Discovery (DSY) H2 2025 earnings summary

Executive summary

• Operating profit grew by 29% to over ZAR 15.2 billion for the year ended 30 June 2025, with headline earnings up 30% to ZAR 9.6 billion, reflecting robust group-wide performance in a volatile geopolitical environment.

• The group is structured around two composites: Discovery South Africa and Vitality globally, both showing strong growth (22% and 70% respectively), and the Vitality Shared-value model's relevance increased.

• Cash generation was strong, with ZAR 17.7 billion generated and a cash conversion ratio of 76.7%.

• The group targets a 15-20% annual growth corridor for the next five years, with the current year outperforming this range.

• New business grew 8% to ZAR 26.5 billion excluding Sasolmed; non-insurance income rose 12% to ZAR 6.6 billion.

Financial highlights

• Normalized headline earnings increased by 30% to over ZAR 9.6 billion; profit before tax up 33%.

• Final dividend declared at ZAR 2.01 (201 cps), total dividend for the year ZAR 2.88 (288 cps), up 33%, with 5x dividend cover.

• Return on embedded value reached 15.7%, with all businesses showing positive experience variances.

• Group financial leverage ratio decreased to 16.8%; cash conversion improved to nearly 77%.

• Group Embedded Value (EV) increased to ZAR 126.6 billion.

Outlook and guidance

• Internal focus on sustaining 15-20% compound annual growth from FY2025 to FY2029, with 15-20% ROE and 60-70% cash conversion ratio.

• ROE expected to climb above 15% as Discovery Bank scales; cash generation supports potential for higher dividends.

• Spend on new initiatives to remain around 5% of profit, with emphasis on Vitality AI and digital transformation.

• Dividend cover expected to remain at or below 5x.

• Strategic focus on scaling Discovery Bank and maintaining market leadership across business lines.