Discovery (DSY) H2 2024 earnings summary

Executive summary

• Achieved robust FY24 results to 30 June 2024, with normalized operating profit up 17% to R11,604m and normalized headline earnings up 15% year-over-year.

• Core new business grew 18% to R26,667m, with strong segmental and international performance.

• Group entered a new high-growth, high-cash generation phase, creating two focused business units: Discovery South Africa and Vitality Limited.

• Strategic focus on organic growth, hyperpersonalization, and leveraging the shared value model across all businesses.

• Discovery Bank scaled rapidly, with client and account growth above 35% and significant progress toward profitability.

Financial highlights

• Normalized headline earnings rose 15% to R7,329m; headline earnings up 7% to R7,202m.

• Dividend per share increased to ZAR 1.52 (152cps), maintaining a five times cover policy.

• Embedded value (EV) grew 12% to over ZAR 110 billion; annualized return on EV above 13%.

• Non-insurance income increased 16% to R6,191m.

• Leverage ratio declining, with pre-funding for refinancing causing a temporary flattening.

Outlook and guidance

• Targeting 15%-20% CAGR in earnings and ROE for FY25-FY29, with cash conversion of 60%-70%.

• Spend on new initiatives expected to decline to 5%, supporting improved central cash position.

• Discovery Bank aims for 2m clients and R3bn profit by FY29.

• International business expected to deliver 20%-30% average earnings growth p.a. (FY25-FY29).

• ROE targeted at 15%-20%, leverage to decrease to 10%-20%, and dividend cover to remain at five times or less.