Discovery today reported another set of strong annual results for the year ended 30th June 2007, highlighted by outstanding profitability from Discovery Life, continued growth in Discovery Health and strong new business in the joint venture with PruHealth in the UK.
The group also announced a two-stage strategy for unbundling from the FirstRand Group, which will increase the free-float of Discovery's shares from 18% to around 50% by November 2007. This will leave Rand Merchant Bank Holdings (RMBH) as a material shareholder in Discovery.
Adrian Gore, CEO of Discovery said: "The unbundling of FirstRand's shareholding in Discovery is a point of inflection for Discovery, in that it removes any strategic conflict going forward and opens up many opportunities for the group.
From Discovery's perspective, whilst we have appreciated the considerable value added by FirstRand we have had to be sensitive to the market-place competition between Discovery and other FirstRand companies. The unbundling removes any strategic constraints and provides Discovery with flexibility and increased scope for business opportunities.
It is also important to point out that RMBH was the original shareholder of Discovery and in effect from a philosophical point of view Discovery is now returning to the shareholder structure it had when it was formed in 1992.
In addition, the unbundling addresses the long-standing issue of Discovery's small free-float and limited liquidity of shares."
The unbundling also creates a significant opportunity to further enhance management ownership. Key members of the management team have indicated their intention to increase their shareholding following the unbundling.
In today's results, Discovery reported a 33% increase in headline earnings per share (HEPS) after BEE to 168.4 cents a share and a 20% increase in group operating profits before the BEE transaction to R1 510m.