Wrap Text
Summary of unaudited group results for the six months ended 31 December 2022
DISCOVERY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1999/007789/06)
Legal Entity Identifier: 378900245A26169C8132
JSE share code: DSY ISIN: ZAE000022331
JSE share code: DSBP ISIN: ZAE000158564
Debt company code: DSYI
(“Discovery” or “the Company” or “the Group”)
SUMMARY OF UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
KEY FINANCIAL RESULTS 31 December 2022 31 December 2021 Change
Normalised profit from operations (R million) 5 930 4 872 22%
Profit from operations (R million) 5 098 5 216 (2%)
Normalised headline earnings (R million) 3 747 2 876 30%
Earnings per share (basic) - (cents) 443.1 498.8 (11%)
Headline earnings per share (basic) - (cents) 453.6 499.1 (9%)
Normalised headline earnings per share (basic) - (cents) 570.2 437.7 30%
Net asset value (R million) 57 184 52 175 10%
Embedded value (R million) 92 459 82 920 12%
Embedded value per share (R) 140.43 126.23 11%
STRATEGY, GROWTH, PROSPECTS AND DIVIDEND
The Group delivered a strong operating performance demonstrating the efficacy of the Vitality shared-value model, despite
specific macro-economic challenges across each of its three composites, South Africa, United Kingdom and Vitality Global.
New business growth was robust, and the Group made significant progress in its organic growth of new businesses as the
cost of new initiatives reduced significantly, now close to the Group’s guidance of 10% of normalised operating profit.
Discovery’s growth strategy is based on the efficacy, repeatability and scalability of its Vitality shared-value model. Since
this model is inherently a new business model, growth is pursued via organic growth and global partnerships. The
performance during the period has enhanced the Group’s confidence in this strategy. The Group’s capital plan and dividend
policy have followed a disciplined approach to facilitate this strategy so that Discovery can deliver significant real growth
in quality earnings and strong returns, without recourse to additional capital, thereby creating enduring shareholder value.
The dividend coverage ratio has been derived mathematically from the organic build model and was set at 4 to 5 times
coverage.
In 2020, the COVID-19 pandemic emerged creating considerable uncertainty and both macro and micro risks, and
consequently the Group followed a conservative approach to capital management – the dividend was suspended, a strategy
of reducing financial leverage was pursued, and further structures were implemented to ensure that the Group remains
protected from movements in interest rates. Importantly, the pursuit of growth was not curtailed and the Group during
this period increased the spend on new initiatives to over 20% of operating profit, most notably on the build of Discovery
Bank, and the Group followed the PAH capital raise in China, with its contribution of R1.5 billion in October 2021.
In the period, the positive manifestation of these strategies has been clear: operating profit has grown strongly, the
leverage ratio has reduced significantly, spend on new initiatives has reduced close to the 10% target level, with Discovery
Bank operating within plan and rapidly approaching profitability and scale. In addition, the strong performance and
consequent cash generation has now removed the need to pursue the stated capital placement previously announced to
fund the PAH capital contribution already made. Discovery is still of the view that given these developments and the current
rates of growth, the ordinary dividend should not be reinstated for the current period, and this will be revisited at the end
of the financial year.
Any forecast financial information contained in this announcement has not been reviewed or reported on by the
company's external auditors.
DIRECTORS’ STATEMENT
The contents of this short form announcement are the responsibility of the Board of Directors of the Company (Board).
Shareholders and/or investors are advised that this short form announcement represents a summary of the information
contained in the full announcement, published on https://senspdf.jse.co.za/documents/2023/JSE/ISSE/DSY/H12023.pdf
and on Discovery’s website: www.discovery.co.za/corporate/investor-relations on 23 February 2023. Any investment
decisions by investors and/or shareholders should be based on a consideration of the full announcement as a whole and
shareholders and/or investors are encouraged to review the full announcement, which is available for viewing on the JSE's
website and on the Company's website set out above. The full announcement is also available for inspection, at no charge,
at the registered office of the Company (1 Discovery Place, Sandton) and at the offices of Discovery’s sponsors, Rand
Merchant Bank (a division of FirstRand Bank Limited) (1 Merchant Place, Corner Fredman Drive and Rivonia Road, Sandton)
from 09:00 to 16:00 weekdays. Investors and/or shareholders may request copies of the full announcement from the
Company Secretary at company_secretarial2@discovery.co.za
On behalf of the Board
ME Tucker A Gore
Chairperson Group Chief Executive
22 February 2023
Directors ME Tucker (UK) (Chairperson), A Gore* (Group Chief Executive), HL Bosman1, R Farber, WM Hlahla, HD Kallner*2,
FN Khanyile, NS Koopowitz*2, D Macready, Dr TV Maphai, T Mboweni, Dr A Ntsaluba*2, A Pollard*2, M Schreuder,
B Swartzberg*, B van Kralingen, DM Viljoen* (Financial Director), SV Zilwa
*Executive
1. Retired effective 1 December 2022.
2. Will step down from the Board effective 1 March 2023 as part of changes in governance structures.
Debt officer DM Viljoen
Registered office and business address
1 Discovery Place,
Sandton 2146
PO Box 78672,
Sandton 2146
Transfer secretaries
Computershare Investor Services Proprietary Limited
Equity and Debt Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Company secretary
NN Mbongo
Independent auditors
PricewaterhouseCoopers Inc.
KPMG Inc.
www.discovery.co.za
SENS release date 23 February 2023
Date: 23-02-2023 08:15:00
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