Discovery Group has reported robust growth across its operations in the past financial year, with Discovery Bank achieving its first profit in the second half, ahead of expectations. Headline earnings rose by 30% to R9.6 billion, while normalised headline earnings increased to R9.78 billion, resulting in a normalised return on equity of 15.4%, up from 13.5% the previous year.
The group announced a final dividend of 201 cents per share, reflecting a 32% increase year on year. Despite operating in a challenging environment marked by geopolitical complexities and uncertainties regarding global policies and trade tensions, Discovery demonstrated strong financial performance.
Financial Performance
While economic growth remained below potential in many of its operating regions, interest rate reductions helped provide a more favourable backdrop for investment markets. Despite elevated risks, Discovery noted that accelerating technological and demographic trends bolster its Vitality Shared-value model, positioning the group well for ongoing growth.
Having emerged from a significant investment phase aimed at creating long-term growth avenues, Discovery is now poised for a new stage of scaled organic growth, particularly through its recently established global composite, Vitality, and its domestic operations in South Africa.
Total new business annual premium income (API) saw a slight decline of 2%, but this figure rose by 8% when excluding the prior year’s substantial Sasolmed take-on. Stronger growth was observed within the Vitality segment.
Operational Highlights
Discovery SA achieved a remarkable 22% growth in normalised profit from operations, with each business division contributing positively. Discovery Bank reported a 30% increase in total clients, a 39% rise in advances, and a 26% growth in deposits, leading to strong revenue growth and the bank’s first profitable period in the second half of the financial year.
Discovery Health experienced a 7% increase in operating profit, thanks to ongoing investments in technology and innovation aimed at enhancing the shared-value model. Discovery Life’s normalised operating profit rose by 14%, primarily due to an exceptional claims experience, although new business decreased by 10% overall.
Discovery Invest saw a 29% increase in normalised operating profit, driven by significant growth in assets under management and certain one-off benefits. Discovery Insure implemented successful pricing and claims management strategies, resulting in a significant improvement in the claims ratio and a remarkable 229% increase in operating profits.
Vitality and International Growth
The Vitality segment delivered a substantial 70% growth in normalised profit from operations, reflecting the successful restructuring of its global operations into a focused single entity over the past nine months, with particularly strong growth in the UK.
VitalityHealth saw profits surge by 173% due to effective pricing strategies and improved claims management. VitalityLife’s operating profit increased by 70%, with new business growing by 28%, thanks to the successful execution of the shared-value insurance model.
In China, Ping An Health Insurance reported a strong operating and investment result, achieving a 22% increase in pretax profit, despite a significant Covid reserve release in the previous year. Overall, Discovery’s strong operational growth positions it well for future success.