Discovery said yesterday it would deliver a robust financial performance for the year to June 30 after its three business composites, South Africa, UK and Vitality Global, performed well.
“High levels of engagement in the Vitality Shared-value model, together with the efficacy of the model, underpinned the group’s performance, despite a challenging and volatile macro-economic environment,” the group’s board said in a trading statement yesterday.
Normalised profit from operations was expected to increase by between 22% and 27%, while normalised headline earnings (NHE) was expected to increase by between 30% and 35%.
The share price traded 2.78% higher at R149.69 yesterday afternoon on the JSE, a level that was 38% higher than a year ago.
Normalised profit from operations in the SA Composite was expected to increase between 20% and 25%. Normalised profit from the UK Composite was expected to rise between 18% and 23%, while the figure for Vitality Global was forecast to increase between 72% and 77%.
Normalised profit from group operations was expected to rise between 22% and 27%.
In the SA Composite, all businesses delivered strong growth, with Discovery Bank reporting “excellent progress across all metrics, as acquisition of quality clients accelerated.”
In the UK Composite, VitalityLife performed well, with profit boosted by positive operating variances, benefiting from significantly higher premium inflation indexation.
VitalityHealth’s profits fell slightly off a strong prior result, given some new business strain from strong sales and the industry-wide return of PMI claims post the Covid-19 pandemic.
The Vitality Global composite delivered strong growth in operating profits after a recovery in investment returns for Ping An Health Insurance in the second half of the 2023 financial year, combined with continued strong operating delivery.
“The reporting year coincided with considerable macro-economic volatility, with significant movements of interest rates in the markets in which Discovery operates. The headline earnings impact of higher rates in the UK was more muted, as the hedging strategy proved effective.
The sizeable increase in interest rates in South Africa had a more pronounced impact on headline earnings over the period, the group said.
“The increase in interest rates creates volatility in Discovery’s headline earnings, but has no impact on the operations of the group, with little impact on the group’s liquidity, cash flows and solvency.”
Group headline earnings a share was expected to be between 3% and 8% higher, while normalised HEPS was expected to be between 30% and 35% higher than the same period a year before.
Discovery intends to report its 2023 financial results on or about September 21.
BUSINESS REPORT