Reference

R’000 R’000 R’000 R’000 R’000

Statement of Financial PerformanceRevenueRevenue from exchange transactionsRendering of services 5 061 333 - 5 061 333 5 551 023 489 690 1Miscellaneous sales 3 655 - 3 655 15 133 11 478Fair value adjustments: National interest - - - 48 559 48 559Royalties received - - - 224 224Rental income 116 - 116 - (116)Discount received 1 500 - 1 500 749 (751)Recoveries - - - 11 745 11 745Teaching income 33 217 - 33 217 40 852 7 635 2Sundry income 10 166 - 10 166 5 712 (4 454)Grants income recognised - - - 142 201 142 201Interest received 22 000 - 22 000 166 223 144 223Total revenue from exchange transactions 5 131 987 - 5 131 987 5 982 421 850 434

Revenue from non-exchange transactionsTransfer revenueGovernment grants and subsidies 121 534 - 121 534 125 280 3 746Total revenue 5 253 521 - 5 253 521 6 107 701 854 180

ExpenditurePersonnel (2 370 986) - (2 370 986) (2 268 476) 102 510 3Depreciation and amortisation (86 676) - (86 676) (101 945) (15 269)Finance costs (6 579) - (6 579) (1 655) 4 924Lease rentals on operating lease (34 909) - (34 909) (43 548) (8 639)



Controlling entity

Approved budget Adjustments Final budget


basis

Difference between


R’000 R’000 R’000 R’000 R’000

Bad debts written off (42 120) - (42 120) (775 842) (733 722) 4Repairs and maintenance - - - (103 093) (103 093)Sale of goods/inventory - - - (19) (19)General expenses (2 573 900) - (2 573 900) (2 634 490) (60 590) 5Total expenditure (5 115 170) - (5 115 170) (5 929 068) (813 898)Operating surplus 138 351 - 138 351 178 633 40 282Loss on disposal of assets and liabilities - - - (553) (553)Deficit for the year 138 351 - 138 351 178 080 39 729Actual amount on comparable basis as presented in the budget and actual comparative statement 138 351 - 138 351 178 080 39 729

Variance Analysis1 The total test revenue is 10.6% over budget with a rand value of R532 million. This positive revenue variance is

mainly attributable to Viral Load and GeneXpert volumes being higher by 33% and 39% against budgeted volumes respectively. Viral Load revenue constituted 18% and GeneXpert constituted 7% of total revenue. Upward volumes are driving the increase in turnover.

2 Teaching income variances have arisen due to the use of an Educational Services Fee formula which uses actual data received from universities at the end of their academic year to calculate the amount of revenue generated for teaching services.

3 Personnel costs are under budget due to a delay in the filling of vacant posts brought on by cash-flow constraints.

4 A bad debt provision for KwaZulu-Natal of R738 million has contributed mainly to the R734 million net variance between actual and budget due to the continued payment of a monthly flat rate.

5 General expenses relate to direct materials and other overheads. Material spend for the last year is R1.8 billion (2014: R1.6 billion). The overall total material percentage to total turnover is realised at 33% which exceeds the budget benchmark of 28.1% by 49% which is R262.2 million. This difference is attributable to a significant increase in the GeneXpert test which has a material cost to selling price ratio of 95%. An unbudgeted utilities provision of R22 million was raised during the current financial year in anticipation of various provinces charging the NHLS for use of laboratory space at their health facilities around the country.

Statement of Comparison of Budget and Actual Amounts (continued)



(continued)4Chapter

Controlling entity

Approved budget Adjustments Final Budget


basis

Difference between


R’000 R’000 R’000 R’000 R’000

Cash Flow StatementCash flows from operating activitiesReceiptsSale of goods and services 3 872 238 - 3 872 238 4 831 821 959 583 1Interest income 22 000 - 22 000 60 436 38 436

3 894 238 - 3 894 238 4 892 257 998 019

PaymentsEmployee costs (2 289 000) - (2 289 000) (1 978 959) 310 041Suppliers (1 153 466) - (1 153 466) (2 566 203) (1 412 737)Finance costs - - - (29) (29)

(3 442 466) - (3 442 466) (4 545 191) (1 102 725)Net cash flows from operating activities 451 772 - 451 772 347 066 (104 706)

Cash flows from investing activitiesPurchase of property, plant and equipment (280 000) - (280 000) (45 338) 234 662 2Proceeds from sale of property, plant and equipment - - - 461 461Purchase of intangible assets - - - (253) (253)Net cash flows from investing activities (280 000) - (280 000) (45 130) 234 870

Cash flows from financing activitiesFinance lease payments - - - (137) (137)Net increase/(decrease) in cash and cash equivalents 171 772 - 171 772 301 799 130 027 3Cash and cash equivalents at the beginning of the year 100 000 - 100 000 346 927 246 927Cash and cash equivalents at the end of the year 271 772 - 271 772 648 726 376 954

1 During the year, the NHLS experienced a net cash outflow due to low cash collections from debtors. This was driven mainly by the challenges faced in collecting cash from the KZN and Gauteng DoH.

2 Capital projects were put on hold during the financial year due to limited cash resources.

3 Net cash deficit is caused by the failure of some provinces to promptly pay for services.

Statement of Comparison of Budget and Actual Amounts (continued)



Accounting Policies

1. Presentation of the Economic Entity Financial Statements

The Group Annual Financial Statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practice (GRAP) as issued by the Accounting Standards Board and Statements of International Financial Reporting Standards (IFRS) where standards of GRAP are not yet effective. The Group Annual Financial Statements have been prepared using the accrual basis of accounting.

The Group Annual Financial Statements have been prepared on the historical cost accounting basis. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

Standards of GRAP approved but not yet effective

The list below does not incorporate those standards that have no impact on the operations of the NHLS.

At the date of authorisation of the Group Annual Financial Statements, the following relevant GRAP standards and interpretations were in issue but not yet effective:

GRAP 20: Related party disclosures - In assessing this new standard, management have determined that related party disclosures exist for the NHLS as it is subject to the overall direction from the executive government and ultimately parliament, and operate together to achieve the policies of government.

GRAP 108: Statutory receivables - In assessing this new standard, management have determined that statutory receivables exist in the financial records of the NHLS. A statutory receivable is a receivable that arises from legislation and the transaction amount for a statutory receivable is levied or charged in accordance with legislation, supporting regulations or similar means. The NHLS has come in to existence through an Act of parliament and governed by rules which stipulate the setting of fees and tariffs approved by the Minister of Health.

iGRAP 3: Determining whether an arrangement contains a lease - Currently, the NHLS enters in to lease arrangements. This interpretation addresses whether an arrangement is, or contains, a lease as defined in the Standard of GRAP on Leases (as revised in 2010). It also determines when the assessment or a reassessment of whether an arrangement is, or contains, a lease should be made. Lastly, if an arrangement is, or contains, a lease, how the payments for a lease should be separated from payments for other elements in an arrangement.

iGRAP 13: Operating leases - incentives - Currently, the NHLS enters in to lease arrangements. In negotiating a lease, the lessor may provide incentives for the lessee to enter in to the agreement. The issue is how incentives in an operating lease should be recognised in the financial statements of the lessor and lessee.

Management is still in the process of assessing the impact of these standards and interpretations on the operations of NHLS. The standards and interpretations where applicable will be adopted in the year they become effective.

A summary of the significant accounting policies, which have been consistently applied, are disclosed below.

1.1 Going concern assumption

These audited Group Annual Financial Statements have been prepared based on the expectation that the economic entity will continue to operate as a going concern for at least the next 12 months. Please also refer to the Accounting Authority’s report for further details.



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1.2 Consolidation

Basis of consolidation

Consolidated audited Group Annual Financial Statements are the audited Group Annual Financial Statements of the economic entity presented as those of a single entity.

The consolidated Group Annual Financial Statements incorporate the Group Annual Financial Statements of the National Health Laboratory Service (NHLS) and the controlled entity, the South African Vaccine Producers (Pty) Ltd (SAVP).

The reporting date of the NHLS and its controlled entity SAVP, are prepared as of the same reporting date.

Control exists when the controlling entity has the power to govern the financial and operating policies of another entity so as to obtain benefits from its activities.

The results of controlled entity, are included in the consolidated audited Group Annual Financial Statements from the effective date of acquisition or date when control commences to the effective date of disposal or date when control ceases.

All intra-entity transactions, balances, revenues and expenses are eliminated in full on consolidation.

1.3 Significant judgements and sources of estimation uncertainty

In preparing the audited Group Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the audited Group Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the audited Group Annual Financial Statements. Significant judgements include:

Trade and other receivables

The economic entity assesses its trade receivables for impairment at the end of each reporting period. Detailed disclosure appears in note 3 to the Statement of Financial Position.

Allowance for slow moving, damaged and obsolete stock

An allowance to write stock down to the lower of cost or net realisable value is made. The write down is included in the inventory note 2 to the Statement of Financial Position.

Provisions

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 14 Provisions.

Post retirement benefits

The present value of the post retirement obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of post retirement obligations.

The economic entity determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the economic entity considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in note 15.



Allowance for doubtful debts

Impairment losses on trade and other receivables are recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the debtors carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition. Detailed disclosure appears in note 3 to the Statement of Financial Position.

1.4 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:• it is probable that future economic benefits or service potential associated with the item will flow to the economic

entity

• the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.



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The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful lifeBuildings 6–50 years Mobile units 6–10 years Plant and machinery 5 years Furniture and fixtures 6–10 years Motor vehicles 5 years Office equipment 3–10 years Computer equipment 3–5 years Assets less than R5000 0 years Grant assets 0 years Laboratory equipment 4–10 years

The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimate unless expectations differ from the previous estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

Derecognition

The carrying amount of an item for property, plant and equipment shall be derecognised:a) on disposal (including disposal through a non-exchange transaction); or

b) when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.5 Heritage assets

Heritage assets are assets that have a cultural, environmental, historical, natural, scientific, technological or artistic significance and are held indefinitely for the benefit of present and future generations.

Recognition

The economic entity recognises a heritage asset as an asset if it is probable that future economic benefits or service potential associated with the asset will flow to the economic entity, and the cost or fair value of the asset can be measured reliably.

Initial measurement

Heritage assets are measured at cost.

Where a heritage asset is acquired through a non-exchange transaction, its cost is measured at its fair value as at the date of acquisition.

Subsequent measurement

After recognition as an asset, a class of heritage assets is carried at its cost less any accumulated impairment losses.



Impairment

The economic entity assess at each reporting date whether there is an indication that it may be impaired. If any such indication exists, the economic entity estimates the recoverable amount or the recoverable service amount of the heritage asset.

Transfers

Transfers from heritage assets are only made when the particular asset no longer meets the definition of a heritage asset. Transfers to heritage assets are only made when the asset meets the definition of a heritage asset.

Derecognition

The economic entity derecognises heritage asset on disposal, or when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss arising from the derecognition of a heritage asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the heritage asset. Such difference is recognised in surplus or deficit when the heritage asset is derecognised.

1.6 Intangible assets

An asset is identifiable if it either:• Is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or

exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or

• Arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable from the economic entity or from other rights and obligations.

A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract.

An intangible asset is recognised when:• It is probable that the expected future economic benefits or service potential that are attributable to the asset will

flow to the economic entity

• The cost or fair value of the asset can be measured reliably.

The economic entity assesses the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.

Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:• It is technically feasible to complete the asset so that it will be available for use or sale

• There is an intention to complete and use or sell it

• There is an ability to use or sell it

• It will generate probable future economic benefits or service potential

• There are available technical, financial and other resources to complete the development and to use or sell the asset

• The expenditure attributable to the asset during its development can be measured reliably.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.



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An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets, amortisation is provided on a straight line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Internally generated goodwill is not recognised as an intangible asset.

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Item Average Useful lifePatents, trademarks and other rights 20 yearsComputer software, internally generated 5–10 years

Intangible assets are derecognised:• on disposal; or

• when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. It is recognised in surplus or deficit when the asset is derecognised.

1.7 Investments

Controlling entity audited Group Annual Financial Statements

In the entity’s separate audited Group Annual Financial Statements, investments are carried at cost less any accumulated impairment.

The cost of an investment in controlled entity is the aggregate of:• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued

by the entity; plus

• any costs directly attributable to the purchase of the controlled entity.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably. 1.8 Financial instruments

Classification

Classification depends on the purpose for which the financial instruments were obtained / incurred and takes place at initial recognition. Classification is re-assessed on an annual basis, except for derivatives and financial assets designated as at fair value through surplus or deficit, which shall not be classified out of the fair value through surplus or deficit category.

Initial recognition and measurement

Financial instruments are recognised initially when the entity becomes a party to the contractual provisions of the instruments.



The entity classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability in accordance with the substance of the contractual arrangement.

For financial instruments which are not at fair value through surplus or deficit, transaction costs are included in the initial measurement of the instrument.

Regular way purchases of financial assets are accounted for at trade date.

Subsequent measurement

Financial instruments at fair value through surplus or deficit are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in surplus or deficit for the period.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Impairment of financial assets

At each end of the reporting period the economic entity assesses all financial assets, other than those at fair value through surplus or deficit, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the economic entity, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment.

Impairment losses are recognised in surplus or deficit.

Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in surplus or deficit within operating expenses. When such assets are written off, the write off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

Loans to/(from) economic entities

These include loans to and from controlling entities and controlled entity, are recognised initially at fair value plus direct transaction costs.

Loans from economic entities are classified as financial liabilities measured at amortised cost.

Receivables from exchange transactions

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for debt for estimated irrecoverable amounts are recognised in surplus or deficit when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the deficit is recognised in surplus or deficit within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in surplus or deficit.



(continued)4Chapter

Payables from exchange transactions

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value and subsequently recognised at amortised cost.

1.9 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

Any contingent rents are expensed in the period in which they are incurred.

1.10 Inventories

Inventories are initially measured at cost except where inventories are acquired through a non-exchange transaction, then their costs are their fair value as at the date of acquisition.

Subsequently inventories are measured at the lower of cost and net realisable value.

Inventories are measured at the lower of cost and current replacement cost where they are held for:• distribution at no charge or for a nominal charge; or

• consumption in the production process of goods to be distributed at no charge or for a nominal charge.

Net realisable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion and the estimated costs necessary to make the sale, exchange or distribution.

Current replacement cost is the cost the economic entity incurs to acquire the asset on the reporting date.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.



The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all inventories having a similar nature and use to the economic entity.

When inventories are consumed, the carrying amounts of those inventories are recognised as an expense in the period in which the related revenue is recognised. If there is no related revenue, the expenses are recognised when the goods are distributed, or related services are rendered. The amount of any write-down of inventories to net realisable value or current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value or current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.11 Impairment of cash-generating assets

Cash-generating assets are those units held by the economic entity with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use.

1.12 Impairment of non-cash-generating assets

Cash-generating assets are those assets held by the economic entity with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Non-cash-generating assets are assets other than cash-generating assets.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.



(continued)4Chapter

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use. Useful life is either:(a) The period of time over which an asset is expected to be used by the economic entity; or

(b) The number of production or similar units expected to be obtained from the asset by the economic entity.

Identification

When the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

The economic entity assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the economic entity estimates the recoverable service amount of the asset.

Irrespective of whether there is any indication of impairment, the entity also test a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.

Value in use

Value in use of non-cash-generating assets is the present value of the non-cash-generating assets’ remaining service potential.

The present value of the remaining service potential of a non-cash-generating asset is determined using the following approach:

Recognition and measurement

If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.

When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the economic entity recognises a liability only to the extent that is a requirement in the Standards of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

1.13 Stated capital

An equity instrument is any contract that evidences a residual interest in the assets of an economic entity after deducting all of its liabilities.

Ordinary shares are classified as equity. Stated capital is carried at par value.

1.14 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.



The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The expected cost of surplus sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Recognition and measurement

When an employee has rendered a service to an entity during an accounting period, the entity shall recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:

a) as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, an entity shall recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

b) as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the entity’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

Defined benefit plans

For defined benefit plans the cost of providing the benefits is determined using the projected credit method.

Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.

Consideration is given to any event that could impact the funds up to end of the reporting period where the interim valuation is performed at an earlier date.

Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight line basis over the average period until the amended benefits become vested.

Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the entity is demonstrably committed to curtailment or settlement.

When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obligation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In surplus or deficit, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a reimbursement.

The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs.

Any asset is limited to unrecognised actuarial losses and past service costs, plus the present value of available refunds and reduction in future contributions to the plan.

Other post retirement obligations

The entity provides post-retirement health care benefits to some retirees.

The entitlement to post-retirement health care benefits is based on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment. Independent qualified actuaries carry out valuations of these obligations.



(continued)4Chapter

1.15 Provisions and contingencies

Provisions are recognised when:• the economic entity has a present obligation as a result of a past event

• it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation

• a reliable estimate can be made of the obligation.

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.

A provision is used only for expenditures for which the provision was originally recognised.

Provisions are not recognised for future operating deficits.

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 32.

1.16 Commitments

Items are classified as commitments when an entity has committed itself to future transactions that will normally result in the outflow of cash.

Disclosures are required in respect of unrecognised contractual commitments.

Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financial statements, if both the following criteria are met:• Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer or

building maintenance services)

• Contracts should relate to something other than the routine, steady, state business of the entity – therefore salary commitments relating to employment contracts or social security benefit commitments are excluded.

1.17 Revenue

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.

An exchange transaction is one in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts.



Sale of goods

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:• the economic entity has transferred to the purchaser the significant risks and rewards of ownership of the goods

• the economic entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold

• the amount of revenue can be measured reliably

• it is probable that the economic benefits or service potential associated with the transaction will flow to the economic entity

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:• the amount of revenue can be measured reliably

• it is probable that the economic benefits or service potential associated with the transaction will flow to the economic entity

• the stage of completion of the transaction at the reporting date can be measured reliably

• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight line basis over the specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by the proportion that costs incurred to date bear to the total estimated costs of the transaction.

Interest and royalties

Revenue arising from the use by others of entity assets yielding interest and royalties is recognised when:• It is probable that the economic benefits or service potential associated with the transaction will flow to the entity

• The amount of the revenue can be measured reliably.

Interest is recognised, in surplus or deficit, using the effective interest rate method.

Interest income is accrued on a time-proportion basis, taking in to account the principal outstanding and the effective interest rate over the period to maturity. Interest is also received for designated, specific research purposes from contracts, grants and donations. In all cases such income is recognised in the statement of financial performance in the financial period in which the company becomes entitled to the use of such funds.

Royalties are recognised as they are earned in accordance with the substance of the relevant agreements.

Service fees included in the price of the product are recognised as revenue over the period during which the service is performed.

1.18 Revenue from non-exchange transactions

Revenue comprises gross inflows of economic benefits or service potential received and receivable by an entity, which represents an increase in net assets, other than increases relating to contributions from owners.



(continued)4Chapter

Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor.

Control of an asset arise when the entity can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit.

Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange.

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified.

Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting entity.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.

Recognition

An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.

Measurement

Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the entity.

When, as a result of a non-exchange transaction, the entity recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.

1.19 Investment income

Investment income is accrued on a time-proportion basis, taking in to account the principal outstanding and the effective interest rate over the period to maturity. Interest is also received for designated, specific research purposes from contracts, grants and donations. In all cases such income is recognised in the statement of financial performance in the financial period in which the company becomes entitled to the use of such funds.

1.20 Irregular expenditure

Irregular expenditure is recognised as expenditure in the statement of financial performance. If the expenditure is not condoned by the relevant authority it is treated as an asset until it is recovered or written off as irrecoverable.



1.21 Conditional grants and receipts

Revenue received from conditional grants, donations and funding are recognised as revenue to the extent that the entity has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent that the criteria, conditions or obligations have not been met a liability is recognised.

1.22 Budget information

General purpose financial reporting by economic entity shall provide information on whether resources were obtained and used in accordance with the legally adopted budget.

The approved budget is prepared on a accrual basis and presented by functional classification linked to performance outcome objectives.

The approved budget covers the fiscal period from 01 April 2014 to 31 March 2015.

The budget for the economic entity includes all the entities approved budgets under its control.

The audited Group Annual Financial Statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period have been included in the Statement of comparison of budget and actual amounts.

The Statement of Comparative and Actual Information has been included in the audited Group Annual Financial Statements as the recommended disclosure when the audited Group Annual Financial Statements and the budget are on the same basis of accounting as determined by National Treasury.

1.23 Sundry income

Teaching income

Teaching Income is recognised upon receipt of funds. This policy decision is attributable to the uncertainty associated with the flow of economic benefits arising from teaching-related transactions to the entity. The management decision taken complies with the requirements of the statement on revenue recognition.

Miscellaneous sales

Miscellaneous sales are generated when the NHLS recovers funds for rental lease agreements and other charges which need to be recovered from the use of its own facilities such as those used by Contract Laboratory Services.

1.24 Related parties

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions or if the related party entity and another entity are subject to common control. Related parties include:a) Entities that directly, or indirectly through one or more intermediaries, control, or are controlled by the reporting

entity

b) Key management personnel, and close members of the family of key management personnel.

A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. Related party transactions exclude transactions with any other entity that is a related party solely because of its economic dependence on the reporting entity.

Related party transactions and outstanding balances or commitments owing between the reporting entity and related parties are disclosed in note 33 to the financial statements. Remuneration of key management personnel is disclosed in note37 of the notes to the Group Annual Financial Statements.



(continued)4Chapter

Notes to the Audited Group Annual Financial Statements

Economic entity Controlling entity2015 2014 2015 2014R’000 R’000 R’000 R’000

2. Inventories

Raw materials 69 285 - -Work in progress 2 575 2 227 - -Finished goods 1 305 419 - -Consumable stores 96 818 88 339 96 814 88 343

100 767 91 270 96 814 88 343Inventories (write-downs) (11 797) (10 228) (11 797) (10 159)

88 970 81 042 85 017 78 184

Inventory write-downs comprise provisions for obsolete stock aged 3 months and older.

3. Trade and other receivables

Trade debtors 5 418 356 4 255 858 5 416 369 4 253 557Prepayments 1 844 2 616 1 844 2 616Other receivables 85 432 65 606 85 432 65 606Less: Provisions for impairment (2 697 325) (1 929 498) (2 697 325) (1 929 498)

2 808 307 2 394 582 2 806 320 2 392 281

Fair value of receivables from exchange transactions

The Accounting Authority considers that the carrying amount of trade and other receivables approximates to their fair value. The NHLS raises a doubtful debt provisions on private debtors (Medical Aid debtors and individual patients who are covered by Medical Aid).

Trade receivables from exchange transactions past due but not impaired

Trade and other receivables for the economic entity which are past due but not impaired as at 31 March 2015, are R538 million (2014: R1 394 million).

The ageing of amounts past due but not impaired is as follows:

1 month past due 187 010 126 453 186 836 126 0302 months past due 313 304 219 228 313 267 219 0213 months past due 37 309 1 047 917 37 298 1 047 775

537 623 1 393 598 537 401 1 392 826

Reconciliation of provision for impairment of trade and other receivables

Opening balance 1 929 498 1 076 379 1 929 498 1 076 379Provision for doubtful debt 581 507 808 138 581 507 808 138Amounts written off as uncollectible (274) (38 662) (274) (38 662)Provision for debtors interest 180 727 74 940 180 727 74 940Provision for credit notes 5 867 8 703 5 867 8 703

2 697 325 1 929 498 2 697 325 1 929 498

The creation and release of provision for impaired receivables have been included in operating expenses. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.




4. Receivables from non-exchange transactions

Research grants 8 943 5 597 8 943 5 597

5. Cash and cash equivalents

Cash and cash equivalents consist of:

Cash on hand 28 28 28 28Bank balances 13 399 9 339 10 958 8 314Short-term deposits 637 739 338 585 637 739 338 585

651 166 347 952 648 725 346 927

Cash and cash equivalents held by the NHLS that are not available for use by the NHLS 62 995 69 354 62 995 69 354

Credit quality of cash at bank and short term deposits, excluding cash on hand

The interest earned on cash at bank and short term deposits was on average 5.18% (2014: 5.35% per annum) and these deposits have an average maturity of 30 days.

6. Property, plant and equipment

2015 2014

Economic entity Cost

Accumulated depreciation

and accumulated impairment

Carrying value Cost



Carrying value

Land 3 208 - 3 208 3 208 - 3 208Leased buildings 131 652 (49 056) 82 596 129 724 (42 669) 87 055Plant and machinery 5 709 (5 294) 415 5 709 (4 335) 1 374Furniture and fixtures 13 331 (10 355) 2 976 13 062 (9 431) 3 631Motor vehicles 10 672 (10 603) 69 10 805 (10 700) 105Office equipment 26 771 (22 313) 4 458 21 032 (16 775) 4 257Computer equipment 96 111 (70 779) 25 332 98 312 (68 967) 29 345Leased vehicles 3 044 (3 044) - 3 044 (2 947) 97Owned buildings 8 821 (2 191) 6 630 5 849 (1 794) 4 055Capital work in progress 61 - 61 306 - 306Laboratory equipment 575 989 (462 953) 113 036 551 481 (439 999) 111 482Mobile units 33 471 (18 599) 14 872 33 477 (16 498) 16 979Buildings – air systems 19 025 (11 975) 7 050 16 481 (10 006) 6 475Total 927 865 (667 162) 260 703 892 490 (624 121) 268 369



(continued)4Chapter

2015 2014

Controlling entity Cost



Carrying value Cost



Carrying value

Land 3 208 - 3 208 3 208 - 3 208Leased buildings 131 652 (49 056) 82 596 129 724 (42 669) 87 055Plant and machinery 5 709 (5 294) 415 5 709 (4 335) 1 374Furniture and fixtures 13 177 (10 256) 2 921 12 908 (9 356) 3 552Motor vehicles 10 672 (10 603) 69 10 805 (10 700) 105Office equipment 26 729 (22 273) 4 456 20 990 (16 736) 4 254Computer equipment 95 767 (70 540) 25 227 98 091 (68 774) 29 317Leased vehicles 3 044 (3 044) - 3 044 (2 947) 97Owned buildings 8 821 (2 191) 6 630 5 849 (1 794) 4 055Laboratory equipment 572 304 (461 135) 111 169 548 384 (438 504) 109 880Mobile units 33 471 (18 599) 14 872 33 477 (16 498) 16 979Buildings – air systems 18 961 (11 930) 7 031 16 417 (9 970) 6 447Total 923 515 (664 921) 258 594 888 606 (622 283) 266 323

Reconciliation of property, plant and equipment – Economic entity – 2015 (R’000s)

Opening balance Additions Disposals Reclass Depreciation Total

Land 3 208 - - - - 3 208Leased buildings 87 055 1 926 - - (6 385) 82 596Plant and machinery 1 374 - - - (959) 415Furniture and fixtures 3 631 622 (30) (2) (1 245) 2 976Motor vehicles 105 - - (3) (33) 69Office equipment 4 257 951 (41) 858 (1 567) 4 458Computer equipment 29 345 4 910 (110) (857) (7 956) 25 332Leased motor vehicles 97 - - - (97) -Owned buildings 4 055 2 971 - - (396) 6 630Capital work in progress 306 (245) - - - 61Laboratory equipment 111 482 33 087 (683) 2 (30 852) 113 036Mobile units 16 979 176 (113) - (2 170) 14 872Buildings – air systems 6 475 2 988 (37) - (2 376) 7 050Total 268 369 47 386 (1 014) (2) (54 036) 260 703

6. Property, plant and equipment (continued)



Reconciliation of property, plant and equipment – Economic entity – 2014 (R’000s) – Restated


Land 3 208 - - - - 3 208Leased buildings 90 309 3 312 - (201) (6 365) 87 055Plant and machinery 2 385 20 - - (1 031) 1 374Furniture and fixtures 3 219 1 688 (31) 1 (1 246) 3 631Motor vehicles 101 89 - - (85) 105Office equipment 3 650 2 314 (8) 3 (1 702) 4 257Computer equipment 5 783 29 105 (125) - (5 418) 29 345Leased motor vehicles 373 - - - (276) 97Owned buildings 6 068 12 - (1 733) (292) 4 055Capital work in progress 30 267 (29 961) - - - 306Laboratory equipment 80 274 111 568 (220) (35) (80 105) 111 482Mobile units 19 137 - - - (2 158) 16 979Buildings – air systems 6 097 2 622 (13) 31 (2 262) 6 475Total 250 871 120 769 (397) (1 934) (100 940) 268 369

Reconciliation of property, plant and equipment – Controlling entity – 2015 (R’000s)


Land 3 208 - - - - 3 208Leased buildings 87 055 1 926 - - (6 385) 82 596Plant and machinery 1 374 - - - (959) 415Furniture and fixtures 3 552 621 (30) (2) (1 220) 2 921Motor vehicles 105 - - (3) (33) 69Office equipment 4 254 950 (41) 858 (1 565) 4 456Computer equipment 29 317 4 786 (110) (857) (7 909) 25 227Leased motor vehicles 97 - - - (97) -Owned buildings 4 055 2 971 - - (396) 6 630Laboratory equipment 109 880 32 501 (683) 2 (30 531) 111 169Mobile units 16 979 176 (113) - (2 170) 14 872Buildings – air systems 6 447 2 989 (37) - (2 368) 7 031Total 266 323 46 920 (1 014) (2) (53 633) 258 594

Reconciliation of property, plant and equipment – Controlling entity – 2014 (R’000s) – Restated


Land 3 208 - - - - 3 208Leased buildings 90 309 3 312 - (201) (6 365) 87 055Plant and machinery 2 385 20 - - (1 031) 1 374Furniture and fixtures 3 116 1 688 (31) 1 (1 222) 3 552Motor vehicles 101 89 - - (85) 105Office equipment 3 644 2 314 (8) 3 (1 699) 4 254Computer equipment 5 722 29 105 (125) - (5 385) 29 317Leased motor vehicles 373 - - - (276) 97Owned buildings 6 068 12 - (1 733) (292) 4 055Capital work in progress 30 218 (30 218) - - - -Laboratory equipment 78 482 111 488 (220) (35) (79 835) 109 880Mobile units 19 137 - - - (2 158) 16 979Buildings – air systems 6 072 2 609 (13) 31 (2 252) 6 447Total 248 835 120 419 (397) (1 934) (100 600) 266 323

Property, plant and equipment (continued)



(continued)4Chapter

Other information

22 620 assets have been fully depreciated and are recorded at R0 NBV. Due to severe cash constraints experienced by the NHLS, old equipment across a number of fixed asset categories have been retained and are currently in full use. The NHLS has a policy to replace assets at specified intervals. However, due to cash flow problems, and due to budget cuts, the NHLS was not able to replace the assets.

7. Non-compliance with section 28(5) of the NHLS Act

National Health Laboratory Service (NHLS) Act No. 37 of 2000 Section 28, Subsection 5 ‘Assets and liabilities’ paragraph 2 states that the registrar of deeds must register the immoveable property and make such entries or endorsements in any relevant register, title deeds or other document.

The following properties reflected in the entity’s asset register have not been transferred into the name of the NHLS. The process to obtain transfer has been a long and cumbersome process since the NHLS was formed.

1) Erf 265, 1883 and 1884 Mount Road, Port Elizabeth

2) Remaining extent of Erf 157 Lyndhurst (Sandringham property)

3) Portion 1,2,5,8 and remaining extent Erf 4354, Johannesburg (Property to the North of the SAIMR site in Braamfontein);

4) Remaining extent portion 70 and 85 of the Farm Rietfontein 61 1R

5) Portion 2 Erf 10102, Durban (Prince Street Property).

The reason for the above is due to loss of title deeds by respective departments/municipalities as well as the fact that some certificates have yet to be issued by the Department of Public Works. Management is continuing to pursue the Department of Public Works for the transfer of the properties with the assistance of the National Department of Health.

8. Intangible assets

2015 2014

Economic entity Cost



Carrying value Cost



Carrying value

Patents, trademarks and other rights 60 (21) 39 60 (18) 42Computer software 162 074 (71 378) 90 696 161 831 (49 649) 112 182Total 162 134 (71 399) 90 735 161 891 (49 667) 112 224

Controlling entity

Patents, trademarks and other rights 60 (21) 39 60 (18) 42Computer software 162 040 (71 344) 90 696 161 797 (49 615) 112 182Total 162 100 (71 365) 90 735 161 857 (49 633) 112 224

Reconciliation of intangible assets – Economic entity – 2015 (R’000s)

Opening balance Additions Amortisation Total

Patents, trademarks and other rights 42 - (3) 39Computer software 112 182 255 (21 741) 90 696

112 224 255 (21 744) 90 735



Reconciliation of intangible assets – Economic entity – 2014 (R’000s) – Restated

Opening balance Additions Disposals Amortisation Total

Patents, trademarks and other rights 45 - - (3) 42Computer software 70 817 63 640 - (22 275) 112 182

70 862 63 640 - (22 278) 112 224

Reconciliation of intangible assets – Controlling entity – 2015 (R’000s)

Opening balance Additions Disposals Amortisation Total

Patents, trademarks and other rights 42 - - (3) 39Computer software 112 182 255 - (21 741) 90 696

112 224 255 - (21 744) 90 735

Reconciliation of intangible assets – Controlling entity – 2014 (R’000s) – Restated

Opening balance Additions Amortisation Total

Patents, trademarks and other rights 45 - (3) 42Computer software 70 817 63 640 (22 275) 112 182

70 862 63 640 (22 278) 112 224

9. Heritage assets

2015 2014

Economic entityCost /

Valuation

Accumulated impairment

lossesCarrying

valueCost /

Valuation


lossesCarrying

value

Historical buildings 170 456 - 170 456 170 456 - 170 456

2015 2014

Controlling entityCost /

Valuation


lossesCarrying

valueCost /

Valuation


lossesCarrying

value

Historical buildings 170 029 - 170 029 170 029 - 170 029

Reconciliation of heritage assets – Economic entity – R’000s – 2015

Opening balance Additions Transfers Total

Historical buildings 170 456 - - 170 456

Reconciliation of heritage assets – Economic entity – R’000s – 2014


Historical buildings 166 889 1 633 1 934 170 456

8 Intangible assets (continued)



(continued)4Chapter

Reconciliation of heritage assets – Controlling entity – R’000s – 2015


Historical buildings 170 029 - - 170 029

Reconciliation of heritage assets – Controlling entity – R’000s – 2014


Historical buildings 166 490 1 605 1 934 170 029

Age and/or condition of heritage assets

NHLS buildings are recognised as Gauteng provincial heritage sites (SAHRA identifier 9/2/228/0034) by the South African Heritage Resource Agency (SAHRA) in accordance with the heritage assessment criteria stipulated under Section 3(3) of the National Heritage Resources Act.

10. Other financial liabilitiesOther financial liabilities comprise of amounts owed to suppliers for the acquisition of laboratory equipment and IT equipment. The liabilities are interest-free and are payable within the next 12 months.


At amortised costOther financial liabilities 3 820 27 486 3 820 27 486

Current liabilitiesAt amortised cost 3 820 27 486 3 820 27 486

11. Finance lease obligation

Minimum lease payments due- within one year - 137 - 137

Present value of minimum lease payments due- within one year - 137 - 137

It is economic entity’s policy to lease out certain motor vehicles under finance leases.

The average lease term was 3–5 years and the average effective borrowing rate was 7% (2014: 5%).

Interest rates are linked to prime at the contract date. All leases have fixed repayments and no arrangements have been entered into for contingent rent.

12. Trade and other payables

Trade payables 432 763 392 159 432 409 391 902Accrued expenses 475 259 217 660 474 773 216 500Other payables 172 773 103 995 172 569 103 798

1 080 795 713 814 1 079 751 712 200

The Accounting Authority considers that the carrying amount of trade and other payables approximates their fair value. Trade payables are non-interest bearing and are normally settled on 30-day payment terms. Payments amounting to R379.8 million (2014: R307.5 million) were not made within the NHLS’ terms and conditions agreed with its suppliers.

9 Heritage assets (continued)



13. Deferred income

The economic entity can only apply accounting records after the initial entry of the grant has been processed in the accounting records. This is due to the nature of the research grant income.


Unspent conditional grants and receipts comprises of:Research grants 52 264 57 992 52 264 57 992

Movement during the yearBalance at the beginning of the year 57 992 105 375 57 992 105 375Additions during the year 136 473 183 657 136 473 183 657Income recognition during the year (142 201) (231 040) (142 201) (231 040)Closing balance 52 264 57 992 52 264 57 992

14. Provisions

Reconciliation of provisions – Economic entity – 2015 (R’000s)

Opening balance Additions

Utilised during the

year

Reversed during the

year Total

Student bursary provision 7 901 - - (7 901) -Leave pay provision 129 674 106 599 (109 677) - 126 596Bonus provision 6 111 21 009 (21 557) - 5 563DoH utility charges provision 196 707 44 563 - - 241 270

340 393 172 171 (131 234) (7 901) 373 429

Reconciliation of provisions – Economic entity – 2014 (R’000s) – Restated


Utilised during the

year

Reversed during the

year Total

Student bursary provision - 7 901 - - 7 901Leave pay provision 117 695 148 477 (136 498) - 129 674Reward and retention provision 25 369 - - (25 369) -Bonus provision 6 682 21 078 (15 988) (5 661) 6 111DoH utility charges provision 161 289 35 418 - - 196 707

311 035 212 874 (152 486) (31 030) 340 393

Reconciliation of provisions – Controlling entity – 2015 (R’000s)


Utilised during the

year

Reversed during the

year Total

Student bursary provision 7 901 - - (7 901) -Leave pay provision 129 674 106 599 (109 677) - 126 596Bonus provision 6 111 21 009 (21 557) - 5 563DoH utility charges provision 196 707 44 563 - - 241 270

340 393 172 171 (131 234) (7 901) 373 429



(continued)4Chapter

Reconciliation of provisions – Controlling entity – 2014 (R’000s) – Restated


Utilised during the

year

Reversed during the

year Total

Student bursary provision - 7 901 - - 7 901Leave pay provision 117 695 148 477 (136 498) - 129 674Reward and retention provision 25 369 - - (25 369) -Bonus provision 6 682 21 078 (15 988) (5 661) 6 111DoH utility charges provision 161 289 35 418 - - 196 707

311 035 212 874 (152 486) (31 030) 340 393

The leave pay provision relates to vesting leave pay to which employees may become entitled upon leaving the employment of the economic entity. The provision arises as employees render a service that increases their entitlement to future compensated leave and is calculated based on an employee’s total cost of employment. The provision is utilised when employees become entitled to and are paid for the accumulated leave pay or utilise compensated leave due to them.

The bonus provision relates to employees who are on the cost to company package and elect to structure part of their package as a 13th cheque. The provision is utilised when employees become entitled to and are paid for their services to the entity. The bonus payable is determined by applying a specific formula based on the employees’ total cost to company.

The DoH utility charges provision relates to utilities and maintenance fees owing to the DoH for various provincial hospital facilities around the country.

15. Employee benefit obligations – Restated

The amounts recognised in the statement of financial position are as follows:


Carrying valuePresent value of the defined benefit obligation – wholly unfunded (876 457) (737 155) (876 457) (737 155)

Non-current liabilities (854 140) (718 630) (854 140) (718 630)Current liabilities (22 317) (18 525) (22 317) (18 525)

(876 457) (737 155) (876 457) (737 155)

NHLS provides post-employment healthcare benefits. Members who joined NHLS before 1 January 2003, and KZN members who joined NHLS before 1 October 2006 are eligible for a subsidy of medical scheme contributions in retirement.

Changes in the present value of the defined benefit obligation are as follows:

Opening balance 737 155 643 441 737 155 643 441Interest cost 70 533 55 844 70 533 55 844Service cost 20 994 17 796 20 994 17 796Benefits paid (19 351) (17 005) (19 351) (17 005) Actuarial gain/(loss) 67 126 37 079 67 126 37 079

876 457 737 155 876 457 737 155

14. Provisions (continued)



15. Employee benefit obligations – Restated (continued)

Calculation of actuarial gains and losses


Change in real discount rate (64 113) 59 575 (64 113) 59 575Change in demographic assumption - - - -Higher than expected healthcare cost inflation including changes in members' benefit options (25 744) (9 212) (25 744) (9 212)Unexpected changes in membership 22 732 (87 442) 22 732 (87 442)

(67 125) (37 079) (67 125) (37 079)

Key Economic assumptions used

For practical reasons, these assumptions are determined before the valuation date. The economic assumptions used in this valuation are based on the market information as at end February 2015. The economic assumptions have been set based on the duration of the liability as at 31 March 2015. At that date, the duration of the liability was 20.7 years; and therefore a duration of 21 years was used to set economic assumptions. Assumptions used at the reporting date:

Discount rate – pre-retirement 8.80 % 9.70 % 8.80 % 9.70 %Discount rate – post-retirement 8.80 % 9.70 % 8.80 % 9.70 %Healthcare inflation rate 8.50 % 9.00 % 8.50 % 9.00 %

Rate of discount:

The discount rate of 8.80% per annum is primarily determined by reference to current market yields on government bonds.

Consumer price index inflation:

While not used explicitly in the valuation, the actuaries have assumed the underlying future rate of consumer price index inflation (CPI inflation) to be 6.50% per annum. This assumption has been based on the relationship between the nominal bond curve and the real bond yield.

Income at retirement

Income at retirement is relevant to the extent that the contribution tables are based on income. The actuaries have assumed that an individual member’s income would increase by 8.00% per annum, based on the underlying assumption that individual remuneration increase including merit and promotional increases would exceed CPI inflation by an average of 1.5% per annum over the long term. The actuarial assumption is that income at retirement would be 65% of final salary.

Healthcare cost inflation

The current contribution tables of the medical schemes would continue to apply in the future, with allowances of inflationary increases of 8.50% per annum. In consultation with the NHLS, assumptions made by the actuaries state that healthcare cost inflation exceed CPI inflation by an average of 2.00% per annum over the long term.

Sensitivity analysis

Assumed healthcare cost trends rates have a significant effect on the amounts recognised in surplus or deficit. A one percentage point change in assumed healthcare cost trends rates would have the following effects:

1% increase 1% decrease 1% increase 1% decrease

Effect on the aggregate of the service cost and interest cost 22.3% -17% 22.3% -17%Effect on defined benefit obligation 20.6% -15.8% 20.6% -15.8%



(continued)4Chapter

Amounts for the current and previous four years are as follows:

2015R ‘000

2014R ‘000

2013R ‘000

2012R ‘000

2011R ‘000

Economic entity 876 457 737 155 643 441 498 565 471 027Controlling entity 876 457 737 155 643 441 498 565 471 027

16. Stated capital


Authorised332 000 Ordinary shares at par value of R1 each 332 332 332 332

Issued332 000 Ordinary shares at par value of R1 each 332 332 332 332

The economic entity’s sole shareholder is the South African Government. There have been no shares issued since the incorporation of NHLS.

17. Capital replacement reserve

The capital replacement reserve was created as a result of the establishment of the NHLS, which assumed control over state-owned laboratories on incorporation. During the current financial year, a transfer of the total balance of funds took place from the Capital Replacement Reserve to Accumulated Surplus Account. No funds have been set aside since the establishment of the NHLS to support this reserve.

Capital replacement reserve 8 000 8 000 8 000 8 000Transfer to accumulated surplus (8 000) - (8 000) -

- 8 000 - 8 000

18. General reserve

The general reserve was created as a result of the establishment of the NHLS, which assumed control over state-owned laboratories on incorporation. During the current financial year, a transfer of the total balance of funds took place from the General Reserve to the Accumulated Surplus Account. Since fund accounting is not allowed in terms of GRAP this reserve now forms part of the accumulated surplus.

General reserve 34 505 34 505 31 206 31 206Transfer to accumulated surplus (34 505) - (31 206) -

- 34 505 - 31 206

19. Investments

South African Vaccine Producers (Pty) LimitedPercentage holding 100 % 100 %Carrying amount 10 10Impairment (10) (10)

- -

15. Employee benefit obligations – Restated (continued)



20. Loan to Group company


Controlled entitySouth African Vaccine Producers (Pty) Ltd - - 40 858 41 046

- - 40 858 41 046Impairment of loans to controlled entity - - (40 858) (41 046)

- - - -

The controlling entity has subordinated it’s rights to claim payments of debts of R40.858 million (2014: R41.046 million) owing to it by South African Vaccine Producers (Pty) Ltd until the assets of the subsidiary, fairly valued, exceeds its liabilities. The report of the Accounting Authority contains further details of the subsidiary.

Loan to SAVP impaired

As of 31 March 2015, loans to economic entities of R40.858 million (2014: R 41.046 million) were impaired and provided for. The amount of the provision was R 40.858 million as of 31 March 2015 (2014: R 41.046 million).

The ageing of these loans is as follows:

1 to 12 months - - - 467Over 12 months - - 40 858 40 579

- - 40 858 41 046

21. Revenue

Sale of goods 15 525 14 250 - -Rendering of services 5 551 023 5 082 009 5 551 023 5 082 009Miscellaneous other revenue 15 133 7 233 15 133 7 233Government grants and subsidies 125 280 104 885 125 280 104 885

5 706 961 5 208 377 5 691 436 5 194 127

The amount included in revenue arising from exchanges of goods or services are as follows:Sale of goods 15 525 14 250 - -Rendering of services 5 551 023 5 082 009 5 551 023 5 082 009Miscellaneous other revenue 15 133 7 233 15 133 7 233

5 581 681 5 103 492 5 566 156 5 089 242

The amount included in revenue arising from non-exchange transactions is as follows:Transfer revenueGovernment grants and subsidies 125 280 104 885 125 280 104 885



(continued)4Chapter

22. Cost of sales – restated


Direct material expenses 2 234 276 1 934 270 2 231 943 1 932 187Employee costs 1 944 835 1 954 716 1 936 174 1 946 857Depreciation and amortisation costs 34 314 74 707 33 983 74 419

4 213 425 3 963 693 4 202 100 3 953 463

23. Other income

Fair value adjustments: National interest 48 559 98 998 48 559 98 998Royalties received 224 77 224 77Discount received 750 1 440 749 1 435Debt impairment recovered 343 418 343 418Internal recoveries 11 402 6 494 11 402 6 494Teaching income 40 852 17 491 40 852 17 491Sundry income 5 712 1 285 5 712 1 285Grant income recognised 142 201 231 040 142 201 231 040

250 043 357 243 250 042 357 238

24. Operating surplus/(deficit)

Operating surplus/(deficit) for the year is stated after accounting for the following:

Operating lease chargesPremises- Contractual amounts 3 840 4 804 3 819 4 643Motor vehicles- Contractual amounts 881 1 532 881 1 532Equipment- Contractual amounts 64 503 61 642 64 354 61 586

69 224 67 978 69 054 67 761

Deficit on sale of property, plant and equipment (553) (319) (553) (319)Amortisation on intangible assets 21 631 22 278 21 631 22 278Depreciation on property, plant and equipment 80 718 97 948 80 314 97 609



25. Employee related costs


Basic 1 620 067 1 585 914 1 613 446 1 579 609Bonus 14 786 64 14 723 (9)Medical aid – company contributions 122 673 120 870 122 052 120 270UIF 10 553 10 762 10 494 10 705WCA 6 296 6 080 6 263 6 050SDL 344 19 863 344 19 792Leave pay provision charge 14 182 25 747 14 175 25 632Training 131 331 133 350 131 196 133 233External bursaries (2 500) 5 769 (2 518) 5 769Other short term costs 58 841 61 206 58 420 60 811Defined contribution plans 297 554 248 085 296 920 247 480Long-term benefits – incentive scheme 3 010 2 930 2 961 2 910

2 277 137 2 220 640 2 268 476 2 212 252

26. Debt impairment

Contributions to debt impairment provision 669 973 918 381 669 781 918 930Debt impairment written off 106 061 (6 250) 106 061 (6 250)

776 034 912 131 775 842 912 680

Contributions to debt impairment provision consists of provision for doubtful debt and provision for the loss in the subsidiary company, SAVP.

Debt impairment written off consists of stale medical aid claims due to late billing as well as write offs due to data-capturing errors, debt that is uneconomical to pursue, death of patients, uncontactable patients and debt which falls over the prescribed period which amounted to R274 thousand (2014: R38.6 million).

An impairment provision of R1 591 billion raised in the prior year was retained in respect of the KZN DoH debt. A further R738 million was raised during the current financial year for the same debtor. Further details are contained in note 3.

27. Investment revenue

Interest revenue – RestatedBank 27 086 21 865 27 086 21 865Interest received – debtors 139 137 49 218 139 137 49 218

166 223 71 083 166 223 71 083

28. Finance costs

Other interest paid 1 655 6 022 1 655 6 022

In 2014, other interest paid of R6 million relates to a 2008 PAYE submission in which SARS claimed PAYE was payable by NHLS. Interest was charged on the penalties for the outstanding sum. NHLS lodged an objection with SARS to waive the interest after it was established that no additional PAYE was payable by NHLS. NHLS was subsequently refunded the interest paid in the 2015 financial year.



(continued)4Chapter

29. Auditors’ remuneration


Audit fees – current year 8 400 11 390 8 400 11 108Audit fees – prior year under provision 6 489 1 541 6 253 1 541Fees for other services 806 2 046 806 2 046

15 695 14 977 15 459 14 695

Auditors’ remuneration consists of external and internal audit remuneration. The NHLS has outsourced its internal audit function.

30. Cash generated from/(used in) operations – Restated

Surplus/(Deficit) 180 915 (152 199) 178 080 (154 974)Adjustments for:Depreciation and amortisation 102 347 147 098 101 944 146 760Loss on sale of assets and liabilities 553 319 553 319Debt impairment 776 034 912 131 775 842 912 680Movements in retirement benefit assets and 139 302 93 714 139 302 93 714liabilitiesMovements in provisions 33 036 29 358 33 036 29 358Grant assets expensed on purchase (26 569) (23 880) (26 570) (24 392)Changes in working capital:Inventories (7 928) (17 244) (6 833) (14 601)Trade and other receivables (413 725) (600 959) (414 039) (600 539)Debt impairment (776 034) (912 131) (775 842) (912 680)Other receivables from non-exchange (3 346) (3 052) (3 346) (2 545)transactionsPrepayments 8 355 (8 427) 8 360 (8 432)Trade and other payables 366 985 424 668 367 556 424 533Deferred income (5 728) (47 383) (5 728) (47 383)

374 197 (157 987) 372 315 (158 182)

31. Commitments

Authorised capital expenditure

Capital expenditure contracted for after the reporting date but not yet incurred is as follows:• Property, plant and equipment 26 057 112 883 26 057 112 883

Not yet contracted for and authorised by the Board• Property, plant and equipment 15 296 - 15 296 -

41 353 112 883 41 353 112 883

This committed expenditure relates to property, plant and equipment and will be financed by available bank facilities, retained surpluses, existing cash resources and funds internally generated.




Operating leases – as lessee expense

Minimum lease payments due- within one year 61 928 18 648 61 928 18 648- in second to fifth year inclusive 35 046 18 913 35 046 18 913

96 974 37 561 96 974 37 561

Operating lease payments represent rentals payable by the economic entity for certain of its office properties. Leases are negotiated for an average term of five years and rentals are fixed for an average of three years. No contingent rent is payable.

32. Contingencies

Contingent liabilities

The current status of the billing dispute between the NHLS and the Gauteng Department of Health is set out in note 1.4 of the Report of the Accounting Authority. The Gauteng Department of Health raised a counter-claim against the NHLS of R1.7 billion. The Accounting Authority is confident that an outcome will be reached in favour of the NHLS.

The intention of the NHLS is to defend all other cases and the legal opinion is of the view that the NHLS is in a favourable legal position to succeed.

The economic entity’s lawyers consider the likelihood of the action against the entity being successful as unlikely.

Claims lodged for damages:Legal fees on ex-employee cases 6 771 1 729 6 771 1 729Eviction application – Mthatha - 70 - 70Gauteng DoH counter-claim 1 711 480 1 711 480 1 711 480 1 711 480

1 718 251 1 713 279 1 718 251 1 713 279

Contingent assets

An employee and a vendor are alleged to have committed fraud and/or theft against the NHLS for a period of about 13 years from 2002 until June 2013. The NHLS conducted a disciplinary process and the employee was dismissed. The matter was reported to the Commercial Crimes Unit and a civil process has been instituted against the employee and the vendor.

Prof. A Wadee and SA Cosmetics cc 18 282 18 282 18 282 18 282

31. Commitments (continued)



(continued)4Chapter

33. Related parties

Relationships Designation Representative ofNon-executive Board MembersAlgonda Perez Chairperson Minister of HealthMahomed Randera Vice-Chairperson Minister of HealthAndre Venter* National Department of HealthFrew Benson** National Department of HealthPatrick Moonasar* National Department of HealthMichael Manning Western Cape ProvinceEric Buch Council for Higher Education: UniversitiesKoleka Mlisana Council for Higher Education: UniversitiesStanley Harvey* Northern Cape ProvinceNtombi Mapukata* Eastern Cape ProvinceTim Tucker* Public Nomination: ResearchThamsanqa Stander* Free State ProvinceThokozani Mhlongo** KZN ProvinceJim McCulloch* Gauteng ProvinceLucky Mapefane** North West ProvinceLunga Ntshinga Public Nomination: FinanceVacant position South African Local Government AssociationJohannes Semenya** Mpumalanga ProvinceThokozani Mhlongo* Mpumalanga ProvinceLufuno Nevondwe** Public Nomination: Legal MattersBen Durham* Department of Science and TechnologyHerbert Basetse** Department of Science and TechnologySuraya Jawoodeen** Organised LabourMichael Shingange* Organised LabourVacant position Limpopo ProvinceExecutive Board Member

Joyce Mogale* Interim Chief Executive Officer: NHLS National Health Laboratory Service

Sagie Pillay** Chief Executive Officer: NHLS National Health Laboratory Service

* New appointment ** Resigned/retired

The NHLS is controlled by the National Department of Health by virtue of the powers conferred to the Minister of Health by the National Health Laboratory Service Act, No. 37 of 2000.

Sales to related parties' transactions relates to the provision of pathology, research and teaching services. Purchases from related parties are as a result of goods and services purchased in the ordinary course of business.



Accounts receivable

Economic entity 2015 Economic entity 2014Owed Services billed Owed Services billed

By RegionWestern Cape 20 667 612 588 30 986 579 490Eastern Cape 144 937 583 386 10 444 544 520Northern Cape 33 485 110 903 15 375 102 641Gauteng 1 266 983 1 433 274 1 016 039 1 218 090North West 104 357 289 094 62 039 262 963Limpopo 33 378 337 305 18 968 307 731Mpumalanga 88 110 332 854 73 788 293 641Free State 59 384 280 738 126 343 282 138KwaZulu-Natal 3 532 218 1 584 472 2 833 695 1 477 007National 10 817 24 593 - -Total 5 294 336 5 589 207 4 187 677 5 068 221

By SegmentHospitals 4 268 462 3 461 778 3 399 764 3 311 182Health Clinics 199 642 465 280 156 378 425 921Correctional Services 12 939 15 600 10 503 18 217Anti-retroviral programmes 472 340 1 440 882 331 042 1 155 413Universities 2 776 35 102 7 174 16 568Defence 7 871 25 500 3 075 23 915Municipalities 316 327 109 759 273 634 112 289Other Public Entities 13 979 35 306 6 107 4 716Total 5 294 336 5 589 207 4 187 677 5 068 221

Controlling entity 2015 Controlling entity 2014Owed Services billed Owed Services billed

By RegionWestern Cape 20 667 612 588 30 986 579 490Eastern Cape 144 937 583 386 10 444 544 520Northern Cape 33 485 110 903 15 375 102 641Gauteng 1 266 983 1 433 274 1 016 039 1 218 090North West 104 357 289 094 62 039 262 963Limpopo 33 378 337 305 18 968 307 731Mpumalanga 88 110 332 854 73 788 293 641Free State 59 384 280 738 126 343 282 138KwaZulu-Natal 3 532 218 1 584 472 2 833 695 1 477 007National 10 817 24 593 - -Total 5 294 336 5 589 207 4 187 677 5 068 221

By SegmentHospitals 4 268 462 3 461 778 3 399 764 3 311 182Health Clinics 199 642 465 280 156 378 425 921Correctional Services 12 939 15 600 10 503 18 217Anti-retroviral programmes 472 340 1 440 882 331 042 1 155 413Universities 2 776 35 102 7 174 16 568Defence 7 871 25 500 3 075 23 915Municipalities 316 327 109 759 273 634 112 289Other Public Entities 13 979 35 306 6 107 4 716Total 5 294 336 5 589 207 4 187 677 5 068 221

33. Related parties (continued)



(continued)4Chapter

Accounts payable

Economic entity 2015 Economic entity 2014Owing Purchases Owing Purchases

By RegionWestern Cape 1 507 20 770 549 25 222Eastern Cape 59 342 4 273 55 080 56 572Gauteng 2 567 50 040 4 547 105 351North West 12 391 9 997Limpopo 747 790 36 252Free State - 550 5 182Mpumalanga 824 824 18 611 18 611KZN 69 394 6 658 122 409 65 715Total 134 393 84 296 201 246 272 902

By SegmentHospitals 132 042 11 754 178 065 120 450Universities 1 104 39 924 19 495 43 888Municipalities - 13 032 323 11 578National Public Entities 1 196 17 115 3 011 84 966Provincial Public Entities 51 2 471 352 12 020Other Public Entities - - - -

134 393 84 296 201 246 272 902

Controlling entity 2015 Controlling entity 2014Owing Purchases Owing Purchases

By RegionWestern Cape 1 507 20 770 549 25 222Eastern Cape 59 342 4 273 55 080 56 572Gauteng 2 567 50 040 4 547 105 351North West 12 391 9 997Limpopo 747 790 36 252Free State - 550 5 182Mpumalanga 824 824 18 611 18 611KZN 69 394 6 658 122 409 65 715Total 134 393 84 296 201 246 272 902

By SegmentHospitals 132 042 11 754 178 065 120 450Universities 1 104 39 924 19 495 43 888Municipalities - 13 032 323 11 578National Public Entities 1 196 17 115 3 011 84 966Provincial Public Entities 51 2 471 352 12 020Other Public Entities - - - -

134 393 84 296 201 246 272 902

33. Related parties (continued)



34. Risk management

Financial risk management

The economic entity’s activities expose it to a variety of financial risks: liquidity risk, interest rate risk and credit risk.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, economic entity treasury maintains flexibility in funding by maintaining availability under committed short-term investments. At year end the investment in short-term deposits amounted to R651 million.

The economic entity’s risk to liquidity is a result of the funds available to cover future commitments. The economic entity manages liquidity risk through an on-going review of future commitments and credit facilities.

The table below analyses the economic entity’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Economic entityLess than

1 yearBetween 2 and

5 years

At 31 March 2015Finance lease obligations - -

At 31 March 2014Finance lease obligations 137 -

Interest rate risk

The economic entity’s interest rate risk arising from short-term investments and finance leases is minimal in view of the immaterial amounts involved.

Fair value

At 31 March 2015, the carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximated their fair values due to the short-term maturities of these assets and liabilities.

The carrying amount of financial assets and financial liabilities approximate their fair values.

Credit risk

Credit risk is managed on a group basis.

Credit risk consists mainly of cash deposits, cash equivalents and trade debtors. The entity only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party to the exception of government departments.

Concentrations of credit risk with respect to trade receivables are limited due to the majority of receivables being owned by government departments. However, due to the current payment disputes with the KZN Provincial Department of Health and Gauteng Department of Health, a total doubtful debt allowance of R2,363 billion has been raised. Trade receivables are interest-bearing and are generally on 30 day payment terms. All interest on overdue debt has been provided for in full due to various communications received from the relevant government departments indicating they will not be in a position to honour the additional interest owed to NHLS.

Financial assets exposed to credit risk at year end were as follows:



(continued)4Chapter


Financial instrumentTrade Receivables and non-exchange receivables 2 817 250 2 407 207 2 815 263 2 404 906

35. Financial assets by categoryThe accounting policies for financial instruments have been applied to the line items below:


Financial assets at amortised costTrade and other receivables 2 808 307 2 394 582 2 806 320 2 392 281Other receivables from non-exchange transactions 8 943 5 597 8 943 5 597Cash and cash equivalents 651 166 347 952 648 725 346 927

3 468 416 2 748 131 3 463 988 2 744 805

36. Financial liabilities by category


Financial liabilities at amortised costTrade and other payables 1 080 795 713 814 1 079 751 712 200Finance lease obligation - 137 - 137Other financial liabilities 3 820 27 486 3 820 27 486

1 084 615 741 437 1 083 571 739 823

37. Prescribed officers and Board members’ emoluments – R’000sEmoluments were paid to the Board members or any individuals holding a prescribed office during the year.

2014 – 2015 SalariesRetirement

contributionMedical

contributionExpense

allowance Other Total

Prescribed OfficersS Madhi 2 475 - 66 - 1 2 542N Sangweni 1 353 121 26 - 1 1 501M Saffer (SAVP Director) 510 44 - - 27 581L Keyise 1 362 125 70 2 4 1 563K Reddy 779 73 59 2 4 917J van Heerden 1 812 - - 1 25 1 838S Pillay (CEO)* 1 614 125 - - 412 2 151M Kistnasamy* 580 47 17 60 308 1 012L Matras (Interim CFO)* 1 270 - - - - 1 270S Zulu (CFO)** 108 - - - - 108M Mphelo** 85 - - - - 85S Kisting** 675 - - - 5 680J Mogale (Interim CEO)** 719 - - - - 719M Randera (Acting CEO)** 180 - - - - 180

13 522 535 238 65 787 15 147

34. Risk management (continued)



* Resigned/retired **New appointment

2013 – 2014 SalariesRetirement

contributionMedical

contributionExpense

allowance Other Total

Prescribed OfficersS Pillay (CEO) 1 870 164 - 11 - 2 045S Madhi 2 230 - 69 11 - 2 310M Saffer (SAVP Director) 466 42 - - 38 546M Kistnasamy 1 344 138 46 191 42 1 761K Reddy 681 65 55 11 12 824S Michas* 378 37 23 25 104 567S Mahlati* 731 71 25 58 282 1 167P Lucwaba* 286 39 - 4 193 522N Mkhize* 383 44 17 38 96 578K Moya* 817 - 26 - 60 903J Mofokeng* 426 39 13 1 306 785D Erriah* 1 746 - - 3 6 1 755N Sangweni** 340 30 7 - - 377J van Heerden** 1 633 - - 5 24 1 662L Keyise** 183 21 15 - - 219

13 514 690 296 358 1 163 16 021

* Resigned/retired **New appointment

Service contracts

Prescribed officers are subject to written employment agreements. The employment agreements regulate duties, remuneration, allowances, restraints, leave and notice periods of these executives. None of these service contracts exceed 5 years.

2014 – 2015Members'

fees Other fees* Total

Non-executive Board MembersAlgonda Perez (Chairperson) 203 - 203Fazel Randera 190 7 197Eric Buch 172 - 172Thokozani Mhlongo 3 68 71Tlou Semenya** - 95 95Lunga Ntshinga 218 52 270Lufuno Nevondwe** 189 86 275Tim Tucker 167 1 168

1 142 309 1 451

*Other fees relate to travel re-imbursement and out-of-pocket expenses.**Board member retired/resigned/term expired.

37. Prescribed officers and Board members' emoluments – R'000s (continued)



(continued)4Chapter

2013 – 2014Members'

fees Other fees Total

Non-executive Board MembersAlgonda Perez (Chairperson) 123 - 123Fazel Randera 117 5 122David Motau 12 1 13Eric Buch 147 2 149Thokozani Mhlongo - 22 22Tlou Semenya - 43 43Tim Tucker 150 6 156

549 79 628

38. Restatement of prior period

Economic entity

Controlling entity

Economic entity

Controlling entity

2014 2014 2013 2013R’000 R’000 R’000 R’000

Statement of financial positionPost-retirement medical aid non-current 18 525 18 525 - -liabilityPost-retirement medical aid current liability (18 525) (18 525) - -Prepayment (7 028) (7 028) - -Property, plant and equipment 44 631 44 631 - -Goods and service accruals - - 738 -Capital-work-in-progress (81 426) (81 426) - -Accumulated depreciation (814) (814) - -Opening Accumulated Surplus (188 507) (190 282) (184 880) (184 141)Other financial liabilities (27 486) (27 486) - -Provisions - Utilities (13 268) (13 268) (102 716) (102 716)

Statement of Financial PerformanceRevenue - - 125 415 125 415Fair value expense - - (125 415) (125 415)Operating expenses 13 268 13 268 102 716 102 716Cost of sales (9 303) (9 303) (738) -

39. Irregular expenditureWith reference to Treasury Regulations 9.1.5 and 28.2.1, Irregular expenditure has been incurred as a result of NHLS procuring goods or services by means other than through competitive bids. A register of irregular expenditure has been maintained and has been disclosed below.


Reconciliation of irregular expenditure – under investigation - - - -Irregular expenditure – current year 341 126 7 912 341 126 7 912

341 126 7 912 341 126 7 912

37. Prescribed officers and Board members' emoluments – R'000s (continued)



Analysis of expenditure awaiting condonation per age classification


Current year 341 126 7 912 341 126 7 912Prior years 7 912 - 7 912 -

349 038 7 912 349 038 7 912

Details of irregular expenditure – current year – R’000s

2015R’000

Grant Thornton Contract expired in October 2012 389Becton Dickinson Contract expired in August 2014 449Becton Dickinson Contract expired in September 2014 810Intergr8 IT Contract expired 31 162Altech Autopage Contract expired in March 2014 10 089Mindex Contract expired in December 2014 306RDC Contract expired in 2014 110Tata Consulting Contract expired in April 2012 106Mahindra Tech Contract expired in April 2014 495Unison Contract expired in 2014 9Chien Consulting No contract 1 320Londocor Trading No contract 233Lenovo South Africa No contract 4 126Callandria No contract 105Metrofile Contract expired 2009 5 301LST (Disa Lab systems) No contract 10 375General Medical supplies No contract 1 095Bioretics No contract 2 407Lenovo South Africa No contract 3 817Bio-Smart Scientific No contract 525Bioweb (Pty) Ltd No contract 4 609Drs du Busson Bruinettekamer Inc. No contract 4 382DHL International (Pty) Ltd No contract 1 623Oracle Corporation SA No contract 17 761Patheq Qpl Logistics (Pty) Ltd No contract 6 137Transpaco Industries No contract 643Capital Lab Suppliers CC No contract 709Interactive Web Works CC No contract 875TLC Engineering Solutions (Pty) Ltd No contract 757Ikhayelihle Reserve Cleaning Services No contract 16 526The Workforce Group (Pty) Ltd No contract 1 052Labex (Pty) Ltd No contract 2 075Metrofile No contract 3 622Phillemon Mhanzanaza South Africa (Pty) Ltd No contract 4 283S Naidoo t/a Print Spectrum No contract 6 228LTC Tech South Africa (Pty) Ltd No contract 23 161Cipherware Storage Solutions Africa (Pty) Ltd No contract 891Wirsam (Pty) Ltd No contract 2 825

39. Irregular expenditure (continued)



(continued)4Chapter

2015R’000

Nyala Technologies (Pty) Ltd No contract 4 148The Scientific Group (Pty) Ltd No contract 58 125Inqaba Biotec No contract 6 239Relational Database Consultancy (Pty) Ltd No contract 19HCL Technologies South Africa (Pty) Ltd No contract 9 755Ingwempisi Security Services No contract 6 784Waltons Stationery Co Ltd (Johannesburg) No contract 9 452Introstat (Pty) Ltd No contract 9 269CHM Vuwani Computer Solutions Pty Ltd No contract 11 514Whitehead Scientific Suppliers No contract 16 454Kat laboratory and medical (Pty) Ltd No contract 5 773Alere Healthcare (Pty) Ltd No contract 8 356Bio-Rad Laboratories (Pty) Ltd No contract 17 776Celtic Molecular Diagnostic (Pty) Ltd No contract 3 955Separations No contract 2 119

341 126Details of irregular expenditure under investigation – R’000s (awaiting condonation)

2014R’000

ADDX Trading CC 864MiSeq bench top sequencer 1 987Thermo cycler 885Fluidigm Biomark HD Reader 1 660MiSeq system L15 1 921Real time PCR termal cycle 595

7 912

39. Irregular expenditure (continued)



Detailed Statement of Financial Performancefor the year ended 31 March 2015


20152014

Restated* 20152014


RevenueSale of goods 15 525 14 250 - -Rendering of services 5 551 023 5 082 009 5 551 023 5 082 009Miscellaneous other revenue 15 133 7 233 15 133 7 233Government grants and subsidies 125 280 104 885 125 280 104 885

5 706 961 5 208 377 5 691 436 5 194 127

Cost of sales 22 (4 213 425) (3 963 693) (4 202 100) (3 953 463)Gross surplus 1 493 536 1 244 684 1 489 336 1 240 664

Other incomeFair value adjustments: National interest 48 559 98 998 48 559 98 998Royalties received 224 77 224 77Discount received 750 1 440 749 1 435Recoveries 11 745 6 912 11 745 6 912Teaching Income 40 852 17 491 40 852 17 491Sundry Income 5 712 1 285 5 712 1 285Grant income recognised 142 201 231 040 142 201 231 040Interest received 27 166 223 71 083 166 223 71 083

416 266 428 326 416 265 428 321

Expenses (Refer to page 220) (1 727 232) (1 819 187) (1 725 866) (1 817 937)Operating surplus/(deficit) 24 182 570 (146 177) 179 735 (148 952)Finance costs 28 (1 655) (6 022) (1 655) (6 022)Surplus/(deficit) for the year 180 915 (152 199) 178 080 (154 974)

The supplementary information presented does not form part of the Group Annual Financial Statements and is presented as additional information. No audit opinion is expressed on these schedules.



(continued)4Chapter


20152014

Restated* 20152014


Operating expensesAdvertising 1 337 3 001 1 337 3 001Rates and taxes 3 64 3 64Assets expensed < R5 000 4 291 10 032 4 286 10 028Auditors remuneration 29 15 695 14 977 15 459 14 695Debt impairment 776 034 912 131 775 842 912 680Bank charges 855 1 156 835 1 142Cleaning 27 131 25 785 27 023 25 570Computer expenses 5 965 3 839 5 965 3 839Conferences and seminars 3 969 1 655 3 943 1 621Consulting and professional fees 38 253 29 987 38 091 29 812Project Management expenses 482 3 805 482 3 805Training expenses 5 874 12 530 5 874 12 530Software development expenses 17 712 42 903 17 712 42 903Consumables 12 600 11 681 12 539 11 594Debt collection 1 196 1 533 1 196 1 533Delivery expenses 963 386 953 385Depreciation, amortisation and impairments 68 035 72 391 67 963 72 341Discount allowed 21 620 22 019 21 620 22 019Employee costs 332 302 265 923 332 302 265 393Entertainment 27 742 27 742Research Trust 39 30 39 30Archiving and Storage 3 468 2 444 3 468 2 444Fines and penalties 4 - 4 -Insurance 2 332 2 631 2 332 2 631Lease rentals on operating lease 43 683 45 366 43 548 45 329Legal expenses 3 289 3 711 3 274 3 705Loss on disposal of assets 553 319 553 319Medical expenses 2 345 128 2 345 128Motor vehicle expenses 592 532 592 532Other expenses 12 1 12 1Packaging 4 108 5 235 4 032 5 109Petrol and oil 6 177 8 440 6 177 8 440Postage 69 367 69 366Printing and stationery 34 489 31 716 34 433 31 647Promotions 258 3 143 258 3 143Promotions and sponsorships 34 446 34 446Repairs and maintenance 55 556 46 115 55 535 46 067Security 7 389 6 809 7 389 6 809Software expenses 59 834 58 927 59 831 58 927Staff welfare 6 006 6 523 5 925 6 491Subscriptions 2 772 2 493 2 748 2 490Telephone and fax 70 450 87 352 70 387 87 267Travel – local 47 352 38 484 47 352 38 484Travel – overseas 38 268 38 268Utilities 42 039 31 167 42 039 31 167

1 727 232 1 819 187 1 725 866 1 817 937

The supplementary information presented does not form part of the Group Annual Financial Statements and is presented as additional information. No audit opinion is expressed on these schedules.


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RP270/2015ISBN: 978-0-621-43928-1

Annual Report 2014/15 - National Health Laboratory Service · 2 NHLS ANNUAL REPORT 2014/15 Contents...

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