DISCOVERY HOLDINGS LIMITED - PRESS RELEASE

DISCOVERY HOLDINGS LIMITED - PRESS RELEASE                                      
DISCOVERY HOLDINGS LIMITED                                                      
(Incorporated in the Republic of South Africa)                                  
(Registration number : 1999/007789/06)                                          
ISIN  : ZAE000022331                                                            
Share Code : DSY                                                                
Strong life and core health businesses boost Discovery"s operating profits 102% 
Discovery enjoyed a 102% growth in operating profit in the year to 30 June 2004 
on the back of strong results from all of its businesses. Discovery Life        
increased profits 138%, US subsidiary Destiny Health achieved profitability in  
its core Illinois business and solid growth was achieved in the core Discovery  
Health business.                                                                
Headline earnings per share before abnormal items rose by 18% to 77,4 cents, on 
a fully diluted basis. The disparity between the 102% increase in operating and 
per share profit can largely be explained by the issue of new shares in July    
2003, which raised R875 million, but increased the weighted average number of   
shares in issue by 29%.                                                         
Embedded value grew by 40% to R6,876 billion (2003: R4,928 billion), but the    
change in the number of shares in issue also affected the per share calculation,
putting embedded value per share on a diluted basis at R12,89 (2003: R12,20).   
Operating profit grew by 102% to R708 million (2003: R350 million), thanks      
largely to the Life business, which grew profits by 138% to R271 million (2003: 
R114 million).                                                                  
According to Discovery CEO Adrian Gore, Discovery"s businesses are built on the 
foundation of innovation and engaging people in the managing of their health in 
order to achieve better social and financial outcomes.                          
"This has enabled Discovery to take a leadership position in the markets wherein
it operates by offering  life and health insurance products that are            
competitive, efficient and sustainable. This has led to strong organic growth   
and a competitive position going forward," he said.                             
The Life business, which now constitutes almost 40% of operating profits, has   
exceeded all expectations since its launch less than four years ago, with its   
unique risk assurance offering.                                                 
Discovery Life"s annualised new business premium increased to R554 million      
(2003: R423 million). The number of policyholders increased by 91% to 119 884   
(2003: 62 914). The company"s market share of new business of the entire life   
assurance market now exceeds 6.1%.                                              
Product innovation and the integration of the offering with Discovery Health and
Vitality have enabled Discovery Life to remain highly competitive. Innovations  
in the year included the launch of the PayBack Benefit which allows Discovery   
Health members who are Discovery Life policyholders to receive back a           
substantial percentage of their life assurance premiums, based on how they      
manage their health.                                                            
Discovery Life is now an established leader in the life assurance market, a     
position reinforced by its rating as the lead risk assurer by its peers in a    
recent industry survey conducted by PriceWaterhouseCoopers, among South Africa"s
leading insurance companies.                                                    
Discovery Health continued to grow market share in the period under review,     
rising to 22.8% (2003: 20.8%), and membership now stands in excess of 1.6       
million members. This growth and improved administration efficiencies helped    
grow operating profits 40% to R522 million (2003: R372 million).                
Discovery Health"s product structures and sound risk management helped grow the 
Discovery Health Medical Scheme surplus by a healthy R1.52 billion over the     
financial year to over R2.5 billion at 30 June 2004. The Scheme is on track to  
meet the 25% statutory reserve level required by 31 December 2004.              
Progress in meeting these reserve levels has meant that Discovery Health and the
Discovery Health Medical Scheme were able to announce a 5.4% contribution       
increase for 2005, its lowest since inception. At the same time member benefits 
were significantly enhanced and remuneration for specialists and general        
practitioners increased by some 40%.                                            
KeyCare, which is aimed at employees earning less than R5 000 per month,        
continues to grow in line with projections, with approximately 67 000 members.  
Destiny Health, Discovery"s healthcare insurance subsidiary in the US, turned a 
small profit in the flagship Illinois business. The Illinois business made an   
operating profit of $190 000 during the second half of the year, while Destiny  
also rolled out joint ventures with Guardian Life Assurance Company of America  
and the Tufts Health Plan of Boston, Massachusetts.                             
Destiny Health membership grew by 66% to 36 189 (2003: 21 858) as a result of a 
70% increase in new business to $73 million (2003: $43 million). Operating      
losses decreased by 37% to R106 million (2003: R169 million), reflecting a      
combination of membership growth, improved quality of business and focused      
expense management.                                                             
The joint venture with Guardian has already produced pleasing results although  
the roll out of the Tufts Health Plan venture has been slower than initially    
anticipated. Destiny will aim to leverage the distribution capability and scale 
of its joint venture partners to grow its membership base.                      
Significant elements of the back-office functionality of Destiny have been moved
into Discovery to achieve the benefits of scale and a lower cost environment. An
important by-product of this has been the creation of job opportunities for     
South Africans of nearly 100 jobs in the past 12 months. It is anticipated that 
this will continue and grow as the business expands.                            
Discovery is also involved in two new initiatives, set to roll out in the coming
financial year. This includes PruHealth, a joint venture between Discovery and  
Prudential plc. The PruHealth product range will be built on Discovery"s        
consumer-driven healthcare experience and, as with Destiny Health, the company"s
administrative and service support functions will reside in South Africa.       
PruHealth is ahead of schedule, with the infrastructure approaching operational 
readiness and the Vitality product offering largely completed, having secured   
deals with two leading UK gym networks. Approval was recently obtained from the 
UK"s Financial Services Authority, paving the way for the consumer product      
launch, the next key milestone in PruHealth"s development.                      
DiscoveryCard is a credit card initiative set to roll out in the coming months. 
The DiscoveryCard is a "next generation" credit card offering full VISA         
functionality, automatic savings at a network of leading stores, interest-free  
finance for healthcare and also operates as a Discovery Health and Vitality     
membership card, giving savings benefits for cardholders who manage their       
health.                                                                         
Looking ahead, Gore said the capital raised in the period should provide        
sufficient capital to fund Discovery"s current growth aspirations. The strong   
operating performances, increased efficiencies achieved across all the          
businesses and new initiatives position the company well for future growth.     
Sandton                                                                         
31 August 2004                                                                  
Date: 31/08/2004 10:14:08 AM Supplied by www.sharenet.co.za                     
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