Discovery Group CEO, Adrian Gore. Picture: Supplied
The Government of National Unity (GNU) currently governing South Africa has brought reprieve in market conditions although the National Health Insurance (NHI) Act signed by President Cyril Ramaphosa is unworkable, said Discovery Group CEO, Adrian Gore after the company raised full year earnings and profits from operations.
Discovery Group runs financial services companies spanning banking, health and wealth investments among others. Gore, like other South African business leaders said the run-up to the May 29 election had occasioned business uncertainty although some up-shoots of stability were now emerging under the GNU.
“A positive election outcome towards the end of the reporting period, following the formation of the Government of National Unity (GNU), resulted in a significant shift in confidence, with some immediate relief in market indicators. The uncertainty around elections in South Africa created further economic headwinds during the year,” said Gore yesterday.
He emphasised though that the NHI “is not workable in its current form” although Discovery Group was now “engaging at multiple levels to facilitate a viable journey to universal healthcare coverage”in SA.
Over the full year period to end June 2024, Discovery also operated against the backdrop of fiscal challenges and the knock-on impact on the National Health Service (NHS) backlogs in the UK which had accelerated the demand for, and utilisation of, private medical insurance.
Across all operations, normalised operating profits in Discovery Group went up by 17% to R11 604 million during the period under review while headline earnings finished the period stronger by 7% at R7.2 billion compared to the prior year. Normalised headline earnings firmed up 15% to R7.3bn while core new business annualised premium income quickened up by 18% to R26.6bn.
The strong growth in normalised profit from was boosted by “strong contributions from Discovery SA and Vitality Global (VG)” which firmed up by 16% and 57% respectively. Normalised profits in Vitality UK however declined by 14% as a consequence of claims experienced in VitalityHealth and a basis strengthening for the back book under VitalityLife.
Discovery has paid a 38% stronger final dividend for the period under review of 152 cents.
On a segmental basis, Discovery Health grew normalised profits from operations by R3.9bn while Discovery Life was also 9% stronger at R4.7bn. Discovery Invest grew by 20% to R1.5bn due to an increase in the value of assets under management.
The Discovery Bank unit, however, improved its operating loss for the year to June by 41% to R454m although it “exceeded expectations” against the background of accelerated acquisition of quality clients.
“Discovery Bank (DB) improved its operating loss before new business acquisition costs by 89%, and the overall loss was 41% better than the prior year. DB remained focused on high-quality growth and customer primacy, given challenging macroeconomic conditions, with deposits growing 29%,” added Gore.
The banking arm attained one million clients after the year end period. Discovery had set a target of 2026 to reach one million banking clients.
During the period under review, Discovery Bank expanded its lending suite after it launched a Revolving Credit Facility in December 2023, before adding up home loans in May this this year.
Vitality UK had grown its customers, with VitalityHealth’s membership reaching 1 million during the reporting period. Nonetheless, it recorded an increase in claims during the reporting period which negatively impacted its earnings by £30m.
BUSINESS REPORT