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Discovery slides almost 8% as market gets spooked by scrapped dividend, possible cap raise

‘Every business has done well. The epicentre has been Discovery Life, where the amount of death claims has been absolutely tragic, beside the financial issues’: CEO Adrian Gore.

RYK VAN NIEKERK: Health and insurance group Discovery is the first major South African company to announce a mandatory vaccination policy for its staff. The group said during its results announcement that all staff need to be vaccinated from January next year. Adrian Gore is on the line. He’s the chief executive of Discovery. Adrian, welcome to the show. Why are you making vaccinations mandatory?

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Read: Discovery to require all employees to be vaccinated from January

ADRIAN GORE: Ryk, I think there’s a very strong moral issue here. Firstly, it’s about death. The amount of death that we’ve seen has been tremendous. We have passed 220 000 people. We’ve lost 14 000 of our customers and 20 of our staff. So we’re surrounded by death and the only way to stop that is vaccination.

The other point is that the vaccine is so effective. The data we’ve seen is compelling. It is safe, it’s available and, critically, if you’re not vaccinated you can transfer (the virus) to others. This is not just about private health, it’s about public health. We’ve been through this debate many times. I think Discovery’s position as a company is that it believes strongly in making people healthy.

We hold ourselves to a high standard. We need to make a difference on this issue. It’s critical.

So I think the logic and the morality is kind of unequivocal.

That’s the basis – that we are, I have to say, following a process, and we’ve spoken to our staff, we are consulting; it will be done with mutual understanding. This is not kind of a hard edge. It’s not that style, but we do need to move.

RYK VAN NIEKERK: What has the response been from the staff?

ADRIAN GORE: The response has been that we spoke to our leadership team of about 1 500 people yesterday, and we were speaking to staff today. It’s generally been very positive. Of course, people raise issues of concerns about vaccine safety. In the main I think staff not only are accepting, but there is strong support for it. We don’t think it’s a simple thing to do. We think there will be a lot of strong voices, and we’ll see other corporates respond as well. I’m sure many will have similar views and we’ll see how it plays out.

RYK VAN NIEKERK: How will you approach staff members who refuse to be vaccinated?

ADRIAN GORE: The entire process – I keep saying (there’s) this point of mutual respect – will be done on a basis where there are going to be clear processes for staff to apply. There may be religious grounds or health grounds and, if those are legitimate, the concept of reasonable accommodations of staff will be offered, ways of how we accommodate them in different ways, working in different areas, testing, and so on.

But ultimately if staff just have a view about it, then they can’t be at Discovery. That’s ultimately what the mandate will be.

RYK VAN NIEKERK: Interesting. I think you’ve drawn a pretty significant line in the sand and it will be interesting to see how other companies follow.

Let’s talk about your [annual] financial results. You earned a profit of R3.2 billion, which is nearly 20 times higher than the R180 million last year. But I’ve also looked at your 2019 profit of R6.6 billion, which is more than double your 2021 profit. How do you think stakeholders should look at the numbers?

ADRIAN GORE: I think they should look at the progression of the operating profit. Obviously during a Covid environment the volatility around, in particular, mortality claims creates all kinds of massive swings in profitability. And then I think last year’s numbers with rates of interest which really don’t affect any cashflow or solvency or anything at all are just kind of balance-sheet numbers.

The reality is I think that stakeholders should look at the progression of operating profit, up 7%.

If you take out the excess mortality claims that hopefully won’t occur, we are very pleased with the operating results. I think they’re strong. Every business has done well. The epicentre has been Discovery Life, where the amount of death claims has been absolutely tragic, beside the financial issues. But I think we’re very pleased with the performance.

RYK VAN NIEKERK: Definitely a significant bounce-back. Adrian, the market did not like the possibility of a rights issue you need to do for your Chinese business to recapitalise that business with around R1.5 billion. You have around R12 billion in the bank – why not fund it from internal sources?

ADRIAN GORE: Yes, it’s important. Ping An Health [Insurance] has given the most, I think, incredible performance. Over five years it has gone from virtually nothing to R40 billion of premium, 30 million clients. And now there’s quite a bit of profitability that’s coming through. So the business itself, the business case, is absolutely compelling because I think during this difficult Covid time we’ve been absolutely disciplined about every business being capitalised properly, about cash buffers in the sense to make sure we grade you.

Read: Discovery scraps dividend, flags possible capital raise

We’re investing a lot in building a bank. So our approach has been like we did with Discovery Card, when we bought it from FNB in that process. If there’s new growth capital required for a specific initiative not in the plan, we raise specific capital for that purpose. We haven’t yet decided exactly what we will do, but that’s likely (to be) how we will do it.

I don’t see a general rights issue raising any more money. If we do an equity raise, it will be to the centre of what’s required for Ping An Health, so we keep discipline in the plan. I think it’s particularly important during a time of uncertainty, and you do need capital discipline.

RYK VAN NIEKERK: Yes. The Chinese business is interesting. It’s been regarded by many analysts as the potential Tencent of the health insurance sector in China. Are you concerned about the way the Chinese authorities are changing regulations on the fly? For example, on Tencent there’s a massive impact.

ADRIAN GORE: If you look in China, there’ve been a number of policy decisions made, but I think there is a level of consistency around what they’re doing. China has this concept now of ‘common prosperity’, and they’re focusing on areas where they see distortion – the education providers that have created massive demographic problems about educating kids. They see that in the tech industry certain companies have almost monopoly status, and they’ve tried to address that. So there are areas, whether we agree or not, that they see as distortions and are acting against them.

In our space around health insurance, health insurance has been well prescribed in the five-year plan, encouraging the private health-insurance market. And I’ll say to you critically, we are providing access to public healthcare, funding typically co-pays that appear when you are in the public healthcare system.

So our product is not elitism or anything like that. Quite the opposite, making sure that hundreds of millions of people get access to healthcare. Our view, and I think it concurs with that of many of our competitors, is that being a regulated industry already there’s unlikely to be massive policy change. I think there is complexity in China, but if you look at the scale of the market and the scale of how growth will appear in the health-insurance market, I think we’re pretty convicted about how powerful the business can be already, given its scale. There’s actually no doubt we will follow those rights into Ping An Health.

RYK VAN NIEKERK: Discovery Bank is an interesting business. You’ve invested a lot of money in this venture but during the period it lost around R1 billion. Is the bank performing according to plan?

ADRIAN GORE: I think it is. I think it’s tracking very much the business plan. The last year has been an excellent credit for the bank. The growth has been slightly above our expectation, and the quality of the clients in terms of kind of revenue-taking primary accounts, using the bank deposit levels, has been fantastic. All aspects have done well.

The only area where I think we are lagging – and that’s been a decision of ours – has been the advances book.

We’ve been very conservative in granting credit.

We remain concerned about a new bank being too frivolous on credit in an environment of uncertainty such as Covid. That will change all the time, hopefully, but the bank has been tremendous. I think, as a client of the bank, the usage, the functionality is remarkable. So I think we’re very excited about the bank.

RYK VAN NIEKERK: Adrian, thank you so much for your time. That was Adrian Gore, the CEO of Discovery.

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Would love to see the stream of lawsuits against this tyrant when it turns out a year or two from now the vaccination drive was a massive mistake as a nobel prize winner opines. Sue the underpants off this little man employees of Discovery. They embody everything people hate about capitalism.

Lol thanks anti Vax…. is this about your horse dewormer?

This is about freedom. I’ve been vaccinated out of free will. Millennials have never had to fight for anything hence the easy parting with freedom. The adults have to try and teach them the error of their ways. The greatest damage emanating from Wuhan is the erosion of freedom but it’s not quantified as such as you cannot easily put a number to the abstract. If the vaccine is all they claim it to be, what is there to fear from the unvaccinated. It simply means they get vaccinated the hard way by contracting it. Wake up from slumberland.

YOUY CAN COME UP WITH A BETTER RESPONSE THAN JUST ” YOU ARE ANTI-VAXER”. Pro-vaxers suck

Throwing labels at people does nothing it just makes you look sheepish.

you guys are really slow in understanding the Covid vaccine supporter vs non-Covid vaccine supporters. The non-covid vaccine supporters are not against vaccines. They are against the Covid vaccine, simply because it has not successfully completed the approved vaccine trials and phases. Do you understand this step at least?

You’re making a big thing about a safe prick in your arm.

…as safe as talcum power, right?

Maybe a injection phobia thing 🙂

They in fact embody everything that (SA) people should love about capitalism. Quite simply, the leading wellness and tech operation on the globe, also with a massive stake in China’s biggest health insurance business.
Good time to buy more shares.

Why such strong negative words for a man that has done so much good for the country, society and the world?

He is a winner, a successful individual that we can look up to.
I look up to achievers and people that are not afraid to do something.

He has created employment for around 10,000 people plus numerous companies are reliant on the Discovery business.

Discovery is a leading edge successful company.

Discovery owns %25 of China’s largest insurance company, 13,000,000 members. R6 Billion due to regulatory requirements is nothing.

Because China is such a beacon for human rights and liberties just like North Korea…oh wait…

looking far from a distance that is what you will think, GO ASK his employees. they will tell you all about it. Depression and depression and culture of sabotage.

You are looking at this through the eyes of a shareholder or capitalist investor which by and large can never hate capitalism. When you put on the shoes of an employee you might find all this progress came due no reluctance to abuse the soldiers in the trenches which is a major competitive advantage albeit morally insolvent. Abusing the position of power you have over peoples lives to take away the only sovereign thing they have in the form of free will to try and protect your own bottom line is inexcusable. I cannot but hope history will teach DSY a proper lesson.

Old rule : Sell your shares in any company that builds a flashy head office.

They are renting. Still expensive but it helps having everyone under the same roof.

This is SOOOO true !!!

I suspect Discovery is actually paying less rent compared to the previous Head office (More floor space). Remember that Discovery is a growing company and not a dying company.

The growth was so high in Discovery that the previous buildings became small.

I would not do business with a Financial company running a business from a small tent in the middle of nowhere or a ship container, would you?

Does Google, Facebook, Microsoft and other big successful banks run from old dilapidated buildings?

Only down 33% the past 3 years !!
Wonderful growth I must say !!!

Just ask Sasol across the road…

Not too late to sell !!
So far only down 9% — will be a lot more shortly !!

The Discovery share is a buy, 25% in the Chinese largest insurance company is sufficient (13,000,000 members).

Looks like Discovery has a future Ten cent equivalent (Naspers/Prosus) in China to me.

Because Tencent and Alibaba aren’t being regulated by the CCP?
Trust the CCP at your own risk.

Too bad South Africa’s will have their pensions thrown at AND & SACP SEO’s in the near future, but yes, trust them with your money and your liberties.

Go ahead and sell Casper1. I want to buy for the long run. Buy when everyone is selling and sell when they are buying….

Prediction gone awfully wrong, the share is up to R129

I did point out the positives.

Ja no well fine Adrian.
Will the next cull of staff be based on the “morality” of smoking, drinking of alcohol, being of Russian orthodox religion or just being of the morally wrong skin colour.

I think you are on the slippery side of the morality hill here !!

I think so too.

Taking the vaccine on your own Will is perfectly fine.

Forcing your staff to take it. Well, if I were working there… I would have left immediately.

Bugger Gores Employment!

Workers are basically Guinea pigs in a rat race… even the so called execs

Casper vs Adrian? sorry Adrian wins 🙂 I will rather follow him

Caspertjie relax vriend, dit is vrydag.
Kry jou inspuiting 🙂

I’m sure Casper1 would be more than happy to donate his allocation to you.

Dear speccie —
It is OOM casper vir jou !!!
Yes I had my 2 Pfizers and are looking forward to the booster shot !!

You are lost — The discourse of mine is not about vax or no vax

IT IS ABOUT YOUR INDIVIDUAL FREEDOM AS A HUMAN BEING TO CHOOSE YOUR DESTINY !!!!!!!

Exactly. People are so blind, but if we’ve learnt anything from history it is this.

“The only thing that we learn from history is that we learn nothing from history” – Ashwin Sanghi

They will be on the wrong side of history.

Conspiracy theories my friend 🙂

Discovery still significantly overpriced even after the 8% fall.

The DSY share is falling upwards 🙂

Up 2% so far today.

I have never sold a share short, but if I would, now would be a great time to sell this company short. Any company that threatens its staff’s constitutional rights (Read 12 (2) b & c of the Bill of rights) should have all customers boycott them.

I guess you are one of those people that also does not believe in science?

The Covid-19 virus is deadly, it kills.

Do you never take any medication?

It is not about science, communism, covid or anything else — It is about you basic (constitutional right) of choice !!
Ah yes of course — you do not worry about little things like that now !!!

Instead of making this a personal attack rather give me the scientific reason you believe a medicine that has just in existence for 18 months will not have major negative effects in 5 years time?

I just believe more in natural immunity than that that comes out of a test tube.

I happened to be one of those that built up that kind of immunity so it is not as deadly as you state.

If all of this was really about health, wouldn’t it make more sense to focus on exercise and healthy nutrition?

Would that not solve a bunch of health issues and major killers. Surely it will mitigate a bunch of deaths caused by diabetes, cardio vascular related deaths and cancers to just name a few. Those kill many more people globally than any flu / pneumonia related viruses.

In 2017 56 million people died worldwide.
– 17.79 million from Cardiovascular diseases
– 9.56 million from Cancers
– 2.51 million from Dementia
– 1.37 million from Diabetes
– 1.24 million from Road injuries

So why not ban all cars and driving?

Fully agree !!!

It has been worked on, for other reasons, for more than 18 months. Do a bit more research on the science behind it. Surely I have a right to be protected by not having unvaccinated people around me? Otherwise I have no problem with the unvaccinated clogging up the I C U s in the hospitals

@Nostra
Research like the fact that these mRNA study dates are running till 2 May 2023, which means those getting the treatment now are in fact the study (trial) group?

Discovery has said that they will not be held liable for any medical or financial harm or injury that occurs directly or indirectly as a a result of you being vaccinated such as adverse reactions, medical emergencies and contracting COVID-19.

To all the anti vaxers i have 4 questions for you
1/ do you take medication?
2/ do you take supplements?
3/ do you drink water?
4/ do you eat food?

How do you know what is in that medication? is there a secrete ingredient to make one better that the other? is it harmful or not?
Performance supplements do they also not have a hidden ingredient to destroy the fit healthy sporty people.
The water you drink is it pure? Even the bought water. What is to stop someone putting something into the water supply. (have you never watched a horror movie?)
How or what was your food treated with? I can go on and on.
Every day a few hundred people in SA die from Covid. I personally know a few. To the best on my knowledge one person died after being vaccinated and that person had a health problem anyway.
How many types pf vaccinations are there? many. Are they all tainted to turn us into zombies or what ever……

Is it “groundbreaking” or are they just digging their own grave?

A great talk by Adrian Gore. He is not being over-run by short term events and local politics. Sadly we have many envious of the success that should be celebrated for thinking South Africans!

Mao was responsible for the deaths of millions of people, including some 2.5 million who were killed or tortured to death, not to mention the between 750,000 and 1.5 million that were killed during the Cultural Revolution and many people to this day still praise him.

Just saying that some people’s perspectives are different than others.

https://alt-market.us/why-do-some-people-support-tyranny-while-others-defy-it/

With all due respect, the discussion here is not about history.

It is about a pandemic, a virus which kills any human and does care about about our history or whether we are free or locked up or where you come from or how much money you have in the bank.

This Virus is killing machine, its mission is to kill and that is it.
That is what nature created it for.

We live in the 21st century, science is breaking new ground every day, we send satellites and explorers/robots to space, we can clone aninmals, we have super computers, we have laptops and cell phones.

Science and our Human brain and will power is what saves us.

Will be surrendering my Discovery medical aid in solidarity with those Discovery Employees being forced to vaccinate.

If this goes smoothly at Discovery other companies will follow suite.

Disclosure : I’m 100% pro vaccination.

However, the statement ” critically, if you’re not vaccinated you can transfer (the virus) to others.” is only partly correct.

Dr Gore is conveniently not mentioning that vaccinated people CAN also transmit CoVid – the delta variant colonizes the nasopharynx for 5 days before levels drop in vaccinated people.

Recent studies are showing that transmission in vaccinated households drops by 40 to 50 %, and that the vaccines do reduce risk of onward transmission. As such, vaccination is the route to go.

I’m not convinced that “… the logic and the morality is kind of unequivocal. ”

As seen repeatedly with dealing with medical practitioners and suppliers, where the “hard edge” is very much Discovery’s style, there appears to be different sets of rationales and definitions of morality for Dr. Gore and his management team.

End of comments.

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