Discovery posts resilient results

Discovery released strong results for the first half of its 2024 financial year, with normalised operating profit growth of 13%.

Discovery released its results for the six months through December 2023 today, which revealed a “robust” performance for the company.

Discovery reported positive contributions from each of its composites, with South Africa increasing by 9%, the United Kingdom increasing by 13%, and Vitality Global increasing by 71%. 

The UK and Vitality Global results benefitted from a weaker rand compared with the prior period. 

Excluding Discovery Health, new business for the company increased by 11%, with particularly pleasing trends for Discovery Individual Life business, Ping An Health Insurance and VitalityHealth, while VitalityLife’s growth was modest in sterling and Group Life declined.

Normalised headline earnings grew 11%, while headline earnings were marginally down by 0.5%. 

This difference is attributable to the considerable prior period fair value gain from the UK interest rate swap option. 

The swap option was realised towards the end of Discovery’s prior financial year, with no profit impact in the current period. 

The company’s organic cash generation increased with cash conversion now at 66% of after-tax normalised operating profit, and central liquidity remained strong. 

Its financial leverage ratio improved to 19.7%, and capital ratios remained strong across each business.

The company’s embedded value increased to R103.5 billion, which represents a 12.1% annualised return on embedded value.

Discovery said it demonstrated “continued financial resilience” over the period. 

“We’ve been disciplined in our strategy of diligent capital allocation, growing cash generation, and balance sheet strength,” CEO Adrian Gore said. 

“Growth in core businesses remained robust over the period, and the focused investment in Discovery Bank and Vitality Global manifested in exceptional performance, with these businesses being positioned as strong platforms for continued growth.”

Discovery’s banking business delivered excellent results, achieving its stated target of monthly operational break-even before acquisition costs during the period ahead of plan. 

For the six months under review, Discovery Bank’s operating loss, before new business acquisition costs, improved by 40%, and the bank had more than 825,000 clients as of December 2023.

Discovery declared an interim dividend of 65 cents per share on the back of these strong results.