Wrap Text
DISCOVERY HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 99/07789/06)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1999
* REVENUE UP 72%
* EMBEDDED VALUE PROFIT UP 37%
* SOUTH AFRICAN AFTER TAX INCOME UP 58%
DISCOVERY HAS CONTINUED ITS BUSINESS MODEL OF AIMING ITS PRODUCTS AT AREAS OF
ESSENTIAL NEED, AND STRUCTURING THEM IN SUCH A WAY THAT PEOPLE ASPIRE TO BUY
THEM. IN ALL AREAS OF ITS BUSINESS THIS APPROACH HAS PROVED EFFECTIVE:
DISCOVERY HEALTH
AS FORECAST IN THE PROSPECTUS REVENUE INCREASED BY 72% TO R1,491M FROM R867M.
NEW BUSINESS ANNUALISED PREMIUM INCOME INCREASED BY 19% TO R591M FROM R497M FOR
THE PERIOD UNDER REVIEW. THIS TRANSLATED INTO AN INCREASE IN COVERED LIVES OF
19% TO 608,822 FROM 509,858 OVER THE SIX-MONTH PERIOD. THIS HAS BEEN AN
EXCITING PERIOD FOR DISCOVERY HEALTH. THE RESEARCH AND DEVELOPMENT TEAM FOUND
INNOVATIVE AND SOUND SOLUTIONS FOR THE NEW MEDICAL SCHEMES ENVIRONMENT AND ALL
AREAS OF ADMINISTRATION AND SYSTEMS HAVE BEEN ADJUSTED TO SUPPORT THE NEW
PRODUCT INITIATIVES.
THE MEDICAL SCHEMES ACT
INITIAL PRODUCT DESIGN ELEMENTS INTRODUCED BY DISCOVERY HEALTH DURING THE LAST
QUARTER OF 1999 MADE USE OF INSURANCE PRODUCTS REGISTERED UNDER THE LONG-TERM
INSURANCE ACT. THIS RESULTED IN A CONTROVERSIAL DEBATE AROUND THE DEMARCATION
BETWEEN WHAT IS MEDICAL SCHEME BUSINESS AND WHAT IS INSURANCE BUSINESS.
IN FEBRUARY 2000, DISCOVERY HEALTH IMPLEMENTED A PRODUCT DESIGN THAT IS
COMPLIANT WITH THE MEDICAL SCHEMES ACT AND HAS BEEN REGISTERED ACCORDINGLY.
THESE CHANGES HAVE CREATED A FOUNDATION FOR DISCOVERY HEALTH TO CONTINUE ITS
INNOVATION AND LEADERSHIP IN HEALTH CARE FINANCING.
DESTINY HEALTH
DESTINY HEALTH IS PROGRESSING WELL IN THE US AND IS ON SCHEDULE FOR ITS LAUNCH
TOWARDS THE END OF THE FINANCIAL YEAR. THE STRATEGY OF EXPORTING DISCOVERY
HEALTH'S TECHNOLOGY AND INTELLECTUAL CAPITAL, COMBINED WITH AN EXPERIENCED US
MANAGEMENT TEAM IS PROVING EFFECTIVE. THE INFRASTRUCTURE IS BEING CAREFULLY
BUILT TO MEET EXPECTED DEMANDS ON THE COMPANY IN THE COMPETITIVE US MARKET
PLACE. IN PARALLEL, THE US HEALTH CARE ENVIRONMENT IS DEVELOPING AS EXPECTED
WITH A COMBINATION OF RISING MEDICAL INFLATION AND RISING DISSATISFACTION WITH
TRADITIONAL MANAGED CARE PRODUCTS - THUS PROVIDING A UNIQUE OPPORTUNITY FOR
MARKET ENTRY.
VITALITY
VITALITY HAS PERFORMED EXCEPTIONALLY WELL IN TERMS OF MEETING MEMBERS' NEEDS
AND FINANCIALLY. ITS CORE FOCUS OF MAKING PEOPLE HEALTHIER WAS STRENGTHENED
CONSIDERABLY DURING THE PERIOD AS BRITISH AIRWAYS/COMAIR, SOUTHERN SUN, AVIS
AND THE SPORTS SCIENCE INSTITUTE OF SOUTH AFRICA WERE INCLUDED IN ITS
STRUCTURES. VITALITY NOW INCENTIVISES AND PROVIDES FACILITIES FOR OVER 380,000
PEOPLE. ITS ROLE, AS AN ADJUNCT TO THE HEALTH PLAN IN TERMS OF FOCUSING ON
WELLNESS, HAS PROVED EXTREMELY SUCCESSFUL.
YEAR 2000
NO Y2K PROBLEMS WERE ENCOUNTERED.
PROSPECTS
WHILE DISCOVERY'S ORGANIC GROWTH HAS BEEN SUBSTANTIAL, MANY OF ITS KEY
INITIATIVES ARE IN THEIR INFANCY. THE STRATEGY GOING FORWARD IS TO DRAMATICALLY
GROW ITS HEALTH CARE FINANCING BUSINESS ON THE COMPETITIVE FOUNDATION CREATED
SO FAR, WHILE UTILISING ITS CORE SKILL SETS TO EXPAND GEOGRAPHICALLY AND BY
PRODUCT TYPE.
THIS IS ILLUSTRATED BY:
* THE NEW DISCOVERY HEALTH PLANS BEING CAREFULLY CONSTRUCTED TO OFFER
SUSTAINABLE HEALTH CARE COVER IN THE NEW MEDICAL SCHEMES ACT ENVIRONMENT. THESE
PRODUCTS OFFER CONTINUED COMPETITIVE ADVANTAGE IN AN ENVIRONMENT THAT SUITS
DISCOVERY'S BUSINESS MODEL - AN ENVIRONMENT OF INCREASING SIZE AND COMPLEXITY.
* VITALITY, THROUGH WHICH THE COMPANY HAS DEVELOPED CORE COMPETENCIES IN
COMBINING HEALTH CARE, LOYALTY AND ACTUARIAL FUNDING TECHNIQUES TO ENHANCE
MEMBERS' LIFESTYLES. THIS "HEALTHSTYLE"
CONCEPT CONTINUES TO PROVIDE DISCOVERY WITH A UNIQUE COMPETITIVE ADVANTAGE AND
A FOUNDATION FOR FURTHER INITIATIVES.
* DESTINY HEALTH IN THE UNITED STATES.
* A NUMBER OF NEW INITIATIVES CURRENTLY BEING INVESTIGATED. IN PARTICULAR,
INNOVATIVE SPECIALIST RISK PRODUCTS ARE BEING DEVELOPED.
THIS INITIATIVE WILL BE FACILITATED THROUGH A NEW WHOLLY OWNED SUBSIDIARY OF
DISCOVERY HOLDINGS.
DISCOVERY HOLDINGS IS CONFIDENT OF MEETING ITS PROJECTIONS AS STATED IN THE
PROSPECTUS.
GROUP CONSOLIDATED EMBEDDED VALUE STATEMENT
EMBEDDED VALUE IS AN ACTUARIAL CALCULATION OF THE BUSINESS OF DISCOVERY
HOLDINGS, MADE UP OF TWO KEY COMPONENTS:
- THE CURRENT VALUE OF SHAREHOLDERS' FUNDS AS PER THE FINANCIAL STATEMENTS;
- THE PRESENT VALUE OF ALL FUTURE PROFITS ON EXISTING BUSINESS.
EMBEDDED VALUE
31 DECEMBER 31 DECEMBER
1999 1998 PRO FORMA
R MILLION
SHAREHOLDERS' FUND 467 168
VALUE OF EXISTING BUSINESS NET
OF COST OF SOLVENCY CAPITAL 1,169 636
EMBEDDED VALUE 1,636 804
EMBEDDED VALUE PROFITS
SIX MONTHS SIX MONTHS
ENDED ENDED
31 DECEMBER 31 DECEMBER
1999 1998
R MILLION
EMBEDDED VALUE AT 31 DECEMBER 1,636 804
EMBEDDED VALUE AT 30 JUNE 1,204 585
INCREASE IN EMBEDDED VALUE 432 219
CAPITAL RAISED (131) 0
EMBEDDED VALUE PROFITS 301 219
COMPONENTS OF EMBEDDED VALUE PROFITS
SIX MONTHS SIX MONTHS
ENDED ENDED
31 DECEMBER 31 DECEMBER
1999 1998
R MILLION
PROFITS FROM NEW BUSINESS 174 144
PROFITS FROM EXISTING BUSINESS
- EXPECTED RETURN 91 46
- EXPERIENCE VARIATIONS 40 27
- CHANGE IN BASIS (6) 0
DESTINY HEALTH START-UP COSTS (11) 0
RETURN ON SHAREHOLDERS' FUNDS 13 2
EMBEDDED VALUE PROFITS 301 219
EMBEDDED VALUE OF NEW BUSINESS
SIX MONTHS SIX MONTHS
ENDED ENDED
31 DECEMBER 31 DECEMBER
1999 1998
R MILLION
NEW BUSINESS API WRITTEN 591 497
EMBEDDED VALUE OF NEW BUSINESS 174 144
GROUP CONSOLIDATED INCOME STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31 DECEMBER 31 DECEMBER 30 JUNE
1999 1998 % 1999
UNAUDITED PRO FORMA CHANGE PRO FORMA
R MILLION
GROSS PREMIUM INCOME 1,491 867 72 2,145
REINSURANCE AND MEDICAL
SCHEME CONTRIBUTIONS (620) (460) 35 (1,096)
NET PREMIUM INCOME 871 407 114 1,049
INVESTMENT INCOME 111 (47) 52
TOTAL INCOME 982 360 1,101
EXPENSES AND CLAIMS (817) (357) 129 (912)
NET INCOME BEFORE
TRANSFERS 165 3 189
TRANSFERS (TO)/FROM
RESERVES (113) 30 (97)
NET INCOME AFTER TAXATION
FOR THE PERIOD FROM SOUTH
AFRICAN OPERATIONS 52 33 58 92
START-UP COSTS FOR
DESTINY HEALTH (11) - (1)
GROUP PROFIT ATTRIBUTABLE
TO SHAREHOLDERS 41 33 24 91
WEIGHTED AVERAGE
NUMBER OF SHARES IN
ISSUE 373,556,164 328,489,163 333,196,247
HEADLINE EARNINGS PER
SHARE (CENTS) 11.0 10.0 27,4
GROUP CONSOLIDATED BALANCE SHEET
31 DECEMBER 30 JUNE
1999 1999
UNAUDITED PRO FORMA
R MILLION
ASSETS
NON-CURRENT ASSETS
FIXED ASSETS 88 79
INVESTMENTS 659 496
747 575
CURRENT ASSETS
AGENTS AND OTHER RECEIVABLES 172 131
CASH AND CASH EQUIVALENTS 398 242
570 373
1,317 948
EQUITIES AND LIABILITIES
CAPITAL AND RESERVES
ISSUED CAPITAL 426 295
ACCUMULATED PROFITS 41 -
467 295
ACTUARIAL LIABILITIES AND RESERVES 499 386
CURRENT LIABILITIES 351 267
1,317 948
FINANCIAL INFORMATION - COMMENTARY
THE COMPARATIVE EMBEDDED VALUE STATEMENT AND INCOME STATEMENT FOR THE PERIOD
ENDED 31 DECEMBER 1998 ARE FOR DISCOVERY HEALTH ONLY, AS AT THAT DATE VITALITY
LIFESTYLE (PTY) LTD AND DESTINY HEALTH INC. HAD NOT YET BEEN INCORPORATED. THE
PRO FORMA INCOME STATEMENT AND BALANCE SHEET PRESENTED FOR THE YEAR ENDED 30
JUNE 1999 REPRESENTS THE CONSOLIDATED FINANCIAL STATEMENTS OF DISCOVERY HEALTH
LIMITED AND DESTINY HEALTH INC. AT THAT DATE.
NOTES TO THE EMBEDDED VALUE STATEMENT
THE EMBEDDED VALUE RESULTS HAVE BEEN PREPARED USING THE SAME BASIS AS DISCLOSED
IN ANNEXURE 1 OF THE PROSPECTUS DATED 27 SEPTEMBER 1999, WITH THE FOLLOWING
BASIS CHANGES:
PRODUCT CHANGES: ALL PRODUCT CHANGES UP TO 11 FEBRUARY 2000 HAVE BEEN
INCORPORATED IN THE EMBEDDED VALUE.
TAX: THE CHANGE IN BASIS OF CALCULATION OF INCOME TAX FOR LONG-TERM INSURERS,
WHICH IS EXPECTED TO INCREASE THE PAYMENT IN TAX, IS INCORPORATED IN THE
EMBEDDED VALUE.
31 DECEMBER 1999 30 JUNE 1999
RISK DISCOUNT RATE: 19.5% 21%
MEDICAL INFLATION: 11% 13%
EXPENSE INFLATION: 9% 11%
INVESTMENT RETURN: 12.5% 14%
THE RISK DISCOUNT RATE HAS BEEN CHANGED TO REFLECT THE DOWNWARD
MOVEMENT IN SOUTH AFRICAN LONG-TERM INTEREST RATES BETWEEN 30 JUNE 1999 AND 31
DECEMBER 1999. INVESTMENT RETURNS AND MEDICAL AND EXPENSE INFLATION HAVE BEEN
ADJUSTED TO REFLECT THE DOWNWARD MOVEMENT OF EXPECTED FUTURE INFLATION.
THE RESULTS HAVE BEEN REVIEWED BY HYMANS ROBERTSON CONSULTING ACTUARIES WHO
HAVE CONFIRMED THAT THE METHODOLOGY AND ASSUMPTIONS USED TO DETERMINE THE
EMBEDDED VALUE ARE REASONABLE.
NEW BUSINESS ANNUALISED PREMIUM INCOME (API) WRITTEN DURING THE PERIOD
COMPRISES NEW EMPLOYERS AND EXCLUDES ADDITIONS TO EXISTING EMPLOYERS AND
INFLATIONARY INCREASES.
NOTES TO THE INCOME STATEMENT
THE DISCOVERY GROUP EXPERIENCED SUBSTANTIAL GROWTH IN ALL ASPECTS OF ITS
BUSINESS.
GROSS PREMIUM INCOME INCREASED BY 72% TO R1,491M FROM R867M OVER THE SIX MONTH
PERIOD UNDER REVIEW.
NET PREMIUM INCOME INCREASED BY 114% OVER THE SIX MONTH PERIOD TO R871M FROM
R407M DUE TO A SIGNIFICANT DECREASE IN REINSURANCE REQUIRED BY DISCOVERY HEALTH
DUE TO A STRENGTHENING IN THE GROUP'S FINANCIAL POSITION. THIS, IN TURN,
RESULTED IN A CORRESPONDING INCREASE IN NET CLAIMS AND POLICYHOLDERS' BENEFITS,
DUE TO REDUCED REINSURANCE RECOVERIES.
INVESTMENT INCOME IMPROVED SUBSTANTIALLY DUE TO AN INCREASE IN INTEREST EARNED
AND AN IMPROVED PERFORMANCE OF LISTED EQUITIES ON THE JSE. THIS RESULTED IN AN
INCREASE IN TRANSFERS TO ACTUARIAL LIABILITIES AND RESERVES DUE TO INVESTMENT
INCOME EARNED ON POLICYHOLDERS' FUNDS.
NET PROFIT FROM THE SOUTH AFRICAN OPERATIONS INCREASED BY 58% TO R52M FROM R33M
WHILE DESTINY HEALTH IN THE UNITED STATES REFLECTED START-UP COSTS OF R11
MILLION IN LINE WITH THE BUSINESS PLAN. THIS RESULTED IN A TOTAL NET PROFIT
GROWTH OF 24% TO R41M FROM R33M.
NOTES TO THE BALANCE SHEET
ISSUED CAPITAL INCREASED BY R131M, BEING THE NET AMOUNT RAISED THROUGH THE
PUBLIC AND PREFERENTIAL OFFER ON THE LISTING OF DISCOVERY HOLDINGS ON 21
OCTOBER 1999 AFTER ALL SHARE ISSUE EXPENSES WERE DEDUCTED. THIS CONTRIBUTED
SIGNIFICANTLY TO THE INCREASE IN CASH AND CASH EQUIVALENTS. THESE FUNDS WILL BE
USED TO FINANCE THE CONTINUED GROWTH OF DISCOVERY HEALTH AND THE FURTHER
FUNDING REQUIREMENTS OF DESTINY HEALTH.
DIVIDENDS
AS STATED IN THE PROSPECTUS AND IN LINE WITH GROUP POLICY NO DIVIDEND HAS BEEN
DECLARED.
ON BEHALF OF THE BOARD:
LL DIPPENAAR (CHAIRMAN)
A GORE (CHIEF EXECUTIVE OFFICER)
DIRECTORS:
LL DIPPENAAR (CHAIRMAN),
A GORE (CHIEF EXECUTIVE OFFICER),
B SWARZTBERG (CHIEF OPERATING OFFICER),
SD WHYTE*, NS KOOPOWITZ*, JM ROBERTSON*, RB GOUWS, HP MEYER, WE LUCAS-BULL, FJC
TRUTER.
* EXECUTIVE
TRANSFER SECRETARIES:
COMPUTER SHARE SERVICES LIMITED
(REGISTRATION NUMBER 58/03546/06),
2ND FLOOR, EDURA, 41 FOX STREET, JOHANNESBURG 2000,
PO BOX 61051, MARSHALLTOWN 2107
SECRETARY AND REGISTRATION OFFICE:
AUBREY CIMRING (CA (SA))
DISCOVERY HEALTH, 1ST FLOOR, 25 FREDMAN DRIVE, SANDTON 2146, PO BOX 786722,
SANDTON 2146
TEL: (011) 881-2888, FAX: (011) 881-2547
WWW.DISCOVERYHEALTH.CO.ZA
EMAIL QUESTIONS TO: ASKTHECFO@DISCOVERYHEALTH.CO.ZA
DISCOVERY - MEDIA RELEASES RELATING TO THE MAIDEN RESULTS
MEDIA RELEASE 1
DISCOVERY'S MAIDEN RESULTS SHOW 58% INCREASE IN OPERATING PROFIT
FEBRUARY 17, 2000
DISCOVERY HOLDINGS TURNED IN A SPARKLING SET OF FINANCIAL RESULTS FOR THE SIX
MONTHS ENDED DECEMBER 1999, POSTING A 72% INCREASE IN GROSS PREMIUM REVENUE TO
R1,49-BILLION AND A 58% INCREASE IN AFTER-TAX PROFIT FROM SOUTH AFRICA
OPERATIONS TO R52-MILLION.
DISCOVERY'S US OPERATION, DESTINY HEALTH, REFLECTED START-UP COSTS OF
R11-MILLION, IN LINE WITH THE BUSINESS PLAN, RESULTING IN A TOTAL NET PROFIT
GROWTH OF 24% TO TOTALLING R41-MILLION (SIX MONTHS TO DECEMBER 1998:
R33-MILLION) AND EARNINGS PER SHARE 11C (10C). THIS FOLLOWS A 13.7% INCREASE IN
WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE TO 373,6-MILLION.
FUELLING THE INCREASE IN GROSS PREMIUM INCOME WAS A 19% INCREASE IN COVERED
LIVES TO 608,822. THE GROUP CONTINUES TO EXTEND ITS FOOTPRINT IN THE CORPORATE
MARKET WITH A PRODUCT OFFERING WHICH INCENTIVISES HEALTHY LIVING AND PREVENTIVE
MEDICINE.
VITALITY, DISCOVERY'S UNIQUE WELLNESS PROGRAMME THAT FOCUSES ON IMPROVING
HEALTH AND THEREBY REDUCES LONG-TERM HEALTH CARE COSTS, NOW ACCOUNTS FOR
380,000 COVERED LIVES.
EMBEDDED VALUE - AN ACTUARIAL CALCULATION OF THE PRESENT VALUE OF DISCOVERY
HEALTH'S SHAREHOLDERS' FUNDS AND FUTURE PROFITS OF EXISTING BUSINESSES - GREW
FROM R1 204-MILLION AS AT 30 JUNE 1999 TO R1.64-BILLION ON 31 DECEMBER 1999,
WHILE EMBEDDED VALUE PROFITS AMOUNTED TO R301-MILLION FOR THE SAME PERIOD.
EMBEDDED VALUE IS REGARDED AS A MORE APPROPRIATE METHOD OF VALUING INSURANCE
COMPANIES THAN TRADITIONAL FINANCIAL ACCOUNTING AS IT ACCOUNTS FOR THE FULL
VALUE OF ALL NEW BUSINESS WRITTEN OVER THE EXPECTED LIFE OF THAT BUSINESS
WITHOUT DEDUCTING FOR NEW BUSINESS STRAIN.
DISCOVERY HOLDINGS' CEO ADRIAN GORE SAYS THE GROUP IS ON TARGET TO MEET ITS
PRELISTING REVENUE AND PROFIT FORECASTS FOR THE FULL FINANCIAL YEAR, ENDING
JUNE 2000.
"WE TRADITIONALLY SEE MOST OF OUR ANNUAL GROWTH IN THE SECOND HALF OF THE YEAR,
AS OUR NOW BUSINESS GROWTH IS OFTEN HIGHER AT THE BEGINNING OF THE CALENDAR
YEAR," SAYS GORE.
"WE ARE DELIGHTED WITH THIS MAIDEN SET OF RESULTS AND WE ARE CONFIDENT OF
MAINTAINING THIS STRONG GROWTH TREND. IT IS CLEAR FROM THE GROWTH WE ARE
EXPERIENCING THAT THE MARKET IS RESPONDING VERY POSITIVELY TO OUR PRODUCT
OFFERING. OUR STRENGTH HAS ALWAYS BEEN OUR ABILITY TO INNOVATE AND BREAK NEW
GROUND IN HEALTH CARE."
DESTINY HEALTH IS ON TARGET TO COMMENCE TRADING BY THE AND OF THE FINANCIAL
YEAR. GORE SAYS DESTINY IS IN THE PROCESS OF BUILDING AN INFRASTRUCTURE CAPABLE
OF MEETING EXPECTED DEMAND IN A HIGHLY COMPETITIVE US MARKETPLACE.
"WE HAVE BEEN ABLE TO ATTRACT TOP FLIGHT SKILLS IN AN EXPERIENCED US MANAGEMENT
TEAM AND WE BELIEVE THAT THROUGH DESTINY WE HAVE SOMETHING NEW AND DYNAMIC TO
OFFER THE US MARKET."
DISCOVERY WAS LISTED IN THE "SHORT TERM INSURANCE" SECTOR OF THE JSE IN OCTOBER
1999.
REFERRING TO THE CONTROVERSY SURROUNDING THE SO-CALLED "DEMARCATION DEBATE"
BETWEEN THE REGISTRAR OF MEDICAL SCHEMES AND THE REGISTRAR OF INSURANCE OVER
THE SALE OF HYBRID HEALTH-INSURANCE PRODUCTS, GORE SAYS DISCOVERY'S PRODUCTS
HAVE BEEN MODIFIED TO COMPLY WITH THE RELEVANT LAWS AND HAVE BEEN REGISTERED
WITH THE REGISTRAR OF MEDICAL SCHEMES.
"WE IMMEDIATELY INITIATED A PROCESS OF CONSULTATION WITH THE DEPARTMENT OF
HEALTH TO RESOLVE THE MATTER. THIS PROCESS LED TO INTENSIVE RESEARCH AND
DEVELOPMENT, WHICH CULMINATED IN A BREAKTHROUGH IN THE DISCOVERY HEALTH PLANS'
STRUCTURE.
"THERE IS A LINGERING PERCEPTION THAT THIS MATTER IS STILL UNRESOLVED. THIS IS
NOT THE CASE. IT HAS HAD VIRTUALLY NO EFFECT ON OUR BUSINESS, NOR WILL IT IN
THE FUTURE."
LOOKING FORWARD, GORE SAYS DISCOVERY'S BUSINESS MODEL, AND ITS HEALTH PLANS,
OFFER A COMPETITIVE ADVANTAGE IN AN ENVIRONMENT THAT IS INCREASING IN
COMPLEXITY AND IN SIZE.
"THE STRATEGY GOING FORWARD IS TO DRAMATICALLY GROW OUR HEALTH CARE FINANCING
BUSINESS ON THE COMPETITIVE FOUNDATION CREATED SO FAR, BY UTILISING OUR CORE
SKILL SETS TO EXPAND GEOGRAPHICALLY AND BY PRODUCT TYPE.
"A NUMBER OF NEW INITIATIVES ARE CURRENTLY BEING INVESTIGATED. IN PARTICULAR
INNOVATIVE SPECIALIST RISK PRODUCTS ARE BEING DEVELOPED, WHICH WILL BE
FACILITATED THROUGH A NOW WHOLLY OWNED SUBSIDIARY OF DISCOVERY HOLDINGS.
GORE ADDS THAT DISCOVERY'S PRODUCT FOCUS ON WELLNESS AND PREVENTIVE MEDICINE
THROUGH VITALITY HAS BEEN ENTHUSIASTICALLY RECEIVED IN THE MARKET.
SAYS GORE: "DISCOVERY'S GREATEST STRENGTH IS ITS PEOPLE AND THEIR UNIQUE
SKILLS. WE HAVE THE ABILITY TO INTERPRET AND UNDERSTAND AN INCREASINGLY COMPLEX
HEALTH CARE MARKET, AND THEN DEVELOP PRODUCTS WHICH MEET THE NEEDS OF AN
INCREASINGLY DEMANDING MARKET."
ENDS
ISSUED ON BEHALF OF: BY
MR ADRIAN GORE FASEDEMI NEWMAN LEO BURNETT
DISCOVERY HEALTH LEO BURNETT HOUSE
25 FREDMAN DRIVE 3 SIMBA RD
SANDTON SUNNINGHILL
CONTACT : MR ADRIAN GORE CONTACT: MS JENNY NEWMAN
TEL : 011 881 2854 TEL : 011 235 4323
FAX : 011 881 2065 FAX : 011 235 4301
CELL : 082 606 2800 CELL : 082 882 8888
MEDIA RELEASE 2
DISCOVERY'S MAIDEN RESULTS UNAFFECTED BY "DEMARCATION" DEBATE
FEBRUARY 17, 2000
ANNOUNCING A STURDY 58% INCREASE IN OPERATING PROFIT TO R52-MILLION FROM SOUTH
AFRICA OPERATIONS FOR THE SIX MONTHS ENDING 31 DECEMBER 1999, DISCOVERY HEALTH
CEO ADRIAN GORE SAYS THE GROUP IS ON TARGET TO MEET ITS PRELISTING PROFIT AND
REVENUE FORECASTS.
THE SO-CALLED "DEMARCATION DEBATE" INVOLVING THE REGISTRAR OF MEDICAL SCHEMES
AND THE REGISTRAR OF INSURANCE HAS HAD NO MATERIAL IMPACT ON BUSINESS.
GORE SAYS CONSULTATIONS WITH THE DEPARTMENT OF HEALTH WERE OPENED AND THIS
PROCESS LED TO INTENSIVE RESEARCH AND DEVELOPMENT, WHICH CULMINATED IN A
BREAKTHROUGH IN THE DISCOVERY HEALTH PLANS' STRUCTURE.
ONLY A SMALL COMPONENT OF DISCOVERY'S HEALTH PLAN WAS AFFECTED BY THE
REGISTRAR'S INTERPRETATION OF THE LAW, SAYS GORE. "WE HAVE NOW REGISTERED THE
REVISED PRODUCTS WITH THE REGISTRAR AND THEREFORE THE MATTER HAS NO MORE
RELEVANCE AS FAR AS OUR BUSINESS IS CONCERNED."
DISCOVERY HEALTH RAISED R131-MILLION FROM ITS LISTING ON THE "SHORT TERM
INSURANCE" SECTOR OF THE JSE IN OCTOBER LAST YEAR.
THE GROUP REPORTED A 24% INCREASE IN NOT PROFIT TO R41-MILLION AFTER ABSORBING
R11-MILLION IN US START-UP COSTS.
THE US OPERATION, DESTINY HEALTH, IS EXPECTED TO COMMENCE TRADING BY THE MIDDLE
OF THIS YEAR. DISCOVERY'S UNIQUE PRODUCT OFFERING AND TECHNOLOGY IS IN THE
PROCESS OF BEING ADAPTED FOR THE US MARKET. INFRASTRUCTURE AND SYSTEMS ARE
BEING PUT IN PLACE TO ENSURE THE GROUP IS ABLE TO MEET PUBLIC DEMAND WHEN IT
OPENS ITS DOORS FOR BUSINESS BY MID-YEAR.
RESULTS RELEASED TODAY SHOW DISCOVERY INCREASED GROSS PREMIUM INCOME FOR THE
SIX MONTHS TO 31 DECEMBER 1999 BY A SPRIGHTLY 72% TO R1.49-BILLION.
EARNINGS PER SHARE INCREASED TO 11C FROM 10C FOR THE COMPARABLE PERIOD IN 1998,
FOLLOWING A 13.7% INCREASE IN WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE TO
373.5-MILLION.
THERE WAS A 19% INCREASE IN COVERED LIVES TO 608,822 OVER THE SIX MONTHS ENDING
31 DECEMBER 1999, THE RESULT OF CONTINUED GAINS IN MARKET SHARE IN THE
CORPORATE AND PERSONAL MARKETS.
DISCOVERY'S VITALITY HEALTH PLAN, WITH THE EMPHASIS ON IMPROVING HEALTH AND
THEREBY REDUCING LONG-TERM HEALTH CARE COSTS, NOW ACCOUNTS FOR 380,000 COVERED
LIVES.
LOOKING FORWARD, GORE SAYS DISCOVERY'S BUSINESS MODEL, AND ITS HEALTH PLANS,
OFFER A COMPETITIVE ADVANTAGE IN AN ENVIRONMENT THAT IS INCREASING IN
COMPLEXITY AND IN SIZE.
"THE STRATEGY GOING FORWARD IS TO DRAMATICALLY GROW OUR HEALTH CARE FINANCING
BUSINESS ON THE COMPETITIVE FOUNDATION CREATED SO FAR, BY UTILISING OUR CORE
SKILL SETS TO EXPAND GEOGRAPHICALLY AND BY PRODUCT TYPE.
"A NUMBER OF NEW INITIATIVES ARE CURRENTLY BEING INVESTIGATED. IN PARTICULAR
INNOVATIVE SPECIALIST RISK PRODUCTS ARE BEING DEVELOPED, WHICH WILL BE
FACILITATED THROUGH A NEW WHOLLY OWNED SUBSIDIARY OF DISCOVERY HOLDINGS."
GORE ADDS THAT DISCOVERY'S PRODUCT FOCUS ON WELLNESS AND PREVENTIVE MEDICINE
THROUGH VITALITY HAS BEEN ENTHUSIASTICALLY RECEIVED IN THE MARKET.
SAYS GORE: "DISCOVERY'S GREATEST STRENGTH IS ITS PEOPLE AND THEIR UNIQUE
SKILLS. WE HAVE THE ABILITY TO INTERPRET AND UNDERSTAND AN INCREASINGLY COMPLEX
HEALTH CARE MARKET, AND THEN DEVELOP PRODUCTS WHICH MEET THE NEEDS OF AN
INCREASINGLY DEMANDING MARKET."
ENDS
ISSUED ON BEHALF OF: BY
MR ADRIAN GORE FASEDEMI NEWMAN LEO BURNETT
DISCOVERY HEALTH LEO BURNETT HOUSE
25 FREDMAN DRIVE 3 SIMBA RD
SANDTON SUNNINGHILL
CONTACT : MR ADRIAN GORE CONTACT: MS JENNY NEWMAN
TEL : 011 881 2854 TEL : 011 235 4323
FAX : 011 881 2065 FAX : 011 235 4301
CELL : 082 606 2800 CELL : 082 882 8888
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