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Summary of audited results and cash dividend declaration for the year ended 30 June 2014 - DSBP/DSY
Discovery Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1999/007789/06)
Company tax reference number: 9652/003/71/7
JSE share code: DSY ISIN: ZAE000022331
JSE share code: DSBP ISIN: ZAE000158564
Summary of AUDITED results and cash dividend declaration
for the year ended 30 June 2014
Normalised profit from operations
up 23%
to R4 976 million
Normalised headline earnings
up 24%
to R3 457 million
Embedded value
up 21%
to R43.1 billion
Transfer secretaries Computershare Investor Services Pty Limited
(Registration number 2004/003647/07) Ground Floor, 70 Marshall Street,
Johannesburg 2001, PO Box 61051, Marshalltown 2107
Sponsors Rand Merchant Bank (A division of FirstRand Bank Limited)
Secretary and registered office MJ Botha, Discovery Limited
155 West Street, Sandton 2146 PO Box 786722, Sandton 2146
Tel: (011) 529 2888 Fax: (011) 539 8003
Directors MI Hilkowitz (Chairperson), A Gore* (Chief Executive Officer), HL Bosman1, Dr BA Brink, P Cooper2, JJ Durand, SB Epstein (USA), R Farber* (Financial Director), HD Kallner*,
NS Koopowitz*, Dr TV Maphai, HP Mayers*, TT Mboweni3, Dr A Ntsaluba*, AL Owen (UK), A Pollard*, JM Robertson*, SE Sebotsa, T Slabbert, B Swartzberg*, SV Zilwa
* Executive 1 Appointed 14 April 2014 2 Resigned 10 April 2014 3 Appointed 1 January 2014
Preparation of final results
The final results for the year ended 30 June 2014 were prepared by B Mill FFA, FASSA, L Capon CA(SA),
L van Jaarsveldt CA(SA) and supervised by R Farber CA(SA), FCMA
COMMENTARY
Group results
The full year to 30 June 2014 marked a period of strong performance for Discovery. The period saw new business grow 15% to R12 196 million; normalised profit from operations up 23%
to R4 976 million; normalised headline earnings up 24% to R3 457 million; growth in embedded value of 21% to R43.1 billion; return on capital of 22.9%; and all businesses competitively
positioned in their respective markets.
While intense activity took place across the Group's primary market (SA), second primary market (UK), and partner markets (China, US, Singapore, and Australia) - the period was also
significant for its simplification and focusing of the Discovery behaviour-based insurance model. This work is profound, given that the business model is responsive to the complex forces
that shape the environment in which Discovery operates:
- There is a rising expectation globally that companies fulfil a socially-progressive core purpose, where economic value is generated through meeting societal needs in a sustainable way.
- Insurance companies are well placed to meet this expectation, given their large risk pools and mandate to provide protection for life's uncertainties and risks.
- There is growing evidence that the main driver of insurance risk is member behaviour, which is inherently irrational and interrelated.
The business model is therefore a powerful asset, as it responds to the above forces by adopting a composite view of members' integrated risk behaviour and incentivising better health
and driving; and channelling the resultant risk savings into the incentives required to deliver this behaviour change. The outcome is excellent member receptivity in all markets;
favourable claims and lapse trends across all businesses; volume and revenue uplift for health and reward partners; and a positive impact on healthcare costs, life expectancy, and road
safety.
1. PRIMARY MARKET: SOUTH AFRICA
Discovery Health
The healthcare environment remains complex, characterised by an increasing disease burden, a deepening shortage of physicians in key disciplines, continued upward cost pressure, and
legislative reform. Against this backdrop, Discovery Health continued its mission to create a superior healthcare system for Discovery Health Medical Scheme and other schemes under
management, with investment across all of its pillars: wellness programmes and pathways for corporates and individuals; the digital platforms through which members and health
professionals interact; its comprehensive product range; its provider networks; and its clinical and risk management assets. The outcome for members remains significant: the best cover,
broadest healthcare provider network, and best value for member-selected benefits.
Discovery Health's performance exceeded expectation: operating profit increased 10% to R1 854 million, after continued efficiencies were passed onto Discovery Health Medical Scheme
through a planned scale-related reduction in administration fees. In addition, Discovery Health new business increased 4% to R5 000 million; and lives under management for all schemes
grew to 2.9 million.
The year-to-date performance of Discovery Health Medical Scheme is also pleasing: lives covered grew 3% off an extremely high base to 2.6 million; and loss ratios, lapse rates, and
buy-downs remained low. Taking investment income into account, the projected net annual surplus for the Scheme is R1.3 billion and the projected solvency level will reach 25% of
annual premium income by 31 December 2014, well ahead of the planned target date.
Discovery Life
Discovery Life demonstrated exceptional operating profit growth of 23% to R2 591 million over the period, driven by new business growth of 6% to R2 013 million, better-than-expected
claims and lapse results, improved renewal efficiencies, and disciplined expense control. Experience variances were positive by R572 million and the business generated R422 million in
cash over the period, before allowing for the repayment of financial reinsurance.
The performance further validates the efficacy of the model, and its unique shared value attributes: members experience better value for money and policyholder returns, and the
insurer benefits from superior actuarial dynamics and higher profit margins. This is the basis for the successful exportation of the model to the UK and Asia.
Discovery Invest
The performance of Discovery Invest over the period exceeded expectation. Operating profit increased by 50% to R331 million, driven by high growth of products sold and strong
performance of the market. Assets under management increased to R42 billion, with new business API increasing by 30% to R1 396 million.
Discovery Insure
Discovery Insure's new business was exceptional, with 73% growth to R632 million, continuing on its trajectory as the fastest-growing short-term insurer in South Africa. Notwithstanding
this accelerated growth, the actuarial dynamics of loss ratio and lapse rates trended downwards.
Discovery's behaviour-based insurance model in short-term insurance is demonstrating the desired linkages between incentives and behaviour change, and creating further unique and
innovative big data pathways to protect members and their assets.
The period was also significant for the step-change in Discovery Insure's technology capability. In partnership with Boston-based Cambridge Mobile Telematics, Discovery Insure launched
a ground-breaking smartphone solution to accurately monitor complex driver behaviour at a granular level, and encourage safer driving in an intuitive, cost-effective, and member-
friendly way.
2. SECOND PRIMARY MARKET: UNITED KINGDOM
PruHealth and PruProtect
The performance of the joint businesses was positive: combined operating profit grew 33% to R628 million; new business grew 35% to R2 129 million; and the combined customer base
measured almost 800 000 at the end of the period. The scale and relevance of Discovery's UK businesses reflect Discovery's vision to build an exemplar of its SA model and assets,
manifesting in the best protection business in the UK. In this light, the period was foundational for its work on the product construct, with Vitality at the core; the distribution network
across both direct and intermediated channels; the investment in the customer journey; and continued elevation of the Vitality brand.
PruHealth delivered 38% operating profit growth to R202 million, driven by strong new business growth of 34% to R1.2 billion, predominantly in PruHealth's traditional markets of
individual and small-to-mid-size SMEs. During the period, significant work was done through Britain's Healthiest Company - a national initiative undertaken in conjunction with the
University of Cambridge and RAND Europe - to better understand the drivers of productivity and employee engagement, allowing a basis for Vitality to become more relevant in the
corporate market going forward. Higher levels of Vitality engagement continued to positively impact retention, where the focus has been around value using sophisticated price
optimisation techniques.
PruProtect delivered operating profit growth of 31% to R426 million and new business growth of 37% to R883 million, supported by the launch of the new Vitality Optimiser product. The
product fully embraces the pricing advantages of Vitality engagement, allowing for both a competitive upfront price point and dynamic annual underwriting based on Vitality
engagement. Initial member receptivity and engagement with Vitality has exceeded expectations. The strong growth enabled PruProtect to entrench its position as the number 3 new
business writer in the IFA segment. From an actuarial perspective, on a cumulative basis since launch, both claims and lapses continue to outperform assumptions.
3. PARTNER MARKETS: CHINA, US, SINGAPORE, AUSTRALIA
Ping An Health
In the period under review, Ping An Health entrenched its position as the largest and fastest-growing health insurer in China. Important advancements included an expanded individual
product range; an enhanced service to brokers and clients; and the improved throughput of both internal and external distribution channels.
New business grew 119% to R339 million. Encouragingly, category growth is evident, particularly in Group high-end (a product range offering extensive private medical insurance,
targeted at employers in China), with many members being first-time purchasers of comprehensive private health insurance. In addition, the mid-June 2014 launch of the Essential Health
Protector (a product offering basic private medical insurance, targeted at individuals), saw a marked increase in individual sales. Furthermore, the white-labelling of individual Ping An
Health products as Ping An Life products, meant a marked increase in sales post reporting period, the result of access to Ping An Life's large intermediary base. This positions Ping An
Health favourably to capture the potential of this burgeoning and important category.
Encouragingly, the ongoing reform of the healthcare system and the direction of government policy continue to provide long-term support to the development of the private health
insurance market in China.
The Vitality Group and AIA Vitality
Over the period, significant effort was invested in globalising the Vitality chassis in the US and pan-Asia through The Vitality Group and AIA Vitality.
The Vitality Group is increasingly being acknowledged as the top wellness provider in the US. Key developments over the period included product enhancements; new Vitality partners;
strengthening of The Vitality Group's sales and distribution capability; and superior levels of member engagement compared to industry. In addition, the Vitality Institute consolidated its
thought leadership, publishing the key findings and recommendations of The Vitality Institute Commission on Health Promotion and the Prevention of Chronic Disease in Working-Age
Americans.
AIA Vitality has now rolled out the integrated model in two countries, Singapore and Australia. Early data from both countries confirms the relevance of Discovery's business model to
these pan-Asian markets, and the products have gained instant recognition as being leading risk products, as judged by intermediaries and industry.
Prospects
The progress made during the period under review positions Discovery strongly for continued growth and profitability into the future. The financial information on which the above forecast is
based has not been reviewed and reported on by the company's external auditors.
On behalf of the Board
MI HILKOWITZ A GORE
Chairperson Group Chief Executive
Sandton
2 September 2014
STATEMENT OF FINANCIAL POSITION
at 30 June 2014
Group Group Group
2014 2013 2012
Audited Audited
R million Audited and restated and restated
Assets
Assets arising from insurance contracts 17 999 14 398 11 591
Property and equipment 666 533 251
Intangible assets including deferred acquisition costs 2 344 1 828 1 608
Goodwill 2 239 1 859 1 542
Investment in associates 551 402 341
Financial assets
- Equity securities 19 830 14 951 9 370
- Equity linked notes 1 672 1 281 6 480
- Debt securities 10 318 5 353 3 100
- Inflation linked securities 483 208 321
- Money market securities 8 028 8 130 5 729
- Derivatives 588 541 149
- Loans and receivables including insurance receivables 3 110 2 884 1 882
Deferred income tax 406 370 348
Current income tax asset 46 32 18
Reinsurance contracts 266 226 201
Cash and cash equivalents 3 650 2 103 2 884
Total assets 72 196 55 099 45 815
Equity
Capital and reserves
Ordinary share capital and share premium 2 582 1 470 1 503
Preference share capital 779 779 779
Other reserves 1 501 1 253 670
Retained earnings 12 549 10 204 8 778
17 411 13 706 11 730
Non-controlling interest - 2 1
Total equity 17 411 13 708 11 731
Liabilities
Liabilities arising from insurance contracts 25 797 19 075 14 319
Liabilities arising from reinsurance contracts 2 247 1 499 1 367
Financial liabilities
- Puttable non-controlling interests 4 494 3 782 2 893
- Negative reserve funding 4 684 2 813 1 264
- Borrowings at amortised cost 572 660 402
- Investment contracts at fair value through profit or loss 8 264 6 410 8 312
- Derivatives 10 28 35
- Trade and other payables 3 752 3 004 2 114
Deferred income tax 4 647 3 784 3 075
Deferred revenue 157 151 116
Employee benefits 154 138 116
Current income tax liability 7 47 71
Total liabilities 54 785 41 391 34 084
Total equity and liabilities 72 196 55 099 45 815
INCOME STATEMENT
for the year ended 30 June 2014
Group Group
2014 2013
Audited %
R million Audited and restated change
Insurance premium revenue 23 090 17 703
Reinsurance premiums (2 182) (2 043)
Net insurance premium revenue 20 908 15 660
Fee income from administration business 5 863 4 819
Vitality income 2 492 1 958
Investment income 414 324
- investment income earned on shareholder investments and cash 152 132
- investment income earned on assets backing policyholder liabilities 262 192
Net realised gains on available-for-sale financial assets 231 1
Net fair value gains on financial assets at fair value through profit or loss 4 278 2 129
Net income 34 186 24 891
Claims and policyholders' benefits (11 718) (8 773)
Insurance claims recovered from reinsurers 1 809 1 693
Net claims and policyholders' benefits (9 909) (7 080)
Acquisition costs (4 296) (3 531)
Marketing and administration expenses (10 146) (7 974)
Amortisation of intangibles from business combinations (187) (186)
Recapture of reinsurance - (336)
Recovery of expenses from reinsurers 360 139
Transfer from assets/liabilities under insurance contracts (3 726) (1 735)
- change in assets arising from insurance contracts 2 816 2 352
- change in liabilities arising from insurance contracts (5 795) (3 953)
- change in liabilities arising from reinsurance contracts (747) (134)
Fair value adjustment to liabilities under investment contracts (1 224) (630)
Profit from operations 5 058 3 558
Puttable non-controlling interest fair value adjustment (201) (133)
Finance costs (220) (220)
- finance costs raised on puttable non-controlling interest financial liability (157) (165)
- other finance costs (63) (55)
Foreign exchange gains 18 40
Share of net losses from equity accounted investments (14) (22)
Profit before tax 4 641 3 223 44
Income tax expense (1 327) (1 092) (22)
Profit for the year 3 314 2 131 56
Profit attributable to:
- ordinary shareholders 3 246 2 063 57
- preference shareholders 68 68
- non-controlling interest - -
3 314 2 131 56
Earnings per share for profit attributable to ordinary shareholders of the company during the year
(cents):
- basic 574.2 372.2 54
- diluted 559.8 367.1 52
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2014
Group Group
2014 2013
Audited %
R million Audited and restated change
Profit for the year 3 314 2 131
Items that are or may be reclassified subsequently to profit or loss:
Change in available-for-sale financial assets (3) 196
- unrealised gains 272 224
- capital gains tax on unrealised gains (87) (27)
- realised gains transferred to profit or loss (231) (1)
- capital gains tax on realised gains 43 *
Currency translation differences 256 235
- unrealised gains 285 284
- deferred tax on unrealised gains (29) (49)
Cash flow hedges (32) 96
- unrealised gains 51 172
- tax on unrealised gains (9) (33)
- current tax on unrealised gains 4 (4)
- gains recycled to profit or loss (87) (54)
- tax on recycled gains 9 15
Share of other comprehensive income from equity accounted investments 27 56
- change in available-for-sale financial assets (*) (1)
- currency translation differences 27 57
Other comprehensive income for the year, net of tax 248 583
Total comprehensive income for the year 3 562 2 714 31
Attributable to:
- ordinary shareholders 3 494 2 646 32
- preference shareholders 68 68
- non-controlling interest - -
Total comprehensive income for the year 3 562 2 714 31
* Amount is less than R500 000.
HEADLINE EARNINGS
for the year ended 30 June 2014
Group Group
2014 2013
Audited %
R million Audited and restated change
Normalised headline earnings per share (cents):
- undiluted 611.3 502.9 22
- diluted 595.9 496.0 20
Headline earnings per share (cents):
- undiluted 542.0 372.0 46
- diluted 528.4 367.0 44
The reconciliation between earnings and headline earnings is shown below:
Net profit attributable to ordinary shareholders 3 246 2 063
Adjusted for:
- realised gains on available-for-sale financial assets net of CGT (188) (1)
- impairment of property and equipment 3 -
- impairment of intangible assets 3 -
Headline earnings 3 064 2 062 49
- amortisation of intangibles from business combinations net of deferred tax 116 131
- finance costs raised on puttable non-controlling interest financial liability 157 165
- fair value adjustment to puttable non-controlling interest financial liability 201 133
- non-controlling interest allocation if no put options (81) (40)
- accrual of dividends payable to preference shareholders - *
- recapture of reinsurance - 336
Normalised headline earnings 3 457 2 787 24
Weighted number of shares in issue (000's) 565 471 554 165
Diluted weighted number of shares (000's) 580 047 561 843
* Amount is less than R500 000.
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2014
Attributable to equity holders of the Company Attributable to equity holders of the Company
Share capital Preference Share-based Non-
and share share payment Revaluation Translation Hedging Retained controlling
R million premium capital reserve reserve1 reserve reserve earnings Total interest Total
Year ended 30 June 2013
At beginning of year 1 503 779 319 58 254 39 8 778 11 730 1 11 731
Total comprehensive income for the year - 68 - 195 292 96 2 063 2 714 - 2 714
Profit for the year - 68 - - - - 2 063 2 131 - 2 131
Other comprehensive income - - - 195 292 96 - 583 - 583
Transactions with owners (33) (68) - - - - (637) (738) 1 (737)
Increase in treasury shares (39) - - - - - 33 (6) - (6)
Proceeds from treasury shares 6 - - - - - - 6 - 6
Non-controlling interest share issues - - - - - - - - 1 1
Dividends paid to preference shareholders - (68) - - - - - (68) - (68)
Dividends paid to ordinary shareholders - - - - - - (670) (670) - (670)
At end of year 1 470 779 319 253 546 135 10 204 13 706 2 13 708
Year ended 30 June 2014
At beginning of year 1 470 779 319 253 546 135 10 204 13 706 2 13 708
Total comprehensive income for the year - 68 - (3) 283 (32) 3 246 3 562 - 3 562
Profit for the year - 68 - - - - 3 246 3 314 - 3 314
Other comprehensive income - - - (3) 283 (32) - 248 - 248
Transactions with owners 1 112 (68) - - - - (901) 143 (2) 141
Share buy-back2 * - - - - - - * - *
Share issue 1 030 - - - - - - 1 030 - 1 030
Share issue costs (2) - - - - - - (2) - (2)
Increase in treasury shares (22) - - - - - 14 (8) - (8)
Delivery of treasury shares 105 - - - - - (105) - - -
Proceeds from treasury shares 1 - - - - - - 1 - 1
Non-controlling interest share issues - - - - - - - - 1 1
Non-controlling interest share buy-backs - - - - - - - - (3) (3)
Dividends paid to preference shareholders - (68) - - - - - (68) - (68)
Dividends paid to ordinary shareholders - - - - - - (810) (810) - (810)
At end of year 2 582 779 319 250 829 103 12 549 17 411 - 17 411
1 This reserve relates to the revaluation of available-for-sale financial assets.
2 Amount is R12 441.
STATEMENT OF CASH FLOWS
for the year ended 30 June 2014
Group Group
2014 2013
Audited
R million Audited and restated
Cash flow from operating activities 2 813 871
Cash generated by operations 6 424 1 514
Net purchase of investments held to back policyholder liabilities (6 036) (1 983)
Working capital changes 1 988 1 123
2 376 654
Dividends received 362 238
Interest received 802 617
Interest paid (63) (55)
Taxation paid (664) (583)
Cash flow from investing activities (1 102) (1 261)
Net purchase of financial assets (228) (741)
Purchase of equipment (208) (302)
Purchase of intangible assets (512) (181)
Increase in investment in associate (133) -
Purchase of businesses (21) (37)
Cash flow from financing activities (176) (671)
Proceeds from issuance of ordinary shares 1 032 1
Proceeds from issuance of preference shares 45 77
Share buy-back * -
Share issue costs (2) -
Dividends paid to ordinary shareholders (810) (670)
Dividends paid to preference shareholders (68) (68)
Non-controlling interest share buy-backs (3) -
Settlement of puttable non-controlling interest liability (352) -
Repayment of borrowings (18) (11)
Net increase/(decrease) in cash and cash equivalents 1 535 (1 061)
Cash and cash equivalents at beginning of year 1 887 2 884
Exchange gains on cash and cash equivalents 98 64
Cash and cash equivalents at end of year 3 520 1 887
Reconciliation to statement of financial position
Cash and cash equivalents 3 650 2 103
Bank overdraft included in borrowings at amortised cost (130) (216)
Cash and cash equivalents at end of year 3 520 1 887
* Amount is R12 441.
ADDITIONAL INFORMATION
at 30 June 2014
FINANCIAL ASSETS - INVESTMENTS
Group Group
June June
2014 2013
Audited and
R million Audited restated
Available-for-sale financial assets: 7 578 6 706
- Equity securities 887 952
- Equity linked notes 30 14
- Debt securities 1 836 544
- Inflation linked securities 71 12
- Money market securities 4 754 5 184
Financial assets at fair value through profit or loss: 32 753 23 217
- Equity securities 18 943 13 999
- Equity linked notes 1 642 1 267
- Debt securities 8 482 4 809
- Inflation linked securities 412 196
- Money market securities 3 274 2 946
40 331 29 923
Available-for-sale financial assets are shareholder investments. Unrealised gains and losses arising from changes in the fair value of these assets are recognised in the statement of other
comprehensive income. When the assets are sold the accumulated fair value adjustments are included in profit or loss as net realised gains/losses on available-for-sale financial assets.
Interest income and dividends received from these assets are recognised as investment income in profit or loss.
Financial assets designated as financial assets at fair value through profit or loss are those that are held in internal funds to match insurance and investment contract liabilities that are
linked to the changes in the fair value of these assets. Discovery recognises interest income, dividends received, realised and unrealised gains and losses from these assets in profit or loss
in 'Net fair value gains on financial assets at fair value through profit or loss'.
EXCHANGE RATES USED IN THE PREPARATION OF THESE RESULTS
USD GBP
30 June 2014
- Average 10.43 17.06
- Closing 10.63 18.17
30 June 2013
- Average 8.94 13.98
- Closing 10.01 15.22
ADDITIONAL INFORMATION
FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The Group's financial instruments measured at fair value have been disclosed using a fair value hierarchy. The hierarchy has three levels that reflect the significance of the inputs used in
measuring fair value. These are as follows:
Level 1 includes financial instruments that are measured using unadjusted, quoted prices in an active market for identical financial instruments. Quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's
length basis.
Level 2 includes financial instruments that are valued using techniques based significantly on observable market data. Instruments in this category are valued using:
(a) quoted prices for similar instruments or identical instruments in markets which are not considered to be active or
(b) valuation techniques where all the inputs that have a significant effect on the valuation are directly or indirectly based on observable market data.
Level 3 includes financial instruments that are valued using valuation techniques that incorporate information other than observable market data and where at least one input (which
could have a significant effect on instruments' valuation) cannot be based on observable market data.
At 30 June 2014
R million (audited) Level 1 Level 2 Level 3 Total
Financial assets
Financial instruments at fair value through profit or loss:
- Equity securities 18 937 6 - 18 943
- Equity linked notes - 1 642 - 1 642
- Debt securities 7 551 931 - 8 482
- Inflation linked securities 412 - - 412
- Money market securities 2 291 983 - 3 274
Available-for-sale financial instruments:
- Equity securities 887 - - 887
- Equity linked notes - 30 - 30
- Debt securities 1 834 2 - 1 836
- Inflation linked securities 71 - - 71
- Money market securities 4 748 6 - 4 754
Derivative financial instruments at fair value:
- Hedges - 585 - 585
- Non-hedges - 3 - 3
36 731 4 188 - 40 919
Financial liabilities
Puttable non-controlling interests - - 4 494 4 494
Negative reserve funding - 4 684 - 4 684
Borrowings at amortised cost - 572 - 572
Derivative financial instruments at fair value:
- Hedges - 3 - 3
- Non-hedges - 7 - 7
- 5 266 4 494 9 760
In the current year, investments in unit trusts have been assessed as level 1, as the fair value derives from observable market data and are traded in an active market.
Included in level 3 is the Puttable non-controlling interest liability. For a detailed description of the valuation of this liability, refer to note 4.3 in the 30 June 2014 Annual Financial
Statements.
At 30 June 2013
R million (audited and restated) Level 1 Level 2 Level 3 Total
Financial assets
Financial instruments at fair value through profit or loss:
- Equity securities 8 815 5 184 - 13 999
- Equity linked notes - 1 267 - 1 267
- Debt securities 3 652 1 157 - 4 809
- Inflation linked securities 196 - - 196
- Money market securities 149 2 797 - 2 946
Available-for-sale financial instruments:
- Equity securities 724 228 - 952
- Equity linked notes - 14 - 14
- Debt securities 33 511 - 544
- Inflation linked securities 7 5 - 12
- Money market securities 2 630 2 554 - 5 184
Derivative financial instruments at fair value:
- Hedges - 536 - 536
- Non-hedges - 5 - 5
16 206 14 258 - 30 464
Financial liabilities
Puttable non-controlling interests - - 3 782 3 782
Negative reserve funding - 2 813 - 2 813
Borrowings at amortised cost - 660 - 660
Derivative financial instruments at fair value:
- Hedges - 10 - 10
- Non-hedges - 18 - 18
- 3 501 3 782 7 283
SEGMENTAL INFORMATION
for the year ended 30 June 2014
IFRS reporting adjustments
New Normalised
SA SA SA SA UK UK business All other Segment UK profit IFRS
R million Health Life Invest Vitality Health Life development segments total Life1 DUT2 adjustments3 total
Income statement
Insurance premium revenue 16 8 522 6 336 - 6 259 1 920 603 - 23 656 (566) - - 23 090
Reinsurance premiums (2) (1 186) - - (925) (566) (69) - (2 748) 566 - - (2 182)
Net insurance premium revenue 14 7 336 6 336 - 5 334 1 354 534 - 20 908 - - - 20 908
Fee income from administration business 4 453 204 837 - 94 - 265 - 5 853 - - 10 5 863
Guarantee received from HumanaVitality - - - - - - 10 - 10 - - (10) -
Vitality income - - - 1 886 215 - 391 - 2 492 - - - 2 492
Investment income on assets backing policyholder liabilities - 204 - - 47 - 11 - 262 - - (262) -
Finance charge on negative reserve funding - - - - - (202) - - (202) 202 - - -
Inter-segment funding* - (448) 448 - - - - - - - - - -
Net fair value gains on financial assets at fair value through profit or
loss - 1 010 2 382 - - - - - 3 392 - 886 - 4 278
Net income 4 467 8 306 10 003 1 886 5 690 1 152 1 211 - 32 715 202 886 (262) 33 541
Claims and policyholders' benefits (2) (4 139) (2 718) - (4 263) (455) (415) - (11 992) 274 - - (11 718)
Insurance claims recovered from reinsurers - 896 - - 852 274 61 - 2 083 (274) - - 1 809
Net claims and policyholders' benefits (2) (3 243) (2 718) - (3 411) (181) (354) - (9 909) - - - (9 909)
Acquisition costs - (1 434) (541) (67) (503) (1 458) (91) - (4 094) (202) - - (4 296)
Marketing and administration expenses
- depreciation and amortisation (183) (31) - - (38) - (40) (1) (293) - - - (293)
- other expenses (2 428) (1 385) (328) (1 781) (1 834) (745) (1 172) (66) (9 739) (114) - - (9 853)
Recovery of expenses from reinsurers - - - - 292 - 68 - 360 - - - 360
Transfer from assets/liabilities under insurance contracts
- change in assets arising from insurance contracts - 1 156 - - - 388 - - 1 544 1 272 - - 2 816
- change in liabilities arising from insurance contracts - (26) (5 752) - 6 (2) (21) - (5 795) - - - (5 795)
- change in liabilities arising from reinsurance contracts - (747) - - - 1 272 - - 525 (1 272) - - (747)
Fair value adjustment to liabilities under investment contracts - (5) (333) - - - - - (338) - (886) - (1 224)
Normalised profit/(loss) from operations 1 854 2 591 331 38 202 426 (399) (67) 4 976 (114) - (262) 4 600
Investment income earned on shareholder investments and cash 32 39 16 7 5 - 14 39 152 - - 262 414
Net realised gains on available-for-sale financial assets - 228 2 - - - - 1 231 - - - 231
Amortisation of intangibles from business combinations - - - - - - - (187) (187) - - - (187)
Puttable non-controlling interest fair value adjustment - - - - - - - (201) (201) - - - (201)
Finance costs (22) - - - (2) (2) - (196) (222) 2 - - (220)
Foreign exchange gains/(losses) - - 5 - (55) - - 68 18 - - - 18
Share of net losses from equity accounted investments - - - - - - (14) - (14) - - - (14)
Profit before tax 1 864 2 858 354 45 150 424 (399) (543) 4 753 (112) - - 4 641
Income tax expense (523) (760) (97) (13) 2 (112) 25 39 (1 439) 112 - - (1 327)
Profit for the year 1 341 2 098 257 32 152 312 (374) (504) 3 314 - - - 3 314
* The inter-segment funding of R448 million reflects a notional allocation of interest earned on the negative reserve backing policy holders' funds of guaranteed investment products and hence is transferred to Discovery Invest.
The segment information is presented on the same basis as reported to the Chief Executive Officers of the reportable segments. The segment total is then adjusted for accounting reclassifications and entries required to produce IFRS compliant
results. These adjustments include the following:
1 The PruProtect results are reclassified to account for the contractual arrangement as a reinsurance contract under IFRS 4 - Insurance contracts.
2 The Discovery Unit Trusts (DUT) are consolidated into Discovery's results for IFRS purposes. In the Segment information the DUT column includes the effects of consolidating the unit trusts into Discovery's results, effectively being the income and
expenses relating to units held by third parties. This was previously included as part of the Discovery Invest segment.
3 Investment income on assets backing policyholder liabilities is included as part of the normalised profit from operations in the segmental disclosure, but is included together with shareholder investment income for IFRS purposes.
SEGMENTAL INFORMATION
for the year ended 30 June 2013
IFRS reporting adjustments
New Normalised
SA SA SA SA UK UK business All other Segment UK profit IFRS
R million Health Life Invest Vitality Health Life development segments total Life1 DUT2 adjustments3 total
Income statement
Insurance premium revenue 16 7 189 4 520 - 4 744 1 128 296 - 17 893 (190) - - 17 703
Reinsurance premiums (2) (1 299) - - (733) (190) (9) - (2 233) 190 - - (2 043)
Net insurance premium revenue 14 5 890 4 520 - 4 011 938 287 - 15 660 - - - 15 660
Fee income from administration business 4 061 140 555 - 34 - 11 - 4 801 - - 18 4 819
Guarantee received from HumanaVitality - - - - - - 18 - 18 - - (18) -
Vitality income - - - 1 660 100 - 198 - 1 958 - - - 1 958
Investment income on assets backing policyholder liabilities - 141 - - 51 - - - 192 - - (192) -
Finance charge on negative reserve funding - - - - - (124) - - (124) 124 - - -
Inter-segment funding* - (360) 360 - - - - - - - - - -
Net fair value gains on financial assets at fair value through profit
or loss - 501 976 - - - - - 1 477 - 652 - 2 129
Net income 4 075 6 312 6 411 1 660 4 196 814 514 - 23 982 124 652 (192) 24 566
Claims and policyholders' benefits (2) (3 648) (1 538) - (3 281) (192) (223) - (8 884) 111 - - (8 773)
Insurance claims recovered from reinsurers 3 1 004 - - 668 111 18 - 1 804 (111) - - 1 693
Net claims and policyholders' benefits 1 (2 644) (1 538) - (2 613) (81) (205) - (7 080) - - - (7 080)
Acquisition costs - (1 497) (401) (73) (379) (1 011) (46) - (3 407) (124) - - (3 531)
Marketing and administration expenses
- depreciation and amortisation (164) (29) (1) - (20) - (15) (1) (230) - - - (230)
- other expenses (2 224) (1 198) (256) (1 552) (1 166) (549) (640) (54) (7 639) (105) - - (7 744)
Recovery of expenses from reinsurers - - - - 139 - - - 139 - - - 139
Transfer from assets/liabilities under insurance contracts
- change in assets arising from insurance contracts - 1 189 - - - 1 073 - - 2 262 90 - - 2 352
- change in liabilities arising from insurance contracts - 117 (4 026) - (11) (10) (23) - (3 953) - - - (3 953)
- change in liabilities arising from reinsurance contracts - (134) - - - 90 - - (44) (90) - - (134)
Fair value adjustment to liabilities under investment contracts - (10) 32 - - - - - 22 - (652) - (630)
Normalised profit/(loss) from operations 1 688 2 106 221 35 146 326 (415) (55) 4 052 (105) - (192) 3 755
Recapture of reinsurance - - - - (336) - - - (336) - - - (336)
Investment income earned on shareholder investments and cash 29 34 13 7 6 - 14 29 132 - - 192 324
Net realised gains on available-for-sale financial assets - 1 - - - - - - 1 - - - 1
Amortisation of intangibles from business combinations - - - - - - - (186) (186) - - - (186)
Puttable non-controlling interest fair value adjustment - - - - - - - (133) (133) - - - (133)
Finance costs (13) - - - (1) (3) - (206) (223) 3 - - (220)
Foreign exchange gains/(losses) 7 - 4 - (10) - 5 34 40 - - - 40
Share of net losses from equity accounted investments - - - - - - (22) - (22) - - - (22)
Profit before tax 1 711 2 141 238 42 (195) 323 (418) (517) 3 325 (102) - - 3 223
Income tax expense (491) (595) (62) 13 - (102) 2 41 (1 194) 102 - - (1 092)
Profit for the year 1 220 1 546 176 55 (195) 221 (416) (476) 2 131 - - - 2 131
* The inter-segment funding of R360 million reflects a notional allocation of interest earned on the negative reserve backing policy holders' funds of guaranteed investment products and hence is transferred to Discovery Invest.
The segment information is presented on the same basis as reported to the Chief Executive Officers of the reportable segments. The segment total is then adjusted for accounting reclassifications and entries required to produce IFRS compliant results.
These adjustments include the following:
1 The PruProtect results are reclassified to account for the contractual arrangement as a reinsurance contract under IFRS 4 - Insurance contracts.
2 The Discovery Unit Trusts (DUT) are consolidated into Discovery's results for IFRS purposes. In the Segment information the DUT column includes the effects of consolidating the unit trusts into Discovery's results, effectively being the income and
expenses relating to units held by third parties. This was previously included as part of the Discovery Invest segment.
3 Investment income on assets backing policyholder liabilities is included as part of the normalised profit from operations in the segmental disclosure, but is included together with shareholder investment income for IFRS purposes.
REVIEW OF GROUP RESULTS
NEW BUSINESS ANNUALISED PREMIUM INCOME
New business annualised premium income increased 15% for the year ended 30 June 2014 when compared to the same period in the prior year.
June June %
R million 2014 2013 change
Discovery Health 5 000 4 820 4
Discovery Life 2 013 1 896 6
Discovery Invest 1 396 1 070 30
Discovery Vitality 206 216 (5)
Discovery Insure 632 366 73
PruHealth 1 246 929 34
PruProtect 883 644 37
The Vitality Group 164 94 74
HumanaVitality 317 420 (25)
Ping An Health* 339 155 119
New business API of Group 12 196 10 610 15
* The comparative for Ping An Health has been reduced by R216 million to exclude the Fund Product which has been discontinued during the current
financial year.
New business API is calculated at 12 times the monthly premium for new recurring premium policies and 10% of the value of new single premium policies. It also includes both automatic
premium increases and servicing increases on existing policies. For The Vitality Group, HumanaVitality and Ping An Health, new business API is calculated based on the date of policy
inception.
GROSS INFLOWS UNDER MANAGEMENT
Gross inflows under management increased 19% for the year ended 30 June 2014 when compared to the same period in the prior year.
June June %
R million 2014 2013 change
Discovery Health 46 395 41 050 13
Discovery Life 8 726 7 329 19
Discovery Invest 11 249 9 089 24
Discovery Insure 610 298 105
Discovery Vitality 1 886 1 660 14
PruHealth 6 568 4 878 35
PruProtect 1 920 1 128 70
The Vitality Group 402 216 86
Other new business development 257 9 2 756
Gross inflows under management 78 013 65 657 19
Less: collected on behalf of third parties (46 002) (40 813) 13
Discovery Health (41 926) (36 973) 13
Discovery Invest (4 076) (3 840) 6
Gross income of Group 32 011 24 844 29
Gross inflows under management measures the total funds collected by Discovery and is an accurate measure of the growth of Discovery.
NORMALISED PROFIT FROM OPERATIONS
The following table shows the main components of the normalised profit from operations for the year ended 30 June 2014:
June June %
R million 2014 2013 change
Discovery Health 1 854 1 688 10
Discovery Life 2 591 2 106 23
Discovery Invest 331 221 50
Discovery Vitality 38 35 9
PruHealth 202 146 38
PruProtect 426 326 31
Normalised profit from existing operations 5 442 4 522 20
Development and other segments (466) (470) 1
Normalised profit from operations 4 976 4 052 23
SIGNIFICANT ITEMS IN THE INCOME STATEMENT
Share-based payments
Included in marketing and administration expenses, in employee costs, is R371 million (2013: R450 million) in respect of phantom shares and options granted under the employee share
incentive schemes, which is expensed in accordance with the requirements of IFRS 2. Discovery has entered into transactions to hedge its exposure to changes in the Discovery share
price arising from these schemes. As at 30 June 2014, approximately 90.8% (2013: 87.7%) of this exposure was hedged. Fair value gains of R145 million (2013: R250 million) relating to
the hedge were recognised in profit or loss resulting in a net expense to Discovery of R226 million (2013: R200 million).
Put options in subsidiaries
During the 2011 financial year, put options were granted to the non-controlling interests of three of Discovery's subsidiaries, entitling the non-controlling interest to sell its interest in the
subsidiary to Discovery at contracted dates at fair value. In accordance with IAS 32, Discovery has recognised the fair value of the non-controlling interest, being the present value of the
estimated purchase price, as a financial liability in the Statement of Financial Position (Puttable non-controlling interests). Interest in respect of this liability of R157 million has been
recorded in finance costs for the year ended 30 June 2014 (2013: R165 million), using the effective interest rate method. The estimated purchase prices have been reconsidered at 30
June 2014 and a fair value adjustment of R201 million has been captured to profit or loss (2013: R133 million).
In August 2013, subject to regulatory approval, Discovery Insure's preference shareholders agreed to sell their 25% shareholding in Discovery Insure Limited to Discovery Limited for R352
million. This approval was received in December 2013 and the transaction was settled. Normalised headline earnings includes an allocation for the non-controlling interest share of losses
to the end of November 2013, being R26 million.
Aggregate effects on Discovery's results at 30 June 2014:
R million Total
Value of puttable non-controlling interests at 1 July 2013 3 782
Further share issues to non-controlling interests 45
Finance costs recognised in profit or loss 157
Fair value adjustments recognised in profit or loss: 201
- resulting from a change in interest rates (54)
- resulting from a change in assumptions 255
Put option exercised (352)
Net exchange differences arising during the year allocated to the translation reserve 661
Value of puttable non-controlling interests at 30 June 2014 4 494
Taxation
For South African entities that are in a tax paying position, tax has been provided at 28% (2013: 28%) in the financial statements.
No deferred tax has been raised on the assessed losses in Discovery Insure, PruHealth and The Vitality Group.
Material transactions with related parties
Discovery Health administers the Discovery Health Medical Scheme (DHMS) and provides managed care services for which it charges an administration fee and a managed healthcare fee
respectively. These fees are determined on an annual basis and approved by the trustees of DHMS. The fees totalled R4 046 million for the year ended 30 June 2014 (2013: R3 714
million). Discovery offers the members of DHMS access to the Vitality programme.
SIGNIFICANT ITEMS IN THE STATEMENT OF FINANCIAL POSITION
Investments in associates and subsidiaries
Ping An Health
In October 2013, following regulatory approval, Discovery Limited purchased a further 5% in Ping An Health for RMB 82.2 million, resulting in a 25% holding.
Discovery Insure
In December 2013, following regulatory approval, Discovery Limited purchased Discovery Insure's preference shareholders' 25% shareholding in Discovery Insure for R352 million.
Discovery Limited now holds 100% of the issued capital of Discovery Insure.
Refinancing of BEE transaction by a BEE partner
In September 2005, Discovery concluded a BEE transaction pursuant to which 38 725 909 shares were issued to a consortium of BEE parties. 17 703 273 of these shares were issued to
WDB Discovery Investment Proprietary Limited (WDB) at R0.113 each, being one of the BEE consortium members. The difference between the market value of the ordinary shares issued
to the BEE parties and the subscription consideration represented an outstanding funded amount provided by Discovery shareholders (funded amount).
In December 2013, WDB decided to refinance the funded amount provided by Discovery with a third-party financial institution, which resulted in the following transactions:
- The repurchase by Discovery of 12 440 910 Discovery shares held by WDB at a price of R0.001 per share to repay the funded amount. The remaining 5 262 363 shares were retained by
WDB as fully paid.
- The issue to WDB by Discovery of 12 440 910 new Discovery shares at a price of R82.75 per Discovery share (representing the 30 day VWAP to 4 December 2013).
The treasury shares decreased by 20 270 560, being 17 703 273 shares from the original transaction, as well as 2 567 287 shares that were purchased with the dividends received by
WDB. This increased Share Premium by R1 135 million.
Financial assets
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss have increased by R9.5 billion due to the sale of Discovery Invest products as well as the significant returns on these investments. These
returns are reflected in the income statement in ‘Net fair value gains on financial assets at fair value through profit or loss'.
Available-for-sale financial assets
Available-for-sale financial assets have primarily increased due to the investment of the cash received from WDB on the refinancing of their BEE shareholding.
Negative reserve funding
The negative reserve funding liability on Discovery's Statement of Financial Position represents the acquisition costs that are funded by the Prudential Assurance Company on behalf of
PruProtect. The liability unwinds and is repaid on a matched basis as the cash flows emerge from the assets arising from insurance contracts. In the event that the cash flows do not
emerge as anticipated, PruProtect would be required to repay these liabilities from other resources.
The increase in the negative reserve funding liability relates to the increase in new business written by PruProtect in the current financial year.
Deferred tax liability
The deferred tax liability is primarily attributable to the application of the Financial Services Board directive 145. This directive allows for the zeroing on a statutory basis of the assets
arising from insurance contracts. The statutory basis is used when calculating tax payable for Discovery Life, resulting in a timing difference between the tax base and the accounting
base.
SHAREHOLDER INFORMATION
Directorate
The following changes were made to the Board of Discovery Limited during the current financial year:
- Mr Tito Mboweni was appointed as a non-executive director with effect from 1 January 2014
- Mr Peter Cooper resigned as a non-executive director with effect from 10 April 2014
- Mr Herman Bosman was appointed as a non-executive director with effect from 14 April 2014
Dividend policy and capital
The following interim dividends were paid during the current financial year:
- preference share dividend of 428.49315 cents per share, paid on 17 March 2014
- ordinary share dividend of 73 cents per share, paid on 24 March 2014
The directors are of the view that the Discovery Group is adequately capitalised at this time. On the statutory basis the capital adequacy requirement of Discovery Life was R522 million
(2013: R455 million) and was covered 3.8 times (2013: 4.0 times).
B preference share cash dividend declaration:
On 28 August 2014, the directors declared a gross cash dividend of 442.19178 cents (375.86301 cents net of dividend withholding tax) per B preference share for period 1 January 2014
to 30 June 2014. The dividend has been declared from income reserves and no secondary tax on companies' credits has been used. A dividend withholding tax of 15% will be applicable
to all shareholders who are not exempt.
The issued preference share capital at the declaration date is 8 million B preference shares.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Friday, 12 September 2014
Shares commence trading "ex" dividend Monday, 15 September 2014
Record date Friday, 19 September 2014
Payment date Monday, 22 September 2014
B preference share certificates may not be dematerialised or rematerialised between Monday, 15 September 2014 and Friday, 19 September 2014, both days inclusive.
Ordinary share cash dividend declaration:
Notice is hereby given that the directors have declared a final gross cash dividend of 78.0 cents per ordinary share, out of income reserves for the year ended 30 June 2014. The Company
has utilised secondary tax on companies' credits amounting to 2.52980 cents per share. The balance of the dividend of 75.47020 cents per share will be subject to a dividend withholding
tax at a rate of 15%, which will result in a net dividend of 66.67947 cents per share to those shareholders who are not exempt.
The issued ordinary share capital at the declaration date is 591 872 390 ordinary shares.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Friday, 3 October 2014
Shares commence trading "ex" dividend Monday, 6 October 2014
Record date Friday, 10 October 2014
Payment date Monday, 13 October 2014
Share certificates may not be dematerialised or rematerialised between Monday, 6 October 2014 and Friday, 10 October 2014, both days inclusive.
SUBSEQUENT EVENTS
African Bank Investments Limited
After year-end there was a credit event reported for African Bank Investments Limited. Discovery is only effected through indirect money market and equity unit trust investments and
the exposure for shareholders and policyholders is immaterial.
ACCOUNTING POLICIES
The annual financial statements have been prepared in accordance with International Financial Reporting Standards including IAS 34, as well as the South African Companies Act 71 of
2008. The accounting policies adopted are consistent with the accounting policies applied in the last annual report, except for changes required by the mandatory adoption of new and
revised IFRS as well as a change to the accounting policy for insurance contracts. The impact on Discovery's results are as follows:
Accounting policy change for insurance contracts - recognition and measurement
Previously, the valuation for policyholder liabilities of South African policies did not include contractual inflation related premium increases or any associated increase in cover levels at
the valuation date. The valuation has been changed to include all contractual premium and benefit increases. Discovery believes the change provides more relevant information as these
increases are contractual.
In accordance with IAS 8, the change has been applied retrospectively but has resulted in no change to the current or prior year results as Discovery's discretionary margins have
absorbed this change.
IFRS 10: Consolidated financial statements
Under IFRS 10, subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when it has power over the entity, is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. Discovery has applied IFRS 10
retrospectively in accordance with the transition provisions of IFRS 10. Discovery consequently re-examined the impact of this standard on all its investments and this resulted in certain
reclassifications of investments in the Discovery Unit Trusts and PruProtect.
Discovery Unit Trusts (DUT)
Previously, investments in the Discovery Unit Trusts in which Discovery had an economic interest of less than 50% of the total fund value were designated as financial assets. The
adoption of IFRS 10 has resulted in the consolidation of all Discovery Unit Trusts even if the economic interest is less than 50% as Discovery has significant power to direct the relevant
activities of the fund and has sufficient exposure to the variable returns of the funds.
PruProtect
PruProtect is a contractual arrangement established by Prudential and Discovery, giving Discovery the ability to sell life insurance in the UK market in Prudential's long-term fund. In the
past, Discovery has consolidated this segment of the Prudential's long-term fund. Under IFRS 10, PruProtect does not meet the definition of an entity for consolidation purposes and
therefore cannot be consolidated. The PruProtect contractual arrangement was reconsidered and it was considered most appropriate to account for the contract as a reinsurance
contract under IFRS 4. PruProtect sells the insurance policy using Prudential's license and passes the risks and rewards onto the Discovery Group using the contractual arrangement. The
net result will be the same as if PruProtect was consolidated as a subsidiary, but certain lines within the income statement and statement of financial position will be disclosed differently.
The segmental disclosure for PruProtect is unchanged from prior years but an additional column has been added to show the adjustments to account for the PruProtect business as a
reinsurance contract in the IFRS income statement.
The tables below show the effects on the statement of financial position, the income statement and the statement of cash flows. There was no effect on the statement of other
comprehensive income, statement of changes in equity and earnings per share.
Impact on statement of financial position
30 June 2013 1 July 2012
Total Total
R million DUT PruProtect adjustments DUT PruProtect adjustments
Assets:
Assets arising from insurance contracts - (9) (9) - (90) (90)
Financial assets
- Equity securities 241 - 241 4 274 - 4 274
- Debt securities 29 - 29 265 - 265
- Inflation linked securities 36 - 36 64 - 64
- Money market securities 16 - 16 - - -
- Loans and receivables including insurance receivables 1 (178) (177) 53 (368) (315)
Reinsurance contracts - (11) (11) - - -
Cash and cash equivalents 41 - 41 955 - 955
Total increase/(decrease) 364 (198) 166 5 611 (458) 5 153
Liabilities:
Liabilities arising from insurance contracts - (11) (11) - - -
Liabilities arising from reinsurance contracts - (9) (9) - (90) (90)
Financial liabilities
- Investment contracts at fair value through profit or loss 361 - 361 5 397 - 5 397
- Trade and other payables 3 (178) (175) 214 (368) (154)
Total increase/(decrease) 364 (198) 166 5 611 (458) 5 153
Equity:
Retained earnings - - - - - -
Impact on the income statement
Year ended June 2013
Total
R million DUT PruProtect adjustments
Insurance premium revenue - (190) (190)
Reinsurance premiums - 190 190
Net fair value gains on financial assets at fair value through profit or loss 30 - 30
Claims and policyholders' benefits - 111 111
Insurance claims recovered from reinsurers - (111) (111)
Acquisition costs - (124) (124)
Marketing and administration expenses - (105) (105)
Transfer from assets/liabilities under insurance contracts
- change in assets arising from insurance contracts - 90 90
- change in liabilities arising from reinsurance contracts - (90) (90)
Fair value adjustment to liabilities under investment contracts (30) - (30)
Finance costs - 127 127
Profit before tax - (102) (102)
Income tax expense - 102 102
Net increase/(decrease) on profit for the year - - -
Impact on statement of cash flows
Year ended June 2013
Total
R million DUT PruProtect adjustments
Cash flow from operating activities (910) - (910)
Cash generated by operations (3 519) (217) (3 736)
Net purchases of investments held to back policyholder liabilities 2 768 - 2 768
Working capital changes (159) 302 143
Interest paid - 127 127
Taxation paid - (212) (212)
Cash flow from investing activities (4) - (4)
Net purchases of financial assets (4) - (4)
Net decrease in cash and cash equivalents (914) - (914)
Net increase in cash and cash equivalents at the beginning of the year 955 - 955
Net increase in cash and cash equivalents at the end of the year 41 - 41
AUDIT
The consolidated financial statements are considered preliminary based on the JSE Listings Requirements and are summarised from a complete set of the Group financial statements on
which the Independent Auditors, PricewaterhouseCoopers Inc., have expressed an unqualified audit opinion, which is available for inspection at the Company's registered office.
This report is extracted from audited information, but is not itself audited. The Auditor's Report does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the Auditor's Report together with
the accompanying financial information from the Company's registered office.
The directors of Discovery take full responsibility for the preparation of this report and that the financial information has been correctly extracted from the underlying Annual Financial
Statements.
A copy of the Annual Financial Statements that have been summarised in this report can be obtained from the Company's registered office.
EMBEDDED VALUE STATEMENT
for the year ended 30 June 2014
The embedded value of Discovery at 30 June 2014 consists of the following components:
- the free surplus attributed to the covered business at the valuation date;
- plus: the required capital to support the in-force covered business at the valuation date;
- plus: the present value of expected future shareholder cash flows from the in-force business;
- less: the cost of required capital.
The present value of future shareholder cash flows from the in-force covered business is calculated as the value of projected future after-tax shareholder cash flows of the business in
force at the valuation date, discounted at the risk discount rate.
The value of new business is the present value, at the point of sale, of the projected future after-tax shareholder cash flows of the new business written by Discovery, discounted at the
risk discount rate, less an allowance for the reserving strain (for Life), initial expenses and cost of required capital. The value of new business is calculated using the current reporting date
assumptions.
For Life, the shareholder cash flows are based on the release of margins under the Statutory Valuation Method ("SVM") basis.
The embedded value includes the insurance and administration profits of the subsidiaries in the Discovery Limited group. Covered business includes business written in South Africa
through Discovery Life, Discovery Invest, Discovery Health and Discovery Vitality, and in the United Kingdom through PruProtect, PruHealth and PruHealth Insurance Limited (previously
Standard Life Healthcare). For The Vitality Group (USA), AIA Vitality, Ping An Health and Discovery Insure, no published value has been placed on the current in-force business as the
businesses have not yet reached suitable scale with predictable experience.
In August 2010, Discovery acquired Standard Life Healthcare and increased its shareholding in the Prudential joint venture from 50% to 75%. During 2011, Discovery announced a venture
with Humana in the United States and launched a short term insurer, Discovery Insure in South Africa. Put options were granted to the non-controlling parties in these subsidiaries. The
put option entitles the non-controlling party to sell its interest in the subsidiary to companies within the Discovery Group at specified future dates.
In December 2013, following regulatory approval, Discovery Limited purchased Discovery Insure's preference shareholders' 25% shareholding in Discovery Insure for R352 million.
Discovery Limited now holds 100% of the issued capital of Discovery Insure.
For accounting purposes, in accordance with IAS32, Discovery has included 100% of the subsidiaries' results. The fair value of the non-controlling interest, being the present value of the
estimated purchase price, is recognised as a financial liability in the Statement of Financial Position (Puttable non-controlling interest). For embedded value purposes, the accounting
treatment is unwound to reflect Discovery's 75% shareholding in these subsidiaries.
In August 2011, Discovery raised R800 million through the issue of non-cumulative, non-participating, non-convertible preference shares. For embedded value purposes, the capital
raised, net of share issue expenses, has been excluded from the adjusted net worth.
The auditors, PricewaterhouseCoopers Inc., have reviewed the consolidated value of in-force business and value of new business of Discovery Limited and its subsidiaries as included in
the embedded value statement for the year ended 30 June 2014. A copy of the auditors' unqualified review report is available for inspection at the company's registered office.
TABLE 1: GROUP EMBEDDED VALUE
30 June 30 June %
R million 2014 2013 Change
Shareholders' funds 17 411 13 706 27
Adjustment to shareholders' funds from published basis1 (11 799) (9 611)
Adjusted net worth 5 612 4 095
- Free surplus 2 311 1 338
- Required capital2 3 301 2 757
Value of in-force covered business before cost of required capital 38 368 32 383
Cost of required capital (930) (757)
Discovery Limited embedded value 43 050 35 721 21
Number of shares (millions)3 574.1 554.0
Embedded value per share R74.98 R64.48 16
Diluted number of shares (millions) 591.2 591.2
Diluted embedded value per share4 R74.13 R63.30 17
1 A breakdown of the adjustment to shareholders' funds is shown in the table below:
R million 30 June 2014 30 June 2013
Life net assets under insurance contracts (11 691) (9 458)
PruHealth and PruHealth Insurance Limited deferred acquisition costs (243) (190)
PruProtect receivable relating to the Unemployment Cover benefit (34) (32)
Goodwill and intangible assets (net of deferred tax) relating to the acquisition of Standard Life
Healthcare and the Prudential joint venture (2 550) (1 983)
Unwind puttable non-controlling interest liability 3 511 2 663
Non-controlling share of profits / losses included in retained earnings (13) 168
Net preference share capital raised (779) (779)
(11 799) (9 611)
2 The required capital at June 2014 for Life is R1 043 million (June 2013: R909 million), for Health and Vitality is R614 million (June 2013: R553 million), for PruHealth and PruHealth
Insurance Limited is R1 154 million (June 2013: R987 million) and for PruProtect is R490 million (June 2013: R308 million). For Life, the required capital was set equal to two times the
statutory Capital Adequacy Requirement ("CAR"). For Health and Vitality, the required capital was set equal to two times the monthly renewal expense and Vitality benefit cost. For
PruHealth, the required capital amount was set equal to 1.25 times the capital prescribed by the Prudential Regulatory Authority under the Individual Capital Adequacy Standards
("ICAS") framework. For PruProtect, the required capital was set equal to the UK Pillar 1 capital requirement.
3 In December 2013, Discovery's BEE partner, WDB Discovery Investment Proprietary Limited (WDB), refinanced the funding provided by Discovery with a third-party financial institution.
This resulted in the delivery of 17 703 273 shares to WDB in respect of the original transaction, as well as 2 567 287 shares that were purchased with the dividends received by WDB.
4 The diluted embedded value per share allows for Discovery's BEE transaction where the impact is dilutive i.e. where the current embedded value per share exceeds the current
transaction value.
TABLE 2: VALUE OF IN-FORCE COVERED BUSINESS
Value Value
before cost Cost of after cost
of required required of required
R million capital capital capital
at 30 June 2014
Health and Vitality 13 879 (209) 13 670
Life and Invest1 20 701 (481) 20 220
PruHealth2 2 762 (130) 2 632
PruProtect2 1 026 (110) 916
Total 38 368 (930) 37 438
at 30 June 2013
Health and Vitality 12 405 (190) 12 215
Life and Invest1 17 213 (340) 16 873
PruHealth2 2 003 (167) 1 836
PruProtect2 762 (60) 702
Total 32 383 (757) 31 626
1 Included in the Life and Invest value of in-force covered business is R735 million (June 2013: R576 million) in respect of investment management services provided on off balance sheet
investment business. The net assets of the investment service provider are included in the adjusted net worth.
2 The value of in-force has been converted using the closing exchange rate of R18.17/GBP (June 2013: R15.22/GBP). The values for PruHealth and PruProtect reflect Discovery's 75%
shareholding in the joint venture.
TABLE 3: GROUP EMBEDDED VALUE EARNINGS
Year ended
30 June 30 June
R million 2014 2013
Embedded value at end of period 43 050 35 721
Less: Embedded value at beginning of period (35 721) (30 246)
Increase in embedded value 7 329 5 475
Net change in capital (1 020) 21
Dividends paid 878 717
Transfer to hedging reserve 30 (85)
Embedded value earnings 7 217 6 128
Annualised return on opening embedded value 20.2% 20.3%
TABLE 4: COMPONENTS OF GROUP EMBEDDED VALUE EARNINGS
Year ended
30 June
Year ended 30 June 2014 2013
Value of
Cost of in-force
Net required covered Embedded Embedded
R million worth capital business value value
Total profit from new business (at point of sale) (1 730) (124) 4 102 2 248 1 860
Profit from existing business
- Expected return 2 735 32 467 3 234 2 826
- Change in methodology and assumptions1 676 (44) (611) 21 (200)
- Experience variances (13) 5 1 441 1 433 992
Acquisition of Discovery Insure joint venture2 (297) - - (297) -
Increase in goodwill and intangibles (256) - - (256) (22)
Other initiative costs3 (466) - 21 (445) (425)
Non-recurring expenses (23) - - (23) (19)
Acquisition costs4 (3) - 1 (2) (4)
Finance costs (37) - - (37) (35)
Foreign exchange rate movements 466 (42) 562 986 798
Return on shareholders' funds5 355 - - 355 357
Embedded value earnings 1 407 (173) 5 983 7 217 6 128
1 The changes in methodology and assumptions will vary over time to reflect adjustments to the model and assumptions as a result of changes to the operating and economic
environment. The current period's changes are described in detail in Table 6 below (for previous periods refer to previous embedded value statements).
2 This item represents the difference between the purchase price of R352 million and R55 million relating to the minority share of Discovery Insure's tangible net asset value at the
acquisition date.
3 This item reflects Group initiatives including expenses relating to the investment in The Vitality Group, AIA Vitality and Discovery Insure.
4 Acquisition costs relate to commission paid on Life business that has been written over the period but will only be activated and on risk after the valuation date. These policies are not
included in the embedded value or the value of new business and therefore the costs are excluded.
5 The return on shareholders' funds is shown net of tax and management charges.
TABLE 5: EXPERIENCE VARIANCES
Health and Vitality Life and Invest PruHealth PruProtect
Net Value of Net Value of Net Value of Net Value of
R million worth in-force worth in-force worth in-force worth in-force Total
Renewal expenses (11) - 13 1 (89) - 2 - (84)
Other expenses (8) - - - - - - - (8)
Lapses and surrenders 29 328 (82) 362 - (1) (12) 6 630
Mortality and morbidity - - 306 (127) 98 - 9 - 286
Policy alterations1 - 48 (396) 289 - - (2) 8 (53)
Premium and fee income 24 117 (74) (72) - - - - (5)
Economic assumptions - - (4) 219 - - - - 215
Commission - - - - 24 - - - 24
Tax2 (4) - 174 (193) (26) - (10) - (59)
Reinsurance - - (0) 0 (14) - - - (14)
Maintain modelling term3 - 190 - 101 - 57 - - 348
Vitality benefits 25 - - - 8 - - - 33
Other 62 1 (51) 106 0 5 (4) 1 120
Total 117 684 (114) 686 1 61 (17) 15 1 433
1 Policy alterations relate to changes to existing benefits at the request of the policyholder.
2 The tax variance for Life and Invest arises due to a movement in the deferred tax asset which delays the payment of tax.
3 The projection term for Health and Vitality, Life, Group Life and PruHealth at 30 June 2014 has not been changed from that used in the 30 June 2013 embedded value calculation. Therefore, an
experience variance arises because the total term of the in-force covered business is effectively increased by 12 months.
TABLE 6: METHODOLOGY AND ASSUMPTION CHANGES
Health and Vitality Life and Invest PruHealth PruProtect
Net Value of Net Value of Net Value of Net Value of
R million worth in-force worth in-force worth in-force worth in-force Total
Modelling changes1 - (8) (367) 131 - - (34) 2 (276)
Expenses - (48) (7) (57) - - 39 (11) (84)
Lapses2 - - 1 (238) - 2 (28) 23 (240)
Mortality and morbidity - - - - - 11 - - 11
Benefit enhancements - - (10) (21) - - - - (31)
Vitality benefits - - - - - (12) - - (12)
Tax - - - - - - - 33 33
Economic assumptions - 264 10 185 - 159 (32) 6 592
Premium and fee income - - 14 44 - - - - 58
Reinsurance3 - - 813 (797) 219 (181) 58 (142) (30)
Other - - - - - (0) - - (0)
Total - 208 454 (753) 219 (21) 3 (89) 21
1 For Health, the embedded value calculation previously allowed for an increase in the lapse assumption after year 10 of the projection term. The model has now been adjusted to allow
for a level lapse rate over the projection term. For Life, the impact of expected movements in Vitality statuses has been included in the model.
2 The Invest lapse assumptions were strengthened to reflect uncertainty about long duration experience.
3 For Life and PruHealth, the reinsurance item primarily relates to the impact of the financing reinsurance arrangements. For PruProtect, the reinsurance item relates to the restructuring
of the risk reinsurance.
TABLE 7: EMBEDDED VALUE OF NEW BUSINESS
Year ended
30 June 30 June %
R million 2014 2013 Change
Health and Vitality
Present value of future profits from new business at point of sale 570 396
Cost of required capital (19) (16)
Present value of future profits from new business at point of sale after cost of required capital 551 380 45
New business annualised premium income1 2 858 1 783 60
Life
Present value of future profits from new business at point of sale2 1 191 1 033
Cost of required capital (52) (44)
Present value of future profits from new business at point of sale after cost of required capital 1 139 989 15
New business annualised premium income3 2 163 1 923 12
Annualised profit margin4 6.3% 6.4%
Annualised profit margin excluding Invest Business 10.1% 10.0%
PruHealth5
Present value of future profits from new business at point of sale 118 54
Cost of required capital (21) (20)
Present value of future profits from new business at point of sale after cost of required capital 97 34 185
New business annualised premium income (Rand)6 761 525 45
Annualised profit margin4 2.3% 1.2%
PruProtect7
Present value of future profits from new business at point of sale 493 480
Cost of required capital (32) (23)
Present value of future profits from new business at point of sale after cost of required capital 461 457 1
New business annualised premium income (Rand) 647 483 34
Annualised profit margin4 10.0% 12.8%
1 Health new business annualised premium income is the gross contribution to the medical schemes. For embedded value purposes, Health new business was previously defined as new
individuals and members of new employer groups, and included additions to first year business. The definition of new business has been adjusted and now also includes new members
who have been added to existing employer groups where the member has a choice of medical scheme. These members were previously included in the embedded value as a positive
lapse experience variance. The impact of the change in definition has resulted in a R132 million increase in the Health value of new business as at June 2014.
The new business annualised premium income shown above excludes premiums in respect of members who join an existing employer after the first year where the member has no
choice of medical scheme, as well as premiums in respect of new business written during the period but only activated after 30 June 2014.
The total Health and Vitality new business annualised premium income written over the period was R5 206 million (June 2013: R5 036 million).
2 Included in the Life and Invest value of new business is R39 million (June 2013: R14 million) in respect of investment management services provided on off balance sheet investment
business.
Risk business written prior to the valuation date allows certain Invest business to be written at financially advantageous terms, the impact of which has been recognized in the value of
new business.
3 Life new business is defined as Life policies or Discovery Retirement Optimiser policies which incepted during the reporting period and which are on risk at the valuation date. Invest
new business is defined as business where at least one premium has been received and which has not been refunded after receipt.
The new business annualised premium income of R2 163 million (June 2013: R1 923 million) (single premium APE: R865 million (June 2013: R614 million)) shown above excludes
automatic premium increases and servicing increases in respect of existing business. The total Life new business annualised premium income written over the period, including both
automatic premium increases of R773 million (June 2013: R651 million) and servicing increases of R473 million (June 2013: R392 million) was R3 409 million (June 2013: R2 966 million)
(single premium APE: R904 million (June 2013: R644 million)). Single premium business is included at 10% of the value of the single premium.
Policy alterations, including Discovery Retirement Optimisers added to existing Life Plans are shown in Table 5 as experience variances and not included as new business.
Term extensions on existing contracts are not included as new business.
4 The annualised profit margin is the value of new business expressed as a percentage of the present value of future premiums.
5 In line with actual experience, the PruHealth lapse and loss ratio assumptions have been adjusted to allow for the impact of duration. While this change has resulted in an increase in
the annualised new business profit margin, the overall levels of these assumptions are unchanged and the change had no impact on the value of in-force.
6 PruHealth new business is defined as individuals and employer groups which incepted during the reporting period. The new business annualised premium income shown above has
been adjusted to exclude premiums in respect of members who join an existing employer group after the first month as well as premiums in respect of new business written during the
period but only activated after 30 June 2014.
7 PruProtect new business is defined as policies which incepted during the reporting period and which are on risk at the valuation date.
TABLE 8: EMBEDDED VALUE ECONOMIC ASSUMPTIONS
30 June 30 June
2014 2013
Beta coefficient
South Africa 0.40 0.49
United Kingdom 0.40 0.49
Equity risk premium (%)
South Africa 3.50 3.50
United Kingdom 4.00 4.00
Risk discount rate (%)
Health and Vitality 10.650 10.215
Life and Invest 10.650 10.215
PruHealth 4.24 4.97
PruProtect 5.50 4.97
Rand/GB Pound Exchange Rate
Closing 18.17 15.22
Average 17.06 13.98
Medical inflation (%)
South Africa 8.25 7.50
United Kingdom 6.50 7.00
Expense inflation and CPI (%)
South Africa 5.25 4.50
United Kingdom - PruHealth 3.30 3.30
- PruProtect 3.30 3.30
Pre-tax investment return (%)
South Africa - Cash 7.75 7.00
- Bonds 9.25 8.50
- Equity 12.75 12.00
United Kingdom - PruHealth investment return 3.16 2.37
- PruProtect investment return 3.90 3.85
Income tax rate (%)
South Africa 28.00 28.00
United Kingdom - Long Term 20.00 20.00
Projection term
- Health and Vitality 20 years 20 years
- Life value of in-force 40 years 40 years
- Group Life 10 years 10 years
- PruHealth 20 years 20 years
Life and Invest mortality, morbidity and lapse and surrender assumptions were derived from internal experience, where available, augmented by reinsurance and industry information.
The Health and Vitality lapse assumptions were derived from the results of recent experience investigations.
The PruHealth assumptions were derived from internal experience, augmented by industry information.
PruProtect assumptions were derived from internal experience, where available, augmented by reinsurance, industry and Discovery group information.
Renewal expense assumptions were based on the results of the latest expense and budget information.
The initial expenses included in the calculation of the value of new business are the actual costs incurred excluding expenses of an exceptional or non-recurring nature.
The South African investment return assumption was based on a single interest rate derived from the risk-free zero coupon government bond yield curve. Other economic assumptions
were set relative to this yield. The current and projected tax position of the policyholder funds within the Life company has been taken into account in determining the net investment
return assumption.
The best estimate investment return assumption for PruHealth and PruProtect was based on the single interest rate derived from the risk-free zero coupon sterling yield curve. In the
past, the PruProtect assumption was set with reference to the expected return on matching assets (or liabilities in the case of negative reserves) held on the Prudential balance sheet.
The United Kingdom expense inflation assumption was set in line with long-term United Kingdom inflation expectations.
It is assumed that, for the purposes of calculating the cost of required capital, the Life and Invest required capital amount will be backed by surplus assets consisting of 100% equities and
the Health, Vitality and PruHealth required capital amounts will be fully backed by cash. The PruProtect required capital amount is assumed to earn the same return as the assets backing
the PruProtect policyholder liabilities. Allowance has been made for tax and investment expenses in the calculation of the cost of capital. In calculating the capital gains tax ("CGT")
liability, it is assumed that the portfolio is realised every 5 years. The Life and Invest cost of capital is calculated using the difference between the gross of tax equity return and the equity
return net of tax and expenses. The Health and Vitality and PruHealth cost of required capital is calculated using the difference between the risk discount rate and the net of tax cash
return. The PruProtect cost of required capital is calculated using the difference between the risk discount rate and the net of tax asset return assumption.
Sensitivity to the embedded value assumptions
The embedded value has been calculated in accordance with the Actuarial Society of South Africa's Advisory Practice Note APN 107: Embedded Value Reporting. The risk discount rate,
calculated in accordance with the guidance note, uses the CAPM approach with specific reference to the Discovery beta coefficient. The Discovery beta coefficient reflects the historic
performance of the Discovery share price relative to the market and may not allow fully for non-market related and non-financial risk. Investors may want to form their own view on an
appropriate allowance for the non-financial risks which have not been modelled explicitly. The sensitivity of the embedded value and the value of new business at 30 June 2014 to
changes in the risk discount rate is included in the tables below.
For each sensitivity illustrated below, all other assumptions have been left unchanged. No allowance has been made for management action such as risk premium increases where future
experience is worse than the base assumptions.
TABLE 9: EMBEDDED VALUE SENSITIVITY
Health and Vitality Life and Invest PruHealth PruProtect2
Cost of Cost of Cost of Cost of
Adjusted Value of required Value of required Value of required Value of required Embedded %
R million net worth in-force capital in-force capital in-force capital in-force capital value change
Base 5 612 13 879 (209) 20 701 (481) 2 762 (130) 1 026 (110) 43 050
Impact of:
Risk discount rate +1% 5 612 13 056 (235) 18 523 (423) 2 573 (201) 895 (140) 39 660 (8)
Risk discount rate -1% 5 612 14 795 (178) 23 363 (552) 2 975 (50) 1 192 (72) 47 085 9
Lapses -10% 5 612 14 409 (219) 22 484 (515) 3 169 (137) 1 116 (123) 45 796 6
Interest rates -1%1 5 612 13 836 (198) 21 297 (516) 2 743 (205) 1 429 (128) 43 870 2
Equity and property market value -10% 5 520 13 879 (209) 20 543 (481) 2 762 (130) 1 026 (110) 42 799 (1)
Equity and property return +1% 5 612 13 879 (209) 20 870 (481) 2 762 (130) 1 026 (110) 43 218 0
Renewal expenses -10% 5 612 15 336 (193) 20 946 (479) 3 000 (130) 1 009 (109) 44 992 5
Mortality and morbidity -5% 5 612 13 879 (209) 21 951 (471) 3 728 (130) 1 007 (108) 45 258 5
Projection term +1 year 5 612 14 087 (211) 20 877 (484) 2 798 (130) 1 026 (110) 43 465 1
1 All economic assumptions were reduced by 1%.
2 The sensitivity impact on the PruProtect value of in-force excludes the net of tax change in negative reserves.
The following table shows the effect of using different assumptions on the value of new business.
TABLE 10: VALUE OF NEW BUSINESS SENSITIVITY
Health and Vitality Life and Invest PruHealth PruProtect
Cost of Cost of Cost of Cost of Value
Value of required Value of required Value of required Value of required of new %
R million new business capital new business capital new business capital new business capital business change
Base 570 (19) 1 191 (52) 118 (21) 493 (32) 2 248
Impact of:
Risk discount rate +1% 524 (22) 968 (46) 91 (31) 455 (41) 1 898 (16)
Risk discount rate -1% 635 (16) 1 458 (60) 148 (10) 541 (21) 2 675 19
Lapses -10% 618 (20) 1 404 (56) 166 (22) 564 (35) 2 619 16
Interest rates -1%1 582 (18) 1 259 (56) 116 (31) 519 (36) 2 335 4
Equity and property return +1% 576 (19) 1 222 (52) 118 (21) 493 (32) 2 285 2
Renewal expense -10% 674 (19) 1 220 (52) 156 (21) 512 (32) 2 438 8
Mortality and morbidity -5% 576 (19) 1 295 (51) 231 (21) 519 (31) 2 499 11
Projection term +1 year 589 (19) 1 209 (52) 123 (21) 493 (32) 2 290 2
Acquisition costs -10% 595 (19) 1 285 (52) 133 (21) 535 (32) 2 424 8
1 All economic assumptions were reduced by 1%.
SENS release date 3 September 2014
Date: 03/09/2014 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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