Discovery H1 earnings up

JOHANNESBURG – Health insurer Discovery said on Friday first-half headline earnings per share (EPS) would rise 60-70 per cent, minus the impact of a tax charge on its black economic empowerment (BEE) deal.

But if the IFRS impact of the BEE transaction is taken into account, headline EPS for the six months to December, are expected to be 0-20 per cent lower than the similar reporting period of 2004, Discovery said in a statement. Shares in Discovery fell two per cent when the market opened and traded 0,80 per cent weaker at 24,80 rand by 0728 GMT, underperforming a 0,34 per cent rise in the midcap index.Discovery, South Africa’s top health insurer, said a charge of 144 million rand in the income statement of Discovery for the six months to December 2005 would reflect the IFRS impact of the BEE transaction.The firm had said in December that 190 million rand would be charged in the six months to December 31 2005, but revised the amount downwards.Discovery said despite disappointing results from its US unit, Destiny Health, operating profit before investment income and the effect of the IFRS adjustments, is expected to increase by between 15-20 per cent, driven by strong local earnings.Discovery is majority-owned by South African financial and banking group FirstRand.Discovery sold seven per cent of its equity to black staff and investors last September in a deal valued at 831 million rand.The seven per cent stake – in new shares issued – would bring the firm’s total BEE shareholding, after accounting for the BEE shareholding in its majority-owner FirstRand, to just over 25 per cent, in line with empowerment requirements in its sector.Under requirements set by the South African government, BEE is meant to give blacks a bigger slice of the economy, opportunities which they did not have under years of apartheid.Discovery is due to issue results on February 27.-Nampa-ReutersShares in Discovery fell two per cent when the market opened and traded 0,80 per cent weaker at 24,80 rand by 0728 GMT, underperforming a 0,34 per cent rise in the midcap index.Discovery, South Africa’s top health insurer, said a charge of 144 million rand in the income statement of Discovery for the six months to December 2005 would reflect the IFRS impact of the BEE transaction.The firm had said in December that 190 million rand would be charged in the six months to December 31 2005, but revised the amount downwards.Discovery said despite disappointing results from its US unit, Destiny Health, operating profit before investment income and the effect of the IFRS adjustments, is expected to increase by between 15-20 per cent, driven by strong local earnings.Discovery is majority-owned by South African financial and banking group FirstRand.Discovery sold seven per cent of its equity to black staff and investors last September in a deal valued at 831 million rand.The seven per cent stake – in new shares issued – would bring the firm’s total BEE shareholding, after accounting for the BEE shareholding in its majority-owner FirstRand, to just over 25 per cent, in line with empowerment requirements in its sector.Under requirements set by the South African government, BEE is meant to give blacks a bigger slice of the economy, opportunities which they did not have under years of apartheid.Discovery is due to issue results on February 27.-Nampa-Reuters