Voluntary trading statement: six months ended 31 December 2019
(Incorporated in the Republic of South Africa)
(Registration number 1999/007789/06)
Legal Entity Identifier: 378900245A26169C8132
JSE share code: DSY, DSYBP
DSY ISIN: ZAE000022331
DSBP ISIN: ZAE000158564
JSE bond code: DSYI
(“Discovery” or “the Company” or “the Group”)
VOLUNTARY TRADING STATEMENT: SIX MONTHS ENDED 31 DECEMBER 2019
Over the six months ended 31 December 2019 (“current period”), all of Discovery’s established and
emerging businesses, with the exception of VitalityLife, produced robust operating results. VitalityLife was
largely impacted by its previously announced strategic decision to mitigate its exposure to further interest
rate declines in the United Kingdom. In addition, the Group has continued its budgeted increased
investment into new strategic initiatives.
As a result, normalised profit from operations for the current period is expected to decrease by between
5% and 10% to between R3 609 million and R3 419 million compared to reported R3 799 million for the six
months ended 31 December 2018 (“prior period”) and the Group's normalised headline earnings per share
(diluted) (Notes 1 and 2) for the current period is expected to reduce by between 10% and 15% to between
330 cents and 311 cents compared to reported 366.4 cents for the prior period. Cash, capital and financial
leverage metrics remain well within guidance.
Normalised profit from operations before investment in new initiatives is expected to increase by between
2% and 7% compared to the prior period as per the following reconciliation to normalised profit from
Indicative increase / (decrease) in normalised
profit from key operations for current period
compared to prior period
Discovery Health +8%
Discovery Life +25%
Discovery Invest +7%
Discovery Insure +21%
VitalityLife (*) -145%
Vitality Group +16%
Ping An Health +467%
Normalised profit from operations before from +2 to +7%
investment in new initiatives
Increase in spend on new initiatives (**)(before +81%
allowing for finance costs)
Normalised profit from operations from -5% to -10%
(*) VitalityLife’s result during the current period was impacted by a strategic decision to mitigate its
exposure to further interest rate declines in the highly volatile, low interest rate United Kingdom
environment. This was effected by way of an interest rate hedge structure as previously announced.
This, combined with a generally difficult operating environment in the UK, resulted in VitalityLife
recording an operating loss for the period, which is a key factor in the higher effective tax rate as
compared with the prior period.
(**)The group has previously highlighted the continuation of increased investment into strategic
initiatives including Discovery Bank, VitalityInvest, Vitality1, Umbrella Funds and Discovery Business
Insurance. Investment spend was budgeted to be higher in the first six months of the year and is
expected to be lower over the remaining period of the year, further supported by these initiatives
having gained traction over this period.
Accordingly, shareholders are advised that given the impact of VitalityLife and continuing investment in
new initiatives as described above:
• Headline earnings per share (diluted) (Note 1) for the current period is expected to reduce by
between 8% and 13% to between 319 cents and 302 cents compared to reported 347.2 cents for
the prior period.
• Earnings per share (diluted) (Note 1) for the current period is expected to reduce by between 10%
and 15% to between 317 cents and 300 cents compared to reported 352.5 cents for the prior
Discovery's interim financial results for the six months ended 31 December 2019 are due to be released on
SENS on 20 February 2020.
The financial information on which this trading statement is based has not been reviewed or reported on
by the Company's external auditors.
1 The expected percentage change in the current period is approximately the same for both diluted and undiluted
earnings per share.
2 The expected difference between normalised profit from operations and normalised headline earnings is
predominantly due to an increase in finance costs in line with the long-term capital plan and a higher average
effective tax rate.
17 February 2020
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 17-02-2020 01:01:00
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