Discovery is currently finalising its results for the 6 months ended 31 December 2010 ("the period"), which will be released on 22 February 2011. Normalised Headline Earnings per share, which excludes the effects of the acquisition of Standard Life Healthcare and realised gains on available-for-sale financial instruments, is expected to be between 20% and 30% higher than the corresponding reporting period of the previous year. Management is of the view that this best represents the operating results for the period. Shareholders are referred to the announcement of 11 May 2010 wherein Discovery announced its acquisition of the entire share capital of Standard Life Healthcare, a wholly-owned subsidiary of the Standard Life Group, for R1.56bn (GBP138m), as well as the related increase in shareholding in Prudential Health Holdings Ltd ("PHHL"), the holding company of PruHealth and PruProtect, the joint ventures between Discovery and Prudential Assurance Company ("Prudential") of the United Kingdom("the Transaction").
Applying the requirements of IFRS3: Business Combinations to the Transaction results in several large impacts in the income statement of the Company, including the recording of a substantial profit on the increase in Discovery's shareholding in PHHL from 50% to 75%. Full details of these impacts will be provided with the results. In order to assist in understanding the results for the period, Discovery intends providing an indication of Normalised Headline Earnings. Normalised Headline Earnings is defined as Earnings excluding the impact of the Transaction and excluding realised gains on available-for-sale financial instruments. Headline Earnings per share which includes some, but not all, of the impacts of the Transaction and excludes realised gains, is expected to be between 10% and 20% lower than the corresponding reporting period of the previous year. Earnings per share which includes all of the impacts of the Transaction and realised gains, is expected to be between 65% and 75% higher than the corresponding reporting period of the previous year. The financial information on which this trading statement is based has not been reviewed and reported on by the Company's external auditors.