Discovery delivers Covid-19 earnings warning
Financial services firm Discovery says it expects its financial performance for the year ended June 2020 to be resilient, despite the effects of the Covid-19 pandemic during the period.
Normalised operating profit growth is expected to increase by between 5% and 15%, before the establishment of a provision for Covid-19 effects, which are expected to emerge post the reporting period.
Core new business is expected to increase 4%, Discovery said, while the overall lapse and claims experience has been resilient for the period, with the performance in June 2020 broadly similar to the trends seen in the initial stages of the pandemic, it said.
Discovery estimates the expected future cost of the Covid-19 pandemic effect to be approximately R3.3 billion, “based on its central (prudent best-estimate) scenario”.
There were significant movements in long-term interest rates in SA and the UK during the period under review, which has a significant impact on policy values and headline earnings, Discovery said.
Normalised headline earnings per share, as a result, are expected to remain within the range of between 20% and 30% lower, to between 617.5 cents per share and 540.3 shares, compared to 771.9 cents previously.
Headline earnings per share are expected to be between 90% and 100% lower, to between 78.9 cents per share and 0 cents per share compared to 789 cents in 2019.
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