Discovery 6M numbers - Investing in Growth

Yesterday morning before the market opened, Discovery released their six-month numbers which showed an 18% drop in profits. Due to their trading statement on the 15 February, we already knew that there wasn't going to be the regular growth in the bottom line. Below you can see how each group did.



What is important is the overall direction of the company, and that is still moving firmly higher. When reading through their results I was struck by how many new operations they have set up, both through white-labelling the Vitality IP and through direct subsidiaries. Following the success of Discovery Invest in South Africa, there is now Vitality Invest in the UK. Discovery Invest is only a couple of years old and it is already making R455 million, every six months, in profits.

Looking at Discovery Insure, this is the first reporting period where the group made profits for the full six months. Until now they have been building their customer base to cover the costs of running an insurer. For the six months, they only made a profit of R51 million but grew premiums received by 21%. The insurance division also mentioned an exciting investment from tech powerhouse, SoftBank. Byron talks about that below.

Another exciting expansion for the company is their partnership with CVS Health, a large US pharmacy group, and Aetna, one of the big four healthcare insurers in the US. These partnerships leverage off Discovery's intellectual property around how people behave, and cost them very little in upfront capital; the perfect type of collaboration.

Yes, the group disappointed by not growing their profits but it is a blip in their path to bigger things. The group is increasingly becoming a global company by selling a product that big insurance companies want. Have a look at how far they have come since their founding. Impressive stuff!